10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________to _______________

Commission file number 0-15327

CYTRX CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	58-1642740 (I.R.S. Employer Identification No.)
11726 San Vicente Blvd. Suite 650 Los Angeles, CA (Address of principal executive offices)	90049 (Zip Code)

(310) 826-5648
(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act).
Yes o No þ

Number of shares of CytRx Corporation Common Stock, $.001 par value, issued and outstanding as of May 7, 2007: 86,813,178 , exclusive of treasury shares.

CYTRX CORPORATION

Form 10-Q

Table of Contents

	Page
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements:		3
Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2007 and December 31, 2006		3
Condensed Consolidated Statements of Operations (unaudited) for the Three-month Periods Ended March 31, 2007 and 2006		4
Condensed Consolidated Statements of Cash Flows (unaudited) for the Three-month Periods Ended March 31, 2007 and 2006		5
Notes to Condensed Consolidated Financial Statements		6
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3 Quantitative and Qualitative Disclosures About Market Risk		18
Item 4 Controls and Procedures		18
PART II. OTHER INFORMATION
Item 1A Risk Factors		19
Item 6 Exhibits		27
SIGNATURES		28
INDEX TO EXHIBITS		29
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.9
EXHIBIT 10.10
EXHIBIT 10.11
Exhibit 10.13
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

Part I — FINANCIAL INFORMATION

Item 1. — Financial Statements

CYTRX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31,			December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	36,351,989		$	30,381,393
Accounts receivable		105,930			105,930
Prepaid expense and other current assets		778,835			233,323
Total current assets		37,236,754			30,720,646
Equipment and furnishings, net		206,246			252,719
Molecular library, net		261,081			283,460
Goodwill		183,780			183,780
Deposits and prepaid insurance expense		183,877			195,835
Total assets	$	38,071,738		$	31,636,440
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	777,207		$	955,156
Accrued expenses and other current liabilities		3,139,251			2,722,478
Deferred revenue, current portion		5,779,337			6,733,350
Total current liabilities		9,695,795			10,410,984
Deferred revenue, non-current portion		15,582,137			16,075,117
Total liabilities		25,277,932			26,486,101
Stockholders’ equity:
Preferred Stock, $.01 par value, 5,000,000 shares authorized, including 5,000 shares of Series A Junior Participating Preferred Stock; no shares issued and outstanding		—			—
Common stock, $.001 par value, 125,000,000 shares authorized; 77,681,000 and 70,789,000 shares issued at March 31, 2007 and December 31, 2006, respectively		77,681			70,789
Additional paid-in capital		159,144,014			146,961,657
Treasury stock, at cost (633,816 shares held at March 31, 2007 and December 31, 2006, respectively)		(2,279,238	)		(2,279,238	)
Accumulated deficit		(144,148,651	)		(139,602,869	)
Total stockholders’ equity		12,793,806			5,150,339
Total liabilities and stockholders’ equity	$	38,071,738		$	31,636,440

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

CYTRX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended
	March 31,
	2007			2006
Revenue:
Service revenue	$	1,446,993		$	60,830
Grant revenue		116,070			—
		1,563,063			60,830
Expenses:
Research and development (includes $281,000 and $44,000 of non-cash stock-based compensation given to consultants for the three month periods ended March 31, 2007 and 2006, respectively; as well as $37,000 and $83,000 of non-cash employee stock option expense for the three month periods ended March 31, 2007 and 2006, respectively)		4,008,374			2,312,010
General and administrative (includes $0 and $68,000 of non-cash stock-based compensation given to consultants for the three month periods ended March 31, 2007 and 2006, respectively; as well as $112,000 and $262,000 of non-cash employee stock option expense for the three month periods ended March 31, 2007 and 2006, respectively)		2,485,085			2,022,667
		6,493,459			4,334,677
Loss before other income		(4,930,396	)		(4,273,847	)
Other income:
Interest and dividend income		382,614			107,490
Minority interest in losses of subsidiary		2,000			—
Net loss applicable to common shareholders before deemed dividend		(4,545,782	)		(4,166,357	)
Deemed dividend for anti-dilution adjustment made to outstanding common stock warrants		—			(488,429	)
Net loss applicable to common shareholders	$	(4,545,782	)	$	(4,654,786	)
Basic and diluted:
Loss per common share	$	(0.06	)	$	(0.07	)
Weighted average shares outstanding		73,273,746			62,343,290

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

CYTRX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended March 31,
	2007			2006
Cash flows from operating activities:
Net loss	$	(4,545,782	)	$	(4,166,357	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		71,353			58,931
Minority interest in losses of subsidiary		(2,000	)		—
Common stock, stock options and warrants issued for services		975,545			112,003
Expense related to employee stock options		148,812			345,000
Net change in operating assets and liabilities		(1,741,723	)		(278,109	)
Total adjustments		(548,013	)		237,825
Net cash used in operating activities		(5,093,795	)		(3,928,532	)
Cash flows from investing activities:
Purchases of property and equipment		(2,501	)		(23,447	)
Net cash used in investing activities		(2,501	)		(23,447	)
Cash flows from financing activities:
Proceeds from exercise of stock options and warrants		11,064,892			334,225
Net proceeds from issuances of common stock		—			12,404,394
Net proceeds from issuances of common stock in subsidiary		2,000			—
Net cash provided by financing activities		11,066,892			12,738,619
Net increase in cash and cash equivalents		5,970,596			8,786,640
Cash and cash equivalents at beginning of period		30,381,393			8,299,390
Cash and cash equivalents at end of period	$	36,351,989		$	17,086,030
Supplemental disclosure of cash flow information:
Cash received during the periods for interest received	$	382,614		$	107,490

Non-Cash Financing Activities:

     In connection with the Company’s adjustment to the terms of certain outstanding warrants on March 2, 2006, the Company recorded a deemed dividend of approximately $488,000 in the three-month period ended March 31, 2006. The deemed dividend was recorded as a charge to retained earning and a corresponding credit to additional paid-in capital.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

CYTRX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2007
(Unaudited)

1. Description of Company and Basis of Presentation

     CytRx Corporation (“CytRx” or the “Company”) is a biopharmaceutical research and development company engaged in developing human therapeutic products based primarily upon our small molecule molecular “chaperone” co-induction technology. The Company recently completed a Phase IIa clinical trial of its lead small molecule product candidate, arimoclomol, for the treatment of amyotrophic lateral sclerosis, which is commonly known as ALS or Lou Gehrig’s disease. Arimoclomol has received Orphan Drug and Fast Track designation from the U.S. Food and Drug Administration, or FDA, and orphan medicinal product status from the European Commission for the treatment of ALS. The Company plans to initiate a Phase IIb trial of arimoclomol for this indication during the second half of 2007, subject to FDA clearance. Additionally, recent preclinical animal studies indicated that arimoclomol accelerated the recovery of sensory and motor functions following a stroke, even when administered up to 48 hours after the stroke. Based upon these positive indications, the Company is considering a possible Phase II clinical trial of arimoclomol in stroke patients. The Company also is pursuing clinical development of its other small molecule product candidates, as well as a novel HIV DNA + protein vaccine exclusively licensed to the Company and developed by researchers at the University of Massachusetts Medical School, or UMMS, and Advanced BioScience Laboratories with funding from the National Institutes of Health.

     The Company also is engaged in developing therapeutic products based upon ribonucleic acid interference, or RNAi, which has the potential to effectively treat a broad array of diseases by interfering with the expression of targeted disease-associated genes. In order to fully realize the potential value of our RNAi technologies, in January 2007, the Company transferred to RXi Pharmaceuticals Corporation, its majority-owned subsidiary, substantially all of its RNAi-related technologies and assets in exchange for equity in RXi. These assets consisted primarily of the Company’s licenses from UMMS and the Carnegie Institution of Washington relating to fundamental RNAi technologies, as well as research and other equipment situated at the Company’s Worcester, Massachusetts, laboratory. On April 30, 2007, the Company provided to RXi $15.0 million, net of expenses of approximately $2.0 million reimbursed to it by RXi, in exchange for additional equity in RXi, to satisfy certain initial funding requirements under its agreements with UMMS. RXi is focused solely on developing and commercializing therapeutic products based upon RNAi technologies for the treatment of human diseases, with an initial focus on neurodegenerative diseases, cancer, type 2 diabetes and obesity. The Company has agreed to reduce its share of ownership of RXi to less than a majority of the outstanding voting power as soon as reasonably practicable. In order to reduce its ownership interest in RXi, the Company has announced its intention to issue a dividend of a portion of its RXi shares to its stockholders. Any proposed dividend to its stockholders of RXi shares would be subject to approval of the CytRx board of directors, SEC rules and the requirements of the Delaware General Corporation Law.

     To date, the Company has relied primarily upon selling equity securities and upon proceeds received upon the exercise of options and warrants and, to a much lesser extent, upon payments from its strategic partners and licensees, to generate funds needed to finance our business and operations. At March 31, 2007, the Company had cash and cash equivalents of $36.4 million, and it received $19.2 million from the sale of shares in its April 2007 financing transaction, net of offering expenses of approximately $2.8 million and the $15.0 million of net proceeds that it provided to RXi on April 30, 2007 to satisfy the initial funding requirements under its agreements with UMMS. Management believes that the Company has adequate financial resources to support its currently planned level of operations into the second half of 2009, which expectation is based in part on projected expenditures for 2007 of $4.5 million for the Company’s Phase IIb trial of arimoclomol for ALS and related studies, $4.4 million for its other ongoing and planned preclinical programs, including a possible Phase II clinical trial of arimoclomol in stroke patients, and $8.8 million for general and administrative expenses. Management estimates that RXi separately will expend approximately $6.2 million on development activities for 2007 (including approximately $400,000 in cash payments under agreements with UMMS, $3.2 million in other research and development expenses and $2.6 million in general and administrative expenses). The Company will be required to obtain additional funding in order to execute its long-term business plans, although it does not currently have commitments from any third parties to provide it with capital. The Company cannot assure that additional funding will be available on favorable terms, or at all. If the Company fails to obtain additional funding when needed, it may not be able to execute its business plans and its business may suffer, which would have a material adverse effect on its financial position, results of operations and cash flows.

     In August 2006, the Company received approximately $24.3 million in proceeds from the privately-funded ALS Charitable Remainder Trust (ALSCRT) in exchange for the commitment to continue research and development of arimoclomol and other

6

potential treatments for ALS and a one percent royalty in the worldwide sales of arimoclomol. Under the arrangement, the Company retains the rights to any developments funded by the arrangement and the proceeds of the transaction are non-refundable. Further, the ALS Charitable Remainder Trust has no obligation to provide any further funding to the Company. Management has analyzed the transaction and concluded that due to the research and development components of the transaction that it is properly accounted for under SFAS No. 68, Research and Development Arrangements (SFAS No. 68). Accordingly, the Company has recorded the value received under the arrangement as deferred service revenue and will recognize service revenue using the proportional performance method of revenue recognition, meaning that service revenue is recognized as a percentage of actual research and development expense incurred for the research and development of arimoclomol or the development of other ALS treatments.

     The accompanying condensed consolidated financial statements at March 31, 2007 and for the three-month periods ended March 31, 2007 and 2006 are unaudited, but include all adjustments, consisting of normal recurring entries, which the Company’s management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. Balance sheet amounts as of December 31, 2006 have been derived from our audited financial statements as of that date.

     Certain reclassifications have been made to the prior year’s condensed financial statements to conform to the current year presentation.

     The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the Company’s audited financial statements in its Form 10-K for the year ended December 31, 2006. The Company’s operating results will fluctuate for the foreseeable future. Therefore, period-to-period comparisons should not be relied upon as predictive of the results in future periods.

2. Recent Accounting Pronouncements

     On July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (“FIN No. 48”), to create a single model to address accounting for uncertainty in tax positions. FIN No. 48 clarifies the accounting for income taxes by prescribing a minimum recognition threshold in which a tax position be reached before financial statement recognition. FIN No. 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN No. 48 as of January 1, 2007, as required. The adoption of FIN No. 48 did not have an impact on the Company’s financial position and results of operations.

     On September 15, 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not expect SFAS No. 157 will have a significant impact on the Company’s consolidated financial statements.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS No. 159 on the Company’s consolidated financial statements.

3. Basic and Diluted Loss Per Common Share

     Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of employee stock options and warrants. Common share equivalents which potentially could dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, as the effect would be anti-dilutive, totaled approximately 22.7 million and 29.0 million shares at March 31, 2007 and 2006, respectively.

     In connection with the Company’s adjustment to the exercise terms of certain outstanding warrants to purchase common stock on March 2, 2006, the Company recorded a deemed dividend of approximately $488,000. This deemed dividend is reflected as an

7

adjustment to net loss for the first quarter of 2006 to arrive at net loss applicable to common stockholders on the Condensed Consolidated Statement of Operations and for purposes of calculating basic and diluted earnings per shares.

4. Stock Based Compensation

     As of March 31, 2007, an aggregate of 10,000,000 shares of common stock were reserved for issuance under the Company’s 2000 Stock Option Incentive Plan, including approximately 6,381,000 shares subject to outstanding stock options and approximately 2,880,000 shares available for future grant. Additionally, the Company has two other plans, the 1994 Stock Option Plan and the 1998 Long Term Incentive Plan, which include approximately 1,700 and 93,000 shares, respectively, subject to outstanding stock options. As the terms of our plans provide that no options may be issued after 10 years, no options are available under the 1994 Plan. Under the 1998 Long Term Incentive Plan, approximately 30,000 shares are available for future grant. Options granted under these plans generally vest and become exercisable as to 33% of the option grants on each anniversary of the grant date until fully vested. The options will expire, unless previously exercised, not later than ten years from the grant date.

     Prior to January 1, 2006, the Company accounted for its stock based compensation plans under the recognition and measurement provisions of Accounting Principles Board No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations for all awards granted to employees. Under APB 25, when the exercise price of options granted to employees under these plans equals the market price of the common stock on the date of grant, no compensation expense is recorded. When the exercise price of options granted to employees under these plans is less than the market price of the common stock on the date of grant, compensation expense is recognized over the vesting period.

     The Company’s share-based employee compensation plans are described in Note 13 to our financial statements contained in our Annual Report on Form 10-K filed for the year ended December 31, 2006. On January 1, 2006, the Company adopted SFAS 123(R), “Accounting for Stock-based Compensation (Revised 2004)” (“SFAS 123(R)”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, non-employee directors, and consultants, including employee stock options. SFAS 123(R) supersedes the Company’s previous accounting under APB 25 and SFAS 123, Employee Stock-Based Compensation, for periods beginning in fiscal 2006. In March 2005, the Securities and Exchange Commission issued SAB 107, Share-Based Payment, relating to SFAS 123(R). The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R).

     The Company adopted SFAS 123(R) using the modified prospective transition method, which requires the application of the accounting standard as of January 1, 2006, the first day of the Company’s fiscal year 2006. The Company’s Statement of Operations as of and for the year ended December 31, 2006 reflects the impact of SFAS 123(R). In accordance with the modified prospective transition method, the Company’s Statements of Operations for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Share-based compensation expense recognized under SFAS 123(R) for the year ended December 31, 2006 was $1.3 million.

     For stock options paid in consideration of services rendered by non-employees, the Company recognizes compensation expense in accordance with the requirements of SFAS No. 123(R) and Emerging Issues Task Force Issue No. 96-18, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” Under SFAS 123(R), the compensation associated with stock options paid to non-employees is generally recognized in the period during which services are rendered by such non-employees. Since its adoption of SFAS 123(R), there have been no changes to the Company’s equity plans or modifications of its outstanding stock-based awards.

     Non-employee option grants that do not vest immediately upon grant are recorded as an expense over the vesting period of the underlying stock options, using the method prescribed by FASB Interpretation 28. At the end of each financial reporting period prior to vesting, the value of these options, as calculated using the Black Scholes option pricing model, will be re-measured using the fair value of the Company’s common stock and deferred compensation and the non-cash compensation recognized during the period will be adjusted accordingly. Since the fair market value of options granted to non-employees is subject to change in the future, the amount of the future compensation expense is subject to adjustment until the stock options are fully vested. The Company recognized approximately $976,000 and $112,000 of stock based compensation expense related to non-employee stock options for the three-month periods ended March 31, 2007 and 2006, respectively. Included in the amount recognized in 2007 is an adjustment of approximately $695,000 related to options granted to consultants in 2006.

     During the first quarter of 2007 the Company did not issue any stock options; however had we issued options during this period the following assumptions would have been used and are presented for comparison purposes. The fair value of stock options at the date of grant was estimated using the Black-Scholes option-pricing model, based on the following assumptions:

8

	Three-Months Ended
	March 31, 2007			March 31, 2006
				(Restated)
Risk-free interest rate		4.41% - 4.89	%		4.27% - 4.83	%
Expected volatility		116.8	%		117.3	%
Expected lives (years)		6			6
Expected dividend yield		0.00	%		0.00	%

     The Company’s expected stock price volatility assumption is based upon the historical daily volatility of its publicly traded stock. For option grants issued during the three-month periods ended March 31, 2007 and 2006, the Company used a calculated volatility for each grant. The expected life assumptions were based upon the simplified method provided for under SAB 107, which averages the contractual term of the Company’s options of ten years with the average vesting term of three years for an average of six years. The dividend yield assumption of zero is based upon the fact the Company has never paid cash dividends and presently has no intention of paying cash dividends. The risk-free interest rate used for each grant is equal to the U.S. Treasury rates in effect at the time of the grant for instruments with a similar expected life. Based on historical experience, for the three-month periods ended March 31, 2007 and 2006, the Company has estimated an annualized forfeiture rate of 15% for options granted to its employees and 3% for options granted to senior management and directors. The Company will record additional expense if the actual forfeitures are lower than estimated and will record a recovery of prior expense if the actual forfeiture rates are higher than estimated. Under provisions of SFAS 123(R), the Company recorded $149,000 and $345,000 of employee stock-based compensation for the three-month periods ended March 31, 2007 and 2006, respectively. No amounts relating to employee stock-based compensation have been capitalized. As of March 31, 2007, there was $772,000 of unrecognized compensation cost related to outstanding options that is expected to be recognized as a component of the Company’s operating expenses through 2009. Compensation costs will be adjusted for future changes in estimated forfeitures.

     At March 31, 2007, there remained approximately $772,000 of unrecognized compensation expense related to unvested employee stock options to be recognized as expense over a weighted-average period of 1.61 years. Presented below is the Company’s stock option activity:

	Stock Options
	Three-Months Ended
	March 31, 2007
				Weighted Average
	Number			Exercise Price
	of Shares			per Share
Outstanding at January 1, 2007		6,858,208		$	1.66
Granted		—		$	—
Exercised		(325,333	)	$	1.74
Forfeited		(57,000	)	$	1.46
Outstanding at March 31, 2007		6,475,875		$	1.66
Options exercisable at March 31, 2007		4,581,644		$	1.78

     A summary of the activity for nonvested stock options as of March 31, 2007, and changes during the three-month period is presented below:

				Weighted Average
	Number			Grant Date Fair
	of Shares			Value per Share
Nonvested at January 1, 2007		2,099,877		$	1.19
Granted		—		$	—
Forfeited		(37,000	)	$	1.00
Vested		(168,645	)	$	1.11
Nonvested at March 31, 2007		1,894,232		$	1.20

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     The following table summarizes significant ranges of outstanding stock options under the three plans at March 31, 2007:

			Weighted Average
			Remaining				Number of
Range of			Contractual Life		Weighted Average		Options		Weighted Average		Weighted Average
Exercise Prices	Number of Options		(years)		Exercise Price		Exercisable		Contractual Life		Exercise Price
$0.25 — 1.00		1,041,876		7.31	$	0.80		660,717		6.82	$	0.80
$1.01 — 1.50		1,761,000		8.45		1.25		956,928		8.10		1.25
$1.51 — 2.00		2,097,500		6.92		1.86		1,398,500		6.77		1.86
$2.01 — 3.00		1,575,499		6.35		2.44		1,565,499		6.33		2.44
		6,475,875		7.26	$	1.66		4,581,644		6.91	$	1.78

     The aggregate intrinsic value of outstanding options as of March 31, 2007, was $19,604,000 of which $13,338,000 is related to exercisable options. The aggregate intrinsic value was calculated based on the positive difference between the closing fair market value of the Company’s common stock on March 31, 2007 ($4.69) and the exercise price of the underlying options. The intrinsic value of options exercised was $961,000 for the three month period ended March 31, 2007, and the intrinsic value of options that vested was approximately $603,000 during the period.

5. Liquidity and Capital Resources

     At March 31, 2007, the Company had cash and cash equivalents of $36.4 million, and it received $19.2 million from the sale of shares in its April 2007 financing transaction, net of offering expenses of approximately $2.8 million, and the $15.0 million of net proceeds that it provided to RXi on April 30, 2007 to satisfy the initial funding requirements under its agreements with UMMS. Management believes that the Company has adequate financial resources to support its currently planned level of operations into the second half of 2009, which expectation is based in part on projected expenditures for 2007 of $4.5 million for the Company’s Phase IIb trial of arimoclomol for ALS and related studies, $4.4 million for its other ongoing and planned preclinical programs, including a possible Phase II clinical trial of arimoclomol in stroke patients, and $8.8 million for general and administrative expenses. Management estimates that RXi separately will expend approximately $6.2 million on development activities for 2007 (including approximately $400,000 in cash payments under agreements with UMMS, $3.2 million in other research and development expenses and $2.6 million in general and administrative expenses). The Company will be required to obtain additional funding in order to execute its long-term business plans, although it does not currently have commitments from any third parties to provide it with capital. The Company cannot assure that additional funding will be available on favorable terms, or at all. If the Company fails to obtain additional funding when needed, it may not be able to execute its business plans and its business may suffer, which would have a material adverse effect on its financial position, results of operations and cash flows.

6. Equity Transactions

     On March 2, 2006, the Company completed a $13.4 million private equity financing in which it issued 10,650,794 shares of its common stock and warrants to purchase an additional 5,325,397 shares of its common stock at an exercise price of $1.54 per share. Net of investment banking commissions, legal, accounting and other expenses related to the transaction, we received proceeds of approximately $12.4 million.

     In connection with the March 2006 financing, the Company adjusted the price and number of underlying shares of warrants to purchase approximately 2.8 million shares that had been issued in prior equity financings in May and September 2003. The adjustment was made as a result of anti-dilution provisions in those warrants that were triggered by the Company’s issuance of common stock in the March 2006 financing at a price below the closing market price on the date of the transaction. The Company accounted for the anti-dilution adjustments as deemed dividends analogous with the guidance in Emerging Issues Task Force Issue (“EITF”) No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF 00-27, Application of 98-5 to Certain Convertible Instruments, and recorded an approximate $488,000 charge to retained earnings and a corresponding credit to additional paid-in capital.

     In connection with the March 2006 private equity financing, the Company entered into a registration rights agreement with the purchasers of its common stock and warrants. That agreement provides, among other things, for liquidated damages, up to a maximum of 16% of the purchase price paid for the securities (approximately $2.1 million), that are payable in the event that the Company were unable to initially register or maintain the effective registration of the securities until the sooner of two years or the date on which the securities could be sold pursuant to Rule 144 of the Securities Act of 1933, as amended. The Company has evaluated the liquidated damages of the March 2006 registration rights agreement in light of FASB Staff Position No. EITF 00-19-2, Accounting for Registration Payment Arrangements, which specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies, pursuant to which a contingent obligation must be accrued only if it is reasonably estimable and probable. In management’s estimation, the contingent payments related to the registration payment arrangement are not probably to occur, and thus no amount need be accrued.

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     During the three-month period ended March 31, 2007, the Company issued 6.9 million shares of its common stock, and received $11.1 million, upon the exercise of stock options and warrants. During the first quarter of 2007, the Company did not grant any new options.

7. Subsequent Events

     On April 19, 2007, the Company completed a $37.0 million private equity financing in which it issued approximately 8.6 million shares of its common stock at a price of $4.30 per share. Net of investment banking commissions, legal, accounting and other expenses related to the transaction, the Company received proceeds of approximately $34.2 million. On April 30, 2007, the Company contributed $15.0 million, net of reimbursed expenses of approximately $2.0 million paid by RXi to the Company, in exchange for equity in RXi, to satisfy the initial funding requirements under its agreements with UMMS.

     In connection with the private equity financing, the Company adjusted the price and number of underlying shares of warrants to purchase approximately 1.4 million shares that had been issued in prior equity financings in May and September 2003. The adjustment was made as a result of anti-dilution provisions in those warrants that were triggered by the Company’s issuance of common stock in the April 2007 financing at a price below the closing market price on the date of the transaction. The Company accounted for the anti-dilution adjustments as deemed dividends analogous with the guidance in Emerging Issues Task Force Issue (“EITF”) No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF 00-27, Application of 98-5 to Certain Convertible Instruments. Because the fair value of the outstanding warrants decreased as a result of the anti-dilution adjustment, no deemed dividend was recorded, and thus the Company did not record a charge to retained earnings or a corresponding credit to additional paid-in capital.

     In connection with the April 2007 private equity financing, the Company entered into a registration rights agreement with the purchasers of its common stock and warrants. That agreement provides, among other things, for liquidated damages, up to a maximum of 16% of the purchase price paid for the securities (approximately $5.9 million), that are payable in the event that the Company were unable to initially register or maintain the effective registration of the securities until the sooner of two years or the date on which the securities could be sold pursuant to Rule 144 of the Securities Act of 1933, as amended. The Company has evaluated the penalty provisions of the April 2007 registration rights agreement in light of FASB Staff Position No. EITF 00-19-2, Accounting for Registration Payment Arrangements, which specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies, pursuant to which a contingent obligation must be accrued only if it is reasonably estimable and probable. In management’s estimation, the contingent payments related to the registration payment arrangement are not probable to occur, and thus no amount need be accrued.

     As of April 30, 2007, the Company has received approximately $2.0 million in connection with the exercise of warrants and options since March 31, 2007.

Item 2. — Management’s Discussion and Analysis of Financial Condition And Results of Operations

  Forward Looking Statements

     From time to time, we make oral and written statements that may constitute “forward-looking statements” (rather than historical facts) as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, or SEC, in its rules, regulations and releases, including Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. We desire to take advantage of the “safe harbor” provisions in the Private Securities Litigation Reform Act of 1995 for forward-looking statements made from time to time, including, but not limited to, the forward-looking statements made in this Quarterly Report on Form 10-Q, as well as those made in other filings with the SEC.

     All statements in this Quarterly Report, including under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” other than statements of historical fact are forward-looking statements for purposes of these provisions, including statements of our current views with respect to the recent developments regarding our RXi Pharmaceuticals Corporation subsidiary, our business strategy, business plan and research and development activities, our future financial results, and other future events. These statements include forward-looking statements both with respect to us, specifically, and the biotechnology industry, in general. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “could” or the negative thereof or other comparable terminology.

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Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the forward-looking statements.

     All forward-looking statements involve inherent risks and uncertainties, and there are or will be important factors that could cause actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, those factors set forth in this Quarterly Report under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” all of which you should review carefully. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we anticipate. Please consider our forward-looking statements in light of those risks as you read this Quarterly Report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

  Overview

     We are a biopharmaceutical research and development company engaged in developing human therapeutic products based primarily upon our small molecule molecular “chaperone” co-induction technology. We recently completed a Phase IIa clinical trial of our lead small molecule product candidate, arimoclomol, for the treatment of amyotrophic lateral sclerosis, which is commonly known as ALS or Lou Gehrig’s disease. Arimoclomol has received Orphan Drug and Fast Track designation from the U.S. Food and Drug Administration, or FDA, and orphan medicinal product status from the European Commission for the treatment of ALS. The Company plans to initiate a Phase IIb trial of arimoclomol for this indication during the second half of 2007, subject to FDA clearance. Additionally, recent preclinical animal studies indicated that arimoclomol accelerated the recovery of sensory and motor functions following a stroke, even when administered up to 48 hours after the stroke. Based upon these positive indications, we are considering a possible Phase II clinical trial of arimoclomol in stroke patients. We are also pursuing clinical development of our other small molecule product candidates, as well as a novel HIV DNA + protein vaccine exclusively licensed to us and developed by researchers at the University of Massachusetts Medical School, or UMMS, and Advanced BioScience Laboratories with funding from the National Institutes of Health.

     We are also engaged in developing therapeutic products based upon ribonucleic acid interference, or RNAi, which has the potential to effectively treat a broad array of diseases by interfering with the expression of targeted disease-associated genes. In order to fully realize the potential value of our RNAi technologies, in January 2007 we transferred to RXi Pharmaceuticals Corporation, our majority-owned subsidiary, substantially all of our RNAi-related technologies and assets in exchange for equity in RXi. These assets consisted primarily of our licenses from UMMS and the Carnegie Institution of Washington relating to fundamental RNAi technologies, as well as research and other equipment situated at our Worcester, Massachusetts, laboratory. On April 30, 2007, we provided to RXi $15.0 million, net of expenses of approximately $2.0 million reimbursed to us by RXi, in exchange for additional equity in RXi, to satisfy certain initial funding requirements under its agreements with UMMS. RXi is focused solely on developing and commercializing therapeutic products based upon RNAi technologies for the treatment of human diseases, with an initial focus on neurodegenerative diseases, cancer, type 2 diabetes and obesity.

     We have relied primarily upon selling equity securities and upon proceeds received upon the exercise of options and warrants and, to a much lesser extent, upon payments from our strategic partners and licensees, to generate funds needed to finance our business and operations. At March 31, 2007, we had cash and cash equivalents of $36.4 million, and we received $19.2 million from the sale of shares in its April 2007 financing transaction, net of offering expenses of approximately $2.8 million and the $15.0 million of net proceeds that it provided to RXi on April 30, 2007 to satisfy the initial funding requirements under its agreements with UMMS. We believe that we have adequate financial resources to support our currently planned level of operations into the second half of 2009, which expectation is based in part on projected expenditures for 2007 of $4.5 million for our Phase IIb trial of arimoclomol for ALS and related studies, $4.4 million for our other ongoing and planned preclinical programs, including a possible Phase II clinical trial of arimoclomol in stroke patients, and $8.8 million for general and administrative expenses. Management estimates that RXi separately will expend approximately $6.2 million on development activities for 2007 (including approximately $400,000 in cash payments under recent agreements with UMMS, $3.2 million in other research and development expenses and $2.6 million in general and administrative expenses). We have no significant revenue, and we expect to have no significant revenue and to continue to incur significant losses over the next several years. Our net losses may increase from current levels primarily due to expenses related to our ongoing and planned clinical trials, research and development programs, possible technology acquisitions, and other general corporate activities. We anticipate, therefore, that our operating results will fluctuate for the foreseeable future and period-to-period comparisons should not be relied upon as predictive of the results in future periods.

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     We have agreed to reduce our share of ownership of RXi to less than a majority of the outstanding voting power as soon as reasonably practicable. In order to reduce our ownership interest in RXi, we have announced our intention to issue a dividend of a portion of our RXi shares to our stockholders. Any proposed dividend to our stockholders of RXi shares would be subject to approval of the CytRx board of directors, SEC rules and the requirements of the Delaware General Corporation Law. We may be unable to comply with these rules and requirements, or may experience delays in complying. Any such dividend may be taxable to CytRx.

     RXi began operating as a stand-alone company with its own management, business, and operations in January 2007. Following RXi’s initial funding, we have agreed under our letter agreement with UMMS and our separate stockholders agreement with RXi and its other current stockholders to reduce our share of ownership of RXi to less than a majority of the outstanding voting power as soon as reasonably practicable. During the time that RXi is majority-owned, the consolidated financial statements of CytRx will include 100% of the assets and liabilities of RXi and the ownership of the interests of the minority shareholders will be recorded as “minority interests.” In the future, if CytRx owns more than 20% but less than 50% of the outstanding shares of RXi, CytRx would account for its investment in RXi using the equity method. Under the equity method, CytRx would record its pro-rata share of the gains or losses of RXi against its historical basis investment in RXi. For 2007, we expect RXi’s research and development expenses will be approximately $6.2 million.

  Critical Accounting Policies and Estimates

     Management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, bad debts, impairment of long-lived assets, including finite lived intangible assets, accrued liabilities and certain expenses. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

     Our significant accounting policies are summarized in Note 2 to our financial statements contained in our Annual Report on Form 10-K filed for the year ended December 31, 2006. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

  Revenue Recognition

     Biopharmaceutical revenues have consisted of license fees from strategic alliances with pharmaceutical companies, service revenues from contract research and laboratory consulting, and grant revenues from government and private grants.

     Monies received for license fees are deferred and recognized ratably over the performance period in accordance with Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. Milestone payments will be recognized upon achievement of the milestone as long as the milestone is deemed substantive and we have no other performance obligations related to the milestone and collectibility is reasonably assured, which is generally upon receipt, or recognized upon termination of the agreement and all related obligations. Deferred revenue represents amounts received prior to revenue recognition.

     Revenues from contract research, government grants, and consulting fees are recognized over the respective contract periods as the services are performed, provided there is persuasive evidence or an arrangement, the fee is fixed or determinable and collection of the related receivable is reasonably assured. Once all conditions of the grant are met and no contingencies remain outstanding, the revenue is recognized as grant fee revenue and an earned but unbilled revenue receivable is recorded.

     In August 2006, we received approximately $24.3 million in proceeds from the privately-funded ALS Charitable Remainder Trust (ALSCRT) in exchange for the commitment to continue research and development of arimoclomol and other potential treatments for ALS and a one percent royalty in the worldwide sales of arimoclomol. Under the arrangement, we retain the rights to any products or intellectual property funded by the arrangement and the proceeds of the transaction are non-refundable. Further, the ALSCRT has no obligation to provide any further funding to us. We have analyzed the transaction and concluded that due to the research and development components of the transaction that it is properly

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accounted for under SFAS No. 68, Research and Development Arrangements. Accordingly, we have recorded the value received under the arrangement as deferred service revenue and will recognize service revenue using the proportional performance method of revenue recognition, meaning that service revenue is recognized on a dollar-for-dollar basis for each dollar of expense incurred for the research and development of arimoclomol and then the development of other potential ALS treatments. We believe that this method best approximates the efforts expended related to the services provided. We adjust our estimates quarterly. For the quarter ended March 31, 2006, we recognized approximately $1.4 million in service revenue.

     The amount of “deferred revenues, current portion” is the amount of deferred revenues that are expected to be recognized in the next twelve months and are subject to fluctuation based upon management estimates. Management’s estimates include what pre-clinical and clinical trials are necessary, the size of the trial, the timing of when trials will be performed and the estimated cost of the trials. These estimates are subject to changes and could have a significant effect on the amount and timing of when the deferred revenues are recognized. Any significant change in ALS related research and development expense in any particular quarterly or annual period will result in a change in the recognition of revenue for that period and consequently affect the comparability or revenue from period to period.

  Research and Development Expenses

     Research and development expenses consist of costs incurred for direct and overhead-related research expenses and are expensed as incurred. Costs to acquire technologies which are utilized in research and development and which have no alternative future use are expensed when incurred. Technology developed for use in its products is expensed as incurred until technological feasibility has been established.

  Clinical Trial Expenses

     Clinical trial expenses, which are included in research and development expenses, include obligations resulting from our contracts with various clinical research organizations in connection with conducting clinical trials for our product candidates. We recognize expenses for these activities based on a variety of factors, including actual and estimated labor hours, clinical site initiation activities, patient enrollment rates, estimates of external costs and other activity-based factors. We believe that this method best approximates the efforts expended on a clinical trial with the expenses we record. We adjust our rate of clinical expense recognition if actual results differ from our estimates.

  Stock-based Compensation

     Effective January 1, 2006, we adopted the provisions of SFAS 123(R), “Share-Based Payment (Revised 2004).” SFAS 123(R) requires that companies recognize compensation expense associated with stock option grants and other equity instruments to employees in the financial statements. SFAS 123(R) applies to all grants after the effective date and to the unvested portion of stock options outstanding as of the effective date. We are using the modified-prospective method and the Black-Scholes valuation model for valuing the share-based payments. We will continue to account for transactions in which services are received in exchange for equity instruments based on the fair value of such services received from non-employees, in accordance with SFAS 123(R) and Emerging Issues Task Force (“EITF”) Issue No. 96-18, “Accounting for Equity Instruments that Are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.”

     The fair value of each option grant is estimated using the Black-Scholes option-pricing model, with the following weighted average assumptions used for grants in 2006: risk-free interest rates of 4.9; expected volatility of 111.6%; expected life of the options of 6.0 years; and no dividends made. Based on historical experience, for 2006, we estimated an annualized forfeiture rate of 10% for options granted to employees and 3% for options granted to senior management and directors. In 2007 we increased our forfeiture rate for employees to 15% in anticipation of employees transferring to RXi. We maintained the same forfeiture rate for senior management and directors.

  Impairment of Long-Lived Assets

     We review long-lived assets, including finite lived intangible assets, for impairment on an annual basis, as of December 31, or on an interim basis if an event occurs that might reduce the fair value of such assets below their carrying values. An impairment loss would be recognized based on the difference between the carrying value of the asset and its estimated fair value, which would be determined based on either discounted future cash flows or other appropriate fair value methods.

  Earnings Per Share

     Basic and diluted loss per common share are computed based on the weighted average number of common shares outstanding. Common share equivalents (which consist of options and warrants) are excluded from the computation of diluted loss per share since the effect would be antidilutive. Common share equivalents which could potentially dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share, totaled approximately 22.7 million shares and 29.0 million shares at March 31, 2007 and 2006, respectively. In connection with our adjustment to the exercise terms of certain outstanding warrants to purchase common stock on March 2, 2006, we recorded a deemed dividend of $488,000. This deemed dividend was reflected as an adjustment to net loss for the first quarter of 2006 to arrive at net loss applicable to common stockholders on the condensed consolidated statement of operations and for purposes of calculating basic and diluted earnings per shares.

  Liquidity and Capital Resources

     At March 31, 2007, we had cash and cash equivalents of $36.4 million and total assets of $38.1 million, compared to $30.4 million and $31.7 million, respectively, at December 31, 2006. Working capital totaled $27.5 million at March 31, 2007, compared to $20.3 million at December 31, 2006.

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     We have relied primarily upon selling equity securities and upon proceeds received upon the exercise of options and warrants and, to a much lesser extent, upon payments from our strategic partners and licensees, to generate funds needed to finance our business and operations. At March 31, 2007, we had cash and cash equivalents of $36.4 million, and we received $19.2 million from the sale of shares in its April 2007 financing transaction, net of offering expenses of approximately $2.8 million and the $15.0 million of proceeds, net of approximately $2.0 million of reimbursed expenses, that we provided to RXi on April 30, 2007 to satisfy the initial funding requirements under its agreements with UMMS. We believe that we have adequate financial resources to support its currently planned level of operations into the second half of 2009, which expectation is based in part on projected expenditures for 2007 of $4.5 million for our Phase IIb trial of arimoclomol for ALS and related studies, $4.4 million for our other ongoing and planned preclinical programs, including a possible Phase II clinical trial of arimoclomol in stroke patients, and $8.8 million for general and administrative expenses. Management estimates that RXi separately will expend approximately $6.2 million on development activities for 2007 (including approximately $400,000 in cash payments under recent agreements with UMMS, $3.2 million in other research and development expenses and $2.6 million in general and administrative expenses). We have no significant revenue, and we expect to have no significant revenue and to continue to incur significant losses over the next several years. Our net losses may increase from current levels primarily due to expenses related to our ongoing and planned clinical trials, research and development programs, possible technology acquisitions, and other general corporate activities. In the event that actual costs of our clinical program for ALS, or any of our other ongoing research activities, are significantly higher than our current estimates, we may be required to significantly modify our planned level of operations. In the future, we will be dependent on obtaining financing from third parties in order to maintain our operations, including completion of the clinical development arimoclomol for ALS and our ongoing research and development efforts related to our other small molecule drug candidates.

     We currently have no commitments from any third parties to provide us with capital. We cannot assure that additional funding will be available to us on favorable terms, or at all. If we fail to obtain additional funding when needed in the future, we would be forced to scale back, or terminate, our operations, or to seek to merge with or to be acquired by another company.

     Our net loss, as adjusted for noncash charges relating to (1) common stock, stock option and warrants issued for services and (2) expenses related to employee stock options, declined by approximately $196,000 from the quarter ended March 31, 2006 to the quarter ended March 31, 2007. This decline in net loss was more than offset by an approximately $1.5 million increase in the use of cash for the net change in operating assets and liabilities between the two quarters resulting in an increase in cash used in operating activities from approximately $3.9 million for the three-month period ended March 31, 2006 to approximately $5.1 million for the three-month period ended March 31, 2007.

     In the three-month periods ended March 31, 2007 and 2006, net cash used in investing activities consisted of approximately $2,500 and $23,000, respectively, for the purchase of equipment. We expect capital spending during the remaining three quarters of 2007 to be higher than the first quarter of 2007 due to the purchase of additional laboratory equipment.

     Cash provided by financing activities in the three-month period ended March 31, 2007 was $11.1 million. The cash provided by financing activities consisted almost exclusively of approximately $11.1 million received from the exercise of stock options and warrants. Cash provided by financing activities in the three-month period ended March 31, 2006 was approximately $12.7 million. During that period, we raised $12.4 million, net of expenses, from the issuance of common stock in a private equity financing in March of 2006, and received proceeds from the exercise of stock options and warrants of approximately $334,000.

     No common stock was issued in the quarter ending March 31, 2007; however, in April 2007, we raised $34.2 million, net of offering expenses of approximately $2.8 million, from the sale of 8.6 million shares in a financing transaction. We subsequently contributed $15.0 million to RXi, net of expenses of approximately $2.0 million reimbursed to us by RXi, on April 30, 2007 to satisfy the initial funding requirements under our agreements with UMMS.

     As a result of the activities described above, our cash and cash equivalents increased by approximately $6.0 million during the quarter ended March 31, 2007, compared to an increase of approximately $8.8 million during the quarter ended March 31, 2006.

     We are evaluating other potential future sources of capital, although we do not currently have commitments from any third parties to provide us with capital. The results of our technology licensing efforts and the actual proceeds of any fund-raising activities will determine our ongoing ability to operate as a going concern. Our ability to obtain future financings through joint ventures, product licensing arrangements, royalty sales, equity financings, gifts, and grants or otherwise is subject to market conditions and out ability to identify parties that are willing and able to enter into such arrangements on terms that are satisfactory to us. Depending upon the

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outcome of our fundraising efforts, the accompanying financial information may not necessarily be indicative of future operating results or future financial condition.

     We expect to incur significant losses for the foreseeable future and there can be no assurance that we will become profitable. Even if we become profitable, we may not be able to sustain that profitability.

  Results of Operations

     We recorded a net loss applicable to common shareholders of approximately $4.5 for the three month period ended March 31, 2007, compared to a $4.7 million loss for the same period in 2006.

     We recognized approximately $1.6 million of revenue, of which $1.4 million resulted from our $24.3 million sale to the ALS Charitable Remainder Trust of a 1% royalty interest in worldwide sales of arimoclomol in 2007. All future licensing fees under our current licensing agreements are dependent upon successful development milestones being achieved by the licensor. During 2007, we do not anticipate receiving any significant service or licensing fees, although we estimate that we will recognize an additional $3.1 million in service revenues from the ALS Charitable Remainder Trust transaction. We will continue to recognize the balance of the deferred revenue recorded from the royalty transaction with the ALS Charitable Remainder Trust over the period of our arimoclomol research.

Research and Development

	Quarters Ended March 31,
	2007		2006
	(In thousands)
Research and development expense	$	3,623	$	2,130
Non-cash research and development expense		281		44
Employee stock option expense		37		83
Depreciation and amortization		67		55
	$	4,008	$	2,312

     Research expenses are expenses incurred by us in the discovery of new information that will assist us in the creation and the development of new drugs or treatments. Development expenses are expenses incurred by us in our efforts to commercialize the findings generated through our research efforts.

     Research and development expenses incurred during the first three months of 2007 and 2006 relate primarily to (i) our Phase II clinical program for arimoclomol in ALS, (ii) our ongoing research and development related to other molecular chaperone drug candidates, (iii) our research and development activities conducted at UMMS related to the technologies covered by the UMMS license agreements, (iv) our prior collaboration and invention disclosure agreement pursuant to which UMMS had agreed to disclose certain inventions to us and provide us with the right to acquire an option to negotiate exclusive licenses for those disclosed technologies, and (v) the small molecule drug discovery operations at our Massachusetts laboratory. All research and development costs related to the activities of RXi and our laboratory were expensed.

     As compensation to members of our scientific advisory board and consultants, and in connection with the acquisition of technology, we sometimes issue shares of our common stock, stock options and warrants to purchase shares of our common stock. For financial statement purposes, we value these shares of common stock, stock options, and warrants at the fair value of the common stock, stock options or warrants granted, or the services received, whichever is more reliably measurable. We recorded non-cash charges of $976,000 and $112,000 in this regard during the quarters ended March 31, 2007 and 2006, respectively. With our adoption of SFAS 123(R) during 2006, we recorded $37,000 and $83,000 of employee stock option expense during the quarters ended March 31, 2007 and 2006, respectively.

     In 2007, we expect our research and development expenses to increase primarily as a result of our ongoing Phase II clinical program with arimoclomol and related studies for the treatment of ALS, our potential Phase II clinical trial of arimoclomol for stroke recovery and the continued development of our RNAi assets by our majority-owned subsidiary RXi. We currently estimate that our clinical program for arimoclomol for the treatment of ALS, including the completion of the planned Phase IIb clinical trial and related studies, will require us to incur approximately $23.0 million over the next two to three years.

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General and administrative expenses

	Quarters Ended March 31,
	2007		2006
	(In thousands)
General and administrative expenses	$	2,369	$	1,689
Stock, stock options and warrant expense to non-employees and consultants		—		68
Employee stock option expense		112		262
Depreciation and amortization		4		4
	$	2,485	$	2,023

     General and administrative expenses include all salaries and general corporate expenses, including legal expenses associated with the prosecution of our intellectual property. General and administrative expenses increased by approximately $0.5 million in the quarter ended March 31, 2007 compared to the same quarter in 2006 as a result of annual salary increases and increased bonuses and legal expenses. During 2007, we expect legal expenses to remain consistent with 2006 levels, as we expect patent expenses to increase, while being off-set by a decline in legal expenses associated with the formation of RXi. In our efforts to comply with the attestation requirements under Section 404 of the Sarbanes-Oxley Act for the first time for the year ended December 31, 2006, we incurred approximately $800,000 in consulting, audit and accounting system conversion expense. We expect to those expenses to decrease in 2007, as our accounting system conversion is now complete.

     From time to time, we issue shares of our common stock or warrants or options to purchase shares of our common stock to consultants and other service providers in exchange for services. For financial statement purposes, we value these shares of common stock, stock options, and warrants at the fair value of the common stock, stock options or warrants granted, or the services received, whichever we can measure more reliably. We recorded no non-cash charges during the quarter ended March 31, 2007, and approximately $68,000 during the quarter ended March 31, 2006. These charges relate primarily to common stock, stock options and warrants issued in connection with the engagement and retention of financial, business development and scientific advisors. With our adoption of SFAS 123(R) during 2006, we recorded approximately $112,000 and $262,000 of employee stock option expense during the quarters ended March 31, 2007 and 2006, respectively.

     Interest and dividend income

     Interest and dividend income was $383,000 for the quarter ended March 31, 2007, compared to $107,000 for the quarter ended March 31, 2006. The variances between years is attributable primarily to the amount of cash available for investment each year and, to a lesser extent, changes in prevailing market rates.

     Minority interest in losses of subsidiary

     We offset against our net loss $2,000 related to the minority interest in RXi held by its minority stockholders in the quarter ended March 31, 2007. During 2006 no comparable entry was necessary as all our subsidiaries were wholly owned. This loss was the minority shareholder’s portion of the loss attributed to RXi and was limited to the extent of their investment.

  Related Party Transactions

     Dr. Michael Czech, who is a member of the Company’s Scientific Advisory Board, is an employee of UMMS and was the principal investigator for a sponsored research agreement between the Company and UMMS. During the three-month period ended March 31, 2006, we incurred expenses to UMMS related to Dr. Czech’s sponsored research agreement of $201,000. Additionally, we paid $27,000 to Dr. Czech for his services on the Scientific Advisory Board for each of the three-month periods ended March 31, 2007 and 2006.

     RXi was incorporated jointly in April 2006 by CytRx and the four current members of RXi’s scientific advisory board for the purpose of pursuing the possible development or acquisition of RNAi-related technologies and assets.

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     On January 8, 2007, CytRx entered into a Contribution Agreement with RXi under which CytRx assigned and contributed to RXi substantially all of its RNAi-related technologies and assets, and entered into a letter agreement with RXi under which RXi has agreed to reimburse CytRx, following its initial funding, for all organizational and operational expenses incurred by CytRx in connection with the formation, initial operations and funding of RXi. On April 30, 2007, CytRx additionally contributed $15 million, net of reimbursed expenses of approximately $2.0 million, to RXi.

     Tod Woolf, Ph.D., the President and Chief Executive Officer of RXi, is one of the Company’s executive officers. The Company recently entered into an employment agreement with Dr. Woolf under which he is entitled to base annual compensation and other employee benefits, including the right to receive, upon completion of RXi’s initial funding, a grant by RXi of stock options to purchase a number of shares of RXi common stock equal to 3/70ths of the number of RXi shares held by CytRx immediately prior to the initial funding at an exercise price equal to the fair market value of the shares at the time of grant.

     Dr. Woolf may be deemed to have a material interest in the Company’s transactions with RXi described above, and in its future dealings with RXi, by reason his status as RXi’s President and Chief Executive Officer and in light of any stock options granted to him by RXi upon completion of its initial funding or otherwise.

Item 3 — Quantitative and Qualitative Disclosures About Market Risk

     Our exposure to market risk is limited primarily to interest income sensitivity, which is affected by changes in the general level of United States interest rates, particularly because a significant portion of our investments are in short-term debt securities issued by the U.S. government and institutional money market funds. The primary objective of our investment activities is to preserve principal. Due to the nature of our short-term investments, we believe that we are not subject to any material market risk exposure. We do not have any derivative financial instruments or foreign currency instruments. If interest rates had varied by 10% in the three month period ended March 31, 2007, it would not have had a material effect on our results of operations or cash flows for that period.

Item 4 — Controls and Procedures

  Evaluation of Disclosure Controls and Procedures

     Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)) as of the end of the quarterly period covered by this Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

  Changes in Controls Over Financial Reporting

     During the quarterly period covered by this report on Form 10-Q, we made changes to our internal control designed to strengthen our financial reporting in light of material weaknesses in that regard reported in our Form 10-K for the year ended December 31, 2006. During the quarterly period covered by this Form 10-Q, we restated our financial statements for the first three fiscal quarters in 2006 to reflect the proper accounting resulting from the integration of our laboratory’s accounting system in the first quarter of 2006, and enhanced our internal review of all equity transactions to ensure the effectiveness of all aspects of our controls related to the accounting for anti-dilution adjustments to our outstanding warrants and other securities..

     We are continuing our efforts to improve and strengthen our control processes to fully remedy the previously reported material deficiency and to ensure that all of our controls and procedures are adequate and effective. Any failure to implement and maintain improvements in the controls over our financial reporting could cause us to fail to meet our reporting obligations under the Securities and Exchange Commission’s rules and regulations. Any failure to improve our internal controls to address the weakness we have identified could also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our common stock.

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PART II— OTHER INFORMATION

Item 1A — Risk Factors

We Have Operated at a Loss and Will Likely Continue to Operate at a Loss For the Foreseeable Future

     We have operated at a loss due to our lack of significant recurring revenue combined with our substantial expenditures for research and development of our products and general and administrative expenses. We incurred net losses of $16.8 million, $15.1 million and $16.4 million for the years ended December 31, 2006, 2005 and 2004, respectively, and had an accumulated deficit of approximately $139.6 million as of December 31, 2006. We are likely to continue to incur losses unless and until, if ever, we are able to commercialize one or more of our products and generate significant recurring revenue.

We Have No Source of Significant Recurring Revenue, Which Makes Us Dependent on Financing to Sustain Our Operations

     Our revenue was $2.1 million, $184,000 and $428,000 during the years ended December 31, 2006, 2005 and 2004, respectively. Of the $2.1 million of revenue in 2006, $1.8 million related to our sale to the ALS Charitable Remainder Trust of a one-percent royalty interest in worldwide sales of arimoclomol. We will not have other significant recurring revenue until at least one of the following occurs:

• We are able to commercialize one or more of our products in development, which may require us to first enter into license or other arrangements with third parties.

• One or more of our licensed products is commercialized by our licensees, thereby generating royalty revenue for us.

• We are able to acquire products from third parties that are already being marketed or are approved for marketing.

     We have relied primarily upon proceeds from sales of our equity securities, including proceeds received upon the exercise of options and warrants, to generate funds needed to finance our business and operations. At March 31, 2007, we had cash and cash equivalents of $36.4 million, and we received $19.2 million from the sale of shares in an April 2007 financing transaction, net of offering expenses of approximately $2.8 million and the $15.0 million of net proceeds that we provided to RXi on April 30, 2007 to satisfy the initial funding requirements under its agreements with UMMS. We believe that our remaining current financial resources will be adequate to support our currently planned level of operations into the second half of 2009. This estimate is based in part on projected expenditures for 2007 of $4.5 million for our Phase IIb trial of arimoclomol for ALS and related studies, $4.4 million for our other ongoing and planned preclinical programs, including a possible Phase II clinical trial of arimoclomol in stroke patients, and $8.8 million for general and administrative expenses. We estimate that RXi separately will expend approximately $6.2 million on development activities for 2007 (including approximately $400,000 in cash payments under agreements with UMMS, $3.2 million in other research and development expenses and $2.6 million in general and administrative expenses). We anticipate it will take a minimum of three years, and possibly longer, for us to generate recurring revenue, and we will be dependent on obtaining future financing until such time, if ever, as we can generate significant recurring revenue. We have no commitments from third parties to provide us with any financing, and may not be able to obtain financing on favorable terms, or at all. A lack of needed financing might force us to reduce the scope of our long-term business plans.

We Will Be Reliant Upon Third Parties for the Development and Eventual Marketing of Our Products

     Our business plan is to enter into strategic alliances, license agreements or other collaborative arrangements with other pharmaceutical companies under which those companies will be responsible for the commercial development and eventual marketing of our products. Although we plan to continue the development of arimoclomol for the treatment of ALS and may market it ourselves if it is approved by the FDA, the completion of the development of our current product candidates, as well as the manufacture and marketing of these products, will likely require us to enter into strategic arrangements with other pharmaceutical or biotechnology companies.

     There can be no assurance that any of our products will have sufficient potential commercial value to enable us to secure strategic arrangements with suitable companies on attractive terms, or at all. If we are unable to enter into such arrangements, we may not have the financial or other resources to complete the development of any of our products. We do not have a commercial relationship with the company that provided an adjuvant for the vaccine for the Phase I clinical trial conducted by UMMS and Advanced BioScience

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Laboratories on an HIV vaccine candidate that utilizes a technology that we licensed from UMMS. If we are not able to enter into such a relationship, we may be unable to use some or all of the results of the clinical trial as part of our clinical data for obtaining FDA approval of this vaccine, which will delay the development of the vaccine.

     To the extent we enter into collaborative arrangements, we will be dependent upon the timeliness and effectiveness of the development and marketing efforts of our contractual partners. If these companies do not allocate sufficient personnel and resources to these efforts or encounter difficulties in complying with applicable FDA and other regulatory requirements, the timing of receipt or amount of revenue from these arrangements may be materially and adversely affected. By entering into these arrangements rather than completing the development and then marketing these products on our own, we may suffer a reduction in the ultimate overall profitability for us of these products. In addition, if we are unable to enter into these arrangements for a particular product, we may be required to either sell our rights in the product to a third party or abandon it unless we are able to raise sufficient capital to fund the substantial expenditures necessary for development and marketing of the product.

We Will Incur Substantial Expenses and May Be Required to Pay Substantial Milestone Payments Relating to Our Product Development Efforts

     We estimate that our clinical program for arimoclomol for the treatment of ALS, including the completion of the planned Phase IIb clinical trial and related studies, will require us to incur approximately $23.0 million (including amounts payable under the Master Agreement for Clinical Trials Management Services we have entered into with Pharmaceutical Research Associates) over the next two to three years, assuming we receive FDA clearance for this trial. In addition, our agreement with Biorex by which we acquired our molecular chaperone co-induction drug candidates provides for milestone payments based on the occurrence of certain regulatory filings and approvals related to the acquired products. In the event that we successfully develop arimoclomol or any other of these candidates, the milestone payments could aggregate as much as $3.7 million, with the most significant of those payments due upon the first commercialization of any of these candidates. The actual costs of our planned Phase IIb trial, and any clinical development of arimoclomol in stroke patients, could significantly exceed the expected amount due to a variety of factors associated with the conduct of clinical trials, including those described below under “If Our Products Are Not Successfully Developed and Approved by the FDA, We May Be Forced to Reduce or Curtail Our Operations.”

     Under our license for our HIV vaccine candidate, we are responsible for all of the costs for any subsequent clinical trials for this vaccine. The costs of subsequent trials for the HIV vaccine, if initiated, would be very substantial. Although we are seeking National Institutes of Health or other governmental funding for these future trials, there can be no assurance that we will be able to secure any such funding. We also will be responsible for milestone payments based upon the development of the vaccine.

If Our Products Are Not Successfully Developed and Approved by the FDA, We May Be Forced to Reduce or Curtail Our Operations

     All of our products in development must be approved by the FDA or foreign governmental agencies before they can be marketed. The process for obtaining FDA and foreign governmental approvals is both time-consuming and costly, with no certainty of a successful outcome. This process typically includes the conduct of extensive pre-clinical and clinical testing, which may take longer or cost more than we or our licensees anticipate, and may prove unsuccessful due to numerous factors. Product candidates that may appear to be promising at early stages of development may not successfully reach the market for a number of reasons. The results of preclinical and initial clinical testing of these products may not necessarily indicate the results that will be obtained from later or more extensive testing. Companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials, even after obtaining promising results in earlier trials.

     Numerous factors could affect the timing, cost or outcome of our drug development efforts, including the following:

• Difficulty in securing centers to conduct trials.

• Difficulty in enrolling patients in conformity with required protocols or projected timelines.

• Unexpected adverse reactions by patients in trials.

• Difficulty in obtaining clinical supplies of the product.

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• Changes in FDA or foreign governmental requirements for our testing during the course of that testing.

• Inability to generate statistically significant data confirming the efficacy of the product being tested.

• Modification of the drug during testing.

• Reallocation of our limited financial and other resources to other clinical programs.

     It is possible that none of the products we develop will obtain the appropriate regulatory approvals necessary for us to begin selling them. The time required to obtain FDA and foreign governmental approvals is unpredictable, but often can take years following the commencement of clinical trials, depending upon the complexity of the drug candidate. Any analysis we perform of data from clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Any delay or failure in obtaining required approvals could have a material adverse effect on our ability to generate revenue from the particular drug candidate.

Our Molecular Chaperone Co-Induction Drug Candidates May Not Receive Regulatory Marketing Approvals

     In September 2006, we announced results of our Phase IIa clinical testing of arimoclomol for the treatment of ALS. We reported that arimoclomol had met the trial’s primary endpoints of safety and tolerability at all three doses tested in the Phase IIa trial, and that the trial results indicated a non-statistically-significant trend of improvement in functional capacity as measured by the Revised ALS Functional Ration Scale in the arimoclomol high dose group as compared with untreated patients. There is no assurance, however, that the results and achievements described will be supported by further analysis of the Phase IIa trial or open-label extension data, or by the results of any subsequent clinical trials, or that the FDA will permit us to commence our planned Phase IIb clinical on a timely basis or at all. The requirements imposed by the FDA in connection with our planned Phase IIb trial could add to the time and expense for us to carry out this trial.

     We believe that the FDA may accept the completion of a successful Phase II clinical program as sufficient to enable us to submit a New Drug Application, or NDA; however, there is no assurance that the FDA will accept our Phase II program in lieu of a Phase III clinical trial. If the FDA requires us to complete a Phase III clinical trial, the cost of development of arimoclomol for treatment of ALS will increase significantly beyond our estimated costs, and the time to completion of clinical testing also will be significantly delayed. In addition, the FDA ultimately could require us to achieve an efficacy end point in the clinical trials for arimoclomol that could be more difficult, expensive and time-consuming than our planned end point. Based upon the positive results of recent preclinical studies in animals, we are considering possible clinical development of arimoclomol in stroke patients. Arimoclomol has also shown therapeutic efficacy in a preclinical animal model of diabetes, and we also may pursue development of arimoclomol for diabetic indications. However, such development would require significant and costly additional testing. There is no guarantee that arimoclomol will show any efficacy for any indication.

     Iroxanadine has been tested in two Phase I clinical trials and one Phase II clinical trial which indicated improvement in the function of endothelial cells in blood vessels of patients at risk of cardiovascular disease. We might develop this product in indications such as diabetic retinopathy and wound healing, which will require significant and costly additional testing. There is no guarantee that iroxanadine will show any efficacy in the intended uses we are seeking. We may also attempt to license iroxanadine to larger pharmaceutical or biotechnology companies for cardiovascular indications; however, there is no guarantee that any such company will be interested in licensing iroxanadine from us or licensing it on terms that are attractive to us.

     Bimoclomol has been tested in two Phase II clinical trials where it was shown to be safe, but where it did not show efficacy for diabetic neuropathy, the indication for which it was tested. We may develop this compound for other therapeutic indications; however, there can be no guarantee that this compound will be effective in treating any diseases. In addition, the FDA may require us to perform new safety clinical trials, which would be expensive and time consuming and would delay development of bimoclomol.

     There is no guarantee that any additional clinical trials will be successful or that the FDA will approve any of these products and allow us to begin selling them in the United States.

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We Recently Identified Material Weaknesses in our Internal Control over Financial Reporting

     In our most recent Annual Report on Form 10-K, we reported material weaknesses in the effectiveness of our internal controls over financial reporting related to the application of generally accepted accounting principles arising from our accounting for historical warrant anti-dilution adjustments as deemed dividends, and in the effectiveness of our internal controls over quarterly and annual financial statement reporting arising from our accounting for research and development expenses related to our laboratory facility in Worcester, Massachusetts, which are described in detail under the heading “Controls and Procedures” in our Form 10-K. Despite our substantial efforts to ensure the integrity of our financial reporting process, we cannot guarantee that we will not identify additional weaknesses as we continue to work with the new systems that we have implemented over the past year. Any continuing material weaknesses in our internal control over financial reporting could result in errors in our financial statements, which could erode market confidence in our company, adversely affect the market price of our common stock and, in egregious circumstances, result in possible claims based upon such financial information.

We Are Subject to Intense Competition, and There is No Assurance that We Can Compete Successfully

     We and our strategic partners or licensees may be unable to compete successfully against our current or future competitors. The pharmaceutical, biopharmaceutical and biotechnology industry is characterized by intense competition and rapid and significant technological advancements. Many companies, research institutions and universities are working in a number of areas similar to our primary fields of interest to develop new products. There also is intense competition among companies seeking to acquire products that already are being marketed. Many of the companies with which we compete have or are likely to have substantially greater research and product development capabilities and financial, technical, scientific, manufacturing, marketing, distribution and other resources than at least some of our present or future strategic partners or licensees.

     As a result, these competitors may:

• Succeed in developing competitive products sooner than us or our strategic partners or licensees.

• Obtain FDA and other regulatory approvals for their products before we can obtain approval of any of our products.

• Obtain patents that block or otherwise inhibit the development and commercialization of our product candidates.

• Develop products that are safer or more effective than our products.

• Devote greater resources to marketing or selling their products.

• Introduce or adapt more quickly to new technologies and other scientific advances.

• Introduce products that render our products obsolete.

• Withstand price competition more successfully than us or our strategic partners or licensees.

• Negotiate third-party strategic alliances or licensing arrangements more effectively.

• Take advantage of other opportunities more readily.

     We are aware of only one drug, Rilutek, which was developed by Aventis Pharma AG, that has been approved by the FDA for the treatment of ALS. Rilutek is now available in generic form. Other companies are working to develop pharmaceuticals to treat ALS, including Aeolus Pharmaceuticals, Celgene Corporation, Mitsubishi Pharma Corporation, Ono Pharmaceuticals, Trophos SA, FaustPharmaceuticals SA, Oxford BioMedica plc, and Teva Pharmaceutical Industries Ltd. In addition, ALS belongs to a family of diseases called neurodegenerative diseases, which includes Alzheimer’s, Parkinson’s and Huntington’s disease. Due to similarities between these diseases, a new treatment for one ailment potentially could be useful for treating others.

     There also are many companies that are producing and developing drugs used to treat neurodegenerative diseases other than ALS, including Amgen, Inc., Cephalon, Inc., Ceregene, Inc., Elan Pharmaceuticals, plc, Forest Laboratories, Inc., H. Lundbeck A/S, Phytopharm plc, and Schwarz Pharma AG.

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     A number of products currently are being marketed by a variety of the multinational or other pharmaceutical companies for treating type 2 diabetes, including among others the diabetes drugs Avandia by GlaxoSmithKline PLC, Actos by Eli Lilly & Co., Glucophage and Junavia by Bristol-Myers Squibb Co., Symlin and Byetta by Amylin Pharmaceuticals, Inc. and Starlix by Novartis and the obesity drugs Acomplia by Sanofi-Aventis SA, Xenical by F. Hoffman-La Roche Ltd. and Meridia by Abbott Laboratories. Many major pharmaceutical companies are also seeking to develop new therapies for these disease indications. Companies developing HIV vaccines that could compete with our HIV vaccine technology include Merck, GlaxoSmithKline, Sanofi Pasteur, VaxGen, Inc., AlphaVax, Inc. and Immunitor Corporation. These competitors have substantially greater research and product development capabilities and financial, technical, scientific, manufacturing, marketing, distribution and other resources than RXi.

We Will Rely upon Third Parties for the Manufacture of Our Clinical Product Supplies

     We do not have the facilities or expertise to manufacture supplies of any of our product candidates, including the clinical supply of arimoclomol used in our Phase II clinical trials. Accordingly, we are dependent upon contract manufacturers or our strategic alliance partners to manufacture these supplies. We have a manufacturing supply arrangement in place with respect to the clinical supplies for the Phase II clinical program for arimoclomol for ALS. We have no manufacturing supply arrangements for any of our other product candidates, and there can be no assurance that we will be able to secure needed manufacturing supply arrangements on attractive terms, or at all. Our failure to secure these arrangements as needed could have a materially adverse effect on our ability to complete the development of our products or to commercialize them.

We May Be Unable to Protect Our Intellectual Property Rights, Which Could Adversely Affect the Value of Our Assets

     We believe that obtaining and maintaining patent and other intellectual property rights for our technologies and potential products is critical to establishing and maintaining the value of our assets and our business. Although we have patents and patent applications directed to our molecular chaperone co-induction technologies, there can be no assurance that these patents and applications will prevent third parties from developing or commercializing similar or identical technologies, that the validity of our patents will be upheld if challenged by third parties or that our technologies will not be deemed to infringe the intellectual property rights of third parties. In particular, although we conducted certain due diligence regarding the patents and patent applications related to our molecular chaperone co-induction drug candidates, and received certain representations and warranties from the seller in connection with the acquisition, the patents and patent applications related to our molecular chaperone co-induction drug candidates were issued or filed, as applicable, prior to our acquisition and thus there can be no assurance that the validity, enforceability and ownership of those patents and patent applications will be upheld if challenged by third parties.

     Any litigation brought by us to protect our intellectual property rights or by third parties asserting intellectual property rights against us, or challenging our patents, could be costly and have a material adverse effect on our operating results or financial condition, make it more difficult for us to enter into strategic alliances with third parties to develop our products, or discourage our existing licensees from continuing their development work on our potential products. If our patent coverage is insufficient to prevent third parties from developing or commercializing similar or identical technologies, the value of our assets is likely to be materially and adversely affected.

We Are Subject to Potential Liabilities From Clinical Testing and Future Product Liability Claims

     If any of our products are alleged to be defective, they may expose us to claims for personal injury by patients in clinical trials of our products or by patients using our commercially marketed products. Even if the commercialization of one or more of our products is approved by the FDA, users may claim that such products caused unintended adverse effects. We currently do not carry product liability insurance covering the commercial marketing of these products. We obtained clinical trial insurance for our Phase IIa clinical trial of arimoclomol for the treatment of ALS, and will seek to obtain similar insurance for the planned Phase IIb clinical trial of arimoclomol and any other clinical trials that we conduct, as well as liability insurance for any products that we market. There can be no assurance that we will be able to obtain additional insurance in the amounts we seek, or at all. We anticipate that our licensees who are developing our products will carry liability insurance covering the clinical testing and marketing of those products. There is no assurance, however, that any insurance maintained by us or our licensees will prove adequate in the event of a claim against us. Even if claims asserted against us are unsuccessful, they may divert management’s attention from our operations and we may have to incur substantial costs to defend such claims.

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We May Be Unable to Acquire Products Approved For Marketing

     In the future, we may seek to acquire products from third parties that already are being marketed or have been approved for marketing. We have not identified any of these products, and we do not have any prior experience in acquiring or marketing products and may need to find third parties to market any products that we might acquire. We may also seek to acquire products through a merger with one or more companies that own such products. In any such merger, the owners of our merger partner could be issued or hold a substantial, or even controlling, amount of stock in our company or, in the event that the other company is the surviving company, in that other company.

Risks Associated With Our Ownership of RXi

     The value of our ownership interest in RXi will depend upon RXi’s success in developing and commercializing products based upon its RNAi technologies, which is subject to significant risks and uncertainties, including the following:

RXi is Subject to Risks of a New Business

     RXi is a start-up company with no operating history. RXi is initially focused solely on developing and commercializing therapeutic products based upon its RNAi technologies, and there is no assurance that RXi will be able to successfully implement its business plan. While RXi’s management collectively possesses substantial business experience, including experience in taking start-up companies from early stage to an operational stage, there is no assurance that they will be able to manage RXi’s business effectively, or that they will be able to identify, hire and retain any needed additional management or scientific personnel, to develop and implement RXi’s product development plans, obtain third-party contracts or any needed financing, or achieve the other components of RXi’s business plan.

The Approach RXi is Taking to Discover and Develop Novel Therapeutics Using RNAi is Unproven and May Never Lead to Marketable Products

     The RNAi technologies that RXi has licensed from UMMS have not yet been clinically tested by CytRx or RXi, nor are we aware of any clinical trials having been completed by third parties involving similar technologies. The scientific discoveries that form the basis for RXi’s efforts to discover and develop new drugs are relatively new. The scientific evidence to support the feasibility of developing drugs based on these discoveries is both preliminary and limited, and no company has received regulatory approval to market therapeutics utilizing RNAi. Successful development of RNAi-based products by RXi will require solving a number of issues, including providing suitable methods of stabilizing the RNAi drug material and delivering it into target cells in the human body. RXi may expend large amounts of money trying to solve these issues, and never succeed in doing so. In addition, any compounds that RXi develops may not demonstrate in patients the chemical and pharmacological properties ascribed to them in laboratory studies, and they may interact with human biological systems in unforeseen, ineffective or even harmful ways.

RXi May Be Unable to Protect Its Intellectual Property Rights Licensed From UMMS or May Need to License Additional Intellectual Property from Others.

     The assets we contributed to RXi include a non-exclusive license to the fundamental Fire and Mello patent owned by UMMS and the Carnegie Institution of Washington, which claims various aspects of gene silencing, or genetic inhibition by double-stranded RNA. There can be no assurance that this patent or other pending applications or issued patents belonging to its patent family would withstand possible legal challenges or that it will effectively insulate the covered technologies from competition. Therapeutic applications of gene silencing technology and other technologies that RXi licenses from UMMS are also claimed in a number of UMMS pending patent applications, but there can be no assurance that these applications will result in any issued patents or that any such issued patents would withstand possible legal challenges or insulate RXi’s technologies from competition. We are aware of a number of third party-issued patents directed to various particular forms and compositions of RNAi-mediating molecules, and therapeutic methods using them, that RXi will not use. Third parties may, however, hold or seek to obtain additional patents that could make it more difficult or impossible for RXi to develop products based on the gene silencing technology that RXi has licensed.

     RXi has entered into an invention disclosure agreement with UMMS under which UMMS has agreed to disclose to RXi certain inventions it makes and give RXi the exclusive right to negotiate licenses to the disclosed inventions. There can be no assurance, however, that any such inventions will arise, that RXi will be able to negotiate licenses to any inventions on satisfactory terms, or at all, or that any negotiated licenses will prove commercially successful.

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     RXi may need to license additional intellectual property rights from third parties in order to be able to complete the development or enhance the efficacy of its product candidates or avoid possible infringement of the rights of others. There is no assurance that RXi will be able to acquire any additional intellectual property rights on satisfactory terms, or at all.

We Are Required To Dispose of Some of Our RXi Shares, and May Not Be Able To Do So Promptly Through the Issuance of a Dividend

     We have agreed under our letter agreement with UMMS and our separate stockholders agreement with RXi and its other current stockholders to reduce our share of ownership of RXi to less than a majority of the outstanding voting power as soon as reasonably practicable. In order to do so, we intend to make a dividend of a portion of our RXi shares to our stockholders. Any future dividend to our stockholders of RXi shares would be subject to the approval of our board of directors and to compliance with SEC rules and the requirements of the Delaware General Corporation Law, and there is no assurance as to the timing or amount of such dividend. We may be unable to comply with these rules and requirements, or may experience delays in complying. Any such dividend may be taxable to our stockholders.

RXi May Not Be Able to Obtain Future Financing

     On April 30, 2007, we provided to RXi $15.0 million, net of approximately $2.0 million of expenses reimbursed to us by RXi, to satisfy the initial funding requirements under its agreements with UMMS. We believe this initial funding will be sufficient to fund RXi’s planned business and operations into the third quarter of 2008. It is possible, however, that RXi could require additional funding prior to this time. RXi also will require substantial additional financing in the future in connection with its RNAi research and development activities and any commercialization of its products. We contributed all of our RNAi-related technologies to RXi in order to accelerate the development and commercialization of drugs based upon these and RXi’s other RNAi technologies. Although we believe that this will facilitate obtaining additional financing to pursue RXi’s RNAi development efforts, RXi has no commitments or arrangements for any financing, and there is no assurance that it will be able to obtain any future financing.

We May Not be Able to Exercise Our RXi Preemptive Rights

     Under our agreement with RXi and its other current stockholders, with some exceptions, once we no longer own a majority of RXi’s outstanding shares CytRx will have preemptive rights to acquire a portion of any new securities sold or issued by RXi so as to maintain our percentage ownership of RXi. Depending upon the terms and provisions of any proposed sale of new securities by RXi, we may be unable or unwilling to exercise our preemptive rights, in which event our percentage ownership of RXi will be diluted. In order to maintain our percentage ownership of RXi, we may need to obtain our own financing, which may or may not be available to us on satisfactory terms, or at all.

RXi Retains Discretion Over Its Use of Any Funds That We Provide To It

     Although RXi currently is a majority-owned subsidiary of ours, we do not control its day-to-day operations. Accordingly, all funds received by RXi, including funds provided by us, may be used by RXi in any manner its management deems appropriate, for its own purposes, including the payment of salaries and expenses of its officers and other employees, amounts called for under the UMMS licenses and invention disclosure agreement, and for other costs and expenses of its RNAi research and development activities.

We Do Not Control RXi, And The Officers, Directors and Other RXi Stockholders May Have Interests That Are Different From Ours

     We have entered into a letter agreement with UMMS and a separate agreement with RXi and its other current stockholders under which we agree during the term of RXi’s new licenses from UMMS to vote our shares of RXi common stock for the election of directors of RXi and to take other actions to ensure that a majority of the RXi board of directors are independent of us. We also have agreed that we will reduce our ownership to less than a majority as soon as reasonably practicable. At any time at which we own less than a majority of the voting power RXi, we will not be able to determine the outcome of matters submitted to a vote of RXi stockholders. The other stockholders of RXi also may have interests that are different from ours. Accordingly, RXi may engage in actions or develop its business and operations in a manner that we believe are not in our best interests.

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Products Developed by RXi Could Eventually Compete With Our Products For ALS, Type 2 Diabetes and Obesity and Other Disease Indications

     RXi has determined to focus its initial efforts on developing an RNAi therapeutics for the treatment of a specific form of ALS caused by a defect in the SOD1 gene. Although arimoclomol is being developed by CytRx for all forms of ALS, it is possible that any products developed by RXi for the treatment of ALS could compete with any ALS products that CytRx may develop. RXi also plans to pursue the development of RNAi therapeutics for the treatment of obesity and type 2 diabetes, which could compete with any products that CytRx may develop for the treatment of these diseases. The potential commercial success of any products that CytRx may develop for these and other diseases may be adversely effected by competing products that RXi may develop.

RXi Will Be Subject to Competition, and It May Not Be Able To Compete Successfully

     A number of medical institutions and pharmaceutical companies are seeking to develop products based on gene silencing technologies. Companies working in this area include Alnylam Pharmaceuticals, Sirna Therapeutics (which was recently acquired by Merck), Acuity Pharmaceuticals, Nastech Pharmaceutical Company Inc., Nucleonics, Inc., Tacere Therapeutics Inc. and Benitec Ltd. and a number of the multinational pharmaceutical companies. These competitors have substantially greater research and development capabilities and financial, scientific, technical, manufacturing, marketing, distribution, and other resources than RXi, and RXi may not be able to compete successfully.

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

     We have a stockholder rights plan and provisions in our bylaws that may discourage or prevent a person or group from acquiring us without the participation and approval of our board of directors. We recently extended the stockholder rights plan through April 2017.

     We have a classified board of directors, which means that at least two stockholder meetings, instead of one, will be required to effect a change in the majority control of our board of directors. This provision applies to every election of directors, not just an election occurring after a change in control. The classification of our board increases the amount of time it takes to change majority control of our board of directors and may cause our potential purchasers to lose interest in the potential purchase of us, regardless of whether our purchase would be beneficial to us or our stockholders. The additional time and cost to change a majority of the members of our board of directors makes it more difficult and may discourage our existing stockholders from seeking to change our existing management in order to change the strategic direction or operational performance of our company.

     Our bylaws provide that directors may only be removed for cause by the affirmative vote of the holders of at least a majority of the outstanding shares of our capital stock then entitled to vote at an election of directors. This provision prevents stockholders from removing any incumbent director without cause. Our bylaws also provide that a stockholder must give us at least 120 days notice of a proposal or director nomination that such stockholder desires to present at any annual meeting or special meeting of stockholders. Such provision prevents a stockholder from making a proposal or director nomination at a stockholder meeting without us having advance notice of that proposal or director nomination. This could make a change in control more difficult by providing our directors with more time to prepare an opposition to a proposed change in control. By making it more difficult to remove or install new directors, the bylaw provisions may also make our existing management less responsive to the views of our stockholders with respect to our operations and other issues such as management selection and management compensation.

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

     As of April 30, 2007, there were outstanding stock options and warrants to purchase approximately 22.4 million shares of our common stock at a weighted-average exercise price of $1.87 per share. Our outstanding options and warrants could adversely affect our ability to obtain future financing or engage in certain mergers or other transactions, since the holders of options and warrants can be expected to exercise them at a time when we may be able to obtain additional capital through a new offering of securities on terms more favorable to us than the terms of outstanding options and warrants. For the life of the options and warrants, the holders have the opportunity to profit from a rise in the market price of our common stock without assuming the risk of ownership. To the extent the

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trading price of our common stock at the time of exercise of any such options or warrants exceeds the exercise price, such exercise will also have a dilutive effect on our stockholders. Many of our outstanding warrants contain anti-dilution provisions pertaining to dividends or distributions with respect to our common stock that could be triggered upon our intended dividend or distribution of RXi shares. Our outstanding warrants to purchase approximately 1.4 million shares also contain anti-dilution provisions that are triggered upon any issuance of securities by us below the prevailing market price of our common stock. In the event that these anti-dilution provisions are triggered by us in the future, we would be required to reduce the exercise price, and increase the number of shares underlying, those warrants, which would have a dilutive effect on our stockholders.

     As of May 4, 2007, we had registered with the SEC for resale by our stockholders a total of approximately 59.9 million outstanding shares of our common stock, and approximately 22.4 million additional shares of our common stock issuable upon exercise of outstanding options and warrants. The availability of these shares for public resale, as well as actual resales of these shares, could 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 are authorized to issue up to 5,000,000 shares of preferred stock in one or more series. Our board of directors may determine the terms of future preferred stock offerings without further action by our stockholders. If we issue preferred stock, it could affect your rights or reduce the value of our outstanding common stock. In particular, specific rights granted to future holders of preferred stock may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, sinking fund provisions, and restrictions on our ability to merge with or sell our assets to a third party.

We May Experience Volatility in Our Stock Price, Which May Adversely Affect the Trading Price of Our Common Stock

     The market price of our common stock has ranged from $0.87 to $5.49 per share during the 52-week period ended April 30, 2007, and may continue to experience significant volatility from time to time. Factors such as the following may affect such volatility:

• Announcements of regulatory developments or technological innovations by us or our competitors.

• Changes in our relationship with our licensors and other strategic partners=.

• Changes in our ownership or other relationships with RXi.

• Our quarterly operating results.

• Developments in patent or other technology ownership rights.

• Public concern regarding the safety of our products.

• Government regulation of drug pricing.

     Other factors which may affect our stock price are general changes in the economy, the financial markets or the pharmaceutical or biotechnology industries.

Item 6. — Exhibits

     The exhibits listed in the accompanying Index to Exhibits are filed as part of this Quarterly Report on Form 10-Q and incorporated herein by reference.

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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 thereunto duly authorized.

	CYTRX CORPORATION (Registrant)
Date: May 10, 2007	By:	/s/ MATTHEW NATALIZIO
		Matthew Natalizio
		Chief Financial Officer (Principal Financial Officer)

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INDEX TO EXHIBITS

Exhibit
Number	Description
4.1 (a)	Amendment No. 2 to Shareholder Protection Rights Agreement
10.1	Contribution Agreement, dated as of January 8, 2007, between CytRx Corporation and RXi Pharmaceuticals Corporation
10.2	Reimbursement Agreement, dated January 8, 2007, between CytRx Corporation and RXi Pharmaceuticals Corporation
10.3 †	Exclusive License Agreement (UMASS Agreement No UMMC 03-75-01), effective as of January 10, 2007, between RXi Pharmaceuticals Corporation and the University of Massachusetts
10.4 †	Non-Exclusive License Agreement (UMASS Agreement No. UMMC 06-08-03), effective as of January 10, 2007, between RXi Pharmaceuticals Corporation and the University of Massachusetts
10.5 †	Exclusive License Agreement (UMASS Agreement No. UMMC 06-21-01), effective as of January 10, 2007, between RXi Pharmaceuticals Corporation and the University of Massachusetts
10.6 †	Exclusive License Agreement (UMASS Agreement No. UMMC 03-68-02), effective as of January 10, 2007, between RXi Pharmaceuticals Corporation and the University of Massachusetts
10.7	Invention Disclosure Agreement (UMASS Agreement No. UMMC 07-U-200), effective as of the “Effective Date” (as defined), between RXi Pharmaceuticals Corporation and the University of Massachusetts
10.8	Voting agreement, dated as of January 10, 2007, between CytRx Corporation and the University of Massachusetts
10.9	Master Agreement for Clinical Trials Management Services, dated February 5, 2007, between CytRx Corporation and Pharmaceutical Research Associates
10.10 *	Employment Agreement dated February 22, 2007, by and among Dr. Tod Woolf, CytRx Corporation and RXi Pharmaceuticals Corporation
10.11	Stockholders agreement, dated February 23, 2007, among CytRx Corporation, RXi Pharmaceuticals Corporation, Craig C. Mello, Ph.D., Tariq Rana, Ph.D., Gregory J. Hannon, Ph.D., and Michael P. Czech, Ph.D
10.12 (b)	Form of Purchase Agreement, dated as of April 17, 2007, by and between CytRx Corporation and each of the selling stockholders named in the prospectus made part of this registration statement
10.13	Contribution Agreement, dated as of April 30, 2007, between CytRx Corporation and RXi Pharmaceuticals Corporation
31.1	Certification of Chief Executive Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer Pursuant to Section 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	Indicates a management contract or compensatory plan or arrangement.
†	Confidential treatment has been requested or granted for certain portions which have been blanked out in the copy of the exhibit filed with the Securities and Exchange Commission. The omitted information has been filed separately with the Securities and Exchange Commission.
(a)	Incorporated by reference to the Corporation’s Annual Report on Form 10-K filed on April 2, 2007.
(b)	Incorporated by reference to the Corporation’s current report on Form 8-K filed on April 18, 2007.

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EX-10.1

Exhibit 10.1

CONTRIBUTION AGREEMENT

by and between

CYTRX CORPORATION

and

RXI PHARMACEUTICALS CORPORATION

January 8, 2007

EXHIBITS

EXHIBIT A	Form of Bill of Sale
EXHIBIT B	Form of Assignment and Assumption Agreement
EXHIBIT C	Registration Rights Terms

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT is dated as of January 8, 2007 and is made by and between CytRx Corporation, a Delaware corporation (“CytRx”), and RXi Pharmaceuticals Corporation, a Delaware corporation (“RXi”). CytRx and RXi are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS:

A. CytRx has assisted in the formation of RXi for the purpose of carrying out the RXi Business (as defined below).

B. CytRx desires to transfer to RXi certain technology, contractual rights and obligations and intellectual property rights relating to or useful for the conduct of the RXi Business, and RXi desires to obtain such technology, contractual rights and obligations and intellectual property rights.

C. The Parties intend for the transactions contemplated by this Agreement to qualify as a contribution pursuant to Section 351 of the Code (as defined below).

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CytRx and RXi agree as follows:

ARTICLE 1
DEFINITIONS

All capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth below:

     1.1. “Affiliate” shall mean a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person of which such Person is deemed an Affiliate. “Control” (and, with correlative meanings, the terms “controlled by” and “under common control with”) shall mean the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock, by contract or otherwise. In the case of a corporation, “control” shall mean, among other things, the direct or indirect ownership of more than fifty percent (50%) of a Person’s outstanding voting stock. For the purposes of this Agreement, neither Party hereto shall be considered an Affiliate of the other Party hereto.

     1.2. “Agreement” shall mean this Contribution Agreement by and between CytRx and RXi.

     1.3. “Assigned Contracts” shall mean the Contracts listed on Schedule 1.3 hereto.

     1.4. “Assumed Liabilities” shall have the meaning set forth in Section 2.2(a) hereof.

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     1.5. “Business Documents” shall have the meaning set forth in Section 2.1(a)(vi) hereof.

     1.6. “Closing” shall have the meaning set forth in Section 2.3 hereof.

     1.7. “Closing Date” shall mean the date of the Closing.

     1.8. “Code” shall mean the Internal Revenue Code of 1986, as amended.

     1.9. “Common Stock” shall mean the common stock, $0.0001 par value per share, of RXi.

     1.10. “Contracts” shall mean any contracts, agreements, leases, mortgages or other arrangements.

     1.11. “CytRx” shall have the meaning set forth in the preamble to this Agreement.

     1.12. “Damages” shall mean out-of-pocket losses, damages, assessments, fines, penalties, fees, expenses, costs (including reasonable attorney’s fees) or amounts paid in settlement, but shall exclude punitive, consequential, special damages or lost profits.

     1.13. “Effective Time” shall mean 11:59 p.m. Eastern Standard Time on the Closing Date.

     1.14. “Encumbrances” shall mean any charge, claim, equitable interest, lien, license, option, pledge, security interest, mortgage, right of way, easement, encroachment, restriction on transfer and right of first offer or first refusal other than Permitted Encumbrances.

     1.15. “Excluded Assets” shall have the meaning set forth in Section 2.1(b) hereof.

     1.16. “FICA” shall mean any applicable taxes established under the Federal Insurance Contribution Act.

     1.17. “Force Majeure” shall mean any contingency beyond the reasonable control of the Party claiming to be affected, including, without limitation, an act of God, judicial or regulatory action, war, civil commotion, destruction of production facilities or materials by explosion, fire, earthquake, flood or storm, and labor disturbances (whether or not any such labor disturbance is within the power of the affected Party to settle).

     1.18. “Governmental Entity” shall mean any United States federal, state or local or any foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power or any court or tribunal (or any department, bureau or division thereof).

     1.19. “Indemnified Party” shall mean a party seeking indemnification under Sections 7.1 or 7.2 hereof.

     1.20. “Indemnifying Party” shall mean the party from which indemnification is sought under Sections 7.1 or 7.2 hereof.

     1.21. “Indemnity Claim” means a claim for indemnity under Section 7.1 or 7.2, as the case may be.

     1.22. “Intellectual Property” shall mean all rights and interests (including contractual rights) pertaining to or deriving from: (a) patents, copyrights and trade marks; (b) trade names,

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service marks and service names; (c) registrations, applications, and licenses relating to any of the foregoing; and (d) any and all technology, inventions or technical information, whether patentable or not, discovered, invented or developed before the Effective Time.

     1.23. “Legal Requirement” shall mean any United States federal, state or local or foreign law, statute, ordinance or regulation, or any Governmental Order, or any license, franchise or permit granted under any of the foregoing.

     1.24. “Material Adverse Effect” shall mean any change in, or effect on, the RXi Business or the Transferred Assets (including on the operations or financial condition of the RXi Business) which, when considered either individually or in the aggregate together with all other adverse changes or effects with respect to which such phrase is used in this Agreement, is materially adverse to the RXi Business or the Transferred Assets; provided, however, that the following shall not be deemed to constitute a Material Adverse Effect: (a) the loss of a RXi Employee after the date of this Agreement or (b) any matter resulting from or arising out of (i) actions taken in connection with the transactions contemplated by this Agreement and the pendency of the transactions contemplated hereby; (ii) the condition of the United States economy, financial markets or political conditions generally; (iii) a condition generally affecting participants in the life sciences industry; or (iv) hostilities or terrorist activities, any war or other national or international calamity or emergency.

     1.25. “Ordinary Course of Business” means an action taken by any Person in the ordinary course of such Person’s business which is consistent with the past customs and practices of such Person.

     1.26. “Organizational Documents” means, with respect to any Person, the certificate or articles of incorporation or organization and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with the creation, formation or organization of such Person and all by-laws of such Person, in each case, as amended or supplemented.

     1.27. “Party” and “Parties” shall have the meaning set forth in the preamble to this Agreement.

     1.28. “Permitted Encumbrances” shall mean (i) those encumbrances set forth in Schedule 1.2828 of this Agreement, (ii) all encumbrances approved in writing by RXi, (iii) mechanics’, materialmen’s, carriers’, workers’, repairers’ and similar statutory liens, (iv) zoning, entitlement, building and other land use regulations imposed by governmental agencies, (v) deposits or pledges made in connection with, or to secure payment of, worker’s compensation, unemployment insurance, and pension programs mandated under applicable Legal Requirements or other social security, (vi) encumbrances arising out of operation of law with respect to any and all debts, liabilities and obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured or determined or determinable incurred in the Ordinary Course of Business and which are not delinquent, (vii) covenants, conditions, restrictions, easements, encumbrances and other similar matters of record, (viii) restrictions on the transfer of securities arising under federal, state or foreign securities laws, (ix) such easements, restrictions of record and other non-monetary encumbrances or other imperfections of title as do not materially detract from the value or unreasonably interfere with the use of or the conduct of the RXi Business or the Transferred Assets, or (x) statutory liens for Taxes, special assessments or other governmental charges not yet due and payable.

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     1.29. “Person” shall mean any individual or corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization, Governmental Entity or other entity of any kind.

     1.30. “Plans” shall mean all pension, profit sharing, retirement, deferred compensation, welfare, insurance, disability, bonus, vacation pay, severance pay and similar plans, programs or arrangements, including without limitation, all employee benefit plans as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) covering current employees or former employees of CytRx employed in conducting the RXi Business.

     1.31. “RXi Business” shall mean the development, manufacture and/or commercialization of therapeutic products related to, based on or utilizing RNA interference technology.

     1.32. “RXi” shall have the meaning set forth in the preamble to this Agreement.

     1.33. “Securities Act” shall mean the Securities Act of 1933, as amended.

     1.34. “Shares” shall have the meaning set forth in Section 3.1 hereof.

     1.35. “Tax” means any and all federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, social security (including FICA), unemployment, real property, sales, use, value added or alternative minimum including any interest or penalties unless subject to a good faith dispute.

     1.36. “Third Party” shall mean any Person other than CytRx or RXi and their respective Affiliates.

     1.37. “Third Party Claim” shall have the meaning set forth in Section 7.3.

     1.38. “Transfer Impediment” shall have the meaning set forth in Section 6.1(a) hereof.

     1.39. “Transferred Assets” shall have the meaning set forth in Section 2.1(a) hereof.

     1.40. “Transferred Technology” shall mean Intellectual Property that is used exclusively by CytRx in its conduct of the RXi Business at the Closing Date and any remedies against any and all past, present and future infringements thereof and rights to protections of interest therein.

ARTICLE 2
TRANSFER OF ASSETS

     2.1 Contribution and Purchase of Transferred Assets.

          (a) CytRx hereby contributes, transfers, assigns, conveys, and delivers to RXi and its successors and assigns, for its and their own use and behalf, all of CytRx’s right, title, and interest in and to the following assets, other than the Excluded Assets (the “Transferred Assets”), and all goodwill associated therewith, and RXi hereby accepts the contribution, transfer, assignment, conveyance and delivery of the Transferred Assets and agrees to fully and entirely stand in the place of CytRx in all matters related thereto:

     (i) the Assigned Contracts;

     (ii) the Transferred Technology;

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     (iii) all (a) accounting and other books and records, (b) correspondence, (c) reports, (d) studies and (e) documents and other business records and files (“Business Documents”) to the extent related exclusively to the RXi Business at the Effective Time; and

     (iv) the equipment listed on Schedule 2.1(a)(iv) of this Agreement.

          (b) Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following properties, assets and rights of CytRx (collectively, the “Excluded Assets”) are excluded from the Transferred Assets:

     (i) the names and marks “CytRx” and any variants and derivations thereof;

     (ii) all items listed in Schedule 2.1(b)(ii) of this Agreement;

     (iii) all claims for refunds of Taxes and other governmental charges of whatever nature;

     (iv) all rights in connection with and assets of any Plans;

     (v) all insurance policies and rights thereunder;

     (vi) all personnel and other records that CytRx is required by law to retain in its possession;

     (vii) CytRx’s rights under this Agreement; and

     (viii) CytRx’s rights under any Contracts not included in the Assumed Liabilities.

     2.2 Assumption of Liabilities.

          (a) At the Effective Time, RXi shall assume and agree to discharge and be responsible for all of the liabilities and obligations, known and unknown, whether absolute or contingent, to the extent (but only to the extent) that such liabilities and obligations relate to the Transferred Assets or the RXi Business (the “Assumed Liabilities”), including without limitation:

     (i) all of CytRx’s payment, performance and other obligations under the Assigned Contracts, whether arising prior to, on or after the Effective Time;

     (ii) all other liabilities relating to the Transferred Assets, whether incurred prior to, on or after the Effective Time.

          (b) Except as provided under this Section 2.22.1(b)(viii), RXi shall not assume or agree to perform, pay or discharge, or have any liability for, and CytRx shall remain unconditionally liable for and shall discharge, any obligations, liabilities and commitments of CytRx, of any kind or nature, known or unknown, fixed or contingent (the “Excluded Liabilities”).

          (c) The assumption of the liabilities by RXi under this Section 2.2 shall not enlarge any rights of Third Parties under Contracts with RXi or CytRx.

     2.3 Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Ropes & Gray LLP, One International Place, Boston,

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Massachusetts, on the date hereof at 10:00 a.m. local time, or at such other place as CytRx and RXi agree in writing. The Closing shall be effective as of the Effective Time.

     2.4 Deliveries.

          (a) At the Closing and subject to Section 6.1 hereof, CytRx shall deliver or cause to be delivered to RXi all of the Transferred Assets, and in furtherance thereof:

     (i) CytRx shall deliver or cause to be delivered to RXi all of the Assigned Contracts with such assignments thereof and consents to assignments as are necessary to transfer to RXi CytRx’s full right, title and interest in the same;

     (ii) CytRx shall execute and deliver to RXi a bill of sale in substantially the form attached hereto as Exhibit A (the “Bill of Sale”) and an Assignment and Assumption Agreement in substantially the form attached hereto as Exhibit B (the “Assignment and Assumption Agreement”); and

     (iii) RXi shall execute and deliver to CytRx the Assignment and Assumption Agreement and deliver to CytRx the Shares (as defined in Section 3.1).

          (b) In addition, within 90 days after the Closing, CytRx shall make available, transfer, and deliver any and all physical embodiments of the Transferred Technology to RXi.

ARTICLE 3
CONSIDERATION

     3.1 Consideration. In consideration of the contribution, transfer and rights granted to RXi hereunder, RXi agrees to issue to CytRx 3,953 shares of the Common Stock of RXi, par value $0.0001 per share (the “Shares”), which, when aggregated with the 200 shares of the Common Stock of RXi held by CytRx on the date hereof, shall represent 85.366% of the issued and outstanding shares of RXi as of the Effective Time. CytRx acknowledges that the certificates representing the Shares will contain customary legends as are required by the Delaware General Corporation Law and regarding restrictions on transferability under federal and state securities laws

     3.2 Reporting. The Parties intend that the consummation of the transactions contemplated by this Agreement will constitute a contribution to which the provisions of Section 351(a) of the Code apply, and each of the Parties agrees to report the consummation of such transactions as such for federal, state and local income tax purposes. Each of CytRx and RXi shall duly and timely file their respective tax returns for their taxable year in which the transactions contemplated by this Agreement are consummated containing the information required under Treasury Regulation Section 1.351-3. The Parties shall cooperate with each other in timely providing the information necessary for the filing of such information.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CYTRX

     CytRx represents and warrants to RXi as of the Closing Date that:

     4.1 Organization and Qualification. CytRx is a corporation, validly existing and in good standing under the laws of the State of Delaware with all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement.

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     4.2 Authorization. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action on the part of CytRx.

     4.3 No Conflicts. Except as would not reasonably be expected to have a Material Adverse Effect and subject to obtaining any third party consents referred to in the final sentence of this Section 4.3, the execution, delivery and performance by CytRx of this Agreement will not:

(a)	result in a material breach or violation of, or default under, any obligation under a Contract; or
(b)	result in a breach or violation of, or default under, the Organizational Documents of CytRx.

No consents, waivers or approvals under any of CytRx’s or any of its subsidiaries’ Contracts are required to be obtained in connection with the consummation of the transactions contemplated hereby, except for those the absence of which would not reasonably be expected to have a Material Adverse Effect.

     4.4 Title to Properties. CytRx has sole and exclusive title to, or right to use, the Transferred Assets, other than the Transferred Technology (which are covered in Section 4.45).

     4.5 Intellectual Property. To its knowledge and without any independent investigation, CytRx has not (i) interfered with or misappropriated any Intellectual Property rights of Third Parties that is included in the Transferred Assets or (ii) received any written charge, complaint, claim, demand, or notice alleging any such interference or misappropriation (including any claim that CytRx must license or refrain from using any Intellectual Property rights of any third party in connection with the conduct of the RXi Business).

     4.6 Permits. All of the approvals, authorizations, permits, licenses, waivers, filings and consents required to be made, obtained or given by CytRx to accomplish the transactions contemplated by this Agreement, have been made or obtained by CytRx, unless the failure to obtain any such approval, authorization, permit, license, waiver, filing or consent would not, individually or collectively, reasonably be expected to have a Material Adverse Effect.

     4.7 Agreements, Contracts and Commitments. A true and correct list of all Assigned Contracts are listed in Schedule 1.3. CytRx is not in arrears on any payment due under any of the Assigned Contracts. CytRx has not received a notice of default from any other party to any of the Assigned Contracts.

4.8 Representations Regarding the Shares.

          (a) CytRx is acquiring the Shares for its own account, for investment and not for, with a view to, or in connection with, any distribution or public offering thereof within the meaning of the Securities Act.

          (b) CytRx understands that the Shares have not been, and will not be, registered under the Securities Act or any state securities law, by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act and such laws, that the Shares must be held indefinitely unless they are subsequently registered under the Securities Act and such laws or a subsequent disposition thereof is exempt from registration, that the certificates for the Shares shall bear a legend to such effect, and that appropriate stop transfer instructions may

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be issued. CytRx further understands that such exemption depends upon, among other things, the bona fide nature of CytRx’s investment intent expressed herein.

          (c) CytRx has not been formed for the specific purpose of acquiring the Shares pursuant to this Agreement. CytRx understands the term “accredited investor” as used in Regulation D promulgated under the Securities Act and represents and warrants to RXi that it is an “accredited investor” for purposes of acquiring the Shares hereunder.

          (d) CytRx has sufficient knowledge and experience in business and financial matters and with respect to investment in securities of privately held companies so as to enable it to analyze and evaluate the merits and risks of the investment contemplated hereby and is capable of protecting its interest in connection with this transaction. CytRx is able to bear the economic risk of such investment, including a complete loss of the investment.

          (e) CytRx acknowledges that it and its representatives have had the opportunity to ask questions and receive answers from officers and representatives of RXi concerning RXi and its business and the transactions contemplated by this Agreement and to obtain any additional information which RXi possesses or can acquire that is necessary to verify the accuracy of the information regarding RXi herein set forth or otherwise desired in connection with its acquisition of the Shares hereunder.

          (f) CytRx understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to CytRx) promulgated by the Securities and Exchange Commission under the Securities Act depends upon the satisfaction of various conditions, and that such exemption is not currently available.

     4.9 Disclaimer. CytRx shall not be deemed to have made to RXi any representation or warranty other than as expressly made by CytRx in this Article 4.

ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF RXi

RXi represents, warrants, and covenants to CytRx as of the Closing Date as follows:

     5.1 Organization and Qualification. RXi is a corporation, validly existing and in good standing under the laws of the State of Delaware with all requisite corporate power and authority to execute, deliver, and perform its obligations under this Agreement and under the Assigned Contracts.

     5.2 Authorization. The execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate action on the part of RXi.

     5.3 No Conflicts. Except as would not reasonably be expected to have a Material Adverse Effect, the execution, delivery and performance by RXi of this Agreement will not:

(a)	result in a material breach or violation of, or default under, any Contractual Obligation of RXi; or
(b)	result in a breach or violation of, or default under, the Organizational Documents of RXi.

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     5.4 Capitalization. Immediately prior to the Effective Time, the authorized capital stock of RXi consists of 1,000,000 shares of Common Stock, 912 shares of which are issued and outstanding.

     5.5 Issuance of the Shares. The issuance, sale and delivery of the Shares in accordance with this Agreement have been duly authorized and reserved for issuance by all necessary corporate action on the part of RXi. The Shares, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Agreement, will be duly and validly issued, fully paid and non-assessable.

     5.6 Permits. All of the approvals, authorizations, permits, licenses, waivers, filings and consents required to be made, obtained or given by RXi to accomplish the transactions contemplated by this Agreement have been made or obtained by RXi, unless the failure to obtain any such approval, authorization, permit, license, waiver, filing or consent would not, individually or collectively, reasonably be expected to materially adversely affect CytRx or otherwise result in a material diminution of the benefits of the transactions contemplated by this Agreement to CytRx.

     5.7 Compliance with Laws. RXi shall comply with all applicable laws and regulations in performing its obligations under this Agreement. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations, among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. RXi hereby agrees and gives assurance that in performing its obligations under this Agreement it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by RXi or its Affiliates or sublicensees under this Agreement, excluding CytRx, and that it will defend and hold CytRx harmless in the event of any legal action of any nature occasioned by such violation.

ARTICLE 6
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES

     6.1 Inability to Transfer Assets.

          (a) If and to the extent that the transfer to RXi of any Transferred Asset from CytRx would be a violation of applicable laws or agreements or require any consent or governmental approval in connection with the transactions contemplated hereby that has not been obtained by the Effective Time (a “Transfer Impediment”), then, unless the Parties shall otherwise determine, the transfer or assignment to RXi of such Transferred Asset shall be automatically deemed deferred and any such purported transfer shall be null and void until such time as all relevant Transfer Impediments are removed or obtained, as applicable, and CytRx shall not be obligated to transfer such asset except as provided in Section 6.1(b) below. Notwithstanding the foregoing, such asset shall still be considered a Transferred Asset for purposes of determining whether any Liability is an Assumed Liability.

          (b) If the transfer or assignment of any asset intended to be transferred or assigned hereunder is not consummated prior to or on the Effective Time, whether as a result the

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provisions of Section 6.1(a) or for any other reason, then CytRx shall hold such asset for the use and benefit, insofar as reasonably possible and not in violation of a Transfer Impediment, of RXi (at the expense of RXi) and shall take such other actions as may be reasonably requested by RXi in order to place RXi, insofar as reasonably possible and not in violation of a Transfer Impediment, in the same position as if such asset had been transferred as contemplated hereby and so that all the benefits and burdens relating to such asset, including possession, use, risk of loss, potential for gain, and dominion, control and command over such asset, are to inure from and after the Effective Time to RXi. If and when a Transfer Impediment which caused the deferral of a transfer of any asset pursuant to Section 6.1(a) is removed or obtained, as applicable, the transfer of the applicable asset shall be effected in accordance with the terms of this Agreement. The Parties shall cooperate and use reasonable efforts, without the requirement to make any payment or make a material concession, to remove or obtain, as applicable, any Transfer Impediment which prohibits the transfer or assignment of assets hereunder.

     6.2 Inability to Assign Liabilities. If the assignment of an Assumed Liability to RXi hereunder is prohibited by a Transfer Impediment, CytRx shall continue to be bound by the relevant obligations and, unless not permitted by law or the terms of the relevant obligation, RXi shall, as agent or subcontractor for CytRx, pay, perform and discharge fully, or cause to be paid, transferred or discharged all the obligations or other liabilities of CytRx thereunder. CytRx shall, without further consideration, pay and remit, or cause to be paid or remitted, to RXi promptly all money, rights and other consideration received by it in respect of such performance (unless any such consideration is an Excluded Asset). If and when such Transfer Impediment is removed or obtained, as applicable, or such obligations shall otherwise become assignable, the transfer of the applicable liability shall be effected in accordance with the terms of this Agreement. The parties shall cooperate and use reasonable efforts, without the requirement to make any payment or make a material concession, to remove or obtain, as applicable, any Transfer Impediment, which prohibits the assignment of any Assumed Liability hereunder.

     6.3 Further Assurances. Each of CytRx and RXi agrees to duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including, without limitation, the execution of such additional assignments, agreements, documents and instruments, that may be necessary or as the other Party hereto may at any time and from time to time reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes of, or to better assure and confirm unto such other Party its rights and remedies under, this Agreement.

     6.4 Access. RXi agrees that CytRx and its accountants, counsel and other representatives shall have the right, at CytRx’s own expense, at any time or from time to time during reasonable business hours upon reasonable notice, to inspect and make copies of or extracts from any of books and records of the RXi Business in the possession of RXi to the extent relating to the operation of the RXi Business or ownership of the Transferred Assets prior to the Effective Time, in each case only to the extent such inspections would not reasonably be expected to interfere with the conduct RXi of its business.

ARTICLE 7
LIMITATION OF LIABILITY AND INDEMNIFICATION

     7.1 Indemnification by CytRx. Subject to Sections 7.4 and 8.2, CytRx shall indemnify RXi from and against Damages, incurred by RXi as a result of any breach of a

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representation or warranty, or material breach of a covenant, made by CytRx in this Agreement. The calculation of any such Damage will reflect (i) the amount of any tax benefit reasonably expected to be recognized by RXi for tax purposes and (ii) the amount of any insurance proceeds received by RXi in respect of such Damage.

     7.2 Indemnification by RXi. Subject to Sections 7.4 and 8.2, RXi shall indemnify CytRx from and against Damages incurred by CytRx as a result of:

(a)	any breach of a representation or warranty, or material breach of a covenant, made by RXi in this Agreement;
(b)	any failure of RXi to discharge any Assumed Liabilities; or
(c)	RXi’s operation of the RXi Business after the Closing Date.

     7.3 Claims. Except as otherwise provided herein, if any third party notifies an Indemnified Party with respect to any matter (a “Third Party Claim”) which may give rise to an Indemnity Claim against an Indemnifying Party under this Article 7 then the Indemnified Party will promptly give written notice to the Indemnifying Party; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party will relieve the Indemnifying Party from any obligation under this Article 7, except to the extent such delay prejudices the Indemnifying Party. The Indemnifying Party will be entitled to control the defense of any Third Party Claim. In addition, the Indemnifying Party will have the right to participate in the defense of any Third Party Claim for which it does not assume control. The Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim for which the Indemnifying Party has assumed control. If the Indemnifying Party does not elect to control the defense of a Third Party Claim, the Indemnified Party will control the defense of the Third Party Claim. The Indemnified Party will not, however, without the prior written consent of the Indemnifying Party, consent to the entry of any judgment or enter into any compromise or settlement with respect to the Third Party Claim.

7.4 Limitations on Indemnification.

          (a) No party shall be obligated pursuant to this Article 7 or for any other reason or cause to indemnify the other in an amount in excess of $10,000,000.

          (b) No indemnification shall be payable pursuant to this Article 7 unless the amount of all claims for indemnification exceeds $100,000 in the aggregate, and, after all claims for indemnification exceed such amount, the Indemnifying Party shall be required to indemnify the Indemnified Parties with respect to all damages claimed by the Indemnified Parties.

          (c) No action or claim pursuant to this Article 7 shall be brought or asserted after the date twelve (12) months from the Closing Date.

     7.5 Exclusive Remedy. The indemnification provisions of this Article 7 shall be the sole and exclusive remedy for both Parties following the Closing Date with respect to any matter arising out of the transactions contemplated hereby.

ARTICLE 8
TERM AND SURVIVAL

     8.1 Term. Subject to Section 8.2 herein, this Agreement shall be effective as of the date hereof and shall continue in full force and effect indefinitely.

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     8.2 Survival. The representations and warranties contained in Article 4 and Article 5 herein shall survive the Closing Date, except that all such representations and warranties shall expire on the date twelve (12) months after the Closing Date, except with respect to and to the extent of any claims of which written notice specifying in reasonable detail, the nature and amount of the claims, has been given by RXi to CytRx, or by CytRx to RXi, as the case may be, prior to such expiration.

ARTICLE 9
MISCELLANEOUS

     9.1 Compliance with Bulk Sales Laws. The parties hereby waive compliance with the bulk sales law and any other similar laws in any applicable jurisdiction in respect of the transactions contemplated by this Agreement, including, without limitation, any applicable state tax law that may require notification of state taxing authorities and related actions in respect of bulk sales of assets outside of the ordinary course of business.

     9.2 Registration Rights. The terms of Exhibit C hereto are incorporated into this Agreement as if set forth fully herein.

     9.3 Notices. Any notice, request, consent or other communication to CytRx or RXi shall be in writing and shall be deemed given (i) when delivered personally or when sent by facsimile transmission and confirmed by telephone or electronic transmission report, (ii) on the next business day after timely delivery to a generally recognized receipted overnight courier (such as FedEx) and (iii) on the third business day after deposit in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), addressed to the Party at such Party’s address as set forth below or as subsequently modified by written notice delivered as provided herein, as follows:

     If to CytRx, to:

CytRx Corporation
11726 San Vicente Blvd.
Suite 650
Los Angeles, California 90049
Attention: General Counsel
Telephone: (310) 826-5648
Facsimile: (310) 826-6139

     with a copy to:

Sanford J. Hillsberg, Esq.
Troy & Gould PC
1801 Century Park East, Suite 1600
Los Angeles, CA 90067
Telephone: (310) 553-4441
Facsimile: (310) 201-4746

     If to RXi, to:

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RXi Pharmaceuticals Corporation
One Innovation Drive
Worcester, Massachusetts 01605
Attention: President
Telephone: ___________________
Facsimile: ___________________

     with a copy to:

Marc A. Rubenstein
Ropes & Gray LLP
One International Place
Boston, Massachusetts 02110-2624
Telephone: (617) 951-7826
Facsimile: (617) 951-7050

     9.3 Entire Agreement. This Agreement, together with any agreements referenced herein, constitutes, on and as of the date hereof, the entire agreement of CytRx and RXi with respect to the subject matter hereof, and all prior or contemporaneous understandings or agreements, whether written or oral, between CytRx and RXi with respect to such subject matter are hereby superseded in their entirety.

     9.4 No Implied Waivers; Rights Cumulative. No failure on the part of CytRx or RXi to exercise and no delay in exercising any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, including, without limitation, the right or power to terminate this Agreement, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

     9.5 Amendments. No amendment, modification, waiver, termination or discharge of any provision of this Agreement, nor consent to any departure by CytRx or RXi therefrom, shall in any event be effective unless the same shall be in writing specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by the Party against whom enforcement of such amendment is sought, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Party against whom enforcement of such variation, contradiction or explanation is sought.

     9.6 Successors and Assigns; Third-Party Beneficiaries. The terms and provisions of this Agreement shall inure to the benefit of, and be binding upon, CytRx, RXi and their respective successors and assigns. This Agreement is for the sole benefit of the parties and their permitted successors and assignees no other provision of this Agreement will give or be construed to give any Person, other than the parties and such successors and assignees, any legal or equitable rights hereunder.

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     9.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws provisions thereof.

     9.8 Force Majeure. If the performance of any part of this Agreement by either Party, or of any obligation under this Agreement, is prevented, restricted, interfered with or delayed by Force Majeure, unless conclusive evidence to the contrary is provided, the Party so affected shall, on giving written notice to the other Party, be excused from such performance to the extent of such prevention, restriction, interference or delay, provided that the affected Party shall use its commercially reasonable efforts to avoid or remove such causes of nonperformance and shall continue performance with the utmost dispatch whenever such causes are removed. When such circumstances arise, the Parties shall discuss what, if any, modification of the terms of this Agreement may be required in order to arrive at an equitable solution.

     9.9 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, then, to the fullest extent permitted by law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties hereto as nearly as may be possible and (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. To the extent permitted by applicable law, CytRx and RXi hereby waive any provision of law that would render any provision hereof prohibited or unenforceable in any respect.

     9.10 Headings. Headings used herein are for convenience only and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement.

     9.11 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their respective corporate names by their respective authorized representatives as of the date first set forth above.

RXI PHARMACEUTICALS CORPORATION		CYTRX CORPORATION
By: /s/	Tod Woolf	By: /s/	Steven A. Kriegsman
	Name: Tod Woolf		Name: Steven A. Kriegsman
	Title: President		Title: President and CEO

EX-10.2

Exhibit 10.2

January 8, 2007

Tod Woolf
President
RXi Pharmaceuticals Corporation
One Innovation Drive
Worcester, MA 01605

Re:       Reimbursement of fees and expenses

Dear Tod:

This letter agreement (this “Agreement”) is between CytRx Corporation (“CytRx”) and RXi Pharmaceuticals Corporation (“RXi”), each a Delaware corporation, with respect to certain fees and expenses incurred by CytRx in connection with the anticipated (i) contribution by CytRx to RXi of certain RNAi-related assets, and (ii) either (a) the sale of RXi securities to one or more accredited investors in a single financing transaction or series of related financing transactions (a “RXi Offering”) or (b) the sale by CytRx of its securities and an subsequent investment by CytRx in RXi (a “CytRx Offering”, and, together with a RXi Offering, an “Offering”).

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CytRx and RXi agree as follows:

1.

RXi Investment Banking Fees. Effective upon the completion of a RXi Offering, RXi hereby assumes all of CytRx’s obligations under any engagement letter with an investment banking firm, placement agent or other financial advisor (the “RXi Advisor”) engaged by CytRx in connection with a RXi offering and agrees to pay any fees and/or grant any rights in or issue to any RXi Advisor any securities upon consummation of the Transaction as may be required under any engagement letter with any such RXi Advisor or otherwise. CytRx represents that it has provided to RXi true and correct copies of all engagement letters with RXi Advisors entered into by CytRx as of the date hereof and will promptly provide to RXi copies of all engagement letters with RXi Advisors entered into by CytRx after the date hereof.

2.

CytRx Investment Banking Fees. Effective upon the completion of a CytRx Offering, RXi hereby assumes its Pro Rata Portion (as defined below) of CytRx’s obligations under any engagement letter with an investment banking firm, placement agent or other financial advisor (the “CytRx Advisor”) engaged by CytRx in connection with a CytRx Offering and agrees to pay its Pro Rata Portion of any fees and/or grant any rights in or issue to any CytRx Advisor its Pro Rata Portion of any securities upon consummation of the CytRx Offering as may be required under any engagement letter with any such CytRx Advisor or otherwise. As used in this letter, the term “Pro Rata Portion” means a fraction, the numerator of which is the amount of the investment made by CytRx in RXi following a CytRx Offering and the denominator of which is the total gross proceeds to CytRx from a CytRx Offering. In addition to the foregoing, RXi will pay to CytRx the

Pro Rata Portion of the value of any convertible securities issued by CytRx in the CytRx Offering, with such value to be determined using a Black-Shoales calculation.

3.

Other Fees and Expenses. Effective upon the completion of an Offering, RXi agrees to reimburse CytRx for other fees and out of pocket expenses incurred by CytRx (including, but not limited to, consulting, legal, accounting and other professional fees, and patent license and maintenance fees) in connection with the Offering, the formation of RXi, the operation of RXi prior to the Offering, and related transactions. Such reimbursement amounts shall be paid within 15 days of the receipt by RXi of CytRx’s invoice listing such amounts and describing the corresponding fees and expenses in reasonable detail.

4.

Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service or facsimile transmission to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice:

If to CytRx:	CytRx Corporation
	11726 San Vicente Boulevard, Suite 650
	Los Angeles, CA 90049
	Attention: President
	Fax: 310-826-6139
If to RXi:	RXi Pharmaceuticals, Inc.
	One Innovation Drive
	Worcester, MA 01605
	Attention: President

5.	Governing Law. This Agreement shall be governed by and be constructed in accordance with the laws of the State of California without regard to the conflict of laws provisions thereof.
6.	Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto.
7.	Complete Agreement. This Agreement sets forth the entire agreement and understanding between the parties hereto with respect to the subject matter hereof. This Agreement may not be changed, altered, modified or amended in any respect, except in a writing signed by the parties hereto.
8.	Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
9.	Attorney’s Fees. In the event of any litigation or other legal proceeding arising out of or related to this Agreement, the prevailing party shall be entitled to recover from the other party its reasonable attorneys’ fees and costs.

If the above reflects your agreement with respect to the foregoing matters, please so confirm by signing the acknowledgement below and returning a copy of this letter to me.

Very truly yours,
CytRx Corporation
By: Name: Title:	/s/ STEVEN A. KRIEGSMAN Steven A. Kriegsman President and Chief Executive Officer

Accepted and Agreed

RXi Pharmaceuticals Corporation

By:	/s/ TOD WOOLF
Name:	Tod Woolf
Title:	President and Chief Executive Officer

EX-10.3

Exhibit 10.3

EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of January 10, 2007 (the “Effective Date”), is between the University of Massachusetts (“University”), a public institution of higher education of the Commonwealth of Massachusetts as represented by its Worcester campus, and RXi Pharmaceuticals Corporation (“Company”), a Delaware corporation.

RECITALS

     WHEREAS, University owns intellectual property rights which relate to therapeutic applications of RNAi, as described in University’s invention disclosure UMMC 03-75, entitled “Gene Silencing with siRNA Containing Mismatches to Targets: A New Method to Cure Allele Specific Genetic Diseases and Disorders ”;

     WHEREAS, Company is engaged in business relating to the development and commercialization of products that use or incorporate University’s intellectual property rights and has the capability of developing commercial applications of the intellectual property;

     WHEREAS, Company desires to obtain an exclusive license to University’s intellectual property rights, and University is willing to grant an exclusive license to its intellectual property rights under the following conditions so that these intellectual property rights may be developed to their fullest and the benefits enjoyed by the general public; and

     WHEREAS, the license that is granted in this Agreement promotes the development of publicly funded intellectual property to practical application for the public good.

     THEREFORE, University and Company agree as follows:

1. Definitions.

     1.1 “Affiliate” means an entity that controls, is controlled by, or is under common control with a party to this Agreement. The term “control” as used in the preceding sentence means possession of the power to direct or call for the direction of the management and policies of an entity, whether through ownership of a majority of the outstanding voting securities, by contract, or otherwise.

     1.2 “Companion UMass License Agreements” means this Agreement and the license agreements with University that are executed on the same date as this Agreement for University technologies, UMMC 03-68, UMMC 06-38, UMMC 06-39, UMMC 06-08, UMMC 07-08, and UMMC 06-21, collectively.

     1.3. “Confidential Information” means any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in connection with this Agreement that is specifically designated as confidential, as further described in Article 7.

Page 1 of 19

     1.4. “Field” means Primary Field and Secondary Field collectively. Any commercial sale of research reagents covered by the Patent Rights is specifically excluded from the Field. The foregoing shall not be interpreted to prevent Company, its Affiliates or corporate partners from performing research related to discovery or development of Licensed Products for itself or any Affiliate or Sublicensee. (a) “Primary Field” means therapeutic, prophylactic, or diagnostic health care applications for amyotrophic lateral sclerosis (ALS), diabetes, and obesity, in humans. (b) “Secondary Field” means therapeutic, prophylactic, or diagnostic health care applications in humans that are not included in the Primary Field.

     1.5. “Licensed Product” means any product that cannot be developed, manufactured, used, or sold without infringing one or more Valid Claims.

     1.6. “Net Sales” means the gross amount billed or invoiced on sales of Licensed Products by Company, its Affiliates and Sublicensees, less the following: (a) customary trade, quantity, or cash discounts to non-affiliated brokers or agents to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of Company; and (d) outbound transportation costs prepaid or allowed and costs of insurance in transit.

     In any transfers of Licensed Products between any of Company and Affiliates and Sublicensees, Net Sales are calculated based on the final sale of the Licensed Product to an independent third party. If Company or an Affiliate or Sublicensee receives non-monetary consideration for any Licensed Products, Net Sales are calculated based on the fair market value of that consideration. If Company or its Affiliates or Sublicensees use or dispose of a Licensed Product in the provision of a commercial service, the Licensed Product is sold and the Net Sales are calculated based on the sales price of the Licensed Product to an independent third party during the same Royalty Period or, in the absence of sales, on the fair market value of the Licensed Product as determined by the parties in good faith.

     1.7. “Patent Rights” means the United States patent applications listed in Exhibit A, patent applications covering invention disclosures listed in Exhibit A, and any divisional, continuation, or continuation-in-part of those patent applications to the extent the claims are directed to subject matter specifically described therein as well as any patents issued on these patent applications and any reissues or reexaminations or extensions of the patents, and any foreign counterparts to any of the foregoing.

     1.8. “Royalty Period” means the partial calendar quarter commencing on the date on which the first Licensed Product is sold or used and every complete or partial calendar quarter thereafter during which either (a) this Agreement remains in effect or (b) Company has the right to complete and sell work-in-progress and inventory of Licensed Products pursuant to Section 8.5.

     1.9. “Sublicense Agreement” means any agreement in which Company grants rights to the Patent Rights pursuant to Section 2.2.

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     1.10. “Sublicense Income” means payments or other value that Company receives from a Sublicensee in consideration of the sublicense of the rights granted Company under Section 2.1., including without limitation, license fees, equity, milestone payments, and license maintenance fees, but excluding the following payments: (a) payments made in consideration for the issuance of equity or debt securities of Company at fair market value, (b) payments specifically committed to the development of Licensed Products, (c) reimbursements of patent expenses for the Patent Rights, and (d) royalties.

     1.11. “Sublicensee” means any permitted sublicensee of the rights granted Company under this Agreement, as further described in Section 2.2.

     1.12. “Valid Claim” means (a) a claim of an issued and unexpired patent covering the Patent Rights which has not been permanently revoked or held unenforceable or invalid by an unappealable or unappealed decision of a court or government agency of competent jurisdiction or (b) a claim of a pending patent application within the Patent Rights that has not been abandoned or finally disallowed without the possibility of appeal or refiling.

2. Grant of Rights

     2.1. License Grant. University grants to Company an exclusive, worldwide, royalty-bearing license in the Patent Rights to make, have made, use, offer to sell, sell, have sold and imported Licensed Products in the Field, including research for development of Licensed Products.

     2.2. Sublicenses. Company may grant sublicenses of its rights under Section 2.1. with the consent of University, which consent may not be unreasonably withheld or delayed. All Sublicense Agreements executed by Company pursuant to this Section 2.2 shall expressly bind the Sublicensee to the terms of this Agreement. Company shall promptly furnish University with a fully executed copy of any Sublicense Agreement.

     2.3. Retained Rights.

          (a) University. University retains the right to use the Patent Rights for academic research, teaching, and non-commercial patient care, without payment of compensation to Company. University may license its retained rights under this Subsection 2.3(a) to research collaborators of University faculty members, post-doctoral fellows, and students.

          (b) Federal Government. If the federal government has funded any invention claimed in the Patent Rights, this Agreement and the grant of any rights in Patent Rights are subject to the federal law set forth in 35 U.S.C. §§ 201-211 and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. Company acknowledges that these statutes and regulations reserve to the federal government a royalty-free, non-exclusive, non-transferrable license to practice any government-funded invention claimed in the Patent Rights. If any term of this Agreement fails to conform to those laws and regulations, the relevant term is invalid, and the parties shall modify the term pursuant to Section 10.11.

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          (c) Other Organizations. University represents that all inventions claimed in the Patent Rights have been funded only by the federal government or University funds.

     2.4. Assignment of UMass/CytRx Licenses. On or before March 31, 2007, Company shall obtain assignment from CytRx Corporation of the license agreements that cover the following RNAi technologies that CytRx has licensed from University and the Carnegie Institution , UMMC 01-36, UMMC 02-01, UMMC 03-17, UMMC 03-33, UMMC 03-60, and UMMC 98-22, in a manner compliant with the relevant license agreements. University shall consent to any assignment as necessary. If Company does not obtain assignment of those license agreements on or before March 31, 2007, this Agreement immediately terminates.

3. Company Obligations Relating to Commercialization.

     3.1. Diligence Requirements. Company shall use diligent efforts or cause its Affiliates and Sublicensees to use diligent efforts to develop Licensed Products and to introduce Licensed Products into the commercial market. Thereafter, Company or its Affiliates or Sublicensees shall make Licensed Products reasonably available to the public. Specifically, Company shall fulfill the following obligations:

          (a) Financing the Company. On or before March 31, 2007, Company shall raise at least Fifteen Million Dollars ($15,000,000) from investors which may include CytRx Corporation (the “Initial Financing”) or this Agreement automatically terminates, and Company shall pay University Seventy-Five Thousand Dollars ($75,000) due April 1, 2007 (payable only once under the Companion UMass License Agreements). However, if Company demonstrates to the reasonable satisfaction of University that, on March 31, 2007, investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, University grants Company a thirty (30) day extension from March 31, 2007, to fulfill the financing obligation set forth in this Subsection 3.1(a). If Company can demonstrate to the reasonable satisfaction of University that investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, Company shall be granted up to two additional thirty (30) day extensions to fulfill the financing obligation by paying to University Twenty-Five Thousand Dollars ($25,000) each on the last day of the previous extension. The extension fees are non-refundable but creditable to the upfront license fee.

          (b) Development of Licensed Products.

               (i) On or before execution of this Agreement, Company shall furnish University with a written business plan under which Company intends as of the Effective Date to develop Licensed Products. University acknowledges that this business plan is a statement of Company’s current intention regarding the development of Licensed Product and that Company’s plans regarding the development of Licensed Products may change.

               (ii) Within sixty (60) days after the start of each calendar year, beginning on January 1, 2008, Company shall furnish University with a written report on progress during the prior year to develop and commercialize Licensed Products, including

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without limitation research and development, efforts to obtain regulatory approval, marketing, and sales figures. The Company shall also include in the report a discussion of its intended development and commercialization efforts and sales projections for the current year.

               (iii) Within five (5) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an IND or its equivalent with the FDA covering at least one (1) Licensed Product.

               (iv) Within twelve (12) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an NDA or BLA with the FDA covering at least one (1) Licensed Product.

               (v) Within three (3) months after receiving FDA approval of the NDA or BLA for any Licensed Product, Company, its Affiliate or Sublicensee shall market the approved Licensed Product in the United States.

               (vi) Company or its partner shall spend at least {***} per calendar year for development of Licensed Products until the earlier of three years after the Effective Date or the commencement of a Phase II clinical trial on a Licensed Product.

     3.2. If University determines that Company has not fulfilled its obligations under Subsection 3.1(b), University shall furnish Company with written notice of the determination. Within sixty (60) days after receipt of the notice, Company shall either (a) fulfill the relevant obligation or (b) negotiate with University a mutually acceptable schedule of revised diligence obligations, failing which University may, immediately upon written notice to Company, terminate this Agreement or convert the exclusive license into a non-exclusive license.

     3.3. Indemnification.

          (a) Indemnity. Company shall indemnify, defend, and hold harmless University and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether the action has any factual basis) concerning any product, process, or service that is made, used, or sold pursuant to any right or license granted under this Agreement. However, indemnification does not apply to any liability, damage, loss, or expense to the extent directly attributable to (i) the gross negligence or intentional misconduct of the Indemnitees or (ii) the settlement of a claim, suit, action, or demand by Indemnitees without the prior written approval of Company.

          (b) Procedures. The Indemnitees agree to provide Company with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to University to defend against any claim. The Indemnitees shall cooperate fully with Company in the defense and will permit Company to conduct and control

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the defense and the disposition of the claim, suit, or action (including all decisions relative to litigation, appeal, and settlement). However, any Indemnitee may retain its own counsel, at the expense of Company, if representation of the Indemnitee by the counsel retained by Company would be inappropriate because of actual or potential conflicts in the interests of the Indemnitee and any other party represented by that counsel. Company agrees to keep University informed of the progress in the defense and disposition of the claim and to consult with University regarding any proposed settlement.

          (c) Insurance. Company shall maintain insurance or self-insurance that is reasonably adequate to fulfill any potential obligation to the Indemnitees, but not less than one million dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence. Company shall provide University, upon request, with written evidence of insurance or self-insurance. Company shall continue to maintain the insurance or self-insurance after the expiration or termination of this Agreement while Company, its Affiliate or Sublicensee continues to make, use, or sell a Licensed Product and thereafter for five (5) years.

     3.4. Use of University Name. In accordance with Section 7.2., Company and its Affiliates and Sublicensees may not use the name “University of Massachusetts” or any variation of that name in connection with the marketing or sale of any Licensed Products.

     3.5. Marking of Licensed Products. To the extent commercially feasible and consistent with prevailing business practices, Company shall mark and shall cause its Affiliates and Sublicensees to mark all Licensed Products that are manufactured or sold under this Agreement with the number of each issued patent under the Patent Rights that applies to a Licensed Product.

     3.6. Compliance with Law. Company shall comply with, and shall ensure that its Affiliates and Sublicensees comply with, all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of Licensed Products. Company expressly agrees to comply with the following:

          (a) Company or its Affiliates or Sublicensees shall obtain all necessary approvals from the United States Food & Drug Administration and any similar foreign governmental authorities in which Company or Affiliate or Sublicensee intends to make, use, or sell Licensed Products.

          (b) Company and its Affiliates and Sublicensees shall comply with all United States laws and regulations controlling the export of commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries and foreign nationals. Company hereby gives written assurance that it will comply with and will cause its Affiliates and Sublicensees to comply with all United States export control laws and regulations, that it bears sole responsibility for any violation of those laws and regulations by itself or its Affiliates or Sublicensees, and that it will indemnify, defend, and hold University harmless (in accordance with Section 3.3.) for the consequences of any violation.

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          (c) If any invention claimed in the Patent Rights has been funded by the United States government, and only to the extent required by applicable laws and regulations, Company agrees that any Licensed Products used or sold in the United States will be manufactured substantially in the United States or its territories. Current law provides that if domestic manufacture is not commercially feasible under the circumstances, University may seek a waiver of this requirement from the relevant federal agency on behalf of Company.

4. Consideration for Grant of Rights.

     4.1. License Fees.

          (a) On the Effective Date, Company shall pay to University {***}.

          (b) Within thirty (30) days after the closing of the Initial Financing, Company shall pay to University {***}.

The license fees are nonrefundable and are not creditable against any other payments due to University under this Agreement.

     4.2. Equity.

          (a) Within thirty (30) days after the closing of the Initial Financing, Company shall issue to University that number shares of Common Stock of Company having an aggregate valuation equal to {***} according to the Company valuation at the Initial Financing. In connection with the issuance of stock pursuant to this Section 4.2, the University agrees to become a party to other agreements of Company to the same extent (except any limitations relating to the University’s status as an agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock restriction agreement). University acknowledges that all certificates representing the shares described in this Subsection 4.2(a) may bear customary legends that require compliance with the Securities Act of 1933 and related state securities laws upon any transfer of the shares. Company shall use commercially reasonable efforts to register the stock issued to University pursuant to this Subsection 4.2(a) as soon as possible, subject to customary terms in connection with the registration.

          (b) Beginning on the Effective Date, Company shall notify University reasonably prior to each Company board of directors meeting and provide University with related documentation to the same extent that is supplied to the board of directors. Company shall permit one representative of University to attend all board of director meetings until the earlier of five (5) years after the Effective Date or the commencement by the Company of a Phase II clinical trial relating to a Licensed Product. The University attendee may not be a voting member of the board. The University attendee shall comply with restrictions to which other board members are subject, such as, confidentiality requirements relating to Board discussions and shall execute any agreement reasonably required by Company to effect those restrictions. The Company board of directors may exclude University representative from those portions of board meetings that pertain to compensation and personnel issues and as deemed

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reasonably necessary for the board members to exercise their fiduciary responsibilities and to comply with applicable laws and regulations.

     4.3. License Maintenance Fee. At the beginning of each calendar year during the term of this Agreement, commencing on January 1, 2008, Company shall pay to University {***}. This annual license maintenance fee is nonrefundable and is not creditable against any other payments due to University under this Agreement.

     4.4. Milestone Payments. Company shall pay University the following milestone payments within thirty (30) days after the occurrence of each event for each Licensed Product:

Event	Payment
The first issuance of any claim under any Patent Rights	{***}
Earlier of filing IND or 4 years after Effective Date	{***}
Earlier of initiation Phase II clinical trial or 6 years after the Effective Date	{***}
Earlier of initiation of Phase III clinical trial or 8 years after the Effective Date	{***}
Earlier of filing NDA or 11 years after the Effective Date	{***}
Commencement of Licensed Product marketing in US or 12 years after the Effective Date	{***}
Commencement of Licensed Product marketing in the EU or 12 years after the Effective Date	{***}

If a milestone payment is made under this Section 4.4 based on the passage of time rather than on the achievement of a particular milestone event, that milestone payment is not due for the first Licensed Product with respect to the later achievement of that milestone event. These milestone payments are nonrefundable and are not creditable against any other payments due to University under this Agreement. For each Licensed Product, Company shall make all milestone payments, even if an earlier milestone event has not occurred. For example, if Company proceeds from Phase I clinical trial directly to Phase III, the milestone payments for both Phase II and III are due upon achievement of the Phase III milestone event. Also, if Company uses a Phase II clinical trial as a registration trial and proceeds directly to NDA submission without performing a Phase III trial, then upon filing of the NDA, both the Phase III and NDA milestone payments are due.

     4.5. Royalties. Company shall pay to University a royalty of {***} of Net Sales.

     4.6. Minimum Royalty. Within sixty (60) days after the beginning of each calendar year during the term of this Agreement, beginning January 1, 2012, Company shall pay to University a minimum royalty of {***}. Company may credit the minimum royalty paid under this Section 4.6 against actual royalties due and payable for the same calendar year. Waiver of any minimum royalty payment by University is not a waiver of any subsequent minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day period, that failure is a material breach of its obligations under this Agreement, and University may terminate this Agreement in accordance with Section 8.3.

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     4.7. Sublicense Income. Company shall pay University the following percentages of all Sublicense Income:

          (a) {***} for Sublicense Agreements that are executed by Company from January 1, 2007 through December 31, 2007;

          (b) {***} for Sublicense Agreements that are executed by Company from January 1, 2008 through December 31, 2008; and

          (c) {***} for Sublicense Agreements that are executed by Company from and after January 1, 2009.

Sublicense Income is due within sixty (60) days after Company receives the relevant payment from the Sublicensee. If Sublicense Income is payable by Company for any one Sublicense Agreement under more than one of the Companion UMass License Agreements and the license agreements assigned to Company pursuant to Section 2.4 (“Assigned License Agreements”), Company shall pay the highest rate of Sublicense Income among the Companion UMass License Agreements and the Assigned License Agreements. That one payment satisfies the payment requirements for the applicable Sublicense Agreement under each of the Companion UMass License Agreements and Assigned License Agreements.

     4.8. Third-Party Royalties. As long as Company remains the exclusive licensee of the Patent Rights in any portion of the Field, if Company is legally required to make royalty payments to one or more third parties in order to practice the Patent Rights granted under this Agreement in the portion of the Field for which the license is exclusive, Company may offset up to {***} of third-party payments against royalty payments that are due to University in the same Royalty Period. However, the royalty payments under Section 4.5., may never be reduced by more than {***} in any Royalty Period.

5. Royalty Reports; Payments; Records.

     5.1. First Sale. Company shall report to University the date of first commercial sale of each Licensed Product within thirty (30) days after occurrence in each country.

     5.2. Reports and Payments.

          (a) Within sixty (60) days after the conclusion of each Royalty Period, Company shall deliver to University a report containing the following information:

               (i) the number of Licensed Products sold to independent third parties in each country and the number of Licensed Products used by Company, its Affiliates and Sublicensees in the provision of services in each country;

               (ii) the gross sales price for each Licensed Product by Company, its Affiliates and Sublicensees during the applicable Royalty Period in each country;

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               (iii) calculation of Net Sales for the applicable Royalty Period in each country, including a listing of applicable deductions;

               (iv) total royalty payable on Net Sales in United States dollars, together with the exchange rates used for conversion; and

               (v) Sublicense Income due to University for the applicable Royalty Period from each Sublicensee.

          (b) Concurrent with this report, Company shall remit to University any payment due for the applicable Royalty Period. If no royalties are due to University for any Royalty Period, the report shall so state.

     5.3. Payments in United States Dollars. Company shall make all payments in United States dollars. Company shall convert foreign currency to United States dollars at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the calendar quarter preceding the applicable Royalty Period. Company may not deduct exchange, collection, or other charges.

     5.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, Company shall give University prompt written notice of the restriction within the sixty-day payment deadline described in Section 5.2. Company shall pay any amounts due University through whatever lawful methods University reasonably designates. However, if University fails to designate a payment method within thirty (30) days after University is notified of the restriction, Company may deposit payment in local currency to the credit of University in a recognized banking institution selected by Company and identified by written notice to University, and that deposit fulfills all obligations of Company to University with respect to that payment.

     5.5. Records. Company shall maintain and shall cause its Affiliates and Sublicensees to maintain complete and accurate records of Licensed Products that are made, used, or sold under this Agreement and any amounts payable to University in relation to Licensed Products with sufficient information to permit University to confirm the accuracy of any reports delivered to University under Section 5.2. The relevant party shall retain records relating to a given Royalty Period for at least three (3) years after the conclusion of that Royalty Period, during which time University may, at its expense, cause its internal accountants or an independent, certified public accountant to inspect records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement. The accountant may not disclose to University any information other than information relating to accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit. If any audit performed under this Section 5.5 reveals an underpayment in excess of ten percent (10%) in any Royalty Period, Company shall bear the full cost of the audit. University may exercise its rights under this Section 5.5 only once every year and only with reasonable prior notice to Company.

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     5.6. Late Payments. Any payments by Company that are not paid on or before the date payments are due under this Agreement bear interest at 1.5% per month, calculated on the number of days that payment is delinquent.

     5.7. Method of Payment. All payments under this Agreement should be made to the “University of Massachusetts” and sent to the address identified below. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment satisfies.

     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to University under this Agreement may not be reduced by reason of any withholding or similar taxes applicable to payments to University. Therefore all amounts owed to University under this Agreement are net amounts and shall be grossed-up to account for any withholding taxes, value-added taxes or other taxes, levies or charges.

6. Patents and Infringement.

     6.1. Responsibility for Patent Rights.

          (a) University has primary responsibility at the expense of Company for the preparation, filing, prosecution, and maintenance of all Patent Rights, using patent counsel reasonably acceptable to Company. University shall consult with Company as to the preparation, filing, prosecution, and maintenance of all Patent Rights reasonably prior to any deadline or action with the United States Patent & Trademark Office or any foreign patent office and shall furnish Company with copies of relevant documents reasonably in advance of consultation. University shall consider in good faith any comments of Company on any patent filings for the Patent Rights.

          (b) If University desires to abandon any patent or patent application within the Patent Rights, University shall provide Company with reasonable prior notice of the intended abandonment, and Company may, at its expense, prepare, file, prosecute, and maintain the relevant Patent Rights.

     6.2. Cooperation. Each party shall provide reasonable cooperation in the preparation, filing, prosecution, and maintenance of all Patent Rights. Cooperation includes, without limitation, promptly informing the other party of matters that may affect the preparation, filing, prosecution, or maintenance of Patent Rights (such as, becoming aware of an additional inventor who is not listed as an inventor in a patent application).

     6.3. Payment of Expenses.

          (a) Within thirty (30) days after the Effective Date, Company shall pay the University {***} to reimburse University for its actual expenses incurred as of the Effective Date in connection with obtaining the Patent Rights. If this Agreement is terminated according to the terms of Subsection 3.1(a), University shall reimburse Company for any patent expenses that are paid pursuant to this Subsection 6.3(a), if it enters into a license agreement with another party for the Patent Rights in the Field.

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          (b) Within thirty (30) days after University invoices Company, Company shall reimburse University for all patent-related expenses that have not been paid under Subsection 6.3(a) and that are incurred by University pursuant to Section 6.1. Company may elect, upon sixty (60) days’ written notice to University, to cease payment of the expenses associated with obtaining or maintaining patent protection for one or more Patent Rights in one or more countries. If Company elects to cease payment of any patent expenses, Company loses all rights under this Agreement with respect to the particular Patent Rights in those one or more countries.

     6.4. Infringement.

          (a) Notification of Infringement. Each party agrees to provide written notice to the other party promptly after becoming aware of any infringement of the Patent Rights.

          (b) Company Right to Prosecute. As long as Company remains the exclusive licensee of the Patent Rights in the Field, Company may, under its own control and at its own expense, prosecute any third party infringement of the Patent Rights in the Field or, together with licensees of the Patent Rights in other fields (if any), defend the Patent Rights in any declaratory judgment action brought by a third party which alleges invalidity, unenforceability, or infringement of the Patent Rights. Prior to commencing any action, Company shall consult with University and shall consider the views of University regarding the advisability of the proposed action and its effect on the public interest. Company may not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Subsection 6.4(b) without the prior written consent of University, which consent may not be unreasonably withheld or delayed. Any recovery obtained in an action under this Subsection 6.4(b) shall be distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the action (including the amount of any royalty payments withheld from University as described below); (ii) as to ordinary damages, Company shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales (whichever measure of damages the court applied), less a reasonable approximation of the royalties that Company would have paid to University if Company had sold the infringing products and services rather than the infringer; and (iii) as to special or punitive damages, the parties shall share equally in any award. Company may offset a total of fifty percent (50%) of any expenses incurred under this Subsection 6.4(b) against any royalty payments due to University under this Agreement. However, Company may never reduce royalty payments under Section 4.5. by more than fifty percent (50%) in any Royalty Period.

          (c) University as Indispensable Party. University shall permit any action under Subsection 6.4(b) to be brought in its name if required by law, provided that Company shall hold University harmless from, and if necessary indemnify University against, any costs, expenses, or liability that University may incur in connection with the action.

          (d) University Right to Prosecute. If Company fails to initiate an infringement action within a reasonable time after it first becomes aware of the basis for the action, or to answer a declaratory judgment action within a reasonable time after the action is filed, University may prosecute the infringement or answer the declaratory judgment action under its sole control and at its sole expense, and any recovery obtained shall be given to

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University. If University takes action under this Subsection 6.4(d), University shall keep Company reasonably informed of material actions taken by University pursuant to the infringement or declaratory action.

          (e) Cooperation. Both parties shall cooperate fully in any action under this Section 6.4. which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any reasonable costs and expenses incurred by the cooperating party in connection with providing assistance.

7. Confidential Information; Publications; Publicity.

     7.1. Confidential Information.

          (a) Designation. The Disclosing Party shall mark Confidential Information that is disclosed in writing with a legend indicating its confidential status (such as, “Confidential” or “Proprietary”). The Disclosing party shall document Confidential Information that is disclosed orally or visually in a written notice and deliver the notice to the Receiving Party within thirty (30) days of the date of disclosure. The notice shall summarize the Confidential Information that was disclosed and reference the time and place of disclosure.

          (b) Obligations. For five (5) years after disclosure of any portion of Confidential Information, the Receiving Party shall (i) maintain Confidential Information in confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its trustees or directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential nature of Confidential Information and who need to know Confidential Information for the purposes of this Agreement; (ii) use Confidential Information solely for the purposes of this Agreement; and (iii) allow its trustees or directors, officers, employees, consultants, and advisors to reproduce the Confidential Information only to the extent necessary for the purposes of this Agreement, with all reproductions being Confidential Information.

          (c) Exceptions. The obligations of the Receiving Party under Subsection 7.1(b) do not apply to the extent that the Receiving Party can demonstrate that Confidential Information (i) was in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party; (iii) was already known or independently developed or discovered by the Receiving Party without use of the Confidential Information; (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a third party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to the Confidential Information; or (v) is required to be disclosed to comply with applicable laws or regulations or with a court or administrative order, provided that the Disclosing Party receives reasonable prior written notice of the disclosure.

          (d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party (or a third party entrusting its own information to the Disclosing Party) owns the Confidential Information in the possession of the Receiving Party. Upon expiration or

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termination of this Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of the Receiving Party, except that the Receiving Party may retain one copy of the Confidential Information in the possession of its legal counsel solely for the purpose of monitoring its obligations under this Agreement.

     7.2. Publicity Restrictions. Company may not use the name of University or any of its trustees, officers, faculty, students, employees, or agents, or any adaptation of their names, or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of University. The foregoing notwithstanding, Company or CytRx Corporation may disclose that information without the consent of University in any prospectus, offering memorandum, or other document or filing required by applicable securities laws or other applicable law or regulation, provided that Company provides University at least ten (10) days (or a shorter period in order to enable Company to make a timely announcement to fulfill applicable securities laws or other applicable law or regulation, while affording University the maximum feasible time to review the announcement) prior written notice of the proposed text for the purpose of giving University the opportunity to comment on the text.

8. Term and Termination.

     8.1. Term. This Agreement commences on the Effective Date and remains in effect until the expiration of all issued patents within the Patent Rights unless earlier terminated in accordance with the provisions of this Agreement.

     8.2. Voluntary Termination by Company. Company may terminate this Agreement for any reason upon ninety (90) days’ prior written notice to University.

     8.3. Termination for Default. If either party commits a material breach of its obligations under this Agreement and fails to cure that breach within sixty (60) days after receiving written notice of the breach, the other party may terminate this Agreement immediately upon written notice to the party in breach. If the alleged breach involves nonpayment of any amounts due University under this Agreement, Company has only one opportunity to cure a material breach for which it receives notice as described above. Any subsequent material breach by Company will entitle University to terminate this Agreement immediately upon written notice to Company, without the sixty-day cure period.

     8.4. Force Majeure. Neither party is responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, explosion, flood, war, strike, act of terrorism or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove those causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the causes are removed.

8.5. Effect of Termination. The following provisions survive the expiration or termination of this Agreement: Articles 1 and 9; Sections 3.3., 3.4, 3.6., 5.2. (obligation to provide final report and payment), 5.3., 5.4., 5.5., 5.6., 5.7., 5.8., 6.4., 7.1., 7.2., 8.5 and 10.9.

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Upon the early termination of this Agreement, Company and its Affiliates and Sublicensees may complete and sell any work-in-progress and inventory of Licensed Products that exist as of the effective date of termination, provided that (a) Company is current in payment of all amounts due University under this Agreement, (b) Company pays University the applicable royalty and Sublicense Income on sales of Licensed Products in accordance with the terms of this Agreement, and (c) Company and its Affiliates and Sublicensees complete and sell all work-in-progress and inventory of Licensed Products within six (6) months after the effective date of termination. Upon the expiration or termination of this Agreement, University may enter into a license agreement directly with each Sublicensee on terms that are reasonably negotiated directly with each Sublicensee. Notwithstanding the foregoing, upon the expiration or termination of this Agreement, University shall enter into a license agreement directly with each Sublicensee on the same terms as each Sublicense Agreement that is in effect. However, the University and Sublicensee shall modify each Sublicense Agreement to the extent necessary to ensure that University does not assume any greater obligations under the license agreement than those set forth in this Agreement and that Sublicensee complies with all obligations of the Company under this Agreement.

9. Dispute Resolution.

     9.1. Procedures Mandatory. The parties shall resolve any dispute arising out of or relating to this Agreement solely by means of the procedures set forth in this Article. These procedures constitute legally binding obligations that are an essential provision of this Agreement. If either party fails to observe the procedures of this Article, as modified by their written agreement, the other party may bring an action for specific performance in any court of competent jurisdiction.

     9.2. Dispute Resolution Procedures.

          (a) Negotiation. In the event of any dispute arising out of or relating to this Agreement, the affected party shall notify the other party, and the parties shall attempt in good faith to resolve the matter within ten (10) days after the date of notice (the “Notice Date”). Any disputes not resolved by good faith discussions shall be referred to senior executives of each party, who shall meet at a mutually acceptable time and location within thirty (30) days after the Notice Date and attempt to negotiate a settlement.

          (b) Mediation. If the matter remains unresolved within sixty (60) days after the Notice Date, or if the senior executives fail to meet within thirty (30) days after the Notice Date, either party may initiate mediation upon written notice to the other party, and both parties shall engage in a mediation proceeding under the then current CPR Institute for Dispute Resolution (“CPR”) Model Procedure for Mediation of Business Disputes. Specific provisions of this Subsection 9.2(b) override inconsistent provisions of the CPR Model Procedure. The parties shall select the mediator from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a mediator within ninety (90) days after the Notice Date, then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation until one of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse; (iii)

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the parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a settlement within one hundred twenty (120) days after the Notice Date.

          (c) Trial Without Jury. If the parties fail to resolve the dispute through mediation, or if neither party elects to initiate mediation, each party may pursue any other remedies legally available to resolve the dispute. However, the parties expressly waive the right to a jury trial in the legal proceeding under this Subsection 9.2(c).

     9.3. Preservation of Rights Pending Resolution.

          (a) Performance to Continue. Each party shall continue to perform its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. However, a party may suspend performance of its obligations during any period in which the other party fails or refuses to perform its obligations.

          (b) Provisional Remedies. Although the procedures specified in this Article are the exclusive procedures for resolution of disputes arising out of or relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, that action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement.

          (c) Statute of Limitations. The parties agree that all applicable statutes of limitation and time-based defenses (such as, estoppel and laches) are tolled while the procedures set forth in Subsections 9.2.(a) and 9.2(b) are pending. The parties shall take any actions necessary to effectuate this result.

10. Miscellaneous.

     10.1. Representations and Warranties. University represents that its employees have assigned to University their entire right, title, and interest in the Patent Rights, and that it has authority to grant the rights and licenses set forth in this Agreement, and that it has not granted any rights in the Patent Rights to any third party that is inconsistent with the grant of rights in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNING THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Specifically, University makes no warranty or representation (a) regarding the validity or scope of the Patent Rights, (b) that the exploitation of the Patent Rights or any Licensed Product will not infringe any patents or other intellectual property rights of a third party, and (c) that any third party is not currently infringing or will not infringe the Patent Rights.

     10.2. Compliance with Law and Policies. Company agrees to comply with applicable law and the policies of University in the area of technology transfer and shall promptly notify University of any violation that Company knows or has reason to believe has occurred or is likely to occur. The University policies currently in effect at the Worcester campus are the Intellectual Property Policy, Policy on Conflicts of Interest Relating to Intellectual Property and Commercial Ventures, and Policy on Faculty Consulting and Outside Activities.

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     10.3. Tax-Exempt Status. Company acknowledges that University, as a public institution of the Commonwealth of Massachusetts, is an exempt organization under the United States Internal Revenue Code of 1986, as amended. Company also acknowledges that certain facilities in which the licensed inventions were developed may have been financed through offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to University reasonably determines, that any term of this Agreement jeopardizes the tax-exempt status of University or the bonds used to finance University facilities, the relevant term is invalid and shall be modified in accordance with Section 10.11.

     10.4. Counterparts. This Agreement may be executed in one or more counterparts, each of which is an original, and all of which together are one instrument.

     10.5. Headings. All headings are for convenience only and do not affect the meaning of any provision of this Agreement.

     10.6. Binding Effect. This Agreement is binding upon and inures to the benefit of the parties and their respective permitted successors and assigns.

     10.7. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party, which consent may not be unreasonably withheld or delayed. Notwithstanding the foregoing, this Agreement may be assigned by either party in connection with a merger, consolidation, sale of all of the equity interests of the party, or a sale of all or substantially all of the assets of the party to which this Agreement relates.

     10.8. Amendment and Waiver. The parties may only amend, supplement, or otherwise modify this Agreement through a written instrument signed by both parties. The waiver of any rights or failure to act in a specific instance relates only to that instance and is not an agreement to waive any rights or fail to act in any other instance.

     10.9. Governing Law. This Agreement is governed by and construed in accordance with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. The parties may only bring legal action that arises out of or in connection with this Agreement in the Massachusetts Superior Court in Suffolk County.

10.10. Notice. Any notices required or permitted under this Agreement shall be in

     writing, shall specifically refer to this Agreement, and shall be sent by recognized national overnight courier, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

If to University:	If to Company:
Office of Technology Management	RXi Pharmaceuticals Corporation
University of Massachusetts	One Innovation Drive
333 South Street, Suite 400	Worcester, MA 01605
Shrewsbury, MA 01545
Attention: Executive Director	Attention: President

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All notices under this Agreement are effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section 10.10.

     10.11. Severability. If any provision of this Agreement is held invalid or unenforceable for any reason, the invalidity or unenforceability does not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach a modified agreement within sixty (60) days after the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in Article 9. While the dispute is pending resolution, this Agreement shall be construed as if the provision were deleted by agreement of the parties.

     10.12. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter.

     The parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

UNIVERSITY OF MASSACHUSETTS		RXI PHARMACEUTICALS CORP.
By:		By:
Name:	James P. McNamara, Ph.D.,	Name:	Tod Woolf, Ph.D.
Title:	Executive Director, Office of Technology Management	Title:	President & CEO
Date:		Date:

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EXHIBIT A

Patent Rights

UMMC 03-75

Invention Disclosure

Entitled: “Gene Silencing with siRNA Containing Mismatches to Targets:
A New Method to Cure Allele Specific Genetic Diseases and Disorders”

Provisional Application

Entitled: “Gene Silencing with siRNA Containing Mismatches to Targets”
Filed 11/26/2002 – Application No. 60/430,517

U.S. Utility Application

Entitled: “Allele-Targeted RNA Interference”
Filed 11/17/2003 – Application No. 10/715,229

PCT Application

Entitled: “Allele-Targeted RNA Interference”
Filed 11/17/2003 – Application No. PCT/US2003/036551

European Application

Entitled: “Allele-Targeted RNA Interference”
Priority Filing Date: 11/17/2003 – Application No. 03786734.8

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EX-10.4

Exhibit 10.4

NON-EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of January 10, 2007 (the “Effective Date”), is between the University of Massachusetts (“University”), a public institution of higher education of the Commonwealth of Massachusetts as represented by its Worcester campus, and, RXi Pharmaceuticals Corporation (“Company”), a Delaware corporation.

RECITALS

     WHEREAS, University owns intellectual property rights which relate to therapeutic applications of RNAi, as described in University’s invention disclosures numbered UMMC 06-08, entitled “Methods of Synthesis and Formulation of New Reagents for Efficient Nucleic Acids Delivery in Cells and Animals” and UMMC 07-08 entitled “Microwave Assisted Method of Synthesis of New Cationic Reagents for Efficient Drug Delivery in Cells and Animals”;

     WHEREAS, Company is engaged in business relating to the development and commercialization of products that use or incorporate University’s intellectual property rights and has the capability of developing commercial applications of the intellectual property;

     WHEREAS, Company desires to obtain a non-exclusive license to University’s intellectual property rights, and University is willing to grant a non-exclusive license to its intellectual property rights under the following conditions so that these intellectual property rights may be developed to their fullest and the benefits enjoyed by the general public; and

     WHEREAS, the license that is granted in this Agreement promotes the development of publicly funded intellectual property to practical application for the public good.

     THEREFORE, University and Company agree as follows:

1. Definitions.

     1.1 “Affiliate” means an entity that controls, is controlled by, or is under common control with a party to this Agreement. The term “control” as used in the preceding sentence means possession of the power to direct or call for the direction of the management and policies of an entity, whether through ownership of a majority of the outstanding voting securities, by contract, or otherwise.

     1.2 “Companion UMass License Agreements” means this Agreement and the license agreements with University that are executed on the same date as this Agreement for University technologies, UMMC 03-75, UMMC 03-68, UMMC 06-38, UMMC 06-39, and UMMC 06-21, collectively.

     1.3. “Confidential Information” means any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in

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connection with this Agreement that is specifically designated as confidential, as further described in Article 7.

     1.4. “Field” means Primary Field and Secondary Field collectively. Any commercial sale of research reagents covered by the Patent Rights is specifically excluded from the Field. The foregoing shall not be interpreted to prevent Company or its Affiliates from performing research related to discovery or development of Licensed Products for itself or any Affiliate. (a) “Primary Field” means therapeutic, prophylactic, or diagnostic health care applications for amyotrophic lateral sclerosis (ALS), diabetes, and obesity, in humans. (b) “Secondary Field” means therapeutic, prophylactic, or diagnostic health care applications in humans that are not included in the Primary Field.

     1.5. “Licensed Product” means any product that cannot be developed, manufactured, used, or sold without infringing one or more Valid Claims.

     1.6. “Net Sales” means the gross amount billed or invoiced on sales of Licensed Products by Company and its Affiliates less the following: (a) customary trade, quantity, or cash discounts to non-affiliated brokers or agents to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of Company; and (d) outbound transportation costs prepaid or allowed and costs of insurance in transit.

     In any transfers of Licensed Products between any of Company and Affiliates Net Sales are calculated based on the final sale of the Licensed Product to an independent third party. If Company or an Affiliate receives non-monetary consideration for any Licensed Products, Net Sales are calculated based on the fair market value of that consideration. If Company or its Affiliates use or dispose of a Licensed Product in the provision of a commercial service, the Licensed Product is sold and the Net Sales are calculated based on the sales price of the Licensed Product to an independent third party during the same Royalty Period or, in the absence of sales, on the fair market value of the Licensed Product as determined by the parties in good faith.

     1.7. “Patent Rights” means the United States patent applications listed in Exhibit A, patent applications covering invention disclosures listed in Exhibit A, and any divisional, continuation, or continuation-in-part of those patent applications to the extent the claims are directed to subject matter specifically described therein as well as any patents issued on these patent applications and any reissues or reexaminations or extensions of the patents, and any foreign counterparts to any of the foregoing.

     1.8. “Royalty Period” means the partial calendar quarter commencing on the date on which the first Licensed Product is sold or used and every complete or partial calendar quarter thereafter during which either (a) this Agreement remains in effect or (b) Company has the right to complete and sell work-in-progress and inventory of Licensed Products pursuant to Section 8.5.

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     1.9. “Valid Claim” means (a) a claim of an issued and unexpired patent covering the Patent Rights which has not been permanently revoked or held unenforceable or invalid by an unappealable or unappealed decision of a court or government agency of competent jurisdiction or (b) a claim of a pending patent application within the Patent Rights that has not been abandoned or finally disallowed without the possibility of appeal or refiling.

2. Grant of Rights

     2.1. License Grant. University grants to Company a nonexclusive, worldwide, royalty-bearing license (without the right to sublicense ) in the Patent Rights to make, have made, use, offer to sell, sell, have sold and imported Licensed Products in the Field, including research for development of Licensed Products.

     2.3. Assignment of UMass/CytRx Licenses. On or before March 31, 2007, Company shall obtain assignment from CytRx Corporation of the license agreements that cover the following RNAi technologies that CytRx has licensed from University and the Carnegie Institution, UMMC 01-36, UMMC 02-01, UMMC 03-17, UMMC 03-33, UMMC 03-60, and UMMC 98-22, in a manner compliant with the relevant license agreements. University shall consent to any assignment as necessary. If Company does not obtain assignment of those license agreements on or before March 31, 2007, this Agreement immediately terminates.

3. Company Obligations Relating to Commercialization.

     3.1. Diligence Requirements. Company shall use diligent efforts or cause its Affiliates to use diligent efforts to develop Licensed Products and to introduce Licensed Products into the commercial market. Thereafter, Company or its Affiliates shall make Licensed Products reasonably available to the public. Specifically, Company shall fulfill the following obligations:

          (a) Financing the Company. On or before March 31, 2007, Company shall raise at least Fifteen Million Dollars ($15,000,000) from investors which may include CytRx Corporation (the “Initial Financing”) or this Agreement automatically terminates, and Company shall pay University Seventy-Five Thousand Dollars ($75,000) due April 1, 2007 (payable only once under the Companion UMass License Agreements). However, if Company demonstrates to the reasonable satisfaction of University that, on March 31, 2007, investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, University grants Company a thirty (30) day extension from March 31, 2007, to fulfill the financing obligation set forth in this Subsection 3.1(a). If Company can demonstrate to the reasonable satisfaction of University that investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, Company shall be granted up to two additional thirty (30) day extensions to fulfill the financing obligation by paying to University Twenty-Five Thousand Dollars ($25,000) each on the last day of the previous extension. The extension fees are non-refundable but creditable to the upfront license fee.

          (b) Development of Licensed Products.

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               (i) On or before execution of this Agreement, Company shall furnish University with a written business plan under which Company intends as of the Effective Date to develop Licensed Products. University acknowledges that this business plan is a statement of Company’s current intention regarding the development of Licensed Product and that Company’s plans regarding the development of Licensed Products may change.

               (ii) Within sixty (60) days after the start of each calendar year, beginning on January 1, 2008, Company shall furnish University with a written report on progress during the prior year to develop and commercialize Licensed Products, including without limitation research and development, efforts to obtain regulatory approval, marketing, and sales figures. The Company shall also include in the report a discussion of its intended development and commercialization efforts and sales projections for the current year.

               (iii) Within four (4) years after the Effective Date, Company or its Affiliate shall file an IND or its equivalent with the FDA covering at least one (1) Licensed Product.

               (iv) Within twelve (12) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an NDA or BLA with the FDA covering at least one (1) Licensed Product.

               (v) Within three (3) months after receiving FDA approval of the NDA or BLA for each Licensed Product, Company or its Affiliate shall market the approved Licensed Product in the United States.

     3.2. If University determines that Company has not fulfilled its obligations under Subsection 3.1(b), University shall furnish Company with written notice of the determination. Within sixty (60) days after receipt of the notice, Company shall either (a) fulfill the relevant obligation or (b) negotiate with University a mutually acceptable schedule of revised diligence obligations, failing which University may, immediately upon written notice to Company, terminate this Agreement.

     3.3. Indemnification.

          (a) Indemnity. Company shall indemnify, defend, and hold harmless University and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether the action has any factual basis) concerning any product, process, or service that is made, used, or sold pursuant to any right or license granted under this Agreement. However, indemnification does not apply to any liability, damage, loss, or expense to the extent directly attributable to (i) the gross negligence or intentional misconduct of the Indemnitees or (ii) the settlement of a claim, suit, action, or demand by Indemnitees without the prior written approval of Company.

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          (b) Procedures. The Indemnitees agree to provide Company with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to University to defend against any claim. The Indemnitees shall cooperate fully with Company in the defense and will permit Company to conduct and control the defense and the disposition of the claim, suit, or action (including all decisions relative to litigation, appeal, and settlement). However, any Indemnitee may retain its own counsel, at the expense of Company, if representation of the Indemnitee by the counsel retained by Company would be inappropriate because of actual or potential conflicts in the interests of the Indemnitee and any other party represented by that counsel. Company agrees to keep University informed of the progress in the defense and disposition of the claim and to consult with University regarding any proposed settlement.

          (c) Insurance. Company shall maintain insurance or self-insurance that is reasonably adequate to fulfill any potential obligation to the Indemnitees, but not less than one million dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence. Company shall provide University, upon request, with written evidence of insurance or self-insurance. Company shall continue to maintain the insurance or self-insurance after the expiration or termination of this Agreement while Company or its Affiliate continues to make, use, or sell a Licensed Product and thereafter for five (5) years.

     3.4. Use of University Name. In accordance with Section 7.2., Company and its Affiliates may not use the name “University of Massachusetts” or any variation of that name in connection with the marketing or sale of any Licensed Products.

     3.5. Marking of Licensed Products. To the extent commercially feasible and consistent with prevailing business practices, Company shall mark and shall cause its Affiliates to mark all Licensed Products that are manufactured or sold under this Agreement with the number of each issued patent under the Patent Rights that applies to a Licensed Product.

     3.6. Compliance with Law. Company shall comply with, and shall ensure that its Affiliates comply with, all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of Licensed Products. Company expressly agrees to comply with the following:

          (a) Company or its Affiliates shall obtain all necessary approvals from the United States Food & Drug Administration and any similar foreign governmental authorities in which Company or Affiliate intends to make, use, or sell Licensed Products.

          (b) Company and its Affiliates shall comply with all United States laws and regulations controlling the export of commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries and foreign nationals. Company hereby gives written assurance that it will comply with and will cause its Affiliates to comply with all United States export control laws and regulations, that it bears sole responsibility

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for any violation of those laws and regulations by itself or its Affiliates, and that it will indemnify, defend, and hold University harmless (in accordance with Section 3.3.) for the consequences of any violation.

          (c) If any invention claimed in the Patent Rights has been partially funded by the United States government, and only to the extent required by applicable laws and regulations, Company agrees that any Licensed Products used or sold in the United States will be manufactured substantially in the United States or its territories. Current law provides that if domestic manufacture is not commercially feasible under the circumstances, University may seek a waiver of this requirement from the relevant federal agency on behalf of Company.

4. Consideration for Grant of Rights.

     4.1. License Fees.

          (a) On the Effective Date, Company shall pay to University{***}.

          (b) Within thirty (30) days after the closing of the Initial Financing, Company shall pay to University {***}.

The license fees are nonrefundable and are not creditable against any other payments due to University under this Agreement.

     4.2. Equity.

          (a) Within thirty (30) days after the closing of the Initial Financing, Company shall issue to University that number shares of Common Stock of Company having an aggregate valuation equal to {***} according to the Company valuation at the Initial Financing. In connection with the issuance of stock pursuant to this Subsection 4.2(a), the University agrees to become a party to other agreements of Company to the same extent (except any limitations relating to the University’s status as an agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock restriction agreement). University acknowledges that all certificates representing the shares described in this Subsection 4.2(a) may bear customary legends that require compliance with the Securities Act of 1933 and related state securities laws upon any transfer of the shares. Company shall use commercially reasonable efforts to register the stock issued to University pursuant to this Subsection 4.2(a) as soon as possible, subject to customary terms in connection with the registration.

     (b) Beginning on the Effective Date, Company shall notify University reasonably prior to each Company board of directors meeting and provide University with related documentation to the same extent that is supplied to the board of directors. Company shall permit one representative of University to attend all board of director meetings until the earlier of five (5) years after the Effective Date or the commencement by the Company of a Phase II clinical trial relating to a Licensed Product. The University attendee may not be a voting member of the board. The University attendee shall comply with restrictions to which other board members are subject, such as, confidentiality requirements relating to Board

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discussions and shall execute any agreement reasonably required by Company to effect those restrictions. The Company board of directors may exclude University representative from those portions of board meetings that pertain to compensation and personnel issues and as deemed reasonably necessary for the board members to exercise their fiduciary responsibilities and to comply with applicable laws and regulations.

     4.3. License Maintenance Fee. At the beginning of each calendar year during the term of this Agreement, commencing on January 1, 2008, Company shall pay to University {***}. This annual license maintenance fee is nonrefundable and is not creditable against any other payments due to University under this Agreement.

     4.4. Milestone Payments. Company shall pay University the following milestone payments within thirty (30) days after the occurrence of each event for each Licensed Product: [IS THERE NO MILESTONE PAYMENT FOR NDA?]

Event	Payment
The first issuance of any claim under any Patent Rights		{***}
Earlier of filing IND or 3 years after Effective Date		{***}
Commencement of Licensed Product marketing in US or 11 years after the Effective Date		{***}

If a milestone payment is made under this Section 4.4 based on the passage of time rather than on the achievement of a particular milestone event, that milestone payment is not due for the first Licensed Product with respect to the later achievement of that milestone event.

These milestone payments are nonrefundable and are not creditable against any other payments due to University under this Agreement. For each Licensed Product, Company shall make all milestone payments, even if an earlier milestone event has not occurred. For example, if Company proceeds from Phase I clinical trial directly to Phase III, the milestone payments for both Phase II and III are due upon achievement of the Phase III milestone event. Also, if Company uses a Phase II clinical trial as a registration trial and proceeds directly to NDA submission without performing a Phase III trial, then upon filing of the NDA, both the Phase III and NDA milestone payments are due.

     4.5. Royalties. Company shall pay to University a royalty of {***} of Net Sales of Licensed Products that are compositions of matter and one percent (1%) of Net Sales of Licensed Products that are covered only by methods claims.

     4.6. Minimum Royalty. Within sixty (60) days after the beginning of each calendar year during the term of this Agreement, beginning January 1, 2012, Company shall pay to University a minimum royalty of {***}. Company may credit the minimum royalty paid under this Section 4.6 against actual royalties due and payable for the same calendar year. Waiver of any minimum royalty payment by University is not a waiver of any subsequent minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day period, that failure is a material breach of its obligations under this Agreement, and University may terminate this Agreement in accordance with Section 8.3.

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5. Royalty Reports; Payments; Records.

     5.1. First Sale. Company shall report to University the date of first commercial sale of each Licensed Product within thirty (30) days after occurrence in each country.

     5.2. Reports and Payments.

          (a) Within sixty (60) days after the conclusion of each Royalty Period, Company shall deliver to University a report containing the following information:

               (i) the number of Licensed Products sold to independent third parties in each country and the number of Licensed Products used by Company and its Affiliates in the provision of services in each country;

               (ii) the gross sales price for each Licensed Product by Company and its Affiliates during the applicable Royalty Period in each country; and

               (iii) calculation of Net Sales for the applicable Royalty Period in each country, including a listing of applicable deductions;

               (iv) total royalty payable on Net Sales in United States dollars, together with the exchange rates used for conversion.

          (b) Concurrent with this report, Company shall remit to University any payment due for the applicable Royalty Period. If no royalties are due to University for any Royalty Period, the report shall so state.

     5.3. Payments in United States Dollars. Company shall make all payments in United States dollars. Company shall convert foreign currency to United States dollars at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the calendar quarter preceding the applicable Royalty Period. Company may not deduct exchange, collection, or other charges.

     5.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, Company shall give University prompt written notice of the restriction within the sixty-day payment deadline described in Section 5.2. Company shall pay any amounts due University through whatever lawful methods University reasonably designates. However, if University fails to designate a payment method within thirty (30) days after University is notified of the restriction, Company may deposit payment in local currency to the credit of University in a recognized banking institution selected by Company and identified by written notice to University, and that deposit fulfills all obligations of Company to University with respect to that payment.

     5.5. Records. Company shall maintain and shall cause its Affiliates to maintain complete and accurate records of Licensed Products that are made, used, or sold under this Agreement and any amounts payable to University in relation to Licensed Products with

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sufficient information to permit University to confirm the accuracy of any reports delivered to University under Section 5.2. The relevant party shall retain records relating to a given Royalty Period for at least three (3) years after the conclusion of that Royalty Period, during which time University may, at its expense, cause its internal accountants or an independent, certified public accountant to inspect records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement. The accountant may not disclose to University any information other than information relating to accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit. If any audit performed under this Section 5.5 reveals an underpayment in excess of ten percent (10%) in any Royalty Period, Company shall bear the full cost of the audit. University may exercise its rights under this Section 5.5 only once every year and only with reasonable prior notice to Company.

     5.6. Late Payments. Any payments by Company that are not paid on or before the date payments are due under this Agreement bear interest at 1.5% per month, calculated on the number of days that payment is delinquent.

     5.7. Method of Payment. All payments under this Agreement should be made to the “University of Massachusetts” and sent to the address identified below. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment satisfies.

     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to University under this Agreement may not be reduced by reason of any withholding or similar taxes applicable to payments to University. Therefore all amounts owed to University under this Agreement are net amounts and shall be grossed-up to account for any withholding taxes, value-added taxes or other taxes, levies or charges.

6. Patents and Infringement.

     6.1. Responsibility for Patent Rights.

          (a) University has primary responsibility at the expense of Company for the preparation, filing, prosecution, and maintenance of all Patent Rights, using patent counsel reasonably acceptable to Company. University shall consult with Company as to the preparation, filing, prosecution, and maintenance of all Patent Rights reasonably prior to any deadline or action with the United States Patent & Trademark Office or any foreign patent office and shall furnish Company with copies of relevant documents reasonably in advance of consultation. University shall consider in good faith any comments of Company on any patent filings for the Patent Rights.

          (b) If University desires to abandon any patent or patent application within the Patent Rights, University shall provide Company with reasonable prior notice of the intended abandonment, and Company may, at its expense, prepare, file, prosecute, and maintain the relevant Patent Rights.

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     6.2. Cooperation. Each party shall provide reasonable cooperation in the preparation, filing, prosecution, and maintenance of all Patent Rights. Cooperation includes, without limitation, promptly informing the other party of matters that may affect the preparation, filing, prosecution, or maintenance of Patent Rights (such as, becoming aware of an additional inventor who is not listed as an inventor in a patent application).

     6.3. Payment of Expenses.

          (a) Within thirty (30) days after the Effective Date, Company shall pay the University {***} to reimburse University for its actual expenses incurred as of the Effective Date in connection with obtaining the Patent Rights. If this Agreement is terminated according to the terms of Section 3.2, University shall reimburse Company for any patent expenses that are paid pursuant to this Subsection 6.3(a), if it enters into a license agreement with another party for the Patent Rights in the Field.

          (b) Within thirty (30) days after University invoices Company, Company shall reimburse University for all patent-related expenses that have not been paid under Subsection 6.3(a) and that are incurred by University pursuant to Section 6.1. Company may elect, upon sixty (60) days’ written notice to University, to cease payment of the expenses associated with obtaining or maintaining patent protection for one or more Patent Rights in one or more countries. If Company elects to cease payment of any patent expenses, Company loses all rights under this Agreement with respect to the particular Patent Rights in those one or more countries.

          (c) University shall use reasonable efforts to have patent costs shared by other licenses that may be executed under the Patent Rights.

     6.4. Infringement.

          (a) Notification of Infringement. Each party agrees to provide written notice to the other party promptly after becoming aware of any infringement of the Patent Rights.

          (b) Company Right to Prosecute. As long as Company remains the only licensee of the Patent Rights in the Field, Company may, under its own control and at its own expense, prosecute any third party infringement of the Patent Rights in the Field or, together with licensees of the Patent Rights in other fields (if any), defend the Patent Rights in any declaratory judgment action brought by a third party which alleges invalidity, unenforceability, or infringement of the Patent Rights. Prior to commencing any action, Company shall consult with University and shall consider the views of University regarding the advisability of the proposed action and its effect on the public interest. Company may not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Subsection 6.4(b) without the prior written consent of University, which consent may not be unreasonably withheld or delayed. Any recovery obtained in an action under this Subsection 6.4(b) shall be distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the action (including the amount of any royalty payments withheld from University as described below); (ii) as to ordinary damages, Company shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales (whichever measure of damages the court applied), less a reasonable approximation of the royalties that Company would have paid to University if

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          Company had sold the infringing products and services rather than the infringer; and (iii) as to special or punitive damages, the parties shall share equally in any award. Company may offset a total of fifty percent (50%) of any expenses incurred under this Subsection 6.4(b) against any royalty payments due to University under this Agreement. However, Company may never reduce royalty payments under Section 4.5. by more than fifty percent (50%) in any Royalty Period.

          (c) University as Indispensable Party. University shall permit any action under Subsection 6.4(b) to be brought in its name if required by law, provided that Company shall hold University harmless from, and if necessary indemnify University against, any costs, expenses, or liability that University may incur in connection with the action.

          (d) University Right to Prosecute. If Company fails to initiate an infringement action within a reasonable time after it first becomes aware of the basis for the action, or to answer a declaratory judgment action within a reasonable time after the action is filed, University may prosecute the infringement or answer the declaratory judgment action under its sole control and at its sole expense, and any recovery obtained shall be given to University. If University takes action under this Subsection 6.4(d), University shall keep Company reasonably informed of material actions taken by University pursuant to the infringement or declaratory action.

          (e) Cooperation. Both parties shall cooperate fully in any action under this Section 6.4. which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any reasonable costs and expenses incurred by the cooperating party in connection with providing assistance.

7. Confidential Information; Publications; Publicity.

     7.1. Confidential Information.

          (a) Designation. The Disclosing Party shall mark Confidential Information that is disclosed in writing with a legend indicating its confidential status (such as, “Confidential” or “Proprietary”). The Disclosing party shall document Confidential Information that is disclosed orally or visually in a written notice and deliver the notice to the Receiving Party within thirty (30) days of the date of disclosure. The notice shall summarize the Confidential Information that was disclosed and reference the time and place of disclosure.

          (b) Obligations. For five (5) years after disclosure of any portion of Confidential Information, the Receiving Party shall (i) maintain Confidential Information in confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its trustees or directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential nature of Confidential Information and who need to know Confidential Information for the purposes of this Agreement; (ii) use Confidential Information solely for the purposes of this Agreement; and (iii) allow its trustees or directors, officers, employees, consultants, and advisors to reproduce the Confidential Information only to the extent necessary for the purposes of this Agreement, with all reproductions being Confidential Information.

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          (c) Exceptions. The obligations of the Receiving Party under Subsection 7.1(b) do not apply to the extent that the Receiving Party can demonstrate that Confidential Information (i) was in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party; (iii) was already known or independently developed or discovered by the Receiving Party without use of the Confidential Information; (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a third party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to the Confidential Information; or (v) is required to be disclosed to comply with applicable laws or regulations or with a court or administrative order, provided that the Disclosing Party receives reasonable prior written notice of the disclosure.

          (d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party (or a third party entrusting its own information to the Disclosing Party) owns the Confidential Information in the possession of the Receiving Party. Upon expiration or termination of this Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of the Receiving Party, except that the Receiving Party may retain one copy of the Confidential Information in the possession of its legal counsel solely for the purpose of monitoring its obligations under this Agreement.

     7.2. Publicity Restrictions. Company may not use the name of University or any of its trustees, officers, faculty, students, employees, or agents, or any adaptation of their names, or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of University. The foregoing notwithstanding, Company or CytRx Corporation may disclose that information without the consent of University in any prospectus, offering memorandum, or other document or filing required by applicable securities laws or other applicable law or regulation, provided that Company provides University at least ten (10) days (or a shorter period in order to enable Company to make a timely announcement to fulfill applicable securities laws or other applicable law or regulation, while affording University the maximum feasible time to review the announcement) prior written notice of the proposed text for the purpose of giving University the opportunity to comment on the text.

8. Term and Termination.

     8.1. Term. This Agreement commences on the Effective Date and remains in effect until the expiration of all issued patents within the Patent Rights unless earlier terminated in accordance with the provisions of this Agreement.

     8.2. Voluntary Termination by Company. Company may terminate this Agreement for any reason upon ninety (90) days’ prior written notice to University.

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     8.3. Termination for Default. If either party commits a material breach of its obligations under this Agreement and fails to cure that breach within sixty (60) days after receiving written notice of the breach, the other party may terminate this Agreement immediately upon written notice to the party in breach. If the alleged breach involves nonpayment of any amounts due University under this Agreement, Company has only one opportunity to cure a material breach for which it receives notice as described above. Any subsequent material breach by Company will entitle University to terminate this Agreement immediately upon written notice to Company, without the sixty-day cure period.

     8.4. Force Majeure. Neither party is responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, explosion, flood, war, strike, act of terrorism or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove those causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the causes are removed.

     8.5. Effect of Termination. The following provisions survive the expiration or termination of this Agreement: Articles 1 and 9; Sections 3.3., 3.4, 3.6., 5.2. (obligation to provide final report and payment), 5.3., 5.4., 5.5., 5.6., 5.7., 5.8., 6.4., 7.1., 7.2., 8.5 and 10.9. Upon the early termination of this Agreement, Company and its Affiliates may complete and sell any work-in-progress and inventory of Licensed Products that exist as of the effective date of termination, provided that (a) Company is current in payment of all amounts due University under this Agreement, (b) Company pays University the applicable royalty and Sublicense Income on sales of Licensed Products in accordance with the terms of this Agreement, and (c) Company and its Affiliates complete and sell all work-in-progress and inventory of Licensed Products within six (6) months after the effective date of termination.

9. Dispute Resolution.

     9.1. Procedures Mandatory. The parties shall resolve any dispute arising out of or relating to this Agreement solely by means of the procedures set forth in this Article. These procedures constitute legally binding obligations that are an essential provision of this Agreement. If either party fails to observe the procedures of this Article, as modified by their written agreement, the other party may bring an action for specific performance in any court of competent jurisdiction.

     9.2. Dispute Resolution Procedures.

          (a) Negotiation. In the event of any dispute arising out of or relating to this Agreement, the affected party shall notify the other party, and the parties shall attempt in good faith to resolve the matter within ten (10) days after the date of notice (the “Notice Date”). Any disputes not resolved by good faith discussions shall be referred to senior executives of each party, who shall meet at a mutually acceptable time and location within thirty (30) days after the Notice Date and attempt to negotiate a settlement.

          (b) Mediation. If the matter remains unresolved within sixty (60) days after the Notice Date, or if the senior executives fail to meet within thirty (30) days after the Notice Date, either party may initiate mediation upon written notice to the other party, and both parties

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shall engage in a mediation proceeding under the then current CPR Institute for Dispute Resolution (“CPR”) Model Procedure for Mediation of Business Disputes. Specific provisions of this Subsection 9.2(b) override inconsistent provisions of the CPR Model Procedure. The parties shall select the mediator from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a mediator within ninety (90) days after the Notice Date, then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation until one of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse; (iii) the parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a settlement within one hundred twenty (120) days after the Notice Date.

          (c) Trial Without Jury. If the parties fail to resolve the dispute through mediation, or if neither party elects to initiate mediation, each party may pursue any other remedies legally available to resolve the dispute. However, the parties expressly waive the right to a jury trial in the legal proceeding under this Subsection 9.2(c).

     9.3. Preservation of Rights Pending Resolution.

          (a) Performance to Continue. Each party shall continue to perform its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. However, a party may suspend performance of its obligations during any period in which the other party fails or refuses to perform its obligations.

          (b) Provisional Remedies. Although the procedures specified in this Article are the exclusive procedures for resolution of disputes arising out of or relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, that action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement.

          (c) Statute of Limitations. The parties agree that all applicable statutes of limitation and time-based defenses (such as, estoppel and laches) are tolled while the procedures set forth in Subsections 9.2.(a) and 9.2(b) are pending. The parties shall take any actions necessary to effectuate this result.

     10. Miscellaneous.

     10.1. Representations and Warranties. University represents that its employees have assigned to University their entire right, title, and interest in the Patent Rights, and that it has authority to grant the rights and licenses set forth in this Agreement, and that it has not granted any rights in the Patent Rights to any third party that is inconsistent with the grant of rights in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNING THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Specifically, University makes no warranty or representation (a) regarding the validity or scope of the Patent Rights, (b) that the exploitation of the Patent Rights or any Licensed Product will not infringe any patents or other intellectual property rights of a third party, and (c) that any third party is not currently infringing or will not infringe the Patent Rights.

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     10.2. Compliance with Law and Policies. Company agrees to comply with applicable law and the policies of University in the area of technology transfer and shall promptly notify University of any violation that Company knows or has reason to believe has occurred or is likely to occur. The University policies currently in effect at the Worcester campus are the Intellectual Property Policy, Policy on Conflicts of Interest Relating to Intellectual Property and Commercial Ventures, and Policy on Faculty Consulting and Outside Activities.

     10.3. Tax-Exempt Status. Company acknowledges that University, as a public institution of the Commonwealth of Massachusetts, is an exempt organization under the United States Internal Revenue Code of 1986, as amended. Company also acknowledges that certain facilities in which the licensed inventions were developed may have been financed through offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to University reasonably determines, that any term of this Agreement jeopardizes the tax-exempt status of University or the bonds used to finance University facilities, the relevant term is invalid and shall be modified in accordance with Section 10.11.

     10.4. Counterparts. This Agreement may be executed in one or more counterparts, each of which is an original, and all of which together are one instrument.

     10.5. Headings. All headings are for convenience only and do not affect the meaning of any provision of this Agreement.

     10.6. Binding Effect. This Agreement is binding upon and inures to the benefit of the parties and their respective permitted successors and assigns.

     10.7. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party, which consent may not be unreasonably withheld or delayed. Notwithstanding the foregoing, this Agreement may be assigned by either party in connection with a merger, consolidation, sale of all of the equity interests of the party, or a sale of all or substantially all of the assets of the party to which this Agreement relates.

     10.8. Amendment and Waiver. The parties may only amend, supplement, or otherwise modify this Agreement through a written instrument signed by both parties. The waiver of any rights or failure to act in a specific instance relates only to that instance and is not an agreement to waive any rights or fail to act in any other instance.

     10.9. Governing Law. This Agreement is governed by and construed in accordance with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. The parties may only bring legal action that arises out of or in connection with this Agreement in the Massachusetts Superior Court in Suffolk County.

     10.10. Notice. Any notices required or permitted under this Agreement shall be in writing, shall specifically refer to this Agreement, and shall be sent by recognized national overnight courier, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

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If to University:	If to Company:
Office of Technology Management	RXi Pharmaceuticals Corporation
University of Massachusetts	One Innovation Drive
333 South Street, Suite 400	Worcester, MA 01605
Shrewsbury, MA 01545
Attention: Executive Director	Attention: President

All notices under this Agreement are effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section 10.10.

     10.11. Severability. If any provision of this Agreement is held invalid or unenforceable for any reason, the invalidity or unenforceability does not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach a modified agreement within sixty (60) days after the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in Article 9. While the dispute is pending resolution, this Agreement shall be construed as if the provision were deleted by agreement of the parties.

     10.12. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter.

     The parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

UNIVERSITY OF MASSACHUSETTS		RXI PHARMACEUTICALS CORP.
By:		By:
Name: James P. McNamara, Ph.D.,		Name: Tod Woolf, Ph.D.
Title: Executive Director,		Title: President & CEO
	Office of Technology Management
Date:		Date:

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EXHIBIT A

Patent Rights

UMMC 06-08

     Invention Disclosure

Entitled: Methods of Synthesis and Formulation of New Reagents for Efficient Nucleic Acids Delivery in Cells and Animals”

Provisional Application

Entitled: “Methods and Compositions for the Efficient Delivery of Therapeutic Agents to Cells and Animals” Filed 8/11/2005 – Application No. 60/707,805

     U.S. Utility Application

Entitled: “Methods and Compositions for the Efficient Delivery of Therapeutic Agents to Cells and Animals”
Filed 8/11/2006 – Application No. 11/503,531

     PCT Application

Entitled: “Methods and Compositions for the Efficient Delivery of Therapeutic Agents to Cells and Animals”
Filed 8/11/17/2006

UMMC 07-08

Invention Disclosure

Entitled: “Microwave Assisted Method of Synthesis of New Cationic Reagents for Efficient Drug Delivery in Cells and Animals”

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EX-10.5

Exhibit 10.5

EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of January 10, 2007 (the “Effective Date”), is between the University of Massachusetts (“University”), a public institution of higher education of the Commonwealth of Massachusetts as represented by its Worcester campus, and RXi Pharmaceuticals Corporation (“Company”), a Delaware corporation.

RECITALS

     WHEREAS, University owns intellectual property rights which relate to therapeutic applications of RNAi, as described in University’s invention disclosure number UMMC 06-21, entitled “Methods and Synthesis of Reagents to Treat ALS”;

     WHEREAS, Company is engaged in business relating to the development and commercialization of products that use or incorporate University’s intellectual property rights and has the capability of developing commercial applications of the intellectual property;

     WHEREAS, Company desires to obtain an exclusive license to University’s intellectual property rights, and University is willing to grant an exclusive license to its intellectual property rights under the following conditions so that these intellectual property rights may be developed to their fullest and the benefits enjoyed by the general public; and

     WHEREAS, the license that is granted in this Agreement promotes the development of publicly funded intellectual property to practical application for the public good.

     THEREFORE, University and Company agree as follows:

1. Definitions.

     1.1 “Affiliate” means an entity that controls, is controlled by, or is under common control with a party to this Agreement. The term “control” as used in the preceding sentence means possession of the power to direct or call for the direction of the management and policies of an entity, whether through ownership of a majority of the outstanding voting securities, by contract, or otherwise.

     1.2 “Companion UMass License Agreements” means this Agreement and the license agreements with University that are executed on the same date as this Agreement for University technologies, UMMC 03-75, UMMC 06-08, UMMC 07-08, UMMC 03-68, UMMC 06-38, and UMMC 06-39, collectively.

     1.3. “Confidential Information” means any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in connection with this Agreement that is specifically designated as confidential, as further described in Article 7.

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     1.4. “Field” means Primary Field and Secondary Field collectively. Any commercial sale of research reagents covered by the Patent Rights is specifically excluded from the Field. The foregoing shall not be interpreted to prevent Company, its Affiliates or corporate partners from performing research related to discovery or development of Licensed Products for itself or any Affiliate or Sublicensee. (a) “Primary Field” means therapeutic, prophylactic, or diagnostic health care applications for amyotrophic lateral sclerosis (ALS), diabetes, and obesity, in humans. (b) “Secondary Field” means therapeutic, prophylactic, or diagnostic health care applications in humans that are not included in the Primary Field.

     1.5. “Licensed Product” means any product that cannot be developed, manufactured, used, or sold without infringing one or more Valid Claims.

     1.6. “Net Sales” means the gross amount billed or invoiced on sales of Licensed Products by Company, its Affiliates and Sublicensees, less the following: (a) customary trade, quantity, or cash discounts to non-affiliated brokers or agents to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of Company; and (d) outbound transportation costs prepaid or allowed and costs of insurance in transit.

     In any transfers of Licensed Products between any of Company and Affiliates and Sublicensees, Net Sales are calculated based on the final sale of the Licensed Product to an independent third party. If Company or an Affiliate or Sublicensee receives non-monetary consideration for any Licensed Products, Net Sales are calculated based on the fair market value of that consideration. If Company or its Affiliates or Sublicensees use or dispose of a Licensed Product in the provision of a commercial service, the Licensed Product is sold and the Net Sales are calculated based on the sales price of the Licensed Product to an independent third party during the same Royalty Period or, in the absence of sales, on the fair market value of the Licensed Product as determined by the parties in good faith.

     1.7. “Patent Rights” means the United States patent applications listed in Exhibit A, patent applications covering invention disclosures listed in Exhibit A, and any divisional, continuation, or continuation-in-part of those patent applications to the extent the claims are directed to subject matter specifically described therein as well as any patents issued on these patent applications and any reissues or reexaminations or extensions of the patents, and any foreign counterparts to any of the foregoing.

     1.8. “Royalty Period” means the partial calendar quarter commencing on the date on which the first Licensed Product is sold or used and every complete or partial calendar quarter thereafter during which either (a) this Agreement remains in effect or (b) Company has the right to complete and sell work-in-progress and inventory of Licensed Products pursuant to Section 8.5.

     1.9. “Sublicense Agreement” means any agreement in which Company grants rights to the Patent Rights pursuant to Section 2.2.

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     1.10. “Sublicense Income” means payments or other value that Company receives from a Sublicensee in consideration of the sublicense of the rights granted Company under Section 2.1., including without limitation, license fees, equity, milestone payments, and license maintenance fees, but excluding the following payments: (a) payments made in consideration for the issuance of equity or debt securities of Company at fair market value, (b) payments specifically committed to the development of Licensed Products, (c) reimbursements of patent expenses for the Patent Rights, and (d) royalties.

     1.11. “Sublicensee” means any permitted sublicensee of the rights granted Company under this Agreement, as further described in Section 2.2.

     1.12. “Valid Claim” means (a) a claim of an issued and unexpired patent covering the Patent Rights which has not been permanently revoked or held unenforceable or invalid by an unappealable or unappealed decision of a court or government agency of competent jurisdiction or (b) a claim of a pending patent application within the Patent Rights that has not been abandoned or finally disallowed without the possibility of appeal or refiling.

2. Grant of Rights

     2.1. License Grant. University grants to Company an exclusive, worldwide, royalty-bearing license in the Patent Rights to make, have made, use, offer to sell, sell, have sold and imported Licensed Products in the Field, including research for development of Licensed Products.

     2.2. Sublicenses. Company may grant sublicenses of its rights under Section 2.1. with the consent of University, which consent may not be unreasonably withheld or delayed. All Sublicense Agreements executed by Company pursuant to this Section 2.2 shall expressly bind the Sublicensee to the terms of this Agreement. Company shall promptly furnish University with a fully executed copy of any Sublicense Agreement.

     2.3. Retained Rights.

          (a) University. University retains the right to use the Patent Rights for academic research, teaching, and non-commercial patient care, without payment of compensation to Company. University may license its retained rights under this Subsection 2.3(a) to research collaborators of University faculty members, post-doctoral fellows, and students.

          (b) Federal Government. If the federal government has funded any invention claimed in the Patent Rights, this Agreement and the grant of any rights in Patent Rights are subject to the federal law set forth in 35 U.S.C. §§ 201-211 and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. Company acknowledges that these statutes and regulations reserve to the federal government a royalty-free, non-exclusive, non-transferrable license to practice any government-funded invention claimed in the Patent Rights. If any term of this Agreement fails to conform to those laws and regulations, the relevant term is invalid, and the parties shall modify the term pursuant to Section 10.11.

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          (c) Other Organizations. University represents that all inventions claimed in the Patent Rights have been funded only by the federal government or University funds.

     2.4. Assignment of UMass/CytRx Licenses. On or before March 31, 2007, Company shall obtain assignment from CytRx Corporation of the license agreements that cover the following RNAi technologies that CytRx has licensed from University and the Carnegie Institution , UMMC 01-36, UMMC 02-01, UMMC 03-17, UMMC 03-33, UMMC 03-60, and UMMC 98-22, in a manner compliant with the relevant license agreements. University shall consent to any assignment as necessary. If Company does not obtain assignment of those license agreements on or before March 31, 2007, this Agreement immediately terminates.

3. Company Obligations Relating to Commercialization.

     3.1. Diligence Requirements. Company shall use diligent efforts or cause its Affiliates and Sublicensees to use diligent efforts to develop Licensed Products and to introduce Licensed Products into the commercial market. Thereafter, Company or its Affiliates or Sublicensees shall make Licensed Products reasonably available to the public. Specifically, Company shall fulfill the following obligations:

          (a) Financing the Company. On or before March 31, 2007, Company shall raise at least Fifteen Million Dollars ($15,000,000) from investors which may include CytRx Corporation (the “Initial Financing”) or this Agreement automatically terminates, and Company shall pay University Seventy-Five Thousand Dollars ($75,000) due April 1, 2007 (payable only once under the Companion UMass License Agreements). However, if Company demonstrates to the reasonable satisfaction of University that, on March 31, 2007, investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, University grants Company a thirty (30) day extension from March 31, 2007, to fulfill the financing obligation set forth in this Subsection 3.1(a). If Company can demonstrate to the reasonable satisfaction of University that investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, Company shall be granted up to two additional thirty (30) day extensions to fulfill the financing obligation by paying to University Twenty-Five Thousand Dollars ($25,000) each on the last day of the previous extension. The extension fees are non-refundable but creditable to the upfront license fee.

          (b) Development of Licensed Products.

               (i) On or before execution of this Agreement, Company shall furnish University with a written business plan under which Company intends as of the Effective Date to develop Licensed Products. University acknowledges that this business plan is a statement of Company’s current intention regarding the development of Licensed Product and that Company’s plans regarding the development of Licensed Products may change.

               (ii) Within sixty (60) days after the start of each calendar year, beginning on January 1, 2008, Company shall furnish University with a written report on progress during the prior year to develop and commercialize Licensed Products, including

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without limitation research and development, efforts to obtain regulatory approval, marketing, and sales figures. The Company shall also include in the report a discussion of its intended development and commercialization efforts and sales projections for the current year.

               (iii) Within five (5) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an IND or its equivalent with the FDA covering at least one (1) Licensed Product.

               (iv) Within twelve (12) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an NDA or BLA with the FDA covering at least one (1) Licensed Product.

               (v) Within three (3) months after receiving FDA approval of the NDA or BLA for any Licensed Product, Company, its Affiliate or Sublicensee shall market the approved Licensed Product in the United States.

               (vi) Company or its partner shall spend at least {***} per calendar year for development of Licensed Products until the earlier of three years after the Effective Date or the commencement of a Phase II clinical trial on a Licensed Product.

     3.2. If University determines that Company has not fulfilled its obligations under Subsection 3.1(b), University shall furnish Company with written notice of the determination. Within sixty (60) days after receipt of the notice, Company shall either (a) fulfill the relevant obligation or (b) negotiate with University a mutually acceptable schedule of revised diligence obligations, failing which University may, immediately upon written notice to Company, terminate this Agreement or convert the exclusive license into a non-exclusive license.

     3.3. Indemnification.

          (a) Indemnity. Company shall indemnify, defend, and hold harmless University and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether the action has any factual basis) concerning any product, process, or service that is made, used, or sold pursuant to any right or license granted under this Agreement. However, indemnification does not apply to any liability, damage, loss, or expense to the extent directly attributable to (i) the gross negligence or intentional misconduct of the Indemnitees or (ii) the settlement of a claim, suit, action, or demand by Indemnitees without the prior written approval of Company.

          (b) Procedures. The Indemnitees agree to provide Company with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to University to defend against any claim. The Indemnitees shall cooperate fully with Company in the defense and will permit Company to conduct and control

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the defense and the disposition of the claim, suit, or action (including all decisions relative to litigation, appeal, and settlement). However, any Indemnitee may retain its own counsel, at the expense of Company, if representation of the Indemnitee by the counsel retained by Company would be inappropriate because of actual or potential conflicts in the interests of the Indemnitee and any other party represented by that counsel. Company agrees to keep University informed of the progress in the defense and disposition of the claim and to consult with University regarding any proposed settlement.

          (c) Insurance. Company shall maintain insurance or self-insurance that is reasonably adequate to fulfill any potential obligation to the Indemnitees, but not less than one million dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence. Company shall provide University, upon request, with written evidence of insurance or self-insurance. Company shall continue to maintain the insurance or self-insurance after the expiration or termination of this Agreement while Company, its Affiliate or Sublicensee continues to make, use, or sell a Licensed Product and thereafter for five (5) years.

     3.4. Use of University Name. In accordance with Section 7.2., Company and its Affiliates and Sublicensees may not use the name “University of Massachusetts” or any variation of that name in connection with the marketing or sale of any Licensed Products.

     3.5. Marking of Licensed Products. To the extent commercially feasible and consistent with prevailing business practices, Company shall mark and shall cause its Affiliates and Sublicensees to mark all Licensed Products that are manufactured or sold under this Agreement with the number of each issued patent under the Patent Rights that applies to a Licensed Product.

     3.6. Compliance with Law. Company shall comply with, and shall ensure that its Affiliates and Sublicensees comply with, all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of Licensed Products. Company expressly agrees to comply with the following:

          (a) Company or its Affiliates or Sublicensees shall obtain all necessary approvals from the United States Food & Drug Administration and any similar foreign governmental authorities in which Company or Affiliate or Sublicensee intends to make, use, or sell Licensed Products.

          (b) Company and its Affiliates and Sublicensees shall comply with all United States laws and regulations controlling the export of commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries and foreign nationals. Company hereby gives written assurance that it will comply with and will cause its Affiliates and Sublicensees to comply with all United States export control laws and regulations, that it bears sole responsibility for any violation of those laws and regulations by itself or its Affiliates or Sublicensees, and that it will indemnify, defend, and hold University harmless (in accordance with Section 3.3.) for the consequences of any violation.

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          (c) If any invention claimed in the Patent Rights has been funded by the United States government, and only to the extent required by applicable laws and regulations, Company agrees that any Licensed Products used or sold in the United States will be manufactured substantially in the United States or its territories. Current law provides that if domestic manufacture is not commercially feasible under the circumstances, University may seek a waiver of this requirement from the relevant federal agency on behalf of Company.

4. Consideration for Grant of Rights.

     4.1. License Fees.

          (a) On the Effective Date, Company shall pay to University {***}.

          (b) Within thirty (30) days after the closing of the Initial Financing, Company shall pay to University {***}.

The license fees are nonrefundable and are not creditable against any other payments due to University under this Agreement.

     4.2. Equity.

          (a) Within thirty (30) days after the closing of the Initial Financing, Company shall issue to University that number shares of Common Stock of Company having an aggregate valuation equal to {***} according to the Company valuation at the Initial Financing. In connection with the issuance of stock pursuant to this Section 4.2, the University agrees to become a party to other agreements of Company to the same extent (except any limitations relating to the University’s status as an agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock restriction agreement). University acknowledges that all certificates representing the shares described in this Subsection 4.2(a) may bear customary legends that require compliance with the Securities Act of 1933 and related state securities laws upon any transfer of the shares. Company shall use commercially reasonable efforts to register the stock issued to University pursuant to this Subsection 4.2(a) as soon as possible, subject to customary terms in connection with the registration.

          (b) Beginning on the Effective Date, Company shall notify University reasonably prior to each Company board of directors meeting and provide University with related documentation to the same extent that is supplied to the board of directors. Company shall permit one representative of University to attend all board of director meetings until the earlier of five (5) years after the Effective Date or the commencement by the Company of a Phase II clinical trial relating to a Licensed Product. The University attendee may not be a voting member of the board. The University attendee shall comply with restrictions to which other board members are subject, such as, confidentiality requirements relating to Board discussions and shall execute any agreement reasonably required by Company to effect those restrictions. The Company board of directors may exclude University representative from those portions of board meetings that pertain to compensation and personnel issues and as deemed

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reasonably necessary for the board members to exercise their fiduciary responsibilities and to comply with applicable laws and regulations.

     4.3. License Maintenance Fee. At the beginning of each calendar year during the term of this Agreement, commencing on January 1, 2008, Company shall pay to University {***}. This annual license maintenance fee is nonrefundable and is not creditable against any other payments due to University under this Agreement.

     4.4. Milestone Payments. Company shall pay University the following milestone payments within thirty (30) days after the occurrence of each event for each Licensed Product:

Event	Payment
The first issuance of any claim under any Patent Rights		{***}
Earlier of filing IND or 5 years after Effective Date		{***}
Earlier of initiation Phase II clinical trial or 7 years after the Effective Date		{***}
Earlier of initiation of Phase III clinical trial or 9 years after the Effective Date		{***}
Earlier of filing NDA or 12 years after the Effective Date		{***}
Commencement of Licensed Product marketing in US or 13 years after the Effective Date		{***}

If a milestone payment is made under this Section 4.4 based on the passage of time rather than on the achievement of a particular milestone event, that milestone payment is not due for the first Licensed Product with respect to the later achievement of that milestone event. These milestone payments are nonrefundable and are not creditable against any other payments due to University under this Agreement. For each Licensed Product, Company shall make all milestone payments, even if an earlier milestone event has not occurred. For example, if Company proceeds from Phase I clinical trial directly to Phase III, the milestone payments for both Phase II and III are due upon achievement of the Phase III milestone event. Also, if Company uses a Phase II clinical trial as a registration trial and proceeds directly to NDA submission without performing a Phase III trial, then upon filing of the NDA, both the Phase III and NDA milestone payments are due.

     4.5. Royalties. Company shall pay to University a royalty of {***} of Net Sales.

     4.6. Minimum Royalty. Within sixty (60) days after the beginning of each calendar year during the term of this Agreement, beginning January 1, 2012, Company shall pay to University a minimum royalty of {***}. Company may credit the minimum royalty paid under this Section 4.6 against actual royalties due and payable for the same calendar year. Waiver of any minimum royalty payment by University is not a waiver of any subsequent minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day period, that failure is a material breach of its obligations under this Agreement, and University may terminate this Agreement in accordance with Section 8.3.

     4.7. Sublicense Income. Company shall pay University the following percentages of all Sublicense Income:

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          (a) {***} for Sublicense Agreements that are executed by Company from January 1, 2007 through December 31, 2007;

          (b) {***} for Sublicense Agreements that are executed by Company from January 1, 2008 through December 31, 2008; and

          (c) {***} for Sublicense Agreements that are executed by Company from and after January 1, 2009.

Sublicense Income is due within sixty (60) days after Company receives the relevant payment from the Sublicensee. If Sublicense Income is payable by Company for any one Sublicense Agreement under more than one of the Companion UMass License Agreements and the license agreements assigned to Company pursuant to Section 2.4 (“Assigned License Agreements”), Company shall pay the highest rate of Sublicense Income among the Companion UMass License Agreements and the Assigned License Agreements. That one payment satisfies the payment requirements for the applicable Sublicense Agreement under each of the Companion UMass License Agreements and Assigned License Agreements.

     4.8. Third-Party Royalties. As long as Company remains the exclusive licensee of the Patent Rights in any portion of the Field, if Company is legally required to make royalty payments to one or more third parties in order to practice the Patent Rights granted under this Agreement in the portion of the Field for which the license is exclusive, Company may offset up to {***} of third-party payments against royalty payments that are due to University in the same Royalty Period. However, the royalty payments under Section 4.5., may never be reduced by more than {***} in any Royalty Period.

5. Royalty Reports; Payments; Records.

     5.1. First Sale. Company shall report to University the date of first commercial sale of each Licensed Product within thirty (30) days after occurrence in each country.

     5.2. Reports and Payments.

          (a) Within sixty (60) days after the conclusion of each Royalty Period, Company shall deliver to University a report containing the following information:

               (i) the number of Licensed Products sold to independent third parties in each country and the number of Licensed Products used by Company, its Affiliates and Sublicensees in the provision of services in each country;

               (ii) the gross sales price for each Licensed Product by Company, its Affiliates and Sublicensees during the applicable Royalty Period in each country;

               (iii) calculation of Net Sales for the applicable Royalty Period in each country, including a listing of applicable deductions;

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               (iv) total royalty payable on Net Sales in United States dollars, together with the exchange rates used for conversion; and

               (v) Sublicense Income due to University for the applicable Royalty Period from each Sublicensee.

          (b) Concurrent with this report, Company shall remit to University any payment due for the applicable Royalty Period. If no royalties are due to University for any Royalty Period, the report shall so state.

     5.3. Payments in United States Dollars. Company shall make all payments in United States dollars. Company shall convert foreign currency to United States dollars at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the calendar quarter preceding the applicable Royalty Period. Company may not deduct exchange, collection, or other charges.

     5.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, Company shall give University prompt written notice of the restriction within the sixty-day payment deadline described in Section 5.2. Company shall pay any amounts due University through whatever lawful methods University reasonably designates. However, if University fails to designate a payment method within thirty (30) days after University is notified of the restriction, Company may deposit payment in local currency to the credit of University in a recognized banking institution selected by Company and identified by written notice to University, and that deposit fulfills all obligations of Company to University with respect to that payment.

     5.5. Records. Company shall maintain and shall cause its Affiliates and Sublicensees to maintain complete and accurate records of Licensed Products that are made, used, or sold under this Agreement and any amounts payable to University in relation to Licensed Products with sufficient information to permit University to confirm the accuracy of any reports delivered to University under Section 5.2. The relevant party shall retain records relating to a given Royalty Period for at least three (3) years after the conclusion of that Royalty Period, during which time University may, at its expense, cause its internal accountants or an independent, certified public accountant to inspect records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement. The accountant may not disclose to University any information other than information relating to accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit. If any audit performed under this Section 5.5 reveals an underpayment in excess of ten percent (10%) in any Royalty Period, Company shall bear the full cost of the audit. University may exercise its rights under this Section 5.5 only once every year and only with reasonable prior notice to Company.

     5.6. Late Payments. Any payments by Company that are not paid on or before the date payments are due under this Agreement bear interest at 1.5% per month, calculated on the number of days that payment is delinquent.

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     5.7. Method of Payment. All payments under this Agreement should be made to the “University of Massachusetts” and sent to the address identified below. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment satisfies.

     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to University under this Agreement may not be reduced by reason of any withholding or similar taxes applicable to payments to University. Therefore all amounts owed to University under this Agreement are net amounts and shall be grossed-up to account for any withholding taxes, value-added taxes or other taxes, levies or charges.

6. Patents and Infringement.

     6.1. Responsibility for Patent Rights.

          (a) University has primary responsibility at the expense of Company for the preparation, filing, prosecution, and maintenance of all Patent Rights, using patent counsel reasonably acceptable to Company. University shall consult with Company as to the preparation, filing, prosecution, and maintenance of all Patent Rights reasonably prior to any deadline or action with the United States Patent & Trademark Office or any foreign patent office and shall furnish Company with copies of relevant documents reasonably in advance of consultation. University shall consider in good faith any comments of Company on any patent filings for the Patent Rights.

          (b) If University desires to abandon any patent or patent application within the Patent Rights, University shall provide Company with reasonable prior notice of the intended abandonment, and Company may, at its expense, prepare, file, prosecute, and maintain the relevant Patent Rights.

     6.2. Cooperation. Each party shall provide reasonable cooperation in the preparation, filing, prosecution, and maintenance of all Patent Rights. Cooperation includes, without limitation, promptly informing the other party of matters that may affect the preparation, filing, prosecution, or maintenance of Patent Rights (such as, becoming aware of an additional inventor who is not listed as an inventor in a patent application).

     6.3. Payment of Expenses.

          (a) Within thirty (30) days after the Effective Date, Company shall pay the University {***} to reimburse University for its actual expenses incurred as of the Effective Date in connection with obtaining the Patent Rights. If this Agreement is terminated according to the terms of Subsection 3.1(a), University shall reimburse Company for any patent expenses that are paid pursuant to this Subsection 6.3(a), if it enters into a license agreement with another party for the Patent Rights in the Field.

          (b) Within thirty (30) days after University invoices Company, Company shall reimburse University for all patent-related expenses that have not been paid under Subsection

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6.3(a) and that are incurred by University pursuant to Section 6.1. Company may elect, upon sixty (60) days’ written notice to University, to cease payment of the expenses associated with obtaining or maintaining patent protection for one or more Patent Rights in one or more countries. If Company elects to cease payment of any patent expenses, Company loses all rights under this Agreement with respect to the particular Patent Rights in those one or more countries.

     6.4. Infringement.

          (a) Notification of Infringement. Each party agrees to provide written notice to the other party promptly after becoming aware of any infringement of the Patent Rights.

          (b) Company Right to Prosecute. As long as Company remains the exclusive licensee of the Patent Rights in the Field, Company may, under its own control and at its own expense, prosecute any third party infringement of the Patent Rights in the Field or, together with licensees of the Patent Rights in other fields (if any), defend the Patent Rights in any declaratory judgment action brought by a third party which alleges invalidity, unenforceability, or infringement of the Patent Rights. Prior to commencing any action, Company shall consult with University and shall consider the views of University regarding the advisability of the proposed action and its effect on the public interest. Company may not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Subsection 6.4(b) without the prior written consent of University, which consent may not be unreasonably withheld or delayed. Any recovery obtained in an action under this Subsection 6.4(b) shall be distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the action (including the amount of any royalty payments withheld from University as described below); (ii) as to ordinary damages, Company shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales (whichever measure of damages the court applied), less a reasonable approximation of the royalties that Company would have paid to University if Company had sold the infringing products and services rather than the infringer; and (iii) as to special or punitive damages, the parties shall share equally in any award. Company may offset a total of fifty percent (50%) of any expenses incurred under this Subsection 6.4(b) against any royalty payments due to University under this Agreement. However, Company may never reduce royalty payments under Section 4.5. by more than fifty percent (50%) in any Royalty Period.

          (c) University as Indispensable Party. University shall permit any action under Subsection 6.4(b) to be brought in its name if required by law, provided that Company shall hold University harmless from, and if necessary indemnify University against, any costs, expenses, or liability that University may incur in connection with the action.

          (d) University Right to Prosecute. If Company fails to initiate an infringement action within a reasonable time after it first becomes aware of the basis for the action, or to answer a declaratory judgment action within a reasonable time after the action is filed, University may prosecute the infringement or answer the declaratory judgment action under its sole control and at its sole expense, and any recovery obtained shall be given to University. If University takes action under this Subsection 6.4(d), University shall keep Company reasonably informed of material actions taken by University pursuant to the infringement or declaratory action.

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          (e) Cooperation. Both parties shall cooperate fully in any action under this Section 6.4. which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any reasonable costs and expenses incurred by the cooperating party in connection with providing assistance.

7. Confidential Information; Publications; Publicity.

     7.1. Confidential Information.

          (a) Designation. The Disclosing Party shall mark Confidential Information that is disclosed in writing with a legend indicating its confidential status (such as, “Confidential” or “Proprietary”). The Disclosing party shall document Confidential Information that is disclosed orally or visually in a written notice and deliver the notice to the Receiving Party within thirty (30) days of the date of disclosure. The notice shall summarize the Confidential Information that was disclosed and reference the time and place of disclosure.

          (b) Obligations. For five (5) years after disclosure of any portion of Confidential Information, the Receiving Party shall (i) maintain Confidential Information in confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its trustees or directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential nature of Confidential Information and who need to know Confidential Information for the purposes of this Agreement; (ii) use Confidential Information solely for the purposes of this Agreement; and (iii) allow its trustees or directors, officers, employees, consultants, and advisors to reproduce the Confidential Information only to the extent necessary for the purposes of this Agreement, with all reproductions being Confidential Information.

          (c) Exceptions. The obligations of the Receiving Party under Subsection 7.1(b) do not apply to the extent that the Receiving Party can demonstrate that Confidential Information (i) was in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party; (iii) was already known or independently developed or discovered by the Receiving Party without use of the Confidential Information; (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a third party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to the Confidential Information; or (v) is required to be disclosed to comply with applicable laws or regulations or with a court or administrative order, provided that the Disclosing Party receives reasonable prior written notice of the disclosure.

          (d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party (or a third party entrusting its own information to the Disclosing Party) owns the Confidential Information in the possession of the Receiving Party. Upon expiration or termination of this Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of the

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Receiving Party, except that the Receiving Party may retain one copy of the Confidential Information in the possession of its legal counsel solely for the purpose of monitoring its obligations under this Agreement.

     7.2. Publicity Restrictions. Company may not use the name of University or any of its trustees, officers, faculty, students, employees, or agents, or any adaptation of their names, or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of University. The foregoing notwithstanding, Company or CytRx Corporation may disclose that information without the consent of University in any prospectus, offering memorandum, or other document or filing required by applicable securities laws or other applicable law or regulation, provided that Company provides University at least ten (10) days (or a shorter period in order to enable Company to make a timely announcement to fulfill applicable securities laws or other applicable law or regulation, while affording University the maximum feasible time to review the announcement) prior written notice of the proposed text for the purpose of giving University the opportunity to comment on the text.

8. Term and Termination.

     8.1. Term. This Agreement commences on the Effective Date and remains in effect until the expiration of all issued patents within the Patent Rights unless earlier terminated in accordance with the provisions of this Agreement.

     8.2. Voluntary Termination by Company. Company may terminate this Agreement for any reason upon ninety (90) days’ prior written notice to University.

     8.3. Termination for Default. If either party commits a material breach of its obligations under this Agreement and fails to cure that breach within sixty (60) days after receiving written notice of the breach, the other party may terminate this Agreement immediately upon written notice to the party in breach. If the alleged breach involves nonpayment of any amounts due University under this Agreement, Company has only one opportunity to cure a material breach for which it receives notice as described above. Any subsequent material breach by Company will entitle University to terminate this Agreement immediately upon written notice to Company, without the sixty-day cure period.

     8.4. Force Majeure. Neither party is responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, explosion, flood, war, strike, act of terrorism or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove those causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the causes are removed.

8.5. Effect of Termination. The following provisions survive the expiration or termination of this Agreement: Articles 1 and 9; Sections 3.3., 3.4, 3.6., 5.2. (obligation to provide final report and payment), 5.3., 5.4., 5.5., 5.6., 5.7., 5.8., 6.4., 7.1., 7.2., 8.5 and 10.9. Upon the early termination of this Agreement, Company and its Affiliates and Sublicensees may complete and sell any work-in-progress and inventory of Licensed Products that exist as of the effective date of termination, provided that (a) Company is current in payment of all amounts

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due University under this Agreement, (b) Company pays University the applicable royalty and Sublicense Income on sales of Licensed Products in accordance with the terms of this Agreement, and (c) Company and its Affiliates and Sublicensees complete and sell all work-in-progress and inventory of Licensed Products within six (6) months after the effective date of termination. Upon the expiration or termination of this Agreement, University may enter into a license agreement directly with each Sublicensee on terms that are reasonably negotiated directly with each Sublicensee. Notwithstanding the foregoing, upon the expiration or termination of this Agreement, University shall enter into a license agreement directly with each Sublicensee on the same terms as each Sublicense Agreement that is in effect. However, the University and Sublicensee shall modify each Sublicense Agreement to the extent necessary to ensure that University does not assume any greater obligations under the license agreement than those set forth in this Agreement and that Sublicensee complies with all obligations of the Company under this Agreement.

9. Dispute Resolution.

     9.1. Procedures Mandatory. The parties shall resolve any dispute arising out of or relating to this Agreement solely by means of the procedures set forth in this Article. These procedures constitute legally binding obligations that are an essential provision of this Agreement. If either party fails to observe the procedures of this Article, as modified by their written agreement, the other party may bring an action for specific performance in any court of competent jurisdiction.

     9.2. Dispute Resolution Procedures.

          (a) Negotiation. In the event of any dispute arising out of or relating to this Agreement, the affected party shall notify the other party, and the parties shall attempt in good faith to resolve the matter within ten (10) days after the date of notice (the “Notice Date”). Any disputes not resolved by good faith discussions shall be referred to senior executives of each party, who shall meet at a mutually acceptable time and location within thirty (30) days after the Notice Date and attempt to negotiate a settlement.

          (b) Mediation. If the matter remains unresolved within sixty (60) days after the Notice Date, or if the senior executives fail to meet within thirty (30) days after the Notice Date, either party may initiate mediation upon written notice to the other party, and both parties shall engage in a mediation proceeding under the then current CPR Institute for Dispute Resolution (“CPR”) Model Procedure for Mediation of Business Disputes. Specific provisions of this Subsection 9.2(b) override inconsistent provisions of the CPR Model Procedure. The parties shall select the mediator from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a mediator within ninety (90) days after the Notice Date, then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation until one of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse; (iii) the parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a settlement within one hundred twenty (120) days after the Notice Date.

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          (c) Trial Without Jury. If the parties fail to resolve the dispute through mediation, or if neither party elects to initiate mediation, each party may pursue any other remedies legally available to resolve the dispute. However, the parties expressly waive the right to a jury trial in the legal proceeding under this Subsection 9.2(c).

     9.3. Preservation of Rights Pending Resolution.

          (a) Performance to Continue. Each party shall continue to perform its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. However, a party may suspend performance of its obligations during any period in which the other party fails or refuses to perform its obligations.

          (b) Provisional Remedies. Although the procedures specified in this Article are the exclusive procedures for resolution of disputes arising out of or relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, that action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement.

          (c) Statute of Limitations. The parties agree that all applicable statutes of limitation and time-based defenses (such as, estoppel and laches) are tolled while the procedures set forth in Subsections 9.2.(a) and 9.2(b) are pending. The parties shall take any actions necessary to effectuate this result.

10. Miscellaneous.

     10.1. Representations and Warranties. University represents that its employees have assigned to University their entire right, title, and interest in the Patent Rights, and that it has authority to grant the rights and licenses set forth in this Agreement, and that it has not granted any rights in the Patent Rights to any third party that is inconsistent with the grant of rights in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNING THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Specifically, University makes no warranty or representation (a) regarding the validity or scope of the Patent Rights, (b) that the exploitation of the Patent Rights or any Licensed Product will not infringe any patents or other intellectual property rights of a third party, and (c) that any third party is not currently infringing or will not infringe the Patent Rights.

     10.2. Compliance with Law and Policies. Company agrees to comply with applicable law and the policies of University in the area of technology transfer and shall promptly notify University of any violation that Company knows or has reason to believe has occurred or is likely to occur. The University policies currently in effect at the Worcester campus are the Intellectual Property Policy, Policy on Conflicts of Interest Relating to Intellectual Property and Commercial Ventures, and Policy on Faculty Consulting and Outside Activities.

     10.3. Tax-Exempt Status. Company acknowledges that University, as a public institution of the Commonwealth of Massachusetts, is an exempt organization under the United States Internal Revenue Code of 1986, as amended. Company also acknowledges that certain

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facilities in which the licensed inventions were developed may have been financed through offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to University reasonably determines, that any term of this Agreement jeopardizes the tax-exempt status of University or the bonds used to finance University facilities, the relevant term is invalid and shall be modified in accordance with Section 10.11.

     10.4. Counterparts. This Agreement may be executed in one or more counterparts, each of which is an original, and all of which together are one instrument.

     10.5. Headings. All headings are for convenience only and do not affect the meaning of any provision of this Agreement.

     10.6. Binding Effect. This Agreement is binding upon and inures to the benefit of the parties and their respective permitted successors and assigns.

     10.7. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party, which consent may not be unreasonably withheld or delayed. Notwithstanding the foregoing, this Agreement may be assigned by either party in connection with a merger, consolidation, sale of all of the equity interests of the party, or a sale of all or substantially all of the assets of the party to which this Agreement relates.

     10.8. Amendment and Waiver. The parties may only amend, supplement, or otherwise modify this Agreement through a written instrument signed by both parties. The waiver of any rights or failure to act in a specific instance relates only to that instance and is not an agreement to waive any rights or fail to act in any other instance.

     10.9. Governing Law. This Agreement is governed by and construed in accordance with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. The parties may only bring legal action that arises out of or in connection with this Agreement in the Massachusetts Superior Court in Suffolk County.

10.10. Notice. Any notices required or permitted under this Agreement shall be in

     writing, shall specifically refer to this Agreement, and shall be sent by recognized national overnight courier, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

If to University:	If to Company:
Office of Technology Management	RXi Pharmaceuticals Corporation
University of Massachusetts	One Innovation Drive
333 South Street, Suite 400	Worcester, MA 01605
Shrewsbury, MA 01545
Attention: Executive Director	Attention: President

All notices under this Agreement are effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section 10.10.

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     10.11. Severability. If any provision of this Agreement is held invalid or unenforceable for any reason, the invalidity or unenforceability does not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach a modified agreement within sixty (60) days after the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in Article 9. While the dispute is pending resolution, this Agreement shall be construed as if the provision were deleted by agreement of the parties.

     10.12. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter.

     The parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

UNIVERSITY OF MASSACHUSETTS		RXI PHARMACEUTICALS CORP.
By:		By:
Name:	James P. McNamara, Ph.D.,	Name:	Tod Woolf, Ph.D.
Title:	Executive Director,	Title:	President & CEO
	Office of Technology Management
Date:		Date:

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EXHIBIT A

Patent Rights

UMMC 06-21

Invention Disclosure

Entitled: “Methods and Synthesis of Reagents to Treat ALS”
Tariq M. Rana, Ph.D. and Zuoshang Xu.

Provisional Application

Entitled: “Improved RNA Interference Agents for Therapeutic Use”
Tariq M. Rana, Ph.D., Filed 1/26/2006 – Application No. 60/762,957

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EX-10.6

Exhibit 10.6

EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of January 10, 2007 (the “Effective Date”), is between the University of Massachusetts (“University”), a public institution of higher education of the Commonwealth of Massachusetts as represented by its Worcester campus, and RXi Pharmaceuticals Corporation (“Company”), a Delaware corporation.

RECITALS

     WHEREAS, University owns intellectual property rights which relate to therapeutic applications of RNAi, as described in University’s invention disclosures numbered UMMC 03-68, entitled “Methods of Efficient siRNA Delivery in Human Cells — New Approaches for the Development of siRNA Therapeutics”; UMMC 06-38, entitled “Design, Synthesis, and Formulation of Nanotransporters for Efficient Nucleic Acids and other Pharmaceutics Delivery in Cells and Animals”; and UMMC 06-39, entitled “Therapeutic Silencing of Genes Involved in Cholesterol Biosynthesis and Other Metabolic Disorders by Chemically Modified siRNA and New Delivery Agents”;

     WHEREAS, Company is engaged in business relating to the development and commercialization of products that use or incorporate University’s intellectual property rights and has the capability of developing commercial applications of the intellectual property;

     WHEREAS, Company desires to obtain an exclusive license to University’s intellectual property rights, and University is willing to grant an exclusive license to its intellectual property rights under the following conditions so that these intellectual property rights may be developed to their fullest and the benefits enjoyed by the general public; and

     WHEREAS, the license that is granted in this Agreement promotes the development of publicly funded intellectual property to practical application for the public good.

     THEREFORE, University and Company agree as follows:

1. Definitions.

     1.1 “Affiliate” means an entity that controls, is controlled by, or is under common control with a party to this Agreement. The term “control” as used in the preceding sentence means possession of the power to direct or call for the direction of the management and policies of an entity, whether through ownership of a majority of the outstanding voting securities, by contract, or otherwise.

     1.2 “Companion UMass License Agreements” means this Agreement and the license agreements with University that are executed on the same date as this Agreement for University technologies, UMMC 03-75, UMMC 06-08, UMMC 07-08, and UMMC 06-21, collectively.

     1.3. “Confidential Information” means any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in

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connection with this Agreement that is specifically designated as confidential, as further described in Article 7.

     1.4. “Field” means Primary Field and Secondary Field collectively. Any commercial sale of research reagents covered by the Patent Rights is specifically excluded from the Field. The foregoing shall not be interpreted to prevent Company, its Affiliates or corporate partners from performing research related to discovery or development of Licensed Products for itself or any Affiliate or Sublicensee. (a) “Primary Field” means therapeutic, prophylactic, or diagnostic health care applications for amyotrophic lateral sclerosis (ALS), diabetes, and obesity, in humans. (b) “Secondary Field” means therapeutic, prophylactic, or diagnostic health care applications in humans that are not included in the Primary Field.

     1.5. “Licensed Product” means any product that cannot be developed, manufactured, used, or sold without infringing one or more Valid Claims.

     1.6. “Net Sales” means the gross amount billed or invoiced on sales of Licensed Products by Company, its Affiliates and Sublicensees, less the following: (a) customary trade, quantity, or cash discounts to non-affiliated brokers or agents to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of Company; and (d) outbound transportation costs prepaid or allowed and costs of insurance in transit.

     In any transfers of Licensed Products between any of Company and Affiliates and Sublicensees, Net Sales are calculated based on the final sale of the Licensed Product to an independent third party. If Company or an Affiliate or Sublicensee receives non-monetary consideration for any Licensed Products, Net Sales are calculated based on the fair market value of that consideration. If Company or its Affiliates or Sublicensees use or dispose of a Licensed Product in the provision of a commercial service, the Licensed Product is sold and the Net Sales are calculated based on the sales price of the Licensed Product to an independent third party during the same Royalty Period or, in the absence of sales, on the fair market value of the Licensed Product as determined by the parties in good faith.

     1.7. “Patent Rights” means the United States patent applications listed in Exhibit A, patent applications covering invention disclosures listed in Exhibit A, and any divisional, continuation, or continuation-in-part of those patent applications to the extent the claims are directed to subject matter specifically described therein as well as any patents issued on these patent applications and any reissues or reexaminations or extensions of the patents, and any foreign counterparts to any of the foregoing.

     1.8. “Royalty Period” means the partial calendar quarter commencing on the date on which the first Licensed Product is sold or used and every complete or partial calendar quarter thereafter during which either (a) this Agreement remains in effect or (b) Company has the right to complete and sell work-in-progress and inventory of Licensed Products pursuant to Section 8.5.

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     1.9. “Sublicense Agreement” means any agreement in which Company grants rights to the Patent Rights pursuant to Section 2.2.

     1.10. “Sublicense Income” means payments or other value that Company receives from a Sublicensee in consideration of the sublicense of the rights granted Company under Section 2.1., including without limitation, license fees, equity, milestone payments, and license maintenance fees, but excluding the following payments: (a) payments made in consideration for the issuance of equity or debt securities of Company at fair market value, (b) payments specifically committed to the development of Licensed Products, (c) reimbursements of patent expenses for the Patent Rights, and (d) royalties.

     1.11. “Sublicensee” means any permitted sublicensee of the rights granted Company under this Agreement, as further described in Section 2.2.

     1.12. “Valid Claim” means (a) a claim of an issued and unexpired patent covering the Patent Rights which has not been permanently revoked or held unenforceable or invalid by an unappealable or unappealed decision of a court or government agency of competent jurisdiction or (b) a claim of a pending patent application within the Patent Rights that has not been abandoned or finally disallowed without the possibility of appeal or refiling.

2. Grant of Rights

     2.1. License Grant. University grants to Company an exclusive, worldwide, royalty-bearing license in the Patent Rights to make, have made, use, offer to sell, sell, have sold and imported Licensed Products in the Field, including research for development of Licensed Products.

     2.2. Sublicenses. Company may grant sublicenses of its rights under Section 2.1. with the consent of University, which consent may not be unreasonably withheld or delayed. All Sublicense Agreements executed by Company pursuant to this Section 2.2 shall expressly bind the Sublicensee to the terms of this Agreement. Company shall promptly furnish University with a fully executed copy of any Sublicense Agreement.

     2.3. Retained Rights.

          (a) University. University retains the right to use the Patent Rights for academic research, teaching, and non-commercial patient care, without payment of compensation to Company. University may license its retained rights under this Subsection 2.3(a) to research collaborators of University faculty members, post-doctoral fellows, and students.

          (b) Federal Government. If the federal government has funded any invention claimed in the Patent Rights, this Agreement and the grant of any rights in Patent Rights are subject to the federal law set forth in 35 U.S.C. §§ 201-211 and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. Company acknowledges that these statutes and regulations reserve to the federal government a royalty-free, non-exclusive, non-transferrable license to practice any government-funded invention claimed in the Patent

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Rights. If any term of this Agreement fails to conform to those laws and regulations, the relevant term is invalid, and the parties shall modify the term pursuant to Section 10.11.

          (c) Other Organizations. University represents that all inventions claimed in the Patent Rights have been funded only by the federal government or University funds.

     2.4. Assignment of UMass/CytRx Licenses. On or before March 31, 2007, Company shall obtain assignment from CytRx Corporation of the license agreements that cover the following RNAi technologies that CytRx has licensed from University and the Carnegie Institution , UMMC 01-36, UMMC 02-01, UMMC 03-17, UMMC 03-33, UMMC 03-60, and UMMC 98-22, in a manner compliant with the relevant license agreements. University shall consent to any assignment as necessary. If Company does not obtain assignment of those license agreements on or before March 31, 2007, this Agreement immediately terminates.

3. Company Obligations Relating to Commercialization.

     3.1. Diligence Requirements. Company shall use diligent efforts or cause its Affiliates and Sublicensees to use diligent efforts to develop Licensed Products and to introduce Licensed Products into the commercial market. Thereafter, Company or its Affiliates or Sublicensees shall make Licensed Products reasonably available to the public. Specifically, Company shall fulfill the following obligations:

          (a) Financing the Company. On or before March 31, 2007, Company shall raise at least Fifteen Million Dollars ($15,000,000) from investors which may include CytRx Corporation (the “Initial Financing”) or this Agreement automatically terminates, and Company shall pay University Seventy-Five Thousand Dollars ($75,000) due April 1, 2007 (payable only once under the Companion UMass License Agreements). However, if Company demonstrates to the reasonable satisfaction of University that, on March 31, 2007, investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, University grants Company a thirty (30) day extension from March 31, 2007, to fulfill the financing obligation set forth in this Subsection 3.1(a). If Company can demonstrate to the reasonable satisfaction of University that investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, Company shall be granted up to two additional thirty (30) day extensions to fulfill the financing obligation by paying to University Twenty-Five Thousand Dollars ($25,000) each on the last day of the previous extension. The extension fees are non-refundable but creditable to the upfront license fee.

          (b) Within three years after the Effective Date, Company shall enter into a bona fide collaboration or strategic alliance with a third party commercial entity having a market capitalization greater than that of Company, such as, a large pharmaceutical or biotechnology company for research and/or development of Licensed Products in the Secondary Field. If Company does not satisfy the diligence obligation set forth in this Subsection 3.1(b) within three years after the Effective Date, University may convert the license for the Secondary Field to a non-exclusive license and offer licenses in the Secondary Field to the Patent Rights to third parties, unless Company pays University One Million Dollars ($1,000,000) within 30 days after

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the third anniversary of the Effective Date. If Company pays the one million dollar fee under this Subsection 3.1(b), Company has an additional three years to fulfill this diligence obligation, failing which University may convert the license for the Secondary Field to a non-exclusive license or terminate the license for the Secondary Field.

          (c) Development of Licensed Products.

               (i) On or before execution of this Agreement, Company shall furnish University with a written business plan under which Company intends as of the Effective Date to develop Licensed Products. University acknowledges that this business plan is a statement of Company’s current intention regarding the development of Licensed Product and that Company’s plans regarding the development of Licensed Products may change.

               (ii) Within sixty (60) days after the start of each calendar year, beginning on January 1, 2008, Company shall furnish University with a written report on progress during the prior year to develop and commercialize Licensed Products, including without limitation research and development, efforts to obtain regulatory approval, marketing, and sales figures. The Company shall also include in the report a discussion of its intended development and commercialization efforts and sales projections for the current year.

               (iii) Within five (5) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an IND or its equivalent with the FDA covering at least one (1) Licensed Product.

               (iv) Within thirteen (13) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an NDA or BLA with the FDA covering at least one (1) Licensed Product.

               (v) Within three (3) months after receiving FDA approval of the NDA or BLA for each Licensed Product, Company, its Affiliate or Sublicensee shall market the approved Licensed Product in the United States.

               (vi) Company or its partner shall spend at least {***} per calendar year for development of Licensed Products until the earlier of three years after the Effective Date or the commencement of a Phase II clinical trial on a Licensed Product.

               (vii) Within three years after the Effective Date, Company shall enter into a bona fide collaboration or strategic alliance with a third party commercial entity having a market capitalization greater than that of Company, such as, a large pharmaceutical or biotechnology company, for research and development of Licensed Products in a field that includes the Primary Field.

     3.2. If University determines that Company has not fulfilled its obligations under Subsection 3.1(c), University shall furnish Company with written notice of the determination. Within sixty (60) days after receipt of the notice, Company shall either (a) fulfill the relevant obligation or (b) negotiate with University a mutually acceptable schedule of revised diligence

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obligations, failing which University may, immediately upon written notice to Company, terminate this Agreement or convert the exclusive license into a non-exclusive license.

     3.3. Indemnification.

          (a) Indemnity. Company shall indemnify, defend, and hold harmless University and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether the action has any factual basis) concerning any product, process, or service that is made, used, or sold pursuant to any right or license granted under this Agreement. However, indemnification does not apply to any liability, damage, loss, or expense to the extent directly attributable to (i) the gross negligence or intentional misconduct of the Indemnitees or (ii) the settlement of a claim, suit, action, or demand by Indemnitees without the prior written approval of Company.

          (b) Procedures. The Indemnitees agree to provide Company with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to University to defend against any claim. The Indemnitees shall cooperate fully with Company in the defense and will permit Company to conduct and control the defense and the disposition of the claim, suit, or action (including all decisions relative to litigation, appeal, and settlement). However, any Indemnitee may retain its own counsel, at the expense of Company, if representation of the Indemnitee by the counsel retained by Company would be inappropriate because of actual or potential conflicts in the interests of the Indemnitee and any other party represented by that counsel. Company agrees to keep University informed of the progress in the defense and disposition of the claim and to consult with University regarding any proposed settlement.

          (c) Insurance. Company shall maintain insurance or self-insurance that is reasonably adequate to fulfill any potential obligation to the Indemnitees, but not less than one million dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence. Company shall provide University, upon request, with written evidence of insurance or self-insurance. Company shall continue to maintain the insurance or self-insurance after the expiration or termination of this Agreement while Company, its Affiliate or Sublicensee continues to make, use, or sell a Licensed Product and thereafter for five (5) years.

     3.4. Use of University Name. In accordance with Section 7.2., Company and its Affiliates and Sublicensees may not use the name “University of Massachusetts” or any variation of that name in connection with the marketing or sale of any Licensed Products.

     3.5. Marking of Licensed Products. To the extent commercially feasible and consistent with prevailing business practices, Company shall mark and shall cause its Affiliates and Sublicensees to mark all Licensed Products that are manufactured or sold under this

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Agreement with the number of each issued patent under the Patent Rights that applies to a Licensed Product.

     3.6. Compliance with Law. Company shall comply with, and shall ensure that its Affiliates and Sublicensees comply with, all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of Licensed Products. Company expressly agrees to comply with the following:

          (a) Company or its Affiliates or Sublicensees shall obtain all necessary approvals from the United States Food & Drug Administration and any similar foreign governmental authorities in which Company or Affiliate or Sublicensee intends to make, use, or sell Licensed Products.

          (b) Company and its Affiliates and Sublicensees shall comply with all United States laws and regulations controlling the export of commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries and foreign nationals. Company hereby gives written assurance that it will comply with and will cause its Affiliates and Sublicensees to comply with all United States export control laws and regulations, that it bears sole responsibility for any violation of those laws and regulations by itself or its Affiliates or Sublicensees, and that it will indemnify, defend, and hold University harmless (in accordance with Section 3.3.) for the consequences of any violation.

          (c) If any invention claimed in the Patent Rights has been funded by the United States government, and only to the extent required by applicable laws and regulations, Company agrees that any Licensed Products used or sold in the United States will be manufactured substantially in the United States or its territories. Current law provides that if domestic manufacture is not commercially feasible under the circumstances, University may seek a waiver of this requirement from the relevant federal agency on behalf of Company.

4. Consideration for Grant of Rights.

     4.1. License Fees.

          (a) On the Effective Date, Company shall pay to University {***}.

          (b) Within thirty (30) days after the closing of the Initial Financing, Company shall pay to University {***}.

The license fees are nonrefundable and are not creditable against any other payments due to University under this Agreement.

     4.2. Equity.

          (a) Within thirty (30) days after the closing of the Initial Financing, Company shall issue to University that number shares of Common Stock of Company having an aggregate

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valuation equal to {***} according to the Company valuation at the Initial Financing. In connection with the issuance of stock pursuant to this Subsection 4.2(a), the University agrees to become a party to other agreements of Company to the same extent (except any limitations relating to the University’s status as an agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock restriction agreement). University acknowledges that all certificates representing the shares described in this Subsection 4.2(a) may bear customary legends that require compliance with the Securities Act of 1933 and related state securities laws upon any transfer of the shares. Company shall use commercially reasonable efforts to register the stock issued to University pursuant to this Subsection 4.2(a) as soon as possible, subject to customary terms in connection with the registration.

          (b) Beginning on the Effective Date, Company shall notify University reasonably prior to each Company board of directors meeting and provide University with related documentation to the same extent that is supplied to the board of directors. Company shall permit one representative of University to attend all board of director meetings until the earlier of five (5) years after the Effective Date or the commencement by the Company of a Phase II clinical trial relating to a Licensed Product. The University attendee may not be a voting member of the board. The University attendee shall comply with restrictions to which other board members are subject, such as, confidentiality requirements relating to Board discussions and shall execute any agreement reasonably required by Company to effect those restrictions. The Company board of directors may exclude University representative from those portions of board meetings that pertain to compensation and personnel issues and as deemed reasonably necessary for the board members to exercise their fiduciary responsibilities and to comply with applicable laws and regulations.

     4.3. License Maintenance Fee. At the beginning of each calendar year during the term of this Agreement, commencing on January 1, 2008, Company shall pay to University {***}. This annual license maintenance fee is nonrefundable and is not creditable against any other payments due to University under this Agreement.

     4.4. Milestone Payments. Company shall pay University the following milestone payments within thirty (30) days after the occurrence of each event for each Licensed Product:

Event	Payment
The first issuance of any claim under any Patent Rights		{***}
Earlier of filing IND or 4 years after Effective Date		{***}
Earlier of initiation Phase II clinical trial or 6 years after the Effective Date		{***}
Earlier of initiation of Phase III clinical trial or 8 years after the Effective Date		{***}
Earlier of filing NDA or 11 years after the Effective Date		{***}
Commencement of Licensed Product marketing in US or 12 years after the Effective Date		{***}
Commencement of Licensed Product marketing in the EU or 12 years after the Effective Date		{***}

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If a milestone payment is made under this Section 4.4 based on the passage of time rather than on the achievement of a particular milestone event, that milestone payment is not due for the first Licensed Product with respect to the later achievement of that milestone event. These milestone payments are nonrefundable and are not creditable against any other payments due to University under this Agreement. For each Licensed Product, Company shall make all milestone payments, even if an earlier milestone event has not occurred. For example, if Company proceeds from Phase I clinical trial directly to Phase III, the milestone payments for both Phase II and III are due upon achievement of the Phase III milestone event. Also, if Company uses a Phase II clinical trial as a registration trial and proceeds directly to NDA submission without performing a Phase III trial, then upon filing of the NDA, both the Phase III and NDA milestone payments are due.

     4.5. Royalties. Company shall pay to University a royalty of {***} of Net Sales.

     4.6. Minimum Royalty. Within sixty (60) days after the beginning of each calendar year during the term of this Agreement, beginning January 1, 2012, Company shall pay to University a minimum royalty of {***}. Company may credit the minimum royalty paid under this Section 4.6 against actual royalties due and payable for the same calendar year. Waiver of any minimum royalty payment by University is not a waiver of any subsequent minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day period, that failure is a material breach of its obligations under this Agreement, and University may terminate this Agreement in accordance with Section 8.3.

     4.7. Sublicense Income. Company shall pay University the following percentages of all Sublicense Income:

          (a) {***} for Sublicense Agreements that are executed by Company from January 1, 2007 through December 31, 2007;

          (b) {***} for Sublicense Agreements that are executed by Company from January 1, 2008 through December 31, 2008; and

          (c) {***} for Sublicense Agreements that are executed by Company from and after January 1, 2009.

Sublicense Income is due within sixty (60) days after Company receives the relevant payment from the Sublicensee. If Sublicense Income is payable by Company for any one Sublicense Agreement under more than one of the Companion UMass License Agreements and the license agreements assigned to Company pursuant to Section 2.4 (“Assigned License Agreements”), Company shall pay the highest rate of Sublicense Income among the Companion UMass License Agreements and the Assigned License Agreements. That one payment satisfies the payment requirements for the applicable Sublicense Agreement under each of the Companion UMass License Agreements and Assigned License Agreements.

     4.8. Third-Party Royalties. As long as Company remains the exclusive licensee of the Patent Rights in any portion of the Field, if Company is legally required to make royalty payments to one or more third parties in order to practice the Patent Rights granted under this

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Agreement in the portion of the Field for which the license is exclusive, Company may offset up to {***} of third-party payments against royalty payments that are due to University in the same Royalty Period. However, the royalty payments under Section 4.5., may never be reduced by more than {***} in any Royalty Period.

5. Royalty Reports; Payments; Records.

     5.1. First Sale. Company shall report to University the date of first commercial sale of each Licensed Product within thirty (30) days after occurrence in each country.

     5.2. Reports and Payments.

          (a) Within sixty (60) days after the conclusion of each Royalty Period, Company shall deliver to University a report containing the following information:

               (i) the number of Licensed Products sold to independent third parties in each country and the number of Licensed Products used by Company, its Affiliates and Sublicensees in the provision of services in each country;

               (ii) the gross sales price for each Licensed Product by Company, its Affiliates and Sublicensees during the applicable Royalty Period in each country;

               (iii) calculation of Net Sales for the applicable Royalty Period in each country, including a listing of applicable deductions;

               (iv) total royalty payable on Net Sales in United States dollars, together with the exchange rates used for conversion; and

               (v) Sublicense Income due to University for the applicable Royalty Period from each Sublicensee.

          (b) Concurrent with this report, Company shall remit to University any payment due for the applicable Royalty Period. If no royalties are due to University for any Royalty Period, the report shall so state.

     5.3. Payments in United States Dollars. Company shall make all payments in United States dollars. Company shall convert foreign currency to United States dollars at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the calendar quarter preceding the applicable Royalty Period. Company may not deduct exchange, collection, or other charges.

     5.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a particular country, conversion into United States dollars or transfer of funds of a convertible currency to the United States is restricted or forbidden, Company shall give University prompt written notice of the restriction within the sixty-day payment deadline described in Section 5.2. Company shall pay any amounts due University through whatever lawful methods University reasonably designates. However, if University fails to designate a payment method within thirty

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(30) days after University is notified of the restriction, Company may deposit payment in local currency to the credit of University in a recognized banking institution selected by Company and identified by written notice to University, and that deposit fulfills all obligations of Company to University with respect to that payment.

     5.5. Records. Company shall maintain and shall cause its Affiliates and Sublicensees to maintain complete and accurate records of Licensed Products that are made, used, or sold under this Agreement and any amounts payable to University in relation to Licensed Products with sufficient information to permit University to confirm the accuracy of any reports delivered to University under Section 5.2. The relevant party shall retain records relating to a given Royalty Period for at least three (3) years after the conclusion of that Royalty Period, during which time University may, at its expense, cause its internal accountants or an independent, certified public accountant to inspect records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement. The accountant may not disclose to University any information other than information relating to accuracy of reports and payments delivered under this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit. If any audit performed under this Section 5.5 reveals an underpayment in excess of ten percent (10%) in any Royalty Period, Company shall bear the full cost of the audit. University may exercise its rights under this Section 5.5 only once every year and only with reasonable prior notice to Company.

     5.6. Late Payments. Any payments by Company that are not paid on or before the date payments are due under this Agreement bear interest at 1.5% per month, calculated on the number of days that payment is delinquent.

     5.7. Method of Payment. All payments under this Agreement should be made to the “University of Massachusetts” and sent to the address identified below. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment satisfies.

     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to University under this Agreement may not be reduced by reason of any withholding or similar taxes applicable to payments to University. Therefore all amounts owed to University under this Agreement are net amounts and shall be grossed-up to account for any withholding taxes, value-added taxes or other taxes, levies or charges.

6. Patents and Infringement.

     6.1. Responsibility for Patent Rights.

          (a) University has primary responsibility at the expense of Company for the preparation, filing, prosecution, and maintenance of all Patent Rights, using patent counsel reasonably acceptable to Company. University shall consult with Company as to the preparation, filing, prosecution, and maintenance of all Patent Rights reasonably prior to any deadline or action with the United States Patent & Trademark Office or any foreign patent office and shall furnish Company with copies of relevant documents reasonably in advance of

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consultation. University shall consider in good faith any comments of Company on any patent filings for the Patent Rights.

          (b) If University desires to abandon any patent or patent application within the Patent Rights, University shall provide Company with reasonable prior notice of the intended abandonment, and Company may, at its expense, prepare, file, prosecute, and maintain the relevant Patent Rights.

     6.2. Cooperation. Each party shall provide reasonable cooperation in the preparation, filing, prosecution, and maintenance of all Patent Rights. Cooperation includes, without limitation, promptly informing the other party of matters that may affect the preparation, filing, prosecution, or maintenance of Patent Rights (such as, becoming aware of an additional inventor who is not listed as an inventor in a patent application).

     6.3. Payment of Expenses.

          (a) Within thirty (30) days after the Effective Date, Company shall pay the University {***} to reimburse University for its actual expenses incurred as of the Effective Date in connection with obtaining the Patent Rights. If this Agreement is terminated according to the terms of Subsection 3.1(a), University shall reimburse Company for any patent expenses that are paid pursuant to this Subsection 6.3(a), if it enters into a license agreement with another party for the Patent Rights in the Field.

          (b) Within thirty (30) days after University invoices Company, Company shall reimburse University for all patent-related expenses that have not been paid under Subsection 6.3(a) and that are incurred by University pursuant to Section 6.1. Company may elect, upon sixty (60) days’ written notice to University, to cease payment of the expenses associated with obtaining or maintaining patent protection for one or more Patent Rights in one or more countries. If Company elects to cease payment of any patent expenses, Company loses all rights under this Agreement with respect to the particular Patent Rights in those one or more countries.

     6.4. Infringement.

          (a) Notification of Infringement. Each party agrees to provide written notice to the other party promptly after becoming aware of any infringement of the Patent Rights.

          (b) Company Right to Prosecute. As long as Company remains the exclusive licensee of the Patent Rights in the Field, Company may, under its own control and at its own expense, prosecute any third party infringement of the Patent Rights in the Field or, together with licensees of the Patent Rights in other fields (if any), defend the Patent Rights in any declaratory judgment action brought by a third party which alleges invalidity, unenforceability, or infringement of the Patent Rights. Prior to commencing any action, Company shall consult with University and shall consider the views of University regarding the advisability of the proposed action and its effect on the public interest. Company may not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Subsection 6.4(b) without the prior written consent of University, which consent may not be unreasonably withheld or delayed. Any recovery obtained in an action under this Subsection 6.4(b) shall be

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distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the action (including the amount of any royalty payments withheld from University as described below); (ii) as to ordinary damages, Company shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales (whichever measure of damages the court applied), less a reasonable approximation of the royalties that Company would have paid to University if Company had sold the infringing products and services rather than the infringer; and (iii) as to special or punitive damages, the parties shall share equally in any award. Company may offset a total of fifty percent (50%) of any expenses incurred under this Subsection 6.4(b) against any royalty payments due to University under this Agreement. However, Company may never reduce royalty payments under Section 4.5. by more than fifty percent (50%) in any Royalty Period.

          (c) University as Indispensable Party. University shall permit any action under Subsection 6.4(b) to be brought in its name if required by law, provided that Company shall hold University harmless from, and if necessary indemnify University against, any costs, expenses, or liability that University may incur in connection with the action.

          (d) University Right to Prosecute. If Company fails to initiate an infringement action within a reasonable time after it first becomes aware of the basis for the action, or to answer a declaratory judgment action within a reasonable time after the action is filed, University may prosecute the infringement or answer the declaratory judgment action under its sole control and at its sole expense, and any recovery obtained shall be given to University. If University takes action under this Subsection 6.4(d), University shall keep Company reasonably informed of material actions taken by University pursuant to the infringement or declaratory action.

          (e) Cooperation. Both parties shall cooperate fully in any action under this Section 6.4. which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any reasonable costs and expenses incurred by the cooperating party in connection with providing assistance.

7. Confidential Information; Publications; Publicity.

     7.1. Confidential Information.

          (a) Designation. The Disclosing Party shall mark Confidential Information that is disclosed in writing with a legend indicating its confidential status (such as, “Confidential” or “Proprietary”). The Disclosing party shall document Confidential Information that is disclosed orally or visually in a written notice and deliver the notice to the Receiving Party within thirty (30) days of the date of disclosure. The notice shall summarize the Confidential Information that was disclosed and reference the time and place of disclosure.

          (b) Obligations. For five (5) years after disclosure of any portion of Confidential Information, the Receiving Party shall (i) maintain Confidential Information in confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its trustees or directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential nature of Confidential Information and

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who need to know Confidential Information for the purposes of this Agreement; (ii) use Confidential Information solely for the purposes of this Agreement; and (iii) allow its trustees or directors, officers, employees, consultants, and advisors to reproduce the Confidential Information only to the extent necessary for the purposes of this Agreement, with all reproductions being Confidential Information.

          (c) Exceptions. The obligations of the Receiving Party under Subsection 7.1(b) do not apply to the extent that the Receiving Party can demonstrate that Confidential Information (i) was in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party; (iii) was already known or independently developed or discovered by the Receiving Party without use of the Confidential Information; (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a third party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to the Confidential Information; or (v) is required to be disclosed to comply with applicable laws or regulations or with a court or administrative order, provided that the Disclosing Party receives reasonable prior written notice of the disclosure.

          (d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party (or a third party entrusting its own information to the Disclosing Party) owns the Confidential Information in the possession of the Receiving Party. Upon expiration or termination of this Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of the Receiving Party, except that the Receiving Party may retain one copy of the Confidential Information in the possession of its legal counsel solely for the purpose of monitoring its obligations under this Agreement.

     7.2. Publicity Restrictions. Company may not use the name of University or any of its trustees, officers, faculty, students, employees, or agents, or any adaptation of their names, or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of University. The foregoing notwithstanding, Company or CytRx Corporation may disclose that information without the consent of University in any prospectus, offering memorandum, or other document or filing required by applicable securities laws or other applicable law or regulation, provided that Company provides University at least ten (10) days (or a shorter period in order to enable Company to make a timely announcement to fulfill applicable securities laws or other applicable law or regulation, while affording University the maximum feasible time to review the announcement) prior written notice of the proposed text for the purpose of giving University the opportunity to comment on the text.

8. Term and Termination.

     8.1. Term. This Agreement commences on the Effective Date and remains in effect until the expiration of all issued patents within the Patent Rights unless earlier terminated in accordance with the provisions of this Agreement.

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     8.2. Voluntary Termination by Company. Company may terminate this Agreement for any reason upon ninety (90) days’ prior written notice to University.

     8.3. Termination for Default. If either party commits a material breach of its obligations under this Agreement and fails to cure that breach within sixty (60) days after receiving written notice of the breach, the other party may terminate this Agreement immediately upon written notice to the party in breach. If the alleged breach involves nonpayment of any amounts due University under this Agreement, Company has only one opportunity to cure a material breach for which it receives notice as described above. Any subsequent material breach by Company will entitle University to terminate this Agreement immediately upon written notice to Company, without the sixty-day cure period.

     8.4. Force Majeure. Neither party is responsible for delays resulting from causes beyond its reasonable control, including without limitation fire, explosion, flood, war, strike, act of terrorism or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove those causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the causes are removed.

     8.5. Effect of Termination. The following provisions survive the expiration or termination of this Agreement: Articles 1 and 9; Sections 3.3., 3.4, 3.6., 5.2. (obligation to provide final report and payment), 5.3., 5.4., 5.5., 5.6., 5.7., 5.8., 6.4., 7.1., 7.2., 8.5 and 10.9. Upon the early termination of this Agreement, Company and its Affiliates and Sublicensees may complete and sell any work-in-progress and inventory of Licensed Products that exist as of the effective date of termination, provided that (a) Company is current in payment of all amounts due University under this Agreement, (b) Company pays University the applicable royalty and Sublicense Income on sales of Licensed Products in accordance with the terms of this Agreement, and (c) Company and its Affiliates and Sublicensees complete and sell all work-in-progress and inventory of Licensed Products within six (6) months after the effective date of termination. Upon the expiration or termination of this Agreement, University may enter into a license agreement directly with each Sublicensee on terms that are reasonably negotiated directly with each Sublicensee. Notwithstanding the foregoing, upon the expiration or termination of this Agreement, University shall enter into a license agreement directly with each Sublicensee on the same terms as each Sublicense Agreement that is in effect. However, the University and Sublicensee shall modify each Sublicense Agreement to the extent necessary to ensure that University does not assume any greater obligations under the license agreement than those set forth in this Agreement and that Sublicensee complies with all obligations of the Company under this Agreement.

9. Dispute Resolution.

     9.1. Procedures Mandatory. The parties shall resolve any dispute arising out of or relating to this Agreement solely by means of the procedures set forth in this Article. These procedures constitute legally binding obligations that are an essential provision of this Agreement. If either party fails to observe the procedures of this Article, as modified by their written agreement, the other party may bring an action for specific performance in any court of competent jurisdiction.

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     9.2. Dispute Resolution Procedures.

          (a) Negotiation. In the event of any dispute arising out of or relating to this Agreement, the affected party shall notify the other party, and the parties shall attempt in good faith to resolve the matter within ten (10) days after the date of notice (the “Notice Date”). Any disputes not resolved by good faith discussions shall be referred to senior executives of each party, who shall meet at a mutually acceptable time and location within thirty (30) days after the Notice Date and attempt to negotiate a settlement.

          (b) Mediation. If the matter remains unresolved within sixty (60) days after the Notice Date, or if the senior executives fail to meet within thirty (30) days after the Notice Date, either party may initiate mediation upon written notice to the other party, and both parties shall engage in a mediation proceeding under the then current CPR Institute for Dispute Resolution (“CPR”) Model Procedure for Mediation of Business Disputes. Specific provisions of this Subsection 9.2(b) override inconsistent provisions of the CPR Model Procedure. The parties shall select the mediator from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a mediator within ninety (90) days after the Notice Date, then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation until one of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse; (iii) the parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a settlement within one hundred twenty (120) days after the Notice Date.

          (c) Trial Without Jury. If the parties fail to resolve the dispute through mediation, or if neither party elects to initiate mediation, each party may pursue any other remedies legally available to resolve the dispute. However, the parties expressly waive the right to a jury trial in the legal proceeding under this Subsection 9.2(c).

     9.3. Preservation of Rights Pending Resolution.

          (a) Performance to Continue. Each party shall continue to perform its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. However, a party may suspend performance of its obligations during any period in which the other party fails or refuses to perform its obligations.

          (b) Provisional Remedies. Although the procedures specified in this Article are the exclusive procedures for resolution of disputes arising out of or relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, that action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement.

          (c) Statute of Limitations. The parties agree that all applicable statutes of limitation and time-based defenses (such as, estoppel and laches) are tolled while the procedures set forth in Subsections 9.2.(a) and 9.2(b) are pending. The parties shall take any actions necessary to effectuate this result.

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10. Miscellaneous.

     10.1. Representations and Warranties. University represents that its employees have assigned to University their entire right, title, and interest in the Patent Rights, and that it has authority to grant the rights and licenses set forth in this Agreement, and that it has not granted any rights in the Patent Rights to any third party that is inconsistent with the grant of rights in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNING THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Specifically, University makes no warranty or representation (a) regarding the validity or scope of the Patent Rights, (b) that the exploitation of the Patent Rights or any Licensed Product will not infringe any patents or other intellectual property rights of a third party, and (c) that any third party is not currently infringing or will not infringe the Patent Rights.

     10.2. Compliance with Law and Policies. Company agrees to comply with applicable law and the policies of University in the area of technology transfer and shall promptly notify University of any violation that Company knows or has reason to believe has occurred or is likely to occur. The University policies currently in effect at the Worcester campus are the Intellectual Property Policy, Policy on Conflicts of Interest Relating to Intellectual Property and Commercial Ventures, and Policy on Faculty Consulting and Outside Activities.

     10.3. Tax-Exempt Status. Company acknowledges that University, as a public institution of the Commonwealth of Massachusetts, is an exempt organization under the United States Internal Revenue Code of 1986, as amended. Company also acknowledges that certain facilities in which the licensed inventions were developed may have been financed through offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to University reasonably determines, that any term of this Agreement jeopardizes the tax-exempt status of University or the bonds used to finance University facilities, the relevant term is invalid and shall be modified in accordance with Section 10.11.

     10.4. Counterparts. This Agreement may be executed in one or more counterparts, each of which is an original, and all of which together are one instrument.

     10.5. Headings. All headings are for convenience only and do not affect the meaning of any provision of this Agreement.

     10.6. Binding Effect. This Agreement is binding upon and inures to the benefit of the parties and their respective permitted successors and assigns.

     10.7. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party, which consent may not be unreasonably withheld or delayed. Notwithstanding the foregoing, this Agreement may be assigned by either party in connection with a merger, consolidation, sale of all of the equity interests of the party, or a sale of all or substantially all of the assets of the party to which this Agreement relates.

     10.8. Amendment and Waiver. The parties may only amend, supplement, or otherwise modify this Agreement through a written instrument signed by both parties. The waiver of any

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rights or failure to act in a specific instance relates only to that instance and is not an agreement to waive any rights or fail to act in any other instance.

     10.9. Governing Law. This Agreement is governed by and construed in accordance with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. The parties may only bring legal action that arises out of or in connection with this Agreement in the Massachusetts Superior Court in Suffolk County.

     10.10. Notice. Any notices required or permitted under this Agreement shall be in writing, shall specifically refer to this Agreement, and shall be sent by recognized national overnight courier, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

If to University:	If to Company:
Office of Technology Management	RXi Pharmaceuticals Corporation
University of Massachusetts	One Innovation Drive
333 South Street, Suite 400	Worcester, MA 01605
Shrewsbury, MA 01545
Attention: Executive Director	Attention: President

All notices under this Agreement are effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section 10.10.

     10.11. Severability. If any provision of this Agreement is held invalid or unenforceable for any reason, the invalidity or unenforceability does not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach a modified agreement within sixty (60) days after the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in Article 9. While the dispute is pending resolution, this Agreement shall be construed as if the provision were deleted by agreement of the parties.

     10.12. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter.

     The parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

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UNIVERSITY OF MASSACHUSETTS		RXI PHARMACEUTICALS CORP.
By:		By:
Name:	James P. McNamara, Ph.D.,	Name:	Tod Woolf, Ph.D.
Title:	Executive Director,	Title:	President & CEO
	Office of Technology Management
Date:		Date:

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EXHIBIT A

Patent Rights

UMMC 03-68

     Invention Disclosure

Entitled: “Methods of efficient siRNA delivery in human cells — new approaches for the development of siRNA therapeutics”

     Provisional Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Filed 11/26/2002 – Application No. 60/430,530

     U.S. Utility Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Filed 11/24/2003 – Application No. 10/772,176

     PCT Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Filed 11/24/2003 – Application No. PCT/US2003/037886

     European Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Priority Filing Date: 11/24/2003 – Application No. 03796481.4

     Australian Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Priority Filing Date: 11/24/2003 – Application No. 2003298724

     Canadian Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Priority Filing Date: 11/24/2003 – Application No. 2,506,714

     Hong Kong Application

Entitled: “Delivery of siRNAs”
Tariq M. Rana, Ph.D.,
Priority Filing Date: 11/24/2003 – Application No. 06104637.5

Page 20 of 21

UMMC 06-38

     Invention Disclosure

Entitled: “Design, Synthesis, and Formulation of Nanotransporters for Efficient
Nucleic Acids and other Pharmaceutics Delivery in Cells and Animals

     Provisional Application

Entitled: “Nanotransporters for Efficient Delivery of Nucleic Acid and Other
Pharmaceutical Agents”
Tariq M. Rana, Ph.D.,
Filed 1/26/2006 – Application No. 60/762,956

UMMC 06-39

     Invention Disclosure

Entitled: “Therapeutic Silencing of Genes Involved in Cholesterol Biosynthesis and
Other Metabolic Disorders by Chemically Modified siRNA and New Delivery Agents”

     Provisional Application

Entitled: “Improved RNA Interference Agents for Use in Therapy of Metabolic
Disorders”
Tariq M. Rana, Ph.D.,
Filed 1/26/2006 – Application No. 60/762,951

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EX-10.7

Exhibit 10.7

INVENTION DISCLOSURE AGREEMENT

     This Agreement, effective as of the Effective Date, as defined below, is between the University of Massachusetts, as represented solely by the Medical School at its Worcester campus (the “Medical School”), a public institution of higher education of the Commonwealth of Massachusetts, and RXi Pharmaceuticals Corporation (“Company”), a Delaware corporation.

R E C I T A L S

     Whereas, the Company would like to receive disclosures of future Medical School RNAi technologies for the purpose of determining its interest in securing an option for the first right to negotiate with Medical School for a license to said RNAi technologies;

     Whereas, Company is engaged in business relating to the development and commercialization of products that use or incorporate RNAi technologies and is developing the capability of developing commercial applications of RNAi technologies; and

     Whereas, the Medical School is willing to disclose RNAi technologies to Company according to the terms of this Agreement.

     Therefore, Medical School and Company agree as follows:

1. Disclosure.

     1.1. Definitions.

          (a) “Effective Date” means the date of the closing of the Initial Financing, as defined below.

          (b) “Field” means RNAi technologies for human therapeutic use.

          (c) “Initial Financing” means the financing of the Company of at least Fifteen Million US Dollars ($15,000,000) from investors that may include CytRx Corporation.

          (d) “Patent Rights” means invention disclosures, patent applications, and patents that the Medical School has the authority to license and are not obligated to other parties (e.g., by sponsored research agreement, material transfer agreements,) for license by the Medical School within the Field, but specifically excludes inventions or other technology developed by laboratories of Howard Hughes Medical Institute investigators, whether resulting in invention disclosures, patent applications, patents or other tangible media.

     1.2. Disclosure. After the internal disclosure is accepted by Medical School according to Medical School policy, the Medical School shall promptly disclose to Company in reasonable detail in writing Patent Rights in the Field that are conceived or reduced to practice by the Medical School during the term of this Agreement.

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     1.3. MEDICAL SCHOOL MAKES NO WARRANTIES CONCERNING THE PATENT RIGHTS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Specifically, Medical School makes no warranty or representation (a) regarding the validity, scope, or patentability of any Patent Rights, (b) that the exploitation of the Patent Rights will not infringe any patents or other intellectual property rights of a third party, and (c) that any third party is not currently infringing or will not infringe the Patent Rights.

2. Consideration for Disclosure Right. In consideration of the rights granted Company under this Agreement, Company shall pay the following to Medical School as of the Effective Date One Million One Hundred Thousand US Dollars ($1,100,000) according to the following schedule.

     2.1. Eight Hundred Thousand US Dollars ($800,000) within thirty (30) days of the Effective Date, payable in cash or that number of shares of Common Stock of Company having an aggregate valuation equal to Eight Hundred Thousand US dollars ($800,000) according to the Company valuation at the Initial Financing. In connection with the issuance of stock pursuant to this Section 2.1, Medical School agrees to become a party to other agreements of Company to the same extent (except any limitations relating to the Medical School’s status as an agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock restriction agreement). University acknowledges that all certificates representing the shares described in this Section 2.1 may bear customary legends requiring compliance with the Securities Act of 1933 and related state securities laws upon any transfer of such shares. Company shall use commercially reasonable efforts to register the stock issued to Medical School pursuant to this Section 2.1 as soon as possible, subject to customary terms in connection with such transaction.

     2.2. Three Hundred Thousand US Dollars ($300,000), payable annually in three (3) One Hundred Thousand US Dollar ($100,000) payments within thirty (30) days of the Effective Date and each anniversary of the Effective Date during the term of this Agreement.

     3. Option to License Patent Rights.

     3.1. Within sixty (60) days after disclosure pursuant to Section 1.2 (the “Option Period”), Company may choose to negotiate a license for the Patent Rights after Company pays the Medical School a nonrefundable “Option Fee” of Twenty-Five Thousand Dollars ($25,000) within the Option Period. After timely receipt of the Option Fee, Medical School grants Company a first option to negotiate a worldwide, royalty-bearing, exclusive license under its rights in the Patent Rights within the Field (the “Option Right”).

     3.2. If Company elects not to exercise the Option Right, or fails to exercise the Option Right during the Option Period, Medical School may license its rights under the Patent Rights to any third party without recourse by or obligation to Company.

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     3.3. If Company does elect to exercise the Option Right, Medical School and Company shall negotiate in good faith a license agreement containing commercially reasonable terms in the form of Medical School’s then current standard license agreement. If Medical School and Company do not reach agreement within one hundred twenty (120) days after Company exercises the Option Right (the “Negotiation Period”), Medical School may offer its rights in the Patent Rights to any third parties without recourse by or obligation to Company. However, if the parties fail to reach an agreement within the Negotiation Period, the following terms apply:

          a. Within five (5) business days after expiration of the Negotiation Period, Company may elect to have the terms of the license determined by arbitration by delivering written notice of that election to Medical School. If Company elects arbitration, the arbitration shall be conducted in Boston, Massachusetts, by one (1) independent arbitrator who is experienced in licensing biotechnology intellectual property. The arbitrator shall be chosen by mutual consent of the parties within thirty (30) days after Company elects arbitration. Company shall pay the first Ten Thousand Dollars ($10,000) of the expenses of the arbitration, and thereafter the parties shall share the expenses equally. Unless Company rejects the arbitrator’s decision or fails to enter into the license agreement within ten (10) days after the arbitrator’s decision, each party is responsible for its own legal expenses in association with the arbitration. The arbitration shall be in a format in which the arbitrator shall rule that either Company’s or Medical School’s proposed terms are the final terms. The arbitrator shall issue its ruling to the parties within sixty (60) days of being selected. Once the terms have been established by the arbitrator and delivered in writing to Company, Company has ten (10) days to enter into the license agreement on those terms or to reject those terms. If Company rejects those terms or fails to enter into the license agreement within ten (10) days after the arbitrator’s decision, (a) Medical School thereafter is free to license its rights under the Patent Rights to any third party without further notice to Company, and (b) Company shall reimburse Medical School for its out-of-pocket arbitration expenses.

          b. If Company does not elect arbitration pursuant to Subsection 3.3(a), Medical School is free to license its rights under the Patent Rights to any third party.

4. Patent Rights. Medical School is responsible at its expense and in its sole discretion for the preparation, filing, prosecution, and maintenance of the optioned Patent Rights.

5. Information Exchange.

     5.1. Purpose. During the term of this Agreement, Company and Medical School are likely to exchange information relating to the Patent Rights. The following provisions are intended to protect the confidential or proprietary information of each party.

     5.2. Definition of Confidential Information. “Confidential Information” means any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in connection with this Agreement, provided that the information is specifically designated as confidential. Confidential Information includes, without limitation, any information relating to the Patent Rights. The Disclosing Party shall

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mark Confidential Information that is disclosed in writing with a legend indicating its confidential status (such as, “Confidential” or “Proprietary”). The Disclosing Party shall document Confidential Information that is disclosed orally or visually in a written notice and deliver it to the Receiving Party within thirty (30) days after the disclosure. The notice shall summarize the Confidential Information and reference the time and place of disclosure.

     5.3. Obligations. For five (5) years after disclosure of any portion of Confidential Information, the Receiving Party shall (a) maintain Confidential Information in confidence, except that the Receiving Party may disclose or permit the disclosure of any Confidential Information to its directors, officers, employees, consultants, and advisors who are obligated to maintain the confidential nature of Confidential Information and who need to know Confidential Information for the purposes of this Agreement; (b) use Confidential Information solely for the purposes of this Agreement; and (c) allow its trustees or directors, officers, employees, consultants, and advisors to reproduce the Confidential Information only to the extent necessary for the purposes of this Agreement, with all reproductions being Confidential Information.

     5.4. Exceptions. The obligations of the Receiving Party under Section 5.3. above do not apply to the extent the Receiving Party can demonstrate that the Confidential Information (a) was in the public domain prior to the time of its disclosure under this Agreement; (b) entered the public domain after the time of its disclosure under this Agreement through means other than an unauthorized disclosure resulting from an act or omission by the Receiving Party; (c) was independently developed or discovered by the Receiving Party without use of the Confidential Information as evidenced by written records of Company; (d) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a third party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to the Confidential Information; or (e) is required to be disclosed to comply with applicable laws or regulations, or with a court or administrative order, provided that the Disclosing Party receives reasonable prior written notice of the disclosure.

     5.5. Ownership and Return. The Receiving Party acknowledges that the Disclosing Party (or any third party entrusting its information to the Disclosing Party) owns its Confidential Information in the possession of the Receiving Party. Upon the expiration or termination of this Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of the Receiving Party, except the Receiving Party may retain one copy of the Confidential Information in the possession of its legal office solely for the purpose of monitoring its obligations under this Agreement.

6. Term and Termination.

     6.1. Term. This Agreement commences on the Effective Date and remains in effect for three (3) years, unless earlier terminated in accordance with the provisions of this Agreement.

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     6.2. Termination for Default. If either party commits a material breach of its obligations under this Agreement and fails to cure that breach within sixty (60) days after receiving written notice thereof, the other party may terminate this Agreement immediately upon written notice to the party in breach. If the alleged breach involves nonpayment of any amounts due Medical School under this Agreement, Company has only one opportunity to cure a material breach for which it receives notice as described above; any subsequent material breach by Company will entitle Medical School to terminate this Agreement immediately upon written notice to Company, without the sixty-day cure period.

     6.3. Failure to Complete Financing. Notwithstanding any other provision of this Agreement, if the Initial Financing has not been completed by June 30, 2007, this Agreement automatically terminates immediately without notice or possibility of cure.

     6.4. Termination by Company. Company may elect to terminate this Agreement at any time upon prior, written notice to Medical School.

     6.5. Effect of Termination. The following provisions survive the expiration or termination of this Agreement: Articles 3 (only for Patent Rights optioned before expiration of term, unless this Agreement is terminated for material breach by Company), and 5; Sections 6.5, 7.1., 7.2., and 7.6.

     6.6. Force Majeure. Neither party is responsible for delays resulting from causes beyond its reasonable control, including without limitation, fire, explosion, flood, war, strike, terrorism, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove those causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever the causes are removed.

7. Miscellaneous.

     7.1. Publicity Restrictions. Neither party may use the name of the other or any of its trustees, officers, faculty, students, employees, or agents, or any adaptation of those names, or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of the other party. The foregoing notwithstanding, (a) Company or CytRx Corporation may disclose such information without the consent of Medical School in any prospectus, offering memorandum, or other document or filing required by applicable securities laws or other applicable law or regulation, provided that Company or CytRx Corporation shall provide Medical School at least ten (10) days (or a shorter period in order to enable Company to make a timely announcement to fulfill applicable securities laws or other applicable law or regulation, while affording Medical School the maximum feasible time to review the announcement) prior written notice of the proposed text for the purpose of giving Medical School the opportunity to comment on the text, and (b) Medical School may disclose the existence of the agreement (but not its terms) according to its customary practice of disclosing its research sponsors and collaborators.

     7.2. Research Partially Funded by Grants.

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          (a) Federal Government. To the extent that any invention claimed in the Patent Rights has been funded by the federal government, this Agreement and the grant of any rights in the invention are subject to and governed by federal law as set forth in 35 U.S.C. §§ 201-211, and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. If any term of this Agreement fails to conform to those laws and regulations, the relevant term is invalid and the parties shall modify the term pursuant to Section 7.8.

          (b) Other Organizations. To the extent that any invention claimed in the Patent Rights has been funded by a non-profit organization, state or local agency, or commercial entity, this Agreement and the grant of any rights in the invention is subject to and governed by the terms of the applicable research grant. If any term of this Agreement fails to conform to those terms, the relevant term is invalid and the parties shall modify the term pursuant to Section 7.8.

     7.3. Tax-Exempt Status. Company acknowledges that Medical School, as a public institution of the Commonwealth of Massachusetts, is an exempt organization under the United States Internal Revenue Code. Company also acknowledges that certain facilities in which the inventions subject to the license disclosure were developed may have been financed through offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to Medical School reasonably determines, that any term of this Agreement jeopardizes the tax-exempt status of Medical School or the bonds used to finance Medical School facilities, the relevant term is invalid and the parties shall modify the term pursuant to Section 7.8.

     7.4. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other party, including without limitation, in connection with a merger, consolidation, or sale of all or substantially all of its assets or that portion of its business (including any subsidiary) to which this Agreement relates

     7.5. Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. Any waiver of any rights or failure to act in a specific instance relates only to that instance and is not an agreement to waive any rights or fail to act in any other instance, whether or not similar.

     7.6. Governing Law. This Agreement is governed by and construed in accordance with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. Any action regarding this Agreement shall be brought in Massachusetts Superior Court, Suffolk County.

     7.7. Notice. Any notices required or permitted under this Agreement shall be in writing, shall specifically refer to this Agreement and Agreement reference number (as provided in the Agreement header), and shall be sent by recognized national overnight courier or registered or certified mail, postage prepaid, return receipt requested, to the following addresses of the parties:

If to Medical School:	If to Company:
Office of Technology Management	RXi Pharmaceuticals Corporation
University of Massachusetts	One Innovation Drive

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333 South Street, Suite 400	Worcester, MA 01605
Shrewsbury, MA 01545
Attention: Executive Director	Attention: President

All notices under this Agreement are effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section 7.7.

     7.8. Severability. If any provision of this Agreement is held invalid or unenforceable for any reason, the invalidity or unenforceability does not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

     7.9. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter. The parties acknowledge that this Agreement has no effect on and does not limit any of Company’s rights under any specific license or sponsored research agreements that have been executed between the parties prior to the Effective Date.

     The parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

UNIVERSITY OF MASSACHUSETTS		RXi PHARMACEUTICALS CORP.
By:		By:
Name:	James P. McNamara, Ph.D.,	Name:	Tod Woolf, Ph.D.
Title:	Executive Director,	Title:	President & CEO
	Office of Technology Management
Date:		Date:

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EX-10.8

Exhibit 10.8

January 10, 2007

Office of Technology Management
University of Massachusetts Medical School
333 South Street, Suite 400
Shrewsbury, MA 01545
Attention: Executive Director

Re: License Agreements between the University of Massachusetts (the “University”) and RXi Pharmaceuticals, Inc. (the “Company”) dated as of January 10, 2007 (the “License Agreements”)

Ladies and Gentlemen:

     In consideration of the University’s cooperation in the establishment of the Company, the grant of the licenses by the University to the Company pursuant to the License Agreements, and other valuable consideration acknowledged by CytRx Corporation (“CytRx”) and the University, CytRx hereby covenants with University as follows (all capitalized terms not otherwise defined shall have the meaning set forth in the License Agreements):

1. From the period beginning upon the closing of the Initial Financing and continuing through the term of the License Agreements, CytRx agrees that it will not vote its shares of capital stock of the Company or otherwise take steps to elect or have elected individuals who are (i) employees, officers or directors of CytRx, (ii) employees, officers or directors of any entity that has a contractual business relationship with CytRx, or (iii) employees, officers, directors of any entity that has a contractual business relationship with any officer or director of CytRx (collectively, (i), (ii), and (iii) are “Affiliates”) to constitute a majority of the Company’s Board of Directors, and, in the event that Affiliates are elected to hold a majority of the seats of the Company’s Board of Directors, CytRx shall use reasonable efforts to cause a sufficient number of its Affiliates to resign from their position as directors of the Company or to cause a sufficient number of independent directors to be added to the Company’s Board of Directors, so that Affiliates do not constitute a majority of the Company’s Board of Directors.

2. If at any time following the Initial Financing, CytRx holds a majority of the outstanding voting power of the Company, it will use reasonable efforts without delay to transfer or otherwise dispose of a sufficient number of shares of the Company’s voting stock to bring its ownership of the total outstanding shares of the Company’s voting stock below fifty percent (50%), subject to the rules and regulations of the Securities and Exchange Commission and applicable state securities laws.

     The University and the Company agree that the provisions of this letter will become effective as of the date of this letter.

UMass Medical School
Office of Technology Management
January 10, 2007
Page 2 of 2 UMass Agreement No.: UMMC 07-U-201

     This letter is governed by and construed in accordance with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. The parties may only bring legal action that arises out of or in connection with this Agreement in the Massachusetts Superior Court in Suffolk County.

     This letter may be executed in counterparts, each of which when executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

CYTRX CORPORATION
By:
Name:	Steven Kreigsman
Title:	President & CEO

AGREED, ACKNOWLEDGED AND ACCEPTED:
UNIVERSITY OF MASSACHUSETTS
By:
Name:	James P. McNamara, Ph.D.
Title:	Executive Director
	Office of Technology Management

EX-10.9

Exhibit 10.9

Master Agreement for

Clinical Trials Management Services

This Master Agreement for Clinical Trials Management Services (the “Agreement”) is made and entered into this 30^th day of November, 2006, by and between CytRx Corporation, a corporation of California with offices at 11726 San Vicente Blvd., Los Angeles, CA 90049 (hereinafter referred to as “Sponsor”) and Pharmaceutical Research Associates, Inc., a corporation of the Commonwealth of Virginia, together with its Affiliates with offices at 12120 Sunset Hills Road, Suite 600, Reston, Virginia 20190 (hereinafter referred to as “PRA”), both hereinafter referred as “Parties”

PRA is engaged in the business of providing services related to the design, management and implementation of clinical development programs for the pharmaceutical, biotechnology and medical device industries; and

Sponsor desires to engage PRA to perform such Services in connection with Sponsor’s proposed maximum tolerated dose study and Phase IIb clinical trial for arimoclomol;

Therefore, in consideration of the premises and mutual promises and undertakings herein, the receipt and sufficiency of which are hereby acknowledged, the parties intending to be legally bound do hereby agree as follows:

1.0 Definitions

a.	Affiliates: With respect to either party, an Affiliate is any entity that is controlled by, controls, or is under common control with the party named above.
b.	Amendment: A written specification of changes to a Task Order that are agreed to by the parties and authorized by signature of each party’s authorized representative(s), in a format substantially similar to Appendix B attached hereto.
c.	Authorized Sponsor Representative: An officer of Sponsor who, is authorized to represent Sponsor and among other things, will maintain regular contact with the PRA Project Manager in order to follow the progress of the Services, notify PRA of any changes to the Project Specifications or other components of a Task Order, and review and approve Amendments.
d.	Budget Estimate for Services: A component of a Task Order that outlines the estimated cost of the Services based upon the Project Specifications.
e.	Key Personnel: The key PRA personnel assigned to the Services including the Project Manager and others as agreed to by the parties.
f.	Milestone: An event associated with a specific date, for which a payment will be due, as set out in the Payment Schedule of any Task Order.
g.	Pass-Through Budget: A component of a Task Order that outlines the estimated costs of pass-through expenses for goods and services incurred by PRA on behalf of

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Sponsor, in connection with the performance of the Services, including but not limited to expenses related to investigator meetings, IRB fees, central laboratory fees, dedicated or dial-up data connections between PRA and Sponsor, travel, overnight mail service, telephone usage fees and materials.

h.	Payment Schedule: A component of a Task Order that describes the timing of payments due to be made for Services delivered and pass through costs incurred.
i.	PRA Project Manager: The PRA representative assigned to lead the PRA project team, act as the principal liaison between PRA and Sponsor, and provide general oversight in the delivery of Services with regard to a specific Task Order.
j.	Project Schedule: A component of a Task Order that outlines the project milestones, estimated timelines and completion date for the Services based upon the Project Specifications.
k.	Project Specifications: A component of a Task Order that outlines the specific Services to be provided, assumptions used in preparing the Budget Estimate for Services, Pass-Through Budget and Project Schedule, and assignment of project-related responsibilities between the parties.
l.	Services: The services to be provided by PRA and its subcontractors (if applicable) under this Agreement as specifically outlined in a Task Order or otherwise authorized in writing by Sponsor.
m.	Task Order: A written specification of Services to be performed by PRA under this Agreement, including the Project Specifications, Project Schedule, transfer of Sponsor obligations, Contact Information, Budget Estimate for Services, Pass-Through Budget, and Payment Schedule.
n.	Time and Materials: A form of pricing whereby Sponsor pays the hourly rates for Services actually performed according to the current PRA Price Schedule for Time and Materials Services, which rates shall not be increased during the term of this Agreement.

2.0 Services

PRA, itself or through one of its Affiliates or subcontractors (if applicable), shall perform the Services as specified in this Agreement and any associated Task Order(s), in accordance with the terms and conditions of this Agreement. PRA shall use reasonable efforts to perform the Services described in any Task Order issued hereunder and to meet all obligations and deadlines described in such Task Orders. PRA’s inability to meet an obligation and/or established deadline for reasons not within the control of PRA, any PRA Affiliate or subcontractor shall not constitute a breach of this Agreement. All Services shall be mutually agreed upon by the parties and authorized in writing through the execution of a Task Order. PRA shall not begin work on any Services without an executed Task Order authorizing the Services.

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2.1 Task Orders

PRA will provide Services as specified in one or more Task Orders, which will be prepared in a format substantially similar to the Form of Task Order, attached hereto as Appendix A. Each Task Order shall include detailed information with respect to a specific project, including Project Specifications, Project Schedule, Budget Estimate for Services, Pass-Through Budget, Payment Schedule, Designation of Key Personnel and transfer of Sponsor Obligations, if required. Task Orders shall become effective when signed by an authorized representative of both parties.

a.	Project Specifications. The Task Order shall provide Project Specifications, which shall include without limitation, a description of the study protocol, investigator sites, subjects, case report forms (CRFs), reports and Services to be provided by PRA. Sponsor acknowledges that the Project Specifications in each Task Order consist of descriptions, assumptions and assignment of responsibilities provided to PRA by Sponsor and/or agreed to by Sponsor, that PRA has relied upon this information in preparing the timelines and budgets outlined in the Task Order, and that the accuracy and completeness of the Project Specifications are the responsibility of Sponsor.
b.	Transfer of Sponsor Obligations. A Task Order may require PRA to perform certain responsibilities of the Sponsor with respect to studies performed under the Federal Food, Drug and Cosmetic Act, as amended (“FDCA”) and 21 C.F.R. Part 312, Subpart D, and that such responsibilities will be transferred to PRA. Any such transfer of obligations under the Task Order shall be specified in the associated Task Order. Sponsor retains responsibility for any and all such responsibilities not transferred to PRA under the Task Order.
c.	Project Schedule.

i.

The Task Order shall include major project milestones and target dates for completion of each Milestone. The parties mutually agree that the timelines in the Project Schedule are reasonable based upon the Project Specifications. PRA agrees to use all reasonable efforts to meet target dates for major milestones and completion of the project as outlined in the Project Schedule. Sponsor agrees to make all reasonable efforts to respond fully and promptly to PRA’s requests for information, approvals and other actions, which are reasonably necessary for PRA’s completion of the Services as outlined in the Project Schedule. Sponsor acknowledges that any failure to respond to such requests from PRA, which results in delay or contributes in any material way to the failure of PRA to meet the timelines specified within the Project Schedule, may result in changes to the Task Order that are reasonably related to the delay, with a corresponding impact on the Project Schedule and Budget Estimate for Services which shall be documented in accordance with Section 2.2 below.

ii.

Project Plans and Deadlines: The parties acknowledge that PRA will prepare a Project Plan which will outline each step of the Services and allocate a specific amount of time for each step. Continuity of Services may depend on approval or delivery of information by Sponsor, and Sponsor acknowledges that some steps in

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the plan will not proceed unless and until PRA receives the approval or information. Conversely, other steps in the plan will proceed in the absence of Sponsor’s approval in the interest of meeting the Project Schedule. Should Sponsor fail to make a decision, transmit approval or submit information which results in a delay, Sponsor will be responsible for any additional costs associated with such delays. Such delays shall not be construed as breaches of this Agreement or any associated Task Order by PRA. Sponsor agrees that any rework required by PRA which is attributable to Sponsor’s failure to make a decision, transmit approval or information, shall be done at Sponsor’s expense.

d.	Budget Estimate for Services. Each Task Order shall include a Budget Estimate for the Services to be performed by PRA and shall include, without limitation, the costs related to the Services to be provided. PRA agrees not to exceed the total cost outlined in the Budget Estimate for Services without the prior approval of Sponsor, unless specifically authorized by Change Notification Form and/or Amendment, as set out in Section 2.2 below. Sponsor acknowledges that the Budget Estimate for Services presented in each Task Order is an estimate based upon the Project Specifications and Project Schedule. Any changes to the Project Specifications, including without limitation, a request by Sponsor for compression of the timelines or extensions of the timelines for any reason, may result in changes to the Task Order, including the Budget Estimate for Services, Pass-Through Budget and/or Project Schedule, which shall be documented in accordance with Section 2.2 below.
e.	Pass-Through Budget. Each Task Order shall include a Pass-Through Budget, which shall contain an estimate of anticipated pass-through expenses to be incurred on Sponsor’s behalf in connection with performance of the Services. Sponsor acknowledges that the Pass-Through Budget contains an estimate based on the Project Specifications, the Project Schedule, and information supplied by third party suppliers, and that such costs cannot be predicted with complete certainty at the outset of a Study. Sponsor agrees to reimburse all of PRA’s actual direct costs for pass-through expenses incurred in performance of the Services, in accordance with Section 3.3 below. Amounts included in the Pass Through Budget for any Task Order will not include social security or other taxes or other amounts which may be due and payable by PRA to local governmental authorities as a consequence of making payments to investigators, since these costs cannot be predicted at the outset of a Study. Sponsor will be notified of all such taxes when assessed, and will be responsible for all such amounts payable in the same manner as the investigator fees. PRA agrees to notify in writing Sponsor of any increases or decreases in the Pass-Through Budget upon receipt of such information from third party suppliers or other sources, as the case may be, and that such information will be included in an Amendment to the applicable Task Order.
f.	Payment Schedule. Each Task Order shall contain a Payment Schedule, which will specify the manner and timing of all payments for Services and pass-through expenses described in the Task Order. Any changes to the Project Specifications, and corresponding changes to the Budget Estimate for Services or Pass-Through Budget, will be reflected in a corresponding change in the Payment Schedule.

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g. Contact Information and Designation of Key Personnel. Each Task Order shall identify the Authorized Sponsor Representative(s) appointed by Sponsor and the PRA Project Manager, and other Key Personnel as the parties may agree are to be included. The Authorized Sponsor Representatives(s) are subject to change by Sponsor at any time upon prior written notice to PRA.

2.2 Amendments

Any changes to a Task Order, including but not limited to changes to the Project Specifications, Project Schedule, Budget Estimate for Services or Pass-Through Budget, shall be mutually agreed upon by the parties and documented first in a Change Notification Form (“CNF”), in a form substantially similar to that attached hereto as Appendix D, and finally in an Amendment to the Task Order in a form substantially similar to that attached hereto as Appendix B. The CNF shall include detailed information on the changes to the Project Specifications and any associated changes to the Project Schedule, Budget Estimate for Services, Pass-Through Budget and Payment Schedule. Sponsor acknowledges that PRA will not perform any out of scope work described in a CNF until it is approved in writing by both parties. PRA agrees to prepare Amendments promptly upon receipt of approved CNFs and Sponsor agrees to promptly review and authorize such Amendments.

a. Unanticipated Changes. Sponsor acknowledges that some changes in costs associated with clinical research resulting from, for example, modifications to the study protocol, changes in amounts charged by third party suppliers or poor subject enrollment due to changes in clinical practices, cannot be reasonably anticipated in advance. Upon identification by either party of changes to the project assumptions or other unanticipated changes to the Project Specifications, the parties agree to negotiate in good faith an Amendment to accommodate increases or decreases to the Project Budget, Project Schedule or Payment Schedule that are reasonably associated with any such adjustments. Amendments shall be documented in accordance with the terms of this Section 2.2. Such unanticipated changes may include, but are not limited to, any of the following:

i.	delays in receiving from Sponsor technical information or Sponsor’s acceptance of documents submitted by PRA in the performance of its duties under this Agreement or any Task Order, or any other delay on the part of Sponsor;
ii.	delay in receipt of regulatory approval from a regulatory agency, Institutional Review Board or Ethics Committee;
iii.	delay in performance by a subcontractor not selected by PRA;
iv.	delay in shipment of study drug and/or clinical supplies;
v.	delay due to changes in standard of care imposed by law, regulation or changes in medical practice affecting participating sites;
vi.	by reason of force majeure as defined herein;

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vii.	Sponsor requested changes to the Services or protocol;
viii.	delays due to questions received by either party from regulatory agencies or ethics committees regarding submission materials that relate to characteristics of the study drug or protocol design;
ix.	delays due to any changes in applicable law or regulatory environment; or
x.	for any other reason agreed upon in writing by Sponsor.

b. Delays in Finalizing Changes to Project Specifications. Sponsor acknowledges that material changes in the scope of the Services may require a considerable effort for the parties to analyze, re-write and agree upon revised Project Specifications and an associated Amendment. In the event that Sponsor requests a change to the Project Specifications and authorizes PRA to continue work before the revised Project Specifications and Amendment are approved, PRA will conduct all such out-of-scope work on a Time and Materials basis until such time as an Amendment is executed by the parties. Upon such execution, PRA agrees to apply all such Time and Materials fees related to the revised Project Specifications to the revised Project Budget.

2.3 Project Staffing

In performing the Services, PRA shall assign personnel who are adequately trained, qualified and experienced to conduct the work as specified in a Task Order. Sponsor shall have the right to make reasonable requests for replacement of assigned personnel for cause, such as unsatisfactory performance or interpersonal conflicts. PRA agrees to promptly respond to any such request and make reasonable efforts to correct the situation in order to improve performance, or to provide a replacement, at its own expense, within a mutually agreeable timeframe.

a.	Key Personnel. PRA will assign a PRA Project Manager and other employees whose participation in a project is required for the duration of the project, who shall serve as Key Personnel. Key Personnel may include, without limitation, Lead Clinical Research Associates, Lead Data Managers, Medical Monitors and Lead Biostatistician. PRA agrees to provide thirty (30) days notice to Sponsor, whenever practical, of any changes to the Key Personnel, but will make reasonable efforts to not change Key Personnel unless requested by Sponsor. PRA will provide project-specific training to replacement Key Personnel at its own expense.
b.	Project Team. PRA will assign non-Core Team project personnel at its sole discretion, from one or more of its offices located worldwide, as needed to perform the Services in accordance with the Task Order.
c.	Use of Contract Employees. PRA may, at its own discretion, assign some elements of the Services to contract employees. PRA agrees that any contract employees used to perform the Services will be adequately qualified, experienced and trained as required to perform the Services in the same manner as PRA qualifies and trains its own employees. PRA shall remain responsible for satisfactory performance of all Services performed by contract employees.

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2.4 Use of Sub-Contractors

PRA may use sub-contractors to conduct some elements of a Task Order, including without limitation, clinical laboratories, patient recruitment services, interactive voice recognition (IVR) systems and other services. PRA agrees to notify Sponsor in advance of its use of sub-contractors. In the event that Sponsor objects, for reasonable cause, to any such PRA sub-contractors, PRA agrees to make reasonable efforts to replace the sub-contractor within a mutually agreeable timeframe.

a.

Sponsor-Selected Sub-Contractors. In the event that Sponsor contracts directly with a sub-contractor or requires PRA to use a specific sub-contractor, PRA is not responsible for any performance of this sub-contractor, and Sponsor agrees to manage the performance of the sub-contractor and be responsible for any delays or changes to the Project Schedule or Project Budget that result from the performance of the sub-contractor. PRA agrees to notify Sponsor promptly of any performance issues arising out of the use of any such sub-contractors. If Sponsor engages a sub-contractor, but requires that PRA manage or oversee the performance of the sub-contractor, then Sponsor shall supply PRA with a copy of the relevant contract with the sub-contractor.

b.

PRA-Selected Sub-Contractors. For sub-contractors selected and contracted directly by PRA, PRA is responsible for the performance and agrees to manage the performance of the subcontractor.

2.5 Applicable Standard Operating Procedures

The parties agree that PRA will provide the operational systems, processes and standard operating procedures to be used in performance of the Services unless specified otherwise in the Project Specifications.

2.6 Sponsor-Provided Systems

In the event that Sponsor requires PRA to use Sponsor’s information systems and associated processes, Sponsor is responsible for all costs associated with installation and operation of the systems, including costs for hardware and software licenses, and for training of PRA personnel assigned to the project in the use of Sponsor system(s).

3.0 Payment

The parties acknowledge that the fees and other reimbursements that PRA will receive for performing the Services hereunder will be outlined in each Task Order, will constitute full and complete consideration for those Services, and are subject to the following terms and conditions. PRA agrees that its fees will not exceed the Budget Estimate for Services and the pass through items charged will not exceed the amounts included in the Pass-Through Budget in a Task Order or associated Amendment without the prior approval of Sponsor.

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3.1 Payment Schedule

Sponsor agrees to pay for Services and pass-through expenses in accordance with the payment schedule outlined in each Task Order or associated Amendment.

3.2 Invoices

a.	Invoices for Services and pass-through expenses shall be submitted in accordance with the Payment Schedule associated with the relevant Task Order and shall be prepared monthly, or as frequently as necessary, in the format shown in Appendix C, attached hereto. Any final payments specified in the Task Order will be invoiced upon completion of the project and delivery to Sponsor of any final study databases, reports or other deliverables as specified in the Project Specifications. If a final payment is specified in a Task Order, it will be due within thirty (30) days of Sponsor’s receipt of invoice unless Sponsor notifies PRA in writing of any deficiencies in the Services. PRA shall correct any such deficiencies within thirty (30) days of notice and resubmit the final invoice to Sponsor immediately upon final shipment of the corrected project deliverable(s).
b.	All invoices under this Agreement shall be forwarded to the Sponsor representative designated in the relevant Task Order.
c.	All payments under this Agreement shall be remitted to the PRA affiliate named in the Task Order, to the address and manner set forth in the Payment Schedule of the applicable Task Order.

3.3 Pass-Through Expenses

a.

Pass-Through Expenses. In order to provide funding for pass- through expenses, Sponsor agrees to make an advance payment to PRA of ten percent (10%) of the Pass-Through Budget related to all pass-through expenses immediately upon execution of a Task Order. PRA will submit to Sponsor monthly invoices for amounts incurred during the relevant billing period. The advance payment will be retained by PRA until the completion of the Services, at which time a reconciliation of expenses will be done to ensure that Sponsor pays for only those expenses actually incurred. The 10% advance payment will then be applied to the final invoice, if unpaid, and any remaining advance payment will be refunded to Sponsor within thirty (30) days from the date of the final reconciliation.

b.

Sponsor shall reimburse all travel expenses in accordance with PRA’s applicable Travel and Expense Policy, as shown on monthly invoices. Copies of travel related receipts will not be provided unless specifically requested by Sponsor, and Sponsor agrees to pay a reasonable administrative service fee for any such requested copies.

3.4 Investigator Grants and Reconciliation.

In order to provide for timely payments to investigators, Sponsor agrees to make an advance payment to PRA of ten percent (10%) of the amounts required for investigator grants

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immediately upon execution of a Task Order. PRA will submit to Sponsor quarterly invoices in advance for estimated amounts to be paid to investigators to be incurred in the upcoming quarter to ensure that adequate funds are available to pay such expenses. Sponsor acknowledges that PRA will not make payments to investigators without sufficient funds available. The advance payment will be retained by PRA until the completion of the Services, at which time a reconciliation of expenses will be done to ensure that Sponsor pays for only those expenses actually incurred. The 10% advance payment will then be applied to the final invoice, if unpaid, and any remaining advance payment will be refunded to Sponsor within thirty (30) days from the date of the final reconciliation.

3.5 Payment Terms

Sponsor agrees to pay for all Services, pass-through expenses and other correctly invoiced items within thirty (30) days of receipt of invoice. All payments shall be made in the currency noted in the Payment Schedule of the Task Order. All fees for Services and pass-through expenses are exclusive of VAT (including non-refundable VAT), local taxes, charges or remittance fees, which Sponsor agrees to pay when applicable. PRA reserves the right to charge interest against any unpaid overdue balance a the rate of one percent (1.0%) per month, except against amounts reasonably withheld by Sponsor due to PRA’s failure to provide Services in accordance with the applicable Task Order.

3.6 Project Delays

a.

In the event that Sponsor requests temporary cessation of work due to clinical holds imposed by regulatory authorities or any other reason, Sponsor acknowledges that certain activities, such as site maintenance and database maintenance, may continue during the delay and agrees to pay the expenses associated with this maintenance. In addition, Sponsor shall have the option to request that PRA hold the Key Personnel, for up to sixty (60) days, so that they remain available to re-initiate work immediately upon notice by Sponsor. Sponsor agrees to pay to PRA a monthly fee equal to the standard hourly rate for each of the Key Personnel held by Sponsor In the event of a project delay where Sponsor does not agree to hold the Key Personnel, PRA may re-assign the staff to other projects.

b.

The parties agree to cooperate with one another in fulfilling their respective obligations under this Agreement and each Task Order issued hereunder. The parties acknowledge that, in certain instances, timely and complete performance depends upon cooperation between PRA and Sponsor. Therefore, in the event PRA does not meet a Milestone which is attributable to:

i.	Any event or circumstance described in Section 2.2 a.; or
ii.	Sponsor’s failure to cooperate with PRA in the performance of Services undertaken by PRA within the timelines and budget provided for in the affected Task Order; or

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iii.	Sponsor’s failure to perform its obligations under this Agreement, or any affected Task Order,
	then PRA will not be accountable for such delay and the parties agree to make appropriate modifications to the Project Specifications, Project Schedule, Budget Estimate for Services and/or Pass-Through Budgets attached to the affected Task Order, pursuant to Section 2.2.

3.7 Accounting Records

PRA will maintain true and complete financial records relating to the Services performed under this Agreement, including pass-through expenses and labor hours applied in connection with any Task Order(s). Sponsor shall have the right to audit, at any reasonable time during normal business hours and upon at least ten (10) business days prior written notice to PRA, on a confidential basis, such records for the purpose of verifying the amounts charged under this Agreement. If any such audit reveals that the amounts charged to Sponsor for any Task Order exceed 110% of the actual amount owed for such Task Order, then PRA shall reimburse Sponsor for the documented costs of the audit. In addition, within fifteen (15) days of the end of each calendar quarter during the term of this Agreement, PRA shall deliver a notice to Sponsor setting forth, with respect to each open Task Order, the approximate percentage of the Services completed.

3.8 Exchange Rate Fluctuation

The value of the Budget Estimate for Services assumes exchange rates as detailed herein. Immediately prior to execution of a Task Order, the exchange rates will be updated to reflect those in effect at that time (the “Task Order Exchange Rates”). PRA reserves the right to modify the Task Order Exchange Rates semi-annually beginning six months after execution of the Task Order. The modified Task Order Exchange Rates will be derived from the average exchange rates for the 30-day period prior to each semi-annual anniversary date (the “Modified Task Order Exchange Rates”). Further, PRA reserves the right to monitor the variance between (a) the exchange rates in effect for each six month period and (b) the actual exchange rates in effect at the invoice dates during each six month period. If the variance is greater than five percent (5%), PRA may quantify the variance denominated in the contract currency and issue a credit memorandum or invoice. The Modified Task Order Exchange Rates will be determined by using the Oanda.com FXHistory tool. All other exchange rates will be taken from the Oanda.com midpoint closing rate.

4.0	Term and Termination
4.1	Term

Unless earlier terminated according to Section 4.2, 4.3 or 4.4 below, this Agreement shall remain in effect from the date first written above, until completion of all Services described herein.

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4.2 Termination without Cause

This Agreement or any Task Order issued hereunder may be terminated by Sponsor for any reason upon thirty (30) days’ written notice to PRA. Should Sponsor terminate this Agreement or a Task Order without cause, the termination process and associated fees shall be as follows:

a.	Sponsor and PRA shall meet within fifteen (15) days of PRA’s receipt of such termination notice to develop a plan for (a) closing down administration of this Agreement or (b) closing down the Study which is the subject of the terminated Task Order, which shall include transferring any remaining tasks or other responsibilities to Sponsor or its designee.
b.	Upon early termination of a Task Order, Sponsor will pay to PRA all sums due and owing for Services and pass-through expenses incurred in the performance of the terminated Task Order, and in the course of winding down or closing out a Task Order; provided that PRA shall immediately cease work and cease incurring expenses upon receipt of notice of termination from the Sponsor.

4.3 Termination for Default By PRA

Failure of PRA to comply with any of the material terms or conditions of this Agreement shall entitle Sponsor to give written notice of default via certified/return receipt mail or overnight courier to ensure receipt by PRA. If PRA does not cure the default within thirty (30) days of receipt of notice, this Agreement may be terminated by Sponsor, which will not be obligated to pay the early termination fees pursuant to Section 4.2 above. Provided, however, that Sponsor agrees to pay PRA for all Services rendered and pass-through expenses incurred pursuant to this Agreement or any terminated Task Order through the date of notice of termination (excluding any wind down expenses); provided, however, that such payment shall in no way limit Sponsor’s rights under this Agreement to recover damages resulting from PRA’s default. Sponsor further agrees to pay for Services and pass-through expenses necessary to conduct an orderly winding down of the administration of this Agreement, or any terminated Task Order, which amount shall not exceed the remaining unpaid balance of the Budget Estimate for Services of the Task Order, unless special circumstances warrant otherwise. As soon as practicable following receipt of notice of termination under this Section 4.3, PRA will submit an itemized accounting of costs incurred, costs anticipated, and payments received in order to determine a balance to be paid by either party to the other. Such balance will be paid within thirty (30) days of completion of work.

4.4 Termination for Default by Sponsor

Failure of Sponsor to comply with any of the material terms or conditions of this Agreement or to fail to respond to PRA’s inquiries or requests for information shall entitle PRA to give written notice of default via certified/return receipt mail or overnight courier to ensure receipt by Sponsor. If Sponsor does not cure the default within sixty (60) days of receipt of notice or for such reasonable amount of time thereafter, if the default is not susceptible of cure within sixty (60) days,, this Agreement may be terminated by PRA, and Sponsor shall pay to PRA all amounts due and owing for Services performed, pass-through expenses incurred, costs associated

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with winding up activities and the early termination fee, described in Section 4.2 above, as well as any late fees which may be due, pursuant to Section 3.4 above.

4.5 Survival

Expiration or termination of this Agreement will not relieve the parties of any obligation accruing prior to such expiration or termination. In addition, Sections 4.0, 7.1, 7.2, 8.0, 9.0, 11.0, 13.0, 14.0, 16.0, 17.0, 18.0, 19.0 and 22.0 will survive expiration or termination of this Agreement indefinitely, or for the period of time noted in the specific clause.

5.0	Representations and Warranties
5.1	Acknowledgments

Sponsor acknowledges that the results of the Services to be provided hereunder are inherently uncertain and that, accordingly, there can be no assurance, representation or warranty by PRA that the drug, compound, device or other material which is the subject of research covered by this Agreement or any Task Order issued hereunder can, either during the term of this Agreement or thereafter, be successfully developed or, if so developed, will receive the required approval by the United States Food and Drug Administration (FDA) or other regulatory authority. Sponsor acknowledges that PRA makes no warranties regarding the Services to be performed hereunder other than those expressly set forth herein.

5.2 Representations and Warranties of Sponsor

a.	Sponsor represents and warrants that it has the right, title and interest in the drug, compound, device or other material which is the subject of research covered by this Agreement or any Task Order and that it has the legal right, authority and power to enter into this Agreement, and to perform any clinical trial which is the subject of a Task Order issued hereunder.
b.	In all instances in which a Task Order includes Services which require PRA to act as Sponsor’s representative in any jurisdiction before any regulatory or governmental agency, for the purposes of, inter alia, seeking approval for conducting a trial, importation of study drug into a particular country, or for any other reason, Sponsor warrants that it shall supply to PRA all information necessary to support applications or submissions so made to such regulatory or governmental agencies. Sponsor further warrants that all information supplied to PRA for whatever purpose will, to the best of its knowledge, be complete, accurate, true and correct, and entirely free from defect, and that Sponsor shall provide assistance to PRA of whatever nature PRA deems necessary, during the course of such representation.
c.	If Sponsor requires PRA to use MedDRA to code, analyze or report data for a Study, Sponsor represents and warrants that it has a current and valid license agreement with the Maintenance and Support Services Organization (“MSSO”) to use MedDRA. Furthermore, if PRA is required to use WHO Drug, WHO Herbal or WHO ART for coding of data, Sponsor warrants and represents that it has a current and valid license agreement with The Uppsala Monitoring Centre for the dictionaries which PRA will

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be required to use. If Sponsor does not currently have such licenses, it hereby represents that such licenses will be in place prior to PRA’s delivery of data which is coded using these dictionaries. PRA is in no occasion liable to Sponsor for wrongful use of data coded using these dictionaries as a result of lack of licenses of Sponsor, and Sponsor will hold PRA harmless in these occasions.

d.

Sponsor further warrants and represents that for any software application, computer system or program that is required to be used by PRA in the performance of Services, it shall have acquired and will maintain current and valid licenses which are necessary for the legitimate use of such applications or programs, and that PRA’s use of such applications or programs will not subject PRA to any liability for improper use.

5.3 Representations and Warranties of PRA

a.	PRA warrants that it will render the Services in accordance with high professional standards and that the Services will be completed in conformance with the terms of this Agreement and any Task Order issued hereunder.
b.	PRA warrants that the personnel assigned to perform Services rendered under this Agreement shall be capable professionally and that it has sufficient personnel and resources to perform the Services in a timely fashion.
c.	PRA further warrants that it will perform the Services in compliance with all applicable laws and regulations and that it will make available to Sponsor or to the responsible regulatory authority relevant records, programs, and data as may be reasonably requested by Sponsor for purposes related to filing and prosecution of Sponsor’s related new drug applications.
d.	The warranties contained in this Section are in lieu of all other warranties expressed or implied.

6.0 Debarment Certification

a.

PRA hereby certifies that it has not been debarred under Section 306 of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §335a(a) or (b). In the event that PRA becomes debarred, PRA agrees to notify Sponsor immediately.

b.

PRA hereby certifies that it has not and will not use in any capacity the services of any individual, corporation, partnership, or association which has been debarred under Section 306 of the Federal Food, Drug and Cosmetic Act, 21 U.S.C §335a (a) or (b). In the event that PRA becomes aware of or receives notice of the debarment of any individual, corporation, partnership, or association providing services to PRA, which relate to the Services being provided under this Agreement, PRA agrees to notify Sponsor immediately.

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7.0	Inspections
7.1	Inspection by Sponsor

PRA agrees to permit representatives of Sponsor who are not competitors of PRA to examine, at any reasonable time during normal business hours and subject to at least ten (10) business days prior written notice to PRA, (i) the facilities where the Services are being conducted; (ii) related study documentation; and (iii) any other relevant information necessary for Sponsor to confirm that the Services are being conducted in conformance with applicable standard operating procedures, the specific Task Orders, this Agreement and in compliance with applicable laws and regulations. PRA shall provide copies of any materials reasonably requested by Sponsor during such inspection.

7.2 Inspection by Regulatory Authorities

PRA agrees to permit regulatory authorities to examine, (i) the facilities where the Services are being conducted; (ii) study documentation; and (iii) any other relevant information, including information that may be designated by one or both of the parties as confidential, reasonably necessary for regulatory authorities to confirm that the Services are being conducted in compliance with applicable laws and regulations. Each party shall immediately notify the other if any regulatory authority schedules, or without scheduling, begins such an inspection, and PRA shall permit Sponsor to participate in any meetings with such regulatory authorities.

8.0 Disposition of Computer Files and Study Materials

PRA will take reasonable and customary precautions, including periodic backup of computer files, to prevent the loss or alteration of Sponsor’s study data, documentation, and correspondence, but PRA cannot guarantee against any such loss or alteration. Upon termination of this Agreement, PRA will dispose of Sponsor computer-stored files and study materials according to PRA’s internal standard operating procedures; provided that none of the foregoing items shall be disposed of without giving Sponsor at least thirty (30) days prior written notice. Sponsor may communicate any special request for the disposition of materials in writing to PRA. Sponsor shall bear all costs incurred by PRA in complying with any such written instructions furnished by Sponsor. PRA will provide a written estimate to Sponsor, and Sponsor will provide written approval, of all such costs prior to any action by PRA.

9.0	Ownership and Confidentiality
9.1	Ownership of Data and Intellectual Property

All data (including without limitation, written, printed, graphic, video and audio material, and information contained in any computer database or computer readable form) generated by PRA in the course of conducting the Services (the “Data”) and related to the Services shall be the property of Sponsor. Any copyrightable work created in connection with performance of the Services and contained in the Data shall be considered work made for hire, whether published or unpublished, and all rights therein shall be the property of Sponsor as employer, author and owner of copyright in such work.

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PRA understands and agrees that the underlying rights to the intellectual property and materials that are the subject of each Task Order, including, without limitation, all intellectual property rights in Sponsor’s drug candidates or products, are owned solely by Sponsor. Neither PRA, its Affiliates nor any of their respective subcontractors shall acquire any rights of any kind whatsoever with respect to Sponsor’s drug candidates or products or proprietary information as a result of conducting Services hereunder. All rights to any know-how, trade secrets, developments, discoveries, inventions or improvements (whether or not patentable) conceived or reduced to practice in the performance of work conducted under this Agreement by PRA’s or its Affiliates’ employees, or independent contractors, either solely or jointly with employees, agents, consultants or other representatives of Sponsor (the “Intellectual Property”), will be owned solely by Sponsor, and PRA shall promptly notify Sponsor in writing of any such information. PRA, its Affiliates and their respective employees and subcontractors shall sign and deliver to Sponsor all writings and do all such things as may be necessary or appropriate to vest in Sponsor all right, title and interest in and to such Intellectual Property. PRA will promptly disclose to Sponsor any such Intellectual Property arising under this Agreement. Sponsor may, in its sole discretion, file and prosecute in its own name and at its own expense, patent applications on any patentable inventions within the Intellectual Property. Upon the request of Sponsor, and at the sole expense of Sponsor, PRA will assist Sponsor in the preparation, filing and prosecution of such patent applications and will execute and deliver any and all instruments necessary to effectuate the ownership of such patent applications and to enable Sponsor to file and prosecute such patent applications in any country.

Notwithstanding the foregoing, Sponsor acknowledges that PRA possesses or may in the future possess analytical methods, computer technical expertise and software, which have been independently developed by PRA and which will remain the sole and exclusive property of PRA, except to the extent that improvements or modifications include, incorporate or are based upon Sponsor’s information or are specifically incorporated into the deliverables of the Services. Sponsor may use this information of PRA free of charge for interpretation purposes or regulatory authorities’ purposes or for any purposes that is appropriate within the scope of this Agreement. Any improvement on information of Sponsor shall remain de sole property of Sponsor.

9.2 Sponsor Confidential Information

a.

Sponsor may provide confidential information to PRA during the course of this Agreement. All information provided by Sponsor or data collected by PRA for Sponsor during the performance of the Services is deemed to be the confidential information of Sponsor when designated “Confidential” and is hereinafter referred to as “Sponsor Information”. PRA shall not disclose Sponsor Information to any person other than its employees, agents, and independent contractors involved in the Services or use any such information for any purpose other than the performance of Services without the prior written consent of Sponsor.

b.

PRA shall ensure that it and its Affiliates’ employees, agents, and independent contractors involved in the Services shall comply with the terms substantively similar to the confidentiality provisions of this Agreement. PRA shall disclose only the Sponsor Information to those of its employees, agents, and independent contractors who reasonably need to know the Sponsor Information.

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c.	PRA shall exercise due care to prevent the unauthorized disclosure and use of Sponsor Information associated with the Services.
d.	This confidentiality and nondisclosure provision shall not apply to information that PRA can demonstrate by competent evidence:

i.	Information which was known by PRA before initiation of the Services or which is independently discovered, after the initiation of the Services, without the aid, application or use of the confidential information, as evidenced by written records;
ii.	Information which is in the public domain at the initiation of the Services or subsequently becomes publicly available through no fault or action of PRA; or
iii.	Information which is disclosed to PRA on a non-confidential basis by a third party authorized to disclose it.

e.

In no event shall either party be prohibited from disclosing Information to the extent required by law to be disclosed, provided that PRA provides Sponsor with written notice thereof, prior to disclosure, to the extent reasonably practicable, and, at Sponsor’s request and expense, cooperates with Sponsor’s efforts to obtain a protective order or other confidential treatment of the information required to be disclosed.

f.

In addition to any other remedies it may have at law or in equity, Sponsor shall be entitled in the event of any breach or threatened breach of this Section to obtain injunctive relief without the need to show actual damages or to post any bond.

9.3 PRA Confidential Information

Sponsor acknowledges that all business processes, contract terms, prices, procedures, policies, methodologies, systems, computer programs, software, applications, databases, proposals and other documentation generally used by PRA and not developed solely for Sponsor are the exclusive and confidential property of PRA (hereinafter “PRA Information”) or the third parties from whom PRA has secured the right to use. Sponsor agrees that all PRA Information, along with any improvement, alteration or enhancement made thereto during the course of the Services shall be the confidential property of PRA, and shall be subject to the same degree of protection as is required of PRA to protect the confidential information of Sponsor.

9.4 Survival

The restrictions of confidentiality and nondisclosure shall survive the performance and/or termination of this Agreement for a period of seven (7) years.

10.0 Publicity

Sponsor may use, refer to and disseminate reprints of scientific, medical and other published articles which disclose the name of PRA consistent with applicable international copyright laws,

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provided such use does not constitute an endorsement of any commercial product or service by PRA. Neither party shall disclose publicly or utilize in any advertising or promotional materials or media the existence of this Agreement or its association with the other, or use of the other party’s name or the name of any of the other party’s Affiliates, divisions, subsidiaries, products or investigations without the prior written permission of the other party, provided however, that PRA may use the name of Sponsor in its list of customers; And provided, further, that either party may make such public disclosures as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations.

11.0	Indemnification
11.1	Sponsor’s Agreement

a.	Subject to Section 11.1(c), Sponsor will hold harmless, defend and indemnify PRA, its Affiliates, and their officers, directors, agents, employees, independent (sub)contractors, and clinical investigators approved by Sponsor (each an “Indemnitee”) against any claim, suit, action, proceeding, arbitration or investigation, pending or threatened by a third party (each a “Claim”) against them based on, relating to or in connection with the Services and other work conducted under this Agreement, including but not limited to court costs, legal fees, awards or settlements. Claims made against PRA in its capacity as Sponsor’s representative in any country are specifically included, including those made if PRA is engaged to act as Sponsor’s legal representative within the meaning of the Article 19 of Directive 2001/20/EC. PRA shall promptly notify Sponsor upon receipt of notice of any Claim (provided that the failure to give such notice shall not relieve Sponsor of its obligations under this Section except to the extent, if at all, it is prejudiced thereby) and shall permit Sponsor’s attorneys and personnel, at Sponsor’s discretion and cost, to handle and control the defense of such claims and suits. In the event that representation of PRA and Sponsor by the same counsel is a conflict of interest for such counsel, PRA may select its own independent counsel, at Sponsor’s expense, without relieving Sponsor of its obligations under this Section.
b.	Under no circumstances, however, shall Sponsor accept liability, settle or otherwise compromise any Claims without the prior written consent of PRA, which shall not be unreasonably withheld or be required for any settlement or compromise if Sponsor does not admit any liability or wrongdoing on the part of PRA. PRA will agree to fully cooperate and aid in such defense.
c.	Sponsor does not agree to indemnify, defend, or hold harmless PRA against any Claim to the extent that such Claim arose as a result of PRA’s negligence, recklessness, intentional misconduct or material breach of a warranty. Under such circumstances PRA will repay to Sponsor any defense costs incurred by Sponsor on its behalf.

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11.2 PRA’s Agreement

a.	PRA shall indemnify, defend and hold harmless Sponsor and its employees, officers, and directors against any and all losses, costs, expenses and damages, including but not limited to reasonable attorney’s fees, based on a personal injury allegedly resulting from PRA’s negligence or reckless or intentional misconduct, or failure to perform its obligations and responsibilities under this Agreement. Sponsor shall promptly notify PRA upon receipt of notice of any claim for which it intends to seek indemnification hereunder, provided that the failure to give such notice shall not relieve PRA of its obligations under this Section except to the extent, if at all, it is prejudiced thereby. Sponsor shall permit PRA’s attorneys and personnel, at PRA’s discretion and cost, to handle and control the defense of such claims and suits. In the event that representation of Sponsor and PRA by the same counsel is a conflict of interest for such counsel, Sponsor may select its own independent counsel, at PRA’s expense, without relieving PRA of its obligations under this Section.
b.	Under no circumstances, however, shall PRA accept liability, settle or otherwise compromise any claims subject to indemnification under this Section without prior written consent of Sponsor. Sponsor agrees to fully cooperate and aid in such defense.
c.	PRA does not agree, and shall have no obligation to indemnify, defend or hold harmless Sponsor against any claim to the extent that such claim arose as a result of Sponsor’s negligence, recklessness, intentional misconduct or material breach of a warranty. Under such circumstances Sponsor will repay to PRA any defense costs incurred by PRA on its behalf.

11.3 Limits of Liability

In no event shall PRA be liable to Sponsor for any indirect, incidental, special, or consequential damages or lost profits arising out of or related to its provision of Services to Sponsor, even if PRA has been advised of the possibility of such damages, except to the extent that such damages result from the negligence, recklessness or intentional misconduct of PRA, its employees, independent contractors or agents.

11.4 Insurance

Each party shall secure and maintain in full force and effect throughout the term of this Agreement appropriate insurance coverage for its activities in relation to this Agreement in amounts consistent with industry standards. If Sponsor engages PRA to be its legal representative within the meaning of the Article 19 of Directive 2001/20/EC, Sponsor must maintain comprehensive insurance coverage of no less than Ten Million Dollars ($10,000,000.00) or its equivalent in another currency, or more, if required by PRA in the exercise of its reasonable discretion, which coverage extends to PRA as an additional named insured.

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12.0 Independent Contractor Relationship

PRA and Sponsor are independent contractors. Nothing in this Agreement shall be construed to create the relationship of partners, joint venturers, or employer and employee between PRA and Sponsor or PRA’s employees. Neither party, nor its employees, or independent contractors shall have authority to act on behalf of or bind the other party in any manner whatsoever unless otherwise authorized in this Agreement or a specific Task Order or in a separate writing signed by both parties.

13.0 Employees

Neither party, during the term of this Agreement and for twelve months thereafter, shall, without the prior written consent of the other party, directly or indirectly solicit for employment or contract, attempt to employ or contract with or assist any other entity in employing, contracting with or soliciting for employment or contract any employee or executive who is at that time employed/contracted by the other party and who had been employed/contracted of the other party in connection with one or more Task Orders issued hereunder. Provided, however, that the foregoing provision will not prevent either party from conduction solicitation via a general advertisement for employment that is not specifically directed to any such employee or from employing any such person who responds to such solicitation.

14.0 Notices

Except as otherwise provided, all communications and notices required under this Agreement shall be mailed by first class mail or sent via nationally recognized overnight courier to the addresses set forth below, or to such other addresses as the parties from time to time specify in writing.

If to Sponsor:	If to PRA:
CytRx Corporation	Pharmaceutical Research Associates, Inc.
11726 San Vicente Blvd.	4105 Lewis and Clark Drive
Los Angeles, CA 90049	Charlottesville, VA 22911
Attn: Dr. Scott Wieland, Vice President, Clinical and Regulatory Affairs	Attn: Bruce A. Teplitzky, Executive Vice President, Business Development

15.0 Force Majeure

If the performance of this Agreement by PRA or Sponsor is prevented, restricted, interfered with or delayed (either totally or in part) by reason of any cause beyond the control of the parties (including, but not limited to acts of God, explosion, disease, weather, war, insurrection, terrorism, civil strike, riots or extensive power failure), the party so affected shall, upon giving notice to the other party as soon as is practical, be excused from such performance to the extent of such prevention, restriction, interference or delay, provided that the affected party shall use reasonable efforts to avoid or remove such causes of non-performance and shall continue performance whenever such causes are removed.

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16.0 Governing Law

This Agreement shall be governed in all respects by the internal laws of the State of Delaware, United States of America.

17.0 Severability

If any of the provisions or a portion of any provision of this Agreement is held to be unenforceable or invalid by a court of competent jurisdiction, the validity and enforceability of the enforceable portion of any such provision and/or the remaining provisions shall not be affected thereby.

18.0 Assignment

Neither party may assign this Agreement without the prior written consent of the other party, which consent will not be unreasonably withheld; provided, however, that Sponsor may assign this Agreement without consent to a successor in interest to substantially all of the business of that party to which the subject matter of this Agreement relates upon delivery to PRA of notice of such assignment.

19.0 Waiver

No waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be construed as a further or continuing waiver of such term, provision or condition or of any other term, provision or condition of this Agreement.

20.0 Entire Agreement

This Agreement, including all Attachments hereto contains the full understanding of the parties with respect to the Services and supersedes all existing Agreements and all other oral, written or other communications between the parties concerning the subject matter hereof. This Agreement will not be modified in any way except in writing and signed by a duly authorized officer of Sponsor and an authorized officer of PRA.

21.0 Counterparts

This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

22.0 Arbitration

In the event a dispute relating to this Agreement or any Task Order arises between the parties, the parties shall use all reasonable efforts to resolve the dispute through direct discussions for a period of thirty (30) business days. The senior management of each party commits itself to respond to any such dispute. Subsequent to such thirty-day period either party may, but shall not be required to, resort to binding arbitration procedures. If arbitration is being conducted it shall take place in Los Angeles, California under the rules of the American Arbitration Association.

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The undersigned have executed this Agreement as of the day and year noted below.

PHARMACEUTICAL RESEARCH ASSOCIATES, INC.

Name

Title

Date

CYTRX CORPORATION

Name

Title

Date

LIST OF ATTACHMENTS

Attachment A: Form of Task Order
Attachment B: Form of Amendment
Attachment C: Invoice Format
Attachment D: Change Notification Form

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EX-10.10

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into as of February 22, 2007 (“Effective Date”) by and between RXi Pharmaceuticals Corporation (“Employer”), a Delaware corporation and a majority owned subsidiary of CytRx Corporation, a Delaware corporation (“CytRx”), and Tod Woolf, an individual and resident of the Commonwealth of Massachusetts (“Employee”).

     WHEREAS, Employer and Employee desire to enter into an employment agreement under which Employee shall serve on a full-time basis as Employer’s President and Chief Executive Officer on the terms set forth in this Agreement, with the term of this Agreement to commence on the Effective Date.

     NOW, THEREFORE, upon the above premises, and in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows.

     1. Engagement. Effective as of the Effective Date, Employer shall continue to employ Employee, and Employee shall continue to serve, as Employer’s President and Chief Executive Officer. Employee shall also continue to serve as a member of Employer’s Board of Directors (“Board”). Employee understands that his duties as President and Chief Executive Officer may change from time to time over the term of this Agreement in the discretion of Employer’s Board of Directors, but such duties shall in all events be consistent with the duties customarily assigned to the Chief Executive Officer of a company such as Employer.

     2. Duties; Place of Employment. Employee shall perform all duties assigned to him by the Employer’s Board faithfully, diligently and to the best of his ability. Such duties include, without limitation, the overseeing and implementation of the business plan adopted by the Board (as may be revised from time to time by the Board). Employee shall perform the services contemplated under this Agreement in accordance with the policies established by and under the direction of the Board of Directors. Employee shall have such corporate power and authority as shall reasonably be required to enable him to discharge his duties under this Agreement. Employee’s services hereunder shall be rendered at Employer’s offices in Worcester, Massachusetts, except for travel when and as required in the performance of Employee’s duties hereunder.

     3. Time and Efforts. Employee shall devote all of his business time, efforts, attention and energies to Employer’s business and the discharge of his duties hereunder, except as noted on Schedule A, which contains other potential activities of the Employee and disclosed conflicts of interest.

     4. Term. The term (the “Term”) of Employee’s employment shall commence on the Effective Date and shall expire on December 31, 2008, unless sooner terminated in accordance with Section 6. Neither Employer nor Employee shall have any obligation to extend or renew this Agreement. In the event the Agreement shall not be extended or renewed by Employer beyond the Term, Employer shall continue to pay Employee his salary as provided for in Section 5.1 during the period commencing on the date on which the Term ends and ending on the earlier of (a) June 30, 2009 or (b) the date of Employee’s re-employment with another employer.

     5. Compensation. As the total consideration for Employee’s services rendered under the Agreement, Employer shall pay or provide Employee the following compensation and benefits:

          5.1. Salary. Commencing on the Effective Date, Employee shall be entitled to receive an annual Base Salary of Two Hundred Fifty Thousand Dollars ($250,000).

          5.2. Discretionary Bonus. Employee may be eligible for an annual bonus for his services during the Term. Employee’s eligibility to receive a bonus, any determination to award Employee such a bonus and, if awarded, the amount thereof shall be in Employer’s sole discretion.

          5.3. Stock Options. At the first regularly scheduled meeting of the Board following the date upon which Employer closes an equity financing, in a single transaction or series of related transactions, of at least $15,000,000 (a “Financing”), Employer shall grant Employee a stock option under RXi Pharmaceuticals Corporation’s 2007 Incentive Plan (the “Plan”) to purchase a number of shares of Employer’s common stock equal to 3/70th of the number of shares of Employer’s common stock held by CytRx immediately prior to the Financing (the “Option”). The Option shall vest and become exercisable in 36 equal monthly installments beginning on the one-month anniversary of the date of grant, in each case, that Employee remains in the continuous employ of Employer through such anniversary date. The Option shall (a) be exercisable at an exercise price equal to the fair market value at the time of granting as determined by Employer, (b) have a term of ten years, and (c) be on such other terms as shall be determined by Employer’s Board of Directors (or the Compensation Committee of the Board) and set forth in a customary form of stock option agreement under the Plan evidencing the Option. Notwithstanding anything to the contrary in Section 6.2 or other provisions of this Agreement or of the stock option agreement evidencing the Option, in the event that either (a) a Covered Transaction as defined in the Plan occurs or (b) CytRx votes its shares of capital stock of Employer to elect individuals who are (i) employees, officers or directors of CytRx, (ii) employees, officers or directors of any entity that has a contractual business relationship with CytRx, or (iii) employees, officers, directors of any entity that has a contractual business relationship with any officer or director of CytRx (collectively, “Affiliates”) to constitute a majority of the Employer’s Board of Directors, the Option shall thereupon vest in full and become exercisable as to all of the shares covered thereby in accordance with the terms of the Plan. Furthermore, in the event that the Employee is terminated without Cause or resigns for Good Reason, the shares that would have vested during the Severance Period (as defined in Section 6.2 below) shall vest and become exercisable as of the date of such termination.

          5.4. Expense Reimbursement. Employer shall reimburse Employee for reasonable and necessary business expenses incurred by Employee in connection with the performance of Employee’s duties in accordance with Employer’s usual practices and policies in effect from time to time.

          5.5. Vacation. Employee shall be entitled to twenty (20) business days of vacation each year during the Term in accordance with Massachusetts law.

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          5.6. Employee Benefits. Employee shall be eligible to participate in any medical insurance and other employee benefits made available by Employer to all of its employees under its group plans and employment policies in effect during the Term. Employee acknowledges and agrees that, any such plans or policies now or hereafter in effect may be modified or terminated by Employer at any time in its discretion.

          5.7. Payroll Taxes. Employer shall have the right to deduct from the compensation and benefits due to Employee hereunder any and all sums required for social security and withholding taxes and for any other federal, state, or local tax or charge which may be in effect or hereafter enacted or required as a charge on the compensation or benefits of Employee.

     6. Termination. The Agreement may be terminated as set forth in this Section 6.

          6.1. Termination by Employer for Cause or Voluntary Resignation Without Good Reason. Employer may terminate Employee’s employment hereunder for “Cause” upon notice to Employee and Employee may voluntarily resign his employment hereunder upon notice to Employer. “Cause” for this purpose shall mean any of the following:

                (a) Employee’s breach of any material term of the Agreement; provided that the first occasion of any particular breach shall not constitute such Cause unless Employee shall have previously received written notice from Employer stating the nature of such breach and affording Employee at least ten days to correct such breach;

                (b) Employee’s conviction of, or plea of guilty or nolo contendere to, any felony or other crime of moral turpitude;

                (c) Employee’s act of fraud or dishonesty injurious to Employer or its reputation;

                (d) Employee’s continual failure or refusal to perform his material duties as required under the Agreement after written notice from Employer stating the nature of such failure or refusal and affording Employee at least ten days to correct the same;

                (e) Employee’s act or omission that, in the reasonable determination of Employer’s Board of Directors (or a Committee of the Board), indicates alcohol or drug abuse by Employee;

                (f) Employee’s act or personal conduct that, in the judgment of Employer’s Board of Directors (or a Committee of the Board), gives rise to a material risk of liability of Employee or Employer under federal or applicable state law for discrimination, or sexual or other forms of harassment, or other similar liabilities to subordinate employees; or

                (g) The termination, on or before June 30, 2007, of any exclusive license agreement entered into between Employer and the University of Massachusetts Medical School due to the failure of Employer to close the Financing.

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                Upon termination of Employee’s employment by Employer for Cause or by Employee due to a voluntary resignation without Good Reason, all compensation and benefits to Employee hereunder shall cease and Employee shall be entitled only to payment, not later than three days after the date of termination, of any accrued but unpaid salary and unused vacation as provided in Sections 5.1 and 5.5 as of the date of such termination and any unpaid bonus that may have been previously awarded Employee as provided in Section 5.2 prior to such date.

          6.2. Termination by Employer without Cause or by Employee for Good Reason. Employer may also terminate Employee’s employment without Cause upon notice to Employee. Employee may also terminate Employee’s employment for Good Reason upon notice to the Employer. Upon termination of Employee’s employment by Employer without Cause or by Employee for Good Reason, all compensation and benefits to Employee hereunder shall cease and Employee shall be entitled to payment of: (a) any accrued but unpaid salary and unused vacation as of the date of such termination as required by Massachusetts law and any unpaid bonus that may have been previously awarded Employee as provided in Section 5.2 prior to such date, which shall be due and payable upon the effective date of such termination; (b) an amount, which shall be due and payable within ten (10) days following the effective date of such termination, equal to the salary that would otherwise be payable as provided in Section 5.1 for the period of time which is equal to the earlier of either (i) the twelve-month anniversary of such termination date; or (ii) the remainder of the Term of the Agreement but in no event less than six (6) months (either (i) or (ii) shall be referred to as the “Severance Period”) and (c) continued participation, at Employer’s cost and expense, during the Severance Period in any Employer-sponsored group benefit plans in which Employee was participating as of the date of termination. For purposes of this Agreement, Good Reason shall mean any of the following: (i) a material reduction in Employee’s duties, position, or responsibilities in effect immediately prior to such reduction; (ii) the Company reduces Employee’s Base Salary or bonus opportunity by more than 5% relative to his salary and bonus opportunity in effect immediately prior to such reduction; (iii) there is a material reduction by the Company in the kind or level of benefits to which Employee is entitled immediately prior to such reduction with the result that Employee’s overall benefits package is significantly reduced; (iv) without Employee’s express written consent, Employee’s relocation to a facility or a location more than thirty five (35) miles from his then current location in Worcester, Massachusetts; or (v) CytRx votes its shares of capital stock of Employer to elect individuals who are Affiliates to constitute a majority of the Employer’s Board of Directors.

          6.3. Death or Disability. Employee’s employment will terminate automatically in the event of Employee’s death or upon notice from Employer in event of his permanent disability. Employee’s “permanent disability” shall have the meaning ascribed to such term in any policy of disability insurance maintained by Employer (or Employee, as the case may be) with respect to Employee, or if no such policy is then in effect, shall mean Employee’s inability to fully perform his duties hereunder for any period of at least 75 consecutive days or for a total of 90 days, whether or not consecutive. Upon termination of Employee’s employment as aforesaid, all compensation and benefits to Employee hereunder shall cease and Employer shall pay to the Employee’s heirs or personal representatives, not later than ten days after the date of termination, any accrued but unpaid salary and unused vacation as of the date of such termination as required by Massachusetts law and any unpaid bonus that may have been previously awarded Employee as provided in Section 5.2 prior to such date.

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     7. Confidentiality. While this Agreement is in effect and for a period of four years thereafter, Employee shall hold and keep secret and confidential all “trade secrets” (within the meaning of applicable law) and other confidential or proprietary information of Employer and shall use such information only in the course of performing Employee’s duties under this Agreement; provided, however, that with respect to trade secrets, Employee shall hold and keep secret and confidential such trade secrets for so long as they remain trade secrets under applicable law. Employee shall maintain in trust all such trade secret or other confidential or proprietary information, as Employer’s property, including, but not limited to, all documents concerning Employer’s business, including Employee’s work papers, telephone directories, customer information and notes, and any and all copies thereof in Employee’s possession or under Employee’s control. Upon the expiration or earlier termination of Employee’s employment with Employer, or upon request by Employer, Employee shall deliver to Employer all such documents belonging to Employer, including any and all copies in Employee’s possession or under Employee’s control.

     8. Equitable Remedies; Injunctive Relief. Employee hereby acknowledges and agrees that monetary damages are inadequate to fully compensate Employer for the damages that would result from a breach or threatened breach of Section 7 of this Agreement and, accordingly, that Employer shall be entitled to equitable remedies, including, without limitation, specific performance, temporary restraining orders, and preliminary injunctions and permanent injunctions, to enforce such Section without the necessity of proving actual damages in connection therewith. This provision shall not, however, diminish Employer’s right to claim and recover damages or enforce any other of its legal or equitable rights or defenses.

     9. Indemnification; Insurance. Employer and Employee acknowledge that, as the Chief Executive Officer of Employer, Employee shall be a corporate officer of Employer and, as such, Employee shall be entitled to indemnification to the full extent mandated by Employer to its officers, directors and agents under the Employer’s Certificate of Incorporation and Bylaws as in effect as of the date of this Agreement. Subject to his insurability thereunder, Employer shall maintain Employee as an additional insured under its current policy of directors and officers liability insurance and shall use commercially reasonable efforts to continue to insure Employee thereunder, or under any replacement policies in effect from time to time, during the Term. Furthermore CytRx shall indemnify, defend and hold harmless Employee and IPIFINI, Inc. for any claim against Employee arising from his work for Employer from the commencement of Employee’s service as Employer’s President and/or Chief Executive Officer through the Effective Date.

     10. Severable Provisions. The provisions of this Agreement are severable and if any one or more provisions is determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provisions to the extent enforceable, shall nevertheless be binding and enforceable.

     11. Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon Employer, its successors and assigns and Employee and his heirs and representatives; provided, however, that neither party may assign this Agreement without the prior written consent of the other party.

5

     12. Entire Agreement. This Agreement including Schedule A contains the entire agreement of the parties relating to the subject matter hereof, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth otherwise therein or herein. Except as expressly provided herein, this Agreement supersedes any and all prior or contemporaneous agreements, written or oral, between Employee and Employer relating to the subject matter hereof. Any such prior or contemporaneous agreements are hereby terminated and of no further effect, and Employee, by the execution hereof, agrees that any compensation provided for under any such agreements is specifically superseded and replaced by the provisions of this Agreement. The parties agree that Employee’s fiduciary responsibility will be to RXi Pharmaceuticals, and not to CytRx, with no prejudice to the fact that CytRx may be advancing the compensation prior to the date of the Financing.

     13. Amendment. No modification of this Agreement shall be valid unless made in writing, approved by the Compensation Committee and signed by the parties hereto and unless such writing is made by an executive officer of Employer (other than Employee). The parties hereto agree that in no event shall an oral modification of this Agreement be enforceable or valid.

     14. Governing Law. This Agreement is and shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts without giving effect to Massachusetts’s choice-of-law rules.

     15. Review by Counsel. Following the closing of the Financing, Employer shall reimburse Employee for consultation and review of this Agreement by legal counsel of his choosing up to a maximum of $3,000.

     16. Notice. All notices and other communications under this Agreement shall be in writing and mailed, telecopied (in case of notice to Employer only) or delivered by hand or by a nationally recognized courier service guaranteeing overnight delivery to a party at the following address (or to such other address as such party may have specified by notice given to the other party pursuant to this provision):

If to Employer:

RXi Pharmaceuticals Corporation
One Innovation Drive
Worcester, MA 01605

and

Until the closing of the Financing, with a copy to:

CytRx Corporation

11726 San Vicente Boulevard, Suite 650

Los Angeles, CA 90049

Facsimile: (310) 826-5529

Attention: Chief Executive Officer

6

If to Employee:

Mr. Tod Woolf

     17. Survival. Sections 8 through 19 shall survive the expiration or termination of this Agreement.

     18. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement.

     19. Attorney’s Fees. In any action or proceeding to construe or enforce any provision of this Agreement the prevailing party shall be entitled to recover its or his reasonable attorneys’ fees and other costs of suit in addition to any other recoveries.

     IN WITNESS WHEREOF, this Agreement is executed as of the day and year first above written.

“EMPLOYER”
By:		/s/ STEVEN A. KRIEGSMAN
		Steven A. Kriegsman
		Director
“EMPLOYEE”
/s/ TOD WOOLF
	Tod Woolf
For the purposes of Section 9 only, CytRx Corporation has executed this Agreement as follows:
CYTRX CORPORATION
By:		/s/ STEVEN A. KRIEGSMAN
		Steven A. Kriegsman
		President

7

EX-10.11

Exhibit 10.11

RXi PHARMACEUTICALS CORPORATION
One Innovation Drive
Worcester, Massachusetts 01605

February 23, 2007

CytRx Corporation	Tariq M. Rana, Ph.D.
11726 San Vicente Boulevard, Suite 650	University of Massachusetts
Los Angeles, California 90049	364 Plantation St., LRB 827,
	Lab 860 A-E
Michael P. Czech, Ph.D.	Worcester, MA 01605
University of Massachusetts
55 Lake Avenue, Suite 100	Gregory J. Hannon, Ph.D.
Worcester, MA 01605	Howard Hughes Medical Institute
	Cold Spring Harbor Laboratory
Craig C. Mello, Ph.D.	One Bungtown Road
Howard Hughes Medical Institute	Cold Spring Harbor, NY 11724
University of Massachusetts
373 Plantation St., Suite 219
Worcester, MA 01605

      Re: Stockholders Agreement

Gentlemen:

     RXi Pharmaceuticals Corporation (“RXi”), CytRx Corporation (“CytRx”), and the other current stockholders and Scientific Advisory Board members of RXi (“SAB Members”) believe it is in their mutual best interests to enter into this letter agreement (this “Agreement”) in order to set forth their understanding and agreement regarding their ownership and voting of shares of common stock of RXi (“RXi Shares”), which for this purpose includes any and all additional shares of common stock and other voting securities of RXi that they may acquire or own at any time. The parties also believe it is mutually beneficial that, in consideration of CytRx’s willingness to enter into this Agreement, RXi grant CytRx certain rights to purchase any “New Securities” (as defined in Annex 1) which RXi proposes to sell or issue.

     In consideration of the mutual promises set forth herein, and other good and valuable consideration, the parties hereby agree as follows:

     1. From the period beginning upon the closing of an equity financing of RXi in an aggregate amount of not less than $15 million dollars from investors (including CytRx acting as an Investor) (the “Initial Financing”), CytRx agrees that it will not vote its RXi Shares or otherwise take steps to elect or have elected individuals who are (i) employees, officers or directors of CytRx, (ii) employees, officers or directors of any entity that has a contractual business relationship with CytRx, or (iii) employees, officers, directors of any entity that has a contractual business relationship with any officer or director of CytRx (collectively, (i), (ii), and

CytRx Corporation
February 23, 2007
Page 2

(iii) are “Affiliates”) to constitute a majority of RXi’s Board of Directors, and, in the event that Affiliates are elected to hold a majority of the seats of RXi’s Board of Directors, CytRx shall use reasonable efforts to cause a sufficient number of its Affiliates to resign from their position as directors of RXi or to cause a sufficient number of independent directors to be added to RXi’s Board of Directors, so that Affiliates do not constitute a majority of RXi’s Board of Directors. If at any time following the Initial Financing, CytRx, together with its subsidiaries and any other entities controlled by, or under common control with, CytRx (collectively, “CytRx Affiliates”) hold in the aggregate a majority of the outstanding voting power of RXi, CytRx will use reasonable efforts without delay to transfer or otherwise dispose of a sufficient number of shares of RXi’s voting stock to bring the aggregate ownership by CytRx and CytRx Affiliates of the total outstanding shares of RXi’s voting stock below fifty percent (50%), subject to the rules and regulations of the Securities and Exchange Commission and applicable state securities laws.

     2. CytRx agrees that, from the period beginning at the closing of the Initial Financing it shall vote, or provide its written consent with respect to, all RXi Shares then owned or controlled by it and CytRx Affiliates in such manner as shall be recommended by the Board of Directors of RXi with respect to any or all of the following matters that may be submitted by RXi for action by the stockholders of RXi:

          (a) any proposal to amend the certificate of incorporation of RXi to increase the authorized RXi Shares in order to facilitate obtaining additional financing needed by RXi at any time and from time to time to fund its ongoing working capital requirements;

          (b) the sale and issuance of RXi Shares or other securities in any such working capital financing; and

          (c) any other matter submitted for action by the RXi stockholders generally with respect to any such financing;

provided, however, that CytRx shall have no obligation hereunder with respect to any of the foregoing matters in which CytRx or the RXi Shares owned by it or CytRx Affiliates would receive different treatment than the treatment afforded the other RXi stockholders generally; and provided further, that CytRx’s obligations above shall not extend to any financing for purposes of acquiring the business, technologies, assets, or operations of any other company.

     3. RXi hereby grants CytRx the rights set forth on Annex 1 hereto, which is incorporated herein by reference. Such rights granted to CytRx shall become effective as of the first date as of which the issued and outstanding RXi Shares owned in the aggregate by CytRx and CytRx Affiliates shall constitute less than 50% of the total issued and outstanding RXi Shares, and shall terminate upon the earlier of (a) January 8, 2012 or (b) the first date as of which CytRx and CytRx Affiliates own in the aggregate less than ten percent (10%) of the outstanding RXi Shares. Notwithstanding the provisions of Annex 1, the rights granted thereunder to CytRx

CytRx Corporation
February 23, 2007
Page 3

shall be suspended if, and for so long as, CytRx shall be in breach of any of its obligations under this Agreement.

     4. Except for the provisions of paragraph 3, above, the provisions of this Agreement may be terminated at any time by the written consent or agreement of CytRx, RXi, and a majority of the SAB Members then serving as such. Unless sooner terminated, the provisions of this Agreement shall terminate as to an SAB Member, at such time as he is no longer serving as a member of RXi’s Scientific Advisory Board.

     5. This Agreement is governed by and construed in accordance with the laws of the State of Delaware irrespective of any conflicts of law principles.

     6. This Agreement shall be binding upon CytRx, RXi, and the SAB Members and their respective heirs and successors in interest. The obligations of each of CytRx and the SAB Members hereunder shall terminate as to any RXi Shares sold, transferred or assigned by it or him upon such sale, transfer or assignment, and this Agreement shall not bind or inure to the benefit of any transferee of RXi Shares sold, assigned or transferred by any party (other than transfers to CytRx Affiliates and other than transfers to a successor in interest of all or any substantial part of the business or assets of a party by way of sale, exchange, merger or otherwise).

     7. This Agreement may not be modified or amended, except in a writing signed by CytRx, RXi, and at least a majority of the SAB Members who are then serving as members of RXi’s Scientific Advisory Board.

     8. Without limiting the rights of each party hereto to pursue any and all other legal and equitable remedies available to such party, each party acknowledges and agrees that the remedy at law in the event of a breach by any party of it obligations under this Agreement would be inadequate and, therefore, that the parties shall be entitled to specific performance, injunctive relief and other equitable remedies in such event.

     9. This Agreement, including Annex 1 hereto, contain the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings with respect thereto.

     10. The parties hereto shall at all times act in good faith and shall not take any actions, or fail to take actions, to circumvent or frustrate the provisions of this Agreement.

CytRx Corporation
February 23, 2007
Page 4

     11. This Agreement may be executed in counterparts, each of which when executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instruction.

		Very truly yours,
		Tod Woolf, Ph.D., Chief Executive Officer
		RXi Pharmaceuticals Corporation
AGREED, ACKNOWLEDGED AND ACCEPTED:
CYTRX CORPORATION
By:
	Steven Kriegsman President and Chief Executive Officer
Craig C. Mello, Ph.D.
Tariq M. Rana, Ph.D.
Michael P. Czech, Ph.D.
Gregory J. Hannon, Ph.D.

ANNEX 1

Preemptive Rights

SECTION 1. General

A.

CytRx shall have the right, on the terms and provisions of this Annex 1, to purchase New Securities (as defined below in Paragraph B) that RXi may, from time to time, sell, issue or exchange.

B.

“New Securities” shall mean, subject to Section 4.B, any shares of common stock of RXi (“RXi Common Stock”) and other equity securities of RXi, whether now authorized or not, any rights, options, and warrants to purchase RXi Common Stock or other equity securities, and securities of any type whatsoever that are, or may become, convertible into, or exercisable or exchangeable for, shares of RXi Common Stock or other equity securities.

SECTION 2. Sales and Issuances of New Securities for Cash

A. RXi shall not at any time issue or sell for cash any New Securities (each, a “Cash Sale”), unless and until RXi shall have first delivered to CytRx notice of the proposed Cash Sale (the “Cash Offer Notice”) and otherwise complied with the provisions of this paragraph A, as follows:

(i) The Cash Offer Notice shall (1) describe in reasonable detail the proposed Cash Sale, (2) set forth the nature and dollar amount of the New Securities involved (the “Offered Securities”), (3) describe the sale price of the Offered Securities and other terms of the proposed Cash Sale, (4) identify the persons or entities, if known, to which the Offered Securities are proposed to be offered, issued or sold, and (5) include an express offer to issue and sell to CytRx a portion of such Offered Securities determined by multiplying the total dollar amount of Offered Securities by CytRx’s Proportionate Percentage (as hereinafter defined) as determined as of the date of the Cash Offer Notice. CytRx’s “Proportionate Percentage” for purposes of this Annex shall mean, as of any determination date, a fraction, expressed as a percentage, the numerator of which is the sum of (w) the number of issued and outstanding shares of RXi Common Stock then owned beneficially (as hereinafter defined) by CytRx plus (x) the number of shares of RXi Common Stock that may be acquired by CytRx upon the exercise, conversion or exchange of rights, options, warrants and other securities of RXi owned beneficially by CytRx that are exercisable or exchangeable for, or convertible into, shares of RXi Common Stock within 60 days of the date of determination of such beneficial ownership, and the denominator of which is the sum of (y) the total number of shares of RXi Common Stock then issued and outstanding plus (z) the number of shares referred to in clause (x) above. CytRx shall be deemed to “beneficially own” shares of RXi Common Stock and other

A-1

ANNEX 1

securities that are held of record by CytRx or held in the name of a broker or other custodian for CytRx’s account.

(ii)	CytRx shall have the right during the 10-business day period following delivery of the Cash Offer Notice to elect to purchase, at the price and upon the other terms specified therein, its Proportionate Percentage of the Offered Securities; provided, however, that RXi may postpone or terminate the transaction described in the Cash Offer Notice, which shall have the effect of postponing or terminating CytRx’s rights under this paragraph A. To exercise its rights under this paragraph A, CytRx must notify RXi on or prior to the expiration of the foregoing 10-business day period of the amount, if any, of the Offered Securities (not to exceed its CytRx’s Proportionate Percentage thereof) that CytRx elects to purchase (the “Notice of Acceptance”).
(iii)	RXi shall have 90 days from the date of the Cash Offer Notice to consummate the Cash Sale in accordance with the Cash Offer Notice, which may include the issuance or sale of all or any part of the Offered Securities which CytRx has not elected to purchase as reflected in the Notice of Acceptance. Any of the Offered Securities not so issued or sold by RXi within such 90-day period shall not be issued or sold by RXi, unless and until RXi again complies with the procedures specified in this Annex.
(iv)	In the event RXi determines in good faith to issue or sell less than all the Offered Securities pursuant to the Cash Sale, then the amount of the Offered Securities that CytRx shall be entitled to purchase shall automatically be reduced to an amount equal to the amount of the Offered Securities, if any, that CytRx elected to purchase as set forth in its Notice of Acceptance multiplied by a fraction, (1) the numerator of which shall be the amount of Offered Securities that RXi issues or sell (including the Offered Securities to be issued or sold to CytRx pursuant to subparagraph A(ii) above prior to such reduction) and (2) the denominator of which shall be the amount of the Offered Securities that RXi initially proposed to issue or sell as specified in the Cash Offer Notice.
(v)	On the date of the closing of the issuance or sale of all or less than all the Offered Securities, CytRx shall purchase from RXi, and RXi shall sell and issue to CytRx, the amount of Offered Securities specified in the Notice of Acceptance (as reduced pursuant to subparagraph A(iv) above, if applicable) upon the terms and conditions specified in the Cash Offer Notice. The purchase by CytRx of any of the Offered Securities is subject in all cases to the preparation, execution and delivery by RXi and CytRx of a customary purchase agreement relating to such Offered Securities and other documents consistent with the terms of the Cash Offer Notice and reasonably satisfactory in form and substance to CytRx, RXi and their respective counsel.

A-2

ANNEX 1

SECTION 3. Sales and Issuances of New Securities Other than for Cash

A. If at any time or from time to time RXi shall issue or sell for consideration other than cash any New Securities (each, a “Non-Cash Sale”), it shall comply with the provisions of this Section 3, as follows:

(i)

RXi shall deliver to CytRx notice of the Non-Cash Sale (the “Non-Cash Offer Notice”). Except as provided below, the Non-Cash Offer Notice shall be delivered within 10 days following the issuance or sale of such New Securities and (1) describe in reasonable detail the Non-Cash Sale, (2) set forth the nature and amount of the New Securities involved, (3) describe the price or value attributable to the New Securities, and other terms of the Non-Cash Sale, (4) identify the persons or entities, if known, to which such New Securities are proposed to be offered, issued or sold, and (5) include an express offer to issue and sell to CytRx from RXi’s authorized but unissued shares of RXi Common Stock, or from treasury shares, such number of shares of RXi Common Stock as are necessary and sufficient to restore CytRx, after giving effect to such award, issuance, sale or exchange, to its Proportionate Percentage as of the time immediately preceding such Non-Cash Sale. Notwithstanding the foregoing, if the amount of the New Securities issued or sold in a Non-Cash Sale, when added to all other New Securities issued and sold in Non-Cash Sales of which CytRx shall not have been notified by RXi in accordance with this subparagraph A(i), represents 5% or less of the shares of RXi Common Stock outstanding immediately prior to such Non-Cash Sale, then RXi may postpone the Non-Cash Offer Notice hereunder until the date 10 days following the earlier of (1) the end of the calendar quarter during which such Non-Cash Sale occurred and (2) the date of the next subsequent issuance or sale of New Securities in a Non-Cash Sale which, when added to all other New Securities issued and sold by RXi in Non-Cash Sales as to which no Non-Cash Offer Notice shall have been given to CytRx, exceeds 1% of the shares of RXi Common Stock outstanding immediately prior to the earliest of all such unreported Non-Cash Sales; provided, however, that in the event the Board of Directors of RXi shall determine to authorize or approve of a merger of RXi with or into any other person or entity, or a sale or other disposition of all or substantially all of RXi shares of capital stock, business or assets, RXi shall immediately deliver to CytRx all previously postponed Non-Cash Offer Notices.

(ii)

CytRx shall have the right during the 30-day period following delivery of the Non-Cash Offer Notice to elect in its discretion to purchase all or any portion of the number of shares of RXi Common Stock determined as provided in subparagraph A(i) above. To exercise its rights under this paragraph A, CytRx must notify RXi on or prior to the expiration of the foregoing 30-day period of the number, if any, of such shares of RXi Common Stock, up to the whole number thereof, that CytRx elects to purchase (the “Notice of Acceptance”). The

A-3

ANNEX 1

purchase price to CytRx of such shares of RXi Common Stock shall be the Fair Value (as defined below) of such shares.

(iii)

At a closing to be held on a date that is mutually agreeable to RXi and CytRx that is not more than 20 days after the Notice of Acceptance, CytRx shall acquire from RXi, and RXi shall sell and issue to CytRx, the number of shares of RXi Common Stock specified in the Notice of Acceptance. The purchase by CytRx of such shares of RXi Common Stock is subject in all cases to the preparation, execution and delivery by RXi and CytRx of a customary purchase agreement relating to such shares of RXi Common Stock and other documents consistent with the terms hereof and reasonably satisfactory in form and substance to CytRx, RXi and their respective counsel.

(iv)

The “Fair Value” per share of RXi’s Common Stock shall be equal to the average closing price of RXi Common Stock as reported on Nasdaq (or other principal exchange on which such shares are then traded) over the 10 trading days ending on the earlier of (1) the date of any press release or other announcement by RXi of the transaction involving such New Securities and (2) the date that CytRx delivers its Notice of Acceptance under subparagraph B(ii) above. If RXi Common Stock is not publicly traded at that time, the Fair Value of a share of RXi Common Stock shall be the fair market value per share of RXi Common Stock as determined in good faith by the Board of Directors of RXi acting by not less than a majority of the disinterested directors of RXi.

SECTION 4. Excluded Securities and New Option Securities

A.

Notwithstanding any other provision of this Annex, this Annex shall not apply to (i) any New Securities issued as a dividend or other distribution on or with respect to RXi Common Stock, or (ii) any stock split, recapitalization or reclassification of RXi Common Stock.

B.

Notwithstanding any other provision of this Annex, the provisions of this Annex shall not apply to the grant, award or issuance for consideration other than cash of any New Securities consisting solely of options, warrants or other rights to subscribe for or purchase shares of RXi Common Stock or other equity securities (“New Option Securities”). With respect to any New Option Securities granted, awarded or issued by RXi for consideration other than cash, the provisions of Section 3 shall apply in all respects to the issuance or sale of any New Securities upon the exercise or conversion of such New Option Securities. Without limiting the generality of the preceding sentence, the purchase price to CytRx of any shares of RXi Common Stock that it elects to purchase upon any such exercise or conversion shall be the Fair Value of such shares as of the date of CytRx’s Notice of Acceptance delivered in accordance with Section 3.

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ANNEX 1

SECTION 5. Miscellaneous

A.	All notices and other communications provided for or permitted to be given under this Annex shall be in writing and shall be given by depositing the notice in the United States mail, addressed to the party to be notified, postage paid, and registered or certified with return receipt requested, or by such notice being delivered in person or by facsimile communication to such party. Notices or other communications given or served pursuant hereto shall be effective upon receipt by the party to be notified. All notices or other communications to be sent to RXi shall be sent to One Innovation Drive, Worcester, Massachusetts 01605, or such other address as RXi may specify by notice hereunder to CytRx. All notices or other communications to be sent to CytRx shall be sent or made at the address of CytRx as set forth in RXi’s books and records or such other address as CytRx may specify by notice hereunder to RXi.
B.	No delay or failure on the part of any party in exercising any rights hereunder, and no partial or single exercise thereof, shall constitute a waiver of such rights or of any other rights hereunder.
C.	In the event that any provision of this Annex, or the application of such provision to any person or circumstance, is determined by a court, arbitrator or other adjudicator to be invalid or unenforceable to any extent, the remainder of this Annex, and the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and such provision and each other provision of this Annex shall be valid and enforceable to the greatest extent permitted by law.
D.	In the event of any arbitration, litigation or other legal proceeding involving the interpretation of this Annex or enforcement of the rights or obligations of the parties hereto, the prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and expenses as determined by the court, arbitrator or other adjudicator. In the event that the arbitration, litigation or other legal proceeding is successful only in party, the court, arbitrator or other adjudicator shall be entitled to prorate and allocate said fees and expenses between the parties.

A-5

EX-10.13

Exhibit 10.13

CONTRIBUTION AGREEMENT

between

CYTRX CORPORATION

and

RXi PHARMACEUTICALS CORPORATION

April 30, 2007

     THIS CONTRIBUTION AGREEMENT (this “Agreement”) is dated as of April 30, 2007 and is made by and between CytRx Corporation, a Delaware corporation (“CytRx”), and RXi Pharmaceuticals Corporation, a Delaware corporation and majority-owned subsidiary of CytRx (“RXi”). CytRx and RXi are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS:

A. The Parties previously entered into a Contribution Agreement, dated as of January 8, 2007 (the “Initial Contribution Agreement”), pursuant to which CytRx assigned and contributed to RXi, and RXi assumed from CytRx, certain technology, contractual rights and obligations, and intellectual property rights relating to or useful for the conduct of the “RXi Business” (as defined therein), as well as a letter agreement, dated as of January 10, 2007 (the “Reimbursement Agreement”), under which RXi agrees to reimburse CytRx for expenses incurred by CytRx in connection with the formation and initial operations of RXi, including an allocable share of placement agent fees and other offering expenses relating to RXi fundraising activities.

B. RXi has entered into four License Agreements and an Invention Disclosure Agreement (collectively, the “UMMS Agreements”)with the University of Massachusetts Medical School (“UMMS”), each dated as of January 10, 2007, under which UMMS grants to RXi certain rights with respect to current and future UMMS proprietary technologies.

C. The UMMS Agreements may be terminated by UMMS, or will not become effective, unless and until RXi completes an “Initial Financing” (as defined therein) by a date specified.

D. RXi has entered into Scientific Advisory Board Agreements (the “SAB Agreements”) dated February 26, 2007 with each of Craig C. Mello, Gregory J. Hannon, Tariq M. Rana and Michael P. Czech (the “SAB Members”).

E. The SAB Agreements will not become effective unless and until RXi completes an “Equity Funding” (as defined therein) by a date specified.

F. RXi has entered into an Employment Agreement (the “CEO Agreement”) dated February 22, 2007, with Tod Woolf (“Woolf”)

G. CytRx now desires to assign and contribute to RXi, and RXi wishes to receive and accept, funds sufficient to satisfy the Initial Financing requirements of the UMMS Agreements and to constitute an Equity Financing under the SAB Agreements, on the terms and provisions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CytRx and RXi agree as follows:

ARTICLE 1

CONTRIBUTION OF FUNDS

     1.1 Contribution of Funds. Concurrently herewith, CytRx shall contribute to RXi for use by RXi as provided herein funds (the “Funds”) totaling Seventeen Million Dollars ($17,000,000), against RXi’s delivery to CytRx of the RXi Shares (as defined in Section 1.2). Of the Funds, Two Million Dollars ($2,000,000) (the “Estimated Reimbursement Amount”) shall be retained by CytRx as satisfaction, in full, of all of RXi’s current liabilities to CytRx under the Reimbursement Agreement, subject to Section 1.3. The remainder of Fifteen Million Dollars ($15,000,000) shall be paid to RXi by wire transfer to an account of RXi or its agent designated by RXi for this purpose.

     1.2 Consideration. In consideration of CytRx’s contribution to RXi of the Funds as provided in Section 1.1, RXi shall issue and deliver to CytRx 1,838 shares (the “RXi Shares”) of the common stock, par value $.0001 per share (“RXi Common Stock”), of RXi, which, when aggregated with the 4,153 shares of RXi Common Stock held by CytRx on the date hereof, shall represent approximately 89.4% of the issued and outstanding shares of RXi Common Stock immediately following such issuance of the RXi Shares. CytRx acknowledges that the certificates representing the RXi Shares will contain customary legends regarding restrictions on transferability under federal and state securities laws.

     1.3 Final Reimbursement Amount. The Estimated Reimbursement Amount represents the estimated amount owing by RXi to CytRx under the Reimbursement Agreement as of the date hereof. CytRx and RXi shall undertake as soon as possible after the date hereof, and in any event within 60 days after the date hereof, to determine the actual amount owing by RXi to CytRx. To the extent the actual amount finally determined to be owing to CytRx (the “Final Reimbursement Amount”) is less than the Estimated Reimbursement Amount, CytRx shall promptly surrender to RXi for cancellation the number of the RXi Shares (rounded to the nearest whole number of RXi shares) determined by dividing by $9,249.18 the excess of the Estimated Reimbursement Amount over the Final Reimbursement Amount. To the extent that the Final Reimbursement Amount exceeds the Estimated Reimbursement Amount, RXi shall promptly issue and deliver to CytRx the number of additional shares of RXi Common Stock (rounded to the nearest whole number of shares) determined by dividing by $9,249.18 the excess of the Final Reimbursement Amount over the Estimated Reimbursement Amount.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF CYTRX

     As a material inducement to RXi to enter into this Agreement, CytRx hereby represents and warrants to RXi that:

     2.1 Organization and Qualification. CytRx is a corporation, validly existing and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement.

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     2.2 Authorization. The execution, delivery and performance of this Agreement by CytRx have been duly authorized by all necessary corporate action on the part of CytRx.

     2.3 Representations Regarding the RXi Shares.

          (a) CytRx is acquiring the RXi Shares for its own account, for investment and not for, with a view to, or in connection with, any distribution or public offering thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”); provided, however, that the foregoing shall not be in derogation of any of CytRx’s obligations under the UMMS Agreements, or otherwise, to reduce its ownership of RXi Common Stock following the Initial Financing.

          (b) CytRx understands that the RXi Shares have not been, and will not be, registered under the Securities Act or any state securities law, by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act and such laws, that the RXi Shares must be held indefinitely unless they are subsequently registered under the Securities Act and such laws or a subsequent disposition thereof is exempt from registration, that the certificates for the Shares shall bear a legend to such effect, and that appropriate stop transfer instructions may be issued. CytRx further understands that such exemption depends upon, among other things, the bona fide nature of CytRx’s investment intent expressed herein.

          (c) CytRx understands the meaning of the term “accredited investor” as used in Regulation D promulgated under the Securities Act and represents and warrants to RXi that it is an “accredited investor” for purposes of acquiring the RXi Shares hereunder.

          (d) CytRx has sufficient knowledge and experience in business and financial matters and with respect to investment in securities of privately held companies so as to enable it to analyze and evaluate the merits and risks of the investment contemplated hereby and is capable of protecting its interest in connection with this transaction. CytRx is able to bear the economic risk of such investment, including a complete loss of the investment.

          (e) CytRx acknowledges that it and its representatives have had the opportunity to ask questions and receive answers from officers and representatives of RXi concerning RXi and its business and the transactions contemplated by this Agreement and to obtain any additional information which RXi possesses or can acquire that is necessary to verify the accuracy of the information regarding RXi herein set forth or otherwise desired in connection with its acquisition of the Shares hereunder.

          (f) CytRx understands that the exemption from registration afforded by Rule 144 (the provisions of which are known to CytRx) promulgated by the Securities and Exchange Commission under the Securities Act depends upon the satisfaction of various conditions, and that such exemption is not currently available.

     2.4 Disclaimer. CytRx has not made, and shall not be deemed to have made, to RXi any representation or warranty other than as expressly set forth in this Article 2.

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ARTICLE 3

REPRESENTATIONS, WARRANTIES AND COVENANTS OF RXi

     In order to induce CytRx to enter into this Agreement, RXi hereby represents and warrants to CytRx that:

     3.1 Organization and Qualification. RXi is a corporation, validly existing and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement.

     3.2 Authorization. The execution, delivery and performance by RXi of this Agreement have been duly authorized by all necessary corporate action on the part of RXi.

     3.3 Capitalization. Immediately following the issuance and delivery hereunder of the RXi Shares, the authorized capital stock of RXi shall consist of 1,000,000 shares of RXi Common Stock, of which 6,703 shares, including the RXi Shares, shall be issued and outstanding and zero shares shall be reserved for issuance upon exercise of outstanding stock options of RXi (the “Options”) and 259 shares shall be reserved for issuance to UMMS as provided in the UMMS Agreements. Except for the Options and the UMMS Agreements and obligations to issue stock options pursuant to the SAB Agreements and other employment and consulting agreements entered into by RXi in the ordinary course of business prior to the date hereof, there are no outstanding subscriptions, option, calls, contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement and also including any rights plan or other anti-takeover agreement, obligating RXi to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of RXi or obligating RXi to grant, extend or enter into any such agreement or commitment. There are no outstanding stock appreciation rights or similar derivative securities or rights of RXi. Other than the letter agreement, dated January 10, 2007, between CytRx and UMMS and the letter agreement, dated February 15, 2007, among RXi, CytRx and the other current stockholders of RXi as such letter agreements pertain to shares of RXi Common Stock held by CytRx and its “Affiliates” (as defined), there are no voting trusts, irrevocable proxies or other agreements or understandings to which RXi is a party or is bound with respect to the voting of any shares of capital stock of RXi.

     3.4 Issuance of the RXi Shares. The issuance and delivery of the RXi Shares in accordance with this Agreement have been duly authorized by all necessary corporate action on the part of RXi. The RXi Shares, when so issued and delivered against payment therefor in accordance with the provisions of this Agreement, will be duly and validly issued, fully paid and non-assessable.

     3.5 Permits. All of the approvals, authorizations, permit, licenses, waivers, filings and consents required to be made, obtained or given by RXi to accomplish the transactions contemplated by this Agreement have been made or obtained by RXi, unless the failure to obtain any such approval, authorization, permit, license, waiver, filing or consent would not, individually or collectively, reasonably be expected to materially adversely affect CytRx or

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otherwise result in a material diminution of the benefits of the transactions contemplated by this Agreement to CytRx.

     3.6 Contracts and Agreements.

          (a) With respect to each UMMS Agreement (i) such UMMS Agreement has not been terminated by RXi, nor has RXi received written notice of termination thereof by UMMS and is legal, valid, binding, enforceable and in full force and effect with respect to RXi and, to the knowledge of RXi, UMMS, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), (ii) neither RXi nor, to RXi’s knowledge, UMMS is in material breach or violation of or in material default in the performance or observance of any term or provision of such UMMS Agreement, and, to the knowledge of RXi, no event has occurred which, with lapse of time or action by a third party, would result in a default under such UMMS Agreement.

          (b) With respect to each SAB Agreement (i) such SAB Agreement has not been terminated by RXi, nor has RXi received written notice of termination thereof by the applicable SAB Member and is legal, valid, binding and enforceable and in full force and effect with respect to RXi and, to the knowledge of RXi, the applicable SAB Member, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), (ii) neither RXi nor, to RXi’s knowledge, any SAB Member is in material breach or violation of or in material default in the performance or observance of any term or provision of such SAB Agreement, and, to the knowledge of RXi, no event has occurred which, with lapse of time or action by a third party, would result in a default under such SAB Agreement.

          (c) Except for the UMMS Agreements, the RXi-CSHL License Agreement dated as of March 15, 2007 between RXi and Cold Spring Harbor Laboratory, the SAB Agreements, the CEO Agreement and other agreements between RXi and its employees and contracts and agreements between CytRx and RXi, RXi is not party to or bound by any contract, agreement, arrangement or understanding of the sort described in Item 601(a)(10) of Reg. S-K under the Securities Act.

          (d) Other than its liabilities and obligations under the UMMS Agreements, the SAB Agreements, the CEO Agreement and other employment and consulting agreements to which RXi is a party and contracts and agreements between CytRx and RXi, RXi has no liabilities or obligations other than liabilities and obligations incurred in the ordinary course of the RXi Business (as defined in the Initial Contribution Agreement), none of which is material, individually or in the aggregate.

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ARTICLE 4

CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES

     4.1 Further Assurances. Each of CytRx and RXi agrees to duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things that may be necessary, or that the other Party hereto may at any time and from time to time reasonably request, in connection with this Agreement or to carry out more effectively the provisions and purposes of, or to better assure and confirm unto such other Party its rights and remedies under, this Agreement.

ARTICLE 5

MISCELLANEOUS

     5.1 Registration Rights. The terms of Exhibit A hereto are incorporated into this Agreement as if set forth fully herein. The terms of Exhibit A hereto supersede and replace in their entirety the terms of Exhibit A to the Contribution Agreement between CytRx and RXi dated as of January 8, 2007 (the “Old Registration Rights”), and the Old Registration Rights shall have no force and effect after the date hereof.

     5.2 Entire Agreement. This Agreement, together with Exhibit A hereto, constitutes, on and as of the date hereof, the entire agreement of CytRx and RXi with respect to the subject matter hereof, and all prior or contemporaneous understandings or agreements, whether written or oral, between CytRx and RXi with respect to such subject matter are hereby superseded in their entirety.

     5.3 No Implied Waivers; Rights Cumulative. No failure on the part of CytRx or RXi to exercise and no delay in exercising any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, including, without limitation, the right or power to terminate this Agreement, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

     5.4 Amendments. No amendment, modification, waiver, termination or discharge of any provision of this Agreement, nor consent to any departure by CytRx or RXi therefrom, shall in any event be effective unless the same shall be in writing specifically identifying this Agreement and the provision intended to be amended, modified, waived, terminated or discharged and signed by the Party against whom enforcement of such amendment is sought, and each such amendment, modification, waiver, termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by the Party against whom enforcement of such variation, contradiction or explanation is sought.

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     5.5 Successors and Assigns; Third-Party Beneficiaries. The terms and provisions of this Agreement shall inure to the benefit of, and be binding upon, CytRx, RXi and their respective successors and assigns. This Agreement is for the sole benefit of the parties and their permitted successors and assignees no other provision of this Agreement will give or be construed to give any Person, other than the parties and such successors and assignees, any legal or equitable rights hereunder.

     5.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws provisions thereof.

     5.7 Execution in Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their respective corporate names by their respective authorized representatives as of the date first set forth above.

CYTRX CORPORATION
By:
	Steven A. Kriegsman
	Chief Executive Officer
RXi PHARMACEUTICALS CORPORATION
By:
	Tod Woolf, Ph.D.
	President

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Exhibit A

Form of Registration Rights Terms

REGISTRATION RIGHTS TERMS

     SECTION 1. Definitions. As used in this Exhibit, the following terms shall have the following meanings:

          (a) The term “1934 Act” means the Securities Exchange Act of 1934, as amended.

          (b) The term “Common Stock” means the RXi’s Common Stock, $.0001 par value per share.

          (c) The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement.

          (d) The term “Registrable Shares” means the Common Stock issued to CytRx pursuant to the Contribution Agreement between RXi and CytRx dated as of January 8, 2007 and the Contribution Agreement between RXi and CytRx dated as of April 30, 2007 and any Common Stock issued as a dividend or other distribution with respect to, or in exchange or in replacement of, such Common Stock.

          (e) The term “Rule 144” means Rule 144 promulgated under the Securities Act.

          (f) The term “SEC” means the Securities and Exchange Commission.

          (g) The term “Securities Act” means the Securities Act of 1933, as amended.

     SECTION 2. Request for Registration. If at any time after the Common Stock is registered under the 1934 Act, RXi shall receive a written request (specifying that it is being made pursuant to this Section 2 from CytRx that RXi file a registration statement under the Securities Act, or a similar document pursuant to any other statute then in effect corresponding to the Securities Act, covering the registration of Registrable Shares the expected price to the public of which equals or exceeds $5,000,000 (based on the market price or fair value on the date of such request), then RXi shall promptly use its best efforts to cause all Registrable Shares that CytRx has requested be registered to be registered under the Securities Act on Form S-1 or any other available form.

     Notwithstanding the foregoing, (i) RXi shall not be obligated to effect a registration pursuant to this Section 2 during the period starting with the date sixty (60) days prior to RXi’s estimated date of filing of, and ending on a date six (6) months following the effective date of, a registration statement pertaining to an underwritten public offering of securities for the account of RXi, provided that RXi is actively employing in good faith its best efforts to cause such registration statement to become effective and that RXi’s estimate of the date of filing such

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registration statement is made in good faith; (ii) RXi shall not be obligated to effect a registration pursuant to this Section 2 within six (6) months after the effective date of a prior registration under this Section 2; and (iii) if RXi shall furnish to CytRx a certificate signed by the President of RXi stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to RXi or its shareholders for a registration statement to be filed in the near future, then RXi’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed ninety (90) days; provided, however, that RXi shall not be permitted to so defer its obligation more than once in any 12-month period.

     RXi shall not be obligated to effect more than two registrations on behalf of CytRx pursuant to this Section 2.

     SECTION 3. RXi Registration. If at any time RXi proposes to register any of its Common Stock under the Securities Act in connection with the public offering of such securities for its own account or for the accounts of shareholders other than CytRx, solely for cash on a form that would also permit the registration of the Registrable Shares, RXi shall, each such time, promptly give CytRx written notice of such determination. Upon the written request of CytRx given within thirty (30) days after giving of any such notice by RXi, RXi shall, subject to the limitations set forth in Section 8, use its best efforts to cause to be registered under the Securities Act all of the Registrable Shares that CytRx has requested be registered; provided, that RXi shall have the right to postpone or withdraw any registration statement relating to an offering in which CytRx is eligible to participate under this Section 3 without any liability or obligation to CytRx under this Section 3.

     SECTION 4. Obligations of RXi. Whenever required under Section 2, Section 3 or Section 11 to use its best efforts to effect the registration of any Registrable Shares, RXi shall, as expeditiously as reasonably possible:

          (a) Prepare and file with the SEC a registration statement with respect to such Registrable Shares and use its best efforts to cause such registration statement to become effective, and, upon the request of CytRx, keep such registration statement effective for a period of up to one hundred eighty (180) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such 180-day period shall be extended for a period of time equal to the period CytRx refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of RXi; and (ii) in the case of any registration of Registrable Shares on Form S-3 which are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such 180-day period shall be extended for up to ninety (90) days, if necessary, to keep the registration statement effective until all such Registrable Shares are sold.

          (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

          (c) Furnish to CytRx such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other

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documents as they may reasonably request in order to facilitate the disposition of such Registrable Shares owned by it.

          (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the distribution of the securities covered by the registration statement, provided that RXi shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, and further provided that (anything in this Exhibit to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the securities in that jurisdiction be borne by shareholders, then such expenses shall be payable by CytRx to the extent required by such jurisdiction.

          (e) Provide a transfer agent for the Common Stock no later than the effective date of the first registration of any Registrable Shares.

          (f) Otherwise use its best efforts to comply with all applicable rules and regulations of the SEC.

          (g) Use its best efforts either (i) to cause all such Registrable Shares to be listed on a national securities exchange (if such securities are not already so listed) and on each additional national securities exchange on which similar securities issued by RXi are then listed, if the listing of such securities is then permitted under the rules of such exchange, or (ii) to secure designation of all such Registrable Shares as a Nasdaq “national market system security” within the meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure listing on Nasdaq for such Registrable Shares and, without limiting the generality of the foregoing, to arrange for at least two (2) market makers to register as such with respect to Registrable Shares with the National Association of Securities Dealers.

          (h) Enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as CytRx shall reasonably request in order to expedite or facilitate the disposition of such Registrable Shares.

          (i) Make available for inspection by CytRx, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by CytRx or any such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of RXi, and cause all of RXi’s officers, directors and employees to supply all information reasonably requested by CytRx, underwriter, attorney, accountant or agent in connection with such registration statement.

          (j) Use every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of such registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the lifting thereof at the earliest reasonable time.

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          (k) Make such representations and warranties to CytRx and the underwriters as are customarily made by issuers to selling stockholders and underwriters, as the case may be, in primary underwritten public offerings.

     SECTION 5. Furnish Information. It shall be a condition precedent to the obligations of RXi to take any action pursuant to this Exhibit with respect to the registration of any CytRx’s Registrable Shares that CytRx shall take such actions and furnish to RXi such information regarding itself, the Registrable Shares held by it, and the intended method of disposition of such securities, as RXi shall reasonably request and as shall be required in connection with any registration, qualification or compliance referred to in this agreement, including, without limitation (i) in connection with an underwritten offering, enter into an appropriate underwriting agreement containing terms and provisions then customary in agreements of that nature, (ii) enter into such custody agreements, powers of attorney and related documents at such time and on such terms and conditions as may then be customarily required in connection with such offering and (iii) distribute the Registrable Shares only in accordance with and in the manner of the distribution contemplated by the applicable registration statement and prospectus. In addition, CytRx shall promptly notify RXi of any request by the Commission or any state securities commission or agency for additional information or for such registration statement or prospectus to be amended or supplemented.

     SECTION 6. Expenses of Demand Registration. All expenses incurred in connection with any registration pursuant to Section 2 or Section 11 (excluding underwriters’ discounts and commissions), including, without limitation, all registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for RXi, and the reasonable fees and disbursements of one special counsel for CytRx, shall be borne by RXi whether or not the registration statement to which such registration expenses relate becomes effective; provided, however, that RXi shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration request is subsequently withdrawn at the request of CytRx (in which case CytRx shall bear such expenses), unless CytRx agrees to forfeit its right to demand registrations pursuant to Section 2.

     SECTION 7. RXi Registration Expenses. All expenses (excluding underwriters’ discounts and commissions) incurred in connection with any registration pursuant to Section 3, including, without limitation, any additional registration and qualification fees and any additional fees and disbursements of counsel to RXi that result from the inclusion of securities held by CytRx in such registration and the reasonable fees and disbursements of one special counsel for CytRx, shall be borne by RXi whether or not the registration statement to which such registration expenses relate becomes effective.

     SECTION 8. Underwriting Requirements.

          (a) In connection with any offering under Section 3 involving an underwriting of shares being issued by RXi, RXi shall not be required to include any Registrable Shares in such underwriting unless CytRx accepts the terms of the underwriting as agreed upon between RXi and the underwriters selected by it, and then only in such quantity as will not, in the reasonable opinion of the underwriters, jeopardize the success of the offering by RXi. If the total amount of securities that CytRx requests to be included in an underwritten offering under

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Section 3 exceeds the amount of securities that the underwriters reasonably believe compatible with the success of the offering, RXi may exclude some or all of the Registrable Shares from such registration and underwriting.

          (b) With respect to any underwriting of shares to be registered under Section 2 or Section 11, CytRx shall have the right to designate the managing underwriter or underwriters, subject to the consent of RXi. In connection with any underwritings of shares to be registered under Section 3, RXi shall have the right to designate the managing underwriter or underwriters. In any such case, such consent of RXi or CytRx shall not be unreasonably withheld or delayed.

     SECTION 9. Delay of Registration. CytRx shall not have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Exhibit.

     SECTION 10. Indemnification. In the event any Registrable Shares are included in a registration statement under this Exhibit:

          (a) To the extent permitted by law, in connection with any Registration in which Registrable Shares are included, RXi will indemnify and hold harmless CytRx and its officers, directors and stockholders, legal counsel and accountants for CytRx, any underwriter (as defined in the Securities Act) for CytRx and each person, if any, who controls CytRx or underwriter within the meaning of the Securities Act or the 1934 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue or alleged untrue statement of any material fact contained in such registration statement, including, without limitation, any prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading or (iii) any violation by RXi of any rule or regulation promulgated under the Securities Act applicable to RXi and relating to action or inaction required of RXi in connection with any such registration; and will promptly reimburse CytRx, and any underwriter, controlling person or other aforementioned person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action, provided, however, that the indemnity agreement contained in this Section 10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of RXi (which consent shall not be unreasonably withheld or delayed) nor shall RXi be liable to CytRx, or any underwriter, controlling person or other aforementioned person in any such case for any such loss, claim, damage, liability or action to the extent that it (i) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished to RXi expressly for use in connection with such registration by or on behalf of CytRx, or any underwriter, controlling person or other aforementioned person, (ii) is caused by the failure of CytRx to deliver a copy of the final prospectus relating to such Registrable Shares, as then amended or supplemented, in connection with a purchase, if RXi had previously furnished copies thereof to CytRx or (iii) is caused by CytRx’s disposition of Registrable Shares during

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any period during which CytRx is obligated to discontinue any disposition of Registrable Shares under Section 13.

          (b) To the extent permitted by law, CytRx will indemnify and hold harmless RXi, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls RXi within the meaning of the Securities Act, and any underwriter (within the meaning of the Securities Act) for RXi against any losses, claims, damages or liabilities to which RXi or any such director, officer, controlling person or underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in such registration statement, including any prospectus or final prospectus contained therein or any amendments or supplements thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information relating to and furnished to RXi by CytRx expressly for use in connection with such registration; and will promptly reimburse RXi or any such director, officer, controlling person or underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of CytRx (which consent shall not be unreasonably withheld or delayed) and provided further that CytRx shall not have any liability under this Section 10(b) in excess of the net proceeds actually received by CytRx in the relevant public offering.

          (c) Promptly after receipt by an indemnified party under this Section 10 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 10, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. The failure to notify an indemnifying party promptly of the commencement of any such action, if prejudicial to his ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 10, but the omission so to notify the indemnifying party will not relieve him of any liability that he may have to any indemnified party otherwise than under this Section 10.

          (d) If the indemnification provided for in this Section 10 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under Section 10(a) or Section 10(b) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein in such proportion as is appropriate to reflect the relative fault of RXi and CytRx in connection with the statements or omissions described in such Section 10(a) or Section 10(b) which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of RXi and

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CytRx shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by RXi or CytRx and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in this Section 10, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in Section 10(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 10(d); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under subsection Section 10(c) for purposes of indemnification. RXi and CytRx agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined solely by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 10(d), CytRx shall not be required to contribute an amount in excess of the net proceeds actually received by CytRx in the relevant public offering. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

     SECTION 11. Registrations on Form S-3.

          (a) If (i) RXi shall receive a written request (specifying that it is being made pursuant to this Section 11) from CytRx that RXi file a registration statement on Form S-3 (or any successor form to Form S-3 regardless of its designation) for a public offering of Registrable Shares the reasonably anticipated aggregate price to the public of which would equal or exceed $1,000,000, and (ii) RXi is a registrant entitled to use Form S-3 (or any successor form to Form S-3) to register such shares, then RXi shall use its best efforts to cause all Registrable Shares that CytRx has requested be registered to be registered on Form S-3 (or any successor form to Form S-3).

          (b) Notwithstanding the foregoing, (i) RXi shall not be obligated to effect a registration pursuant to this Section 11 during the period starting with the date sixty (60) days prior to RXi’s estimated date of filing of, and ending on a date six (6) months following the effective date of, a registration statement pertaining to an underwritten public offering of securities for the account of RXi, provided that RXi is actively employing in good faith its best efforts to cause such registration statement to become effective and that RXi’s estimate of the date of filing such registration statement is made in good faith; (ii) RXi shall not be obligated to effect a registration pursuant to this Section 11 within six (6) months after the effective date of a prior registration under this Section 11; and (iii) if RXi shall furnish to CytRx a certificate signed by the President of RXi stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to RXi or its shareholders for a registration statement to be filed in the near future, then RXi’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed ninety (90) days; provided, however, that RXi shall not be permitted to so defer its obligation more than once in any 12-month period.

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          (c) CytRx’s rights to registration under this Section 11 are in addition to, and not in lieu of, their rights to registration under Section 2 and Section 3 of this Exhibit.

     SECTION 12. No Transfer of Registration Rights. The registration rights and obligations of CytRx under this Exhibit with respect to any Registrable Shares may not be transferred to any third party other than any acquirer of all or substantially all of the assets or outstanding shares of stock of CytRx or any entity that merges with or into CytRx

     SECTION 13. Future Events. If CytRx is, at the time participating in a Registration, RXi will notify CytRx of the occurrence of any of the following events of which RXi is actually aware, and when so notified, CytRx will immediately discontinue any disposition of Registrable Shares until notified by RXi that such event is no longer applicable:

          (a) the issuance by the Commission or any state securities commission or agency of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose (in which case RXi will make reasonable efforts to obtain the withdrawal of any such order or the cessation of any such proceedings); or

          (b) the existence of any fact which makes untrue any material statement made in the registration statement or prospectus or any document incorporated therein by reference or which requires the making of any changes in the registration statement or prospectus or any document incorporated therein by reference in order to make the statements therein not misleading (in which case RXi will make reasonable efforts to amend the applicable document to correct the deficiency).

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Steven A. Kriegsman, Chief Executive Officer of CytRx Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CytRx Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this quarterly report based on such evaluation; and

     (c) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2007	/s/ STEVEN A. KRIEGSMAN
	Steven A. Kriegsman
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Matthew Natalizio, Chief Financial Officer of CytRx Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of CytRx Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

     (b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this quarterly report based on such evaluation; and

     (c) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2007	/s/ MATTHEW NATALIZIO
	Matthew Natalizio
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of CytRx Corporation (the “Company”) hereby certifies based on his knowledge that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

Date: May 10, 2007	/s/ STEVEN A. KRIEGSMAN
	Steven A. Kriegsman
	Chief Executive Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 (Section 906), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to CytRx Corporation and will be retained by CytRx Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an Exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of CytRx Corporation (the “Company”) hereby certifies based on his knowledge that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

Date: May 10, 2007	/s/ MATTHEW NATALIZIO
	Matthew Natalizio
	Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 (Section 906), or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to CytRx Corporation and will be retained by CytRx Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certification is being furnished to the Securities and Exchange Commission as an Exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.