[[Updated 1:30 pm with investor name]] Cell Therapeutics has been slashing costs to keep its doors open this year, and now it has found a source of new capital to keep going at least a little while longer. The Seattle biotech company (NASDAQ: CTIC) said today it has pulled in $15 million from a single institutional investor.
The deal will provide this investor—Cranshire Capital, according to this regulatory filing—with shares of preferred stock in the company. The investor will also have the right to buy more preferred stock with a stated value of $5 million within the next 60 days, the company said. Rodman & Renshaw acted as the placement agent on the deal.
This amount of cash clearly means a lot at this stage of the game. Before today, Cell Therapeutics has said it only had enough money to last through May. Even to stay alive as long as it has, the company has made significant cuts by closing its Italian research center and eliminating 62 jobs there, cutting another 34 jobs in the U.S., and selling off its 50 percent ownership stake in the lymphoma drug Zevalin. The company is now pinning its hopes on winning FDA approval to sell pixantrone, a drug for non-Hodgkin’s lymphoma, by the end of 2009. The company says it plans to present positive data from a clinical trial of that drug at the American Society of Clinical Oncology’s annual meeting in late May and early June.
“It’s important in this marketplace to have an investor come in and make a substantial purchase of stock,” said Ed Bell, a company spokesman.
As of last month, the company had 85 employees, and plans to bring down its cash spending rate to $2.1 million a month in the second half of this year. If Cell Therapeutics can keep its expenses that low as it prepares its pixantrone application to the FDA, then simple math says the latest round of financing could keep the company operating at least another seven months. But since the second half hasn’t yet begun, Bell wouldn’t go so far as to say the new capital will last that long, or that it will last until the company hears a verdict on FDA approval of pixantrone. The company hopes to form a partnership with a larger drugmaker to help with commercializing pixantrone, and Swiss drug giant has an option to form a partnership, which, if exercised, could bring in $7.5 million upfront to Cell Therapeutics, Bell says.
Cell Therapeutics shares fell 19 percent, to 31 cents, on heavier-than-average trading after today’s deal was announced.
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