Cell Therapeutics Fails to Impress

We were disappointed to hear that the US Food and Drug Administration (FDA) has granted standard review status to Cell Therapeutics’ (CTIC - Analyst Report) pixantrone for the treatment of relapsed and refractory non-Hodgkin’s lymphoma (NHL).

The company completed filing its rolling New Drug Application (NDA) in June this year and asked for priority review. Priority review would have reduced the approval period by four months.

Pixantrone, currently under a ten-month standard review, has been assigned a Prescription Drug User Fee Act (PDUFA) action date of April 23, 2010. NHL is a cancer that affects lymphocytes, a type of white blood cell that helps fight infection.

Since pixantrone had already received fast-track status from the FDA, we were expecting a priority review for the drug. In June, Cell Therapeutics presented encouraging results from a phase III trial of the experimental drug.

Even though efficacy data for pixantrone were encouraging, we were concerned about its side effects. While neutropenia was 41.2% for pixantrone versus 19.4% for comparator, leukopenia was 23.5% for pixantrone versus 4.5% for comparator.

Although the grade 3, 4 cardiac disorder was similar among the two treatment groups (1.5% vs. 1.5%), there was a higher incidence of serious cardiac disorders in patients treated with pixantrone than patients who received comparator agents (8.8% vs. 4.5%). Higher-than-expected side effects may limit the utility of pixantrone in NHL patients.

One of the top selling drugs for the treatment of NHL is Rituxan, co-promoted in the U.S. by Biogen Idec (BIIB - Analyst Report) and Genentech (a part of Roche). Biogen recorded sales of $1.13 billion from the drug in 2008, a rise of 18% over 2007. Competition is very tough in this therapeutic area with the presence of Bayer’s Campath, Millennium’s (a part of Takeda now) Velcade and Cephalon’s (CEPH - Analyst Report) Treanda among others.

In this scenario, we believe it will be quite difficult for Cell Therapeutics to make any significant impact in this market. With limited improvement over existing therapies, we do not think pixantrone will be able to change the company’s prospects much. Without a proper revenue stream, we remain concerned about the company’s liquidity position. Cell Therapeutics is under great pressure to raise additional cash to fund its operations.

Earlier, we assumed a suitable partnership program could ease the company’s liquidity crisis. But under the current circumstances, pixantrone does not look attractive from the partnership point of view.

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