Cell Therapeutics raises $40 million in stock sale

Cell Therapeutics said this morning it has a deal to sell 23 million shares of stock to select investors at $1.73 per share, in an offering that would raise $40 million.

The news of dilution to existing shareholders drove the stock down 16 percent in heavy mid-day trading, to $1.75.

One day earlier, the stock had surged, closing at $2.08, after the company said it signed a partnership to co-develop and commercialize its lead cancer drug with Novartis. The company sold 8.7 million shares to Novartis at the same discounted price, $1.73 a share.

Rodman & Renshaw was the lead placement agent of the financing, assisted by Punk, Ziegel & Company. The sale is expected to close on Thursday. Cell Therapeutics has granted the investors options to buy another 5.8 million shares at the same price over a 90-day period.

If the investors exercise all their options, Cell Therapeutics will have 146 million shares outstanding on the market.

A day earlier, Chief Executive James Bianco said he hoped to take advantage of the momentum from the Novartis deal to buy products or companies to "re-build" Cell Therapeutics' commercial operations. The company has been running low on cash this year, with $48 million in the bank at the end of June, just enough to last until year's end.

With the $15 million cash infusion from Novartis and $40 million from investors, Cell Therapeutics has secured enough cash to run into the second half of 2007. By then, it expects to see results from pivotal clinical trials of its two main cancer drugs, Xyotax and Pixantrone.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com