Together we are redefining the landscape of cancer therapies. cti annual report 2004 Cell Therapeutics, Inc. 501 Elliott Avenue West Seattle, Washington 98119 206.282.7100 www.cticseattle.com directors* senior management team* James A. Bianco, M.D. James A. Bianco, M.D. President, Chief Executive OKicer, and Director President, Chief Executive Ogcer, and Director Cell Therapeutics, Inc. Steve Aselage Max E. Link, Ph.D.(1, 2) Executive Vice President, Chairman of the Board of Directors Global Commercial Operations Former Chairman and CEO, Centerpulse, Ltd. Louis A. Bianco John M. Fluke Jr.(2, 3) Executive Vice President, Director Finance and Administration Chairman, Fluke Capital Management James Canfield, S.P.H.R.** Vartan Gregorian, Ph.D.(1) Executive Vice President, Director Chief Administrative Ogcer President, Carnegie Corporation Richard E. Leigh, Jr. Mary O. Mundinger, D.P.H.(1, 3) Executive Vice President, Director General Counsel and Corporate Secretary Dean of School of Nursing, Columbia University Jack W. Singer, M.D. Phillip M. Nudelman, Ph.D.(2, 3) Executive Vice President, Director Chief Medical Ogcer, and Director President and CEO, Hope Heart Institute Silvano Spinelli Erich Platzer, M.D. Executive Vice President, Director Development and Managing Director, Former Chairman of the Board of Directors Cell Therapeutics (Europe) S.r.l., and Director Novuspharma Except for the historical information contained herein, the matters Jack W. Singer, M.D. set forth in this Annual Report include information concerning Director our drug development pipeline, including anticipated regulatory timelines and the status of clinical trials, which are forward-looking Executive Vice President, Chief Medical Ogcer statements within the meaning of the “safe harbor” provisions of Cell Therapeutics, Inc. the Private Securities Litigation Reform Act of 1995. These forward- looking statements are subject to risks and uncertainties that may Silvano Spinelli cause actual results to diKer materially, including the likelihood of continued egcacy in treatment of cancers with our products, the Director commercialization of our products, and our ability to successfully Executive Vice President, develop and support new indications; the impact of technological advances and competition; the timing and ability to enroll and com- Development and Managing Director plete clinical trials; the role that other factors and other competitive Cell Therapeutics (Europe) S.r.l. products may play in accelerating the discovery and development of new therapeutic products; and other risks detailed elsewhere in this report and from time to time in CTI’s SEC reports, including its Annual Report on Form 10-K for the year ended December 31, 2004. These forward-looking statements speak only as of the date thereof. CTI disclaims any intent or obligation to update these forward-looking statements. CTI, TRISENOX, and XYOTAX (formerly referred to as PG-TXL) are our proprietary marks. All other product names, trademarks, and trade names referred to in this Annual Report are the property of (1) Member of the Compensation Committee. their respective owners. (2) Member of the Audit Committee. (3) Member of the Nominating and Governance Committee. *As of March 15, 2005 ** Resigned as of April 1, 2005 We believe the patient is our first priority. cti annual report 2004 01 Loretta Carter is a XYOTAX™ patient on the single-agent phase III trial, STELLAR 4. She is fighting her cancer so she has more time to spend with her family. After my initial surgery for lung cancer, I was in remission for seven years. When I relapsed, the cancer spread to my bones. My doctor told me that PS2 patients like me live for an average of only about four months. He also told me that the available treatments might help me feel more comfortable but probably wouldn’t do anything to stop the cancer. I was very scared. I beat cancer once, but I was worried that I wouldn’t beat it a second time. My children told me that cancer isn’t the death sentence it used to be, and with their support, I decided to participate in a clinical trial of XYOTAX. At first, the treatment made me nauseated, but I was able to manage this with anti- nausea medication. I also experienced some tingling in my toes, but I didn’t lose my hair or develop anemia. I’ve already survived twice as long as my doctor thought I would. I love feeling well enough to get out of the house. Mostly I’m thankful to have more time to spend with my four children and my grandchildren. I feel fortunate that I had the opportunity to do something positive for myself. Sitting here today with my kids, I’m glad I tried it. right: Loretta Carter outside her Philadelphia home with her daughters Aletha Grimes and Nikita Carter and granddaughter Nik’ell Byrd. cti annual report 2004 02/03 We believe not only in extending survival, but also improving quality of life. cti annual report 2004 04/05 Gracie Pena is a full-time mother and non-Hodgkin’s lymphoma (NHL) survivor. She’s also a pixantrone clinical trial participant. I never had any cancer symptoms, but a friend noticed some swelling in my neck and shoulder and insisted that I get it checked out. That was when the nightmare started. I was working full time and raising my daughters, one at home and one who had just left for college. My life was just as normal as everyone else’s, working full time as an examiner for a title agency and taking care of my family. With my first course of chemotherapy, I experienced tingling in my toes and fingers, as well as nausea and fatigue. I went into remission, but the cancer came back six months later. It was a very stressful time, and I was feeling overwhelmed. My girls thought they might lose their mom and that was hard for me. When the cancer came back, I enrolled in a pixantrone clinical trial. I had fewer side effects with this regimen, and I actually felt good during treatment. By the end of the fifth cycle, I was in complete remission and was able to undergo a stem cell transplant. I’ve been in remission for two and a half years. Today I enjoy spending time with my family, visiting my daughters, and working out. I have new priorities as a cancer survivor, and I’m glad I’ve been given a second chance on life. right: Gracie Pena pictured in her garden in Corpus Christi, Texas. cti annual report 2004 06/07 We believe the care of cancer patients can be significantly improved. According to the World Cancer Research Fund (WCRF) and its most recent cancer statistics from Globocan, there were approximately 11 million newly reported cases of cancer worldwide in 2002, with a projected prevalence in 2007 of more than 24 million. This year, for the first time, cancer surpassed heart disease as the leading killer of Americans under the age of 85. An estimated 1.4 million patients worldwide were newly diagnosed with lung cancer in 2002, according to Globocan. We believe XYOTAX has the potential to provide a more effective, more tolerable treatment option for patients with this disease, with the aim of delivering more of the active ingredient directly to the tumor. In 2002, an estimated 205,000 patients were newly diagnosed with ovarian cancer worldwide, according to Globocan’s statistics. XYOTAX may provide ovarian cancer patients with a treatment option that is more tolerable than current chemotherapy regimens, minimizing common side effects of standard treatment such as hair loss. Non-Hodgkin’s lymphoma was diagnosed in 300,000 people worldwide in 2002, according to Globocan. Anthracyclines cause cardiac toxicity that limit their repeated use in the NHL patients who relapse following treatment. Pixantrone may provide a new treatment to these patients and to patients with preexisting cardiac risk factors. cti annual report 2004 08/09 We believe doctors and patients need new and more tolerable treatment options. cti annual report 2004 10/11 “We’re still not curing enough cancer patients. I’m always looking for new therapeutic opportunities that will give my patients the power to manage their disease for the long term while maintaining a good quality of life during treatment. XYOTAX is a promising investigational cancer therapy that may be more effective and more tolerable than paclitaxel, giving patients an important new weapon in their fight against cancer.” Alan B. Sandler, M.D. Associate Professor of Medicine Director, Thoracic Oncology, Vanderbilt-Ingram Cancer Center cti annual report 2004 12/13 XYOTAX has a unique profile that may provide superior tolerability, better efficacy, and an improved side effect profile when compared to other taxanes, one of the most widely prescribed classes of chemotherapy. Overview XYOTAX (paclitaxel poliglumex) is a novel compound made by linking the active ingredient, paclitaxel, a taxane widely used in treating a variety of cancers, to a biodegradable polymer. According to IMS Health, 2003 U.S. taxane sales were nearly $1 billion and worldwide sales were approximately $2.5 billion, despite the difficulties associated with the administration and serious dose-limiting toxicities of taxane-based chemotherapies. Taxanes are a standard of care in lung and ovarian cancers, as well as breast and prostate cancers. A new approach to taxane chemotherapy Unlike paclitaxel, XYOTAX is readily dissolved in a solution of water and sugar and typically infused in just ten minutes, without the need for a surgically placed catheter. The biodegradable polymer eliminates the need for pretreatment with steroids and antihistamines in all but rare instances. Combined, these properties shorten and simplify the administration for patients treated with XYOTAX compared with standard taxane therapy. A novel compound, XYOTAX is better tolerated, which may allow more cumulative doses than can be administered with standard paclitaxel.