CytRx reports financial results for the three months and nine months ended September 30, 2009

Nov 9 2009

CytRx Corporation (NASDAQ: CYTR), a biopharmaceutical company, today reported financial results for the three months and nine months ended September 30, 2009.

“We are taking actions that support our focus on developing our considerable oncology assets, which we believe offer the greatest near-term potential to produce revenue and drive stockholder value," said Steven A. Kriegsman, CytRx President and CEO. “Recently Dr. Daniel Levitt joined CytRx as Chief Medical Officer with leadership responsibility over all our drug development programs. Dan has an extensive success record in oncology drug development and commercialization, and in his brief tenure at CytRx has become an integral part of our operations and is invigorating all aspects of our organization.

“We have taken an important step aimed at broadening the market opportunity for tamibarotene as a treatment for acute promyelocytic leukemia, or APL,” he added. “In September, a dose escalating trial with tamibarotene in combination with arsenic trioxide injection was initiated to determine an appropriate dose for the treatment of refractory or relapsed APL, as well as to prepare for a planned Phase 2 clinical trial with a tamibarotene/arsenic trioxide combination as a first-line treatment for APL. That trial is being conducted in parallel with our STAR-1 registration clinical trial, which is evaluating tamibarotene’s efficacy and safety as a third-line APL treatment.

“Several pharmaceutical companies are evaluating partnership opportunities to advance development of our molecular chaperone assets. This is not surprising, given the tremendous promise of this technology. Recent study results demonstrated that arimoclomol exhibited both statistically significant neuroprotective and neuroregenerative effects in brain cells of animals induced with stroke, which further supports our data indicating its potential in treating a broad range of neurodegenerative diseases. We are currently waiting for the U.S. Food and Drug Administration to lift the clinical hold this quarter on testing of arimoclomol as a treatment for amyotrophic lateral sclerosis, also known as ALS or Lou Gehrig’s disease, and look forward to the opportunity to move this program back into the clinic,” he continued.

Review of Financial Results

CytRx reported net income applicable to common stockholders for the three months ended September 30, 2009 of $3.9 million, or $0.04 per diluted share based on 105.8 million diluted weighted average shares outstanding, compared with a net loss applicable to common stockholders for the three months ended September 30, 2008 of $12.3 million, or $0.14 per share based on 91.0 million weighted average shares outstanding. Net income for the third quarter of 2009 reflected the recognition of $6.7 million in service revenue from the ALS Charitable Remainder Trust or ALSCRT. The increase in weighted average shares outstanding for the third quarter of 2009 resulted primarily from the completion of a registered direct offering of $18.3 million, net of fees and expenses, in July 2009. The net loss for the third quarter of 2008 included charges of approximately $8.0 million related to in-process research and development resulting from the Company's acquisition of Innovive Pharmaceuticals, Inc. in September 2008.

Revenue for the third quarter of 2009 was $7.0 million, compared with revenue of $0.9 million in the third quarter of 2008, and consisted primarily of service revenue recognized from CytRx's 2006 $24.3 million royalty transaction with the ALSCRT. Pursuant to an amendment signed between CytRx and the beneficiary of the ALSCRT in August 2009, the Company recognized the remaining $7.0 million from this transaction as service revenue in the third quarter of 2009.

Research and development (R&D) expenses were $1.2 million for the three months ended September 30, 2009, compared with $2.0 million for the comparable period in 2008. R&D expenses for the third quarter of 2009 included development costs of $0.2 million for the tamibarotene program and $0.1 million for the INNO-206 program, and $0.9 million for the cost of operations at CytRx’s former research laboratory.

General and administrative (G&A) expenses were $2.6 million for the third quarter of 2009, compared with $1.6 million in the third quarter of 2008. G&A expenses increased in the three months ended September 30, 2009, compared with the comparable 2008 period, due primarily to increased non-cash G&A expenses related to a reversal of a reserve of $0.7 million upon the completion of the acquisition of Innovive in the third quarter of 2008, and higher employee stock option expense in the third quarter of 2009. G&A expenses excluding stock option expense, non-cash expenses and depreciation expense were $1.6 million in three months ended September 30, 2009, compared with $1.9 million in the three months ended September 30, 2008, with the decrease of $0.3 million in the third quarter of 2009 primarily due to lower personnel costs and a reduction in professional and consulting fees. The Company also recognized an impairment loss of $1.2 million resulting from the write-down of laboratory equipment available for sale in the third quarter of 2009.

Cash and cash equivalents and short term investments totaled $35.5 million as of September 30, 2009, including proceeds of $18.3 million, net of fees and expenses, from a registered direct offering completed in July 2009, and $1.2 million, net of fees, from the sale of 500,000 shares of common stock of RXi Pharmaceuticals Inc. (Nasdaq: RXII) in September 2009. CytRx's ownership stake in RXi as of September 30, 2009 had a market value of approximately $14.1 million.