SEATTLE ( TheStreet) --U.S. regulators rejected again Cell Therapeutics' ( CTIC - Get Report) blood cancer drug pixantrone -- with a small (and cruel) asterisk.

Next up for the financially strapped biotech firm: A reverse stock split.

Cell Therapeutics has a habit of burying important (and negative) news developments, so it's helpful to read the company's press releases from the bottom to the top.

"OND denied the dispute appeal request to conclude that the efficacy of pixantrone has been demonstrated…," Cell Therapeutics said Tuesday, albeit deep in its publicly released statement.

OND is the Office of New Drugs, the division within the U.S. Food and Drug Administration to which Cell Therapeutics appealed the agency's decision last year to reject pixantrone as a new treatment for non-Hodgkin's lymphoma.

Translation: FDA rejects pixantrone again.

The asterisk I mention above: FDA's Office of New Drugs is apparently allowing Cell Therapeutics to resubmit pixantrone for another medical review, if certain matters can be resolved. The cruel part is that Cell Therapeutics must resubmit pixantrone to the FDA's Office of Oncology Drug Products, which is the same group of hard-nosed regulators that threw out pixantrone in the first place.

Translation: Ouch!

Naturally, Cell Therapeutics is claiming this new pixantrone development as a victory. I guess Cell Therapeutics might win, if winning is defined as spinning the bad news enough to convince some gullible retail investors that pixantrone still has a fighting chance left in its appeal process. The ultimate goal for Cell Therapeutics is to keep the company's foundering stock afloat, even if just barely.

No doubt this will be the case that Cell Therapeutics argues on its conference call later this morning, which comes, not so coincidentally, one day after the expiration of Nasdaq's delisting deadline. Cell Therapeutics has all but run of out time in an effort to get the stock price above a buck, which means the company will likely need to pull the trigger on its third reverse stock split in the last four years.

More on the Cell Therapeutics' lousy financial condition and the reverse stock split in a minute. First, it's important to put pixantrone in the proper clinical perspective. Cell Therapeutics may get a chance to resubmit pixantrone for another FDA review, but the drug's phase III clinical data remain the same, which is to say, not warranting approval.

For those not familiar with pixantrone's history, the clinical data come from a phase III study that was stopped prematurely because Cell Therapeutics was only able to enroll 140 patients with aggressive, non-Hodgkin's lymphoma (NHL), instead of the planned enrollment of 320 patients.

Of those 140 patients enrolled in the pixantrone study, only eight came from the U.S. and none of the eight U.S. patients responded to pixantrone treatment.

According to the FDA's independent review, the 25.7% response rate to pixantrone treatment in the study (compared to 7% response rate for patients in the control arm) was artificially high because five patients who responded to pixantrone weren't diagnosed with aggressive NHL, and as such, were thrown out of the analysis.

Cell Therapeutics claimed pixantrone demonstrated improvement in progression-free survival over control -- a key secondary endpoint of the study. FDA disagreed, but again, even if FDA is forced to adjudicate again, the data have not changed. Most importantly, perhaps, pixantrone didn't help patients live any longer than control patients.

Pixantrone belongs to the anthracycline class of chemotherapy drugs, which are well known to cause heart failure at high doses and/or prolonged exposure. Pixantrone is designed to be less toxic to the heart, allowing it to be used in patients who have been treated previously with other anthracyclines, according to Cell Therapeutics.

But FDA raised serious questions about pixantrone's safety, noting that deaths and serious adverse events were more common on the pixantrone arm than in control patients. Moreover, three pixatrone paients died to due to heart failure compared to a single patient in the study's comparator arm, according to the FDA's analysis.

These data aren't fine wine. They don't get better with age. Last year, experts on an independent advisory panel voted unanimously against recommending pixantrone's approval. FDA then rejected the drug.

Cell Therapeutics can try again, but without new clinical data which the company does not yet have, it's hard to see any scenario by which pixantrone is approved.

The pixantrone troubles underscore Cell Therapeutics' precarious financial health. This is a company that truly survives paycheck to paycheck -- or in this case, from one dilutive financing to another.

Last week, Cell Therapeutics raised $16 million by selling preferred shares sweetened with healthy serving of cheap warrants. That deal came close on the heels of two other preferred share offerings in the first quarter that boosted the company's cash coffers to around $60 million.

Cell Therapeutics has to repay $22 million in debt this year, $10 million of which heads back to creditors this week, according to the company. Cell Therapeutics burns through about $21-24 million in cash per quarter, so whatever money is left in the company's coffers won't last long, especially with research and development expenses ramping to pay for new clinical trials.

Cell Therapeutics hasn't disclosed details about the timing or extent of the next reverse stock split, but interestingly, the company does not require shareholder permission to enact one, according to its recent regulatory filings.

A special shareholder meeting is scheduled for June 17, at which Cell Therapeutics will seek shareholder approval to increase the company's authorized share count to 1.7 billion from 1.2 billion.

Last September, Cell Therapeutics won a similar shareholder vote to increase the authorized share count to 1.2 billion. Amazingly, all those new shares have already been used in dilutive financings, yet Cell Therapeutics is back asking for more.

Raise money. Dilute shareholders. Spend money. Raise money. Dilute shareholders. Spend money. It's the circle of life for Cell Therapeutics, which explains why the company has no approved drugs to sell, more than 1 billion shares outstanding and a stock price that's lost 99.9% of its value in the past five years.

That's the sad story of Cell Therapeutics which management can't bury, no matter how hard they try.

--Written by Adam Feuerstein in Boston.

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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.