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Cell Therapeutics, Inc. (CTIC)
Q2 2008 Earnings Call
August 18, 2008 8:30 am ET
James Bianco – Chief Executive Officer
Craig Philips – President
Louis Bianco – Chief Financial Officer
Vernon Bernardino – Rodman & Renshaw
Leah Hartman – CRT Capital Group
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Before we get started I’d like to remind you as is common with presentations of this type we will be making forward looking statements and as such we recommend that you refer to our SEC filings for more information on the risks and benefits of our programs. Let me also remind you that this call will be recorded and will be available for playback on our website. Any unauthorized recording of this call or use of this recording is prohibited without written consent from the company.
I will briefly overview the progress on some of our strategic initiatives, briefly overview our financials and then turn the call over to Craig Philips our President. We also have available for Q&A section this morning or CFO and our Chief Medical Officer.
Let me begin by discussing a series of recent transactions all of which again have been aimed at simplifying our capital structure and cleaning up our balance sheet. You may recall since December 2007 we have now retired approximately $33 million in exchange $23.3 million of our 2008 comparable debt due in 2011. The next maturity on any of our convertible notes does not occur until Q3 2010 and we feel that that gives us plenty of runway to achieve our goal of trying to break even in 2009.
In addition we have reduced our outstanding preferred stock to approximately $13.1 million of par value remaining, about half of those holders expressing interest in a voluntary conversion to underlying common. As such, we have made significant progress on cleaning up the balance sheet, streamlining our capital structure while continuing to access cash needed for operations during something I’m sure you’re all familiar, a very difficult market in general.
We’ve done that through the issuance of additional convertible debt security as well as an equity line of credit using a warrant to purchase common stock through multiple ongoing closings. Even with the $12 million equity line and the upcoming $22.5 million investment from a single institutional investor we announced last month we obviously will need to raise additional capital in the near future.
We’ve been trying to limit dilution by raising enough cash to get us through each quarter that allow us to get closer to some key pivotal regulatory and clinical milestones where we anticipate the stock price would be more favorable than at present.
That noted let me briefly review our Q2 and year to date financial we reported in our press release this morning. Let me start by noting that while cash flows used in operations for the six month period total approximately $48 million that number included several one time exceptional expenses including as you’ll recall the $2 million for the Zevalin Fit Agreement with Bayer Schering Pharmaceuticals, about $0.5 million milestone payment to PG-TXL for successfully submitting our OPAXIO MAA to the EMEA.
Approximately $2 million in legal expenses associated with certain litigation related expenses and with the establishment of various operating agreements for Nuco. We expect most of the legal expenses relating to the establishment of Nuco to be reimbursed in the event when Nuco is funded. We also had an additional one time operating expense of approximately $750,000 related to strategic financial advisory services. Once you account for the non-recurring expenses our operating burn rate is approximately $7 million a month and will continue to come down throughout the remainder of the year.
Briefly, we have made excellent progress on our spin-off initiative. We expect to be able to announce the independent funding of Nuco which we call it currently within this quarter and once spun out the operational liabilities of our Bresso and our Assistants Medical Facility and personnel’s really become that of the core process in founding for the new company for Nuco. That obviously takes CTI’s headcount down significantly.
This will be the final step in our strategic goal of transforming the company into a commercial stage operation with several eight stage product approvals under regulatory review. Also central to our goal of reducing our 2009 run rate to a goal of approximately $4 to $4.5 million a month prior to any growth in Zevalin sales or from potential success milestones that may be earned from Novartis.
From 2009 we want to be in a position to see regulatory approval for Zevalin in the front line consolidation. The significant growth in sales and revenues now that the reimbursement and in 2009 the administration hurdles will be removed and the product adoption starts to spread to community and college aesthetics.
We also hope to see approval of OPAXIO in the EU as a single agent for non-small cell lung cancer patients who have poor performance status and its launch by our partner Novartis. Lastly, we’d like to be in a position for a third regulatory approval and launch specifically for Pixantrone in a relapse a few speed cells lymphoma setting following successful pivotal trial results which we will report later this year.