CytRx to acquire Innovive

$23 million deal creates company focused on molecular chaperone technology platform, near-term oncology opportunities

LOS ANGELES—CytRx Corp., a biopharmaceutical company engaged in the development and commercialization of therapeutics based on molecular chaperone amplification technology, 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 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 percent interest in RXi Pharmaceuticals. 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,º which is currently in a Phase II clinical trial in APL. CytRx anticipates that the acquisition of Innovive 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," says Steven A. Kriegsman, CytRx president and CEO. "[It] 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."

According to CytRx, 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.

In addition to tamibarotene, Innovive has two clinical drug candidates poised for Phase II development and one drug candidate that is in Phase I development. 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 I development. The addressable market opportunity for INNO-206 could be up to $5 billion, and CytRx estimates 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.

Steven Kelly, Innovive president and CEO, states, "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." DDN


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