Is 2012 Make or Break for Cell Therapeutics?

With a series of binary events ahead, 2012 is certainly a make-it year for Cell Therapeutics (Nasdaq: CTIC  ) . If all goes well, the $200 million market cap will look like pocket change at the conclusion of the year.

I'm not convinced that this is a break-it year for the biotech if things go poorly. Unfortunately. More on that in a bit; let's stay positive for a second.

The first decision Cell Therapeutics will face could come as early as Jan 19. The European Medicines Agency's Committee for Human Medicinal Products meets that day and could sign off on Cell Therapeutics' non-Hodgkin's lymphoma drug pixantrone, which the biotech plans to call Pixuvri in Europe.

According to Cell Therapeutics, the CHMP has only one major concern remaining that can be resolved through a "literature review of mechanisms of rituximab resistance and analyses that demonstrate the efficacy of Pixuvri in patients with prior rituximab treatment." If that's all the committee is worried about, and there aren't any concerns about higher-level issues regarding the clinical trial supporting the approval, as there was with the FDA, that's a good sign.

European approval is important, but it might not be the limiting step. In Europe, getting a cancer drug approved is still a major hurdle. Some really solid drugs -- Johnson & Johnson's (NYSE: JNJ  ) Velcade and Celgene's (Nasdaq: CELG  ) Revlimid, just to name a couple -- have been given the cold shoulder by European payers. Pixuvri isn't a cure by any measure, and governments might not be willing to foot the bill to help patients who have already failed two other treatments live just a little while longer.

In the U.S., the last-resort nature of pixantrone isn't a major issue. Cell Therapeutics won't sell as much as first- and second-line treatments such as Rituxan from Roche and Biogen Idec (Nasdaq: BIIB  ) and Spectrum Pharmaceuticals' (Nasdaq: SPPI  ) Zevalin, but insurance companies will still cover it and there will be enough patients to make it possible to sell a few hundred million dollars worth of the stuff.

Persuading U.S. regulators to make the drug available for sale might be more difficult. The FDA already turned down pixantrone once. Cell Therapeutics appealed, but that seems like a long shot. Without a peephole into the meetings between the agency and the company, it's impossible to know if the FDA is willing to backtrack or if the company is spinning its wheels. We'll know soon enough; the FDA is scheduled to give its answer sometime around April 24.

Worst-case scenario, Cell Therapeutics fails to get approval in Europe and the U.S., but I doubt even that would kill the biotech. For some reason, investors are in love with this company, which has allowed it to raise more than $400 million during the past six years. The company has a split adjusted share price that's north of $16,000 if you go back about a decade. For that reason, if pixantrone fails, don't be surprised if Cell Therapeutics likely survives, even if shares won't be worth much.

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