Washington Editor

The FDA has placed a clinical hold on CytRx Corp.'s Phase IIb trial of arimoclomol, a drug being tested as a treatment for amyotrophic lateral sclerosis (ALS), commonly called Lou Gehrig's disease.

CEO Steven A. Kriegsman said the reason for the FDA's action is the agency's interest in further analysis of data from previously completed animal toxicology studies with the drug.

News of the FDA's verdict sent shares of CytRx (NASDAQ:CYTR) down 23.4 percent Tuesday, or 49 cents, to close at $1.60.

The firm was informed of the FDA's decision during a brief telephone conversation with drug regulators, Kriegsman said Tuesday during a conference call. CytRx expects to receive written correspondence from the FDA "in the coming weeks" clarifying the agency's initial comments, he told investors and analysts.

"In the meantime, we have begun preparations to respond to the FDA, and we intend to work diligently to respond as promptly as possible following receipt of the FDA's anticipated written correspondence," Kriegsman said.

Jack Barber, CytRx's chief scientific officer, said the firm is further analyzing data from its earlier studies of arimoclomol in preparation for responding to the FDA. However, he said, "we will await further clarification from the FDA before submitting a detailed response."

To the company's knowledge, Barber said, there are no human adverse safety data obtained from any clinical trials of arimoclomol that led to the clinical hold on the Phase IIb trial.

CytRx in September 2006 reported that results of a 10-center, double-blind, placebo-controlled Phase IIa trial showed that arimoclomol at 25 mg, 50 mg and 100 mg administered three times daily over 12 weeks was safe and well tolerated in patients with ALS.

The company in June reported results from a short-term, double-blind, placebo-controlled rising multiple-dose study of 40 healthy volunteers that indicated arimoclomol was safe and well tolerated at doses as high as 600 mg administered three times daily over a seven-day period, Barber noted.

"Despite the safety of that high dose, we decided to be prudent and plan for an additional margin of safety for our Phase IIb trial," he explained. "In order to prepare for such a trial, we tested 400 mg administered three times daily in 16 healthy volunteers over a 28-day period."

Results from that double-blind, placebo-controlled trial, which CytRx reported in November, indicated that arimoclomol was safe and well tolerated at the 400-mg dose level, Barber said, adding that no clearly drug-related adverse events were reported in that trial.

The firm in December submitted the study report from the 400-mg dosage trial along with additional reports on animal toxicology studies to the FDA as part of CytRx's protocol submission for the Phase IIb clinical trial, he noted.

"We designed the Phase IIb clinical trial to assess the safety and efficacy of arimoclomol at 400 mg three times daily in a total of 390 people with ALS treated for nine months, at which time the primacy efficacy endpoint will be evaluated," Barber said. "Following an additional nine months of arimoclomol treatment at the same dose level, we plan to evaluate secondary endpoints."

To help ensure safety in the Phase IIb trial, he said, the clinical protocol includes a "fairly conservative" initial lead-in safety phase in 24 patients with ALS, Barber said.

"The protocol calls for these patients to be monitored on a weekly basis instead of every other week, as was done in our Phase IIa study," he expounded. "The safety profile of arimoclomol in this initial lead-in phase will be evaluated by an independent data safety monitoring board (DSMB), and only if the drug seems safe will we proceed with full trial enrollment."

Barber noted that one patient already had been dosed with arimoclomol in the Phase IIb trial, and as a result of the clinical hold, must be taken off the drug.

He said he could not speculate about what the FDA's concerns entailed, and told analysts and investors that the basis for the agency's hold on the trial was not based on any information from the DSMB, since that panel has yet to meet.

Simos Simeonidis, senior research analyst for Broadpoint Capital, said the market overreacted Tuesday to CytRx's announcement about the FDA's hold on the Phase IIb trial.

Wall Street, he told BioWorld Today, more than likely assumed that the hold meant that a study participant had experienced a severe adverse event related to arimoclomol, and that the drug was dead, which was not the case, according to CytRx.

"I think this hold means more that the FDA wants to get more comfortable with the increased dose" from the earlier Phase IIa study that tested the drug at 100 mg for the highest dosage," Simeonidis said.

While Tuesday's drop in CytRx's stock was negative for the firm, "I don't see it as a long-term issue," he said, adding that once the company provides the FDA with the requested information, the Phase IIb study will be "back on track."

He urged that now, while CytRx's stock price is low, is the time for investors to buy.

CytRx, Kriegsman said, is "committed to work with the FDA to provide the data to continue our Phase IIb clinical trial with arimoclomol for ALS and to do so with speed and prudence."

The firm is continuing to make preparations to submit investigational new drug applications to begin two additional Phase II clinical trials, the first with arimoclomol in stroke recovery, he noted.

"Last year we reported statistically significant improvement in recovery following oral arimoclomol administration in an animal model up to 48 hours after stroke," Kriegsman said.

CytRx's second Phase II trial is with iroxanadine, a small-molecule drug candidate being investigated as a treatment for diabetic foot ulcers, "which represents a large poorly served market," he said.

The company plans to start the stroke recovery Phase II clinical trial in the first half of 2008, subject to the FDA's clearance, Kriegsman noted.

CytRx decided to move the start of its iroxanadine Phase II diabetic foot ulcer trial to the second half of the year "in order to allow time to develop a manufacturing process that we believe may significantly reduce our company's manufacturing costs," he said.

On another note, Kriegsman said CytRx intends to distribute to its stockholders about 36 percent of its currently outstanding stock of RXi Pharmaceutical Corp., the company's majority-owned RNAi subsidiary.

"The distribution is planned to be made to our stockholders as of the record date for the distribution, which is expected to be 20 days after the registration statement filed with the SEC," Kriegsman said, noting that Worcester, Mass.-based RXi recently filed an amendment to the registration statement.