CytRx Contributes $15 Million net to Majority-Owned RNAi Subsidiary RXi Pharmaceuticals
News May 02, 2007
CytRx Corporation has announced that it has contributed $15.0 million, net of expenses reimbursed to CytRx, to its majority-owned subsidiary RXi Pharmaceuticals Corporation (RXi) to satisfy RXi’s initial funding requirements under its various agreements with the University of Massachusetts Medical School (UMMS).
In exchange for the contribution, CytRx increased its ownership in RXi to nearly 90%. The contribution by CytRx to RXi was made following CytRx’s completion of its recent private placement of securities, in which it received approximately $34.3 million, net of offering expenses.
As previously announced, CytRx has agreed with UMMS and RXi’s other stockholders to reduce its ownership of RXi to less than a majority of the outstanding common shares as soon as practicable following the funding of RXi announced.
It is expected that RXi will file a Form 10 registration statement with the Securities and Exchange Commission in the coming weeks, and conditional upon the effectiveness of the Form 10, CytRx intends to issue a dividend of a sufficient number of its shares of RXi to CytRx stockholders so that, after the dividend, CytRx no longer owns a majority of RXi.
Following receipt of the contributed funds today, RXi is obliged under its license and other agreements with UMMS to pay UMMS $275,000 and to issue UMMS shares of RXi common stock having a value of $2.4 million. RXi intends to use the remaining proceeds for its working capital and general corporate purposes.