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Cell Therapeutics Must Deliver on Promise for Myelofibrosis Drug Partner

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SEATTLE ( TheStreet) -- Cell Therapeutics (CTIC - Get Report) CEO Jim Bianco has told investors -- including the hedge funds which bought his last fund-raising deal in September -- that he'll land a partner for the company's experimental myelofibrosis drug before the end of the year.

That's the next big catalyst for the company, and it helps explain why Cell Therapeutics shares closed Monday at $1.95, a 52-week high.

Cell Therapeutics is famous -- I should say infamous -- for drug development futility. Few companies in the biopharma world have lost as much money ($1.9 billion) for as long (22 years) as Cell Therapeutics. Yet Cell Therapeutics refuses to die, mostly due to Bianco's uncanny ability to emerge unscathed from failure while coaxing cash from another group of investors with promises that "the next drug" will finally work out.

Bianco's next, next drug is pacritinib, an oral Jak-2 inhibitor for myelofibrosis which Cell Therapeutics bought in 2012 from Singapore's S-Bio for $30 million upfront, half of that in stock. Onyx Pharmaceuticals once owned development rights to pacritinib but returned it to S-Bio for reasons never fully disclosed. That's why Cell Therapeutics was able to pick up pacritinib cheap, especially for a drug phase III ready.

Consider Gilead Sciences (GILD - Get Report) paid $500 million to acquire YM BioSciences and its phase III-ready myelofibrosis drug CYT387, now renamed momelotinib. The myelofibrosis treatment market is already served by Jakafi, marketed by Incyte (INCY - Get Report) and Novartis (NVS - Get Report).

With the exception of Pixuvri (which barely counts), Cell Therapeutics has never developed a cancer drug successfully on its own. All of the company's past, phase III cancer drug clinical trials have either failed or been stopped prematurely.

This is why Bianco's promise to find a development and marketing partner for pacritinib is so important. No one wants Cell Therapeutics to be chiefly responsible for conducting the pacritinib clinical trials because -- let's be frank -- the company will screw them up.

Pacritinib has baggage that makes people doubt the drug's clinical and commercial potential. Cell Therapeutics licensing and developing the drug doesn't help, either. But investors might start to look at pacritinib differently if a company with a solid reputation and track record in cancer drug development signs on as Cell Therapeutics' partner.

A trustworthy partner doesn't guarantee pacritinib's success but it would validate the drug to some degree.

Cell Therapeutics has already started the first pacritinib phase III myelofibrosis clinical trial. On Monday, the company announced an agreement with the FDA on the design for the second trial.

The clock is ticking. Bianco needs to deliver the partner.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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