e425
Filed by CytRx Corporation
pursuant to Rule 425 of the Securities Act of 1933, as amended
Subject Company: CytRx Corporation
Subject Companys Commission File No.: 000-15327
On
August 12, 2008, CytRx Corporation issued the following press release:
CytRx Corporation Announces Second Quarter Results
Pending Acquisition of Innovive Pharmaceuticals to Add Attractive Oncology Portfolio to Business
LOS ANGELESAugust 12, 2008CytRx Corporation (Nasdaq:CYTR), a biopharmaceutical company engaged
in the development and commercialization of therapeutics based on molecular chaperone
amplification, today reported financial results for the three months ended June 30, 2008 and other
second quarter developments.
During the second quarter, we announced the signing of a definitive agreement to purchase Innovive
Pharmaceuticals, Inc., said Steven A. Kriegsman, CytRx President and CEO. The acquisition is a
compelling strategic fit for CytRx. The combined business will provide us with the opportunity for
near-term revenue while maintaining our longer-term emphasis on our molecular chaperone technology.
We look forward to completing the acquisition in the third quarter of 2008.
Steven Kriegsman continued, The drug candidate tamibarotene is a key asset in the Innovive
portfiolio. It is currently in a pivotal Phase 2 clinical trial to evaluate the safety and
efficiacy for the treatment of relapsed or refractory APL, a type of leukemia. Based on successful
development of tamibarotene, a New Drug Application (NDA) could be filed as early as 2010. Also,
tamibarotene may become a treatment for other hematologic cancers and solid tumors.
In 2008, we have continued to advance our molecular chaperone amplification compounds, including
iroxanadine for diabetic foot ulcers, said Steven Kriegsman. In June, we reported that diabetic
mice treated with iroxanadine healed nearly two times faster than untreated diabetic mice. These
data suggest that iroxanadine may treat the underlying condition associated with diabetic foot
ulcers by promoting wound healing through a molecular chaperone pathway. Our goal is to advance
iroxanadine into a Phase 2 clinical trial in the first quarter of 2009.
Earlier in 2008, we successfully completed the partial spinoff of RXi Pharmaceuticals which began
trading on Nasdaq as RXII, stated Steven Kriegsman. With the spinoff completed, we are focused on
enhancing shareholder value through the planned integration of the Innovive oncology products into
our pipeline and through the discovery and development of novel compounds produced at our San Diego
laboratory using our molecular chaperone amplification platform.
REVIEW OF FINANCIAL RESULTS
CytRx reported a net loss for the three months ended June 30, 2008, of $5.8 million, or $0.06 per
share, based on 90.8 million weighted average shares outstanding, compared with a net loss for the
three months ended June 30, 2007, of $6.3 million, or $0.07 per share, based on 85.4 million shares
outstanding. The increase in weighted average shares outstanding resulted primarily from the
issuance of shares of common stock upon the exercise of stock options and warrants.
Revenue for the second quarter of 2008 was $1.7 million, compared with the second quarter of 2007
revenue of $2.4 million, and consisted primarily of service revenue recognized from CytRxs 2006
royalty transaction with the ALS Charitable Remainder Trust, or ALSCRT. CytRx will continue to
recognize the balance of the deferred revenue recorded from the royalty transaction with the ALSCRT
on a dollar-for-dollar basis for ALS-related research expenses incurred.
Research and development (R&D) expenses were $2.5 million for the three months ended June 30, 2008,
compared with $6.9 million for the comparable period in 2007. R&D expenses incurred during the
second quarter of 2008 related primarily to (i) the Companys Phase 2b clinical trial for
arimoclomol in ALS, which currently is on clinical hold by the FDA, (ii) the molecular chaperone
amplification research and development conducted at the Companys San Diego laboratory, and (iii)
the ongoing development and manufacturing of iroxanadine in preparation for its Phase 2 clinical
trial.
General and administrative (G&A) expenses were $3.2 million for the second quarter of 2008,
compared with $4.1 million for the same period in the prior year. The decrease in G&A expenses in
2008 resulted primarily from a reduction of approximately $700,000 in RXi expenses and
approximately $490,000 in professional fees which largely related to the partial spinoff of RXi.
Cash and cash equivalents totaled $36.4 million as of June 30, 2008, compared to $43.5 million as
of March 31, 2008. CytRxs 45% ownership stake in RXi at June 30, 2008, had a market value of
approximately $50.2 million.
2008 SECOND QUARTER AND RECENT HIGHLIGHTS
Proposed Acquisition of Innovive Pharmaceuticals, Inc.
On June 9, 2008, CytRx announced the signing of a definitive agreement to acquire Innovive
Pharmaceuticals. Included in the to-be-acquired pipeline are North American and European rights to
tamibarotene, a drug currently being sold in Japan for the treatment of relapsed or refractory APL.
Tamibarotene is presently in a pivotal Phase 2 clinical trial at sites in the United States and
Europe for the treatment of APL. The Innovive pipeline also includes three additional oncology drug
candidates, INNO-406, INNO-206 and INNO-305, for the treatment of chronic myelogenous leukemia,
small cell lung cancer, and acute myelogenous leukemia, respectively.
The combined company will have an attractive and expanded portfolio of clinical development
programs in oncology, diabetic foot ulcers, amyotrophic lateral sclerosis (ALS or Lou Gehrigs
disease) and stroke recovery. CytRx anticipates that the acquisition will accelerate the time to
its first potential NDA filing to 2010.
On Monday, August 11, 2008, CytRx announced that the registration statement relating to the
Innovive transaction was declared effective by the Securities and Exchange Commission on August 9,
2008. The transaction is expected to close in the third quarter of 2008, subject to approval by
Innovive stockholders at the special meeting of Innovive stockholders scheduled for September 19,
2008 and other customary closing conditions.
Molecular Chaperone Development
CytRx remains focused on advancing the development of arimoclomol, an oral drug candidate based on
molecular chaperone technology in development for ALS and stroke recovery. In June, CytRx announced
its plans to conduct additional preclinical toxicology studies of arimoclomol, which are expected
to take up to one year to complete. Based on telephone discussions with the FDA and having received
a formal determination letter from them regarding its clinical hold on arimoclomol for ALS, CytRx
anticipates that the planned Phase 2b clinical trial of arimoclomol will require completion of this
additional preclinical work. In addition, CytRx anticipates that the time frame for initiating the
previously planned Phase 2 clinical trial of arimoclomol in stroke recovery will depend on the
results of the new preclinical toxicology studies.
CytRx is expected to begin Phase 2 testing of iroxanadine for diabetic foot ulcers in the first
quarter of 2009, subject to FDA clearance. During the second quarter of 2008, CytRxs Senior Vice
President of Research and Development Shi Chung Ng, Ph.D., presented data for iroxanadine at the
Third Congress of the World Union of Wound Healing Societies held in Toronto, Canada, reporting
that diabetic mice treated with iroxanadine healed from diabetic wounds nearly two times faster
than untreated diabetic mice. These results suggest that iroxanadine promotes healing by
normalizing endothelial dysfunction through the molecular chaperone amplification pathway.
Furthermore, scientists at the Companys laboratory have identified possible next-generation
chaperone-amplifying compounds. In the field of oncology, CytRx has adapted its proprietary
chaperone screening assay to identify inhibitors (rather than amplifiers) of chaperone activity.
Because certain chaperones appear to be essential for cancer cell survival, CytRxs internal
molecular chaperone-inhibiting drug candidates may form the basis of future oncology products.
RXi Pharmaceuticals Corporation (RXi)
In March 2008, CytRx completed its partial spin out of RXi by awarding a dividend of RXi common
shares to holders of CytRx common stock as of March 6, 2008. At the same time, RXi common stock
commenced trading on Nasdaq under the symbol RXII. CytRx continues to hold approximately 45% of
RXis outstanding common stock.
CytRx management presented at the following conferences during the second quarter:
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GTCbios Third Assay Development & Screening Technologies Conference |
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Risk-Reduced Models for the Biotech Industry Panel at BIO 2008 International
Convention |
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Jefferies 2nd Annual Healthcare Conference |
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Third Congress of the World Union of Wound Healing Societies |
CYTRX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
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June 30, |
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December 31, |
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2008 |
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2007 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
|
$ |
36,382,744 |
|
|
$ |
50,498,261 |
|
Short-term investments, at amortized cost |
|
|
|
|
|
|
9,951,548 |
|
Accounts receivable |
|
|
29,332 |
|
|
|
101,217 |
|
Loan receivable, net of reserve |
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|
1,600,000 |
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|
|
|
|
Prepaid expense and other current assets |
|
|
1,232,891 |
|
|
|
930,596 |
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|
|
|
|
|
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Total current assets |
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39,244,967 |
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|
61,481,622 |
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Equipment and furnishings, net |
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|
1,703,607 |
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|
|
1,573,290 |
|
Molecular library, net |
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|
148,639 |
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|
193,946 |
|
Investment in unconsolidated subsidiary (see Note 9) |
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|
1,344,373 |
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Goodwill |
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|
183,780 |
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|
183,780 |
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Other assets |
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|
238,387 |
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|
713,398 |
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Total assets |
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$ |
42,863,753 |
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$ |
64,146,036 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
520,363 |
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|
$ |
1,946,215 |
|
Accrued expenses and other current liabilities |
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|
2,262,637 |
|
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|
3,700,866 |
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Income taxes payable |
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|
342,000 |
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Deferred revenue, current portion |
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|
6,228,035 |
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|
8,399,167 |
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Total current liabilities |
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9,353,035 |
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14,046,248 |
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Deferred revenue, non-current portion |
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5,417,062 |
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7,167,381 |
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Total liabilities |
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14,770,097 |
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|
21,213,629 |
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Minority interest |
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2,708,368 |
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Commitments and Contingencies |
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Stockholders equity: |
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Preferred Stock, $.01 par value, 5,000,000 shares
authorized, including 15,000 shares of Series A
Junior Participating Preferred Stock; no shares
issued and outstanding |
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Common stock, $.001 par value, 150,000,000 shares
authorized; 91,404,269 and 90,397,867 shares
issued at June 30, 2008 and December 31, 2007,
respectively |
|
|
91,404 |
|
|
|
90,398 |
|
Additional paid-in capital |
|
|
206,617,383 |
|
|
|
203,905,691 |
|
Treasury stock, at cost (633,816 shares held at
June 30, 2008 and December 31, 2007,
respectively) |
|
|
(2,279,238 |
) |
|
|
(2,279,238 |
) |
Accumulated deficit |
|
|
(176,335,893 |
) |
|
|
(161,492,812 |
) |
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|
|
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Total stockholders equity |
|
|
28,093,656 |
|
|
|
40,224,039 |
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Total liabilities and stockholders equity |
|
$ |
42,863,753 |
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|
$ |
64,146,036 |
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CYTRX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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June 30, |
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2008 |
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2007 |
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Revenue: |
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Service revenue |
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$ |
1,740,362 |
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$ |
2,369,513 |
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Grant revenue |
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|
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|
|
|
|
|
|
|
|
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1,740,362 |
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2,369,513 |
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Expenses: |
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Research and development |
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|
2,525,659 |
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|
|
6,884,296 |
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General and administrative |
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|
3,192,082 |
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|
|
4,106,597 |
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|
|
|
|
|
|
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|
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|
5,717,741 |
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|
|
10,990,893 |
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|
|
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Loss before other income |
|
|
(3,977,379 |
) |
|
|
(8,621,380 |
) |
Other income: |
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|
|
|
|
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Interest income |
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|
284,304 |
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|
659,062 |
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Other income, net |
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|
1,000 |
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|
1,501,000 |
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Equity in loss of unconsolidated subsidiary |
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|
(2,133,956 |
) |
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Minority interest in losses of subsidiary |
|
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|
176,136 |
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Net loss before income taxes |
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|
(5,826,031 |
) |
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|
(6,285,182 |
) |
Provision for income taxes |
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|
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|
|
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|
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Net loss |
|
|
(5,826,031 |
) |
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|
(6,285,182 |
) |
Deemed dividend for anti-dilution adjustment
made to stock warrants |
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|
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Net loss applicable to common stockholders |
|
$ |
(5,826,031 |
) |
|
$ |
(6,285,182 |
) |
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Basic and diluted loss per share |
|
$ |
(0.06 |
) |
|
$ |
(0.07 |
) |
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Weighted average shares outstanding |
|
|
90,768,145 |
|
|
|
85,379,769 |
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About Molecular Chaperone Amplification
CytRx is a leader in molecular chaperone amplification technology. The Company currently has three
orally administered, clinical-stage small-molecule programs and recently discovered a series of
additional compounds that provide pipeline leads for additional drug candidates. The Companys drug
candidates are believed to function by stimulating a normal cellular protein repair pathway through
the activation of molecular chaperones. Since damaged proteins are thought to play a role in many
diseases, CytRx believes that activation of molecular chaperones that help to reduce the
accumulation of mis-folded proteins may have therapeutic efficacy in a broad range of disease
states.
About CytRx Corporation
CytRx Corporation is a biopharmaceutical research and development company engaged in the
development of high-value human therapeutics. The Company owns three clinical-stage compounds based
on its small-molecule molecular chaperone amplification technology. CytRx has a research and
development facility in San Diego. CytRx currently owns a 45% equity interest in RXi
Pharmaceuticals Corporation (NASDAQ:RXII). For more information on the Company, visit
www.cytrx.com.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements involve risks and uncertainties that
could cause actual events or results to differ materially from the events or results described in
the forward-looking statements, including risks or uncertainties related to CytRxs business,
including those related to the outcome or results of the additional pre-clinical testing of
arimoclomol and any future clinical testing of arimoclomol for ALS and stroke recovery and of
iroxanadine for diabetic foot ulcers, uncertainties related to the impact of the FDAs clinical
hold on the Companys arimoclomol clinical trial for ALS on the timing and ability to resume
clinical testing at the desired dosage of arimoclomol, and the impact of that clinical hold on the
timing and ability to initiate the planned Phase 2 clinical trial of arimoclomol for stroke
recovery, the risk that any requirements imposed on the Companys planned clinical trial designs
for ALS or stroke recovery by the FDA as a result of the concerns expressed in their clinical hold
of the Companys ALS program might adversely affect the Companys ability to demonstrate that
arimoclomol is efficacious in treating ALS or stroke patients or cause the Company to cancel one or
both of those trials, the potential need to conduct additional toxicology or human studies with
arimoclomol or iroxanadine, which could result in substantial additional expenses and delay the
initiation or resumption, as applicable, of the Companys planned clinical trials, uncertainties
related to the outcome or results of any future identification, development or testing of product
candidates based on new molecular chaperone amplification compounds, including their safety and
efficacy, and CytRxs need for additional capital to fund its ongoing working capital needs. The
statements in this press release also are subject to risks and uncertainties related to the
proposed acquisition of Innovive Pharmaceuticals, Inc., including those related to CytRxs ability
to achieve one or more of its objectives in undertaking the acquisition, the risk that secured loan
amounts advanced by CytRx to Innovive cannot be repaid by Innovive if the acquisition is not
completed, the risk that the added costs of CytRxs planned additional clinical trials of
arimoclomol for the treatment of ALS and funding of Innovives operating losses before and after
the acquisition will be greater than CytRx anticipates and adversely affect CytRxs liquidity and
require CytRx to obtain additional equity financing sooner than expected, and risks relating to
clinical development of the Innovive product candidates if the acquisition is completed, as well as
other risks and uncertainties described in CytRxs Form 10-Q for the quarter ended June 30, 2008
and other recently filed SEC documents, such as its most recent annual report on Form 10-K. The
business and operations of RXi, as well as CytRxs ownership of RXi shares, also are subject to
risks and uncertainties, including those set forth in RXis filings with the SEC. All
forward-looking statements are based upon information available to CytRx on the date the statements
are first published. CytRx undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
# # #
In connection with the proposed Innovive acquisition, CytRx has filed with the SEC a registration
statement on Form S-4, which includes a prospectus/proxy statement of CytRx and Innovive relating
to the merger. INVESTORS AND STOCKHOLDERS ARE STRONGLY ADVISED TO READ THE PROSPECTUS/PROXY
STATEMENT, BECAUSE IT CONTAINS IMPORTANT INFORMATION. Investors and stockholders may obtain a free
copy of the prospectus/proxy statement and other documents filed by us and Innovive at the SECs
website at http://www.sec.gov.
This communication does not constitute an offer to sell or the solicitation of an offer to sell or
the solicitation of an offer to buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of such jurisdiction. No offering of securities will be
made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act
of 1933, as amended.
This communication is not a solicitation of a proxy from any stockholder of Innovive. However,
CytRx, Innovive and their respective officers and directors may be deemed to be participants in the
solicitation of proxies from Innovive stockholders in connection with the proposed Innovive
acquisition. Information about the officers and directors of CytRx and their ownership of CytRx
common stock is set forth in the proxy statement for CytRxs 2008 Annual Meeting of Stockholders,
which was filed with the SEC on May 23, 2008. Information about the officers and directors of
Innovive and their ownership of Innovive common stock is set forth in Innovives most recent Annual
Report on Form 10-K, which was filed with the SEC on March 31, 2008 and amended on April 29, 2008.
Investors and stockholders may obtain additional information regarding the direct and indirect
interests of CytRx, Innovive and their respective officers and directors in the proposed
acquisition by reading the prospectus/proxy statement referred to above.
CONTACT: CytRx Corporation
Porter Novelli Life Sciences
Investors:
Parag Dave, 212-601-8186
pdave@pnlifesciences.com
Media:
Cory Tromblee, 617-897-8294
ctromblee@pnlifesciences.com
SOURCE: CytRx Corporation