Baxter bets $60M on Cell Therapeutics' blood cancer drug

Long-troubled biotech Cell Therapeutics ($CTIC) has landed a big-name partner for its Phase III myelofibrosis drug, convincing Baxter ($BAX) to shell out $60 million upfront for a cut of pacritinib.

Under the deal, half of Baxter's down payment will serve as an equity investment in Cell Therapeutics, and the biotech is eligible for another $112 million in clinical and regulatory milestones. The two will codevelop the blood-cancer treatment, with Baxter claiming overseas commercial rights and the pair agreeing to split profits in the U.S.

The agreement means an infusion of both cash and confidence for Cell Therapeutics, a biotech with a long rap sheet of developmental woes. The Seattle company spent years and millions of investor dollars on lymphoma drug pixantrone only to endure a scathing FDA rebuke in 2010. This year, its next big hope tosedostat got saddled with a partial clinical hold after a patient died of heart inflammation, torpedoing expectations for that blood cancer drug.

Now, after licensing pacritinib from Singapore's S*BIO for $30 million last year, Cell Therapeutics is counting on the myelofibrosis treatment to succeed where past projects have failed, and with the well-respected Baxter in tow, the 9-lived biotech may have an easier time convincing investors to give it another chance. CEO James Bianco had promised shareholders his company would partner up on pacritinib by year's end, and Wall Street rewarded him for keeping his word Friday morning, sending Cell Therapeutics' shares up about 20% to $2.08 in premarket trading.

Cell Therapeutics is taking a two-pronged approach to Phase III, charting pacritinib's efficacy and safety in a broad set of myelofibrosis in an in-progress trial while planning to start a tandem study on those with low platelet counts later this year.

If approved, the drug would compete with Incyte's ($INCY) Jakafi, and Bianco believes pacritinib can best its JAK2-inhibiting contemporaries, showing promise in leukemia and certain solid tumors.

- read the announcement