Cell Therapeutics, Inc. Announces Single Institutional Investor to Purchase $44.5 Million of Units Consisting of Senior Convertible Notes and Warrants

SEATTLE (Map) - SEATTLE, July 24 /PRNewswire-FirstCall/ -- Cell Therapeutics, Inc. (Nasdaq and MTA: CTIC) today announced that a single institutional investor has agreed to purchase, for $44.5 million, newly issued 18.33% Convertible Senior Notes due 2011, with a conversion price of $0.79 per share, and a warrant to purchase approximately 28.2 million shares of common stock with an exercise price of $0.79 per share. Of such amount, $22.25 million will be funded this week and the remaining $22.25 million must be funded prior to August 25, 2008. Additionally, the agreement provides for the further amendment of the original warrant right which would be exercisable for an additional $44.5 million of units to the investor under the same terms if both parties agree to do so and subject to additional filings with the Nasdaq Stock Market.

This transaction constitutes an exercise of a previously granted warrant right for the investor to purchase up to $67.5 million of such unit securities. The Company and the investor have amended their original April 2008 agreements and subsequent amendment to change from 15.0% to 18.33% the interest rate on the Notes within these units being issued in July and August, and to reduce from $0.95 to $0.79 the per share exercise price of all common stock warrants arising from the April 2008 agreements and subsequent exercises, but the purchase price for the securities and the conversion price of the notes remain unchanged. The Company has also agreed to repurchase from the investor an aggregate amount of $17.5 million of outstanding 13.5% Convertible Senior Notes, of which half are being repurchased in connection with this July transaction and the other half will be repurchased in connection with the subsequent exercise prior to August 25, 2008. Warrants to purchase approximately 11 million shares of common stock which were issued in connection with the $17.5 million of notes are also being surrendered to the Company and will be cancelled.

The new Notes have a $44.5 million initial principal balance and feature a make-whole provision entitling the holder, upon any conversion of the Notes, to receive the interest payable through scheduled maturity, less any interest paid before conversion. The Company expects to receive net proceeds of approximately $21.8 million from the portion of the notes funded this week, prior to depositing amounts in escrow for the make-whole provision and the repurchase of prior notes and warrants as described above, and a similar amount prior to August 25, 2008. The Notes will rank equal in right of payment with all existing and future unsecured senior indebtedness of the Company. Rodman & Renshaw, LLC, a subsidiary of Rodman & Renshaw Capital Group, Inc. (Nasdaq: RODM), acted as the exclusive placement agent for the transaction.

This press-release contains forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect future results. The risks and uncertainties include that the investor might, if it breaches its agreement, not fund the remaining $22.25 million prior to August 25, 2008; the investor may choose not to purchase any of the additional warrant securities for $44.5 million or at all; the Company may not receive the necessary approvals to sell such additional securities on these terms; these transactions will be highly dilutive to our current stockholders; the Company continues to have a substantial amount of debt outstanding and the quarterly interest expense associated with the debt is significant; the Company's operating expenses continue to exceed its net revenues and the Company will continue to need to raise capital to fund its operating expenses; as well as other risks listed or described from time to time in the Company's most recent filings with the SEC on Forms 10-K, 8-K and 10-Q. Except as required by law, the Company does not intend to update any of the statements in this press release upon further developments.

     Media Contact:
     Cell Therapeutics, Inc.
     Dan Eramian
     T: 206.272.4343
     C: 206.854.1200
     Lindsey Jesch
     T : 206.272.4347
     F : 206.272.4434
     E: media@ctiseattle.com
     http://www.CellTherapeutics.com/media.htm
     Investors Contact:
     Cell Therapeutics, Inc.
     Ed Bell
     T: 206.272.4345
     F: 206.272.4434
     E: invest@ctiseattle.com
     http://www.cticseattle.com/investors.htm