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Biotech Stock Mailbag: Exelixis

Cell Therapeutics' CEO Jim Bianco needs retail investors to buy into his story that pixantrone has a shot at FDA approval because the company must raise more money. Cell Therapeutics runs out of cash in the first quarter of next year -- that's before FDA will issue a second approval decision in April.

Bianco raises money by selling discounted company shares to fast-money funds rounded up by Rodman & Renshaw. These funds, which don't give a rat's posterior about Cell Therapeutics or pixantrone, make quick profits by selling their discounted shares at market price to mostly retail investors who naively and wrongly believe the rags-to-riches story that Bianco sells so well.

Cell Therapeutics is very good at raising money but is very, very bad at developing drugs.

Pixantrone is, and always will be, a me-too chemotherapy drug for lymphoma with marginal efficacy and a questionable safety profile. No one is clamoring for pixantrone. FDA rejected the drug in April 2010, one month after an advisory panel voted unanimously to recommend against its approval. Let's repeat that: An entire panel of cancer experts -- people who treat cancer patients for a living -- didn't think pixantrone was good enough for approval. Not a single expert on the panel supported the drug.

Cell Therapeutics will tell you FDA biased the panel against pixantrone by insisting incorrectly that the phase III study upon which the drug was being reviewed was a statistical failure. Part of this appeal process entailed Cell Therapeutics convincing FDA that the pixantrone study was not a statistical failure and deserved another review.

The more relevant question is whether pixantrone provides a clinically meaningful benefit to lymphoma patients. The problem facing Cell Therapeutics in this "do-over" review is that the pixantrone data have not changed for the better even if the study's statistical significance might have improved. Let's not forget that the "PIX301" study only enrolled 140 of a planned 320 patients. Twenty-eight clinical sites in the U.S. managed to enroll just eight patients. None of these U.S. patients responded to pixantrone.

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