Cell Therapeutics Has to Sprint to Reach Target

Revenue forecasts have also fallen short. The company took in $9,000 in April and May. An expected $3 million milestone payment from Cephalon(CEPH Quote) in May has not yet materialized, nor has a $25 million upfront license fee for the company's cancer drug pixantrone that Cell Therapeutics forecast for June.

Cell Therapeutics has no approved drugs on the market yet and therefore doesn't generate any product revenue.

Cell Therapeutics reported a cash balance of $28.4 million at the end of May, according to SEC filings. In June, in addition to normal operating expenses, the company spent $7.1 million on the cash portion of its debt tender offer, which reduced long-term debt from $119 million to $65 million.

Bianco says Cell Therapeutics is positioned to break even in the fourth quarter, but to date, he has not explained how the company will generate enough revenue to achieve that goal, nor has he said how the company expects profits in 2010.

Under a best-case scenario, the U.S. Food and Drug Administration will approve the company's cancer drug pixantrone on Dec. 24, which leaves little time for the drug's launch before the end of the year.

And in order to sell pixantrone, Cell Therapeutics first must hire and train a commercial sales force. The company's sales and marketing expenses will also increase due to the drug's launch. All these new expenses will require the company to raise additional funds.

One way for Cell Therapeutics to avoid the high cost of launching and selling pixantrone would be to license the drug to a larger partner. Novartis(NVS Quote) has an existing licensing option for both pixantrone and Opaxio, another of the company's cancer drugs. But to date, Novartis has not exercised that option, which would trigger milestone payments and royalties based on product sales to Cell Therapeutics.