CytRx Corporation: Key Developments Ahead

| About: CytRx Corporation (CYTR)

The clouds of darkness that have been hanging over CytRx Corporation (NASDAQ:CYTR), may soon be cast aside. The stock, which has traded as low as $.24 earlier this year, appears to be on the rebound with at least two key developments on the horizon.

On Friday morning, after seeing the stock gap up on heavy volume, we issued a trade alert to our subscribers as rumors began to swirl throughout cyberspace and on message boards. "Someone knows something," claimed one investor who has been patiently following the stock since it was trading at close to $5 per share in late 2007.

Earlier in the week, shares of the company, whose drug development pipeline includes two product candidates in clinical development for cancer indications and treatments for neurodegenerative and other disorders based on its small-molecule molecular chaperone amplification technology, had barely registered a blip on the radar screen.

In fact the last significant spike (to $1.29) came in late July when CytRx announced that results demonstrating that their cancer drug candidate, INNO-206, had caused statistically significant tumor shrinkage in an animal model of ovarian cancer had been accepted for publication in the peer reviewed journal Investigational New Drugs.

By contrast, nearly 8 million shares traded and sent the stock up 25% to $1.14 from a previous close of $.91.

Could it be that investors are anticipating good news for the stock that fell out of grace on the day the FDA placed a clinical hold on their Phase IIb clinical trial for Arimoclomol- a treatment for amyotrophic lateral sclerosis (ALS or Lou Gehrig's disease)?

Perhaps news had leaked that the company was starting their Phase 2 clinical trial with INNO-206 as a second-line treatment in patients with advanced gastric cancer?

Others speculated that a partnership might soon be announced.

Perhaps all of the above?

Either way, the sudden injection of interest and excitement in the company has not been seen since early 2008, when the U.S. Food and Drug Administration surprised many in the biotech community by placing the company's promising Lou Gehrig's drug Arimoclomol on clinical hold.

Months earlier, the drug had been making headlines and offering tremendous hope to those suffering with the disease. In fact, prior to the surprise announcement, the company had been looking forward to showcasing the substantial potential for arimoclomol for ALS, stroke recovery and other neurodegenerative diseases.

Arimoclomol is one of CytRx's three orally-administered, small molecule compounds. This small molecule drug candidate is believed to function by stimulating a normal cellular protein repair pathway through the activation of "molecular chaperones." Since damaged proteins called aggregates are thought to play a role in many diseases, CytRx believes that activation of molecular chaperones could have therapeutic efficacy for a broad range of diseases.

"On that day, we put out the press release about that, the stock went down over a dollar and the share price began deteriorating day after day," explains Steven A. Kriegsman, President and CEO of CytRx.

Especially hard to swallow was the fact that the FDA's decision to place the Phase IIb program on clinical hold pertained to a previously completed toxicology study in rats and was not related to data generated from any human studies.

"I think our team's first reaction was, 'Wait! We're already past the animal studies. We're already at the human trials stage," explains Kriegsman.

At the end of the day, the company could have simply chosen to modify the protocol for the trial, but instead they chose to provide the FDA with all the materials and data they had aked for. Assuming that the company would get a prompt response to all issues and that they would be able to resume the Phase IIb clinical trial, they - along with investors - were asked to wait and wait, then wait some more for that planned resumption. Many shareholders chose instead to move along and place their bets elsewhere.

"Many investors saw the hold as the end of the road for Arimoclomol," explains Kriegsman. "They misinterpreted the news, while others thought it meant that the drug and science behind it was not working."

It was an especially shocking blow to a drug candidate that had shown so much promise and hope for ALS. The company had been considering partnership opportunities with several pharmaceutical companies in hopes of advancing the development of the molecular chaperone asset. This is not surprising, given the tremendous promise of the technology.

While officials at the company would not confirm that the clinical hold on the trials might soon be finally lifted by the FDA, credible sources told BioMedReports that an announcement involving as many as two or three key positive developments might be only days away.

Asked to speculate about what this might mean for the share price of the company, one of several analysts who recently covered the stock said,

It means we'll have to raise our short term price target up, is what it means. I think that FDA hold really hurt the stock and if it does come off, it will definitely have an effect on the value of the company.

There is little doubt that the news would be welcome by investors, particularly those who have been holding long to the stock throughout the entire drama.

Asked specifically to comment about the rumors, Kriegsman refused to say anything other than he hopes any pending announcement will be embraced as good news for the company.

We can't really comment on any pending news releases and I'm certainly not going to speculate on our share price or how the FDA might react since we don't control that, but we feel confident going forward and we've been working very hard to make sure that the company is on track to meet and announce some key milestones.