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Flynn's Harp:Recent success for often-maligned CTI and its CEO stir global interest

Cell Therapeutics Inc., the Seattle biotech firm that has alternately raised and dashed investor hopes over the past 20 years, has scored a triple play in recent weeks, gaining European approval for a new drug, buying a phase-three cancer drug at deep discount and finding a major new investor. The spate of recent news, while drawing little attention from Seattle area media, has left influential national bloggers and websites musing over why CTI's developments haven't attracted more investor interest and movement in its stock price. The stock has stayed under $1 for some weeks and is down 40 percent from a year ago.

Attention for CTI has peaked following late May word that the company's cancer drug Pixantrone, with the brand name Pixuvri, has received conditional marketing approval from the European Commission, following February approval from the European Medicines Agency.

National websites have enthused about CTI's recent successes, with the influential market blog "Seeking Alpha" a few days ago offering the intriguing headline, both promising and pointed: "Cell Therapeutics' Pixantrone - Is Hope Coming For Patients And Patient Shareholders?"

And the respected "24/7 Wall St. Wire" asked, in a column noting the recent successes, "Can a European Approval of Pixantrone Save Cell Therapeutics?"

The Pixantrone approval will allow CTI to produce revenue from the drug in a market about equal in size to the U.S. market, and will also mean that it can accumulate additional data toward FDA approval from the use of Pixantrone in patients with a rare form of non-Hodgkin lymphoma.

Just this week, CTI announced that it has completed the acquisition, first announced in April, of Pacritinib, a Phase III-ready drug that's part of a new class of targeting agents, known as JAK inhibitors, for treating myelofibrosis, a type of leukemia that affects bone marrow.

The Pacritinib purchase price of $15 million in cash and another $15 million in convertible stock was described by one national blogger as "a near steal" because, despite four competitors, CTI will be going after a piece of what the company views as a $7 billion market in the U.S. alone.

Finally, CTI announced a $40 million investment from New York-based Socius Capital, which analysts suggest paid about 10 percent above the CTI stock price for its passive-investment stake of just under 10 percent. That reflected, according to an analyst, "a high level of confidence" in the commercialization of Pixuvri and clinical development of Pacritinib.

But it's the Pixantrone success, enhancing the Pacritinib acquisition and spurring the cash infusion, that is most intriguing, particularly, since there are several sub-plots that come into play with the European announcement. Those include the politics surrounding FDA's handling of the pipeline for new potentially life-saving drugs, as well as the emerging controversy over high-priced drugs that offer only a few months of life expectancy for patients.

Then there's the on-going dynamic tension between CTI CEO Dr.James Bianco and Seattle-area media, which have frequently targeted the company and Bianco for the $1.74 billion he's raised and spent without much benefit to shareholders and the wide swings in the stock price over the years, as high as $72 and as low as 88-cents. Bianco's defenders brush aside media criticisms, contending that the only reason CTI is still alive after 20 years is because of Bianco's creativity and leadership.

As one Bianco supporter put it, "let's just say the media and Jim Bianco don't like each other very much," the tension possibly due in part to the fact Bianco enjoys the perks that go with the CEO role and is a competitive kind of guy who doesn't shrink from a fight.

The latter isn't surprising given his Bronx upbringing as a second-generation Italian kid in a household shared by up to 20 relatives at a time in an environment where "you were okay as long as you didn't leave the few square blocks of our neighborhood."

Then he smiled as he remembered that his bus to high school made its closest stop 10 blocks from his home. "Every day I sprinted to the bus because if you couldn't get there faster than anyone else, you were a statistic."

He admits he didn't do very well academically in high school, but by the time he found himself at NYU, he recalls that a major disappointment was the lone "B" he received among his "A's."

Medical school, internship and residency in New York led to Seattle and an opportunity at the Fred Hutchinson Cancer Institute, and eventually to the founding of CTI.

In addition to being high visibility in his business, he's also highly visible in fund-raising efforts for his special causes, including the Hope Heart Institute, where he and his wife, Sue, won the Wings of Hope award in 2002 and where he's helped revamp the key fund-raising event, and Gilda's Club, for whom he is planning the first capital campaign.

He's been involved with Gilda's Club for a dozen years, explaining that it "provides that other kind of Medicine, the kind you can't get in hospitals or clinics but that place where family, kids, friends etc have support. It's a great cause, but because they don't do research they're not sexy so funding in these times is tough. That's why I stay involved. It's in our (CTI's) DNA."

The manner in which the European Medicine agency's approach brought conditional approval for Pixontrone while the FDA dallied, eventually causing CTI to withdraw its application, represents another log on the fire of controversy that swirls around getting new drugs through the FDA to patients.

In Europe, 25 member states and five independent experts represent the review panel for an application and two-third of the 32 must give their okay. Critics of the FDA process of an office with a single final decision maker in each therapeutic category, from oncology to cardiovascular and rheumatologic, etc. call the European approach a more balanced review.

The critics contend that people are losing their lives while the FDA is holding things up and urge that Congress and the administration press for conditional approval as a more certain part of the FDA review process. For obvious political reasons, Bianco declines to join those criticisms, particularly since a new application to the FDA for Pixontrone is planned in a few months.

And since Pixontrone will cost, once the pricing is worked out with each of the European countries, somewhere between $33,000 and $38,000 to extend the lives of the target patients by less than a year, it will come to be part of the growing debate over end-of-life costs vs. benefit.

But over the longer term, it will be interesting to see how the developments of the past few weeks play out for Bianco and CTI, and to what extent the prediction of one of the national bloggers proves accurate: "It has been a long road for investors of CTIC, but it now looks as though the future is bright."

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Mike Flynn is retired publisher of Puget Sound Business Journal who now has a consulting firm, Mike Flynn & Associates LLC, and writes a weekly column called Flynn’s Harp. Contact him at Mike@emikeflynn.com if you would like to be added to the list of those receiving it via email, or to see previous Flynn’s Harp columns, go to emikeflynn.com and click on blogs

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