13D Filing: Biotechnology Value Fund LP and CTI Biopharma Corp (CTIC)

UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED
IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 3)¹

CTI BioPharma Corp.

(Name
of Issuer)

Common Stock, no par value per share

(Title of Class of Securities)

12648L 60 1

(CUSIP Number)

SPIKE
LOY

BVF
Partners L.P.

1 Sansome Street, 30th Floor

San Francisco, California 94104

(415) 525-8890

ADAM W. FINERMAN, ESQ.

OLSHAN FROME WOLOSKY LLP

1325 Avenue of the Americas

New York, New York 10019

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices
and Communications)

June 9, 2017

(Date of Event Which Requires
Filing of This Statement)

If
the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
box ☒.

Note:  Schedules
filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See
§ 240.13d-7 for other parties to whom copies are to be sent.

1
The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided
in a prior cover page.

The information required
on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities
Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).

* See Item 5 of the Schedule 13D.

* See Item 5 of the Schedule 13D.

* See Item 5 of the Schedule 13D.

* See Item 5 of the Schedule 13D.

* See Item 5 of the Schedule 13D.

* See Item 5 of the Schedule 13D.

* See Item 5 of the Schedule 13D.

The following constitutes
Amendment No. 3 to the Schedule 13D filed by the undersigned (“Amendment No. 3”). This Amendment No. 3 amends the Schedule
13D as specifically set forth herein.

Item 3 is hereby
amended and restated to read as follows:

The Shares purchased
by each of BVF, BVF2, Trading Fund OS, and held in the Partners Management Accounts, were purchased with working capital (which
may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases,
except as otherwise noted on Schedule A.

The
aggregate purchase price of the 3,566,549 Shares beneficially owned by BVF is approximately $25,892,944, including brokerage commissions.
The aggregate purchase price of the 2,295,083 Shares beneficially owned by BVF2 is approximately $15,508,452, including
brokerage commissions. The aggregate purchase price of the 651,074 Shares beneficially owned by Trading Fund OS is approximately
$4,842,274, including brokerage commissions. The aggregate purchase price of the 2,083,651
Shares beneficially owned by the Partners Management Accounts is approximately $21,325,253, including brokerage commissions.

The
aggregate purchase price of the 281 shares of Series N3 Preferred Stock, no par value per share (the “Series N3 Preferred
Stock”) owned directly by BVF is approximately $562,000, including brokerage commissions.
The aggregate purchase price of the 197 shares of Series N3 Preferred Stock owned directly by BVF2 is approximately $394,000,
including brokerage commissions. The aggregate purchase price of the 48 shares of Series N3 Preferred Stock owned directly by Trading
Fund OS is approximately $96,000, including brokerage commissions. The aggregate purchase
price of the 49 shares of Series N3 Preferred Stock held in the Partners Management Accounts is approximately $98,000,
including brokerage commissions.

The 43,139 Shares
beneficially owned by Mr. Perry were granted to Mr. Perry by the Issuer in his capacity as a director of the Issuer.

 Items 5(a)
– (c) are hereby amended and restated to read as follows:

(a)          The
aggregate percentage of Shares reported owned by each person named herein is based on a denominator that is the sum of: (i) 28,389,186
Shares outstanding as of June 13, 2017, which is the total number of Shares outstanding as advised by the Issuer and (ii) 14,616,633
Shares issued upon the conversion of certain Series N3 Preferred Stock.

As of the date hereof, the Reporting
Persons hold 575 Series N3 Preferred Stock, convertible into an aggregate of 383,333 shares of Common Stock. The conversion ratio
is 667 Shares for 1 share of Series N3 Preferred Stock. The Series N3 Preferred Stock may not be converted if, after such conversion,
the Reporting Persons would beneficially own, as determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, more than 19.99% of the Shares outstanding immediately after giving effect to such exercise (the “Beneficial
Ownership Limitation”).

As of the date hereof, (i) BVF beneficially
owned 3,566,549 Shares, excluding approximately 187,333 Shares of Common Stock issuable upon the conversion of certain Series
N3 Preferred Stock, representing percentage ownership of approximately 8.3% of the Shares outstanding, (ii) BVF2 beneficially
owned 2,295,083 Shares, excluding 131,333 Shares of Common Stock issuable upon the conversion of certain Series N3 Preferred Stock,
representing percentage ownership of approximately 5.3% of the Shares outstanding, (iii) Trading Fund OS beneficially owned 651,074
Shares, excluding 32,000 Shares of Common Stock issuable upon the conversion of certain Series N3 Preferred Stock, representing
percentage ownership of approximately 1.5% of the Shares outstanding and (iv) 2,083,651 Shares were held in the Partners Management
Accounts, excluding 32,667 Shares of Common Stock issuable upon the conversion of certain Series N3 Preferred Stock, representing
percentage ownership of approximately 4.9% of the Shares outstanding.

Partners, as the general partner of BVF,
BVF2, the sole member of Partners OS and the investment manager of Trading Fund OS and the Partners Management Accounts, may be deemed
to beneficially own the 8,596,357 Shares beneficially owned in the aggregate by BVF, BVF2, Trading Fund OS, and held in the Partners
Management Accounts, excluding, 383,333 Shares of Common Stock issuable upon the conversion of certain Series N3 Preferred Stock,
representing percentage ownership of approximately 19.99% of the Shares outstanding.

BVF Inc., as the general partner of Partners,
may be deemed to beneficially own the 8,596,357 Shares beneficially owned by Partners, excluding, 383,333 Shares of Common Stock
issuable upon the conversion of certain Series N3 Preferred Stock, representing percentage ownership of approximately 19.99% of
the Shares outstanding.

Mr. Lampert, as a director and officer
of BVF Inc. may be deemed to beneficially own the 8,596,357 Shares beneficially owned by BVF Inc., excluding, 383,333 Shares of
Common Stock issuable upon the conversion of certain Series N3 Preferred Stock, representing percentage ownership of approximately
19.99% of the Shares outstanding.

As of the date hereof, Mr. Perry directly
owns 43,139 Shares, representing percentage ownership of less than 1% of the Shares outstanding.

(b)          Each
of BVF, BVF2 and Trading Fund OS shares with Partners voting and dispositive power over the Shares each such entity beneficially
owns. Trading Fund OS shares with Partners OS, voting and dispositive power over the Shares beneficially owned by Trading Fund
OS. Partners, BVF Inc. and Mr. Lampert share voting and dispositive power over the 8,596,357 Shares they may be deemed to beneficially
own with BVF, BVF2, Trading Fund OS and Partners OS.

(c)          Schedule
A annexed hereto lists all transactions in securities of the Issuer during the past sixty days by the Reporting Persons. All of
such transactions were effected in the open market, except as otherwise noted.

Item 6 is hereby
amended to add the following:

On June 9, 2017, the Issuer entered into
a letter agreement with certain of the Reporting Persons pursuant to which the Issuer has agreed to, upon certain of the Reporting
Persons’ election and subject to any board and committee approvals, exchange shares of Common Stock purchased by certain
of the Reporting Persons directly from the Issuer or underlying convertible preferred stock purchased by certain of the Reporting
Persons directly from the Issuer, including the shares of Common Stock underlying the Series N3 Preferred Stock offered in the
offering, into shares of a convertible non-voting preferred stock with substantially similar terms as the Series N3 Preferred Stock
in this offering, including a conversion “blocker” of the Issuer’s Common Stock. Such right would terminate if
at any time BVF Partners’ beneficial ownership of the Issuer’s Common Stock falls below 5%. The Issuer will take commercially
reasonable efforts to cooperate to effectuate such exchange, provided that it does not adversely affect the Issuer and complies
with applicable federal and state securities laws.

Also on June 9, 2017, in connection
with the letter agreement, the Reporting Persons converted 6,175 Shares of Series N3 Preferred Stock into 4,116,666 Shares of
Common Stock in accordance with the Beneficial Ownership Limitation.

SIGNATURES

After reasonable inquiry
and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement
is true, complete and correct.

Dated: June 13, 2017

SCHEDULE A

Transactions in the Securities
of the Issuer During the Past Sixty Days

BIOTECHNOLOGY VALUE FUND, L.P.

BIOTECHNOLOGY VALUE FUND II, L.P.

BIOTECHNOLOGY VALUE TRADING FUND
OS LP

BVF PARTNERS L.P. (THROUGH THE
PARTNERS MANAGEMENT ACCOUNTS)

* In connection with the letter agreement, as further described
in Item 6, on June 9, 2017, 6,175 Shares of Series N3 Preferred Stock were converted into 4,116,666 Shares of Common Stock. As
a result, the Reporting Persons now only hold an aggregate of 575 Shares of Series N3 Preferred Stock.