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): April 29, 2011
CELL THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Washington | 001-12465 | 91-1533912 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
501 Elliott Avenue West, Suite 400
Seattle, Washington 98119
(Address of principal executive offices)
Registrants telephone number, including area code: (206) 282-7100
Not applicable
(Former name or former address, if changed since last report).
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 2.02. Results of Operations and Financial Condition.
The information provided pursuant to this Item 2.02 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any filing or other document filed by the Company pursuant to the Exchange Act or the Securities Act of 1933, as amended (the Securities Act), except as shall be expressly set forth by specific reference in such filing or document. The information provided pursuant to this Item 2.02 shall instead be deemed furnished.
Pursuant to a request from CONSOB, the Italian securities regulatory authority, Cell Therapeutics, Inc. (the Company) issued a press release in Italy on April 29, 2011 (the Press Release), providing certain requested financial information for the month ended March 31, 2011 and other information. An English translation of the Press Release is attached as Exhibit 99.1 and incorporated by reference herein. The financial information contained in the Press Release was prepared at the instruction of CONSOB pursuant to Section 114, paragraph 5, of the Unified Financial Act. In communications with CONSOB about their request that certain estimated and unaudited financial information be disclosed by the Company, the Company advised CONSOB that the information is not otherwise required to be disclosed in the United States by public companies under the U.S. securities laws. The Company further advised CONSOB that any such financial information has not been reviewed or audited by the Companys independent auditors as such reviews only occur on a quarterly basis in connection with the requirements of Quarterly Reports on Form 10-Q which are prepared for the first three quarters of the year, and in connection with the annual audit of the Companys year-end financial statements which is included in the Companys Annual Reports on Form 10-K. The Company further advised CONSOB that any such financial information could not be prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), as promulgated by the Financial Accounting Standards Board.
In addition, the financial information contained in the Press Release does not conform to U.S. GAAP because the Company has not concluded its consideration of authoritative literature and guidelines, including the guidelines established by FAS 133 Accounting for Derivatives and other Hedging Activities, in the preparation of the information. Accordingly, the data presented in the information does not reflect the Fair Market Value assessments of the Companys convertible debt, convertible preferred stock and the underlying derivative instruments under U.S. GAAP as such instruments are presented in the Companys quarterly and annual financial statements and therefore should not be relied on for investment purposes. Moreover, the information may deviate from values as reported in accordance with U.S. GAAP in the Companys reviewed quarterly financial statements and audited year-end financial statements.
Further, the information contained in the Press Release may constitute non-GAAP financial measures within the meaning of Regulation G of U.S. securities law. These non-GAAP financial measures are being provided solely at the instruction of CONSOB and are not presented as or intended to be an alternative to U.S. GAAP financial information. The Company is unable to provide a reconciliation of these non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, because no such comparable U.S. GAAP financial measures exist or are available at the time, as the Companys year-end review and audit process has not yet been completed.
Investors are urged to refer to the Companys financial statements prepared in accordance with U.S. GAAP, including a more detailed description of the terms of the convertible debt and convertible preferred stock, and the risk factors listed or described from time to time in the Companys filings with the U.S. Securities and Exchange Commission including, without limitation, the Companys filings on Forms 10-K, 10-Q, and 8-K.
Item 7.01. Regulation FD Disclosure.
The information provided pursuant to this Item 7.01 shall not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any filing or other document filed by the Company pursuant to the Exchange Act or the Securities Act except as shall be expressly set forth by specific reference in such filing or document. The information provided pursuant to this Item 7.01 shall instead be deemed furnished.
Pursuant to a request from CONSOB, the Company issued a press release in Italy on April 29, 2011 providing certain requested financial information about the Companys financial condition and operations. Attached hereto as Exhibit 99.1 is an English translation of such press release.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description | |
99.1 | English Translation of Press Release of Cell Therapeutics, Inc. dated April 29, 2011. |
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.
CELL THERAPEUTICS, INC. | ||||||
Date: April 29, 2011 | By: | /S/ LOUIS A. BIANCO | ||||
Louis A. Bianco | ||||||
Executive Vice President, Finance and Administration |
EXHIBIT INDEX
Exhibit |
Description | |
99.1 | English Translation of Press Release of Cell Therapeutics, Inc. dated April 29, 2011. |
Exhibit 99.1
| ||||
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501 Elliott Ave. W. #400 Seattle, WA 98119 |
T 206.312.7100 F 206.272.4010 |
Cell Therapeutics Provides Monthly Information
at Request of CONSOB
April 29, 2011 Seattle Cell Therapeutics, Inc. (the Company or CTI) (NASDAQ and MTA: CTIC) is providing the information herein pursuant to a request from the Italian securities regulatory authority, CONSOB, pursuant to Article 114, Section 5 of the Unified Financial Act, that the Company issue at the end of each month a press release providing a monthly update of certain information relating to the Companys management and financial situation. However, the Company also directs its Italian shareholders to the Italian language section of its website at www.celltherapeutics.com/italiano, where more complete information about the Company and its products and operations, including press releases issued by the Company, as well as the Companys U.S. Securities and Exchange (SEC) filings and the Listing Prospectus authorized to be published by CONSOB, can be found. The information provided below is qualified in its entirety by reference to such information. Please note that all the information disclosed in this press release primarily refers to the period March 1, 2011 through March 31, 2011 except as otherwise expressly noted.
Provisional financial information as of March 31, 2011 and EBITDA
The following information concerns the Companys provisional (unaudited) results for the month ended March 31, 2011.
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Such financial information represents estimates that are based on assumptions the occurrence of which depends on circumstances relating to the Company and the macroeconomic situation, and which assumptions might or might not occur.
The following table reports the Estimated Indication of a few relevant items referring to the statements of operations for the month ended March 31, 2011:
Estimated financial data of the Company for the month ended March 31, 2011
The estimated and unaudited financial data of the Company as of March 31, 2011 compared with those for the previous month are shown below (amounts in thousands of U.S. dollars):
February 28, 2011 | March 31, 2011 | |||||||
Net revenue |
$ | | $ | | ||||
Operating income (expense) |
$ | (5,653 | ) | $ | (9,941 | ) | ||
Profit /(Loss) from operations |
$ | (5,653 | ) | $ | (9,941 | ) | ||
Other income (expenses), net |
$ | 80 | $ | 549 | ||||
Preferred Stock: |
||||||||
-Deemed Dividend |
$ | | $ | (31,283 | ) | |||
EBITDA |
$ | (5,573 | ) | $ | (40,675 | ) | ||
Depreciation and amortization |
$ | (147 | ) | $ | (150 | ) | ||
Amortization of debt discount and issuance costs |
$ | (10 | ) | $ | (148 | ) | ||
Interest expense |
$ | (117 | ) | $ | (155 | ) | ||
Net profit /(loss) attributable to common shareholders |
$ | (5,847 | ) | $ | (41,128 | ) | ||
Estimated Research and Development expenses were $2.4 million and $7.1 million for the months of February 2011 and March 2011, respectively.
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Net Financial Standing
The following table reports the estimated and unaudited net financial standing of the Company as of February 28, 2011 and March 31, 2011, including the separate indication of the total financial needs, regarding debts expiring less than 12 months ahead (current portion). The relevant financial data are compared with those for the previous month (amounts in thousands of U.S. dollars).
Net Financial Standing |
February 28, 2011 | March 31, 2011 | ||||||
Cash and cash equivalents |
$ | 32,270 | $ | 43,814 | ||||
Long term obligations, current portion |
$ | (1,718 | ) | $ | (1,715 | ) | ||
Convertible senior notes |
$ | (22,308 | ) | $ | (22,445 | ) | ||
Net Financial Standing, current portion |
$ | 8,244 | $ | 19,654 | ||||
Long term obligations, less current portion |
$ | (4,233 | ) | $ | (4,010 | ) | ||
Net Financial Standing, less current portion |
$ | (4,233 | ) | $ | (4,010 | ) | ||
Net Financial Standing |
$ | 4,011 | $ | 15,644 |
The total estimated and unaudited net financial position of the Company as of March 31, 2011 was approximately positive $15,644 (in thousands of U.S. dollars).
The Companys 7.5% Convertible Senior Notes with a maturity date of April 30, 2011 (the 7.5% Notes) and 5.75% Convertible Senior Notes with a maturity date of December 15, 2011 come due within the next twelve months.
The Company had no debt that matured during the month of March 2011. In the event the holders of the 7.5% Notes elect to convert the 7.5% Notes into shares of common stock, the Company has reserved sufficient authorized shares of the Companys common stock, no par value per share (the Common Stock), to complete the conversion. If the holders of the 7.5% Notes do not elect to convert the 7.5% Notes on or prior to the maturity date, then the Company currently intends to pay the holders the outstanding principal amount and accrued unpaid interest of the 7.5% Notes. As of April 29, 2011, the principal amount outstanding on the 7.5% Notes was $10.25 million.
Outstanding notes and preferred shares
The following tables disclose information about the Companys outstanding convertible senior notes as of March 31, 2011, compared with the same information as of February 28, 2011, and the Companys outstanding non-convertible Series 8 preferred stock as of March 31, 2011, compared with the same information as of February 28, 2011:
www.CellTherapeutics.com
Convertible NotesMarch 31, 2011
Description |
Maturity/ Redemption Date |
Principal/ Aggregated Stated Value Outstanding as of February 28, 2011($) |
Number
of Common Stock Reserve as of February 28, 2011 |
Principal/ Aggregated Stated Value Outstanding as of March 31, 2011($) |
Number of Common Stock Reserve as of March 31, 2011 |
|||||||||||||||
7.5% Convertible Senior Notes |
30-Apr-11 | $ | 10,250,000 | 122,620 | $ | 10,250,000 | 122,620 | |||||||||||||
5.75% Convertible Senior Notes |
15-Dec-11 | $ | 10,913,000 | 363,766 | $ | 10,913,000 | 363,766 | |||||||||||||
Totals |
$ | 21,163,000 | 486,386 | $ | 21,163,000 | 486,386 | ||||||||||||||
Preferred StockMarch 31, 2011
Description |
Principal/Aggregated Stated Value Outstanding as of February 28, 2011 ($) |
Number of
Preferred Shares outstanding as of February 28, 2011 |
Principal/Aggregated Stated Value Outstanding as of March 31, 2011 ($) |
Number of
Preferred Shares outstanding as of March 31, 2011 |
||||||||||||
Series 8 Non-Convertible Preferred Stock* |
$ | 25,000,000 | 25,000 | | | |||||||||||
Totals |
$ | 25,000,000 | 25,000 | | | |||||||||||
* | The shares of Series 8 Non-Convertible Preferred Stock accrued annual dividends at the rate of 10% from the date of issuance, payable in additional shares of Series 8 Non-Convertible Preferred Stock. As described below, on March 21, 2010, the shares of Series 8 Non-Convertible Preferred Stock were redeemed and ceased to accrue dividends. |
As previously announced, (i) in January 2011, the Company issued shares of Series 8 Non-Convertible Preferred Stock, no par value per share (the Series 8 Preferred Stock), to a single holder (the Holder) in a transaction pursuant to which the Company also issued to the Holder warrants and an additional investment right (the January Offering) and (ii) in February 2011, the Company agreed to issue shares of Series 10 Non-Convertible Preferred Stock, no par value per share (the Series 10 Preferred Stock), to the Holder in a transaction pursuant to which the Company also issued to the Holder warrants and an additional investment right (the February Offering). As of February 28, 2011, 25,000 shares of Series 8 Preferred Stock were outstanding and no shares of Series 10 Preferred Stock were outstanding. On March 4, 2011, 24,957 shares of Series 10 Non-Convertible were outstanding upon the effectiveness of the Companys Articles of Amendment to the Companys Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Washington on March 3, 2011, which established the Series 10 Non-Convertible Preferred Stock. The shares of Series 10 Preferred Stock accrued annual dividends at a rate of 10% from the date of issuance, payable in additional
www.CellTherapeutics.com
shares of Series 10 Preferred Stock. As announced on March 22, 2011, the Company elected to redeem (the Redemption) all its outstanding shares of Series 8 Preferred Stock and Series 10 Preferred Stock (such Series 8 Preferred Stock, together with the Series 10 Preferred Stock, the Redeemed Preferred Stock) effective March 21, 2011 (the Redemption Date). When exercising the warrants and additional investment rights issued to the Holder in the January Offering and February Offering, the Holder issued fully secured recourse notes to the Company (the Notes). The Company did not use any cash in connection with the Redemption. Instead, all shares of Redeemed Preferred Stock, including any shares of Redeemed Preferred Stock representing accrued and unpaid dividends, was redeemed by offset against all of the outstanding Notes (plus accrued interest thereon) held by the Company, and all of the outstanding Notes were cancelled. After the Redemption Date, dividends on the Redeemed Preferred Stock ceased to accrue, the Redeemed Preferred Stock is no longer outstanding and all rights of the Holder in respect of the Redeemed Preferred Stock terminated.
Debt Restructuring Program
In March 2011, the Company neither issued any new debt instruments nor bought any debt instruments already issued by the Company. The Company believes it is in compliance with the covenants on each series of its outstanding convertible notes.
Regulatory Matters and Products in Development
Pixantrone
On March 3, 2011, the Company announced that it has met with officials of the U.S. Food and Drug Administrations (FDA) Office of New Drugs (OND) and presented its arguments supporting the Companys belief that the data contained in its New Drug Application (NDA) for pixantrone support the conclusion that pixantrone is effective for its planned use. The Company anticipates a decision from the OND regarding the appeal during the second quarter of 2011. On March 21, 2011, the Company announced that it has initiated its randomized pivotal trial of pixantrone for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL). The clinical trial, referred to as PIX-R or the PIX 306 trial, is now open to patient enrollment.
Products in development
On March 14, 2011, the Company announced that it entered into a co-development and license agreement (the License Agreement) with Chroma Therapeutics Ltd. (Chroma). The License Agreement provides the Company with exclusive marketing and co-development rights to Chromas drug candidate, tosedostat, in North, Central and South America. The
www.CellTherapeutics.com
Company plans to collaborate with Chroma with respect to a phase III clinical study in the United States and Europe for elderly patients with relapsed or refractory acute myeloid leukemia (the Privotal Trial). Pursuant to the terms of the License Agreement, the Company made an upfront payment of $5 million and will make a milestone payment of $5 million when the Pivotal Trial is initiated. The License Agreement also includes customary development-based milestone payments, as well as royalties on net sales in the Companys territories. In addition, subject to a funding cap of $50 million for the first three years, the Company will be responsible for 75% of development costs and Chroma will be responsible for 25% of development costs. For additional information about the License Agreement, please refer to the Companys press release disseminated on March 14, 2011.
Corporate Transactions and Assignment of Assets
With respect to the period from March 1, 2011 through March 31, 2011, the Company has no additional information to disclose to the market.
Exchange Listing Matters
With respect to the period from March 1, 2011 through March 31, 2011, the Company has no additional information to disclose to the market.
Update on Outstanding Shares of Common Stock
The number of shares of Common Stock issued and outstanding as of February 28, 2011 and March 31, 2011 was 940,771,275 and 1,004,462,095, respectively.
During the month of March 2011, the following transactions contributed to the change in the number of shares of the Companys outstanding Common Stock:
| the conversion of the Companys Series 11 Convertible Preferred Stock resulting in the issuance of 44,409,496 shares of Common Stock; |
| the issuance of 15,542,908 shares of Common Stock upon exercise of warrants to purchase Common Stock; |
| the issuance of 4,275,000 shares of Common Stock relating to restricted stock awards granted under the Companys 2007 Equity Incentive Plan, as amended and restated (the 2007 Equity Plan); and |
| the cancellation of 536,584 shares of Common Stock under the 2007 Equity Plan. |
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The Company is not aware of any agreement for the resale of its shares of Common Stock on the Mercato Telematico Azionario (MTA) nor of the modalities by means of which shares of Common Stock were or will be resold.
Information about the capacity of the Company to sustain its financial needs
As disclosed in this press release, the Company had approximately $43.8 million in cash and cash equivalents as of March 31, 2011.
On April 28, 2011, the Company announced that it had entered into an agreement to sell, subject to customary closing conditions, approximately $16.0 million of shares of the Companys Series 12 Convertible Preferred Stock (the Series 12 Preferred Stock) and warrants to purchase up to 18,253,714 shares of Common Stock (the Warrants) in a registered offering (the April Offering) to three institutional investors (the Investors). Each share of Series 12 Preferred Stock was convertible at the option of the holder, at any time during its existence, into approximately 2,857 shares of Common Stock at a conversion price of $0.35 per share of Common Stock, for a total of 45,634,286 shares of Common Stock. As of April 28, 2011, the Investors had elected to convert all of the shares of the Series 12 Preferred Stock into a total of 45,634,286 shares of Common Stock. The Warrants have an exercise price of $0.40 per warrant share, are exercisable immediately and expire five years and one day from the date of issuance. The April Offering is expected to close on May 2, 2011. For further information about the April Offering, please refer to the press release disseminated on April 28, 2011.
About Cell Therapeutics, Inc.
Headquartered in Seattle, the Company is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. For additional information, please visit www.CellTherapeutics.com. This press release includes forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect actual future results and the trading price of the Companys securities. Specifically, the risks and uncertainties that could affect the Company include risks associated with preclinical and clinical developments in the biopharmaceutical industry in general, and with pixantrone in particular, including, without limitation, the potential failure of pixantrone to prove safe and effective for the treatment of relapsed or refractory aggressive non-Hodgkins lymphoma, relapsed or refractory diffuse large B-cell lymphoma and/or other tumors (whether alone or in combination with rituximab) as determined by the FDA and/or European Medicines Agency (the EMA), that if the Company conducts an additional clinical trial, it may not demonstrate the safety and effectiveness of pixantrone, the potential failure of tosedostat to prove safe and effective for the treatment of AML, multiple myeloma, blood-related cancers and solid tumors as determined by the FDA and/or the EMA, that the FDA may not accept the proposed clinical trial design of tosedostat (including a pivotal study targeting AML in the U.S. and Europe) and/or may request additional trials, that clinical trials may not demonstrate the safety and effectiveness of tosedostat, that the Company cannot predict or guarantee the pace or geography of enrollment of its clinical trials or the total number of patients enrolled, that the EMA may not approve the Companys marketing authorization application for pixantrone after review, that the Company may not regain compliance with the NASDAQ Stock Market LLCs minimum bid price rule by May 2, 2011, that the Company cannot predict the outcome of the formal dispute resolution process with the FDA, that the Companys appeal of the FDAs decision regarding the Companys NDA may not be successful, that the FDA may not make its decision on the appeal during the second quarter of 2011, the Companys ability to sustain its current cost controls, and the Companys ability to continue to raise capital as needed to fund its operations, competitive factors, technological developments, and costs of developing, producing and selling pixantrone. Further risks and uncertainties include that the Company continues to have a substantial amount of debt outstanding and the quarterly interest expense associated with the debt is significant, the Companys operating expenses continue to exceed its net revenues, that the Company may not be able to further reduce its operating expenses, that the Company will continue to need to raise capital to fund its operating expenses and may not be able to raise sufficient amounts to fund its continued operation, and that the information presented herein with respect to the Companys convertible notes and non-convertible preferred stock may differ materially from the information presented by the Company with respect to its convertible notes and non-convertible preferred stock prepared in accordance with U.S. GAAP in its periodic reports on Form 10-K and Form 10-Q, as well as other risks listed or described from time to time in the Companys most recent filings with the U.S. Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K. Except as required by law, the Company does not intend to update any of the statements in this press release upon further developments.
###
www.CellTherapeutics.com
Media Contact:
Cell Therapeutics, Inc.
Dan Eramian
T: 206.272.4343
C: 206.854.1200
E: deramian@ctiseattle.com
www.CellTherapeutics.com/press_room
Investors Contact:
Cell Therapeutics, Inc.
Ed Bell
T: 206.272.4345
F: 206.272.4434
Lindsey Jesch Logan
T : 206.272.4347
F : 206.272.4434
E: invest@ctiseattle.com
www.CellTherapeutics.com/investors
www.CellTherapeutics.com
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