8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 13, 2011

CYTRX CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

000-15327 (Commission File Number)	58-1642740 (I.R.S. Employer Identification No.)
11726 San Vicente Boulevard, Suite 650 Los Angeles, California (Address of Principal Executive Offices)	90049 (Zip Code)

(310) 826-5648

(Registrant’s Telephone Number, Including Area Code)

______________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (See General Instruction A.2 below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01.  ENTRY INTO MATERIAL CONTRACT

On May 13, 2011, CytRx Corporation (“we,” “us,” “our” or the “Company”) and Orphazyme ApS (“Orphazyme”) entered into an asset purchase agreement pursuant to which we sold to Orphazyme certain pre-clinical and clinical data, intellectual property rights and other assets relating to our compounds associated with molecular chaperone regulation technology, which are designed to repair or degrade mis-folded proteins associated with disease.  In doing so, we accomplished our previously disclosed business strategy with respect to these compounds.

Under the asset purchase agreement, we received a cash payment and are entitled to receive various future payments that will be contingent upon the achievement of specified regulatory and business milestones, as well as royalty payments based on a specified percentage of any eventual net sales of products derived from the assets.  We also will be entitled to a percentage-based fee from any licensing agreement entered into by Orphazyme with respect to the sold assets within 18 months after entering intothe asset purchase agreement.

The asset purchase agreement contains customary representations, warranties, and covenants made by the parties, including, among others, representations regarding our title and transfer rights to with respect to the assets.  The representations, warranties, and covenants contained in the asset purchase agreement were made only for purposes of that agreement and as of the specific dates set forth therein, were solely for the benefit of the parties to the asset purchase agreement, and may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the asset purchase agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.  Investors are not third-party beneficiaries under the asset purchase agreement and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Orphazyme or any of their respective affiliates.

The preceding summary of the asset purchase agreement, and the transactions contemplated thereby, does not purport to be complete and is subject to the full text of the asset purchase agreement that will be filed with our quarterly report on Form 10-Q for the quarter ended June 30, 2011.

A copy of our press release issued on May 17, 2011 regarding the transactions described in this Item 1.01 is attached hereto as Exhibit 99.1 and incorporated herein by reference.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(d)           Exhibits.

There is filed as part of this report the exhibit listed on the accompanying Index to Exhibits, which information is incorporated herein by reference.

SIGNATURES

 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 17, 2011	By:	/s/ JOHN Y. CALOZ
		John Y. Caloz
		Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	CytRx Corporation press release, dated May 17, 2011.

EX-99.1

EXHIBIT 99.1

CytRx Completes Sale of Molecular Chaperone Assets to Orphazyme ApS in Deal Worth up to $120 Million

– Potential milestone payments represent substantial return on investment as CytRx executes on monetization strategy to support advancement of oncology programs –

– Completes strategic transformation into dedicated oncology company, with six clinical trials ongoing and an additional clinical trial planned –

– Opportunity to develop molecular chaperone therapy for the treatment of lysosomal storage diseases –

– Copenhagen-based Orphazyme backed by Novo A/S and Sunstone Capital –

LOS ANGELES (May 17, 2011) – CytRx Corporation (Nasdaq: CYTR), a biopharmaceutical company specializing in oncology, today announced that it has sold the worldwide rights to its molecular chaperone assets to privately-held, Copenhagen, Denmark-based Orphazyme ApS. If all of the development and commercialization milestones in the transaction agreement are met, in addition to an up-front payment, CytRx could receive total payments of up to $120 million, in addition to royalties on sales of products developed by Orphazyme from its molecular chaperone technology.  This transaction represents the completion of CytRx’s previously announced, non-dilutive monetization strategy for its non-core assets.

“This could be a game-changing transaction for CytRx with an ultimate potential value that exceeds our current market capitalization,” said President and Chief Executive Officer Steven A. Kriegsman.  “It illustrates our exceptional execution of a strategy to acquire assets and add value, in this case through multiple clinical and preclinical trials, then monetize them to support our focus on oncology.”

Orphazyme was formed in 2009 to develop molecular chaperone therapies to treat rare genetic lysosomal diseases. Orphazyme develops innovative new therapies for the treatment of a family of serious genetic disorders called lysosomal storage diseases.  The company’s strategy is based on pioneering discoveries on the cytoprotective properties of human heat shock proteins, with the aim of developing paradigm-changing treatments for lysosomal storage diseases.

Orphazyme is backed by Novo A/S and Sunstone Capital. Novo A/S, which is wholly owned by the Novo Nordisk Foundation, is an international financial venture fund with offices in Copenhagen, San Francisco and London. Sunstone Capital is a Nordic-based early stage venture capital investor founded by an international team with more than 200 years of combined entrepreneurial, operational and financial experience.

The CytRx molecular chaperone portfolio includes three drug candidates, arimoclomol, iroxanadine and bimoclomol, which are orally administered molecular chaperone amplifiers. The compounds collectively have proven to be safe and well tolerated in more than 680 human subjects tested in 13 Phase 1 and six Phase 2 clinical trials.  By targeting the underlying cause of many diseases, this novel approach has the potential to be developed for a broad variety of indications, including genetic diseases.

Mr. Kriegsman added, “We are delighted to place these important molecular chaperone assets in the hands of the world-class scientists at Orphazyme for further development with the ultimate goal of commercialization.  We are pleased that the management team and Board of Directors of Orphazyme share our vision that molecular chaperones have the potential to improve the lives of patients worldwide.  This transaction provides us with additional resources to focus on our highly promising oncology drug candidates.”

Orphazyme Chief Executive Officer Anders Hinsby, Ph.D., stated, “We are developing paradigm-changing medicines for the treatment of individuals with inherited genetic lysosomal storage diseases for which there are currently no cures.  All of these diseases share a common characteristic in that they originate from a deficiency in the ability of the lysosomes to metabolize macromolecules. We believe that CytRx’s molecular chaperone technology can be used to revert lysosomal pathology through the induction of heat shock proteins, such as HSP70, and thus can be applied to develop new treatments for these diseases.”

CytRx is focused on advancing its oncology portfolio and currently has six clinical trials underway and one additional clinical trial planned with its oncology drug candidates, bafetinib, tamibarotene and INNO-206.  Preliminary data from the Company’s clinical trial of bafetinib in advanced-stage leukemia is expected this quarter.  In pursuing its strategy to monetize non-oncology assets, CytRx recently completed its sale of common stock in RXi Pharmaceuticals (Nasdaq: RXII), successfully raising a total of approximately $17 million from its former RNAi assets.  Additionally, CytRx received 163,000 shares of common stock of ADVENTRX Pharmaceuticals (of which approximately 20% are being held in escrow) in exchange for its 19.1% stake in SynthRx.  If all milestones under that agreement are achieved, CytRx could receive up to 2.9 million additional shares of ADVENTRX.  The last sale price of ADVENTRX (NYSE Amex: ANX) shares on the NYSE Amex on May 13, 2011 was $2.58.

About CytRx Corporation

CytRx Corporation is a biopharmaceutical research and development oncology company engaged in the development of high-value human therapeutics. The CytRx oncology pipeline includes three programs in clinical development for cancer indications: bafetinib, tamibarotene and INNO-206. The Company is evaluating bafetinib in the ENABLE Phase 2 clinical trial in high-risk B-cell chronic lymphocytic leukemia (B-CLL) and the PROACT Phase 2 clinical trial in advanced prostate cancer, and is conducting a pharmacokinetic clinical trial in brain cancer. With its tumor-targeting drug candidate INNO-206, CytRx plans to initiate Phase 2 proof-of-concept clinical trials as a treatment for soft tissue sarcomas, following an abbreviated safety trial. CytRx's pipeline also includes tamibarotene, which it is testing in patients with non-small-cell lung cancer and which is in a registration clinical trial as a treatment for acute promyelocytic leukemia (APL). For more information on the Company, visit http://www.cytrx.com.

About Orphazyme

Orphazyme develops innovative new therapies for the treatment of a family of serious genetic disorders called lysosomal storage diseases, and is based on discoveries emerging from the academic laboratory of its scientific founders: Professor Marja Jäättela and Thomas Kirkegaard Jensen from the Danish Cancer Society (Kræftens Bekæmpelse). Orphazyme is based in Copenhagen and has established collaborations with top-tier academic institutions in Europe and the United States.  For more information on Orphazyme, visit http://www.orphazyme.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements involve substantial risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks and uncertainties related to the achievement of any of the milestones for payments to CytRx under the sale agreement with Orphazyme and the commercialization by Orphazyme of any molecular chaperone technology products and the possibility that the actual payments received by CytRx under the sale agreement will differ substantially from the maximum potential payments, as well as risks and uncertainties related to the outcome, timing and results of clinical trials of CytRx’s oncology drug candidates, uncertainties regarding regulatory approvals for current and future clinical testing and the scope of the clinical testing of CytRx’s oncology drug candidates that may eventually be required by regulatory authorities, the significant time and expense that will be incurred in developing any of the potential commercial applications for CytRx's oncology drug candidates, and the other risks and uncertainties described in the most recent annual and quarterly reports filed by CytRx with the Securities and Exchange Commission and current reports filed since the date of CytRx's most recent annual report. All forward-looking statements are based upon information available to CytRx on the date the statements are first published. CytRx undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Investor Relations

Legend Securities, Inc.

Thomas Wagner

800-385-5790 x152

718-233-2600 x152

twagner@legendsecuritiesinc.com

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