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CytRx Halts Investments in Genomics Firms, Benefits from NIH Grant Supporting ALS Work

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In a bid to sharpen its focus on drug development, CytRx said last week that it has decided to end all investment in genomics firms Blizzard Genomics and Psynomics. CytRx also said that it would write off its ownership positions in the two companies, resulting in a one-time charge in the fourth quarter 2003.

CytRx’s 40 percent stake in Blizzard and 5 percent stake in Psynomics came, along with CEO Steven Kriegsman, as part of the company’s merger with Global Genomics in July 2002. Prior to the merger, CytRx said, Global Genomics had invested about $1.65 million in cash into the two genomics companies. Following the merger, the company’s additional investment in the firms was less than $25,000.

“We realized that to bring therapeutics to market … is an awesome undertaking,” Kriegsman told RNAi News. “But, I don’t want to be diverting my energies to other businesses, which don’t really add value to our RNAi programs. So, I made a decision, with the board’s approval, that we basically do no more investing and no more financing in the genomics area, because we feel it is not part of our long term strategic plan.”

According to CytRx’s 10-Q report with the US Securities and Exchange Commission, the company recorded $86,562 in Blizzard-associated losses in the third quarter. Losses associated with Psynomics were not detailed in the SEC filing.

Additionally, CytRx said in a press release that there is “substantial doubt about [Blizzard’s and Psynomics’] abilities to continue as going concerns.”

As such, Kriegsman said that the decision to drop further investment in Blizzard and Psynomics is a positive for his firm.

“We’ll still own whatever interest we have [in the companies],” he said. “We hope they continue [to operate], because if they do we could make money.” But if they don’t, he added that “we’re fortunate that we haven’t invested a lot of money in these two companies” and that CytRx is now focused on its core activities.

CytRx also decided to write off its investments in Blizzard and Psynomics, which Kriegsman said amounts to about $1.65 million in cash and roughly $3.8 million in intangibles. This write off will lead to a one-time charge of approximately $5.4 million to $5.5 million in the fourth quarter, he noted. CytRx’s cash or working capital position will not be affected.

As a result of the investments, Kriegsman added, “we learned a lot about the genomics space — the biggest thing is that we don’t want to be in it anymore. We have so much to do in the RNAi programs that we’re involved in, we don’t have the time to really handle these other things,” he said.

One of those RNAi programs is a recently formed collaboration to develop RNAi-based treatments for amyotrophic lateral sclerosis with the University of Massachusetts Medical School’s Zuoshang Xu, who has just been awarded a grant in support of the effort from the NIH’s National Institute of Neurological Disorders and Stroke. The grant project, which is being allocated up to $1.15 million, begins on Feb. 1 and runs through January 2009.

“[The project] is mainly trying to use transgenic RNAi to do a proof-of-principle experiment to demonstrate in vivo RNAi is possible and we can silence a disease gene … without affecting a normal gene,” Xu told RNAi News. “It’s also a technological [project], because there hasn’t been any demonstration that transgenic RNAi works in adult somatic cells.”

The grant’s abstract states that the project will be applying RNAi in a transgenic mouse model for ALS associated with mutations in the Cu, Zn superoxide dismutase (SOD-1) gene. Specifically, short hairpin RNAs targeting mutant SOD-1 mRNAs will be expressed in the transgenic mice to determine the ability of RNAi to suppress mutant protein expression and alleviate the disease.

Xu said that aside from possibly leading to the discovery of a therapeutic option for ALS, the project would hopefully yield insight into the mechanics of the disorder: part of the effort will involve expressing the shRNAs in various cell types using Cre-lox recombination systems in order to control SOD-1 expression in specific cell types and determine the ones in which suppression of mutant proteins is most critical.

“One of the hotly debated questions is: how does mutant SOD-1 kill motor neurons — whether the mutant protein acts inside motor neurons to kill motor neurons or whether mutant SOD-1 acts in other cells, such as glial cells, [and this effect] produces some sort of toxicity that induces motor neuron [death], “ he said. “If inducible silencing or desilencing can be done in a cell-specific manner, then we can actually test this.”

Xu and his colleagues will also use a tamoxifen-inducible Cre recombinant system to control the silencing effect in the mice — essentially turning the RNAi effect on and off at will. This will allow them to determine at what stage of the disease RNAi silencing of SOD-1 expression is most effective.

CytRx’s other RNAi programs focus on RNAi-based treatments for obesity, type 2 diabetes, and cytomegalovirus-related diseases.

—DM

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