Editors' pick: Originally published Feb. 10.
A handful of immutable laws of biotech investing can always be relied upon to steer investors on the correct course. One says anything touched by CTI Biopharma (CTIC) - Get Report CEO Jim Bianco turns to shit, eventually.
Pardon the vulgarity but it's the only way to accurately describe CTI Bio's most recent blowup. A new drug application for pacritinib, CTI Bio's experimental myelofibrosis therapy, was withdrawn from the U.S. Food and Drug Administration because an unacceptable number of patients treated with the drug in an ongoing clinical trial are dying, the company said Tuesday night.
The FDA took an early look at the phase III study dubbed PERSIST-2 and found a "detrimental effect on survival," CTI disclosed.
What that means is more patients in the pacritinib arm of the study were dying compared to patients in the control arm. Cancer patients die, unfortunately, but cancer therapies are supposed to prolong life, not accelerate death. Even worse, the FDA found pacritinib patients were dying from brain bleeds, heart failure and heart attacks, not just a more rapid progression of their cancer.
The alarming safety problems compelled FDA to dock pacritinib with a full clinical hold. That's an upgrade from the partial clinical hold placed on the drug by FDA just days ago. CTI Bio must stop treating all patients with the drug and meet with FDA to figure out next steps, if any, to move forward again.
At this point, the chance CTI Bio resurrects pacritinib are slim to none. The company may try if only to maintain the illusion of a multi-drug research pipeline, but investors will ignore it, as they should.
CTI Bio shares are down 38% to 31 cents in early Wednesday trading. The steep loss is on top of a 50% plunge Monday when the pacritinib partial clinical hold was disclosed.
And consider this: If you bought a stake in CTI Bio in 2001 and held it through today, the investment would have lost 99.999999% of its value. Yet the company lives on.
That's probably the most remarkable aspect of pacritinib's demise. All biotech companies experience drug-development failure, but few, if any, biotech companies have been responsible for as many drug failures as CTI Bio and somehow managed to survive. Before pacritinib, there was the lung cancer drug Xyotax/Opaxio, the blood cancer drug pixantrone and the breast cancer drug brostallicin -- all monumental failures.
The only viable drug remaining in CTI Bio's pipeline is the blood cancer drug tosedostat, but that clock is almost surely ticking down given the company's drug-development ineptitude.
But CTI Bio, itself, will not die. Thanks to a $50 million investment in the company from the hedge fund BVF Partners last December, CTI Bio has more than enough cash to carry on. In a few months, CTI Bio CEO Bianco will spin a new story. Pacritinib will be the past, some other drug will be the future. Bianco will raise more money, like he always does, to keep the company's doors open, and more importantly, to support his rapacious appetite for excessive executive compensation.
During the years in which CTI Bio's market value has plunged by more than 99%, Bianco has extracted tens of millions of dollars in salary, bonuses and insider stock sales.
The "Everything Bianco touches turns to shit" law of biotech investing applies to everyone but Bianco.. He turns shit into gold -- for himself.
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.