CytRx Corporation Soars on Positive Phase 2b Sarcoma Data

On Wednesday morning, shares of CytRx Corporation (NASDAQ:CYTR) soared by as much as 80 percent after the company announced positive data from its Phase 2b clinical trial in soft tissue sarcoma. The trial was evaluating the efficacy and safety of aldoxorubicin compared with doxorubicin in patients with first-line metastatic, locally advanced or unresectable soft tissue sarcomas.

Aldoxorubicin is a tumor-targeted doxorubicin conjugate. It essentially combines doxorubicin (current standard of care in cancer treatment) with a novel-linker molecule that binds to albumin in the blood. This molecule allows for a higher delivery of doxorubicin (3.5 to 4 times as much) without the associated toxicity. The principal investigator of the study, Dr. Sant Chawla, stated that, “Aldoxorubicin is the first and only single agent to surpass doxorubicin as a first-line treatment for soft tissue sarcomas.”

The trial evaluated 123 patients who received either aldoxorubicin or doxorubicin in a 2:1 randomization (83 patients received aldoxorubicin while 40 patients received doxorubicin). In order to properly analyze the results, CytRx used two approaches to evaluate the efficacy; an investor assessment and a central lab review. The major takeaways from the data include the following:

  • The median progression-free survival for patients treated with aldoxorubicin was 8.4 months versus just 4.7 months for doxorubicin patients in the investigator assessment.
  • In the central lab review, the median progression-free survival for aldoxorubicin patients was 5.7 months versus just 2.8 months for doxorubicin patients.
  • Investigators determined that the overall response rate for aldoxorubicin patients was 25.4 percent (2.7 percent complete response and 22.7 percent partial response) versus just 5.4 percent doxorubicin patients.  Of that 5.4 percent, none elicited a complete response.
  • In the central lab review, the overall response rate for those on aldoxorubicin was shown to be 23 percent compared to 0 percent for those on doxorubicin.

These results were highly statistically significant.  In both cases (investigator and central lab reviews), aldoxorubicin demonstrated between an 80 percent and 100 percent improvement over the standard of care, doxorubicin. So what do these results mean for the valuation of CytRx Corporation? A lot.

The American Cancer Society estimates that roughly 11,000 people will be diagnosed with soft tissue sarcomas each year in the United States. Additional analysis indicates that as many as 40,000 people each year across the U.S. and Europe may be diagnosed with STS. Given that new breakthrough medical treatments tend to cost roughly $100,000 per year per patient, CytRx could be looking at a potential market size of $1.1 billion in the United States and roughly $4 billion globally.

In addition to STS, CytRx Corporation is working on developing treatment for several other cancer types including:

  • Second Line STS — Phase 3 pivotal trial expected to start during the first quarter of 2014
  • Glioblastoma Multiforme — Phase 2b trial was recently initiated
  • Kaposi’s Sarcoma — Phase 2 trial expected to start in January 2014

Given the results that aldoxorubicin demonstrated in this Phase 2b trial, investors have to be encouraged about the company’s ability to succeed in the other indications.

Investors wondering if the company may need to raise money in the near-term can breathe easy as the company ended the third quarter 2013 with approximately $6 million in cash and $17 million in short term investments. In October, CytRx raised capital netting $24.1 million in addition to the $23 million above. That balance should be enough to carry the company through at least the middle of 2015 based on the current monthly burn rate of approximately $1.95 million per month. The good news is that if the company does have to raise more money, they will be able to take advantage of the higher share price, which means less dilution for investors.

CytRx Corporation remains a biotechnology stock that investors should keep their eyes on. The company has a lot of potential and appears to be in the early stages of a big run.

Follow Tom on Twitter @tommymeyer82.

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