Biotech Stock Mailbag: Cell Therapeutics
Cell Therapeutics' (CTIC) latest fund-raising Wednesday night brought in a few emails, including Tanya D., who wrote to say, "I guess you were right about Cell Therapeutics needing to raise more money. But I don't understand why they would do it now with fast-track status for pixantrone coming so soon."
Cell Therapeutics sold 29.3 million shares in an overnight deal priced at $1.30, or a 20% discount to the Wednesday close. The deal included 25% warrant coverage, which means buyers got one warrant (priced at $1.70) for every four shares of stock they bought. The warrants are a common sweetener used by underwriters (in this case Rodman & Renshaw) to induce clients to participate in the deal.
Total gross proceeds from this follow-on offering: $38.1 million.
That's money badly needed by Cell Therapeutics, which is apparent to any investor who can even skim a balance sheet. I realize that most retail investors owning or interested in Cell Therapeutics focus on the cancer drug pixantrone, but you cannot ignore the perils of the company's balance sheet.The recent debt tender offer improved Cell Therapeutics' financial health somewhat (and so does this latest financing) but the company is still burning cash, still has debt on the books, and will probably need to raise even more money in the future. Tanya raises a good point about the timing of this recent fund-raising. The Food and Drug Administration will inform Cell Therapeutics next month whether the agency will grant pixantrone a six-month review. Pixantrone is a cancer drug. Almost all cancer drugs get a six-month review, so I'd only be surprised if the FDA decides to take more time.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV