Indicate by check mark with the Registrant is a well-known seasoned issuer (as defined in Securities Act Rule 405). Yeso Noþ

     Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yeso Noþ

     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 and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-Kþ

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

     Indicate by check mark whether the Registrant is a shell company (as defined in Rule 2b-2 of the Act). Yeso Noþ

     The aggregate market value of the Registrant’s common stock held by non-affiliates on June 30, 20052006, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $49,272,313.$86.4 million. On March 23, 2006,2007, there were 70,457,988outstanding 76,788,694 shares of the Registrant’s common stock, outstanding, exclusive of treasury shares.

     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 Annual Report, on Form 10-K, as well as those made in our other filings with the SEC.

     All statements in this Annual Report, including inunder the captions “Business,” “Risk Factors,” “Compensation Discussion and Analysis,” and “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 any projections of financial items, any statements of our current views with respect to the plansrecent developments regarding our RXi Pharmaceuticals Corporation subsidiary, our business strategy, business plan and objectives of management forresearch and development activities, our future operations, anyfinancial results, and other future events. These statements concerning proposed new products or services, anyinclude forward-looking statements regarding future economic conditions or performance,both with respect to us, specifically, and any statement of assumptions underlying any of the foregoing.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. Although we believe that the expectations reflected in the forward-looking statements contained herein and in documents incorporated by this Annual Report 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.

     Our future financial condition and results of operations, as well as anyAll forward-looking statements are subject toinvolve inherent risks and uncertainties, includingand 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, the riskthose factors set forth under the heading “Risk Factors” in this Annual Report under the captions “Business,” “Risk Factors,” and including“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 regarding the scope of the clinical testing thatmaterialize, or if our underlying assumptions prove to be incorrect, actual results may be required by regulatory authorities forvary materially from what we anticipate. Please consider our molecular chaperone co-induction drug candidates, including with respect to arimoclomol for the treatment of amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease), our HIV vaccine candidate and our other product candidates, and the outcomesforward-looking statements in light of those tests; uncertainties related to the early stage of our diabetes, obesity, cytomegalovirus, or CMV, and ALS research; the need for future clinical testing of any small molecules and products based on ribonucleic acid interference, or RNAi, that may be developed by us; the significant time and expense that will be incurred in developing any of the potential commercial applications for our small molecules or RNAi technology; risks or uncertainties related to our ability to obtain capital to fund our ongoing working capital needs, including capital required to fund the RNAi development activities to be conducted by our planned new subsidiary; and risks relating to the enforceability of any patents covering our products and to the possible infringement of third party patents by those products. All forward-looking statements and reasons why results may differ included inas you read this Annual Report are made as of the date hereof, and we assumeReport. We undertake no obligation to publicly update or review any such forward-looking statement, whether as a result of new information, future developments or reason why actual results might differ.otherwise.

     As used inIn this report, the terms “we,” “our,” “ours” and “us”Annual Report, we sometimes refer to CytRx Corporation a Delaware corporation,as “CytRx” and to our majority-owned subsidiary, RXi Pharmaceuticals Corporation, as “RXi.” References to the “company,” “we,” “us” or “our” refer to CytRx and RXi, unless the context suggests otherwise.

     We areCytRx is a biopharmaceutical research and development company engaged in developing human therapeutic products based in Los Angeles, California, with an obesity and type 2 diabetes research laboratory in Worcester, Massachusetts. We are in the process of developing products, primarily in the areas ofupon our small molecule therapeutics and ribonucleic acid interference, or RNAi, for the

ability to refold those proteins into the appropriate, non-toxic shape. However, ifIf the protein is so badly mis-folded that it cannot be repaired, the molecular chaperones also have the ability to “tag” the toxic protein for destruction by the cell. This tag, called ubiquitin, directs the mis-folded protein to a cellular apparatus called the proteasome, whose function is to degrade the protein into its constituent amino acids for recycling.recycling within the human body.

     ALS Clinical Trials

     TheWe are pursuing directly and indirectly through RXi the development of therapeutics for the treatment of various forms of ALS is an area of significant interest for us.ALS. ALS is a debilitating disease. According to the ALS Survival Guide, 50% of ALS patients die within 18 months of diagnosis and 80% of ALS patients die within five years of diagnosis. According to the ALS Association, in the

proves to be efficacious in preclinical work, and the FDA agrees that it is appropriate to proceed with a Phase II clinical trial, we believe thatwould consider initiation of a Phase II clinical trial for eitherone of these indications could begin in 2007.indications.

     Therapeutic Copolymer Program

     Before the Global Genomics merger, our primary focus was on CRL-5861 (purified poloxamer 188), which we also call Flocor. Flocor is an intravenous agent for the treatment of sickle cell disease and other acute vaso-occlusive disorders. Sickle cell disease is an inherited disease caused by a genetic mutation of hemoglobin in the blood, and acute vaso-occlusive disorders are a blockage of blood flow caused by deformed, or “sickled,” red blood cells which can cause intense pain in sickle cell disease patients. In June 2004, we licensed our copolymer technologies, including Flocor,CRL-5861, on an exclusive basis, to SynthRx, Inc., a Houston, Texas-based biopharmaceutical company. Ascompany, in exchange for a result of the SynthRx license, we received a 19.9%cash payment and and ownership interest in SynthRx and a cash payment from SynthRx of approximately $228,000, in return for our rights to the licensed technologies. In addition, uponSynthRx. Upon commercialization of any products developed under our alliance with SynthRx, we may also receive significant milestone payments and royalties. Prior to the change in our business strategy that led us to seek licensees for our Flocor technology, we had internally developed Flocor. In December 1999, we reported results from a Phase III clinical study of Flocor for treatment of acute sickle cell crisis. Although the study did not demonstrate statistical significance in the primary endpoint, or objective, of the study, statistically significant and clinically important benefits associated with Flocor were observed in certain subgroups. All amounts paid to us by SynthRx are non-refundable upon termination of the agreement and require no additional effort on our part.

     On January 8, 2007, we entered into a Contribution Agreement with RXi under which we assigned and contributed to RXi substantially all of our RNAi-related technologies and assets. The assigned assets consisted primarily of our licenses from UMMS and from the Carnegie Institution of Washington relating to fundamental RNAi technologies, as well as equipment situated at our Worcester, Massachusetts, laboratory. The licensed technologies include patent applications on RNAi target sequences, chemical modifications and delivery to cells, field-specific licenses to a patent application on chemical modification of RNAi invented by Tariq M. Rana, Ph.D., the “Tuschl I” patent, and our exclusive licenses to patent applications that disclose gene targets for diabetes and obesity, including RIP140 (see, “Material Licenses and Other Agreements,” below). In connection with the contribution of the licenses and other assets, RXi assumed primary responsibility for all payments to UMMS and other obligations under the contributed licenses and assets (See footnote 4 to the table of contractual obligations at page 41).

     Under the stockholders agreement, we also undertake to vote our shares of RXi stock in the election of directors of RXi and dispose of our RXi shares in accordance with the terms of our letter agreement with UMMS described above. We have further agreed in the stockholders agreement to approve of actions that may be adopted and recommended by RXi’s board of directors to facilitate any future financing of RXi.

     As of January 8, 2007, we entered into a letter agreement with RXi under which RXi has agreed to reimburse us, following its initial funding, for all organizational and operational expenses incurred by us in connection with the end of 2003, Blizzard had ceasedformation, initial operations and funding of RXi. As of February 28, 2007, we have advanced approximately $592,000 to RXi for which it will be obligated to reimburse us.

     RNAi technology uses short double-stranded RNA, or dsRNA, molecules to silence targeted genes and, as a result, is commonly referred to as “gene silencing.” RNAi has been shown to effectively silence targeted genes within living cells with great specificity and potency. As a result, RNAi technology may effectively silence targeted genes without impacting other, non-targeted, genes. RNAi is regarded as a significant advancement in 2004, returnedgene silencing and was featured inScience magazine as the “Breakthrough of the Year” in 2002.

     In mammals and human cells, gene silencing can be triggered by dsRNA molecules present in the cell’s cytoplasm (the region inside the cell membrane but outside the cell nucleus). Within the cell, dsRNA is thought to interact with other cellular proteins to form the RNA-induced silencing complex, or RISC, which causes the unwinding of the bound siRNA. This unwound strand of the siRNA can then act as a template to seek out and bind with the complementary target mRNA, which carries the coding, or instructions, from the cell nucleus DNA. These instructions determine which proteins the cell will produce. When the siRNA-loaded RISC binds with the corresponding mRNA, that “message” is degraded and the cell does not produce the specific protein that it encodes. Since the siRNA can be designed to specifically interact with a single gene through its licensedmRNA, it can prevent the creation of a specific protein.

     RXi has determined that the initial indication that it plans to pursue is a form of ALS caused by a defect in the SOD1 gene. Early preclinical studies in a mouse model of SOD1 mediated ALS conducted by Dr. Tariq Rana of UMMS, one of RXi’s scientific founders and a member of our scientific advisory board and Dr. Zuoshang Xu of UMMS showed promising results using an RNAi therapeutic to inhibit the defective SOD1 gene. RXi’s second planned indication is the treatment of obesity and type 2 diabetes. RXi has in-licensed intellectual property regarding the RIP140 gene, which appears to the Minnesota Research Fund.

     ExpendituresAlthough RXi’s near-term focus will be on ALS and type 2 diabetes, RXi plans to leverage its experience related to local delivery of RNAi therapeutics to seek to develop RNAi-based treatments for researchneurodegenerative diseases other than ALS. For example, in addition to ALS, many neurodegenerative diseases exist for which no effective therapies are available, including Alzheimers, Huntington’s and Parkinson’s diseases. In many of these cases, molecular targets have been identified that are difficult to access by conventional small molecule or antibody based approaches. RXi believes that the knowledge gained in its discovery and development activities were $9.1related to ALS will allow RXi to rapidly move into additional related therapeutic areas.

     The foregoing license agreements with UMMS require us to make aggregate payments of up to $300,000 in 2007. In subsequent periods, we will be required to make aggregate payments ranging from $250,000 to $1.7 million $9.0 million and $4.4 million duringper year to maintain the years ended December 31, 2005, 2004 and 2003, respectively. Included in research and developmentlicenses through 2018. We are obligated to pay legal expenses for 2004 was $3.0 millionthe prosecution of in-process researchpatents licensed from UMMS, which we anticipate will be approximately $175,000 during 2007, and to make milestone payments to UMMS based upon our progress in the clinical development and marketing of products utilizing the technologies licensed from UMMS. In the event that was written offwe were to successfully develop a product in conjunctioneach of the categories of obesity/type 2 diabetes and ALS, these milestone payments could aggregate up to $27.4 million. We do not anticipate the occurrence of an event that would require a milestone payment during 2007. We also would be required to pay royalties to UMMS based on the net sales of those products. The actual milestone payments will vary, perhaps significantly, based upon the milestones we achieve and the products, if any, we develop.

     On January 10, 2007, RXi also entered into an invention disclosure agreement with our acquisitionUMMS pursuant to which UMMS is obligated for a three-year period to disclose to RXi any unrestricted inventions conceived or reduced to practice by UMMS related to therapeutic applications of assets from Biorex.RNAi technologies. Under the invention disclosure agreement, UMMS also grants to RXi an option to negotiate the terms of a license to any disclosed inventions. If RXi exercises the option and the parties are unable to reach agreement on the terms of any such license, RXi may elect to have an arbitrator determine the terms of the license. The invention disclosure agreement will become effective only upon RXi’s achievement of a funding milestone in the coming few months. Upon effectiveness, RXi will be obligated to pay UMMS $100,000 in cash and issue to UMMS $800,000 of RXi common stock that is to be valued on a per share basis for this purpose based on the valuation of RXi in the initial funding, and RXi will also be obligated to pay UMMS $100,000 on each of the first and second anniversaries of the effective date of the invention disclosure agreement. RXi also will be obligated to pay UMMS a fee each time RXi exercises its right to negotiate a license under the invention disclosure agreement. Once effective, the invention disclosure agreement will be terminable by either party upon an uncured breach by the other party and by RXi at any time for any reason.

     CytRx Corporation

We do not have the facilities or expertiseno capability to manufacture any of the clinical or commercial supplies of any of our products, and rely on third-party contract manufacturers to produce materials needed for research and clinical trials, including our supplyclinical supplies of arimoclomol used for our clinical program.planned Phase IIb trial. To be successful,commercialized, our products and the productsalso must be capable of our partners must bebeing manufactured in commercial quantities in compliance with stringent regulatory requirements and at an acceptable cost. To date,We intend to rely on third-party manufacturers to produce commercial quantities of any products for which we are able to obtain marketing approval. We have not commercialized any products, norproduct, and so have wenot demonstrated that we can manufacture commercial quantitiesany of our product candidates can be manufactured in commercial quantities in accordance with regulatory requirements.requirements or at an acceptable cost.

     If weour product candidates cannot manufacture productsbe manufactured in suitable quantities and in accordance with regulatory standards, either on our own or through contracts with third parties, it may delay clinical trials, regulatory approvals and marketing efforts for such products.products may be delayed. Such delays could adversely affect our competitive position and our chances of achieving profitability. Wegenerating significant recurring revenues. If our products are not able to be manufactured at an acceptable cost, the commercial success of our products may be adversely affected.

     RXi currently plans to manufacture its RNAi compounds through contract oligonucleotide manufacturers. The speciality oligonucleotide manufacturing companies with whom RXi’s management has previously worked offer research grade and GMP (Good Manufacturing Practices) grade RNAi for clinical use. However, if RXi’s product candidates cannot be sure that we can manufacture, either on our own or through contractsmanufactured in suitable quantities and in accordance with third parties,regulatory standards, RXi’s clinical trials, regulatory approvals and marketing efforts for such products may be

delayed. If RXi’s compounds and products are not able to be manufactured at aan acceptable cost, or in quantities, which are commercially viable. We currently rely and intend to continue to rely on third-party contract manufacturers to produce materials needed for research, clinical trials and, ultimately, for product commercialization.the commercial success of any products that it may develop could be adversely affected.

     We actively seek patent protection for our technologies, processes, uses, and ongoing improvements and consider our patents and other intellectual property to be critical to our business. We acquired patents and patent applications, and have filed several new patent applications, for a number of patents and have been granted patents related to technologies, primarily TranzFect and Flocor, we were developing prior to our 2002 merger with Global Genomics. Subsequent to the merger, we acquired patents in connection with our acquisition of intellectual property rights of Biorexmolecular chaperone program, and we have licensed additional technologies, covered byincluding patents or patent applications, most of which are in the RNAi field.

     As part of our development process, weWe regularly evaluate the patentability of new inventions and improvements developed by us or our collaborators. Whenevercollaborators, and, whenever appropriate, we will endeavor to file United States and international patent applications to protect these new inventions and improvements. However, weWe cannot be certain that any of the current pending patent applications we have filed or licensed, or any new patent applications we may file or license, will ever be issued in the United States or any other country. Even if issued, there can beThere also is no assurance that thoseany issued patents will be sufficiently broadeffective to prevent others from using our products or processes. Furthermore, ourIt is also possible that any patents issued to us, as well as those we have licensed or may license in the future, may be held invalid or unenforceable by a court, or third parties could obtain patents that we would need to either license or to design around, which we may be unable to do. Current and future competitors may have licensed or filed patent applications or received patents, and may acquire additional patents and proprietary rights relating to molecular chaperone co-induction and other small molecule technology, RNAi technology, DNA-based vaccines or other compounds, products or processes that may be competitive with ours.

     In addition to patent protection, we also attempt to protect our proprietary products, processes and other information by relying on trade secrets and non-disclosure agreements with our employees, consultants and certain other persons who have access to such products, processes and information. Under the agreements, all inventions conceived by employees are our exclusive property. Nevertheless,property, but there can beis no assurance that these agreements will afford significant protection against misappropriation or unauthorized disclosure of our trade secrets and confidential information.

     Currently,CytRx Corporation

     We are aware of only one drug, Rilutek,^®, which was developed by Aventis Pharma AG, is the only drug of which we are aware that has been approved by the FDA for the treatment of ALS.ALS, which is now available in generic form. Other companies are working to develop pharmaceuticals to treat ALS, including Aeolus Pharmaceuticals, Ono Pharmaceuticals, Trophos SA, FaustPharmaceuticals SA and Oxford BioMedica plc. 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 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.

     Companies developing HIV vaccines that could compete with our HIV vaccine technology include Merck, VaxGen, Inc., AlphaVax, Inc. and Immunitor Corporation, and ABL may also seek to develop competing HIV vaccines that could utilize a portion of the technology that we have licensed from UMMS and ABL.

     With respect to both our RNAi and non-RNAi products, manyMany companies, including large pharmaceutical and biotechnology firms with financial resources, research and development staffs, and facilities that may in certain cases, be substantially greater than those of ours or our strategic partners or licensees, are engaged in the research and development of pharmaceutical products that could compete with our potential products. To the extent that we seek to acquire, through license or otherwise, existing or potential new products, we will be competing with numerous other companies, many of which will have substantially greater financial resources, large acquisition and research and development staffs that may give those companies a competitive advantage over us in identifying and evaluating these drug acquisition opportunities. Any products that we acquire will be competing with products marketed by companies that in many cases will have substantially greater marketing resources than we have. The industry is characterized by rapid technological advances and competitors may develop their products more rapidly and such products may be more effective than those currently under development or that may be developed in the future by our strategic partners or licensees. Competitive products for a number of the disease indications that we have targeted are currently being marketed by other parties, and additional competitive products are under development and may also include products currently under development that we are not aware of or products that may be developed in the future.

     The United States and other developed countries extensively regulate the preclinical and clinical testing, manufacturing, labeling, storage, record-keeping, advertising, promotion, export, marketing and distribution of drugs and biologic products. The United States Food and Drug Administration, under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and other federal statutes and regulations, regulates pharmaceutical and biologic products.

     To obtain approval of our product candidates from the FDA, we must, among other requirements, submit data supporting safety and efficacy for the intended indication as well as detailed information on the manufacture and composition of the product candidate. In most cases, this will require extensive laboratory tests and preclinical and clinical trials. The collection of these data, as well as the preparation of applications for review by the FDA involve significant time and expense. The FDA also may require post-marketing testing to monitor the safety and efficacy of approved products or place conditions on any approvals that could restrict the therapeutic claims and commercial applications of these products. Regulatory authorities may withdraw product approvals if we fail to comply with regulatory standards or if we encounter problems at any time following initial marketing of pharmaceutical products requiresour products.

     After the IND becomes effective, a company may commence human clinical trials. These are typically conducted in three sequential phases, but the phases may overlap. Phase I trials consist of testing of the product candidate in a small number of patients or healthy volunteers, primarily for safety at one or more doses. Phase II trials, in addition to safety, evaluate the efficacy of the product candidate in a patient population somewhat larger than Phase I trials. Phase III trials typically involve additional testing for safety and clinical efficacy in an expanded population at multiple test sites. A company must submit to the FDA a clinical protocol, accompanied by the approval of the Institutional Review Boards at the institutions participating in the trials, prior to commencement of each clinical trial.

     To obtain FDA and comparable regulatory authorities in foreign countries. The FDA has established guidelines and safety standards which applymarketing authorization, a company must submit to the pre-clinical evaluation,FDA the results of the preclinical and clinical testing, together with, among other things, detailed information on the manufacture and marketingcomposition of pharmaceutical products. The processthe product candidate, in the form of obtaining FDA approval for a new drug product generally takesapplication, or NDA, or, in the case of a biologic, a biologics license application, or BLA.

     The amount of time taken by the FDA for approval of an NDA or BLA will depend upon a number of years and involvesfactors, including whether the expenditureproduct candidate has received priority review, the quality of substantial resources. The steps required before such a product can be produced and marketed for human use in the United States include preclinical studies in animal models, the filing of an Investigational New Drug (IND) application, human clinical trials and the submission and approval of a New Drug Application (NDA) or a Biologics License Application (BLA). The NDA or BLA involves considerable data collection, verification and analysis, as well as the

preparation of summariesstudies presented, the potential contribution that the compound will make in improving the treatment of the manufacturingdisease in question, and testing processes, preclinical studies, and clinical trials.the workload at the FDA.

     The FDA must approvemay, in some cases, confer upon an investigational product the status of a fast track product. A fast track product is defined as a new drug or biologic intended for the treatment of a serious or life-threatening condition that demonstrates the potential to address unmet medical needs for this condition. The FDA can base approval of an NDA or BLA for a fast track product on an effect on a surrogate endpoint, or on another endpoint that is reasonably likely to predict clinical benefit. If a preliminary review of clinical data suggests that a fast track product may be effective, the FDA may initiate review of entire sections of a marketing application for a fast track product before the sponsor completes the application. The FDA has granted fast track designation and orphan drug may be marketed. There can be no assurance that we or our strategic alliance partners or licensees will be ablestatus to obtainarimoclomol for the required FDA approvals for anytreatment of our products.ALS.

     The manufacturing facilities and processes forWe anticipate that our products which we anticipate will be manufactured by our strategic partners, or licensees or other third parties,parties. Before approving a BLA, the FDA will be subject to rigorous regulation, includinginspect the need tofacilities at which the product is manufactured and will not approve the product unless the manufacturing facilities are in compliance with the FDA’s cGMP, which are regulations that govern the manufacture, holding and distribution of a product. Manufacturers of biologics also must comply with Federal Good Manufacturing Practice regulations.the FDA’s general biological product standards. Our manufacturers also will be subject to regulation under the Occupational Safety and Health Act, the Environmental Protection Act, the Nuclear Energy and Radiation Control Act, the Toxic Substance Control Act and the Resource Conservation and Recovery Act. Following approval, the FDA periodically inspects drug and biologic manufacturing facilities to ensure continued compliance with the good manufacturing practices regulations. Our manufacturers will have to continue to comply with those requirements. Failure to comply with these requirements subjects the manufacturer to possible legal or regulatory action, such as suspension of manufacturing or recall or seizure of product. Adverse patient experiences with the product must be reported to the FDA and could result in the imposition of marketing restrictions through labeling changes or market removal. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following approval.

     As of DecemberJanuary 31, 2005,2007, we had 2825 employees, 1814 of whom were engaged in research and development activities and 1011 of whom were involved in management and administrative operations. All

     We maintain a website at www.cytrx.com and make available there, free of charge, our periodic reports filed with the SEC, as soon as is reasonably practicable after filing. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the full-time employees engaged in researchPublic Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http:/www.sec.gov that contains our reports, proxy and development activities hold Ph.D. degrees.information statements, and other information regarding issuers that file electronically with the SEC. We post on our website our Code of Business Conduct and Ethics.

     If any of the following risks actually occur, our business or prospects could be materially adversely affected. You should also refer to the other information in this Annual Report, including our financial statements and the related notes.

     We have incurredoperated at a loss due to our lack of significant losses over the past five years, including net losses of $15.1 million, $16.4 millionrecurring revenue and $17.8 million for the years ended December 31, 2005, 2004 and 2003, respectively, and we had an accumulated deficit of approximately $121.3 million as of December 31, 2005. Our operating losses have been due primarily to oursubstantial expenditures for research and development on our products and for general and administrative expensesexpenses. We incurred net losses of $16.8 million, $15.1 million and our lack$16.4 million for the years ended December 31, 2006, 2005 and 2004, respectively. We had an accumulated deficit of significant revenues.approximately $139.6 million as of December 31, 2006. We are likely to continue to incur operating losses unless and until, such time, if ever, that we are able to commercialize one or more of our products and generate significant recurring revenues. We anticipate it will take a minimum of three years (and possibly longer) for us to generate recurring revenues, since we expect that it will take at least that long before the development of any of our licensed or other current potential products is completed, marketing approvals are obtained from the FDA and commercial sales of any of these products can begin.revenue.

     Our revenues wererevenue was $2.1 million, $184,000 $428,000, and $94,000$428,000 during the years ended December 31, 2006, 2005 and 2004, and 2003, respectively. Of the $2.1 million of revenues recognized in 2006, $1.8 million represented revenue recognized 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 operating revenuesrevenue until at least one of the following occurs:

     We expecthave relied primarily upon selling equity securities and upon proceeds received upon the exercise of options and warrants and, to incur lossesa much lesser extent, upon payments from our strategic partners and licensees, to generate funds needed to finance our business and operations. At December 31, 2006, we had cash and cash equivalents of $30.4 million, and as of March 23, 2007, we had received approximately $11.0 million in connection with the exercise of warrants and options since December 31, 2006. We believe that we have adequate financial resources to support our currently planned level of operations into the first quarter of 2009, which expectation is based in part on projected expenditures for 2007 of: $6.5 million for our Phase IIb trial for arimoclomol for ALS and related studies, $3.9 million for our other ongoing and planned preclinical programs, $8.8 million for general and administrative expenses, and $1.6 million to provide interim funding for RXi’s first few months of operations. We estimate RXi will expend approximately $6.2 million on development activities for 2007 (including approximately $400,000 in payments under agreements with UMMS, $3.2 million in other research and development expenses and $2.6 million in general and administrative expenses). If, in addition to the interim funding for which we have already budgeted, we elect to provide RXi with all or a substantial portion of its initial funding for 2007 and beyond in the coming few months, and if we are unable to raise funds in the future to replenish any amounts that we provide to RXi, our current working capital will be depleted accordingly. 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 revenues. On March 7, 2006, we completed a private placement financing and received net proceeds of approximately $12.4 million. Although we believe that we have adequate financial resources to support our

favorable terms, or at all. A lack of needed financing wouldmight force us to reduce the scope of or terminate, our operations, or to seek to mergelong-term business plans.