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Cell Therapeutics Sours as it Seeks FDA Approval

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Investors have been given a gift -- to get out with only a 30% haircut.

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Cell Therapeutics (CTIC) has long been one of the stocks I've told people to avoid. The latest attempt from this management team to pull a rabbit out of a hat is its filing for drug approval for pixantrone, a drug for non-Hodgkin's lymphoma. The drug is going in front of an FDA panel (ODAC) on February 10 and the briefing papers were released this morning.

The key negative is at the top of page three: "The study was not stopped at a planned interim analysis and early study stopping invalidated the applicant's Special Protocol Assessment." [emphasis added]

The FDA rarely approves drugs when companies deviate from the planned trial protocol. This goes double when a company violates a Special Protocol Assessment. The assessments are written agreements between the FDA and the drug sponsor with detailed specifications on how a trial should be run. The study was planned to enroll 320 patients, but only 140 were enrolled because docs preferred different treatment alternatives. The FDA clearly states the trial didn't meet its primary endpoint with statistical significance, as required for approval, because of this early stopping.

Side effects were significant, with twice as many patients discontinuing for adverse events in the pixantrone arm of the study compared to those taking the treatments on the control arm. 17.6% of the patients who took pixantrone died of side effects related to the drug compared with "only" 7.5% of patients who died from side effects in the control arm.

In fact, the 17.6% death from drug rate was almost as high as the 20% response rate (the number of patients whose tumors completely responded). I'm not certain I've ever seen those two numbers so close in a drug that someone actually submitted for approval. Cell Therapeutics argues in its briefing document that only one of the deaths in their arm due to side effects was related to their drug. I don't think the FDA or the ODAC panelists will buy that analysis.

To be fair, the data aren't all bad. The response rate is higher than the comparator arm (20% vs. 5.7%) at the initial analysis of all patients and 24.3% vs. 7.1% at a follow-up analysis -- though the FDA expressed some discomfort with this analysis. Overall survival is better with pixantrone, 10.2 months to 6.9 months.

Interestingly, the FDA sent the radiology scans out for its own independent review of the response rate. It didn't disclose the results of that review in the briefing document. Optimists will claim the results weren't in the FDA's briefing document because they weren't different. Knowing Office of Oncologic Drugs head Richard Pazdur, my guess is there is a difference (negative for Cell Therapeutics) and he's saving it for drama purposes to present at the ODAC meeting itself.

Investors unfamiliar with Pazdur's ODAC may look at these data and wonder why they aren't good enough for approval. After all, pixantrone appears to be better in response rate and survival. That's a legitimate question.

First, the drug is awfully toxic. Significant cardiac toxicity and side effects severe enough for hospitalization make the benefits of the drug perhaps not worth the cost.

Second, the enrollment problems show docs don't want to use single agents in this third-line population. Fundamentally, Cell Therapeutics ran the wrong study. The panel of docs will count this as a big negative.

Finally, Pazdur's ODAC will always pay more attention to biostatistics than patients. The statistics here don't fit into Pazdur's perfect box, and ODAC is wrapped around Pazdur's finger on this issue, so the chance they'll see past the statistical issue is slim. Cell Therapeutics bamboozled investors by implying the FDA was fine with the early termination. In fact, the FDA said the early termination voided the Special Protocol Assessment and invalidated the statistical significance of the results. I also believe there's a significant chance a "surprise" analysis of the response rate will be presented by the FDA during the panel meeting, which won't be positive for Cell Therapeutics.

The panel review is on February 10. I very much doubt if the outcome will be positive for Cell Therapeutics. I see it as a significant gift to Cell Therapeutics investors the stock is down only 30%. Assuming the ODAC panel isn't snowed out, I expect the stock will be trading under $0.25 by the time the panel is over on the 10th.
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