By Mary Welch

Staff Writer

Cell Therapeutics Inc. raised $40 million in a private placement that will help the company file a new drug application for arsenic trioxide and advance development of its other oncology products, PG-TXL and Apra.

The Seattle-based company sold 3.33 million shares of stock at $12 each. The company now has about 21 million shares outstanding. The financial infusion should provide the company with a "comfortable two years plus of operating capital," said James Bianco, the company's president and CEO.

"We had some institutional investors approach us and so we set out to raise about $20 million to $30 million," Bianco said. "Instead, we raised $40 million, but we probably could have raised two to two-and-a-half times that. What is particularly exciting is that the investors were some of the premier oncology-based investors. They are clearly focused not only on the near-term opportunities in arsenic, but with our PG-Taxol drug, our other products and our technology platform."

Among the investors were Proquest Investments LP, of Princeton, N.J.; Vulcan Ventures Northwest, of Seattle; Icahn Associates, of New York; PIMCO Equity Advisors, of Newport Beach, Calif.; and Essex Woodlands Healthcare Ventures Funds, of The Woodlands, Texas.

Earlier this year, the company raised $10 million in a private placement.

Cell Therapeutics intends to file an NDA in the first half of this year for arsenic trioxide (ATO) for the treatment of acute promyelocytic leukemia. The company obtained the rights last month to ATO through the acquisition of New York-based PolaRx Biopharmaceuticals Inc. It intends to market the drug itself in the U.S., but may find a partner for Europe. (See BioWorld Today, Jan. 11, 2000, p. 1.)

In its pivotal trial, ATO induced a high rate of complete remission among patients suffering from acute promyelocytic leukemia who had relapsed after prior therapy. In addition, ATO has shown activity in other cancers, including solid tumors.

Cell Therapeutics' second product is polyglutamic acid paclitaxel (PG-TXL), a less toxic and possibly more effective version of the cancer drug paclitaxel. The drug is in Phase I trials in the UK for people with advanced cancers. Phase I/II studies are planned later this year in the U.S. and the UK The company believes it could be on the market as early as 2003.

Apra (CT-2584) is an anti-cancer drug that may treat patients with tumors resistant to conventional forms of chemotherapy, including sarcomas, prostate, colon, lung and breast cancer. It is currently in Phase II trials for sarcoma and prostate cancer and may be on the market by 2002 or 2003.

The company's previous lead drug, lisofylline, failed in Phase III trials for patients with acute myeloid leukemia. (See BioWorld Today, Oct. 13, 1999, p. 1.)

For the first nine months of 1999, the company reported no revenues and a net loss of $27.9 million. At that time, the company had $31.2 million in cash.

"All of this goes to show that if you have good products, keep your head down and follow your game plan, you'll grow the business and people will eventually take an interest in you," Bianco said.

Cell Therapeutics' stock (NASDAQ:CTIC) closed Thursday at $23, up $2.687.