Cell Therapeutics Pulls Cancer Drug After CEO Boasted About Approval Chances

SEATTLE ( TheStreet) -- Cell Therapeutics ( CTIC) withdrew its U.S. approval application for the experimental lymphoma pixantrone due to unresolved and undisclosed "communications" with the U.S. Food and Drug Administration, the company said.

The surprise announcement from Cell Therapeutics means next Thursday's advisory committee, which was scheduled to review pixantrone, has been cancelled. The FDA will also no longer make a decision on the approvability of pixantrone on April 24, although it's relatively easy to surmise that the agency wasn't leaning towards approval given the company's decision to pull the drug's application.

Shares of Cell Therapeutics are down 17% to $1.10 in pre-market trading Monday.

Cell Therapeutics says it plans to resubmit pixantrone to FDA later this year after it has time to prepare new information. Pixantrone, if ever approved, would be used as last-line treatment for patients with aggressive non-Hodgkin's lymphoma that no longer responds to other therapies.

In March 2010, an FDA advisory panel voted 12-0 to recommend pixantrone's rejection, which the FDA later did. Cell Therapeutics appealed that rejection and resubmitted the drug last year, setting up what was supposed to be a second shot at approval this spring.

This most recent pixantrone setback is yet one more example of how Cell Therapeutics' CEO Jim Bianco fails habitually to deliver on his promises, hurting shareholders in the process. Eight years after acquiring pixantrone and promising a speedy approval, Cell Therapeutics still hasn't delivered. The same can be said for the company's other long-delayed cancer drug, Opaxio (born Xyotax).

Since late November, Bianco has been awarded with nearly $800,000 in cash bonuses by Cell Therapeutics' board, including a $150,000 bonus for 20 years service to the company.

In private conversations with Wall Street investors recently, Bianco had been predicting a positive vote from the pixantrone advisory committee meeting scheduled for Feb. 9.

The reason for Bianco's confidence: He claimed that FDA's cancer-drug review chief Dr. Richard Pazdur was dressed down by his agency superiors for an unfairly negative review of pixantrone which led to the drug's rejection in 2010.

If Pazdur had been muzzled, as Bianco boasts, the FDA's second clinical review of pixantrone could be more lenient and the panel of outside experts more likely to recommend the drug's approval, according to investors who have met with the Cell Therapeutics CEO recently.

Investors who heard Bianco spin his "Pazdur has been muzzled" story said they didn't take his boasts seriously. The hasty pixantrone withdrawal doesn't sound like FDA's top cancer drug reviewer was backing down from his previous criticisms of the drug.

Cell Therapeutics is also seeking pixantrone's approval in Europe. This fall, Bianco told investors that European regulators would make an approval decision on pixantrone in January. He also said all major questions and issues raised by European regulators about pixantrone had been answered, clearly leaving the impression that the drug was likely to be approved.

European drug regulators, however, met in January without passing judgment on pixantrone. It's not known when the drug will come up for review again, although Cell Therapeutics says it may happen when European regulators meet again Feb. 13-16.

Shares of Cell Therapeutics sank to around 70 cents after the negative pixantrone panel in March 2010. At Friday's close, shares traded for 22 cents, adjusted for the 1-for-6 reverse split in May 2011.

--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.

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