Cti Biopharma Corp (NASDAQ:CTIC)

I have to admit I got sucked into Cell Therapeutics' transient success with pacritinib and green thumbed them about a year ago, ruining my perfect record on the stock. Fortunately I never followed up that green thumb with a real money bet. As it turned out, pacritinib is going down the toilet along with all of Cell Therapeutics' other programs over the years. A red thumb is still the right bet for this stock no matter how much it looks like they've finally developed a legitimate drug.

This month the company withdrew their NDA for pacritinib thanks to an FDA full clinical hold regarding a detrimental effect of pacritinib on overall survival in both of the two phase III trials. That's a polite way of saying the drug kills people. Not good. Given how bad this looks and Cell Therapeutics' long history of failure, I think we can discard pacritinib from the company's value equation.

What's left? The new lead drug is tosedostat. In December management reported a complete response rate of 49% at an interim analysis of the phase II IST of tosedostat in AML. Tosedostat is also being tested for AML in a "Pick-A-Winner" program developed by the NCRI of the UK. Management is planning discussions regarding registrational trials of tosedostat with regulators in the US and UK later this year. Paclitaxel analogue Opaxio wasn't mentioned in the last earnings PR, although a phase III trial as maintenance therapy in ovarian cancer is supposedly in progress. Pixuvri is showing weak and static revenues, barely over 1M in the last quarter reported. This drug seems to be going nowhere commercially.

Cell Therapeutics has 128M in cash thanks to a series of vulture financings conducted in late 2015. These financings involved the creation of preferred stock equivalent to 90M of common, so there is at least 60M of hidden market cap in addition to the 190M cap based on the outstanding common. There's probably plenty of other preferred stock and options still out there that I haven't kept track of adding to the hidden cap. There's also 52M in long-term debt and a quarterly burn over 20M.

For some reason Cell Therapeutics isn't trading under cash despite the fact that several bios with better pedigrees and prospects are doing exactly that. If we subtract the debt and two quarters of burn from the cash that leaves us with 36M net as of the end of March 2016. Meanwhile, the market cap including preferred stock is over 250M with no positive catalysts apparent on the near term horizon. Cell Therapeutics may be catching a little air for now, but the street has proven to be a harsh mistress for biotech of late. I really don't see this ending well.

Cancer. With less rad.