CytRx Corporation (NASDAQ:CYTR) investors are heading for the hills after the oncology drug maker announced that it has entered into securities purchase agreements with existing institutional investors to purchase shares of our common stock at a purchase price of $0.42 per share in a registered direct offering with gross proceeds of $8.1 million. To the extent that the purchase of shares of common stock would result in beneficial ownership above 4.99%, an investor may elect to purchase shares of our Series B convertible preferred stock in lieu of common stock. Each share of preferred stock has a conversion price of $0.42 and no dividend rights. The offering is expected to close on or about December 16, 2016, subject to the satisfaction of customary closing conditions.
CytRx has also agreed in the securities purchase agreements that, for each share of common stock (or each share underlying the shares of convertible preferred stock) purchased in this offering, a corresponding number of warrants of CytRx that were issued to the existing institutional investors in July 2016 will be amended to have an exercise price of $0.5055 per share and the term of exercise will be extended by twelve months.
After deducting the placement agent’s commission and other estimated offering expenses payable by CytRx, the net proceeds to CytRx are anticipated to be approximately $7.4 million. CytRx intends to use the net proceeds from the offering for working capital and general corporate purposes.
Shares of Cytrx are currently trading at $0.405, down $0.10, or 20%. CYTR has a 1-year high of $3.66 and a 1-year low of $0.40. The stock’s 50-day moving average is $0.50 and its 200-day moving average is $0.97.
On the ratings front, FBR analyst Christopher James reiterated a Buy rating on CYTR, with a price target of $3, in a report issued on November 11. The current price target implies an upside of 488% from current levels. According to TipRanks.com, James has a yearly average loss of 13.4%, a 32% success rate, and is ranked #4162 out of 4269 analysts.
CytRx Corp. operates as a biopharmaceutical research and development company specializing in oncology. It provides clinical development of aldoxorubicin oncology pipeline for the treatment of cancer. The company was founded on February 28, 1985 and is headquartered in Los Angeles, CA.