NEW YORK (
CEO Jim Bianco is being forced to beg for his job from the one group of people he has hurt the most over his career -- his own company's shareholders.
With cash dwindling and currently authorized shares almost depleted, Cell Therapeutics is in danger of bankruptcy unless a majority of shareholders vote to allow the small, money-losing biotech firm to increase the number of company shares to 1.2 billion from its present level of 800 million.
The shareholder vote will be tallied at Cell Therapeutics' annual shareholder meeting on Thursday, Sept. 16. Before that, Cell Therapeutics is scheduled to present at the Rodman & Renshaw investment conference on Tues. Sept. 14.
Since 2005, Cell Therapeutics shares have plunged more than 99.9%, hit again and again by clinical trial blowups and drug approval rejections. The stock closed Friday at 38 cents. The only biotech firms that have caused greater shareholder losses over this time period are no longer in business. The fact that Cell Therapeutics is still alive is somewhat of an unexplainable phenomenon but may be a testament to the quicksilver tongue and wily fund-raising ability of the company's chief executive.
Yet Bianco has run out of tricks. He can sell no more stock because the company has no more stock to sell. If Bianco is going to keep the lights on at Cell Therapeutics and continue to pull down his customary multi-million dollar package of salary, bonus, stock options and executive perks, he needs the help of shareholders.
Which is why the company is now groveling for the mercy of its shareholders, pleading with them to approve the share-boosting plan:
"We all have family or friends who have been struck down by cancer. At CTI, we believe we can make cancer more treatable for many cancer patients by advancing the products in our development pipeline – that is our mission," says a letter signed by Cell Therapeutics' CFO Louis Bianco, the brother of CEO Jim Bianco, and sent to shareholders recently.
"We are committed to bringing our drugs to cancer patients, but CTI needs your support," the letter continues. "Your vote can help us make a difference in the potential success of these drugs and in the lives of the patients who could someday benefit from them. Without your voting support, CTI may not be able to continue this research."
At the top of the letter is a new company logo with a slogan that reads, "Please Vote. Help Make Cancer More Treatable."
Cell Therapeutics had $25 million in cash remaining at the end of July and the company is burning between $4 million and $5 million in cash per month. The company needs money to simply stave off bankruptcy at the end of December, but also needs even more cash to run "do over" clinical trials and repay $10 million in debt that comes due in April 2011.
The U.S. Food and Drug Administration rejected the company's lead lymphoma drug pixantrone earlier this year, forcing the company to conduct a new study here even while it tries futiley to get the drug approved in Europe. Cell Therapeutics' other main cancer drug, Opaxio, has failed repeated phase III studies.
The burden of this crushing financial picture falls on current shareholders, who if they approve a 400 million boost to the company’s authorized shares, will certainly face more, massive dilution as the Bianco seeks to quickly raise money by selling those shares in one form or the other.
No one knows how shareholders will vote on Sept. 16, but Cell Therapeutics has tried and failed four times in the past year to convene a special shareholders meeting to address the same proposal. This fact alone may signal that angry shareholders have finally had enough with Bianco and his years of inept management and personal enrichment.
--Written by Adam Feuerstein in Boston.
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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
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