Cell Therapeutics Sells Product to Cephalon - TheStreet

Cephalon

( CEPH) is buying the blood cancer drug Trisenox from

Cell Therapeutics

(CTIC) - Get Report

in a transaction that the acquirer says will expand its oncology business.

Cephalon, based in Frazer, Pa., will pay $70 million for the Trisenox assets and as much as $100 million in cash if certain sales and regulatory milestones are met. Trisenox is designed to treat relapsed or refractory acute promyelocytic leukemia.

"With Trisenox for APL and its associated commercial infrastructure, Treanda for non-Hodgkin's lymphoma from the pending acquisition of

Salmedix

, and the promise of CEP-701 for acute myeloid leukemia, we are building a fully integrated oncology business," said Dr. Frank Baldino, Cephalon's chairman and CEO.

About 1,500 people in the U.S. are diagnosed with APL each year, and 400 of those are candidates for a second-line therapy, that is, a treatment for which a prior therapy failed or cases where a disease recurs. The FDA gave Trisenox "orphan drug" status in 1998. The Orphan Drug Act grants a drug approval for a disease and gives it seven years of market exclusivity.

Trisenox is being tested by independent investigators for other types of hematologic cancers. Last year, worldwide sales of the treatment for relapsed or refractory APL brought in $26.6 million.

As a result of the deal, Cell Therapeutics is selling its only approved product. The company will lay off 130 employees, including 75 jobs cut as part of the reorganization plan announced last week. Several of the effected employees will be offered positions at Cephalon. Cell Therapeutics currently has 400 employees worldwide.

Cell plans to focus its resources on developing the cancer drugs Xyotax and pixantrone. The Seattle-based company will take a charge of $1.4 million in the third quarter for the job cuts. The companies are awaiting regulatory approval and expect to close the agreement in the third quarter.

Shares of Cephalon were recently down 6 cents to $38.79, and Cell Therapeutics was up 9 cents, or 3.5%, to $2.65.