After Monday's close, Cell Therapeutics ( CTIC) said it was selling 2.59 million shares of common stock to several unnamed institutional investors in a registered direct offering at $7.10. The offering, raising about $18 million, is priced at a 19% discount to Cell Therapeutics' Monday closing price of $8.46.

Tuesday, the company also said it has inked a $30 million financing agreement for its marketed drug Trisenox.

The timing of this stock sale is very peculiar and worrisome if you're a Cell Therapeutics fan. For the past six months or so, CEO Jim Bianco has been telling anyone who will listen about how well the company's lung cancer drug Xyotax seems to be performing in an ongoing phase III clinical trial. While always careful to say that data from the so-called Stellar 3 study are still blinded to the company, Bianco has repeatedly pushed back timelines for the completion of the study because enrolled patients are living longer than expected. Last week, Bianco said to expect results from Stellar 3 at the end of the first quarter 2005, delayed from earlier in the quarter.

Are these patients living longer because of Xyotax? Bianco claims not to know yet (the longer-than-expected survival represents a blended group of patients taking the drug or a placebo). But then again, Bianco loves to spout historical statistics about how similar lung cancer patients in other studies rarely live this long. These historical comparisons (with a nudge, nudge and a wink, wink) are supposed to make you believe that Xyotax is working, that Stellar 3 study will be a success, and that Xyotax is destined for regulatory approval.

Such public posturing by a company conducting an ongoing pivotal study is promotional and highly unusual, even questionable. You don't see executives from Genentech ( DNA) or Biogen Idec ( BIIB) providing running commentary on how many patients have died in their ongoing clinical studies. I'm half expecting Cell Therapeutics to stick a patient death "counter" on its Web site!

But if Bianco is so confident about Stellar 3, then why is he directing the company to raise cash three months or so before Xyotax's moment of glory? And, presumably, before Cell Therapeutics' stock price moves significantly higher? And why is Cell Therapeutics raising money at such a steep discount to the market price?

These are questions I'd be asking if I owned the stock. It might be that Cell Therapeutics is feeling the pressure of its less-than-stellar financial position. The company's $103 million in cash and marketable securities at the end of the third quarter is only expected to last into the first half of 2005. The company is also carrying about $190 million in debt on its balance sheet.

Tuesday, the company said it will receive another $25 million plus $5 million in services by selling a royalty stream based on future sales of its drug Trisenox to Quintiles Transnational. This is the financing move the company told shareholders to expect on its last quarterly conference call, so why do this royalty deal and the stock sale? (On a positive but unrelated note, CEO Bianco finally repaid a delinquent $3.5 million corporate loan plus accrued interest on Oct. 22.)

Whatever the reason for Monday's quickie stock sale, it just doesn't foster confidence coming so soon before the crucial Xyotax data event expected at the end of March. Cell Therapeutics' shareholders had better hope that the Xyotax Stellar 3 trial is a success, because if it fails, a stock sale at a 19% discount to the market price will be the least of their worries.

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