8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):   January 17, 2007    

Commission File No. 000-16929

DOR BIOPHARMA, INC.

(Exact name of small business issuer as specified in its charter)

DELAWARE		41-1505029
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
1101 Brickell Ave., Suite 701 S Miami, FL		33131
(Address of principal executive offices)		(Zip Code)
	(786) 425-3848
	(Issuer’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01 Other Events

On January 17, 2007, DOR BioPharma, Inc. (“DOR” or the “Company”) received an unsolicited proposal from Cell Therapeutics, Inc. (Cell Therapeutics”, NASDAQ “CTIC”) to acquire DOR. The proposal from Cell Therapeutics is subject to, among other things, the completion of satisfactory due diligence regarding clinical, regulatory, manufacturing and proprietary positioning for orBec®. Under the proposed terms, Cell Therapeutics would issue the Company’s shareholders 29,000,000 shares of Cell Therapeutics’ common stock, representing 19.9% of Cell Therapeutics outstanding shares of common stock. Warrant and option holders would receive shares of Cell Therapeutics common stock in an amount determined using the Black Scholes pricing model. Cell Therapeutics has reserved the right to offer cash as consideration for the warrants instead of Cell Therapeutics common stock. In addition, Cell Therapeutics is also offering the potential for an additional $15 million payment (in stock or cash at the Company’s option) upon receipt of the approval of the U.S. Food & Drug Administration of the Company’s new drug application for orBec®.

As previously disclosed, on January 3, 2007, the Company entered into a non-binding letter of intent (the “Letter of Intent”) with Sigma-Tau Pharmaceuticals, Inc. (“Sigma-Tau”), which grants Sigma-Tau an exclusive right to negotiate terms and conditions for a possible business transaction or strategic alliance regarding the Company’s lead product, orBec®, and potentially other Company programs until March 1, 2007. Accordingly, absent express written permission from Sigma-Tau, the Company’s board of directors cannot consider Cell Therapeutics’ merger proposal at this time.

A copy of the Cell Therapeutics’ January 17, 2007 proposal is filed herewith as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits:

10.1January 17, 2007 letter from Cell Therapeutics, Inc. to DOR BioPharma, Inc.

99.1Press release issued by DOR BioPharma, Inc. on January 17, 2007.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DOR BIOPHARMA, INC.

By: /s/ Christopher J. Schaber   

Name: Christopher J. Schaber

Title: Chief Executive Officer

Date: January 17, 2007

EXHIBIT INDEX

Exhibit No.Description

10.1January 17, 2007 letter from Cell Therapeutics, Inc. to DOR BioPharma, Inc.

99.1Press release issued by DOR BioPharma, Inc. on January 17, 2007.

EX-99.1

EXHIBIT 99.1

DOR BioPharma, Inc.

1101 Brickell Avenue

Miami, Florida 33131

www.dorbiopharma.com

DOR BioPharma Receives Unsolicited Acquisition Proposal from

Cell Therapeutics

MIAMI - January 19, 2007 - DOR BioPharma, Inc. (OTCBB: DORB) (“DOR” or the “Company”) announced today that it has received an unsolicited proposal from Cell Therapeutics, Inc. (Cell Therapeutics”, NASDAQ “CTIC”) to acquire DOR.

Under the proposed terms, Cell Therapeutics would issue the Company’s shareholders 29,000,000 shares of Cell Therapeutics’ common stock, representing 19.9% of Cell Therapeutics outstanding shares of common stock. Warrant and option holders would receive shares of Cell Therapeutics common stock in an amount determined using the Black Scholes pricing model. Cell Therapeutics has reserved the right to offer cash as consideration for the warrants instead of Cell Therapeutics common stock. In addition, Cell Therapeutics is also offering the potential for an additional $15 million payment (in stock or cash at the Company’s option) upon receipt of the approval of the U.S. Food & Drug Administration of the Company’s new drug application for orBec®. The proposal from Cell Therapeutics is subject to, among other things, the completion of satisfactory due diligence regarding clinical, regulatory, manufacturing and proprietary positioning for orBec®.

As previously announced on January 3, 2007, the Company entered into a non-binding letter of intent (the “Letter of Intent”) with Sigma-Tau Pharmaceuticals, Inc. (“Sigma-Tau”), which grants Sigma-Tau an exclusive right to negotiate terms and conditions for a possible business transaction or strategic alliance regarding the Company’s lead product, orBec®, and potentially other Company programs until March 1, 2007. Accordingly, absent express written permission from Sigma-Tau, the Company’s board of directors cannot consider Cell Therapeutics’ merger proposal at this time.

A copy of the Cell Therapeutics’ January 17, 2007 proposal is filed as an Exhibit to the Form 8-K filed today January 19, 2007.

About DOR BioPharma, Inc.

DOR BioPharma, Inc. is a biopharmaceutical company developing products to treat life-threatening side effects of cancer treatments and serious gastrointestinal diseases, and vaccines for certain bioterrorism agents. DOR’s lead product, orBec^® (oral beclomethasone dipropionate), is a potent, locally-acting corticosteroid being developed for the treatment of GI GVHD, a common and potentially life-threatening complication of bone marrow transplantation. DOR has filed an NDA with the FDA for the treatment of GI GVHD, and has received an FDA PDUFA date of July 21, 2007.  An MAA with the EMEA for orBec^® has also been filed and validated. orBec^® may also have application in treating other gastrointestinal disorders characterized by severe inflammation.

Through its Biodefense Division, DOR is developing biomedical countermeasures pursuant to the recently enacted Project BioShield Act of 2004. DOR’s biodefense products in development are recombinant subunit vaccines designed to protect against the lethal effects of exposure to ricin toxin and botulinum toxin. The ricin toxin vaccine, RiVax^TM, has been evaluated successfully in a Phase 1 clinical trial in normal volunteers.

For further information regarding DOR BioPharma, please visit the Company's website located at www.dorbiopharma.com.

This press release contains forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, that reflect DOR BioPharma, Inc.’s current expectations about its future results, performance, prospects and opportunities, including statements regarding the potential use of orBec^® for the treatment of gastrointestinal GVHD and the prospects for regulatory filings for orBec^®. Where possible, DOR has tried to identify these forward-looking statements by using words such as "anticipates", "believes", "intends", or similar expressions. These statements are subject to a number of risks, uncertainties and other factors that could cause actual events or results in future periods to differ materially from what is expressed in, or implied by, these statements. DOR cannot assure you that it will be able to successfully develop or commercialize products based on its technology, including orBec^®, particularly in light of the significant uncertainty inherent in developing vaccines against bioterror threats, manufacturing and conducting preclinical and clinical trials of vaccines, and obtaining regulatory approvals, that its technologies will prove to be safe and effective, that its cash expenditures will not exceed projected levels, that it will be able to obtain future financing or funds when needed, that product development and commercialization efforts will not be reduced or discontinued due to difficulties or delays in clinical trials or due to lack of progress or positive results from research and development efforts, that it will be able to successfully obtain any further grants and awards, maintain its existing grants which are subject to performance, enter into any biodefense procurement contracts with the U.S. Government or other countries,that the U.S. Congress may not pass any legislation that would provide additional funding for the Project BioShield program,that it will be able to patent, register or protect its technology from challenge and products from competition or maintain or expand its license agreements with its current licensors, or that its business strategy will be successful. Important factors which may affect the future use of orBec^® for gastrointestinal GVHD include the risks that: because orBec^® did not achieve statistical significance in its primary endpoint in the pivotal Phase 3 clinical study (i.e. a p-value of less than or equal to 0.05), the FDA may not consider orBec^® approvable based upon existing studies, orBec^® may not show therapeutic effect or an acceptable safety profile in future clinical trials, if required, or could take a significantly longer time to gain regulatory approval than DOR expects or may never gain approval; DOR is dependent on the expertise, effort, priorities and contractual obligations of third parties in the clinical trials, manufacturing, marketing, sales and distribution of its products; or orBec^® may not gain market acceptance; and others may develop technologies or products superior to orBec^®.  There can be no assurance that neither the unsolicited proposed from Cell Therapeutics nor a transaction with Sigma-Tau will be realized. These and other factors are described from time to time in filings with the Securities and Exchange Commission, including, but not limited to, DOR's most recent reports on Form 10-QSB and Form 10-KSB. DOR assumes no obligation to update or revise any forward-looking statements as a result of new information, future events, and changes in circumstances or for any other reason.

Company Contact:Investor Contacts:

Evan MyrianthopoulosLippert/Heilshorn & Associates

Chief Financial Officer Anne Marie Fields (afields@lhai.com)

(786) 425-3848(212) 838-3777

www.dorbiopharma.comBruce Voss (bvoss@lhai.com)

 (310) 691-7100

EX-10.1

Exhibit 10.1

Cell Therapeutics, Inc.

CTIJames A. Bianco

501 Elliott Ave. W.President and Chief Executive Officer

#400

Seattle, WA 98119

T206-282-7100

F206-284-6114

D206-284-5774

January 17, 2007

James Kuo, M.D.MBA, Chairman

Steve Kanzer, J.D., Vice-Chairman

Christopher Schaber, Ph.D., President and Chief Executive Officer

Evan Myrianthopoulos, Chief Financial Officer

DOR BioPharma, Inc.

1101 Brickell Avenue

Suite 701 South

Miami, Florida 33131

Gentlemen:

We would like to express our sincere interest in potentially merging DOR BioPharma (“DOR”) with Cell Therapeutics, Inc. (“CTI”). We propose a stock-for-stock merger at a significant premium to DOR’s current stock price. If the proposal outlined below is acceptable in principle, we would like to move forward immediately with mutual due diligence under an exclusivity agreement. If we proceed, I am confident that we will each be able to conclude our diligence in a matter of weeks.

As you know we have been following the progress of orBec® for quite some time and re-initiated discussions with DOR regarding our interest in either a license agreement or product acquisition. We were, of course, very disappointed with your decision to enter into a exclusivity period with Sigma Tau Pharmaceuticals and cease discussions with CTI, including discussions regarding our interest in a PIPE investment. We prefer to work with you expeditiously on a confidential basis, but reserve the right in the future to bring our proposal directly to your shareholders. We believe, despite your exclusivity agreement with Sigma Tau Pharmaceuticals, that your Board has a fiduciary duty to pursue a proposal that is likely superior to terms you may currently be contemplating in a licensing deal, and that consensual discussions about the transaction we are proposing are not precluded by that agreement.

We believe that our two companies fit together strategically extremely well:

§   CTI’s management and founders are experts and pioneers in the field of bone marrow transplantation, with more than 450 peer reviewed publications and books related to marrow and stem cell transplantation.

§   CTI’s team has a proven track record of success in launching niche products in the U.S. and Europe, having successfully taken Trisenox® to sales of $26,000,000 in 2005.

§   CTI’s partnership with Novartis facilitates our commitment to investing in orBec® commercialization through Novartis’ commitment to fund a CTI sales force of 35 FTE’s. CTI would prioritize the label expansion and commercial development of orBec® as a synergistic product in our hematology portfolio.

§   Combining our late stage pipelines offers shareholders significant risk diversification and upside.

Structure:

§   The transaction would be structured as a stock-for-stock exchange.

§   In addition, shareholders of DOR would be offered a contingent value right (“CVR”) as described below.

Price:

§   CTI would offer DOR stakeholders 29,000,000 shares of CTIC representing 19.9% of CTI’s outstanding shares. This price represents a substantial premium to your current public market capitalization.

§   Warrant and option holders will receive shares of CTI common stock in an amount determined using the Black Scholes pricing model. CTI reserves the right to offer cash as consideration for the warrants instead of CTI common stock.

§   CTI is trading at the low end of its long term trading range. With two phase 3 products approaching registration and a $485 million collaboration with Novartis in which CTI retains over 50% of product related NPV, we believe our offer provides the potential for additional significant upside appreciation to DOR shareholders.

§   Furthermore, DOR’s shareholders will benefit from substantially increased liquidity once they receive CTI stock.

Contingent Value Right:

§   CTI is also offering potential to earn an additional $15 million payment (in stock or cash at DOR’s option) upon receipt of a NDA approval for orBec® by the U.S. Food and Drug Administration.

Management:

§   CTI would provide a 2 year employment contract to both the CEO and CFO of DOR, in addition to granting to each, subject to 2 year cliff vesting, 150,000 restricted shares of CTI as a retention inducement to provide services for successful NDA and MAA defence, and for the transition of the orBec® assets to CTI.

§   In addition CTI desires to employ Dr. Schaber as its Chief Operating Officer, whose salary, benefit and relocation package would be commensurate with current executive level employees at CTI.

Board of Directors:

§   CTI would invite DOR to nominate one member to the Board of Directors of CTI.

Selected Closing Conditions:

§   Affirmative vote of the shareholders of DOR. CTI does not envision requiring shareholder approval for this transaction.

§   Standard representations or warranties of DOR accurate as of signing and closing,

Board Recommendation:

§   The Merger Agreement would include a standard commitment by DOR’ s board to recommend the transaction its stockholders, subject to standard fiduciary exceptions in the case of an unsolicited superior proposal.

Biodefense Assets:

§   CTI would be amenable to spinning out and capitalizing, as a separate entity, the bio-defence assets of DOR, which are non-core to CTI, in a structure to be addressed at a later date.

Key Assumptions:

§   DOR has 72 million shares outstanding, plus 35 million warrants with average exercise price of $0.68/share and 10 million options with an average exercise price of $0.5 1/share.

§   DOR has a no-shop agreement with Sigma Tau Pharmaceuticals and Sigma Tau Pharmaceuticals owns 5.5% (4 million shares) of DOR.

§   DOR retains U.S. and European rights to orBec®. However- If DOR is successful in licensing rights for orBec® to Sigma Tau Pharmaceuticals; we assume such terms would include a royalty on European sales of 15% to 20%, cumulative registration directed milestones of at least $15 million and sales threshold milestones totaling at least $10 million, in addition to an upfront license fee of at least $5 million. This assumption is based on the fact that CTI believes that the European market represents approximately 35% to 40% of the total U.S./European commercial opportunity.

§   Satisfactory due diligence regarding clinical, regulatory, manufacturing and proprietary (IP and/or orphan protection) positioning for orBec®.

§   DOR’s financials and long term obligations are as represented in its SEC filings.

We believe that a merger of our two companies would allow DOR to diversify its business, allowing shareholders to be part of a larger, stronger organization, while retaining significant holdings in the combined company. We are confident that our stock is significantly undervalued, creating a significant upside for DOR shareholders.

I look forward to talking with you about our interest in DOR. If you have any questions, please feel free to contact me at any time day or night, as this transaction is my highest priority. 

Sincere regards,

/s/ James A. Bianco

James A. Bianco, M.D.

President and CEO

Cell Therapeutics, Inc.