A Disappearing Act at Cell Therapeutics

Two top executives of Cell Therapeutics (CTIC - Cramer's Take - Stockpickr) have left in recent months -- but you would need to be a detective to figure it out.

Dr. Carolyn Paradise, executive vice president and chief medical officer, resigned from Cell Therapeutics last August. Michael Mumford, executive vice president of manufacturing operations, departed in March.

Both Paradise and Mumford were executive officers of Seattle-based Cell Therapeutics, which means their status and salary were high enough to be listed in the company's annual reports and proxy statements filed with the Securities and Exchange Commission.

Yet the company chose not to issue press releases informing investors about the departures of the two -- a disclosure strategy that is raising some eyebrows. Instead, Cell Therapeutics simply omitted their names, with no explanation, from the list of executive officers included with the 2002 10-K, filed on March 27. Both were listed in the 10-K and proxy statement for 2001.

Cell Therapeutics' CEO Jim Bianco confirms that both executives are no longer employed with the company, but says separate disclosure through press releases was not necessary in either case because there was no material impact on the company's operations.

Quynh Pham, a biotech analyst at Delafield Hambrecht, a small Seattle-based investment firm, disagrees with Bianco. "To me, the departure of an executive officer of a company -- for whatever reason -- is a material event and should be disclosed," she says. Pham rates Cell Therapeutics a buy and her firm has no banking relationship with the company.

In Paradise's case, Bianco says several other people with more experience running clinical trials were hired to manage the company's efforts to develop Xyotax, a reformulation of the cancer drug Taxol that is currently in multiple phase III studies. Paradise worked for Cell Therapeutics, in various roles, since November 1997.