The United States Food and Drug Administration (FDA) put the smack down on CTI BioPharma Corp (NASDAQ: CTIC) stock today after the company announced the result of a TYPE B meeting with the regulatory body. While the meeting did lead to a clearly outlined path toward a New Drug Application, it wasn’t what investors wanted to see.

What Investors Wanted To See From The FDA Meeting

The meeting with the FDA had to do with pacritinib, a treatment that CTIC has been working hard to bring to commercialization stages. In fact, the company has already two phase 3 clinical trials assessing the candidate as a treatment for myelofibrosis. The company is also in the midst of a Phase 2 clinical study of pacritinib as we speak.

Ultimately, investors were hoping that the FDA would tell CTI BioPharma news that would put the company’s treatment up for regulatory approval in 2019. However, that wasn’t the case. In fact, the news today set the stage for a potential application for approval months or even years behind schedule.

What Investors Actually Got From The Meeting

Ultimately, investors got a delay. In a release issued early this morning, CTIC said that the FDA asked the company to conduct yet another Phase 3 clinical trial surrounding pacritinib. However, to add insult to injury, the Phase 3 clinical trial won’t be able to even begin until 2019. That’s because the FDA requested that CTI BioPharma use the data from the Phase 2 clinical study to define dosing for the Phase 3 study.

While the Phase 2 clinical study is ongoing, enrollment isn’t expected to be completed until the end of this year. When it comes to results, the company said that it would be offering them within the second quarter of 2019. As a result, we likely won’t see enrollment into the Phase 3 clinical trial until at lest the third quarter of 2019, and results until mid-to-late 2020. This pushes the time range for an NDA surrounding pacritinib back to late 2020 at the earliest.

What CTIC Is Doing Ahead

In the release, CTI BioPharma said that it plans to hold another meeting with the FDA after the second interim analysis of the Phase 2 clinical trial. Ultimately, the company hopes to discuss the design of the Phase 3 study at this point.

In the mean time, the company will likely work to improve sales of its only approved product, Pixuvri. Pixuvri was approved by the FDA as a treatment for non-Hodgkins lymphoma. While the treatment showed promise, it hasn’t been picked up by the commercial market very well as of yet, so, CTIC is going to need to put more effort into making the pixuvry brand successful.

Risks To Consider

Investors know that any time an investment is made, risk will be tied to that investment. When it comes to CTIC, the most important risks to consider include:

  • Inability To Commercialize – If Pixuvri is any indication, CTIC may be able to bring a product to market, but once it hits the market, it flops in commercialization. If the company can’t seem to get it’s only approved product to start seeing some sales, it could be a sign of what to expect from future products.
  • Pacritinib Is Marred With Delays – As mentioned above, pacritinib is no new topic to CTI BioPharma investors. At the end of the day, the company has spent a massive amount of money on multiple phase 3 clinical trials, yet an NDA still seems to be a long way off.
  • The Phase 3 Request Is A Bad Sign – In the Type B meeting with the FDA, CTIC said that the regulatory agency requested another Phase 3 clinical trial. This isn’t a good sign when it comes to the ability to bring the treatment to approval. At the end of the day, the company already has data from two Phase 3 clinical trials and will soon have data from an ongoing Phase 2 clinical trial. With so much data available, what’s so bad about the data that the FDA requires further testing? While there’s no public answer to this question, there has to be an answer out there!

Should You Consider CTIC?

When it comes to CTIC, my opinion is relatively mixed. On one hand, if pacritinib does make it to approval, the treatment could be a game changer for the company. However, if this is going to hapepn, it’s a long way off. The only real near-term revenue generating proposition is pixuvri. However, sales of the company’s only approved treatment are lack luster to say the least. Therefore, I see no real potential for short term value growth. While in the long term, there may be some opportunity here, I don’t think that now is the time to pull the trigger.


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