In line with its strategy to become a fully integrated drug development company using RNAi technology and DNA-based vaccines, CytRx Corporation, a biopharmaceutical company, announced that it would cease funding its existing investments in genomics companies to focus on its core strategy of developing human therapeutics for large market indications. This event will have no effect on CytRx's cash or working capital position.
In the past nine months, CytRx has invested more than $3.7 million in research focused on using RNAi (gene suppression) technology to treat or cure ALS (also known as Lou Gehrig's Disease), type 2 diabetes, obesity, and cytomegalovirus (CMV). CytRx holds exclusive licenses from the University of Massachusetts Medical School for these technologies, as well as an exclusive license for a DNA-based HIV vaccine technology that is expected to enter a Phase I clinical trial in the first quarter of this year.
"With this, CytRx completes its break with the past and will concentrate on developing treatments and cures for major market medical indications. It was our position that continuing to invest in genomics companies would take away both capital and management's time from the development of therapeutic programmes," said Steven Kriegsman, CytRx CEO.
CytRx, through its GGC Pharmaceuticals, Inc. subsidiary, owns 40 per cent of Blizzard Genomics and 5 per cent of Psynomics, Inc.
CytRx has decided that it will not make further investments in these genomics companies. In addition, CytRx now believes that there is substantial doubt about their abilities to continue as going concerns. Consequently, CytRx expects to record a write off of its investments in the genomics companies in the quarter ending December 31, 2003. The write off will have no impact upon CytRx's cash or working capital position.
GGC (formerly known as Global Genomics Capital, Inc.), prior to its merger with CytRx, invested a total of approximately $1.65 million in cash in Blizzard and Psynomics. Subsequent to the merger, CytRx has invested less than $25,000 in the companies. For accounting purposes, the carrying value of the Blizzard and Psynomics investments, as of September 30, 2003, was approximately $5.85 million, all of which was accounted for as an intangible asset. In the first nine months of 2003, CytRx's consolidated financial statements included its portion of the Blizzard Genomics losses of approximately $245,000 or $0.01 per share and amortization of the recorded investment of approximately $550,000 or $0.02 per share. Beginning in the first quarter of 2004, these charges will be eliminated from CytRx's consolidated financial reports.