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Cell Therapeutics, Inc. (CTI) Reports 2008 Fourth Quarter and Year End Financial Results

Net operating expenses decreased by 33% in 2008; Forecast cutting net operating expenses by approximately 50% in 2009

CTI expects to complete pixantrone NDA submission in Q2 2009

SEATTLE, March 16 /PRNewswire-FirstCall/ -- Cell Therapeutics, Inc. (CTI) (Nasdaq and MTA: CTIC) today reported recent accomplishments and financial results for the fourth quarter and year ended December 31, 2008.

Recent Events

  • Met primary endpoint in the Phase III study of pixantrone in relapsed, aggressive non-Hodgkin's lymphoma with patients treated with pixantrone achieving a high rate of confirmed and unconfirmed complete remissions compared to patients treated with standard chemotherapy (14/70 (20.0%) for pixantrone arm compared to 4/70 (5.7%) for the standard chemotherapy arm, p = 0.02). Additionally, demonstrated an increase in progression free survival of 81% compared to standard chemotherapeutic agents. CTI expects to complete submission of the pixantrone NDA in the second quarter of 2009. CTI will request priority review for the application. Potential approval by end of 2009.
  • Zevalin sales prior to the establishment of the joint venture with Spectrum Pharmaceuticals, Inc. (Spectrum) were approximately $11.4 million in 2008.
  • Sold an initial 50% interest in Zevalin to a 50/50 owned joint venture with Spectrum for $15 million in December 2008 and sold the remaining 50% interest in the Zevalin joint venture to Spectrum for approximately $16.5 million in March 2009, bringing total gross funds that will be received from Spectrum for 100% interest in Zevalin to $31.5 million. The transaction closed with CTI receiving $6.5 million on March 2, 2009, with the remaining $10 million to be received as follows: $6.5 million on April 3, 2009, and $3.5 million, subject to adjustments for expenses and revenues, on April 15, 2009. Zevalin was originally purchased from Biogen in December 2007 for $10 million.
  • Planned reduction in force will reduce headcount from 194 employees as of December 31, 2008 to 85 employees early in the second quarter of 2009. The reduction in force is primarily related to the planned closure of Bresso, Italy Research Center and employees that were dedicated to Zevalin related activities. Closing the facility and the sale of Zevalin is expected to result in a reduction in annual operating expenses of approximately $29 million that, in addition to other expense reductions, are forecasted to reduce net operating expenses to approximately $2.1 million per month in the second half of 2009.

"Unfortunately in this current economic environment the Company finds itself like most of our peers unable to justify supporting non-essential long term investments in preclinical research. In a move to maintain adequate liquidity to advance pixantrone to market we continue to streamline our operations to meet the goal of pixantrone approval in 2009," said James A. Bianco, M.D., CEO of CTI. "The non-dilutive capital infusion from the sale of Zevalin and resulting reduction in expenses associated with the product is important as we can utilize our resources for products we now believe have significantly greater market potential."

Financial Results

For the quarter ended December 31, 2008, total operating expenses decreased approximately 69% to $11.2 million compared to $36.2 million for the same period in 2007 mainly as a result of the reduction in research and development expenses as well as a gain of $9.4 million on the sale of Zevalin to a 50/50 owned joint venture with Spectrum in 2008. CTI reported a net loss attributable to common shareholders of $41.3 million ($0.52 per share) compared to a net loss attributable to common shareholders of $39.1 million ($7.44 per share) for the same period in 2007. The reduction in net loss per share is due to an increase in the number of shares outstanding.

For the year ended December 31, 2008, total operating expenses decreased approximately 33% to $88.7 million for 2008 compared to $133.1 million for 2007 mainly as a result of a decrease in research and development expenses, acquired in-process research and development expense of $24.6 million in 2007 and a gain of $9.4 million on the sale of Zevalin to a 50/50 owned joint venture with Spectrum in 2008. CTI posted a net loss attributable to common shareholders of $202.9 million ($7.00 per share), compared to a net loss attributable to common shareholders of $148.3 million ($32.75 per share) for the same period in 2007. The increase in net loss is primarily related to increased expenses related to financing in 2008. The reduction in net loss per share is due to an increase in the number of shares outstanding.

The Company ended the year with cash and cash equivalents, securities available-for-sale and interest receivable of approximately $10.7 million. In March 2009, CTI closed its transaction to sell its remaining interest in the Zevalin joint venture to Spectrum for approximately $16.5 million. Even with this additional financing, in order to meet liquidity needs, the Company will need to raise additional capital this year in order to fund its continued operations and is exploring alternatives to do so, which may include potential partnerships or joint ventures, public or private equity financings, debt financings or restructurings, dispositions of assets or other means.

In addition, given the current credit crunch most biotech companies must operate in today, its Board of Directors is engaged in an evaluation of short- and long-term strategic business development opportunities and operational efficiencies for the company and has authorized management to retain a financial advisor for this process.

The review process may include seeking additional partners or collaborators for the company's product development candidates, additional equity or debt financings or seeking further efficiencies in its operations. No specific timetable has been set for completion of the review. CTI presently has no commitment or agreement with respect to any possible future transaction, and there can be no assurance that any transaction will result.

About Cell Therapeutics, Inc.

Headquartered in Seattle, CTI is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. For additional information, please visit

This press release includes forward-looking statements about our commercial progress, potential regulatory filings, expected timing of clinical trial results as well as efforts to reduce operating expenses, that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect actual future results. Specifically, the risks and uncertainties include statements about our ability to submit an NDA in the first half of 2009 for pixantrone and gain approval in 2009, our ability to continue to reduce our operating expenses, the Company's ability to continue to raise capital as needed to fund its operations, a decision by the Nasdaq Listing Qualifications Panel to delist our common stock as a result of our continued non-compliance with Nasdaq's quantitative requirements to remain listed, the development of OPAXIO, pixantrone, and brostallicin, which include risks associated with preclinical and clinical developments in the biopharmaceutical industry in general and with OPAXIO, pixantrone, and brostallicin in particular, including, without limitation, the potential failure of these product candidates to prove safe and effective for treatment of non-small cell lung cancer, ovarian cancer, non-Hodgkin's lymphoma, and sarcoma, determinations by regulatory, patent and administrative governmental authorities, competitive factors, technological developments, costs of developing, producing and selling OPAXIO, pixantrone, and brostallicin, and the risk factors listed or described from time to time in the Company's filings with the Securities and Exchange Commission including, without limitation, the Company's most recent filings on Forms 10-K, 8-K, and 10-Q. Except as may be required by law, CTI does not intend to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.

    Media Contact:
    Dan Eramian
    T: 206.272.4343
    C: 206.854.1200

    Investors Contact:
    Ed Bell
    T: 206.272.4345
    Lindsey Jesch Logan
    T: 206.272.4347
    F: 206.272.4434

                        Cell Therapeutics, Inc.

              Condensed Consolidated Statements of Operations
               (In thousands, except for per share amounts)

                          Three Months          Year Ended
                           December 31,         December 31,
                          ------------         ------------
                           2008      2007       2008       2007
                           ----      ----       ----       ----
      Product sales      $2,528       $47    $11,352        $47
      License and
       revenue               20        20         80         80
                             --        --         --         --
        Total revenues    2,548        67     11,432        127
                          -----        --     ------        ---
    Operating expenses, net:
      Cost of product
       sold                 895        49      3,244         49
      Research and
       development        8,576    21,651     51,614     72,019
       general and
       administrative    11,081    10,923     41,607     35,517
      Amortization of
       intangibles          118       275      1,658        913
      Gain on sale of
       Zevalin           (9,444)        -     (9,444)         -
      Acquired in-
       research and
       development            -     3,272         36     24,615
                            ---     -----         --     ------
         expenses, net   11,226    36,170     88,715    133,113
                         ------    ------     ------    -------
    Loss from
     operations          (8,678)  (36,103)   (77,283)  (132,986)
    Other income (expense):
      Investment and
       other income,
       net                   50       363        549      2,430
      Interest expense   (1,604)   (2,091)    (8,559)    (8,237)
      Amortization of
       debt discount
       and issuance
       costs            (14,271)     (369)   (66,530)    (4,280)
       exchange gain      2,728     1,515      3,637      4,657
       expense          (17,731)        -    (70,243)    (2,310)
      Gain on
       net               13,647        54     69,739      3,672
      Loss on
       exchange of
       notes             (9,223)     (972)   (25,103)      (972)
      Write-off of
       costs               (485)        -     (2,846)         -
      Equity loss
       from investment
       in joint
       venture             (123)        -       (123)         -
       expense           (2,594)        -     (3,393)      (160)
                         ------       ---     ------       ----
    Loss before
     minority interest  (38,284)  (37,603)  (180,155)  (138,186)
       interest in net
       loss of
       subsidiary            31        42        126         78
                             --        --        ---         --
    Net loss            (38,253)  (37,561)  (180,029)  (138,108)
      Preferred stock
       feature                -    (1,248)    (1,067)    (9,549)
      Preferred stock
       dividends            (88)     (253)      (662)      (648)
       dividends on
       conversion of
       preferred stock   (3,000)        -    (21,149)         -
                         ------       ---    -------        ---
    Net loss
     attributable to
     shareholders      $(41,341) $(39,062) $(202,907) $(148,305)
                       ========  ========  =========  =========
    Basic and diluted
     net loss per
     common share        $(0.52)   $(7.44)    $(7.00)   $(32.75)
                         ======    ======     ======    =======
    Shares used in
     calculation of
     basic and diluted
     net loss per
     common share (1)    80,074     5,247     28,967      4,529
                         ======     =====     ======      =====

    Balance Sheet Data:   (amounts in thousands)

                                 December 31,
                               2008        2007
                               ----        ----
    Cash and cash
     and interest
     receivable             $10,680     $18,392
    Restricted cash           6,640           -
    Working capital         (14,141)    (30,909)
    Total assets             64,243      73,513
    Convertible debt        142,373     137,396
    Accumulated deficit  (1,312,320) (1,109,413)
     deficit               (132,061)   (134,125)

    (1) Amounts reflect a one-for-ten reverse stock split of our common stock
        effective August 31, 2008.

SOURCE Cell Therapeutics, Inc.
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