By Karen Pihl-Carey

Equipped with the recently completed rough draft of the human genome sequence, Cell Therapeutics Inc. (CTI) plans to leverage a new technology to find drug targets through the creation of a majority-owned subsidiary.

PanGenex Inc., which initially will be located at CTI's headquarters in Seattle, will employ 10 scientists. CTI will own two-thirds of the subsidiary.

"We are not a drug discovery company," said James Bianco, CTI's president and CEO. "So the only way that we can see exploiting this technology breakthrough is to allow scientists to take it and run with it."

CTI's stock (NASDAQ:CTIC) closed Wednesday at $32.562, up $3.562, or 12 percent.

By creating the subsidiary, CTI can remain focused on commercializing its oncology drug candidates, while also exploring the new technology. The cost is minimal, Bianco said, and provides more flexibility for CTI in attracting capital and corporate collaborators.

CTI has committed a minimum of $50,000 in funding for the first six months of PanGenex. Bianco said he expects the subsidiary eventually will spin off into an independent company.

Within six to nine months, the scientists expect to have research on the technology published in a scientific journal. CTI applied for patents to the technology in 1999 and earlier, and the company plans to have all patents in place before releasing specific details about the technology, Bianco said.

Robert Finney, who will be president and chief scientific officer of PanGenex, helped develop the technology for CTI over the past 18 to 24 months. He said the biggest advantage the technology has is the ability to rapidly sift through large amounts of data to identify genes that are valid targets for drug discovery.

Of an estimated 50,000 to 100,000 genes within the human genome, about 10,000 to 15,000 may yield new drug targets, Finney said. "So the challenge now facing the pharmaceutical industry is how do you sort through 50,000 to 100,000 genes to arrive at that small number of drug development targets," he said.

"The current technologies to determine the function of human genes relies on a one-gene-at-a-time approach," Finney said. "They are very labor intensive, they take years to pursue, and they are very costly, and when you get at the end of them, there's a good chance you've chosen the wrong target."

The technology to be used at PanGenex allows scientists to validate targets much faster with less expense and a higher throughput.

"At the end of the process of drug development, there's still a risk of failure, and that risk may actually be much, much lower if you can look at multiple targets instead of the best guess," Bianco said.

While CTI has a "keen interest" in the development of therapeutics for cancer indications, the technology can be used for all diseases, Bianco said.

CTI has three product candidates in its pipeline: arsenic trioxide (ATO) to treat patients with relapsed or refractory acute promyelocytic leukemia; polyglutamic acid paclitaxel (PG-TXL), a potentially safer and more effective derivative of paclitaxel, the active ingredient in the cancer drug Taxol; and Apra (CT-2584), an anticancer drug candidate for patients with soft tissue sarcoma and prostate cancer and other cancers that have become resistant to conventional chemotherapy.

In March, CTI filed a new drug application for ATO, and a decision from the FDA is expected before the end of the year. Cell Therapeutics gained rights to ATO through its acquisition of PolaRx Biopharmaceuticals Inc., of New York. (See BioWorld Today, March 30, 2000, p. 1.)

PG-TXL is in a Phase I dose-escalation study in the UK. CTI expects to file an investigational new drug application in the U.S. later this summer, Bianco said.

As for Apra, about 58 out of 80 patients have been enrolled in a Phase II study in sarcoma. It also is being tested in prostate cancer, and soon will start a trial in combination with chemotherapy in lung cancer.

In February, CTI raised $40 million in a private placement to help finance the filing of the ATO new drug application. It sold 3.33 million shares at $12 each. (See BioWorld Today, Feb. 18, 2000, p. 1.)

CTI also sought to raise $88 million in March in a follow-on offering of 3 million shares, but later withdrew the offering due to market conditions. (See BioWorld Today, March 28, 2000, p. 1.)