CytRx: Multiple Clinical Catalysts In 2013

This year could be transformative for CytRx (CYTR) as it delivers important clinical datapoints, regulatory milestones and Phase III starts for its cancer pipeline. Major value inflection points include FDA agreement on the aldoxorubicin pivotal study in second-line soft tissue sarcoma (STS), aldoxorubicin Phase II data in first-line STS and tamibarotene Phase II results in advanced lung cancer. We value the company at $120m, or $4.00 per share, which could rise to $180m, or $5.80 per share, following positive clinical data.


Multiple clinical catalysts in 2013
CytRx’s recent FY12 report outlined a rich newsflow profile for 2013, including four clinical study readouts - three aldoxorubicin, one tamibarotene - and start of the aldoxorubicin pivotal Phase III trial in second-line STS. The major value inflection points, in our view are: (1) FDA agreement (SPA grant) for the second-line Phase III trial, (2) aldoxorubicin Phase II data in first-line STS, and (3) tamibarotene Phase II results in advanced non-small cell lung cancer (NSCLC). Our updated financial model projects cash of $16.1m at year-end 2013, which provides a runway into late 2014.

Aldoxorubicin: Targeting Phase III start in Q313
We anticipate an SPA for the second-line STS Phase III study in Q213 and first patient enrolment in Q313. Separately, results of two supportive Phase Ib trials in advanced solid tumours are due Q213. In H213, we expect topline results from the Phase IIb study vs doxorubicin in first-line STS; PFS and safety data favouring aldoxorubicin would increase our confidence in the second-line opportunity and could drive a re-rating in CytRx’s valuation. Finally, competitor Phase III readouts (Ziopharm’s palifosfamide, Threshold’s TH-302) in H113 could clarify the competitive landscape in first-line STS.

Tamibarotene: Phase II lung cancer data in Q413
In H213, we anticipate headline results from tamibarotene Phase IIb study in advanced non-small cell lung cancer (NSCLC). The global trial is evaluating chemotherapy (paclitaxel, carboplatin) +/- tamibarotene as front-line therapy in 140 patients with stage IIIB or IV disease. The study recently completed enrolment, which points to progression free survival (PFS) data sometime in Q413.

Valuation: rNPV of $120m
We value CytRx at $120m, or $4.00/share, based on a NPV analysis. This includes aldoxorubicin in second-line STS ($70m), aldoxorubicin in second-line pancreatic cancer ($34m), tamibarotene in front-line NSCLC ($44m), year-end 2013 cash ($16m) and operating costs ($-43m).

To Read the Entire Report Please Click on the pdf File Below.