Cell Therapeutics Sells TRISENOX(R) to Cephalon. for $70 Million in Cash

15-Jun-2005

CTI Technologies, Inc. (CTIT), a wholly-owned subsidiary of Cell Therapeutics, Inc. (CTI) announced that it has agreed to sell the TRISENOX brand to Cephalon, Inc. Under the terms of the agreement, Cephalon will pay to CTI and its affiliates an aggregate of approximately $70 million for TRISENOX and certain proteasome assets, subject to a working capital adjustment. In addition, CTI may receive in the future up to an additional $100 million in cash if certain sales and regulatory milestones are achieved. The agreement is subject to customary closing conditions, including Hart- Scott-Rodino clearance. Under the terms of its existing financing agreement for TRISENOX, CTI is required to use a portion of the proceeds from the sale to repay PharmaBio Development. CTI expects the gross up front proceeds from the transaction, prior to closing costs, will be approximately $30 million after repayment of the PharmaBio agreement. CTI expects the transaction to close during the third quarter.

Under the terms of the agreement, Cephalon will assume control of the worldwide marketing, sales, and development of TRISENOX. Cephalon will offer employment to CTI's U.S.-based commercial employees. The agreement also provides for CTI to transfer to Cephalon sole rights to its current joint proteasome inhibitor research collaboration, which is in preclinical development. Cephalon will assume all costs for advancing the proteasome inhibitor candidate and will pay CTI royalties on future worldwide product sales. CTI and Cephalon have also negotiated a transitional services agreement to support the successful transfer of TRISENOX and the proteasome inhibitor program to Cephalon, during which time Cephalon will reimburse CTI for services related to the transition.

TRISENOX (arsenic trioxide), which generated worldwide sales revenues of $26.6 million in 2004, was approved in the United States in 2000 and in Europe in 2002 for the treatment of patients with relapsed or refractory acute promyelocytic leukemia (APL), a life-threatening hematologic cancer. In clinical trials, TRISENOX has been shown to provide high complete response rates (70-75%) and a high molecular remission rate (82%) in patients with relapsed disease, while offering a unique non-chemotherapy side-effect profile. CTI acquired worldwide rights to TRISENOX when it acquired PolaRx in 2000.

As a result of the agreement with Cephalon and an internal reorganization, CTI's headcount will be reduced by approximately 130 in the United States, which is expected to reduce its operating expenses, as the Company focuses its resources and efforts on the development of XYOTAX and pixantrone. CTI expects to pay $1.4 million in the third quarter of 2005 as a result of the workforce reductions. Steve Aselage, Executive Vice President of Global Commercial Operations, will be assisting with the TRISENOX transition before leaving CTI at the end of June.

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