Exhibit 10.1

Cell Therapeutics, Inc.
 
CTI          James A. Bianco
501 Elliott Ave. W.        President and Chief Executive Officer
#400
Seattle, WA 98119
T206-282-7100
F206-284-6114
D206-284-5774

January 17, 2007

James Kuo, M.D.MBA, Chairman
Steve Kanzer, J.D., Vice-Chairman
Christopher Schaber, Ph.D., President and Chief Executive Officer
Evan Myrianthopoulos, Chief Financial Officer
DOR BioPharma, Inc.
1101 Brickell Avenue
Suite 701 South
Miami, Florida 33131

Gentlemen:

We would like to express our sincere interest in potentially merging DOR
BioPharma (“DOR”) with Cell Therapeutics, Inc. (“CTI”). We propose a
stock-for-stock merger at a significant premium to DOR’s current stock price. If
the proposal outlined below is acceptable in principle, we would like to move
forward immediately with mutual due diligence under an exclusivity agreement. If
we proceed, I am confident that we will each be able to conclude our diligence
in a matter of weeks.

As you know we have been following the progress of orBec® for quite some time
and re-initiated discussions with DOR regarding our interest in either a license
agreement or product acquisition. We were, of course, very disappointed with
your decision to enter into a exclusivity period with Sigma Tau Pharmaceuticals
and cease discussions with CTI, including discussions regarding our interest in
a PIPE investment. We prefer to work with you expeditiously on a confidential
basis, but reserve the right in the future to bring our proposal directly to
your shareholders. We believe, despite your exclusivity agreement with Sigma Tau
Pharmaceuticals, that your Board has a fiduciary duty to pursue a proposal that
is likely superior to terms you may currently be contemplating in a licensing
deal, and that consensual discussions about the transaction we are proposing are
not precluded by that agreement.

We believe that our two companies fit together strategically extremely well:

§  
CTI’s management and founders are experts and pioneers in the field of bone
marrow transplantation, with more than 450 peer reviewed publications and books
related to marrow and stem cell transplantation.

§  
CTI’s team has a proven track record of success in launching niche products in
the U.S. and Europe, having successfully taken Trisenox® to sales of $26,000,000
in 2005.

§  
CTI’s partnership with Novartis facilitates our commitment to investing in
orBec® commercialization through Novartis’ commitment to fund a CTI sales force
of 35 FTE’s. CTI would prioritize the label expansion and commercial development
of orBec® as a synergistic product in our hematology portfolio.

§  
Combining our late stage pipelines offers shareholders significant risk
diversification and upside.

 
Structure:

§  
The transaction would be structured as a stock-for-stock exchange.

§  
In addition, shareholders of DOR would be offered a contingent value right
(“CVR”) as described below.

Price:

§  
CTI would offer DOR stakeholders 29,000,000 shares of CTIC representing 19.9% of
CTI’s outstanding shares. This price represents a substantial premium to your
current public market capitalization.

§  
Warrant and option holders will receive shares of CTI common stock in an amount
determined using the Black Scholes pricing model. CTI reserves the right to
offer cash as consideration for the warrants instead of CTI common stock.

§  
CTI is trading at the low end of its long term trading range. With two phase 3
products approaching registration and a $485 million collaboration with Novartis
in which CTI retains over 50% of product related NPV, we believe our offer
provides the potential for additional significant upside appreciation to DOR
shareholders.

§  
Furthermore, DOR’s shareholders will benefit from substantially increased
liquidity once they receive CTI stock.

Contingent Value Right:

§  
CTI is also offering potential to earn an additional $15 million payment (in
stock or cash at DOR’s option) upon receipt of a NDA approval for orBec® by the
U.S. Food and Drug Administration.

Management:

§  
CTI would provide a 2 year employment contract to both the CEO and CFO of DOR,
in addition to granting to each, subject to 2 year cliff vesting, 150,000
restricted shares of CTI as a retention inducement to provide services for
successful NDA and MAA defence, and for the transition of the orBec® assets to
CTI.

§  
In addition CTI desires to employ Dr. Schaber as its Chief Operating Officer,
whose salary, benefit and relocation package would be commensurate with current
executive level employees at CTI.

Board of Directors:

§  
CTI would invite DOR to nominate one member to the Board of Directors of CTI.

Selected Closing Conditions:

§  
Affirmative vote of the shareholders of DOR. CTI does not envision requiring
shareholder approval for this transaction.

§  
Standard representations or warranties of DOR accurate as of signing and
closing,

Board Recommendation:

§  
The Merger Agreement would include a standard commitment by DOR’ s board to
recommend the transaction its stockholders, subject to standard fiduciary
exceptions in the case of an unsolicited superior proposal.

Biodefense Assets:

§  
CTI would be amenable to spinning out and capitalizing, as a separate entity,
the bio-defence assets of DOR, which are non-core to CTI, in a structure to be
addressed at a later date.

Key Assumptions:

§  
DOR has 72 million shares outstanding, plus 35 million warrants with average
exercise price of $0.68/share and 10 million options with an average exercise
price of $0.5 1/share.

§  
DOR has a no-shop agreement with Sigma Tau Pharmaceuticals and Sigma Tau
Pharmaceuticals owns 5.5% (4 million shares) of DOR.

§  
DOR retains U.S. and European rights to orBec®. However- If DOR is successful in
licensing rights for orBec® to Sigma Tau Pharmaceuticals; we assume such terms
would include a royalty on European sales of 15% to 20%, cumulative registration
directed milestones of at least $15 million and sales threshold milestones
totaling at least $10 million, in addition to an upfront license fee of at least
$5 million. This assumption is based on the fact that CTI believes that the
European market represents approximately 35% to 40% of the total U.S./European
commercial opportunity.

§  
Satisfactory due diligence regarding clinical, regulatory, manufacturing and
proprietary (IP and/or orphan protection) positioning for orBec®.

§  
DOR’s financials and long term obligations are as represented in its SEC
filings.

We believe that a merger of our two companies would allow DOR to diversify its
business, allowing shareholders to be part of a larger, stronger organization,
while retaining significant holdings in the combined company. We are confident
that our stock is significantly undervalued, creating a significant upside for
DOR shareholders.

I look forward to talking with you about our interest in DOR. If you have any
questions, please feel free to contact me at any time day or night, as this
transaction is my highest priority. 

Sincere regards,

/s/ James A. Bianco
James A. Bianco, M.D.
President and CEO
Cell Therapeutics, Inc.