CytRx Says Net Losses,
Operating Costs Decline in Q1
At the same time as it was promoting its drug programs in its first-quarter financial statement, CytRx said in a filing with the US Securities and Exchange Commission that it expects its resources to allow it to operate at planned levels through the second quarter of 2006.
The company noted, however, that it is required to fund certain research at the University of Massachusetts under a series of partnerships with the school to develop RNAi drugs. "The aggregate amount of these expenditures under certain circumstances is expected to be approximately $2.4 million during 2005," the company said in the SEC filing, "of which $600,000 had been expensed through March 31."
CytRx said first-quarter net losses declined to $3.5 million, or $0.07 per share, from $3.8 million, or $0.11 per share, in the year-ago quarter.
Operating costs during the quarter fell to $3.6 million from $3.9 million in the same period a year earlier, as general and administrative expenses held steady at about $1.7 million and research and development spending dropped to roughly $400,000 from $1.9 million.
CytRx attributed the drop in R&D costs to a $1.1 million non-cash charge in the first-quarter of 2004 related to consulting services for which there was no comparable charge in the first quarter of this year. The company noted that this was partially offset by higher R&D spending in the first-quarter 2005 at its small-molecule drug subsidiary CytRx Laboratories (formerly Araios) and on arimoclomol
Revenues in the quarter were immaterial, according to CytRx, dropping to $2,000 from $100,000 in the first quarter of 2004. The company said the $100,000 it earned last year was due to a milestone payment from a licensee of its Tranzfect technology, which was being developed by CytRx prior to its merger with Global Genomics and subsequent refocusing under CEO Steve Kriegsman.
The company noted that all future licensing fees related to Tranzfect are dependent on successful development milestones being achieved by the technology's licensees, which include Merck and Vical, and that no significant licensing revenue is expected during 2005.
As of March 31, CytRx said it had cash, cash equivalents, and short-term investments totaling $19.5 million.
CytRx this week touted recent advances in a couple of its drug-development programs as it released its first-quarter financial results, but notably neither involved the company's RNAi technology.
Though CytRx was an early mover in the RNAi drug field, the company has recently been quiet on this front, causing some in the industry to wonder whether its RNAi efforts have fallen by the wayside as the company focuses on its more advanced small-molecule and DNA vaccine-based programs.
But according to Steve Kriegsman, CEO of CytRx, this is only partially true. He told RNAi News this week that while his company has been focusing heavily on its clinical programs — none of which involve therapeutic RNAi — its efforts to develop the gene-silencing technology for therapeutic purposes remain on track.
Kriegsman said that arimoclomol, a small-molecule treatment for ALS that the company acquired from Biorex last October, and a DNA vaccine have been focuses for the company in recent months, but stressed that CytRx's RNAi projects "continue to be very active."
In 2003, CytRx acquired from the University of Massachusetts rights to intellectual property related to the use of siRNAs 21 to 23 long as human therapeutics for indications such as obesity, type II diabetes, cancer, and amyotrophic lateral sclerosis. This deal made CytRx the first company to throw its hat into the RNAi-based drugs ring.
The company then initiated a number of preclinical RNAi programs, including ones in ALS, diabetes, obesity, and cytomegalovirus retinitis, while heavily promoting its RNAi pipeline at both conferences and in press releases. Last year at the BIO-CEO conference in New York, CytRx CEO Steve Kriegsman told RNAi News that the company's RNAi activities were advancing so well that he expected an investigational new drug application for an AMD therapy to be filed before the end of 2004.
Having missed this target, Kriegsman backed away from this timeline in January and told RNAi News that a new estimated filing date for the ALS drug had not been set. According to Kriegsman, the delay stems from CytRx's focus on arimoclomol, for which CytRx expects to seek regulatory approval to begin a phase II trial of arimoclomol sometime before the end of June.
The company also plans to investigate the use of arimoclomol in combination with Bristol-Myers Squibb's Glucophage for diabetes.
Also taking up CytRx's time and resources is a DNA-based vaccine for HIV, which was co-developed with the University of Massachusetts Medical School and is currently being evaluated in a phase I trial.
Kriegsman defended CytRx's decision to expand its drug-development efforts beyond RNAi, telling RNAi News this week that "we wanted to get a balanced program going" should RNAi not live up to expectations as a therapeutic modality.
"You can't bet the ranch on one particular technology — it's too risky," he said.
Despite asserting CytRx's commitment to RNAi-based medicines, Kriegsman declined to offer projections on when any of the company's programs in the field might be ready for clinical testing. CytRx is "still working through [issues] scientifically," he said, adding that more details would be available before the end of the year.
— Doug Macron ([email protected])