CytRx Can 'Silence' Genes That Cause Disease

Investors Zero In
Since october, shares of CytRx (CYTR ) have more than doubled, from 1.50 to 3.50 on Feb. 14 as investors zeroed in on its RNA interference technology (RNAi) that targets diabetes, obesity, and ALS (Lou Gehrig's disease). RNAi effectively interferes with the power of diseased genes. "RNAi's ability to silence genes could provide a new way to treat a wide range of human diseases," says Chrystyna Bedrij of Griffin Securities, who rates CytRx a buy. "RNAi technology is hot for two reasons," says Elemer Piros of Rodman & Renshaw, who pegs CytRx "outperform." First, Craig Mello, professor of molecular medicine at University of Massachusetts Medical School, joined the CytRx scientific board in January. Mello co-discovered RNAi in 1998--and won the Nobel Prize for it in 2006. Second, Merck (MRK ) paid $1.1 billion in 2006 for Sirna Therapeutics, which is developing therapy for diseases such as hepatitis using RNAi. Merck's buy was seen as a validation of RNAi--and of CytRx' focus on RNAi. Piros says: "If CytRx succeeds in its RNAi tests for humans, scheduled in 12 to 18 months, the stock could double if not triple."

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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