Cell Therapeutics' ( CTIC) latest fund-raising Wednesday night brought in a few emails, including Tanya D., who wrote to say, "I guess you were right about Cell Therapeutics needing to raise more money. But I don't understand why they would do it now with fast-track status for pixantrone coming so soon."

Cell Therapeutics sold 29.3 million shares in an overnight deal priced at $1.30, or a 20% discount to the Wednesday close. The deal included 25% warrant coverage, which means buyers got one warrant (priced at $1.70) for every four shares of stock they bought. The warrants are a common sweetener used by underwriters (in this case Rodman & Renshaw) to induce clients to participate in the deal.

Total gross proceeds from this follow-on offering: $38.1 million.

That's money badly needed by Cell Therapeutics, which is apparent to any investor who can even skim a balance sheet. I realize that most retail investors owning or interested in Cell Therapeutics focus on the cancer drug pixantrone, but you cannot ignore the perils of the company's balance sheet.

The recent debt tender offer improved Cell Therapeutics' financial health somewhat (and so does this latest financing) but the company is still burning cash, still has debt on the books, and will probably need to raise even more money in the future.

Tanya raises a good point about the timing of this recent fund-raising. The Food and Drug Administration will inform Cell Therapeutics next month whether the agency will grant pixantrone a six-month review. Pixantrone is a cancer drug. Almost all cancer drugs get a six-month review, so I'd only be surprised if the FDA decides to take more time.

The bigger question I have is what happened to Cell Therapeutics' plans to partner pixantrone? Why hasn't Novartis stepped up to grab the drug, especially since it already owns an option on it?

If a partnership deal were imminent (along with the cash that goes with it) would Cell Therapeutics be selling stock at $1.30 a share? Even with a pixantrone partnership in place, the company would probably need to raise even more money, but still, presumably it could do so at a higher price and under more favorable terms.

One more thing about Cell Therapeutics: I know some investors out there believe the $1.30-a-share offer price sets a floor on the stock because investors who bought into the deal must think the company is worth at least that much. If not, why would they agree to buy the stock?

I'd be very surprised if any of the buyers of this Cell Therapeutics offering still own their shares. The investors in this deal essentially made free money by buying the stock at $1.30 and flipping those shares to buyers (most likely heavily retail) at some marginally higher price.

Think about it this way. You're a small hedge fund and you get a call from Rodman offering you 1 million shares of Cell Therapeutics at $1.30, or a 20% discount. Mr. Rodman assures you (Mr. hedge fund trader) that there is enough liquidity in the stock for an easy flip. So you buy the stock overnight Wednesday and even before the market opens on Thursday, you've sold your 1 million shares of Cell Therapeutics back into the market at $1.35.

Mr. hedge fund just made $50,000 before even finishing his morning latte.

Plus, Mr. hedge fund got 250,000 warrants for buying his 1 million shares, so that's more free money if the stock ever gets above $1.70. Or, if Mr. Hedge Fund happens to be short some Cell Therapeutics, he can use the free warrants as a nice hedge.

That's the way this game works.


I think I've spent way too much Mailbag real estate on Cell Therapeutics this week, so moving on to an email from Canton T., who asks, "Does the positive data from Onyx Pharmaceuticals ( ONXX) in breast cancer increase the chance for a buyout from Bayer?"

Yes, I think it does.

Do I have confidence that Bayer will announce an acquisition of Onyx any time soon? No.

Nexavar is a very successful cancer used to treat patients with kidney and liver cancer. While we lack details, the success of the phase II breast cancer study (which was randomized and controlled, by the way) points to yet another potential cancer indication for Nexavar. (Recall that studies in lung cancer and melanoma have not been successful.)

If breast cancer can up the peak revenue potential for Nexavar by another $500 million or more, Bayer may finally decide that it wants to own 100% of the drug's rights, which means it would be time to pull the trigger on an Onyx acquisition.

The reason I'm hesitant about this scenario playing out is that I previously thought Bayer would buy Onyx after Nexavar was approved for kidney cancer and then for liver cancer. Never happened.

It will be important to see the actual data from the Nexavar breast cancer study before making judgments about the drug's potential for a third approval, but Wednesday announcement by itself was good and a reason to be positive on Onyx.


Paul M. writes, "Adam, I appreciate reading your articles. Do you know of a website that would list the companies with pending drug approvals? I was not able to find the status of companies with drugs in the pipeline (phase 3) on the FDA website."

The FDA Web site, unfortunately, is not the place to find a list of pending drug approvals. That information is not conveniently compiled in one place, unless you're willing to pay for it through a subscription research service.

I have come across amateur efforts on the Web that try to compile FDA approval databases but I don't find the information reliable and these sites tend to exist solely to pump penny stocks.

I try to compile reader-friendly lists of pending drug approvals on a semi-regular basis. The last such FDA approval calendar can be found here. I'll definitely try to update the list as often as possible, so stay tuned.


Next, an email from Joseph P. "Thank you for your great writing and informative articles. I always respect the fact that you write factual information and try and inform investors. I am wondering what your thoughts are on Hemispherx ( HEB) which is once again running wild in the past couple days on some teleconference call about their flu vaccine progress with the U.S. and other countries.

"I have just about had it with this company because they keep promising all sorts of things to investors and most of it seems like made-up garbage and lies. They still have not earned one penny toward any flu vaccine from other countries. Do you expect this to change? I have a feeling investors will be sadly disappointed. What they are doing almost seems criminal. Ampligen for chronic fatigue syndrome is a whole other story and seems like a joke. I am shocked the FDA is even considering approving this."

The hour I spent listening to Hemispherx's conference call Wednesday was an hour I will never get back. What a waste of time.

I'll just second Joseph's comments and leave it at that for now. The steep slide in Hemispherx's stock price in the hours after Wednesday's call, which continued Thursday, was a suitable indictment of the manipulative (and often nonsensical) ramblings of CEO William Carter.

Ampligen is not a chronic fatigue syndrome drug. It's not a vaccine adjuvant for swine flu. It's not an HIV treatment. It's a total sham.


I hope I was clear there. Next up, Norman B. writes, "What do you think of Curis ( CRIS) and their joint venture with Roche? Do they expect results any time soon?"

Roche (formerly Genentech) is a great partner for Curis. Genentech is a company with a phenomenal track record in cancer drug development, so the company's decision to license Curis' drug GDC-0449 is a significant endorsement.

With that said, the Genentech/Roche imprimatur cannot guarantee success - no such guarantees exist in biotech. Curis was beat up last year in the stock market tumble, with shares falling below 70 cents. The stock has recovered nicely to about $1.50, with a very reasonable, if not cheap, enterprise value of less than $60 million.

Perhaps the biggest enemy of a stock like Curis right now is time. Data from three different phase II studies of GDC-0449 won't be available until the latter part of next year. Curis is a good speculative stock to acquire on dips.


Finally, I'll close the Mailbag with some hate mail because it's tradition -- and fun. I particularly liked this email from "Hawk" because I suspect he spent a lot of time trying to come up with a real zinger.

"Adam, why don't you mow my lawn, you loser."

At least he didn't call me a looser.

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; click here to send him an email.

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