Lou Gehrig and a tiny drug stock
 

Lou Gehrig and a tiny drug stock


Buy $10,000 worth of CytRx (CYTR, news, msgs) at the open.
I am buying $10,000 worth of CytRx (CYTR, news, msgs), a biopharmaceutical research and development company that just received a huge $24 million royalty payment from the nonprofit ALS Charitable Remainder Trust for a mere 1% stake of the company's future arimoclomol drug sales.

The deal is relatively nondilutive and looks to help the company speed up its research on ALS (also know as Lou Gehrig’s disease), with its lead molecule drug candidate arimoclomol currently in late stage 2 development. The early results indicate that arimoclomol may show promise as a treatment for Huntington's, Alzheimer's and Parkinson's diseases, as well as stroke and cystic fibrosis.

At $24 million for just a 1% stake in sales, we could mathematically imply that the CytRx, as a whole, could be worth in excess of $2.4 billion, or more than $30 per share. With the stock trading at levels giving it about a $100 million market cap, I think there's a lot of upside here, given the funding and increased visibility of the potential value of arimoclomol and company's other drug pipelines focusing on treatment of HIV, obesity, type 2 diabetes and cytomegalovirus using RNAi technology. The company is targeting multibillion-dollar markets.

While it may take awhile to realize the true value for CYTR, I believe the company is on the right path to eventual success. The stock looks extremely cheap here, while the potential could be huge.

Full disclosure: I own shares of CytRx.
http://articles.moneycentral.msn.com...nal060831.aspx