Just weeks after the FDA's embarrassing rejection of its cancer drug pixantrone, Seattle-based Cell Therapeutics (CTIC) said it was able to raise $21 million through the sale of preferred stock to three institutional investors. Each share of the preferred stock gives the investors the right to buy common stock at a 40-cent conversion price. And the investors have the right to purchase another $13 million in preferred shares.
According to the company, which has been pummeled by analysts repeatedly for the harsh review pixantrone received at the hands of the FDA, the money can be used to provide working capital for paying interest or debt, funding research and development, preclinical and clinical trials as well as the preparation and filing of new drug applications. The FDA is demanding a new pivotal trial before it approves the therapy, but several analysts have questioned if Cell Therapeutics--which has spent more than $1.4 billion without bringing a drug to market--can continue to raise fresh funds.
A week ago TheStreet noted that Cell Therapeutics planned to pay $30 million of a $40 million debt payment due July 1 with 60 million shares of the company's stock. Investors responded to today's news by cutting the share price yet again. This morning shares dropped 9 cents a share to 36 cents.
- here's Cell Therapeutics' release