By Lisa Seachrist

Washington Editor

After balking at the unfriendly market last year, Cell Therapeutics Inc. said it will go public in March with an anticancer and anti-inflammatory program based on two small molecules that exploit phospholipid chemistry.

The Seattle company registered for an initial public offering (IPO) of 3 million shares that are expected to sell for $14 to $16 each.

Underwriters are UBS Securities, of New York, Montgomery Securities, of San Francisco, and Raymond James & Associates Inc., of St. Petersburg, Fla. The underwriters will carry an option to purchase up to 450,000 shares to cover allotments.

Cell Therapeutics originally registered for an IPO in April 1996. However, they postponed the offering in hopes of a better market. In September, they withdrew their registration.

Cell Therapeutics' lead compound, Lisofylline, is being pursued as a chemotherapy adjunct and an anti-inflammatory compound. The drug modulates selective stress-activated signaling pathways that respond to cytotoxic chemotherapy regimens and radiation.

Lisofylline is in Phase III clinical trials to test whether the drug can reduce infections and mortality in people who have undergone chemotherapy or radiation doses so high that they require bone marrow transplants. The drug is also in Phase I/II trials to reduce infections in acute myelogenous leukemia (AML) and to combat inflammation associated with trauma. Phase II/III trials are expected to begin in AML in 1997.

Cell Therapeutics has a $5 million collaboration with Johnson & Johnson to develop the product. The New Brunswick, N.J., pharmaceutical company also will purchase 300,000 shares of stock.

In addition to Lisofylline, Cell Therapeutics is developing CT-2584 to kill cancer cells that have become resistant to chemotherapy and radiation. CT-2584 is expected to enter Phase II trials in the U.S. in the second half of 1997.

The company also is developing a line of tumor-sensitizing drugs that will enhance the effectiveness of radiation for tumors that have deleted or mutated tumor suppression genes.

In the prospectus filed with the Securities & Exchange Commission, Cell Therapeutics reported having $31.2 million in cash at the end of 1996 and a net loss of $13.9 million for the year. *