Brentwood biotechnology firm CytRx Corp. couldn’t cure investor concerns last week after it fell short of analysts’ first-quarter expectations.
Shares dropped after CytRx reported a net loss of $17.5 million (-31 cents a share), wider than analysts’ expectations of an $11.7 million loss (-21 cents). The company, which is developing a drug to fight cancer, blamed the losses on research and development expenses that increased to $12.6 million in the quarter ended March 31, up from $7 million during the same period last year.
CytRx followed the earnings news with a more upbeat report that results from two ongoing clinical trials were promising. Preliminary findings indicated its drug aldoxorubicin, known as Aldox, was well-tolerated by patients and shrunk some tumors, the company said.
The news brought the stock back to life – a bit. Shares rebounded slightly to close at $4.24, down 11 percent for the week ended May 6, making CytRx among the top losers on the LABJ Stock Index. (See Page 72.)
“We believe that aldoxorubicin has the potential to be combined with other anti-cancer agents in order to improve patient outcomes for many types of cancer,” CytRx Chief Executive Steven A. Kriegsman said in a statement last week. “These results, which include excellent tolerability and compelling initial signs of activity, even at the lowest dose of aldoxorubicin, provide an opportunity to expand the aldoxorubicin development pipeline and explore additional indications.”
The company declined to comment on its stock performance.
In November, the Food and Drug Administration placed a hold on enrolling patients in clinical trials of CytRx’s experimental cancer drug after the death of a patient. The FDA removed the partial hold in January after the company revised trial protocols.
Andrew S. Fein, an analyst at H.C. Wainwright & Co. in New York, rates the company a “buy.” He lauded the promising trial results in a research note last week.
“Overall, we believe (CytRx) shares will continue in an upward trajectory into 2016, as we leave behind investor anxiety over the now-resolved clinical hold of December-January, and as a string of data points from ongoing studies reinforces the thesis of Aldox as an active and safe agent,” he said in his note. “We reiterate our positive view on the long-term potential of Aldox in oncology, our buy rating and our $10 price target.”
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