Inaccurate Article Sends CytRx Shares Lower
CytRx Corporation (NASDAQ:CYTR) shares have surged higher since last week because of positive data from the company’s Phase 2b first-line soft tissue sarcoma trial. The company reported statistically significant results and demonstrated 80 to 100 percent superiority over doxorubicin in progression-free survival. The results also showed that aldoxorubicin had a higher overall response rate than the current standard of care, doxorubicin.
Shares of CytRx traded as high as $6.79 last week before closing the week at $5.72, a gain of roughly 150 percent from where shares began on Monday, December 9. Unfortunately, an inaccurate report was published on Monday, December 16, by The Street’s Adam Feuerstein. The report contained several inaccuracies, which caused shares of CytRx to sell off by more than 10 percent. Mr. Feuerstein raised three points that need to be addressed:
- Option Grants before Aldoxorubicin Press Release
- Compared CytRx data to that of Ziopharm Oncology (NASDAQ:ZIOP)
- Geographic Distribution
The Street’s article seemed to imply that CytRx management purposely issued option grants to insiders knowing that a press release would cause the shares to spike shortly after. That is inaccurate. The CytRx board meets at least once per quarter. Additionally, the company has demonstrated a history of conducting board meetings in December and issuing option grants during those same December meetings.
In fact, just last year, CytRx had a board meeting and option issuance on December 10, and there was no dramatic spike in price after that issuance. It had long been expected that Phase 2b data would be reported in December 2013 as per the company’s timeline that has been kept up to date on the company website. There were also several articles written by various bloggers that continued to mention that Phase 2b data would be reported near year-end. If the option grants would have been given after the shares spiked with a low option strike, there would have been as much, if not more criticism. It’s also important to note that none of the board members have ever exercised their options. That speaks to their long-term view on the stock and the significant market potential that aldoxorubicin has.