By Karen Pihl-Carey

Staff Writer

Cell Therapeutics Inc. gained rights to arsenic trioxide (ATO) through an acquisition of New York-based PolaRx Biopharmaceuticals Inc. The treatment for acute promyelocytic leukemia will be the subject of a new drug application (NDA) filing in the first half of this year.

"This will allow us to become a commercial entity this year, selling this product to oncologists initially for the treatment of this leukemia, and then for other cancers that the drug has shown activity in," said James Bianco, president and CEO of Cell Therapeutics. "It just jump-starts our whole effort."

Under terms of the acquisition, Cell Therapeutics, of Seattle, will assume up to $5 million in PolaRx liabilities. The company also will issue 2 million shares of common stock to PolaRx shareholders and possibly 3 million additional shares upon approval of the NDA.

Cell Therapeutics' stock (NASDAQ:CTIC) closed Monday at $7, up 25 cents. At that price, PolaRx shareholders would receive $14 million and possibly $21 million more, making the deal worth $35 million.

The deal also includes two additional payouts tied to annualized sales thresholds of $10 million and $20 million. They are payable in tranches of $4 million and $5 million at the then-fair market value of the company's stock. For annual sales in excess of $40 million, PolaRx shareholders would receive a 2 percent royalty on net sales payable at the then-fair market value of Cell Therapeutics' common stock, or possibly in cash.

"Being able to generate revenues, even if they are $10 million or $20 million in the first year is very attractive," Bianco told BioWorld Today. "It puts us in front of oncologists and allows them to look at our whole integrated pipeline."

In a recently completed pivotal trial, data showed ATO induced a high rate of complete remission among patients suffering from acute promyelocytic leukemia who had relapsed after prior therapy. Most common side effects were asymptomatic EKG changes, which were managed with steroids.

Outside this one indication, ATO has shown activity in other cancers, even solid tumors, Bianco said. That means, if approved, the drug has a high potential to be used off-label.

"The type of activity that they [researchers] see is very compelling data," he said. "There's just a groundswell of interest from the oncology community. We think this could be a very exciting commercial opportunity for us."

Bianco also said having a product on the market will help Cell Therapeutics fund the development of its other products in the pipeline.

The company also has Apra, its anticancer drug to treat patients with tumors resistant to conventional forms of chemotherapy, which is in a Phase II efficacy trial. And PG-TXL (polyglutamic acid paclitaxel) to treat breast, colon, lung and other forms of cancer is entering a Phase I/II study in the UK.

In October, the company pulled the plug on its small-molecule anti-inflammatory compound lisofylline, which failed in several trials, including a Phase III trial in acute myeloid leukemia patients. (See BioWorld Today, Oct. 13, 1999, p. 1.)