Cell Therapeutics shareholders mount a revolt. Italians hold the majority stake -- and they're not happy
By JOSEPH TARTAKOFF
P-I REPORTER
Seattle's Cell Therapeutics can't catch a break from its Italian stockholders, who own the majority of its shares.
Two years ago, the cancer drug company had to cancel a shareholder meeting after it could not get enough of its Italian shareholders to submit votes. The company tried to boost participation later that year by moving the meeting to Milan but again failed to reach a quorum.
Now -- with another shareholder meeting scheduled for Thursday in Seattle -- a loosely organized group of the company's Italian shareholders is refusing to vote out of protest.
On an Italian Web site, meteofinanza.com, the shareholders are mounting a quiet, albeit sharply worded, revolt against Cell Therapeutics' management.
Upset partly by the tumbling value of their shares (down 85 percent over the last year), the shareholders trade laments about Cell Therapeutics' many stock offerings and the company's latest request to split its stock (which is up for a vote next week). Some also say they will not contribute to the quorum.
In an e-mail, a spokesman for Cell Therapeutics said, "CTI always encourages all shareholders to vote their positions, it's in their interests."
The sway of the Italian shareholders is not entirely clear.
One Italian shareholder said that there are 377 registered members on meteofinanza.com. Of those, he said, 52 collectively own 1.7 million shares. Cell Therapeutics has roughly 121 million shares outstanding.
In 2003, when Cell Therapeutics bought Milan-based Novuspharma to acquire its chemotherapy drug, Novuspharma shareholders ended up owning about 31 percent of Cell Therapeutics' stock.
That percentage has since grown -- and the company now says Italians own the majority of its shares.
In order to withhold their shares from the meeting, though, the stockholders have to contact a U.S. broker dealer who, in the aftermath of the two canceled meetings, now votes the Italian-held shares unless shareholders say otherwise.
Using the U.S. broker, Cell Therapeutics has managed to have a quorum at all of its shareholder meetings since the two canceled ones in 2006.
But the company has warned that the strategy might no longer work.
In a May 8 proxy filing, the company says that "in the past 12 months the percentage of our shares that are held by our Italian shareholders has increased, as well as the percentage of ... our shares held through intermediaries ... who do not participate in the custody transfer arrangement."
"Therefore, we have found it increasingly challenging to obtain quorum even with the custody transfer arrangements in place."
Cell Therapeutics is asking its shareholders to vote on a proposal to reduce the quorum necessary to hold shareholder meetings from a majority to one-third.
For that proposal to pass next week, enough of the Italian shareholders would have to vote.
P-I reporter Joseph Tartakoff can be reached at 206-448-8293 or joetartakoff@seattlepi.com. For more information on life sciences, read blog.seattlepi.com/lifesciences.
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