799698--4/1/2008--CYTRX

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{product, candidate, development}

{investment, property, distribution}

{stock, price, share}

{product, liability, claim}

{property, intellectual, protect}

{stock, price, operating}

{acquisition, growth, future}

{control, financial, internal}

{financial, litigation, operation}

{operation, natural, condition}

{provision, law, control}

{competitive, industry, competition}

{cost, regulation, environmental}

{regulation, government, change}

If we do not achieve our projected development goals in the time frames we announce and expect, or if our financial projections prove to be materially inaccurate, the commercialization of our products may be delayed and our stock price may significantly decline. If our products are not successfully developed and approved by the FDA, we may be forced to reduce or curtail our operations. Our current and planned clinical trials of our molecular chaperone amplification product candidates may fail to show that these product candidates are clinically safe and effective. The FDA recently placed a clinical hold on our Phase IIb efficacy trial of arimoclomol, which will delay the trial and could lead to a requirement that we conduct additional toxicology studies or alter the trial design. Even if we obtain regulatory approval for arimoclomol or iroxanadine, these product candidates may not achieve market acceptance or be profitable. Any drugs we develop may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which could have a material adverse effect on our business. Our current financial resources may be diminished if we elect to provide RXi with additional future funding. We may rely upon third parties in connection with the commercialization of our products. We may be unable to protect our intellectual property rights, which could adversely affect our ability to compete effectively. If our product candidates infringe the rights of others, we could be subject to expensive litigation or be required to obtain licenses from others to develop or market them. We have reported several material weaknesses in the effectiveness of our internal controls over financial reporting, and if we cannot maintain effective internal controls or provide reliable financial and other information, investors may lose confidence in our SEC reports. We are subject to intense competition, and we may not compete successfully. We may be required to pay milestone and other payments relating to the commercialization of our products. We will rely upon third parties for the manufacture of our clinical product supplies. We are subject to potential liabilities from clinical testing and future product liability claims. We may be unable to acquire products approved for marketing. We use hazardous materials and must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do business. Risks Associated With Our Investment in RXi The distribution of RXi common stock to our stockholders will be taxable to us. Our ownership interest in RXi may be diluted. We may be required to dispose of some of our remaining RXi shares, and may not be able to do so on attractive terms. RXi retains discretion over its use of the funds that we have provided to it. We do not and will not control RXi, and the officers, directors and other RXi stockholders may have interests that are different from ours. Products developed by RXi could eventually compete with our products for ALS, type 2 diabetes, obesity and other disease indications. Risks Associated with Our Common Stock Our anti-takeover provisions may make it more difficult to change our management, or may discourage others from acquiring us, and thereby adversely affect stockholder value. Our outstanding options and warrants and the availability for resale of our shares issued in our private financings may adversely affect the trading price of our common stock. We may issue preferred stock in the future, and the terms of the preferred stock may reduce the value of our common stock. We may experience volatility in our stock price, which may adversely affect the trading price of our common stock.

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799698--4/1/2008--CYTRX_CORP