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Biotech / Medical : Biotech Valuation

CRSP 55.26

+1.2%

3:59 PM EST

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To: Biomaven who wrote (16022)	3/7/2005 10:55:47 AM
From: Sam Citron	Read Replies (1) of 52153

I would put Hambrecht's current take in perspective of Kantor's very bullish perspective all along on CTIC. E.g.: January 21, 2005 BIOTECHNOLOGY NASDAQ: CTIC RATING: BUY PRICE: $8.11 CTIC: STELLAR 3 NEARLY COMPLETE; EXPECT POSITIVE DATA IN MARCH/APRIL-REITERATE BUY RATING Investment Conclusion: We are reiterating our Buy rating on Cell Therapeutics based on a very favorable risk/reward profile and our view that the stock could double or more in the next two to three months. We expect data from the Phase III STELLAR 3 trial of Xyotax in 1(st) line lung cancer patients in late-March or early-April. Our expectation is for a statistically significant survival advantage over Taxol. However, we believe more modest results could also offer a viable regulatory path. Our bullish outlook is enhanced by a relatively large short position and a likely well entrenched negative bias against the company among many investors. Highlights * Big upside. We believe positive results from STELLAR 3 could bring CTIC shares to our target price of $16, with upside into the $20’s. Supporting this large move are: 1) the sizeable market opportunity for a 1st line lung cancer drug; 2) the potential for a highly lucrative partnership deal; and 3) increased confidence in the other two Phase III trials [STELLAR 4 and STELLAR 2]. Factors that could further multiply the impact of positive data include: 1) the large short position in the stock [close to 20%]; 2) significantly reduced financing risk; and 3) increased management credibility. * Trial completion imminent. Management previously forecast a January 2005 completion of STELLAR 3-its Phase III trial of Xyotax in 1st line lung cancer patients. We expect the company to announce its completion (311 deaths) on January 27th at the Piper Jaffray conference. * Well defined timeline. Following completion of the trial, the CRO will take 8-10 weeks to audit and clean the database prior to locking it. The company will therefore unblind the data in late-March or early-April. * Alternative winning scenario. Importantly, we do not view the results as completely binary. The obvious homerun is for Cell Therapeutics to show a statistically significant survival advantage of Xyotax vs. Taxol. However, we believe that if survival trends in the right direction, that Xyotax will be able to win approval based on non-inferiority and better tolerability. The low regulatory hurdle in lung cancer is exemplified by Eli Lilly’s Alimta and AstraZeneca’s Iressa, both of which won approval without positive survival data. * Reiterate Buy rating. Our price target is $16, or 25x our 2008E EPS discounted at 35%. Regarding the highlighted statement about approvability "if survival trends in the right direction", does anybody have anything more concrete on this now? Sam

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