Cell Therapeutics (CTIC) suffered a net loss of 14 cents per share in the second quarter of 2011, compared with a net loss of 46 cents (excluding special items) per share in the year-ago quarter. The narrower loss per share in the reported quarter was due to lower operating expenses and lower deemed dividend paid to preferred shareholders. The Zacks Consensus Estimate for the reported quarter was a loss of 12 cents per share. Cell Therapeutics did not generate any revenue during the reported quarter versus $0.029 million in the second quarter of 2010. Total operating expense in the quarter declined 15% to $16.9 million.
Pipeline Update
In June this year, Cell Therapeutics met with the Division of Oncology Drug Products (the DODP) of the US Food and Drug Administration (FDA) and received guidance for resubmission of the new drug application (NDA) for its lead pipeline candidate pixantrone. Pixantrone has been developed for the treatment of relapsed or refractory aggressive non-Hodgkin’s lymphoma (NHL) in patients who have not responded to other treatment options. The company is also looking for accelerated approval of the NDA based on data from the originally completed PIX301 study.
The meeting follows the early May decision of the Office of New Drugs (OND) of the FDA allowing the company to re-submit the NDA for pixantrone for review without the need for an additional trial. The FDA had issued a complete response letter (CRL) in April 2010 for pixantrone based on concerns that PIX301 has not proved sufficiently the effectiveness of the drug.
The DODP will review the NDA within 6 months of the resubmission. Cell Therapeutics will re-submit the NDA in the fourth quarter of 2011 and anticipates receiving approval in April 2012.
Moreover, the drug is also under review in the European Union (EU) and is expected to receive a positive recommendation for approval from the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) before the end of this year, leading to a potential launch in the EU in early next year.
The decision of OND has removed a major overhang for the company and revived the prospects of pixantrone. The company has been saved 2-3 years’ time by getting the opportunity to file on the basis of the original completed trial PIX301 instead of the new trial PIX306.
Cell Therapeutics’ second most advanced pipeline candidate is Opaxio under development for the treatment of ovarian cancer, brain cancer, and esophageal cancer. In June 2011, the company announced positive data from a mid-stage trial in patients with newly diagnosed high-grade malignant brain tumors at the American Society of Clinical Oncology (ASCO). The data showed that Opaxio in combination with temozolomide and radiotherapy resulted in encouraging progression free survival.
Cell Therapeutics bolstered its late stage pipeline by acquiring an exclusive license from Chroma Therapeutics to co-develop and market Chroma's drug candidate tosedostat in the Americas. Tosedostat has demonstrated encouraging responses as a single agent therapy in treating hematopoietic cancers such as acute myeloid leukemia (AML), myelodysplastic syndrome (MDS), and myeloma, which synergizes well with Cell Therapeutics’ experience.
In June 2011, interim data from a mid-stage OPAL study of tosedostat in elderly patients with relapsed or refractory AML were presented at ASCO. The study demonstrated encouraging single agent response rates including a high response rate in patients who had received prior hypomethylating treatments. The data suggests that tosedostat should be studied in combination with other hypomethylating agents in first-line elderly AML patients.
Our Recommendation
We currently have a Neutral recommendation on Cell Therapeutics.
We believe the uncertainty surrounding the approval of Cell Therapeutics’ lead pipeline candidate pixantrone for aggressive NHL in the US has eased following the opportunity given by the FDA to resubmit the NDA. However, we prefer to remain on the sidelines since Cell Therapeutics is heavily dependent on the approval of pixantrone. Therefore, any delay in gaining approval would be a major blow for the company.
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