CytRx Announces First Quarter 2008 Financial Results

LOS ANGELES--(Business Wire)--
CytRx 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 March 31, 2008.

"Late in the first quarter, RXi Pharmaceuticals Corporation
initiated trading on the NASDAQ Capital Market under the ticker RXII,
and we presently own 49% of RXi's outstanding common stock. Public
trading of RXII provides a market valuation for this investment and
increased liquidity, which has enabled us to unlock and crystallize
the value of our former RNAi assets. This liquidity event was the
singular watershed event for the Company during the first quarter,"
said Steven A. Kriegsman, CytRx President and CEO. "With the creation
and partial spinoff of RXi behind us, we can now focus on our ongoing
development work in the exciting, potentially groundbreaking field of
molecular chaperone amplification. We look to build on our leadership
role in leveraging this science that uses the body's own natural
repair system to treat disease."

"We now have a terrific scientific team in place, and a new
research facility in San Diego, to continue this pioneering work in
molecular chaperones and advance our goal of building a platform
technology that will lead to a robust pipeline of compounds to address
a variety of disease states. As we have mentioned previously, the San
Diego laboratory recently discovered a highly promising series of
next-generation molecular chaperone drug candidates, so we are
confident we are moving our science-based development in the right
direction. Looking forward, we have a clear vision for delivering on
the promise of chaperone amplification technology, and we will
maintain our dedication to this science-based approach to drug
development."

"We envision an exciting future in developing treatments for major
disease and disorders including cancer, cardiovascular disease,
diabetes and neurodegenerative diseases. As previously disclosed, we
are working to determine a rational clinical development pathway for
arimoclomol in ALS consistent with ongoing FDA guidance; we will
tailor as necessary our clinical development for arimoclomol in stroke
recovery based on the optimized development pathway in ALS; and we
expect to have all of the necessary pieces in place to initiate a
Phase II trial of iroxanadine in diabetic foot ulcers in the first
quarter of 2009. We also are keenly aware of the mandate to maintain
flexibility and creativity to take advantage of new opportunities that
may arise given the difficult macro environment for biotechnology
companies and current market conditions," concluded Kriegsman.

REVIEW OF FINANCIAL RESULTS

CytRx reported a net loss for the three months ended March 31,
2008, of $6.1 million, or $0.07 per share, based on 90.3 million
weighted average shares outstanding, compared with a net loss for the
three months ended March 31, 2007, of $4.5 million, or $0.06 per
share, based on 73.3 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, and the completion in April 2007 of a private placement
of our common stock.

Revenue for the first quarter of 2008 was $2.2 million, compared
with the first quarter of 2007 revenue of $1.6 million, and consisted
primarily of service revenue recognized from CytRx's 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 $3.2 million for the
three months that ended March 31, 2008, compared with $4.0 million for
comparable period in 2007. R&D expenses incurred during the first
quarter of 2008 related primarily to (i) the Company's Phase II
clinical program for arimoclomol in ALS, (ii) the ongoing research and
development related to CytRx's molecular chaperone amplification drug
candidates, (iii) molecular chaperone amplification research and
development conducted at the Company's new California laboratory.

General and administrative (G&A) expenses were $4.5 million for
the first quarter of 2008, compared with $2.5 million in the prior
year period. The increase in G&A expenses in 2007 resulted primarily
from increased audit, legal and consulting fees and higher employment
costs.

Cash, cash equivalents and short-term investments totaled $43.5
million as of March 31, 2008, compared with cash, cash equivalents and
short-term investments of $48.7 million as of December 31, 2007
(excluding cash held by RXi).

2008 FIRST QUARTER AND RECENT HIGHLIGHTS

CytRx has announced plans to expand its research and development
of therapeutic products based on its novel, orally administered
molecular chaperone amplification technology, including broadening its
clinical focus beyond CNS.

-- April 2008 - Announced the discovery of a novel series of
molecular chaperone amplification compounds that provide
pipeline leads for next-generation drug candidates in a number
of disease indications including cancer, cardiovascular
disease, diabetes and neurodegenerative diseases.

-- March 2008 - Submitted response to U.S. Food and Drug
Administration (FDA) addressing issues cited in the FDA's
February 2008 written correspondence placing a clinical hold
on CytRx's Phase IIb clinical trial of arimoclomol for the
treatment of ALS.

CytRx management presented at the following investment
conferences:

-- Roth 20th Annual Growth Stock Conference (February 2008)

-- 10th Annual BIO CEO and Investor Conference (February 2008)

RXi Pharmaceuticals Corporation (RXi)

In January 2007, CytRx established RXi as a majority-owned
subsidiary to build on CytRx's RNAi therapeutics programs with initial
focus on type 2 diabetes, obesity, oncology and neurodegenerative
diseases. RXi's new management team is led by President and CEO, Tod
Woolf, Ph.D., who co-invented and commercialized STEALTH(TM) RNAi, and
is supported by a scientific advisory board including 2006 Nobel
Laureate Craig C. Mello, Ph.D., among other RNAi thought-leaders.
During 2007, RXi expanded upon CytRx's RNAi technology assets by
entering into additional agreements to expand its RNAi intellectual
property portfolio.

-- In March 2008, CytRx reported the award of a stock dividend of
RXi common shares to holders of CytRx common stock as of March
6, 2008. CytRx continues to hold approximately 49% of RXi's
outstanding common stock.

-- In May 2008, CytRx announced that, for tax purposes, it had
valued the shares of common stock of RXi distributed to CytRx
stockholders on March 11, 2008 at $8.84 per share.

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 Company's drug candidates are 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 that help to reduce the
accumulation of aggregates 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" co-induction technology. In
September 2006 CytRx announced that arimoclomol was shown to be safe
and well-tolerated at all three doses tested in its Phase IIa clinical
trial in patients with ALS. The Company's Phase IIb clinical trial
with arimoclomol for ALS was placed on clinical hold by the FDA in
January 2008. The FDA has granted Fast Track designation and Orphan
Drug status to arimoclomol for the treatment of ALS, which has also
been granted orphan medicinal product status for the treatment of ALS
from the European Medicines Agency. The Company has announced plans to
commence a Phase II clinical trial with its next drug candidate,
iroxanadine, for diabetic foot ulcers in the first quarter of 2009,
subject to FDA clearance. The Company has also announced plans to
commence a Phase II clinical trial for arimoclomol in stroke recovery
in the second half of 2008, subject to FDA clearance. CytRx has
recently opened a research and development facility in San Diego. 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 the outcome or results of any future
pre-clinical or clinical testing of arimoclomol for ALS and stroke
recovery, and of iroxanadine for diabetic foot ulcers, uncertainties
related to the impact of the FDA's clinical hold on the Company's
arimoclomol clinical trial for ALS on the timing and ability to resume
and continue that clinical trial at the desired dosage of arimoclomol,
and the impact of that clinical hold on the timing and ability to
initiate the planned Phase II clinical trial of arimoclomol for stroke
recovery, the risk that any requirements imposed on the Company's
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
Company's ALS program might adversely affect the Company's 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 Company's 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, the potential inability to obtain patents that provide
commercially significant protection for any new molecular chaperone
amplification compounds, CytRx's need for additional capital to fund
its ongoing working capital needs, as well as other risks or
uncertainties described in CytRx's most recently filed SEC documents,
such as its most recent annual report on Form 10-K. The business and
operations of RXi, as well as ownership of RXi shares, also are
subject to risks and uncertainties, including those set forth in RXi's
registration statement filed with the Securities and Exchange
Commission. 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.

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CYTRX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,
2008 2007
-------------- --------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 43,538,946 $ 50,498,261
Short-term investments, at amortized
cost -- 9,951,548
Accounts receivable -- 101,217
Prepaid expense and other current
assets 1,101,651 930,596
-------------- --------------
Total current assets 44,640,597 61,481,622

Equipment and furnishings, net 1,349,548 1,573,290
Molecular library, net 182,017 193,946
Investment in unconsolidated subsidiary 3,536,614 --
Goodwill 183,780 183,780
Other assets 647,055 713,398
-------------- --------------
Total assets $ 50,539,611 $ 64,146,036
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 721,093 $ 1,946,215
Accrued expenses and other current
liabilities 2,699,777 3,700,866
Income taxes payable 342,000 --
Deferred revenue, current portion 8,207,492 8,399,167
-------------- --------------
Total current liabilities 11,970,362 14,046,248
Deferred revenue, non-current portion 5,177,967 7,167,381
-------------- --------------
Total liabilities 17,148,329 21,213,629
-------------- --------------

Minority interest -- 2,708,368
-------------- --------------

Commitments and Contingencies

Stockholders' equity:
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 -- --
Common stock, $.001 par value,
150,000,000 shares authorized;
91,374,269 and 90,397,867 shares
issued at March 31, 2008 and December
31, 2007, respectively 91,374 90,398
Additional paid-in capital 206,089,009 203,905,691
Treasury stock, at cost (633,816 shares
held at March 31, 2008 and December
31, 2007, respectively) (2,279,238) (2,279,238)
Accumulated deficit (170,509,863) (161,492,812)
-------------- --------------
Total stockholders' equity 33,391,282 40,224,039
-------------- --------------
Total liabilities and stockholders'
equity $ 50,539,611 $ 64,146,036
============== ==============
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CYTRX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
-------------------------
2008 2007
------------ ------------
Revenue:
Service revenue $ 2,181,088 $ 1,446,993
Grant revenue -- 116,070
------------ ------------
2,181,088 1,563,063
------------ ------------
Expenses:
Research and development 3,191,713 4,008,374
General and administrative 4,473,149 2,485,085
------------ ------------
7,664,862 6,493,459
------------ ------------
Loss before other income (5,483,774) (4,930,396)
Other income:
Interest income 524,271 382,614
Other income, net 218,229 --
Equity in loss of unconsolidated
subsidiary (378,898) --
Minority interest in losses of subsidiary 88,374 2,000
------------ ------------
Net loss before income taxes (5,031,798) (4,545,782)
Provision for income taxes (342,000) --
------------ ------------
Net loss (5,373,798) (4,545,782)
Deemed dividend for anti-dilution adjustment
made to stock warrants (756,954) --
------------ ------------
Net loss applicable to common stockholders $(6,130,752) $(4,545,782)
============ ============

Basic and diluted loss per share $ (0.07) $ (0.06)
============ ============

Weighted average shares outstanding 90,280,449 73,273,746
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CytRx Corporation
Porter Novelli Life Sciences
Investors:
John Quirk, 212-601-8296
jquirk@pnlifesciences.com
or
Media:
Cory Tromblee, 617-897-8294
ctromblee@pnlifesciences.com

Copyright Business Wire 2008