Moving on to reader email. First up is a note from Cesar, who asks: "Could you explain very briefly, what is your math to reach $50-$100 million a year for Pixantrone sales?? I have read your article about Cell Therapeutics and I'm very concerned about misleading from management. They say Pixantrone sales could be $1 billion a year." A bunch of people emailed with similar questions. Before I get into some numbers, let me say that my general rule for estimating peak sales of any drug is to start by giving a 50% haircut to whatever management tells me. Drug company CEOs are like butchers with heavy thumbs when it comes to forecasting sales of unapproved drugs. To pixantrone: If approved, the drug's label will carry an indication for use as monotherapy in patients with aggressive non-Hodgkin's lymphoma who have already been treated with three or more prior lines of chemotherapy. Cell Therapeutics estimates that population to be about 5,300 patients in the United States and further forecasts 25% market penetration at peak. If the company prices pixantrone at $40,000 (again, a Cell Therapeutics estimate), peak sales pencil out to $53 million. For your information, Cell Therapeutics has a slide presentation containing all this information, which it uses for investor pitches. I, of course, have a copy.
Most of the email I received about the Cell Therapeutics column was from folks just angry and wanting to vent. Very few people had substantive arguments to counter anything I wrote.
Paul P. writes, "This article smacks of market manipulation. The recent news of Cell Therapeutics' financial restructuring is viewed by most analysts as responsible management. The drug is actually less toxic than chemo. Why the bias? This article does not serve the public well. Writing negative news to manipulate stock prices can't be legal!" I'll brush off Paul's ignorance of the First Amendment but concede his point that it's a positive if Cell Therapeutics can reduce a good portion of its $118 million in debt. Eramian made the same point above, so let it not be said that I reject as untrue everything coming out of the company's Seattle headquarters. However, this restructuring is far from a sure thing. In fact, if what I hear is correct, debt holders are very likely to balk at the debt tender offer, which proposes to pay them just 25-30 cents for every $1 of debt they hold.
Not everyone was ticked off by my column. A few of you liked it. Jim O. writes, "Nice job. You couldn't have written the Cell Therapeutics story any better, especially your last line. I've watched the Bianco brothers ... take lavish trips for board meetings on their expensive private jet. Each of them has pulled millions out in stock options and shareholders have received nothing in return. The board is totally asleep at the helm. And these two Seattle sailors ride off into the sunset on their expensive sloops."
Stephen H. writes, "Nice article. I can't believe the stock price has been bid up so high. In search of a bigger sucker, I guess. As for Bianco, he deserves every stone heaved his way. No wonder he hired personal security at shareholders expense."
Let's end with an email from Mike, "Do you really believe that Cell Therapeutics has no chance?"I believe pixantrone is a niche cancer drug, if it even gets approved, which is not a sure bet. And I think Cell Therapeutics, with an enterprise value of $800 million, is entirely overvalued, even with a stock price of $1.22. This is what I believe, which is why I wrote my column Tuesday. I'm offering my opinion as a columnist who writes about biotech stocks. You can agree with me or not. More Biotech Mailbag coming tomorrow -- Cell Therapeutics free.