Cell Therapeutics Inc. (CTIC) suffered a net loss of $15.6 million (2 cents per share) in the third quarter of 2010 as opposed to the net loss of $48.8 million (9 cents per share) suffered in the year-ago quarter. The narrower loss was primarily attributable to lower operating expenses, lower deemed dividends on preferred stock and a one-time milestone modification expense which was taken care of in the previous year.
Excluding deemed dividends on preferred stock, foreign exchange effect and a one-time milestone modification expense, loss at Cell Therapeutics came in at $15.2 million or approximately 2 cents per share, against $28.8 million or 5 cents in the year ago quarter. The Zacks Consensus Estimate hinted at a loss of 6 cents per share for the quarter. Cell Therapeutics did not generate any revenues during the reported quarter.
Net operating expenses during the reported quarter declined 52% to $13 million, driven by a 52.9% reduction in selling, general and administrative (SG&A) expenses and a 32.9% decline in research and development (R&D) expenses. The massive decline in SG&A expenses were driven by a reduction in expenses pertaining to non-cash equity based compensation.
In another development, Cell Therapeutics recently submitted a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for its lead candidate pixantrone (proposed trade name: Pixuvri). The company is seeking European approval of the candidate as a monotherapy for treating adults with relapsed or refractory aggressive non-Hodgkin’s lymphoma (NHL). The patients did not respond to other treatment options. However, the USapproval of pixantrone is surrounded by uncertainty.
In April 2010, the US Food and Drug Administration (FDA) denied approval to pixantrone and issued a complete response letter (CRL) based on issues related to the study design. The FDA asked Cell Therapeutics to conduct an additional trial to determine the safety and efficacy of pixantrone. In August 2010, the company submitted a proposal for a new study, to compare the efficacy of pixantrone in combination with rituximab against the current standard of care in aggressive NHL, to the US regulatory agency.
The company announced in September 2010, that it will appeal the FDA’s decision to deny approval to pixantrone. The decision was based on management’s belief that there are no approved or effective therapies for patients suffering from relapsed or refractory aggressive NHL beyond second relapse. A response from the regulatory body on the appeal is expected by year end.
Even though the company carries a Zacks #3 Rank (short-term Hold rating) in the short-run, the uncertainty surrounding the approval of pixantrone, on which the company is heavily dependent, coupled with its unsatisfactory financial position causes us to have an Underperform rating on the stock in the long-run.