CytRx plans to raise $37M in placing

California, USA-based biopharmaceutical company CytRx has entered into definitive agreements with a group of institutional investors to raise approximately $37.0 million from the private sale of common stock, with net proceeds to the firm of about $34.4 million after deduction of offering expenses. Under the terms of the financing, CytRx will sell 8.6 million shares of common stock at $4.30 each.

CytRx will invest at least $15.0 million of the proceeds in its majority-owned subsidiary, RXi Pharmaceuticals, which focuses on developing RNAi-based therapeutics for the treatment of human diseases including neurodegenerative diseases, obesity, type 2 diabetes and oncology. The investment will satisfy RXi's financing requirements under its agreements with the University of Massachusetts Medical School and trigger CytRx' pre-existing contractual obligations to reduce its ownership of RXi to less than a majority. At present, CytRx intends to accomplish this by a dividend or other distribution of RXi shares to CytRx stockholders.

The remainder of the net proceeds will be used to augment CytRx' working capital and for general corporate purposes, including further development work and clinical trials of its lead product candidates. The firm may use a portion to support its plan for a potential Phase II trial for arimoclomol in stroke recovery.