Cell Therapeutics said yesterday what disappointed investors have expected for months. Its cancer drug, Xyotax, was not better than existing...

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Cell Therapeutics said yesterday what disappointed investors have expected for months. Its cancer drug, Xyotax, was not better than existing treatments in extending the lives of patients dying from lung cancer.

The Seattle biotech company unveiled the results from the last two of its three Xyotax lung-cancer trials yesterday, along with its quarterly financial report. The trials, which included about 1,700 patients, showed Xyotax was about as effective as standard chemotherapy.

The studies were originally designed to prove patients would live longer with Xyotax, which could have given it a clear-cut marketing advantage and made a strong case for a speedy approval from the Food and Drug Administration.

Now, the company said on a conference call, it will try another tack. It will seek FDA approval for Xyotax based on its milder side effects and its ability to improve quality of life.

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“This data is consistent,” said Jack Singer, the company’s chief medical officer. “Xyotax offers a less toxic, equally effective treatment for patients.”

The studies showed that Xyotax patients suffered less anemia, heart damage, fatigue and hair loss than patients receiving standard chemotherapies.

Investors were not at all enthusiastic. The stock fell 3 percent yesterday to close at $3.73, down 54 percent this year. Even one of the company’s longtime cheerleaders, CIBC World Markets, downgraded the stock yesterday.

Cell Therapeutics Chief Executive James Bianco said the company plans to present its results soon to the FDA, and may submit a new drug application by year-end. He said the company also plans to argue that Xyotax may save money by reducing hospitalizations and the need for expensive drugs that treat side effects.

David Miller, president of Biotech Monthly, a Seattle-based newsletter, said it would be “an uphill battle” to persuade the FDA to approve a drug that didn’t accomplish the goals specified in its clinical trials. To survive long enough to make its case to the FDA, the company will take steps to conserve cash and raise more.

The company lost $39 million in the first quarter and had $73 million in cash left at the end of March. Without being specific, Bianco said the company plans to reduce its cash spending rate to $8 million a month.

He said the company will look at selling its other cancer drug, Trisenox, or selling partnership rights to other cancer drugs. A company spokeswoman said it is premature to say whether any employees will lose their jobs.

Luke Timmerman: 206-515-5644

Cell Therapeutics
Figures in parentheses are losses
March 31 %
1st QTR 2005 2004 CHG
Profit ($39,132,000) ($136,395,000) +71.2
Per share (0.62) (2.75) +77.5
Sales 6,140,000 4,495,000 +36.6