In a skittish stock market, the sudden departure from a small company of just one top executive let alone two can send stock prices reeling, especially if they are accounting types.
Yet shares of Los Angeles-based biotech CytRx Corp. have held up surprisingly well, even though its chief financial officer and his counterpart at a high-profile subsidiary in Massachusetts were replaced within a week of each other this month.
On Sept. 7, subsidiary RXi Pharmaceuticals Corp., announced that CFO Jim Warren was leaving in a "planned departure," and would be replaced by Stephen DiPalma, a veteran of Massachusetts' large biotech community. Then on Sept. 12, CytRx announced that CFO Matthew Natalizio had resigned to "pursue other interests," and would be replaced by Mitchell Fogelman, who was CFO at Monterey Park's International Aluminum Corp. when it was taken private earlier this year.
CytRx shares did register a 6 percent drop over the two announcements, but have since recovered to a decline of less than 3 percent, closing at $3.37 on Sept. 19. Chief Executive Steven Kriegsman said the two staff changes not only were unrelated, but the timing also was a coincidence.
Warren actually had been acting more as an interim CFO, Kriegsman said, and Natalizio, who lives in La Canada Flintridge, had found a comparable position closer to home.
"We had been working on the change at RXi for quite some time," Kriegsman said. "We're in a stage of growth at both companies where we had the opportunity to bring in some high-level people and we did."
CytRx has a drug in pill form to treat Lou Gehrig's disease in mid-stage clinical trials, plus therapies for diabetes, obesity and cancer in earlier stages of development. RXi Pharmaceuticals Corp., which was spun off earlier this year, is in early stages of developing technologies that can target the gene at the root of a disease like cancer and switch it off without affecting other genes or cells.
CytRx itself is growing. Just last month it relocated research and development and clinical-regulatory operations to a new laboratory in San Diego, where it expects to have 17 people on staff by the end of the year. The Los Angeles office, which has 15 employees and consultants, will continue to serve as corporate headquarters for administration, business development and eventual marketing activities.
"I really wish we had been able to keep our scientific here, but to attract the caliber of people we've now been able to hire from other parts of the country, San Diego's larger (biomedical) community had more synergies to offer," said Kriegsman. "I wish it wasn't the case, because I live in L.A."
Despite the decline this month, CytRx shares are up more than 76 percent for the year to date since the RXi spinoff was announced. Kriegsman, who is the second largest shareholder with 4.6 percent of shares, noted the other largest shareholders are institutional, with a subsidiary of Fidelity Investment the largest at nearly 15 percent.
CytRx owns 86 percent of RXI, but it intends to reduce its stake to 49 percent by divesting shares to stockholders via a dividend, possibly in the coming year.
Long Beach private equity firm National Healthcare Services reached across the Orange Curtain for an investment this month, pumping $3 million of Series A funding into an Irvine-based electronic health care record provider called Accenx.
NHS is the investment arm of MemorialCare Medical Centers, which operates Long Beach Memorial Medical Center and Miller Children's Hospital. It specializes in early- to mid-stage companies, often with technology that might one day benefit its hospital properties.
Accenx's RyTRAK ACM technology helps hospitals and laboratories better exchange information with physician medical record information systems.
Another NHS investment this month was $4 million given to Houston's ThromboVision Inc. to fund clinical trials for its proprietary disposable test kit technology.
Life sciences landlord Alexandria Real Estate Equities Inc. hasn't added much value for investors so far this year as the credit crunch rocks real estate investment trusts. But that's not stopping the Pasadena REIT from going to market.
Alexandria shares fell nearly 4 percent to $96.16 on Sept. 20, after the REIT announced the previous evening a public offering of 2 million shares of common stock. Proceeds will be used to reduce the balance on its outstanding credit and acquire new properties. The offer, which the company anticipates will net $200 million, is expected to close Sept. 25. Citigroup and Merrill Lynch are joint book-running managers.
Alexandria acquires converts and manages office and industrial space in or near established biotech clusters, such as Seattle, San Diego, San Francisco and Boston. It owns more than 155 properties.
Staff reporter Deborah Crowe can be reached at (323) 549-5225, ext. 232, or at firstname.lastname@example.org.
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