Cell Therapeutics, Inc. (NASDAQ: CTIC) recently decided to exchange up to 60 million shares of its common stock for $30 million of notes. Liquidity crisis at the company continues to remain a major concern for us. Earlier, in April 2010, the company raised $18.5 million through preferred stock and warrants.

Although Cell Therapeutics has taken several steps to reduce the burn rate, its cash crunch will continue for the time being. During 2009, Cell Therapeutics reduced its debt burden considerably. However, the company’s policy to reduce debt level by converting into common stock dilutes shareholder value.

The liquidity crisis at Cell Therapeutics has become more prominent since its New Drug Application for lead candidate, Pixuvri was denied. The company has been seeking approval for the drug to treat relapsed or refractory aggressive non-Hodgkin’s lymphoma (NHL) in patients who have not responded to other treatment options.

In April 2010, the company received a complete response letter for Pixuvri from the US Food and Drug Administration. The company will be required to conduct additional trials, the roadmap for which will be decided in consultation with the FDA.

Following the setback for Pixuvri, Cell Therapeutics reduced its workforce by 36 employees. The reduction in staff strength along with the elimination of other planned expenses is likely to result in savings of about $16 million in 2010. The company expects operating expenses for 2010 to be approximately $60 million, a 21% reduction from its earlier projection.

Apart from Pixuvri, the company has other pipeline candidates as well. With the advancement of the pipeline, additional funds are required to support the various programs.

Current investor focus is primarily on the future course of action that Cell Therapeutics takes for Pixuvri. We are Neutral on the stock.

ZACKS REPORTS

Close: CTIC closed up 0.5% at $0.4625 today, but shares were up over $0.50 early this morning.

Denosumab is a subcutaneous RANK Ligand inhibitor and the aim here is to slow or stop he spread of tumors into the skeleton.   Bone metastasesis a serious concern for many patients with advanced cancer.

If cancer reaches into the bone structure, the growing cancer cells weaken and destroy the bone around the tumor.  After that occurs, patients can end up with easy fractures, spinal cord compression, and/or the need to receive radiation or surgery to bone.

The RANK/RANKL pathway is believed to play a central role in cancer-induced bone destruction, regardless of cancer type. Denosumab is the first therapy to target this important pathway.

Amgen said that it intends to submit marketing applications in the European Union, Switzerland, Canada and Australia, and also in Japan, all in a short period of time, with its licensing partner, Daiichi-Sankyo, under a collaboration and license agreement for the development and commercialization of denosumab in Japan.

This BLA represents the second marketing application for denosumab that has been submitted to FDA; denosumab is currently being reviewed under the trade name Prolia™ for conditions related to bone loss. For that application, the FDA has set a corresponding Prescription Drug User Fee Act (PDUFA) action date of July 25, 2010.

Roger M. Perlmutter, M.D., Ph.D., EVP ofR&D said, “We believe that denosumab will offer substantial benefit to cancer patients suffering from bony metastases.  Denosumab, administered monthly as a 120 mg dose subcutaneously, demonstrated consistently similar or greater efficacy in clinical trials when compared to zolendronic acid, offering the potential to improve on the current standard of care. One potential advantage of denosumab is that dose adjustments resulting from declining renal function are not necessary.”

Amgen shares closed down 2.25% at $54.63 (unofficial closing bell price) on only about 4.8 million shares.

JON C. OGG

The New Jersey-based biotherapeutics company plans to take the ticker “IKAR” on NASDAQ.  The underwriting group is rather large: Goldman Sachs, Morgan Stanley, Credit Suisse, Lazard Capital Markets, Cowen & Co., and Wedbush PacGrow Life Sciences.

Unlike many BioHealth pre-public companies which file to come public, Ikaria has revenues.  2009 sales were $274 million.  The company also had had net income of $13 million and EBITDA of $109 million in 2009.

Ikaria is focused on developing and commercializing new therapeutics and interventions designed to meet the significant unmet medical needs of critically ill patients.

Its net sales are generated from INOtherapy, most of which come from the medical gas called Inomax used to treat a certain type of respiratory failure and is approved for hypoxic respiratory failure in term-infants and in premature infants.  INOtherapy is sold in the United States, Puerto Rico, Canada, Australia, Mexico and Japan.  Inomax is also in clinical trials for other indications.

Other focal areas are Hepatorenal Syndrome, where kidneys start to fail, as well as treating post heart attack patients.

OTHER PROPOSED TREATMENTS:

• LUCASSIN, a Terlipressin/vasopressin receptor agonist, is for Hepatorenal Syndrome Type 1 with a pivotal phase III expected to start in 2010;
• IK-5001, a sodium alginate and calcium gluconate/mechanical support of infarcted heart muscle, targeted for cardiac remodeling and subsequent congestive heart failure following a heart attack with an expected Pivotal phase II/III expected to commence in 2011.
• IK-1001, a sodium sulfide to treat conditions characterized by tissue ischemia is in the clinical program in planning stage.
• IK-6001, is a Fibrinogen Bb15-42/anti-inflammatory indicated for conditions characterized by vascular leakage and is in pre-clinical stages.

FULL SEC FILING

JON C. OGG

Today the company’s shares were dealt a serious blow after the company confirmed that the Joint Advisory Committees of the U.S. FDA, including the Arthritis Drugs Advisory Committee and the Drug Safety and Risk Management Advisory Committee, voted against the approval of naproxcinod in the war against osteoarthritis.

It wasn’t exactly a close vote.  16 to 1, and one abstention.  Ouch.

The Joint Committee said that they did not have sufficient evidence at this time to support the approval of naproxcinod for the relief of the signs and symptoms of osteoarthritis.  The press release noted that “there was enthusiasm for the potential of naproxcinod but more data was required from additional safety studies.”

The data included included 35 clinical studies involving more than 6,500 subjects; and the NDA file contained data from three pivotal Phase III studies, which the company said all met the co-primary efficacy endpoints.

While the FDA is not required to follow the panel recommendation and while a final decision is due on or before June 24, 2010, a vote of 16-1-1- is a hell of an endorsement against an approval.

Naproxcinod is NicOx’s lead investigational compound and the first in a new class of anti-inflammatory agents known as CINODs (Cyclooxygenase- Inhibiting Nitric Oxide Donators).  The NDA was filed in December 2009 and the company said “is supported by data from a large program of 35 clinical trials that involved more than 6,500 subjects. The program evaluated the efficacy of naproxcinod in relieving signs and symptoms of osteoarthritis, as well as its safety, with particular care given to its effect on blood pressure.”

On the Euronext in Paris, NicOx fell over 44% to 2.90 Euro on over 15.5 million shares.  Shares hit a low of 2.34 today, and that marked a 52-week low.  This company has been public since 2001.

JON C. OGG

The company has entered into an agreement to issue and sell 12,435,000 shares of its common stock at $4.15 per share to certain investors.  The gross proceeds of the private placement are expected to be approximately $51.6 million.  $4.15???? Shares closed at $5.37 yesterday.

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Kunkle noted:

• MannKind (MNKD) saw a large bearish synthetic short as 5,000 November $7 calls are sold and the $7 puts are bought in a $0.45 debit.  The Street is undecided on MannKind, with Jefferies having a $2 target, and Rodham having an $18 target, shares at $7.  Biodel Inc. (NASDAQ: BIOD), noted yesterday with a bullish article, could be a threat to MannKind’s Afrezza and is seen as safer and more effective, potentially a knock out punch for MannKind.  MannKind is preparing to meet with the FDA in June to discuss the issues the FDA has with Afrezza.  MannKind is also struggling with liquidity, and without some good news, will not make it past Q1 of next year.

MannKind shares are down almost 3% at $6.92 today on rather light trading volume of about 666,000 shares (12:51 PM EST).

JON C. OGG

Shares are currently down 1.6% at $40.53.  The current open interest for the MAY-2010 options expirations is close to 200,000 contracts when you spread across all available strike prices.  That is over 20 million shares equivalent on a fully diluted basis.

We do not want to contribute to additional volatility in an already-volatile situation, but Dendreon is not a stock without controversy and PROVENGE is not without controversy.  The short interest as of mid-April was listed as over 13.12 million shares, which is the highest in the last year.

The 52-week trading range is $7.50 to $42.60 and average volume is now over 3.5 million shares per day.  At the end of 2009, Dendreon had close to $600 million in cash, short-term securities, and long-term securities.

JON C. OGG

This morning news is out on its development program.  Generex updated Phase I results from it novel immunotherapeutic vaccine showing that circulating levels of the extracellular domain of the HER2 protein were decreased.  Additional results from a recently completed Phase I clinical trial of its novel immunotherapeutic peptide AE37 in prostate cancer patients. In addition to safety and the demonstration of a specific immunological response to AE37, it was shown that circulating levels of the extracellular domain of the HER2 protein were decreased in immunized patients compared to pre-vaccine levels.

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The current guidance would expand upon the disclosed information over waivers prior to an FDA committee meeting. The current guidance proposed would require the FDA to post online the name of the company or institution associated with the financial interest, along with a description of an individual’s conflict of interest if such conflict(s) exist.

Scientific advisory committees provide expert advice on scientific, technical, and policy matters, with the ultimate goal of protecting and promoting safety and public health. These are often regulatory decisions, product approvals, general policy matters, and other issues.

Why not just cut out any and all conflicts of interest on any FDA panel or anywhere inside the FDA?  The reason is rather simple.  It is not possible.  The best and the brightest generally go to work in the private sector at drug, biotech, and device companies, or they go do work at universities or special interest groups or they go to work at other private-sector positions.  With hundreds (or thousands) or ailments and treatments being sought after today and with the number of experts in some fields (or sub-sectors of fields), the FDA has no choice but to rely upon expertise from the outside…. conflict or no conflict.

Why does this matter for biohealth and biotech investors?  Many many drugs have been delayed or  kept off market or have been outright denied marketing that many have felt were more than approvable drugs.

• It was last summer when we noted that Array may have a pay-off in its inhibitor pipeline.

After the close, Array announced that it has entered into an agreement with Novartis (NYSE: NVS) that will cover the development of the small-molecule MEK inhibitors ARRY-162, currently in a Phase 1 cancer trial, its back-up, ARRY-300, and other MEK inhibitors.  This is a worldwide partnership valued at $467 million if all conditions come to pass.  Not bad for a $152.7 million market cap.

The report causing the run-up is new published analysis of its clinical trial excerpt taken from the Journal of Alzheimer’s Disease.

The publication published an article about Prana’s lead drug candidate dubbed PBT2 for Alzheimer’s Disease.  New analysis shows that PBT2 is effective in reversing dementia symptoms.  To date, all market-approved Alzheimer’s and dementia drugs are aimed to slow the progression of the disease.

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The test results were refractory to conventional treatment with the somatostatin analogue, octreotide; the Y-90-edotreotide therapy resulted in objective tumor response or stable disease in 67 of 90 patients with metastatic carcinoid refractory to octreotide therapy.  That comes to 74.4% response rate.

The median progression-free survival and overall survival were 16.3 and 26.9 months, respectively; and the company noted that there appeared to be a correlation with prolongation of the period of progression free survival in those patients who had durable diarrhea improvement.  Key improvements in patient symptoms and quality of life related to carcinoid tumors were also noted, and treatment was well-tolerated and had an acceptable adverse event profile.

Where this is interesting is that the patients involved in the study had incurable, progressive disease refractory to octreotide with severe symptoms which could themselves be life-threatening and the results support Onalta’s potential to improve outcomes among a refractory, metastatic patient population lacking treatment options.  The article is available here.

This move in Molecular Insight is up 160% at $3.90, and the stock has traded even higher this morning.   The move is strong enough that it seems to be adding a boost to other biotech shares with positive cancer news this morning.

EntreMed, Inc. (NASDAQ: ENMD) is up big this morning on reports that it has initiated a Phase II study for its ENMD-2076 in ovarian cancer.  This is one of the stocks that has been around since the late 1990’s and has been in the $20’s, $40’s, $60’s and even higher in the distant past.

The FDA cited as its primary reason for the action its concerns previously raised at the Oncologic Drugs Advisory Committee meeting on March 22, 2010 and recommended the company conduct an additional trial to demonstrate the safety and effectiveness of its product.

The company said further that, based on the FDA’s ODAC presentation, it has decided to pursue expanded access program for pixantrone while it conducts an additional study in aggressive non-Hodgkin’s lymphoma.

It now expects enrollment in a follow-up combination therapy study in a similar population could be rapid and occur predominantly within the U.S. and it has had preliminary discussions on the subsequent trial design with a leading statistician, and potential lead investigators who believe the study will be positively received by the lymphoma treatment community.  That was noted as being “on the basis of the PIX 301 clinical trial results and the lack of satisfactory alternative therapies for their patients with multiple relapsed aggressive non-Hodgkin’s lymphoma.”

The company further noted that this is a sad outcome for its patients with relapsed/refractory aggressive NHL and it noted disappointment that the FDA “would ignore clinically meaningful improvements in overall response rate and progression-free survival, let alone complete responses….”

Cell Therapeutics plans to request a meeting with the FDA on both the design of the follow-on study as well as expanded access program for patients who are not participating in the company’s clinical trial.  Later this month, it plans to meet with its clinical expert and the co-rapporteurs as it prepares to submit its Marketing Authorization Application to the European Medicines Agency for review. Based on their feedback and guidance, the Company expects to submit the application in the third quarter of 2010.

What is interesting here is that this is another true fight.  The company’s version of statistically significant is different than the FDA’s version.  This is also for relapsed or refractory aggressive non-Hodgkin’s lymphoma, which is far from the company trying to get a “first line of defense” or primary treatment status.

This stock battle of bulls and bears appears to be far from over.  The company recently raised capital and is set for its special meeting of shareholders.  The market is far from open, but the initial indications show the stock trading up at $0.66 versus a $0.637 close on Thursday.

Stay tuned.

JON C. OGG

Joe Kunkle of OptionsHawk.com noted, “OSI had a buyer of 2,000 May $55 puts at $0.90 that sold 2,000 May 60/65 call spreads at $1.45… looking for OSI Pharma not to receive a better takeover offer and for the current offer to potentially fall apart, sending shares lower.  The trade was done for a net credit so that bet is more that no other offer comes in and shares remain below $60, but it has added profit potential if things fall apart.”

If you look at the current Astellas hostile offer, this was initially rejected at $3.5 billion or $52.00 per share as inadequate.  That tender offer was initially set to expire last week but was extended to a date of April 23, 2010.

Astellas has been trying to buy OSI Pharma for about a year, but it seems that the predator may have gotten into a one-man bidding show.  OSI was a $70+ stock in 2004 and was a $80+ stock back in 2000.

This is a profitable company targeting with cancer and diabetes/obesity, so with a $3.5 billion market cap and expectations for sales of almost $500 million in 2010 and $536 million in 2011 there may still be some value for someone.  Still, shares have petered out here at $60.00 for almost two weeks.  If another buyer is going to surface, OSI holders better hope that comes fast.

The bet right now is that even a higher bid might not mean a premium to today’s above-offer share prices…. Stay tuned.

JON C. OGG

Dendreon is no stranger to takeover rumors, and those have never really gone away.  The problem is that Dendreon’s $5 billion market cap with no Provenge approval yet means that a buyer would be saddling extreme risks if there is an unexpected adverse FDA event.  The reality versus the takeover scenario is that it just seems something that would come AFTER the FDA event.  Even then, a takeover shot here may have already been passed up long ago even though anything is possible in the world of biotech M&A.

This stock was touted recently on “Fast Money” on CNBC and the most recent analyst calls have been in support of the stock.  This is all despite the notion that the FDA has a history against Provenge.  Some even have gone on record noting that the bias against Provenge was not a fair bias due to conflicts of interest.

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Last week the company agreed to sell $20 million in preferred stock and warrants to several institutional investors, and it noted that it could raise up to $32 million in total if those investors exercise their warrants.  The company has also been hit by lawsuits of the class action nature and has a key upcoming meeting that will be a make or break decision time for shareholders.

Class action suits have come from The Law Firm of Barroway Topaz Kessler Meltzer & Check, LLP… A separate announcement by Brower Piven also asked those with losses of $50,000 or more contact to contact it regarding a lead plaintiff status.   Hagens Berman Sobol Shapiro also has a class action against Cell Therapeutics.

Cell Therapeutics is hosting its Special Meeting of Shareholders in Seattle at 10:00 AM Pacific Time on April 9, 2010.  The company has two key issues for vote listed from the February proxy:

• (1) to approve an amendment to the Company’s amended and restated articles of incorporation to increase the total number of authorized shares from 810,000,000 to 1,210,000,000 and to increase the total number of authorized shares of common stock from 800,000,000 to 1,200,000,000; and
• (2) to approve an amendment to the Company’s 2007 Equity Incentive Plan, as amended (the “2007 Equity Plan”), to increase the number of shares available for issuance under the 2007 Equity Plan by40,000,000 shares.

The other notion to consider is that this Special Meeting is only for holders of record at the close of business on February 19, 2010 as far as those who are entitled to vote.

We have seen a volatility compression take hold, so it will be interesting to see what (if anything) comes from the meet8ing this Friday.  Either way, it may have some heated words thrown in that meeting.

At 10:38 AM EST Cell Therapeutics is up almost 1% at $0.536 on 2.65 million shares.

JON C. OGG

Oxigene Inc. (NASDAQ: OXGN) is an example of one such stock which has been given an exponential upside call in a research note.  We decided to back through the rest of our research call history in recent days and weeks to look for the other stocks with exponential or near-exponential calls.  Of course these are not your multi-billion stocks which have already risen exponentially.  Among these are Inovio Biomedical Corporation (AMEX: INO), Novavax, Inc. (NASDAQ: NVAX), Orexigen Therapeutics, Inc. (NASDAQ: OREX), Sequenom Inc. (NASDAQ: SQNM), and Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA).

We have given a breakdown on each of these for the upside of the time and the upside remaining on individual price targets.

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In the intent to treat population, median progression-free survival was 16.1 weeks in the study arm versus only 9.7 weeks in the erlotinib plus placebo arm.

ARQ 197 is an orally available, small molecule inhibitor of the c-Met receptor tyrosine kinase. Erlotinib, marketed as Tarceva, is an inhibitor of the EGFR tyrosine kinase.  167 patients were evaluated in the Phase 2 trial.

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This morning came the announcement that the U.S. Patent and Trademark Office issued a patent on methods of treating heart failure patients with bucindolol based on genetic testing.

The patent, “Methods for Treatment with Bucindolol Based on Genetic Targeting” was given patent #7,678,824.  If all goes as the plans detail, then this would be a new approach to treating heart failure.  The company also expects that this will extend its pharmacogenetic intellectual property protection around bucindolol.

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There is one issue to consider as far as what may happen in the ongoing management shuffles in Corporate America.  Termeer has been CEO of Genzyme for 25 years, and it is not as though an old CEO gets run over by the peasant riots at the first sign of trouble in a company.  Old CEOs can usually withstand many revolts.  Still, it is very possible that Henri Termeer could be stripped of one title rather than be marched out entirely.  If that occurs, he would lose the President or CEO role, or both… and still potentially maintain the Chairman position.  This is a thought that is far from new.  As far as our own call, Genzyme has been a part of CEO WATCH since 2009 and the FDA action this week made this come up front and center.

As far as a background of the issues in 2009… A rare virus shut down production of its lucrative and life saving, then came foreign products in its liquid drugs.  The company now has more competition from Protalix BioTherapeutics, Inc. (AMEX: PLX), Shire plc (NASDAQ: SHPGY), and Pfizer Inc. (NYSE: PFE).  The recent woes at Genzyme have allowed for these competitors to have perhaps a stronger footing than what might have been expected.

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There were some rather large changes both up and down.  Again, the change reflects the March 15 settlement date versus a prior date of February 26:

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RXi has announced that it will repurchase 675,000 of the RXi common shares which are held by CytRx.  What is interesting is that RXi had a share price of $7.71 after a near-5% drop today, but the price agreed upon for sale is “approximately $5.70 per share.”

CytRx will hence receive immediate cash proceeds of approximately $3.8 million from the RXi transaction.   This RXi share buyback agreement will be completed in conjunction with a $16.2 million registered direct offering of RXi shares and warrants, also announced today by RXi.

The agreement with CytRx also allows for CytRx’s possible sale of up to an additional 135,000 shares of CytRx’s RXi shares to the extent warrants sold by RXi in its registered direct offering are exercised.

The Orphan Drug status pertains to the treatment of acute myeloid leukemia, or AML.  This is actually the second GVAX cancer vaccine from BioSante to secure FDA orphan drug designation.

Today’s news noted that a paper published in the peer-reviewed journal “Blood” showed that clinical investigators led by Johns Hopkins University shed light on the results of a Phase II study of GVAX AML which was accompanied by immunotherapy-primed lymphocytes after autologous stem cell transplantation in hematologic malignancies.  The article noted that immunotherapy in combination with primed lymphocytes and autologous stem cell transplantation did show encouraging signals of potential activity in AML.

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