CytRx Completes $37.0 Million Private Placement

CytRx Corporation (NASDAQ:CYTR - News), a biopharmaceutical company engaged in the development and commercialization of human therapeutics, today reported the completion of a previously-announced $37.0 million private placement of 8.6 million shares of common stock at $4.30 per share to existing and new institutional investors. The financing raised net proceeds to the Company of approximately $34.4 million. No warrants were issued in conjunction with the transaction.

CytRx will invest in RXi Pharmaceuticals Corporation (RXi), its majority-owned subsidiary, no less than $15 million, which will satisfy RXi's financing requirements under its agreements with the University of Massachusetts Medical School (UMMS). RXi intends to use those proceeds for its working capital and general corporate purposes, including funding of its RNAi research and development activities and the payment of up-front and annual maintenance fees under its agreements with UMMS. A portion of the money invested in RXi will be paid back to CytRx as reimbursement for certain organizational and operational expenses incurred by CytRx in connection with RXi's formation and initial operations. CytRx plans to reduce its ownership of RXi to less than a majority of the outstanding common shares following its funding of RXi. At present, CytRx intends to make a dividend or other distribution of RXi shares to its stockholders to satisfy its obligations to reduce its ownership of RXi.

The remainder of the net proceeds from the financing will be used to augment CytRx's working capital and for general corporate purposes, including further development work and clinical trials of its lead product candidates. CytRx also may determine to use a portion of the net proceeds for the acquisition of complementary businesses, technologies or products, although it has no present commitments or agreements with respect to any such acquisitions.

"Completing this financing is an important step in accomplishing our previously-stated goal of unlocking the intrinsic value to our shareholders of the RNAi assets that now reside with RXi," said CytRx's President and CEO Steven A. Kriegsman. "At CytRx, we are now better positioned to move forward with plans to pursue potential Phase II clinical development of our orally-administered drug candidate arimoclomol for stroke recovery, while maintaining a significant ownership interest in RXi."

Lehman Brothers acted as the lead placement agent on the transaction, with Oppenheimer & Co. Inc., Griffin Securities, Inc. and Pulse Obsidian, a division of Pulse Trading, Inc., serving as co-placement agents.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of the securities discussed herein. The securities offered in the private placement will not be registered under the Securities Act of 1933 or any state securities laws, as the private placement was made only to accredited investors in accordance with Section 4(2) under the Securities Act of 1933 and the rules and regulations promulgated thereunder.

About CytRx Corporation

Los Angeles, California-based CytRx Corporation is a biopharmaceutical research and development company engaged in the development of high-value human therapeutics. The Company owns three clinical-stage compounds based on its small molecule "molecular chaperone" co-induction technology. In September 2006 CytRx announced that arimoclomol was shown to be safe and well tolerated at all three doses tested in its Phase IIa clinical trial in patients with ALS. The Company expects to announce results of its completed open-label extension trial in the second quarter of 2007. The Company plans to enter a Phase IIb clinical trial with arimoclomol in ALS in the second half of 2007, subject to U.S. Food and Drug Administration (FDA) acceptance. The FDA has granted Fast Track designation and Orphan Drug status to arimoclomol for the treatment of ALS and has also been granted orphan medicinal product status for the treatment of ALS by the European Commission. The Company is also developing a potential Phase II clinical plan for arimoclomol in stroke recovery. For more information on the Company, visit www.cytrx.com

About RXi Pharmaceuticals Corporation

Worcester, Massachusetts-based RXi Pharmaceuticals Corporation is a biopharmaceutical research and development company that focuses on developing RNAi-based therapeutics for the treatment of human disease. RXi's initial focus is on neurodegenerative diseases, oncology, type 2 diabetes and obesity. RXi has licenses to a diverse series of early patents and patent applications that were filed from 1998 to 2006 in the areas of RNAi target sequences, RNAi chemistry and RNAi delivery.

RXi was founded by CytRx and RNAi pioneers Craig Mello, Ph.D., 2006 Nobel Laureate for discovering RNAi and inventing RNAi therapeutics, Tariq M. Rana, Ph.D., inventor of fundamental technology for stabilizing RNAi and of RNAi nanotransporters, Greg Hannon, Ph.D., discoverer of RNAi mechanism (RISC) and short hairpin RNAi (shRNAi), and Michael Czech, Ph.D., a leader in the application of RNAi to diabetes and obesity. RXi's CEO, Tod Woolf, Ph.D., previously co-invented and commercialized STEALTH(TM) RNAi, one of the most widely used second-generation RNAi research products.