On the heels of a $20 million offering, a share increase and a reverse stock split, Cell Therapeutics Inc. (CTI) said it plans to raise another $37.2 million through the sale of stock and warrants.
Separately, DOR BioPharma Inc. said in a regulatory filing on Thursday that its board of directors and an independent board committee unanimously agreed to reject an unsolicited offer by Seattle-based CTI to acquire Miami-based DOR. However, CTI President and CEO James Bianco told BioWorld Today that CTI had withdrawn its offer on Tuesday.
"They had unrealistic value expectations," Bianco said, noting that DOR's value ran up after the company publicized CTI's confidential offer. "They were also getting too close to the binary event," he added, referring to a pending FDA meeting.
CTI approached DOR in January, offering a stock-based deal worth about $50 million, as well as a $15 million milestone payment for approval of DOR's gastrointestinal graft-vs.-host disease candidate orBec (oral beclomethasone dipropionate). At the time, DOR was unable to consider the offer due to a letter of intent with Sigma-Tau Pharmaceuticals Inc. for partnerships on orBec and other pipeline compounds. Sigma-Tau's exclusivity expired in March, allowing DOR to consider the CTI offer. (See BioWorld Today, Jan. 22, 2007.)
In its filing, DOR called the CTI offer "inadequate," but emphasized that it would consider "any and all expressions of interest and offers of interested parties to acquire the Company" following the May 9 Oncologic Drugs Advisory Committee meeting slated to discuss orBec.
Dan Eramian, CTI's executive vice president of corporate communications, said the company plans to "sit on the sidelines" regarding DOR, at least for the time being. He added that CTI has been "looking at other potential acquisitions."
CTI certainly has sufficient cash on hand should it decide to up its offer for DOR or pursue another acquisition. In addition to the $37.2 million offering announced Thursday, CTI gained $20 million in gross proceeds from an offering in February and ended 2006 with $54.4 million in cash and equivalents.
The current offering will involve the sale of $37.2 million of 3 percent convertible stock and warrants. CTI will sell Series B convertible preferred stock to investors at the negotiated price of $1,000 per share. The preferred stock will be convertible into shares of common stock beginning on April 16 at a conversion price of $1.68 per share, or $6.73 per share following the one-for-four reverse stock split effective on April 15. The conversion will maintain the value of the shares by increasing the volume to account for the decrease in price, a financing structure designed to accommodate CTI's dual-listing in the U.S. and Europe. The reverse stock split directly follows an increase in the company's shares approved earlier this week.
Purchasers also will receive warrants to purchase common stock in an amount equal to 50 percent of their total investment amount divided by the same conversion price. The warrants will have an exercise price of $1.62 per share, or $6.48 post-split, equal to CTI's closing price on April 10.
Rodman & Renshaw LLC acted as the exclusive placement agent for the offering, which is expected to close April 16.
All that cash gives CTI "the freedom to look for new opportunities" as well as fund Phase III trials with its two lead cancer drugs, Eramian said.
Earlier this year, CTI filed two special protocol assessments with the FDA for Phase III trials of Xyotax (poliglumex paclitaxel) in women with advanced non small-cell lung cancer. The SPA filings followed the early closure of another Phase III trial of the drug, which links paclitaxel to a biodegradable polyglutamate polymer. The new trials will focus exclusively on women with normal estrogen levels, the subset in which Xyotax demonstrated the greatest survival advantage in the STELLAR trials, which missed their primary endpoints. (See BioWorld Today, March 8, 2005, and May 3, 2005.)
Xyotax also is being studied in investigator-led ovarian, prostate and breast cancer trials.
CTI also recently filed an SPA for a Phase III trial of pixantrone in indolent non-Hodgkin's lymphoma. The drug, an anthracycline derivative, is also in a Phase III single-agent trial and a Phase II combination trial in aggressive NHL. An interim analysis from the Phase III trial is expected this summer.
Xyotax is partnered with Novartis AG, which also has an option on pixantrone, but CTI currently is funding both programs. (See BioWorld Today, Sept. 19, 2006.)
Shares of CTI (NASDAQ:CTIC) slid 19 percent, or 35 cents, to close at $1.48 on Thursday. Bianco attributed the pressure on the stock to short investors trading on the financing news rather than the DOR announcement.
In other financing news:
• BCY LifeSciences Inc., of Toronto, is raising C$1 million (US$872,600) through the sale of 20 million units at 4 cents per unit. Each unit will consist of a common share and a warrant for the purchase of one additional common share at 9 cents within two years. BCY's shares (TSX:BCY) rose 333.3 percent, or C10 cents, to close at C13 cents on Thursday. The company plans to acquire and develop drug candidates.