Sometimes, says CytRx Corp. Chief Executive Steven Kriegsman, you have to do “the ugly financing.”

For the West L.A.-based biotech company, last week was one of those times. CytRx shares plunged after the company announced it would seek about $19 million in capital from a stock offering that Kriegsman acknowledged looked dilutive to many stockholders.

Shares fell to a new 52-week low of 41 cents July 27, down 36 percent from the day before and 41 percent from a week earlier.

“My sister is an investor in the company and I even got a call from her,” Kriegsman said. “She couldn’t understand – she paid $3.50 for the stock. She wasn’t very happy with her brother.”

CytRx reported 110 million shares outstanding as of July 15. The offering of 39.2 million new shares and a like amount of warrants would increase the number of shares outstanding by 36 percent, or up to 71 percent if all warrants in the offering were exercised.

Kriegsman acknowledged that the offering looks dilutive, but said that dilution was “irrelevant” for CytRx shareholders.

“In order to build a major biotech company, you have to raise capital,” he said. “When you raise capital (through an offering) what appears to be happening is you’re diluting. But what you’re really doing is increasing capital and increasing the overall value of the company.”

He said CytRx plans to use the capital raised through the offering to continue clinical trials of three cancer drugs for the next two and a half years. Later this year, he said the company plans to start a mid-stage, worldwide study of Inno-206, a drug that targets tumors and allows for larger doses of chemotherapy.

“In order to do that and do it well and get the kind of efficacy we’re looking for, you don’t want to run the risk of not having enough capital,” he said.

Kriegsman said the CytRx board decided the timing was right to make the move.

“Our board felt that, because of the conditions in the market on a worldwide basis, we could not run the risk of raising money six months from now,” he said. “We’ve seen, overall, the smaller biotechs not particularly doing well in the market. We didn’t want to be left empty-handed.”