Cytrx Corporation Signs Definitive Agreement to Acquire Innovive Pharmaceuticals, Inc.
Combined Company to Drive Stockholder Value with Commitment to Molecular Chaperone Technology Platform and Near-Term Commercialization Opportunities in Oncology
Acquisition Subject to Customary Closing Conditions Including Innovive Stockholder Approval
Company to Host Conference Call at 9:00 AM EDT (6:00 AM PDT) Today to Discuss Transaction
LOS ANGELES, June 9, 2008 – CytRx Corporation (NASDAQ:
CYTR), a biopharmaceutical company engaged in the development and
commercialization of therapeutics based on molecular chaperone
amplification technology, today announced the signing of a
definitive agreement to purchase Innovive Pharmaceuticals, Inc., a
publicly traded biopharmaceutical company with four clinical stage
oncology drug candidates. The combined company will have an
attractive and expanded portfolio of clinical development programs
in oncology, Amyotrophic Lateral Sclerosis (ALS or Lou
Gehrig’s disease), stroke recovery and diabetic foot ulcers.
In addition, the combined company will own a 49% interest in RXi
Pharmaceuticals (NASDAQ: RXII). Included in the acquired pipeline
are North American and European licensing rights to tamibarotene, a
drug currently being sold in Japan for the treatment of relapsed or
refractory acute promyelocytic leukemia (APL). Tamibarotene is
presently in a pivotal Phase 2 clinical trial in APL, and CytRx
anticipates that the acquisition will accelerate the time to its
first potential NDA filing by several years to 2010.
“The Innovive acquisition is a compelling strategic fit for
CytRx and is expected to provide several key benefits. Innovive has
an attractive oncology portfolio with the opportunity for
relatively near-term drug approval with low regulatory risk,”
said Steven A. Kriegsman, CytRx President and CEO. “This
acquisition improves our potential for near-term revenue while
maintaining our longer-term emphasis on our molecular chaperone
technology platform. The addition of this pipeline leverages our
significant expertise in oncology drug development. Moreover, the
up-front price we are paying, and the structure of the
success-based milestones, affords CytRx stockholders a significant
opportunity for upside on our investment. We are confident that
CytRx has the financial and operational flexibility to manage the
appropriate integration of these assets into our existing
portfolio. Following the completion of this transaction, we will
undertake a comprehensive strategic review of all Innovive assets
to determine where we can maximize stockholder value while managing
financial risk.”
Steven Kelly, Innovive President and CEO, stated,
“Innovive’s pipeline was designed to lower clinical and
regulatory risk by targeting diseases with well-understood clinical
endpoints providing a clear and established pathway to approval.
Current market conditions, however, limited our ability to fund
ongoing clinical development as intended, and we recognized the
need to find a strong partner like CytRx to advance the four drug
candidates. We are confident this acquisition by CytRx will serve
the best interests of cancer patients.”
Leverages CytRx Oncology Expertise
Collectively, CytRx’s management and its Board of Directors
have brought numerous oncology drugs to market. The senior managers
and directors of CytRx who hold significant oncology experience
include: Joseph Rubinfeld, Ph.D., a director since July 2002 and
world-renowned expert in the field of oncology, who was one of the
four initial founders of Amgen, Inc.; Max Link, Ph.D., Chairman of
the Company’s Board of Directors since 1996, who served for a
number of years as Chairman and CEO of Sandoz Pharma and also
serves as a director of Alexion Pharmaceuticals, Inc., Celsion
Corporation and Discovery Laboratories, Inc.; Jack R. Barber,
Ph.D., Chief Scientific Officer, who has significant R&D
experience in oncology at Immusol and Viagene, where Dr. Barber
most recently served as Head of Oncology; and Shi Chung Ng, Ph.D.,
Senior Vice President of Research and Development, who has
substantial R&D experience at companies such as Abbott and
ArQule, Inc., and most recently served as Vice President of
Molecular Oncology at Ligand Pharmaceuticals.
Update on Molecular Chaperone Development
“We look forward to integrating the Innovive portfolio into
CytRx as we continue to build upon our molecular chaperone
technology and pipeline,” said Mr. Kriegsman. “We are
proceeding with our Phase 2 clinical trial of iroxanadine for
diabetic foot ulcers, which is expected to begin in the first
quarter of 2009, subject to FDA clearance. Furthermore, scientists
at our San Diego laboratory have already identified possible
next-generation chaperone-amplifying compounds to expand our
pipeline. In the field of oncology, CytRx has been applying
molecular chaperone technology to the identification of drug
candidates by adapting its proprietary chaperone screening assay to
identify inhibitors (rather than amplifiers) of chaperone activity.
Because certain chaperones appear to be essential for cancer cells,
CytRx’s own internal molecular chaperone-inhibiting drug
candidates may form the basis of future oncology
products.”
CytRx also announced today that it plans to conduct additional preclinical toxicology studies of arimoclomol, in development for ALS and stroke recovery, which are expected to take up to one year to complete. Based on recent telephone discussions with the FDA regarding its clinical hold on arimoclomol for ALS, CytRx anticipates that the planned Phase 2b clinical trial of arimoclomol will remain on hold pending completion of this additional preclinical work. However, CytRx has not yet received a formal determination letter from the FDA with respect to the ongoing clinical hold of arimoclomol for ALS. In addition, CytRx anticipates that the time frame for initiating the previously planned Phase 2 clinical trial of arimoclomol in stroke recovery will depend on the results of the new preclinical toxicology studies and other factors.
Innovive Oncology Portfolio Highlights:
-Tamibarotene (formerly known as TM-411, TOS-80T, or Am-80),
licensed to Innovive in North America and Europe, is an oral,
rationally-designed, synthetic retinoid originally synthesized by
the University of Tokyo in 1984. In April 2005, tamibarotene was
approved in Japan for use in relapsed/refractory APL.
- The FDA has granted Orphan Drug Designation and Fast Track
Designation for the use of tamibarotene in patients with relapsed
or refractory APL following treatment with all-trans retinoic acid
(ATRA) and arsenic trioxide. CytRx expects to rely on Orphan Drug
Designation and proprietary data for market exclusivity since
tamibarotene chemical matter is off-patent.
- Innovive has a Special Protocol Assessment (SPA) in place
with the FDA for a pivotal Phase 2 clinical trial, known as STAR-1,
which is evaluating the efficacy and safety of tamibarotene for the
treatment of relapsed or refractory APL. The STAR-1 trial is
currently ongoing and includes 31 clinical sites, 22 of which are
in Europe. CytRx believes that successful data from the STAR-1
trial and supporting studies, in conjunction with data from the
Japanese clinical trials, will form the basis for a New Drug
Application (NDA).
- The efficacy of orally administered tamibarotene was
demonstrated in two Phase 2 studies conducted in Japan in a total
of 63 Japanese subjects with APL. The overall complete response
rate in these subjects was 60%. In subjects experiencing their
first relapse, the overall complete response rate was
81%.
- Innovive also retains an option to expand its licenses for
the use of tamibarotene in other fields in oncology, including
multiple myeloma, myelodysplastic syndrome and solid tumors in the
U.S., and multiple myeloma, myelodysplastic syndromes and solid
tumors other than hepatocellular carcinoma in Europe.
- APL is apparently caused by a suppressive mutation of the
Retinoic Acid Receptor-alpha (RAR alpha) gene. Both tamibarotene
and ATRA are thought to act by restoring the normal activity of RAR
alpha. However, of the three known RAR’s (RAR alpha, -beta,
and -gamma) tamibarotene has the highest affinity for the desired
RAR alpha, with considerably less affinity for RAR beta, and
essentially no affinity for RAR gamma. This selectivity may result
in fewer side effects than ATRA, which conversely has its highest
affinity for RARs –gamma and –beta and its lowest
affinity for the desired RAR-alpha. These differences from ATRA
provide a rationale for the hypothesis that tamibarotene may be
associated with less toxicities, which may allow a future
opportunity for tamibarotene to replace ATRA as a first-line
therapy for APL.
- INNO-406 (formerly known as NS-187) is a potent, oral,
rationally designed, dual Bcr-Abl and Lyn-kinase inhibitor that is
currently being planned as a third line treatment for patients with
Chronic Myeloid Leukemia (CML) or certain forms of Acute Myeloid
Leukemia (AML) that are refractory or intolerant of other approved
treatments. In an international Phase 1 clinical trial that is near
completion, INNO-406 has resulted in complete clinical responses
with apparently fewer of the dose-limiting side effects observed
with other marketed drugs. INNO-406 has been granted Orphan Drug
Status for the treatment of CML by the FDA. Upon completion of the
Phase 1 clinical trial, the Company anticipates evaluating options
for a Phase 2 protocol with the FDA in CML.
- INNO-206 (formerly DOXO-EMCH) is a prodrug of the commonly
prescribed chemotherapeutic doxorubicin and was designed to reduce
adverse events by preferentially targeting the tumor. In a Phase 1
study, doses were administered at up to six times the standard
dosing of doxorubicin without an increase in observed side effects
over those historically seen levels with doxorubicin. Objective
clinical responses were seen in patients with sarcoma, breast and
lung cancers. The Company anticipates evaluating options for a
Phase 2 protocol with the FDA.
- INNO-305, a cancer vaccine immunotherapeutic, also known as
WT1 (Wilm’s Tumor Antigen 1) heteroclitic peptide
immunotherapy, is in a Phase 1 clinical trial for the treatment of
subjects with AML and myelodysplastic syndrome (MDS) as well as
subjects with non-small cell lung cancer (NSCLC) and mesothelioma.
INNO-305 was designed to have a unique ability among WT1 peptide
cancer immunotherapeutics to stimulate both CD8 and CD4 T-cells
which may result in a more robust immune response.
Acquisition Improves CytRx’s Strategic Position
CytRx management and its Board of Directors believe Innovive
represents an excellent strategic opportunity for the Company that
may lead to significant stockholder value creation for the
following reasons:
- Relatively Low-Risk Market Opportunity: The near-term market
opportunity for Innovive’s tamibarotene in refractory APL in
the U.S. alone is estimated to approach $20 million per year --
with the market opportunity for an expanded label including
refractory, maintenance and front-line therapy expanding to up to
$150 million in potential recurring revenue in the U.S. and Europe.
There are currently no approved third-line treatment options for
refractory APL patients. As mentioned, tamibarotene is currently
approved as a drug in Japan and is in a pivotal Phase 2 clinical
trial in the U.S. that is subject to an SPA agreement with the FDA.
CytRx expects to use the data from the ongoing pivotal Phase 2
trial of tamibarotene in APL and supporting studies in conjunction
with previously generated safety data from Japanese trials as the
basis for a New Drug Application (NDA) which could be filed as
early as 2010.
- Attractive Oncology Portfolio with Improvements Over
Existing Therapies: In addition to tamibarotene, Innovive has two
clinical drug candidates poised for Phase 2 development and one
drug candidate that is in Phase 1 development. The portfolio has
relatively low regulatory risk in that the diseases are
well-understood, clinical endpoints are well-documented and
established, and the regulatory pathway to drug approval is
generally fairly straightforward. Moreover, there is early evidence
of clinical activity and safety in both INNO-406 and INNO-206, in
addition to tamibarotene, and each candidate has differentiating
characteristics that may represent improvements over existing
therapies. In addition, INNO-305 is an attractive cancer vaccine
therapeutic that is in Phase 1 development. The addressable market
opportunity for INNO-206 could be up to $5 billion, and the Company
believes the combined U.S. and European addressable market
opportunity for INNO-406 could be up to $400 million, and up to
$150 million for INNO-305.
- Creates Near-term Potential for NDA Filing: Through the
Innovive acquisition, tamibarotene’s ongoing development may
provide a relatively rapid path to commercialization. Already
approved in Japan, tamibarotene represents an attractive late-stage
oncology product candidate with significant differentiation from
competitor agents.
- Attractive Price: Since inception in 2004, Innovive has
invested more than $41 million to move its oncology product
candidates forward through clinical development in the U.S. CytRx
may receive substantial benefits from this acquisition for an
up-front cost of $3.0 million payable in CytRx common stock plus
the payment of Innovive’s current liabilities – with
any future consideration only payable upon the achievement of sales
milestones.
- Chaperone Technology Platform Provides Longer-Term
Opportunity: CytRx owns three clinical-stage compounds based on its
small molecule "molecular chaperone" co-induction technology and is
currently identifying additional pipeline candidates. Molecular
chaperones play a critical role in maintaining the health of every
cell, and because of this, CytRx’s technology may be
applicable to a wide range of diseases. The Company has announced
plans to commence a Phase 2 clinical trial of iroxanadine for
diabetic foot ulcers in the first quarter of 2009 subject to FDA
clearance.
- RXi 49% Equity Ownership Provides Independent Market Value:
CytRx maintains a 49% equity interest in RXi Pharmaceuticals, Inc.
(NASDAQ: RXII), an RNAi company. CytRx’s approximately 6.3
million shares have a current market value of approximately $54
million.
Transaction Summary
CytRx has agreed to acquire Innovive for total consideration of
approximately $21.3 million plus the assumption of Innovive’s
liabilities. The consideration has three components: 1) at the
completion of the transaction, the holders of Innovive’s
fully diluted shares of common stock will be entitled to receive in
the aggregate $3.0 million in CytRx common stock valued at a price
of $0.94 per share, determined as the volume weighted average
price of CytRx common stock for the ten trading days immediately
prior to the signing of the definitive agreement on Friday, June 6;
2) CytRx will assume Innovive liabilities and accrued expenses
through the closing (as of today, current liabilities are
approximately $3.7 million); and 3) CytRx will pay future
performance-based milestone earn-outs to Innovive stockholders of
up to approximately $18.3 million payable in cash or stock at
CytRx’s discretion upon the satisfactory completion of
specific sales milestones for Innovive product candidates.
The transaction is expected to close in the third quarter of 2008 subject to customary closing conditions including regulatory clearance, approval by stockholders representing a majority of Innovive shares outstanding, and effectiveness of the registration statement that CytRx will file with the U.S. Securities and Exchange Commission (SEC) relating to the CytRx common stock to be paid as consideration to Innovive’s stockholders.
Conference Call and Webcast
CytRx Corporation will host a conference call and webcast today,
Monday, June 9, 2008, at 9:00 A.M. EDT (6:00 AM PDT) to discuss the
Innovive transaction and review recent developments. Interested
participants and investors may access the teleconference call by
dialing 877-591-4949 and/or (U.S./Canada) or 719-325-4862
(international).
The webcast of the call can be accessed on the Investor section of
CytRx’s Web site at http://www.cytrx.com/
Web participants are encouraged to go to the Web site 15 minutes
prior to the start of the call to register, download and install
any necessary software. After the live webcast, a replay will
remain available in the Investors section of CytRx’s Web site
for 180 days.
A telephonic replay will also be available beginning at 12:00 Noon
EDT for thirty days through Wednesday, July 9, Midnight EDT. Access
numbers for this replay are 888-203-1112 (U.S./Canada) and
719-457-0820 (international); participant code 9480407.
CytRx’s press releases are also available at http://www.cytrx.com/
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. CytRx has a research and development
facility in San Diego. CytRx also has a 49% equity interest in RXi
Pharmaceuticals Corporation (NASDAQ: RXII). For more information on
the Company, visit www.cytrx.com.
About Innovive Pharmaceuticals
Innovive Pharmaceuticals, Inc. acquires, develops and
commercializes novel therapeutics addressing significant unmet
medical needs in the fields of oncology and hematology. The company
has four drug programs in clinical development: INNO-406,
tamibarotene, INNO-206 and INNO-305, for the treatment of chronic
myelogenous leukemia, acute promyelocytic leukemia, small cell lung
cancer, and acute myelogenous leukemia, respectively. For
additional information, please visit www.Innovivepharma.com.
Forward-Looking Statements
This press release contains 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 relating to the timing and the satisfaction of conditions to
completion of our proposed acquisition of Innovive Pharmaceuticals,
Inc., and our ability to achieve one or more of our objectives in
undertaking the acquisition, the risk that secured loan amounts
advanced by us to Innovive cannot be repaid by Innovive if the
acquisition is not completed, the risk that the costs of our
planned molecular chaperone amplification clinical and preclinical
programs and funding of Innovive’s operating expenses before
and after the acquisition will be greater than we anticipate and
adversely affect our liquidity and require us to obtain additional
financing sooner than expected, risks relating to clinical
development of the product candidates of CytRx and Innovive, and
the risks and uncertainties described in the most recent annual and
quarterly reports filed by CytRx with the Securities and Exchange
Commission and current reports filed since the date of
CytRx’s most recent annual report. 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
the most recent annual and quarterly reports filed by RXi with the
Securities and Exchange Commission and current reports filed since
the date of RXi’s most recent annual report. 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.
In connection with the proposed transaction, CytRx will file with the SEC a registration statement on Form S 4, which will include a preliminary prospectus/proxy statement of CytRx and Innovive relating to the merger. INVESTORS AND STOCKHOLDERS ARE STRONGLY ADVISED TO READ THE PRELIMINARY PROSPECTUS/PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders may obtain a free copy of the prospectus/proxy statement (when available) and other documents filed by us and Innovive at the SEC's website at http://www.sec.gov.
This communication does not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offering of securities will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
This communication is not a solicitation of a proxy from any
stockholder of Innovive. However, CytRx, Innovive and their
respective officers and directors may be deemed to be participants
in the solicitation of proxies from Innovive stockholders in
connection with the proposed acquisition. Information about
the officers and directors of CytRx and their ownership of CytRx
common stock is set forth in the proxy statement for CytRx’s
2008 Annual Meeting of Stockholders, which was filed with the SEC
on May 23, 2008. Information about the officers and directors
of Innovive and their ownership of Innovive common stock is set
forth in Innovive’s most recent Annual Report on Form 10-K,
which was filed with the SEC on March 31, 2008 and amended on April
29, 2008. Investors and stockholders may obtain additional
information regarding the direct and indirect interests of CytRx,
Innovive and their respective officers and directors in the
proposed acquisition by reading the prospectus/proxy statement
referred to above.
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