SEATTLE ( TheStreet) --As expected, the U.S. Food and Drug Administration formally rejected Cell Therapeutics' ( CTIC - Get Report) application to approve its lymphoma drug pixantrone. The only surprise in the FDA's negative decision was that it came earlier than the agency's April 23 deadline.

The FDA's alacrity in deciding to reject pixantrone was helped, no doubt, by the vote of the agency's advisory panel on March 22 to unanimously recommend against the drug's approval.

In a statement issued early Friday morning, Cell Therapeutics says it plans to push ahead with a new clinical trial for pixantrone in an effort to get the drug approved in the U.S. at some point in the future. Meantime, Cell Therapeutics will seek to make pixantrone available to lymphoma patients through an expanded access, or compassionate use, program allowed by the FDA.

At this point, however, Cell Therapeutics doesn't have the money to conduct another pixantrone clinical trial. The compassionate use program for pixantrone will not help in that effort because under FDA rules a company is only allowed to recoup its costs. That means, at best, expanded access to pixantrone in the U.S. will be cash flow neutral to Cell Therapeutics.

Cell Therapeutics is another step closer to insolvency Friday morning. Shares closed Thursday at 63 cents, which simply reflects the stubbornness of the Cell Therapeutics' retail investor shareholder base to ignore the gravity of the company's financial problems.

If the FDA's rejection of pixantrone serves as a wakeup call for investors, they will realize that Cell Therapeutics is not worth more than 10 cents a share on Friday morning. And that's being generous.

Even after raising about $18 million in March, Cell Therapeutics still lacks the funds to remain in business through the end of year, let alone pay off $40 million in debt coming due in July or pay for another pixantrone clinical trial.

Meantime, Cell Therapeutics share count continues to bloat like a corpse pinned under water. It won't be long before the company's total number of outstanding shares hits 700 million.

Later Friday, Cell Therapeutics will hold its annual shareholder meeting. Item No. 1 on the agenda is a management proposal seeking shareholder permission to increase the total number of authorized shares to 1.2 billion from 800 million.

Cell Therapeutics' CEO Jim Bianco is a biotech magician when it comes to raising money (dilution be damned) so perhaps he can keep the enterprise afloat somehow. Yet even if the company manages to pare its expenses, raise money to stay in business and find the funds to run a new pixantrone clinical trial, the company's future remains very much in doubt.

It will be years before any new pixantrone study would be ready for re-submission to the FDA, and that's assuming the new study turns out positive. As I pointed out last month, even if Cell Therapeutics were to get pixantrone approved, there may be no commercial market for the drug because of looming expiration dates on its key patents.

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.

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.