WEALTH on WIRE

New FDA date for reviewing pixantrone of Cell Therapeutics is March 22.  The earlier scheduled meeting was cancelled due to severe winter weather in February.

In advance of the postponed advisory panel meeting, the FDA issued a critical review of pixantrone, highlighting numerous concerns about pixantrone’s safety and efficacy.

Shares of Cell Therapeutics were down 10% to 60 cents Monday after auditors attached a “going concern” letter to the company’s 10-K annual report filed with the Securities and Exchange Commission Friday.  For the investor, if the drug works and gets approval, auditors concern doesn’t matter.  But what if the drug fails to get an approval?

Other drug of Opaxio as a treatment for lung cancer is irrelevant as better alternatives are already in the market.  So  Pixantrone approval is very critical to the company. 

Cell Therapeutics’ total share count reached more than 615 million at the end of January, compared to 296 million shares at the end of January 2009, according to SEC filings.  Whereas, in 2009, the top five Cell Therapeutics executives earned $32 million in total compensation, most of which came in the form of company stock awards.  A classic case of Executives feasting on investors money.

Biotech is always an exciting sector for market players to invest in. In Biotech stock, risk is high but the returns are also sweet. Generally Biotech  firms are struggling to stay in business as research and developments costs eat through their cash positions.

Unfortunately, the only way that biotech companies have a chance at coming to market with a successful drug is by spending money on R&D.  Every Biotech or pharmacy company has to pass many hurdles before they come up with a successful product in the market. If you take the history of Biotech companies, most of them had been at the brink of Bankruptcy at one point of their life.  This is primarily due to the lack of income during the research and development stage of the product. It takes long to successfully develop, get approved by FDA and successfully market the product.  Check to see whether they have enough money to survive through this phase.

 A good way to gauge how well a biotech company is doing is to simply follow the FDA trials for its key drugs. If you follow the trials, you can see if any potential drug is advancing or showing positive results. Of course, these trials make for great catalysts for the stocks, especially when there is bullish news.

Keep watch on companies coming up on trials for phase II and phase III studies of FDA drug approval. Combine that key information with an unemotional view of a potential company’s stock chart, and you might be able to spot some big opportunities in the biotech sector.

There are a number of companies poised to report key clinical results, it might be well worth the time to evaluate their charts. So watch out for FDA announcements.