CytRx Corp. said it plans to merge with privately held Global Genomics Capital Inc. in a deal that was valued at up to $6.28 million based on Monday’s opening stock price for CytRx.
CytRx Corp., of Atlanta, will acquire all outstanding shares and rights to acquire shares of capital stock of Los Angeles-based Global Genomics by issuing a maximum of 9,963,000 shares of its common stock. The combined company will be based in Los Angeles.
“We’ve been pursuing a number of opportunities and felt this was exciting,” said Jack Luchese, president and CEO of CytRx, noting that it will be an opportunity to form a company participating in both pharmaceuticals and genomics.
CytRx’s stock (NASDAQ:CYTR) fell 6 cents Monday, or 9.5 percent, to close at 57 cents.
Luchese will remain as president and CEO through the merger, when Steven Kriegsman, chairman and founder of Global Genomics, will become president and CEO.
Global Genomics is a holding company that has a 40 percent ownership interest in Blizzard Genomics Inc., of Minneapolis. Blizzard Genomics is focused on developing instrumentation, software and supplies for the genomics industry. Global Genomics also owns a 5 percent interest in Psynomics Inc., of San Diego, a genomics company focused on the central nervous system.
CytRx has CRL-5861, or Flocor, an intravenous agent for sickle cell disease and TransFect, a delivery technology for gene-based vaccines. TransFect is licensed to Merck & Co. Inc., of Whitehouse Station, N.J., for DNA-based vaccines for HIV and other infectious diseases. The poloxamer technology also is licensed to Vical Inc., of San Diego, to enhance viral or nonviral delivery of polynucleotides in preventive and therapeutic human and animal health applications, except four infectious disease vaccine targets already licensed to Merck. Flocor in 1999 failed to meet its primary endpoint of decreasing the length of sickle cell anemia-associated vascular occlusive crisis in a multicenter Phase III clinical trial. The agent is being looked at in a number of other studies. (See BioWorld Today, Dec. 22, 1999.)
Luchese said both the TransFect and Flocor programs at CytRx will continue.
According to a Nov. 14 10-Q filing by CytRx, the company had cash and equivalents of $1.9 million on Sept. 30, enough to last through the first half of this year. Luchese said the company has received an undisclosed amount of cash since then. CytRx has about 10.9 million shares outstanding, before outstanding options and warrants. Specific details of the number of shares being issued to Global Genomics were not disclosed.
The new company, which will be based in Los Angeles, will have three board members from CytRx, including Max Link, former CEO of Corange U.S. Holdings Inc. and former chairman and CEO of Sandoz Pharma Ltd.; Herbert McDade, former president of Armour Pharmaceutical Corp. and former president of the Revlon Healthcare Group; and Alexander Cappello, chairman and president of Cappello Group Inc. Three board members will come from Global Genomics, including Kriegsman, Louis Ignarro, a Nobel laureate in medicine 1998, and one to be named.