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Cell Therapeutics' Deal Begs $18 Million Questions

But if Bianco is so confident about Stellar 3, then why is he directing the company to raise cash three months or so before Xyotax's moment of glory? And, presumably, before Cell Therapeutics' stock price moves significantly higher? And why is Cell Therapeutics raising money at such a steep discount to the market price?

These are questions I'd be asking if I owned the stock. It might be that Cell Therapeutics is feeling the pressure of its less-than-stellar financial position. The company's $103 million in cash and marketable securities at the end of the third quarter is only expected to last into the first half of 2005. The company is also carrying about $190 million in debt on its balance sheet.

Tuesday, the company said it will receive another $25 million plus $5 million in services by selling a royalty stream based on future sales of its drug Trisenox to Quintiles Transnational. This is the financing move the company told shareholders to expect on its last quarterly conference call, so why do this royalty deal and the stock sale? (On a positive but unrelated note, CEO Bianco finally repaid a delinquent $3.5 million corporate loan plus accrued interest on Oct. 22.)

Whatever the reason for Monday's quickie stock sale, it just doesn't foster confidence coming so soon before the crucial Xyotax data event expected at the end of March. Cell Therapeutics' shareholders had better hope that the Xyotax Stellar 3 trial is a success, because if it fails, a stock sale at a 19% discount to the market price will be the least of their worries.

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