<PAGE>   1

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                  FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
           SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998
                                                        -----------------
                                       OR
[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                           Commission File No. 0-15327
                                               -------
                               CYTRX CORPORATION
                               -----------------
             (Exact name of Registrant as specified in its charter)

             Delaware                                  58-1642740
  ---------------------------------        ------------------------------------
    (State or other jurisdiction           (I.R.S. Employer Identification No.)
  of incorporation or organization)

           154 Technology Parkway
           Norcross, Georgia 30092                         30092
           -----------------------                      ----------
  (Address of principal executive offices)              (Zip Code)


Registrant's telephone number, including area code:   (770) 368-9500
                                                    ------------------

                               -----------------

Securities registered pursuant to Section l2(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001
par value per share

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.

      YES   X       NO    .
           ---         ---

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-K. [X]

On March 22, 1999, the aggregate market value of the Registrant's common stock
held by non-affiliates was approximately $20,740,000.

On March 22, 1999, there were 7,630,249 shares of the Registrant's common stock
outstanding, exclusive of treasury shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the CytRx Corporation 1998 Annual Report to Stockholders are
incorporated by reference into Parts II and IV. Portions of the CytRx
Corporation Proxy Statement for the 1999 Annual Meeting of Stockholders (the
"Proxy Statement") are incorporated by reference into Part III.


<PAGE>   2

         THIS FORM 10-K AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
CYTRX CORPORATION OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. THOSE STATEMENTS INCLUDE STATEMENTS REGARDING
THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF CYTRX CORPORATION AND MEMBERS OF
ITS MANAGEMENT TEAM, AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE
BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY
KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE IN FORWARD-LOOKING STATEMENTS ARE INCLUDED AS EXHIBIT 99.1 TO THIS FORM
10-K, AND ARE HEREBY INCORPORATED BY REFERENCE. THE COMPANY UNDERTAKES NO
OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED
ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE
OPERATING RESULTS OVER TIME.


                                     PART I


ITEM 1.  BUSINESS

GENERAL
         CytRx Corporation, a Delaware corporation ("CytRx"), was founded in
1985 and is engaged in the development and commercialization of
pharmaceutical-related products and services primarily involving human
therapeutics focused on high-value critical-care therapies (the "Core
Business"). The Company's lead product is FLOCOR, now in pivotal Phase III
clinical trials for the treatment of acute sickle cell crisis. CytRx is also
developing FLOCOR for acute respiratory disorders and has plans to expand its
development for other vascular disorders such as shock and stroke over time.
CytRx is also currently engaged in research in the areas of infectious disease,
gene and drug delivery, vaccines, and animal feed additives.

         CytRx has in the past, and may in the future, create operating
subsidiaries to develop its technologies for indications outside of its Core
Business. CytRx intends to use the proceeds from the sale of the operations of
its subsidiaries to fund its Core Business. Vaxcel, Inc. ("Vaxcel") is
developing technologies to enhance the effectiveness of vaccines. Prior to the
divestiture of substantially all of its assets related to its cattle marketing
operations in April 1998, CytRx Animal Health, Inc. ("CytRx Animal Health")
(formerly VetLife, Inc.) was engaged in developing technologies to enhance food
animal growth and marketing and distributing products to enhance North American
beef cattle productivity. Before the divestiture of substantially all of its
non-real estate assets in February 1998, Proceutics, Inc. ("Proceutics")
provided preclinical development services to the pharmaceutical industry (see
"New Business Developments"). Reference herein to "the Company" includes CytRx
and its majority-owned subsidiaries.

         Certain financial information concerning the industry segments in which
the Company operates can be found in Note 13 to the Company's Consolidated
Financial Statements.

NEW BUSINESS DEVELOPMENTS

Divestiture of Subsidiaries and Sale of Real Estate
         During the first half of 1998, CytRx divested itself of its real estate
assets and substantially all of the assets of two operating subsidiaries to
allow CytRx to focus its activities on its Core Business and, specifically, to
raise capital to undertake Phase III testing of FLOCOR. See "Product
Development."

         Proceutics - In February 1998, CytRx's wholly-owned subsidiary,
Proceutics consummated a sale of substantially all of its non-real estate assets
to Oread Laboratories, Inc. ("Oread") for approximately $2.1 million. The
Company recorded a gain of approximately $782,000 related to such sale. Prior to
consummation of this transaction, Proceutics provided


                                                                               2

<PAGE>   3

preclinical development services to the pharmaceutical industry. Proceutics
retained its real estate assets consisting solely of a laboratory building which
it leased to Oread. The laboratory building was subsequently sold in May 1998.

         CytRx Animal Health - In April 1998, CytRx's wholly-owned subsidiary,
CytRx Animal Health, consummated a sale of substantially all of its assets
related to its cattle marketing operations to VetLife, LLC ("VL LLC") (an
unaffiliated company) for a total purchase price of $7,500,000, subject to
certain working capital adjustments, plus certain contingent payments based on
certain events and future sales of specified products of VL LLC and its
affiliates that, if made in full, could total up to $5,500,000. CytRx Animal
Health retained $5.3 million in investments that were pledged to secure a
letter-of-credit, as well as the rights to certain technologies licensed from
CytRx. The Company recorded a gain of approximately $6,230,000 related to the
sale. Prior to consummation of this transaction, CytRx Animal Health was engaged
in marketing and distributing products to enhance North American beef cattle
productivity.

         Sale of Real Estate - In May 1998, CytRx and Proceutics consummated the
sale of the two buildings owned by them at 150 and 154 Technology Parkway,
Norcross, Georgia, to Alexandria Real Estate Equities, Inc. ("Alexandria") for
$4.5 million. Proceutics' rights and obligations under the lease to Oread were
assigned to Alexandria, and CytRx began leasing the building at 154 Technology
Parkway from Alexandria. The CytRx lease is for a period of ten years, with base
annual rent of $148,500, escalating 4% annually. CytRx will also be responsible
for all operating expenses for the property. The Company recorded a gain of
$434,000 for the sale of the Proceutics building which was recognized during the
second quarter of 1998. A gain of $279,000 on the sale/leaseback of the CytRx
building was deferred and will be amortized over the ten year lease period.

         Vaxcel - During 1998, Vaxcel's Board of Directors retained an
investment banking firm to introduce Vaxcel and its technology licenses to the
trade with the purpose of concluding a strategic transaction for the benefit of
the Vaxcel shareholders. The Company was considering all available options for
the disposition of Vaxcel, including license or sale of specific technologies
and possible merger with another organization. Based on the results of the
investment banking firm's efforts and management's reevaluation of CytRx's
strategic direction, in the fourth quarter of 1998 the Company adopted a plan to
dispose of the research and development activities in which Vaxcel is engaged.
The Company intends to complete the plan during 1999. As a result of adopting
such a plan, the operations of Vaxcel are presented as discontinued operations
in the consolidated statements of operations.

         In January 1999, Vaxcel entered into an agreement with a third party
giving the third party the option to purchase the rights to certain of its
technologies for an aggregate purchase price of $600,000. The third party paid a
nonrefundable option fee of $200,000, with an additional $400,000 due upon the
exercise of the option. The initial option period expired on March 22, 1999, but
was extended to April 1 upon the payment of additional fees by the third party.

PRODUCT DEVELOPMENT

FLOCOR
         General. CytRx's human therapeutics product development efforts are
focused on critical-care products providing target opportunities for high-value
breakthrough products to address unmet medical needs. CytRx's current product
development focus is FLOCOR, a novel, intra-vascular agent with pharmacological
properties that can be characterized as rheologic, cytoprotective and
anti-adhesive / anti-thrombotic. FLOCOR is an intravenous solution that has the
unique property of improving blood flow. Extensive preclincial and clinical
studies suggest FLOCOR may be of significant benefit in acute ischemic vascular
disorders such as stroke, heart attack, and vaso-occlusive crisis of sickle cell
disease. FLOCOR may also provide benefit in acute care situations such as
circulatory shock and acute respiratory distress syndromes where it's favorable
effects on microvascular blood flow may improve recovery from widespread
ischemic / reperfusion injury.

         The active agent in FLOCOR is a highly purified form of poloxamer 188
which is a synthetic block copolymer composed of polyoxyethylene and
polyoxypropylene. A commercial grade of poloxamer 188 was originally synthesized
in the 1950's as a surfactant / emulsifying agent, and was extensively used as a
food additive and excipient in pharmaceutical products. Commercial grade
poloxamer 188 has also been extensively used as an anti-hemolytic agent in the
priming fluid of cardiopulmonary bypass pump oxygenators.


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<PAGE>   4

         The safety profile of FLOCOR is well established. It has been
investigated in 13 clinical studies representing administration to more than
2,400 patients and healthy volunteers. A pivotal phase III study investigating
FLOCOR for the treatment of acute vaso-occlusive crisis of sickle cell disease
is currently in progress.

         The use of poloxamer 188 as a intravascular therapeutic for obstructive
vascular disorders was discovered and patented by CytRx in the mid 1980's. At
that time, CytRx utilized a formulation of commercial grade poloxamer 188 which
it referred to as RheothRx(R) Copolymer For Injection ("RheothRx"). CytRx began
clinical testing on RheothRx in 1989. Following the completion of phase I
studies in 1990, CytRx licensed RheothRx to the former Burroughs Wellcome
Company on a exclusive world wide basis. Between 1990 and 1996, Burroughs
Wellcome conducted nine clinical studies. In phase II studies in sickle cell
crisis and acute myocardial infarction (AMI),RheothRx was well tolerated and
achieved statistical significance in the primary efficacy endpoints. However, in
larger trials in AMI patients, RheothRx was associated with mild to moderate,
but reversible elevations in creatinine in a small percentage of patients. The
elevations in creatinine resulted in discontinuation of the dose that was
effective in phase II studies and the outcome of the larger AMI studies were
equivocal. Following the merger between Glaxo and Burroughs Wellcome,
Glaxo-Wellcome terminated the license and all rights to RheothRx were returned
to CytRx in 1996.

         Scientists at CytRx discovered that small amounts of impurities present
in commercial grade poloxamer 188 (RheothRx) were contributing to the renal
toxicity observed in clinical studies. More importantly, CytRx discovered a
process for removing the nephrotoxic impurities without altering the beneficial
properties of the compound. CytRx refers to the purified form of poloxamer 188
as FLOCOR. When compared in a standard model of renal failure, FLOCOR is 63%
less nephrotoxic compared to RheothRx. Consistent with that observation, no
elevation in creatinine was observed following 48 hour continuous infusion of
FLOCOR in sickle cell patients (n = 15) at doses up to 33% higher than those
that were previously discontinued due to elevated creatinine. CytRx believes
that the therapeutic index of FLOCOR is significantly improved compared to
RheothRx and for this reason, the development of RheothRx was discontinued by
CytRx in favor of FLOCOR.

         CytRx has met with the U.S. Food and Drug Administration concerning the
switch from RheothRx to FLOCOR. Specifically, CytRx inquired whether the
existing pharmacology, toxicology, and human safety data for RheothRx could be
used to support a New Drug Application ("NDA") submission for FLOCOR. CytRx was
informed that data generated with RheothRx would support an NDA for FLOCOR.

         FLOCOR for Sickle Cell Crisis. The Company believes that FLOCOR has
significant potential in treating a variety of vascular-occlusive diseases where
blood flow is restricted. CytRx has chosen the painful vaso-occlusive crisis
associated with sickle cell anemia as its first development priority.

         Sickle cell disease is an inherited abnormality of hemoglobin, the
oxygen-carrying molecule in red blood cells. Under conditions of low blood
oxygen, which is generally caused by dehydration or stress, the sickle cell
victim's hemoglobin becomes rigid. This causes red blood cells to lose their
normal flexibility. The cells become rough, sticky and irregularly shaped, often
looking like sickles, which gives the disease its name. Estimates place the
number of persons suffering from sickle cell anemia in the U.S. at about 72,000,
or roughly one in 400 African-Americans. It is also estimated that complications
from sickle cell disease results in healthcare expenditures of from $1.0 to $1.5
billion annually in the U.S.

         The most common problem sickle cell patients face is episodic pain
(also referred to as vaso-occlusive crisis, or VOC). These episodes can last
anywhere from five minutes to days or weeks, and can vary significantly in their
severity. The deformed sickle cells cannot easily flow through the smaller blood
vessels of the body and tend to clump together, forming occlusions which impede
blood flow. The occlusions deprive tissues of vital oxygen that can result in
tissue death, inflammation and intense throbbing pain. Patients suffering from
sickle cell disease may experience several crisis episodes each year.
Hospitalization is required when pain becomes too much to bear. There are about
100,000 hospital admissions annually to treat sickle cell patients undergoing
acute vascular-occlusive crisis caused by the disease. On average, these
patients require in-patient treatment for 7.2 days.

         Currently there is no effective treatment to alleviate the pain and
suffering sickle cell anemia patients in crisis must endure. As there is
currently no effective treatment to alleviate the crisis, patients only receive
narcotics, fluids and rest. Aside from causing considerable pain and suffering,
these crisis episodes slowly destroy vital organs as they are deprived of
oxygen. As a result, the life expectancy of sickle cell victims is about twenty
years shorter than those without the disease.


                                                                               4
<PAGE>   5

         FLOCOR's unique surface-active properties decrease blood viscosity and
enable the rigid sickled cells to become more flexible, thus allowing easier
passage of blood cells through narrow blood vessels. In a Phase II human
clinical trial, FLOCOR demonstrated positive results, reducing the duration of
crisis by 16 to 45%, the need for pain medication by 2.8 to 4.3 fold, pain
intensity by 40 to 45%, and the duration of hospital stay by 1 to 2 days.

         CytRx is currently conducting a Phase III double-blind
placebo-controlled multicenter trial to assess the efficacy and safety of FLOCOR
in vaso-occlusive crisis of sickle cell disease. The trial will involve 224
patients, ages 10 to 65, and is expected to be completed by the end of 1999. In
January 1999, the Company announced a favorable review from an independent
Safety and Data Monitoring Board following examination of data from the first 50
patients enrolled in the trial. As of March 22, 1999 a total of 129 patients
have been enrolled in the trial.

         The Company is also currently conducting a Phase I study in patients
with Acute Chest Syndrome (ACS), a life-threatening condition associated with
sickle cell disease, and is planning follow-on studies on the recurrent use of
FLOCOR in sickle cell patients.

         FLOCOR for Other Indications. CytRx believes that FLOCOR has the
potential to be an effective treatment for other vascular-occlusive diseases as
well. CytRx plans to explore the opportunities with FLOCOR in significant
diseases such as Acute Lung Injury (ALI), shock and stroke. However, CytRx's
current strategy is to focus its efforts and resources on gaining approval for
the acute crisis of sickle cell anemia.

         Orphan Drug Status. In June 1989, the FDA informed CytRx of its
decision to grant RheothRx "Orphan Drug" designation for the treatment of sickle
cell crisis and this designation applies to FLOCOR as well. The Orphan Drug Act
of 1983, as amended, provides incentive to drug manufacturers to develop drugs
for the treatment of rare diseases (e.g. diseases that affect less than 200,000
individuals in the United States, or diseases that affect more than 200,000
individuals in the United States where the sponsor does not reasonably
anticipate that its product will become profitable). As a result of the
designation of RheothRx/FLOCOR as an Orphan Drug, if the Company is the first
manufacturer to obtain FDA approval to market FLOCOR for treatment of sickle
cell crisis, the Company will obtain a seven-year period of marketing
exclusivity beginning from the date of FLOCOR's approval. During this period,
the FDA may not approve the same drug for the same use from another sponsor. In
March 1990, RheothRx also received Orphan Drug designation for the treatment of
severe burns.


Other Product Development Efforts
         Vaccine Adjuvants / Delivery Systems -- CytRx has discovered the use of
certain non-ionic block copolymers (poloxamers) both alone and in a variety of
emulsion systems as vaccine delivery systems - immunoadjuvants. The
adjuvant-delivery systems have potential for use in both injectable and oral
vaccines. CytRx's subsidiary, Vaxcel, has the rights for the human therapeutic
use of these compounds while CytRx holds the rights for veterinary use.

         Anti-Microbial -- CRL-1072 is a highly purified poloxamer that has
demonstrated potent activity against a wide range of infectious agents. In
animal models of fatal Mycobacterium tuberculosis, Mycobacterium avium, and
Toxoplasmosis infection, CRL-1072 results in significantly improved survival
rates. More importantly, the compound is active against drug resistant isolates
of M.tuberculosis. CRL-1072 has also been shown to reduce viral load and viral
reactivation in models of chronic hepatitis B infection.

         P-Glycoprotein Inhibitor -- CytRx has identified a series of novel
non-toxic inhibitors of the drug efflux pump P-glycoprotein. These compounds
have potential therapeutic use as (a) chemosensitizers for drug resistant
bacteria, (b) oral bioavailability enhancers for antibiotics or
chemotherapeutics, and (c) chemosensitizers for drug resistant cancer.

         Gene Delivery -- CytRx has discovered the use of certain poloxamers for
oligionucleotide delivery. Poloxamers are as effective as cationic liposomes but
are significantly less toxic and are not metabolized. CytRx believes there is
potential use for this technology in (a) gene-based vaccines, (b) gene
replacement therapy, and (c) ribozyme and anti-sense delivery.

         Animal Growth Promotant -- CytRx's growth promotant has been shown to
have a consistent effect to improve the rate of weight gain and feed efficiency
in well-controlled studies in poultry and swine.


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<PAGE>   6

         Expenditures for research and development activities related to
continuing operations were $7.3 million, $3.6 million, and $2.0 million during
the years ended December 31, 1998, 1997, and 1996, respectively.

Products and Services Currently Marketed
Titermax(R) - CytRx manufactures, markets and distributes TiterMax, an adjuvant
used to produce cell mediated and humoral responses in research animals. The
keys to the potency of TiterMax lie in its immunostimulatory activity and the
formation of stable water-in-oil emulsions. TiterMax aids in the antigen's
effective presentation to the immune system without the toxic effects of other
research adjuvants.

Spectrum Recruitment Research - CytRx also has a small group of human resource
professionals who, in addition to their services to the Company, provide
recruiting services to third parties under the name of Spectrum Recruitment
Research.

MANUFACTURING

         The Company requires three suppliers of materials or services to
manufacture FLOCOR; (i) a supplier of the raw drug substance, (ii) a supplier of
the purified drug which is refined from the raw drug substance and (iii) a
manufacturer who can formulate and sterile fill the purified drug substance into
the finished drug product. The raw drug substance is currently widely available
at commercial scales from numerous manufacturers. The Company has not entered
into a formal agreement with any supplier for the raw drug substance because of
its wide availability. The Company entered into an agreement with a French
company to obtain the purified drug substance for use in clinical studies, and
is currently negotiating with another supplier for a longer-term commercial
supply contract. There can be no assurance that the Company's relationship with
such supplier will continue or that the Company will be able to obtain
additional purified drug substance if the Company's current supply is
inadequate. Such inability to obtain additional purified drug substance in
amounts and at prices acceptable to the Company could have a material adverse
effect on the Company's business. To meet the need for manufacture of the
Company's finished drug product, the Company has entered into a supply agreement
with the Hospital Products Division of Abbott Laboratories. The inability of the
Company to maintain such relationship on terms acceptable to the Company could
have a material adverse effect on the Company's business.

         Management believes that the Company has an adequate supply of
materials on hand to meet the Company's needs for 2 to 3 years (both drug
substance and formulated drug product) which management anticipates to be
sufficient to complete the anticipated studies necessary for filing an
NDA/Product License Application with the FDA. However, there can be no assurance
that delays and complications, among other factors, could make the Company's
current supply inadequate.

         If the Company modifies its manufacturing process or changes the source
or location of product supply, regulatory authorities will require the Company
to demonstrate that the material produced from the modified or new process or
facility is equivalent to the material used in the Company's clinical trials.
Further, any manufacturing facility and the quality control and manufacturing
procedures used by the Company for the commercial supply of a product must
comply with applicable Occupational Safety and Health Administration,
Environmental Protection Agency, and FDA standards, including Good Manufacturing
Practice regulations. See "Government Regulation".

PATENTS AND PROPRIETARY TECHNOLOGY

         The Company actively seeks patent protection for its technologies,
processes, uses, and ongoing improvements and considers its patents and other
intellectual property to be critical to its business.

         The Company continually evaluates the patentability of new inventions
and improvements developed by its employees and collaborators. Whenever
appropriate, the Company will endeavor to file United States and international
patent applications to protect these new inventions and improvements. However,
there can be no assurance that any of the current pending patent applications or
any new patent applications that may be filed will ever be issued in the United
States or any other country.

         The Company also attempts to protect its proprietary products,
processes and other information by relying on trade secrets and non-disclosure
agreements with its employees, consultants and certain other persons who have
access to such products, processes and information. Under the agreements, all
inventions conceived by employees are the exclusive property of the Company.
Nevertheless, there can be no assurance that these agreements will afford
significant protection against misappropriation or unauthorized disclosure of
the Company's trade secrets and confidential information.


                                                                               6
<PAGE>   7

COMPETITION

         Many companies, including large pharmaceutical, chemical and
biotechnology firms with financial resources, research and development staffs,
and facilities that are substantially greater than those of the Company, are
engaged in the research and development of pharmaceutical products that could
compete with FLOCOR or other products under development by the Company. The
industry is characterized by rapid technological advances and competitors may
develop their products more rapidly and/or such products may be more effective
than those under development by the Company or its licensees and corporate
partners. The Company competes in this research and development environment by
attempting to develop its products and technologies in an innovative and timely
fashion that would provide the Company with an advantage in the licensing and/or
marketing of its products and technologies.

GOVERNMENT REGULATION

         The marketing of pharmaceutical products requires the approval of the
FDA and comparable regulatory authorities in foreign countries. The FDA has
established guidelines and safety standards which apply to the pre-clinical
evaluation, clinical testing, manufacture and marketing of pharmaceutical
products. The process of obtaining FDA approval for a new therapeutic product
(drug) generally takes several years and involves the expenditure 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 an NDA. The NDA involves considerable
data collection, verification and analysis, as well as the preparation of
summaries of the manufacturing and testing processes, preclinical studies, and
clinical trials. The FDA must approve the NDA before the drug may be marketed.
There can be no assurance that the Company will be able to obtain the required
FDA approvals for any of its products.

         The manufacturing facilities and processes for the Company's products,
whether manufactured directly by the Company or by a third party, will be
subject to rigorous regulation, including the need to comply with Federal Good
Manufacturing Practice regulations. The Company is also 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.

ENVIRONMENTAL PROTECTION

         During 1998 compliance with federal, state and local regulations
pertaining to environmental standards did not have a material effect upon the
capital expenditures or earnings of the Company.

EMPLOYEES

         As of December 31, 1998, the Company had sixteen full-time and four
part-time employees, ten of which were directly involved in the conduct of
scientific or research and development activities for the Company.


ITEM 2.  PROPERTIES

         The Company currently subleases laboratory and related space from Oread
at 150 Technology Parkway, Norcross, Georgia, and leases administrative office
space from Alexandria at 154 Technology Parkway, Norcross, Georgia. See
"Business - New Business Developments." These facilities are in satisfactory
condition and suitable for purposes of the Company's present operations.

ITEM 3.  LEGAL PROCEEDINGS

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                                                               7
<PAGE>   8

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is traded on The Nasdaq Stock Market under
the symbol CYTR. The following table sets forth the high and low sale prices for
the Common Stock for the periods indicated as reported by Nasdaq. Such prices
represent prices between dealers without adjustment for retail mark-ups,
mark-downs, or commissions and may not necessarily represent actual
transactions.

<TABLE>
<CAPTION>
                                                   High               Low
 COMMON STOCK:                                  ----------         ---------
      1999
 <S>                                            <C>                <C>
          January 1 to March 22                    3   3/8           1
      1998
          Fourth Quarter                           1   1/4               3/4
          Third Quarter                            2   1/8             29/32
          Second Quarter                           3  7/16           2  1/16
          First Quarter                            3   5/8           2  9/16
      1997
          Fourth Quarter                           5   5/8           2   7/8
          Third Quarter                            5                 3  5/32
          Second Quarter                           4   1/4           3   1/4
          First Quarter                            5                 3   1/4
</TABLE>

         On March 22, 1999, the closing price of the Common Stock as reported on
The Nasdaq Stock Market, was $2 3/4 and there were approximately 1,500 holders
of record of the Company's Common Stock. The number of record holders does not
reflect the number of beneficial owners of the Company's Common Stock for whom
shares are held by Cede & Co., certain brokerage firms and other institutions.
The Company has not paid any dividends since its inception and does not
contemplate payment of dividends in the foreseeable future.


ITEM 6.  SELECTED FINANCIAL DATA

         Information with respect to this item is incorporated herein by
reference from the Company's 1998 Annual Report to Stockholders. The applicable
portion of the 1998 Annual Report to Stockholders is included in Exhibit 13.1 to
this report.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         Information with respect to this item is incorporated herein by
reference from the Company's 1998 Annual Report to Stockholders. The applicable
portion of the 1998 Annual Report to Stockholders is included in Exhibit 13.1 to
this report.


ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

         Information with respect to this item is incorporated herein by
reference from "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in the Company's 1998 Annual Report to
Stockholders. The applicable portion of the 1998 Annual Report to Stockholders
is included in Exhibit 13.1 to this report.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Information with respect to this item is incorporated herein by
reference from the Company's 1998 Annual Report to Stockholders. The applicable
portion of the 1998 Annual Report to Stockholders is included in Exhibit 13.1 to
this report.


                                                                               8

<PAGE>   9

ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information with respect to this item is incorporated herein by
reference from the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION

         Information with respect to this item is incorporated herein by
reference from the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information with respect to this item is incorporated herein by
reference from the Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      Documents filed as part of this 10-K:

         1.       Financial Statements The financial statements listed below are
                  incorporated by reference from the Company's 1998 Annual
                  Report to Stockholders:

                  Consolidated Balance Sheets as of December 31, 1998 and 1997

                  Consolidated Statements of Operations for the Years Ended
                  December 31, 1998, 1997 and 1996

                  Consolidated Statements of Stockholders' Equity for the Years
                  Ended December 31, 1996, 1997 and 1998

                  Consolidated Statements of Cash Flows for the Years Ended
                  December 31, 1998, 1997 and 1996

                  Notes to Consolidated Financial Statements

                  Report of Independent Auditors


         2.       Financial Statement Schedules:

                  Schedule II - Valuation and Qualifying Accounts for the years
                  ended December 31, 1998, 1997 and 1996


                                                                               9

<PAGE>   10

                  All other schedules are omitted because they are not required,
                  not applicable, or the information is provided in the
                  financial statements or notes thereto.


         3.       Exhibits required by Item 601 of Regulation S-K:

                  See Exhibit Index on page 11 of this Form 10-K.


(b)      Reports on Form 8-K:

         None





























                                                                              10
<PAGE>   11


                                CYTRX CORPORATION
                             FORM 10-K EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number
 -------
<S>       <C>                                                                     <C>
  2.1     Agreement and Plan of Merger and Contribution dated as of
          December 6, 1996, among CytRx Corporation, Vaxcel, Inc.,
          Vaxcel Merger Subsidiary, Inc. and Zynaxis, Inc.                        (a)
  2.2     Preferred Stock and Warrant Agreement dated as of December 6,
          1996, among CytRx Corporation, Zynaxis, Inc., Vaxcel, Inc. and
          each of the holders of Zynaxis, Inc. warrants signatory
          thereto                                                                 (a)
  3.1     Certificate of Incorporation                                            (c)
  3.2     By-Laws                                                                 (d)
  4.1     Shareholder Protection Rights Agreement dated April 16, 1997
          between CytRx Corporation and American Stock Transfer & Trust
          Company as Rights Agent                                                 (e)
  4.2     CytRx Corporation Stock Purchase Warrants dated as of October
          22, 1997 in favor of various investors                                  (b)
 10.1     Agreement with Emory University, as amended                             (f)
 10.2     Agreement with BASF Corporation, as amended                             (f)
 10.3 *   1995 Employment Agreement between CytRx Corporation and Jack
          J. Luchese                                                              (l)
 10.4 *   Amendment No. 1 to 1995 Employment Agreement between CytRx
          Corporation and Jack J. Luchese                                         (g)
 10.5 *   Amendment No. 2 to 1995 Employment Agreement between CytRx
          Corporation and Jack J. Luchese                                         (h)
 10.6 *   Change of Control Employment Agreement between CytRx
          Corporation and Jack J. Luchese                                         (h)
 10.7 *   1986 Stock Option Plan, as amended and restated                         (i)
 10.8 *   1994 Stock Option Plan, as amended and restated                         (h)
 10.9 *   1995 Stock Option Plan                                                  (j)
10.10 *   1998 Long-Term Incentive Plan
10.11     Asset Purchase Agreement dated February 10, 1998 by and
          between Proceutics, Inc. and Oread Laboratories, Inc.                   (l)
10.12     Sublease Agreement dated February 16, 1998 by and between
          CytRx Corporation and Oread, Inc.                                       (l)
10.13     Purchase and Sale Agreement dated February 23, 1998 by and
          between CytRx Corporation and Alexandria Real Estate Equities,
          Inc.                                                                    (l)
10.14     Purchase and Sale Agreement dated February 23, 1998 by and
          between Proceutics, Inc. and Alexandria Real Estate Equities,
          Inc.                                                                    (l)
10.15     Acquisition Agreement dated April 17, 1998 by and among CytRx,
          VetLife, Inc. and VetLife, L.L.C.                                       (k)
 13.1     Selected Portions of the 1998 CytRx Corporation Annual Report
          to Shareholders
 21.1     Subsidiaries of Registrant
 23.1     Consent of Ernst & Young LLP
 27.1     Financial Data Schedule (for SEC use only).
 27.2     Financial Data Schedule - 1996 Restatement (for SEC use only).
 27.3     Financial Data Schedule - 1997 Restatement (for SEC use only).
 99.1     Safe Harbor Compliance Statement for Forward-looking Statements
</TABLE>

*Indicates a management contract or compensatory plan or arrangement.

-------------------

(a) Incorporated by reference to the Registrant's Current Report on Form 8-K
    filed on December 6, 1996.
(b) Incorporated by reference to the Registrant's Current Report on Form 8-K
    filed on November 6, 1997.
(c) Incorporated by reference to the Registrant's Registration Statement on Form
    S-3 (File No. 333-39607) filed on November 5, 1997.

                                                                              11
<PAGE>   12

(d) Incorporated by reference to the Registrant's Registration Statement on Form
    S-8 (File No. 333-37171) filed on July 21, 1997.
(e) Incorporated by reference to the Registrant's Current Report on Form 8-K
    filed on April 21, 1997.
(f) Incorporated by reference to the Registrant's Registration Statement on Form
    S-l (File No. 33-8390) filed on November 5, 1986.
(g) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
    filed on August 14, 1997.
(h) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
    filed on November 13, 1997.
(i) Incorporated by reference to the Registrant's Annual Report on Form 10-K
    filed on March 27, 1996.
(j) Incorporated by reference to the Registrant's Registration Statement on Form
    S-8 (File No. 33-93818) filed on June 22, 1995.
(k) Incorporated by reference to the Registrant's Current Report on Form 8-K
    filed on May 1, 1998.
(l) Incorporated by reference to the Registrant's Annual Report on Form 10-K
    filed on March 30, 1998.




























                                                                              12
<PAGE>   13


                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) 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


                                        By: /s/ Jack J. Luchese
                                           --------------------------
                                        Jack J. Luchese, President
Date: March 30, 1999                    and Chief Executive Officer
                                        (Principal Executive Officer)


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                            Title                                       Date
---------                            -----                                       ----


<S>                                  <C>                                         <C>
/s/ Jack L. Bowman                   Director                                    March 30, 1999
------------------------------
Jack L. Bowman


/s/ Raymond C. Carnahan, Jr.         Director                                    March 30, 1999
------------------------------
Raymond C. Carnahan, Jr.


/s/ Lyle A. Hohnke                   Director                                    March 30, 1999
------------------------------
Lyle A. Hohnke


/s/ Max Link                         Chairman of the                             March 30, 1999
------------------------------       Board of Directors
Max Link


/s/ Jack J. Luchese                  Director                                    March 30, 1999
------------------------------       President and Chief Executive Officer
Jack J. Luchese                      (Principal Executive Officer)


/s/ Herbert H. McDade, Jr.           Director                                    March 30, 1999
------------------------------
Herbert H. McDade, Jr.


/s/ Mark W. Reynolds                 Chief Financial Officer                     March 30, 1999
-------------------------------      (Principal Financial Officer)
Mark W. Reynolds
</TABLE>






                                                                              13
<PAGE>   14



                                CYTRX CORPORATION

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                    Additions
                                                            ---------------------------
                                           Balance at        Charged to     Charged to                   Balance at
                                            Beginning         Costs and        Other                         End
              Description                   of Period         Expenses       Accounts      Deductions     of Period
--------------------------------------    ------------      ------------    -----------   ------------  -------------
<S>                                       <C>               <C>             <C>           <C>           <C>
Reserve Deducted in the Balance Sheet
from the Asset to Which it Applies:

  Allowance for Bad Debts
   Year ended December 31, 1998           $     22,187      $        --      $    --      $    22,187   $         --
   Year ended December 31, 1997                 48,430           44,850           --           71,093         22,187
   Year ended December 31, 1996                     --            2,516       45,914               --         48,430

  Allowance for Deferred Tax Assets
   Year ended December 31, 1998           $ 17,684,000       $3,085,000      $            $             $ 20,769,000
   Year ended December 31, 1997             15,200,000        2,484,000           --               --     17,684,000
   Year ended December 31, 1996             13,600,000        1,600,000           --               --     15,200,000
</TABLE>




















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