R |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
£ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
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58-1642740
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
11726 San Vicente Blvd., Suite 650
Los Angeles, CA
|
90049
|
(Address of principal executive offices)
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(Zip Code)
|
Large accelerated filer
£
|
Accelerated filer
R
|
Non-accelerated filer
£
|
Smaller reporting company
£
|
(Do not check if a smaller reporting company)
|
Page
|
|
PART I. — FINANCIAL INFORMATION
|
|
Item 1.
Financial Statements (unaudited)
|
1 |
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
12 |
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
|
18 |
Item 4.
Controls and Procedures
|
19 |
PART II. — OTHER INFORMATION
|
|
Item 1.
Legal Proceedings
|
20 |
Item 1A. Risk Factors
|
20 |
Item 6.
Exhibits
|
21 |
SIGNATURES
|
22 |
INDEX TO EXHIBITS
|
23 |
September 30, 2016
|
December 31, 2015
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
58,875,925
|
$
|
22,261,372
|
||||
Short-term investments
|
—
|
35,035,420
|
||||||
Receivables
|
108,345
|
4,621,605
|
||||||
Prepaid expenses and other current assets
|
2,618,919
|
2,373,708
|
||||||
Total current assets
|
61,603,189
|
64,292,105
|
||||||
Equipment and furnishings, net
|
2,066,392
|
1,467,681
|
||||||
Goodwill
|
183,780
|
183,780
|
||||||
Other assets
|
54,648
|
1,080,872
|
||||||
Total assets
|
$
|
63,908,009
|
$
|
67,024,438
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
Accounts payable
|
$
|
4,815,597
|
$
|
8,058,624
|
||||
Accrued expenses and other current liabilities
|
5,049,006
|
9,693,359
|
||||||
Litigation settlement due in shares of common stock
|
—
|
4,500,000
|
||||||
Warrant liability
|
6,686,381
|
693,457
|
||||||
Term loan, net - current
|
3,562,578
|
—
|
||||||
Total current liabilities
|
20,113,562
|
22,945,440
|
||||||
Long-term loan, net
|
20,197,992
|
—
|
||||||
Total liabilities
|
40,311,554
|
22,945,440
|
||||||
Commitments and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.01 par value, 5,000,000 shares authorized, including 25,000 shares of Series A Junior Participating Preferred Stock; no shares issued and outstanding
|
—
|
—
|
||||||
Common stock, $0.001 par value, 250,000,000 shares authorized; 96,943,072 shares issued and outstanding at September 30, 2016; 66,480,065 shares issued and outstanding at December 31, 2015
|
96,942
|
66,480
|
||||||
Additional paid-in capital
|
431,693,072
|
409,107,292
|
||||||
Accumulated deficit
|
(408,193,559
|
)
|
(365,094,774
|
)
|
||||
Total stockholders' equity
|
23,596,455
|
44,078,998
|
||||||
Total liabilities and stockholders' equity
|
$
|
63,908,009
|
$
|
67,024,438
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenue:
|
||||||||||||||||
License revenue
|
$
|
—
|
$
|
—
|
$
|
100,000
|
$
|
—
|
||||||||
Expenses:
|
||||||||||||||||
Research and development
|
8,927,037
|
8,470,592
|
29,531,609
|
31,043,741
|
||||||||||||
General and administrative
|
2,771,732
|
2,188,656
|
12,859,069
|
9,510,657
|
||||||||||||
11,698,769
|
10,659,248
|
42,390,678
|
40,554,398
|
|||||||||||||
Loss before other income (loss)
|
(11,698,769
|
)
|
(10,659,248
|
)
|
(42,290,678
|
)
|
(40,554,398
|
)
|
||||||||
Other income (loss):
|
||||||||||||||||
Interest income
|
68,635
|
68,678
|
195,809
|
171,707
|
||||||||||||
Interest expense
|
(781,038
|
)
|
—
|
(1,939,186
|
)
|
—
|
||||||||||
Other income (loss), net
|
(10,489
|
)
|
2,040
|
(4,398
|
)
|
17,948
|
||||||||||
Gain on warrant derivative liability
|
246,211
|
3,515,178
|
939,668
|
4,079,748
|
||||||||||||
Net loss
|
$
|
(12,175,450
|
)
|
$
|
(7,073,352
|
)
|
$
|
(43,098,785
|
)
|
$
|
(36,284,995
|
)
|
||||
Basic and diluted net loss per share
|
$
|
(0.13
|
)
|
$
|
(0.11
|
)
|
$
|
(0.57
|
)
|
$
|
(0.62
|
)
|
||||
Basic and diluted weighted-average shares outstanding
|
91,042,450
|
63,848,208
|
75,001,770
|
58,462,214
|
||||||||||||
Nine Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(43,098,785
|
)
|
$
|
(36,284,995
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
364,548
|
240,391
|
||||||
Stock-based compensation expense
|
5,400,604
|
4,520,307
|
||||||
Fair value adjustment on warrant liability
|
(939,668
|
)
|
(4,079,748
|
)
|
||||
Amortization of loan cost and discount
|
382,241
|
—
|
||||||
Loss on retirement of fixed assets
|
9,116
|
—
|
||||||
Changes in assets and liabilities:
|
||||||||
Receivables
|
4,485,130
|
351,388
|
||||||
Interest receivable
|
28,130
|
97,873
|
||||||
Prepaid expenses and other assets
|
781,013
|
1,545,955
|
||||||
Accounts payable
|
(3,254,181
|
)
|
(447,430
|
)
|
||||
Accrued expenses and other current liabilities
|
(4,644,353
|
)
|
(26,763
|
)
|
||||
Net cash used in operating activities
|
(40,486,205
|
)
|
(34,083,022
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchase of short-term investments
|
—
|
(32,982,710
|
)
|
|||||
Proceeds from the sale of short-term investments
|
35,035,420
|
63,581,849
|
||||||
Purchases of equipment and furnishings
|
(961,221
|
)
|
(325,471
|
)
|
||||
Net cash provided by investing activities
|
34,074,199
|
30,273,668
|
||||||
Cash flows from financing activities:
|
||||||||
Net proceeds from public offering
|
18,309,781
|
26,780,068
|
||||||
Net proceeds from term loan
|
24,012,078
|
—
|
||||||
Net proceeds from exercise of warrants and stock options
|
704,700
|
590,001
|
||||||
Net cash provided by financing activities
|
43,026,559
|
27,370,069
|
||||||
Net increase in cash and cash equivalents
|
36,614,553
|
23,560,715
|
||||||
Cash and cash equivalents at beginning of period
|
22,261,372
|
32,218,905
|
||||||
Cash and cash equivalents at end of period
|
$
|
58,875,925
|
$
|
55,779,620
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the year for interest
|
$
|
1,359,028
|
$
|
—
|
||||
Cashless warrant exercises
|
$
|
—
|
$
|
3
|
||||
Cash paid for income taxes
|
$
|
800
|
$
|
800
|
September 30, 2016
|
||||
Term Loan Principal - Current
|
$
|
4,311,336
|
||
Issuance Cost - Current
|
(122,335
|
)
|
||
Loan Discount - Current
|
(626,423
|
)
|
||
Term Loan, Net - Current
|
$
|
3,562,578
|
||
Term Loan Principal
|
$
|
20,688,664
|
||
End Fee Payable
|
1,771,250
|
|||
Long Term Issuance Cost
|
(353,919
|
)
|
||
Long Term Loan Discount
|
(1,908,003
|
)
|
||
Long Term Loan, Net
|
$
|
20,197,992
|
||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Research and development — employee
|
$
|
455,341
|
$
|
402,292
|
$
|
1,443,347
|
$
|
1,131,072
|
||||||||
General and administrative — employee
|
586,315
|
482,954
|
3,742,733
|
3,182,798
|
||||||||||||
Total employee stock-based compensation
|
$
|
1,041,656
|
$
|
885,246
|
$
|
5,186,080
|
$
|
4,313,870
|
||||||||
Research and development — non-employee
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
General and administrative — non-employee
|
(5,938
|
)
|
(27,647
|
)
|
214,524
|
206,437
|
||||||||||
Total non-employee stock-based compensation
|
$
|
(5,938
|
)
|
$
|
(27,647
|
)
|
$
|
214,524
|
$
|
206,437
|
Nine Months Ended
September 30, 2016
|
Nine Months Ended
September 30, 2015
|
|||||||
Risk-free interest rate
|
1.72
|
%
|
2.21
|
%
|
||||
Expected volatility
|
74.9
|
%
|
78.2% - 84.4
|
%
|
||||
Expected lives (years)
|
6
|
6 - 10
|
||||||
Expected dividend yield
|
0.00
|
%
|
0.00
|
%
|
||||
Nine Months Ended September 30, 2016
|
||||||||||||||||
Number of Options
(Employees)
|
Number of Options
(Non-Employees)
|
Total Number of
Options
|
Weighted-Average
Exercise Price
|
|||||||||||||
Outstanding at January 1, 2016
|
13,583,862
|
635,714
|
14,219,576
|
$
|
3.10
|
|||||||||||
Granted
|
475,000
|
—
|
475,000
|
$
|
2.05
|
|||||||||||
Exercised, Forfeited or Expired
|
(1,221,040
|
)
|
(35,714
|
)
|
(
1,256,754
|
)
|
$
|
3.30
|
||||||||
Outstanding at September 30, 2016
|
12,837,822
|
600,000
|
13,437,822
|
$
|
3.04
|
|||||||||||
Options exercisable at September 30, 2016
|
9,242,803
|
600,000
|
9,842,803
|
$
|
3.27
|
Range of Exercise
Prices
|
Total Number
of Options
|
Weighted-Average Remaining Contractual Life
(years)
|
Weighted-Average
Exercise Price
|
Total Number of Options
Exercisable
|
Weighted-Average Remaining Contractual Life
(years)
|
Weighted-Average
Exercise Price
|
||||||||||||||||||||
$
|
0.60 – $2.00
|
1,274,498
|
6.34
|
$
|
1.78
|
1,224,498
|
6.19
|
$
|
1.83
|
|||||||||||||||||
$
|
2.01 – $2.50
|
7,899,179
|
8.41
|
$
|
2.33
|
4,522,874
|
8.06
|
$
|
2.30
|
|||||||||||||||||
$
|
2.51 – $4.00
|
968,291
|
7.37
|
$
|
2.88
|
937,458
|
7.34
|
$
|
2.87
|
|||||||||||||||||
$
|
4.01 – $32.55
|
3,295,854
|
6.46
|
$
|
5.30
|
3,157,973
|
6.42
|
$
|
5.32
|
|||||||||||||||||
13,437,822
|
7.66
|
$
|
3.04
|
9,842,803
|
7.23
|
$
|
3.27
|
(In thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Cash equivalents
|
$
|
56,972
|
$
|
—
|
$
|
—
|
$
|
56,972
|
||||||||
Warrant liability
|
—
|
—
|
(6,686
|
)
|
(6,686
|
)
|
(In thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Cash equivalents
|
$
|
20,673
|
$
|
—
|
$
|
—
|
$
|
20,673
|
||||||||
Short-term investments
|
35,035
|
—
|
—
|
35,035
|
||||||||||||
Warrant liability
|
—
|
—
|
(693
|
)
|
(693
|
)
|
·
|
commercially reasonable royalties based on a percentage of net sales (as defined in the agreement);
|
·
|
a percentage of non-royalty sub-licensing income (as defined in the agreement); and
|
·
|
milestones of $1 million for each additional final marketing approval that we obtain.
|
Three-Month Period Ended
September 30,
|
Nine-Month Period Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(In thousands)
|
(In thousands)
|
|||||||||||||||
Research and development expenses
|
$
|
8,331
|
$
|
8,002
|
$
|
27,756
|
$
|
29,709
|
||||||||
Employee stock option expense
|
455
|
402
|
1,443
|
1,131
|
||||||||||||
Depreciation and amortization
|
141
|
67
|
333
|
204
|
||||||||||||
$
|
8,927
|
$
|
8,471
|
$
|
29,532
|
$
|
31,044
|
|||||||||
Three-Month Period Ended
September 30,
|
Nine-Month Period Ended
September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(In thousands)
|
(In thousands)
|
|||||||||||||||
General and administrative expenses
|
$
|
2,181
|
$
|
1,727
|
$
|
8,869
|
$
|
6,086
|
||||||||
Non-employee warrant expenses
|
(6
|
)
|
(28
|
)
|
215
|
206
|
||||||||||
Employee stock option expense
|
587
|
483
|
3,743
|
3,183
|
||||||||||||
Depreciation and amortization
|
10
|
7
|
32
|
36
|
||||||||||||
$
|
2,772
|
$
|
2,189
|
$
|
12,859
|
$
|
9,511
|
CytRx Corporation | |||
Date: November 9, 2016
|
By:
|
/s/ JOHN Y. CALOZ | |
John Y. Caloz | |||
Chief Financial Officer | |||
Exhibit
Number
|
Description
|
|
1.1
|
Engagement Letter, dated as of July 14, 2016, between CytRx Corporation and Rodman & Renshaw, a unit of H.C. Wainwright & Co., LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 15, 2016)
|
|
4.1†
|
Amendment No. 3 to Shareholder Protection Rights Agreement
|
|
4.2
|
Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed on July 15, 2016)
|
|
10.1
|
Form of Securities Purchase Agreement, dated as of July 15., 2016, among CytRx Corporation and the purchasers identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 of Form 8‑K filed on July 15, 2016)
|
|
31.1†
|
Certification of Chief Executive Officer Pursuant to 17 CFR 240.13a-14(a)
|
|
31.2†
|
Certification of Chief Financial Officer Pursuant to 17 CFR 240.13a-14(a)
|
|
32.1*
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
32.2*
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Schema Document
|
|
101.CAL
|
XBRL Calculation Linkbase Document
|
|
101.DEF
|
XBRL Definition Linkbase Document
|
|
101.LAB
|
XBRL Label Linkbase Document
|
|
101.PRE
|
XBRL Presentation Linkbase Document
|
|
Accepted and agreed to as of the date first written above: | ||||
American Stock Transfer & Trust Company | ||||
/s/ STEVEN A. KRIEGSMAN
|
/s/ MICHAEL A. NESPOLI
|
|||
Name: Steven A. Kriegsman
|
Name: Michael A. Nespoli
|
|||
Title: Chairman of the Board and Chief Executive Officer
|
Title: Executive Director
|
CytRx Corporation | |||
Date: November 9, 2016
|
By:
|
/s/ STEVEN A. KRIEGSMAN | |
Steven A. Kriegsman | |||
Chief Executive Officer | |||
CytRx Corporation | |||
Date: November 9, 2016
|
By:
|
/s/ JOHN Y. CALOZ | |
John Y. Caloz | |||
Chief Financial Officer | |||
Cytrx Corporation | |||
Date: November 9, 2016
|
By:
|
/s/ STEVEN A. KRIEGSMAN | |
Steven A. Kriegsman | |||
Chief Executive Officer | |||
CytRx Corporation | |||
Date: November 9, 2016
|
By:
|
/s/ JOHN Y. CALOZ | |
John Y. Caloz | |||
Chief Financial Officer | |||