----

----

| (Mark      one) |                                                                                                                                                                                                                    |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| R               | ANNUAL REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                                                                                     |
|            |                                                                                                                                                                                                                    |
|            | For      the fiscal year ended December 31, 2008                                                                                                                                                                        |
|            |                                                                                                                                                                                                                    |
| or              |
|            |                                                                                                                                                                                                                    |
| £          | TRANSITION REPORT PURSUANT TO      SECTION 13 OR 15(d) OF SECURITIESEXCHANGE ACT OF      1934                                                                                                                           |
|            |                                                                                                                                                                                                                    |
|            | For      the transition period from ______________ to      ______________                       |

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

| Title of each class                                                |   | Name of exchange on which      registered |
|--------------------------------------------------------------------|--------|-------------------------------------------|
| Common      Stock, $0.001 par value per share                      |   | The      NASDAQ Stock Market LLC          |
| Series      A Junior Participating Preferred Stock Purchase Rights |   |                                      |

| Large      accelerated filer £ | Accelerated      filer R | Non-accelerated      filer £                  | Smaller      reporting company £ |
|-------------------------------------|--------------------------|----------------------------------------------------|---------------------------------------|
|                                |                     | (Do      not check if a smaller reporting company) |                                  |

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----

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|                                                                                                                                      | Page   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                                                      |   |   |
| “SAFE HARBOR” STATEMENT                                                                                                       | 3      |   |
| PART      I                                                                                                                               |   |   |
| Item      1. BUSINESS                                                                                                                     | 4      |   |
| Item      1A. RISK FACTORS                                                                                                                | 16     |   |
| Item      2. PROPERTIES                                                                                                                   | 28     |   |
| Item      3. LEGAL PROCEEDINGS                                                                                                            | 28     |   |
| PART      II                                                                                                                              |   |   |
| Item      5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY      SECURITIES | 28     |   |
| Item      6. SELECTED FINANCIAL DATA                                                                                                      | 31     |   |
| Item      7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL      CONDITION AND RESULTS OF OPERATIONS                             | 32     |   |
| Item      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT      MARKET RISK                                                             | 43     |   |
| Item      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY      DATA                                                                             | 43     |   |
| Item      9A. CONTROLS AND PROCEDURES                                                                                                     | 44     |   |
| PART      III                                                                                                                             |   |   |
| Item      10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE      GOVERNANCE                                                                 | 45     |   |
| Item      11. EXECUTIVE COMPENSATION                                                                                                      | 47     |   |
| Item      12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL      OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                         | 62     |   |
| Item      13. CERTAIN RELATIONSHIPS AND RELATED      TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                              | 63     |   |
| Item      14. PRINCIPAL ACCOUNTANT FEES AND      SERVICES                                                                                 | 64     |   |
| PART      IV                                                                                                                              |   |   |
| Item      15. EXHIBITS AND FINANCIAL STATEMENT      SCHEDULES                                                                             | 66     |   |
| SIGNATURES                                                                                                                                | 69     |   |

----

SAFE 

----

BUSINESS

| Technology                             | Product Candidate                  | Indication                                                                                       | Stage of Development    |
|----------------------------------------|------------------------------------|--------------------------------------------------------------------------------------------------|-------------------------|
|                                   |                               |                                                                                             |                    |
| Synthetic      retinoid                | Tamibarotene                       | APL      (acute promyelocytic leukemia)                                                          | Pivotal      Phase II   |
| Doxorubicin      prodrug               | INNO-2006                          | SCLC      (small cell lung cancer) and other solid tumor cancers                                 | Phase      II (2H-2009) |
| Tyrosine      kinase inhibitor         | Bafetinib      (formerly INNO-406) | CML      (chronic myeloid leukemia)                                                              | Phase      I            |
| Molecular      chaperone amplification | Arimoclomol                        | ALS      (amyotrophic lateral sclerosis, or Lou Gehrig’s disease) and stroke      recovery | Phase      IIb          |
| Molecular      chaperone amplification | Iroxanadine                        | Diabetic      foot ulcers, other indications                                                     | Phase      I            |

----

----

| ·   | after      administration, INNO-206 rapidly binds endogenous circulating albumin      through the EMCH linker; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | circulating      albumin preferentially accumulates in tumors, bypassing uptake by other      non-specific sites, including the heart, bone marrow and the      gastrointestinal tract; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | once      albumin-bound INNO-206 reaches the tumor, the acidic environment of the      tumor causes cleavage of the acid sensitive linker;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | free      doxorubicin is released at the site of the  tumor. |
|--------------------|--------------------------------------------------------------|

----

----

| ·   | in      July 2006, we completed an 84-patient, multi-center, double-blind,      placebo-controlled, multi-dose Phase IIa clinical trial of safety and      tolerability of arimoclomol in volunteers with ALS, which we refer to as      the Phase IIa trial; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | in      May 2007, we completed an open-label extension of the Phase IIa trial in      approximately 70 ALS patients from the trial who were administered the      highest investigational dose (100 mg three times daily) of arimoclomol for      an additional six months; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | in      June 2007, we completed a multiple ascending-dose clinical trial of safety      and tolerability involving 40 healthy  volunteers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | in      November 2007, we completed a 28-day safety clinical trial with 400 mg of      arimoclomol three times daily involving 16 healthy volunteers;      and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | in      December 2007, we initiated patient screening in a double blind,      placebo-controlled Phase IIb clinical study. In this trial, we expect to      enroll 390 ALS patients at 30 to 40 clinical sites in the U.S. and Canada.      The primary purpose of this trial is to evaluate the safety and efficacy      of a 400 mg dose of arimoclomol administered orally three times daily. The      Phase IIb clinical trial was placed on clinical hold by the FDA in January      2008. Based on written correspondence we received from the FDA, their      decision pertained to a previously completed animal toxicology study in      rats and was not related to data generated from any human studies with      arimoclomol.  We are in the process of completing additional      animal toxicology studies that we plan to submit to the FDA in the second      quarter of 2009. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

| ·   | commercially      reasonable royalties based on a percentage of net sales (as defined in the      agreement); |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | a      percentage of non-royalty sub-licensing income (as defined in the      agreement); and |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | milestones      of $1 million for each additional final marketing approval that we might      obtain. |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | commercially      reasonable royalties based on a percentage of net sales (as defined in the      Nippon Shinyaku license agreement), dependent on reaching certain revenue      thresholds; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | annual      minimum payments if sales of bafetinib do not meet specified levels;      and |
|--------------------|-------------------------------------------------------------------------------------------|

----

| ·   | a      percentage of non-royalty sub-licensing income (as defined in the license      agreement). |
|--------------------|---------------------------------------------------------------------------------------------------|

----

| ·   | Wyeth’s      SKI-606 is a dual Abl and Src kinase inhibitor similar to dasatinib and is      currently in a Phase III trial in newly diagnosed Ph+ CML      patients; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Ceflatonin      from Chemgenix, a plant alkaloid primarily targeting a single Bcr-Abl      mutation known as T315I, which is in a Phase II/III clinical      trial; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Exelixis’      XL228,a multi-kinase inhibitor that targets Src and Abl , has shown      preclinical activity against the T315I mutation and is in a Phase I      clinical trial in CML patients; and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | AP24534      from Ariad Pharmaceuticals is a multi-kinase inhibitor that targets      Bcr-Abl including the T315I mutation and is in a Phase I clinical trial in      CML patients. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

RISK 

| ·   | fund      our clinical trials and pursue regulatory approval of our existing and      possible future product candidates; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | expand      our research and developmentactivities; |
|--------------------|-----------------------------------------------------|

----

| ·   | finance      our general and administrativeexpenses; |
|--------------------|------------------------------------------------------|

| ·   | acquire      or license new technologies; |
|--------------------|-------------------------------------------|

| ·   | prepare,      file, prosecute, maintain, enforce and defend our patent and other      proprietary rights; and |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | develop      and implement sales, marketing and distribution capabilities to      successfully commercialize any product for which we obtain marketing      approval and choose to marketourselves. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | difficulty      in securing centers to conducttrials; |
|--------------------|-------------------------------------------------------|

| ·   | difficulty      in enrolling patients in conformity with required protocols or projected      timelines; |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | unexpected      adverse reactions by patients intrials; |
|--------------------|---------------------------------------------------------|

| ·   | difficulty      in obtaining clinical supplies of theproduct; |
|--------------------|---------------------------------------------------------------|

| ·   | changes      in or our inability to comply with FDA or foreign governmental product      testing, manufacturing or marketing  requirements; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | regulatory      inspections of clinical trials or manufacturing facilities, which may,      among other things, require us or our manufacturers or licensees to      undertake corrective action or suspend or terminate the affected clinical      trials if investigators find them not to be in compliance with applicable      regulatory requirements; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | inability      to generate statistically significant data confirming the safety and      efficacy of the product beingtested; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | modification      of the product during testing; and |
|--------------------|------------------------------------------------------|

| ·   | reallocation      of our limited financial and other resources to other clinical      programs. |
|--------------------|-------------------------------------------------------------------------------------------------|

----

| ·   | additional      toxicology or human studies prior to or in parallel with the resumption of      clinical trials, which would result in substantial additional expenses and      possible significant delays in completing the clinical trials;      or |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes      in the design of our previously planned Phase IIb clinical efficacy      trial, including a reduction in the planned dosage of arimoclomol, which      could delay further or increase the cost of the trial, adversely affect      our ability to demonstrate the efficacy of arimoclomol in the trial or      cause the cancellation of the trial altogether due to one or more of these      consideration. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | they      are “incidental” to a physician’sservices, |
|--------------------|------------------------------------------------------------------------|

| ·   | they      are “reasonable and necessary” for the diagnosis or treatment of the      illness or injury for which they are administered according to accepted      standard of medical practice, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | they      are not excluded as immunizations,and |
|--------------------|-------------------------------------------------|

| ·   | they      have been approved by the FDA. |
|--------------------|------------------------------------------|

----

| ·   | we      may become involved in time-consuming and expensive litigation, even if      the claim is without merit; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | we      may become liable for substantial damages for past infringement if a court      decides that our technology infringes a competitor’s    patent; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      court may prohibit us from selling or licensing our product without a      license from the patent holder, which may not be available on commercially      acceptable terms, if at all, or which may require us to pay substantial      royalties or grant cross licenses to our patents;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      may have to redesign our product candidates or technology so that it does      not infringe patent rights of others, which may not be possible or      commercially feasible. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | we      identified a material weakness related to our accounting for an equity      transaction by RXi and our tax withholding in connection with exercises of      employee stock options. As a result, we restated our financial statements      for the quarter ended June 30, 2007 and extended the filing of our      quarterly report for the quarter ended September 30,  2007; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      identified a material weakness related to our accounting for transactions      at our former laboratory facility in Worcester, Massachusetts. As a      result, we restated our financial statements for the quarters ended March      31, 2006, June 30, 2006 and September 30,  2006; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      improperly applied generally accepted accounting principles related to our      accounting for deemed dividends incurred in connection with anti-dilution      adjustments made to our outstanding warrants. This misapplication of      accounting principles constituted a material weakness and caused us to      twice restate our financial statements for the quarters ended March 31,      2005, June 30, 2005 and September 30, 2005 and for the year ended December      31, 2005, as well as restate our financial statements for the quarters      ended March 31, 2006, June 30, 2006 and September 30, 2006;      and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we      miscalculated pro forma employee stock option compensation figures      disclosed in the footnotes to our financial statements. As a result, we      restated our financial statements for the quarters ended March 31, 2005,      June 30, 2005 and September 30, 2005 and for the year ended December 31,      2005. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | succeed      in developing competitive products sooner than us or our strategic      partners or licensees; |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | obtain      FDA or foreign governmental approvals for their products before we can      obtain approval of any of ourproducts; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------|

| ·   | obtain      patents that block or otherwise inhibit the development and      commercialization of our product candidate  candidates; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | develop      products that are safer or more effective than our    products; |
|--------------------|------------------------------------------------------------------------------|

----

| ·   | devote      greater resources than us to marketing or selling  products; |
|--------------------|--------------------------------------------------------------------------|

| ·   | introduce      or adapt more quickly than us to new technologies and other scientific      advances; |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | introduce      products that render our productsobsolete; |
|--------------------|-----------------------------------------------------------|

| ·   | withstand      price competition more successfully than us or our strategic partners or      licensees; |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | negotiate      third-party strategic alliances or licensing arrangements more effectively      than us; and |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | take      better advantage than us of otheropportunities. |
|--------------------|-----------------------------------------------------------|

----

| ·   | commercially      reasonable royalties based on a percentage of net sales (as defined in the      agreement); |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | a      percentage of non-royalty sub-licensing income (as defined in the      agreement); and |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | milestones      of $1,000,000 for each additional final marketing approval that we might      obtain. |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | commercially      reasonable royalties based on a percentage of net sales (as defined in the      agreement), dependent on reaching certain revenue    thresholds; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | annual      minimum payments if sales of bafetinib do not meet specified levels;      and |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | a      percentage of non-royalty sub-licensing income (as defined in the      agreement). |
|--------------------|-------------------------------------------------------------------------------------------|

----

----

----

----

| ·   | 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 of or other relationships with  RXi; |
|--------------------|--------------------------------------------------------------------|

| ·   | our      quarterly operating results; |
|--------------------|---------------------------------------|

| ·   | litigation      involving or affecting us; |
|--------------------|--------------------------------------------|

| ·   | shortfalls      in our actual financial results compared to our guidance or the forecasts      of stock market analysts; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | developments      in patent or other technology ownershiprights; |
|--------------------|------------------------------------------------------------------|

| ·   | acquisitions      or strategic alliances by us or ourcompetitors; |
|--------------------|-------------------------------------------------------------------|

| ·   | public      concern regarding the safety of our products;  and |
|--------------------|----------------------------------------------------------------|

| ·   | government      regulation of drug pricing. |
|--------------------|---------------------------------------------|

PROPERTIES

LEGAL 

----

MARKET

|                   | High   | Low    |
|------------------------|--------|--------|
| Fiscal      Year 2008: |   |   |
| Fourth      Quarter    | $0.65  | $0.23  |
| Third      Quarter     | $0.68  | $0.40  |
| Second      Quarter    | $1.27  | $0.61  |
| First      Quarter     | $2.98  | $1.00  |
|                   |   |   |
| Fiscal      Year 2007: |   |   |
| Fourth      Quarter    | $4.70  | $2.60  |
| Third      Quarter     | $4.09  | $3.00  |
| Second      Quarter    | $5.36  | $2.97  |
| First      Quarter     | $5.49  | $1.74  |
|                   |   |   |

|         Plan      Category                                                                            |   |  (a)Number      of Securitiesto      be Issued UponExercise      ofOutstanding      Options,Warrants and Rights |       |   |   (b)Weighted-AverageExercise      Price ofOutstanding      Options,Warrants and Rights |   |   | Number      of SecuritiesRemaining      Availablefor      Issuance UnderEquity      Compensation      Plans      (ExcludingSecurities      Reflectedin Column (a)) |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|------------|--------|---------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity      compensation plans approved by our security holders:                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                 |       |   |                                                                                              |   |   |                                                                                                                                                               |   |
| 2000      Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                 | 7,054,940  |   |                                                                                              | $      | 1.92   |                                                                                                                                                               |   |   | 697,000 |   |
| Equity      compensation plans not approved by our security holders:                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                 |       |   |                                                                                              |   |   |                                                                                                                                                               |   |   |   |   |
| 2008      Stock Incentive Plan (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                 | 350,000    |   |                                                                                              |   | 0.35   |                                                                                                                                                               |   |   | — |   |
| Outstanding      warrants (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                 | 10,634,848 |   |                                                                                              |   | 1.40   |                                                                                                                                                               |   |   | — |   |
| Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                 | 18,039,788 |   |                                                                                              | $      | 1.58   |                                                                                                                                                               |   |   | 697,000 |   |

| (1) | Our      board of directors adopted this plan on November 21, 2008.  The      plan will be submitted for approval by our stockholders at our 2009 Annual      Meeting of stockholders.  In the meantime, we may make awards      under the plan, whose effectiveness is conditioned upon obtaining      stockholder approval. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2) | The      warrants shown were issued in discreet transactions from time to time as      compensation for services rendered by consultants, advisors or other third      parties, and do not include warrants sold in private placement      transactions. The material terms of such warrants were determined based      upon arm’s-length negotiations with the service providers. The warrant      exercise prices approximated the market price of our common stock at or      about the date of grant, and the warrant terms range from five to ten      years from the grant date. The warrants contain customary anti-dilution      adjustments in the event of a stock split, reverse stock split,      reclassification or combination of our outstanding common stock and      similar events and certain of the warrants contain anti-dilution      adjustments triggered by other corporate events, such as dividends and      sales of equity below market price. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                             | December 31, |
|----------------------------------|--------------|
|                             | 2004         | 2005 | 2006 | 2007 | 2008 |
| CytRx      Corporation           | 75.27        | 55.37 | 102.68 | 152.67 | 23.42 |
| NASDAQ      Stock Market Index   | 109.16       | 111.47 | 123.05 | 140.12 | 84.12 |
| NASDAQ      Pharmaceutical Index | 106.51       | 117.29 | 114.81 | 120.74 | 112.34 |

----

SELECTED 

|                                                                                              |   | 2008   |        |   | 2007   |   |        | 2006   |   |   | 2005        |   |   | 2004   |        |
|---------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|--------|-------------|
| Statement      of Operations Data:                                                                |   |   |        |   |   |   |        |   |   |   |        |   |   |   |        |
| Revenues                                                                                          |   |   |        |   |   |   |        |   |   |   |        |   |   |   |        |
| Service      revenue                                                                              |   | $      | 6,166,000   |   |   | $      | 7,242,000   |   |   | $      | 1,859,000   |   |   | $      | 83,000      |   |   | $ | — |   |
| Licensing  revenue                                                                      |   |   | 100,000     |   |   |   | 101,000     |   |   |   | 101,000     |   |   |   | 101,000     |   |   |   | 428,000 |   |
| Grant      revenue                                                                                |   |   | —     |   |   |   | 116,000     |   |   |   | 106,000     |   |   |   | —     |   |   |   | — |   |
| Total      revenues                                                                               |   | $      | 6,266,000   |   |   | $      | 7,459,000   |   |   | $      | 2,066,000   |   |   | $      | 184,000     |   |   | $ | 428,000 |   |
|                                                                                              |   |   |        |   |   |   |        |   |   |   |        |   |   |   |        |   |   |   |   |   |
| Deemed      dividend for anti-dilution adjustments made to outstanding common stock      warrants |   |   | (757,000    | )      |   |   | —     |   |   |   | (488,000    | )      |   |   | (1,076,000  | ) |   |   | — |   |
| Net      loss applicable to common stockholders                                                   |   | $      | (27,803,000 | )      |   | $      | (21,890,000 | )      |   | $      | (17,240,000 | )      |   | $      | (16,169,000 | ) |   | $ | (16,392,000 | ) |
| Basic      and diluted loss per share applicable to common stock                                  |   | $      | (0.30       | )      |   | $      | (0.26       | )      |   | $      | (0.25       | )      |   | $      | (0.28       | ) |   | $ | (0.48 | ) |
| Balance      Sheet Data:                                                                          |   |   |        |   |   |   |        |   |   |   |        |   |   |   |        |   |   |   |   |   |
| Cash,      cash equivalents and short-term investments                                            |   | $      | 25,042,000  |   |   | $      | 60,450,000  |   |   | $      | 30,381,000  |   |   | $      | 8,299,000   |   |   | $ | 1,988,000 |   |
| Total      assets                                                                                 |   | $      | 28,324,000  |   |   | $      | 64,146,000  |   |   | $      | 31,636,000  |   |   | $      | 9,939,000   |   |   | $ | 5,049,000 |   |
| Total      stockholders’ equity                                                             |   | $      | 15,698,000  |   |   | $      | 40,224,000  |   |   | $      | 5,150,000   |   |   | $      | 7,208,000   |   |   | $ | 1,595,000 |   |

| In-process      research and development                  |   | $      | 8.0  |   |
|-----------------------------------------------------------|--------|--------|------|--------|
| Leasehold      interests                                  |   |   | 0.1  |   |
| Prepaid      expenses                                     |   |   | 0.3  |   |
| Accounts      payable                                     |   |   | (6.1 | )      |
| Net      assets acquired through issuance of common stock |   | $      | 2.3  |   |

----

MANAGEMENT’S

----

----

| ·   | our      ability to advance product candidates into pre-clinical and clinical      trials; |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | the      scope, rate and progress of our pre-clinical trials and other research and      development activities; |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | the      scope, rate of progress and cost of any clinical trials we      commence; |
|--------------------|------------------------------------------------------------------------------------|

| ·   | the      cost of filing, prosecuting, defending and enforcing any patent claims and      other intellectual property rights; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | future      clinical trial results; |
|--------------------|-------------------------------------|

| ·   | the      terms and timing of any collaborative, licensing and other arrangements      that we may establish; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | the      cost and timing of regulatoryapprovals; |
|--------------------|--------------------------------------------------|

| ·   | the      cost and timing of establishing sales, marketing and distribution      capabilities; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | the      cost of establishing clinical and commercial supplies of our product      candidates and any products that we may develop;  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      effect of competing technological and market  developments. |
|--------------------|----------------------------------------------------------------------|

----

----

----

|                                                                                             |   | Quarters Ended                             |    |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                             |   | March 31                                   |    |   | June 30 |   |   | September 30 |   |   | December 31 |   |
|                                                                                             |   | (In      thousands, except per share data) |    |
| 2008                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |
| Total      revenues                                                                              |   | $                                          | 2,181   |   |   | $ | 1,740 |   |   | $ | 917 |   |   | $ | 1,428 |   |
| Net      loss                                                                                    |   |                                       | (5,374  | ) |   |   | (5,826 | ) |   |   | (12,316 | ) |   |   | (3,530 | ) |
| Deemed      dividend for anti-dilution adjustments made to outstanding      commonstock warrants |   |                                       | (757    | ) |   |   | — |   |   |   | — |   |   |   | — |   |
| Net      loss applicable to common stockholders                                                  |   | $                                          | (6,131  | ) |   | $ | (5,826 | ) |   | $ | (12,316 | ) |   | $ | (3,530 | ) |
| Basic      and diluted loss per share applicable to common stock                                 |   | $                                          | (0.07   | ) |   | $ | (0.06 | ) |   | $ | (0.14 | ) |   | $ | (0.04 | ) |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      revenues                                                                              |   | $                                          | 1,563   |   |   | $ | 2,371 |   |   | $ | 2,046 |   |   | $ | 1,479 |   |
| Net      loss                                                                                    |   |                                       | (4,546  | ) |   |   | (6,285 | ) |   |   | (4,597 | ) |   |   | (6,462 | ) |
| Deemed      dividend for anti-dilution adjustments made to outstanding      commonstock warrants |   |                                       | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Net      loss applicable to common stockholders                                                  |   | $                                          | (4,546  | ) |   | $ | (6,285 | ) |   | $ | (4,597 | ) |   | $ | (6,462 | ) |
| Basic      and diluted loss per share applicable to common stock                                 |   | $                                          | (0.06   | ) |   | $ | (0.07 | ) |   | $ | (0.05 | ) |   | $ | (0.07 | ) |

----

----

|                   |   | Non-Cancelable      |    |   |                     |   |    |     |   |
|------------------------|--------|---------------------|---------|--------|--------------------------|--------|---------|----------|--------|
|                   |   | OperatingLeases (1) |    |   | EmploymentAgreements (2) |   |    | Subtotal |   |   | Research      andDevelopment (3) |   |   | Total |   |
| 2009                   |   | $                   | 521     |   |                     | $      | 1,610   |     |   | $ | 2,131 |   |   | $ | 1,758 |   |   | $ | 3,889 |   |
| 2010                   |   |                | 376     |   |                     |   | — |     |   |   | 376 |   |   |   | 49 |   |   |   | 425 |   |
| 2011                   |   |                | 253     |   |                     |   | — |     |   |   | 253 |   |   |   | 49 |   |   |   | 302 |   |
| 2012                   |   |                | 124     |   |                     |   | — |     |   |   | 124 |   |   |   | 149 |   |   |   | 273 |   |
| 2013 and    thereafter |   |                | — |   |                     |   | — |     |   |   | — |   |   |   | 532 |   |   |   | 532 |   |
| Total                  |   | $                   | 1,274   |   |                     | $      | 1,610   |     |   | $ | 2,884 |   |   | $ | 2,537 |   |   | $ | 5,421 |   |

| (1) | Operating      leases are primarily facility lease related obligations, as well as      equipment and software lease obligations with third party      vendors. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Employment      agreements include management contracts, which have been revised from time      to time, provide for minimum salary levels, adjusted annually at the      discretion of the Company’s Compensation Committee, as well as for minimum      bonuses that are payable. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Research      and development obligations relate primarily to clinical trials. Most of      these purchase obligations arecancelable. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

----

|                                           |   | Years Ended December 31, |   |
|------------------------------------------------|--------|--------------------------|--------|
|                                           |   | 2008                     |   |   | 2007 |   |   | 2006 |   |
|                                           |   | (In      thousands)      |   |
| Research      and development expense          |   | $                        | 9,913  |   |   | $ | 14,454 |   |   | $ | 8,858 |   |
| Non-cash      research and development expense |   |                     | (224   | ) |   |   | 3,778 |   |   |   | 674 |   |
| Employee      stock option expense             |   |                     | 777    |   |   |   | 592 |   |   |   | 249 |   |
|                                           |   | $                        | 10,466 |   |   | $ | 18,824 |   |   | $ | 9,781 |   |

----

|                                                                                |   | Years Ended December 31, |   |
|-------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                |   | 2008                     |   |   | 2007 |   |   | 2006 |   |
|                                                                                |   | (In      thousands)      |   |
| General      and administrative expenses                                            |   | $                        | 9,134  |   |   | $ | 12,666 |   |   | $ | 8,622 |   |
| Stock,      stock option and warrant expenses to non-employees and      consultants |   |                     | 189    |   |   |   | 2 |   |   |   | 60 |   |
| Employee      stock option expense                                                  |   |                     | 1,610  |   |   |   | 2,154 |   |   |   | 975 |   |
|                                                                                |   | $                        | 10,933 |   |   | $ | 14,822 |   |   | $ | 9,657 |   |

----

----

QUANTITATIVE

FINANCIAL

----

CONTROLS

----

DIRECTORS

|  Name                                                    |   |  Age         |   | Class      ofDirector(1) |   |  Position                                                                          |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------------------------|--------|-----------------------------------------------------------------------------------------|
| Max      Link, Ph.D.                                                                                                                                                                                                                                                                                                         |   | 68                                                        |   | III                      |   | Director,      Chairman of the Board(2)(3)(4)                                           |
| Steven      A. Kriegsman                                                                                                                                                                                                                                                                                                     |   | 67                                                        |   | II                       |   | Director,      Chief Executive Officer, President                                       |
| Marvin      R. Selter                                                                                                                                                                                                                                                                                                        |   | 81                                                        |   | II                       |   | Director,      Vice Chairman of the Board(2)(3)(4)                                      |
| Louis      Ignarro, Ph.D.                                                                                                                                                                                                                                                                                                    |   | 67                                                        |   | I                        |   | Director                                                                                |
| Joseph      Rubinfeld, Ph.D.                                                                                                                                                                                                                                                                                                 |   | 76                                                        |   | I                        |   | Director                                                                                |
| Richard      L. Wennekamp                                                                                                                                                                                                                                                                                                    |   | 66                                                        |   | II                       |   | Director(2)(3)(4)                                                                       |
| John      Y. Caloz                                                                                                                                                                                                                                                                                                           |   | 57                                                        |   | —                  |   | Chief      Financial Officer, Treasurer                                                 |
| Jack      R. Barber, Ph.D.                                                                                                                                                                                                                                                                                                   |   | 53                                                        |   | —                  |   | Chief      Scientific Officer                                                           |
| Shi      Chung Ng, Ph.D.                                                                                                                                                                                                                                                                                                     |   | 54                                                        |   | —                  |   | Senior      Vice President — Research and Development                             |
| Scott      Wieland                                                                                                                                                                                                                                                                                                           |   | 49                                                        |   | —                  |   | Senior      Vice President — Drug Development                                     |
| Benjamin      S. Levin                                                                                                                                                                                                                                                                                                       |   | 33                                                        |   | —                  |   | General      Counsel, Vice President — Legal Affairs and Corporate      Secretary |

| (1) | Our      Class III director serves until the 2009 annual meeting of stockholders,      our Class I directors serve until the 2010 annual meeting of stockholders,      and our Class II directors serve until the 2011 annual meeting of      stockholders. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Members      of our Audit Committee. Mr. Selter is the Chairman of the      Committee. |
|-----|----------------------------------------------------------------------------------------|

| (3) | Members      of our Nominating and Corporate Governance Committee. Mr. Wennekamp is      Chairman of the Committee. |
|-----|---------------------------------------------------------------------------------------------------------------------|

| (4) | Members      of our Compensation Committee. Mr. Wennekamp is Chairman of the      committee. |
|-----|----------------------------------------------------------------------------------------------|

----

----

EXECUTIVE

----

----

| ·   | base      salary; |
|--------------------|-------------------|

| ·   | annual      and special bonuses; and |
|--------------------|--------------------------------------|

| ·   | equity      incentive compensation. |
|--------------------|-------------------------------------|

| ·   | the      negotiated terms of each executive’s employment agreement, if      any; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | an      internal review of the executive’s compensation, both individually and      relative to other named executiveofficers; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·   | each      executive’s individual performance;and |
|--------------------|--------------------------------------------------------|

| ·   | base      salaries paid by comparablecompanies. |
|--------------------|-------------------------------------------------|

----

----

| ·   | links      the creation of stockholder value with executive    compensation; |
|--------------------|------------------------------------------------------------------------------|

| ·   | provides      increased equity ownership byexecutives; |
|--------------------|--------------------------------------------------------|

| ·   | functions      as a retention tool, because of the vesting features included in all      options granted by the Compensation Committee;  and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | maintains      competitive levels of totalcompensation. |
|--------------------|---------------------------------------------------------|

----

| Richard      L. Wennekamp, Chairman | Marvin      R. Selter | Dr.      Max Link |
|-------------------------------------|-----------------------|-------------------|

----

| Name and       Position        |   | Year   |   | Salary ($)         |   |   |  Bonus ($) (1) |   |   | Option Awards ($) (2) |   |   | All      OtherCompensation ($)(5) |   |   | Total ($) |   |
|------------------------------------------------------------------------|--------|--------|--------|--------------------|--------|--------|---------------------|--------|--------|-----------------------|--------|--------|-----------------------------------|--------|--------|-----------|--------|
| Steven      A. Kriegsman                                               |   |   |   |               |   |   |                |   |   |                  |   |   |                              |   |   |      |   |
| President      and Chief Executive Officer                             |   | 2008   |   | 551,000            |   |   | 150,000             |   |   | 105,328               |   |   | 10,000                            |   |   | 816,328   |   |
|                                                                   |   | 2007   |   | 524,767            |   |   | 300,000             |   |   | 295,534               |   |   | —                           |   |   | 1,120,301 |   |
|                                                                   |   | 2006   |   | 417,175            |   |   | 800,000             |   |   | 340,426               |   |   | —                           |   |   | 1,557,601 |   |
| Mitchell      K. Fogelman                                              |   |   |   |               |   |   |                |   |   |                  |   |   |                              |   |   |      |   |
| Chief      Financial Officer and Treasurer (3)                         |   | 2008   |   | 285,576            |   |   | 55,000              |   |   | 24,531                |   |   | —                           |   |   | 365,107   |   |
|                                                                   |   | 2007   |   |        76,763 |   |   | 100,000             |   |   | 35,665                |   |   | —                           |   |   | 212,428   |   |
|                                                                   |   |   |   |               |   |   |                |   |   |                  |   |   |                              |   |   |      |   |
| Jack      R. Barber, Ph.D.                                             |   |   |   |               |   |   |                |   |   |                  |   |   |                              |   |   |      |   |
| Chief      Scientific Officer                                          |   | 2008   |   | 364,375            |   |   | 55,000              |   |   | 24,603                |   |   | —                           |   |   | 443,978   |   |
|                                                                   |   | 2007   |   | 327,074            |   |   | 125,000             |   |   | 168,876               |   |   | —                           |   |   | 620,950   |   |
|                                                                   |   | 2006   |   | 261,750            |   |   | 218,750             |   |   | 90,544                |   |   | —                           |   |   | 571,044   |   |
| Benjamin      S. Levin General Counsel,                                |   |   |   |               |   |   |                |   |   |                  |   |   |                              |   |   |      |   |
| General      Counsel, Vice President —                           |   | 2008   |   | 276,000            |   |   | 55,000              |   |   | 24,603                |   |   | —                           |   |   | 355,603   |   |
| LegalAffairs and      Secretary                                        |   | 2007   |   | 250,000            |   |   | 100,000             |   |   | 84,438                |   |   | —                           |   |   | 434,438   |   |
|                                                                   |   | 2006   |   | 208,170            |   |   | 219,750             |   |   | 120,550               |   |   | —                           |   |   | 548,470   |   |
| Shi      Chung Ng, Ph.D.                                               |   |   |   |               |   |   |                |   |   |                  |   |   |                              |   |   |      |   |
| Senior      Vice President – Research and                        |   | 2008   |   | 275,000            |   |   | 41,250              |   |   | —               |   |   | —                           |   |   | 316,250   |   |
| Development (4)                                                        |   | 2007   |   | 167,628            |   |   | —             |   |   | —               |   |   | —                           |   |   | 167,628   |   |

| (1) | Bonuses      to the named executive officers reported above relating to 2008 were paid      in December 2008. Bonuses to the named executive officers reported above      relating to 2007 were paid in April 2008. Bonuses to the named executive      officers reported above relating to 2006 were paid in both June 2006, in      connection with the contractual year end for those officers, and also in      April 2007, following our decision to determine and award bonuses in      connection with each fiscal year end. For purposes of this table, the      entire amount of the bonus paid as attributed to 2006 has been presented      as a 2006 amount. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The      values shown in this column represent the dollar amount recognized for      financial statement reporting purposes with respect to the 2006, 2007 and      2008 fiscal years for the fair value of stock options granted in 2006,      2007 and 2008 and prior fiscal years in accordance with SFAS 123(R).      Pursuant to SEC rules, the amounts shown exclude the impact of estimated      forfeitures related to service-based vesting conditions. The amount      recognized for these awards was calculated using the Black Scholes      option-pricing model, and reflect grants from our 2000 Long-Term Incentive      Plan, which is described in Note 13 of the Notes to Consolidated Financial      Statements. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr.      Fogelman served as our Chief Financial Officer and Treasurer from      September 11, 2007 through December 31, 2008, when he      resigned.  On January 1, 2009, John Caloz was appointed to these      positions. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Dr.      Ng was hired on April 1, 2007. |
|-----|-----------------------------------------|

----

|  Name                                                               |   | Grant Date |   | All      OtherOption      Awards(#      of CytRxShares) |    |   | Exercise      Price ofOption      Awards($/Share) |    |   | Grant      DateFair      Value ofOption      Awards($) |   |
|--------------------------------------------------------------------------|--------|------------|--------|---------------------------------------------------------|---------|--------|---------------------------------------------------|---------|--------|--------------------------------------------------------|--------|
| Steven      A. Kriegsman                                                 |   | 4/07/2008  |   |                                                    | 450,000 |   |                                              | $       | 1.21   |                                                   |   | $ | 425,700 |   |
| President      and Chief Executive Officer                               |   | 11/21/2008 |   |                                                    | 300,000 |   |                                              |    | 0.37   |                                                   |   |   | 92,100 |   |
|                                                                     |   |       |   |                                                    |    |   |                                              |    |   |                                                   |   |   |   |   |
| Mitchell      K. Fogelman (1)                                            |   | 4/07/2008  |   |                                                    | 100,000 |   |                                              | $       | 1.21   |                                                   |   | $ | 94,600 |   |
| Chief      Financial Officer and Treasurer                               |   | 11/21/2008 |   |                                                    | 100,000 |   |                                              |    | 0.37   |                                                   |   |   | 30,700 |   |
|                                                                     |   |       |   |                                                    |    |   |                                              |    |   |                                                   |   |   |   |   |
| Jack      R. Barber, Ph.D.                                               |   | 4/07/2008  |   |                                                    | 100,000 |   |                                              | $       | 1.21   |                                                   |   | $ | 94,600 |   |
| Chief      Scientific Officer                                            |   | 11/21/2008 |   |                                                    | 100,000 |   |                                              |    | 0.37   |                                                   |   |   | 30,700 |   |
|                                                                     |   |       |   |                                                    |    |   |                                              |    |   |                                                   |   |   |   |   |
| Benjamin      S. Levin                                                   |   | 4/07/2008  |   |                                                    | 100,000 |   |                                              | $       | 1.21   |                                                   |   | $ | 94,600 |   |
| General      Counsel, Vice President — Legal Affairs and Secretary |   | 11/21/2008 |   |                                                    | 100,000 |   |                                              |    | 0.37   |                                                   |   |   | 30,700 |   |
|                                                                     |   |       |   |                                                    |    |   |                                              |    |   |                                                   |   |   |   |   |
| Shi      Chung Ng, Ph.D.                                                 |   | 11/21/2008 |   |                                                    | 50,000  |   |                                              |  $ | 0.37   |                                                   |   | $ | 15,350 |   |
| Senior      Vice President – Research and Development              |   |       |   |                                                    |    |   |                                              |    |   |                                                   |   |   |   |   |

|   | (1)      Mr. Fogelman resigned from the company on December 31,    2008. |
|--------|--------------------------------------------------------------------------|

| ·   | options      to purchase shares of common stock, which may be incentive stock options      or non-qualified stock options; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | stock      appreciation rights; |
|--------------------|---------------------------------|

| ·   | restricted      stock; |
|--------------------|------------------------|

| ·   | performance      units; |
|--------------------|-------------------------|

| ·   | dividend      equivalents; and |
|--------------------|--------------------------------|

| ·   | other      stock-based awards. |
|--------------------|--------------------------------|

----

| ·   | designate      participants; |
|--------------------|------------------------------|

| ·   | determine      the types of awards to grant to each participant and the number, terms and      conditions of any award; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | establish,      adopt or revise any rules and regulations as it may deem necessary or      advisable to administer the Plan;and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | make      all other decisions and determinations that may be required under, or as      the Compensation Committee deems necessary or advisable to administer, the      Plan. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | the      achievement by CytRx or a parent or subsidiary of a specific financial      target; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | CytRx’s      stock price; |
|--------------------|---------------------------------|

| ·   | the      achievement by an individual or a business unit of CytRx or a subsidiary      of a specific financial target; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | the      achievement of specific goals with respect to (i) product development      milestones, (ii) corporate financings, (iii) merger and acquisition      activities, (iv) licensing transactions, (v) development of strategic      partnerships or alliances, or (vi) acquisition or development of new      technologies; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | any      combination of the goals set forthabove. |
|--------------------|---------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Option Awards                                                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Number      of SecuritiesaUnderlying      UnexercisedOptions      (#) |   |  OptionExercise Price |   |  OptionExpiration |
| Name                                                                     |   | Exercisable                                                           |   | Unexercisable |   | ($) |   | Date |
| Steven      A. Kriegsman                                                                                                                                                                                                                                                                                                                                                                                                     |   | 8,333                                                                 |   | (1) | 291,667 |   | 0.37 |   | 11/21/18 |
| President      and Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                   |   | 100,000                                                               |   | (1) | 350,000 |   | 1.21 |   | 4/07/18 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 194,444                                                               |   | (1) | 155,556 |   | 4.51 |   | 4/18/17 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 166,667                                                               |   | (1) | 33,333 |   | 1.38 |   | 6/16/16 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 300,000                                                               |   | (1) | — |   | 0.79 |   | 5/17/15 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 250,000                                                               |   | (2) | — |   | 2.47 |   | 6/19/13 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 750,000                                                               |   | (2) | — |   | 2.47 |   | 6/20/13 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                  |   |   |   |   |   |   |   |
| Mitchell      K. Fogelman (3)                                                                                                                                                                                                                                                                                                                                                                                                |   | 2,778                                                                 |   | (1) | 97,222 |   | 0.37 |   | 11/21/18 |
| Chief      Financial Officer and Treasurer                                                                                                                                                                                                                                                                                                                                                                                   |   | 22,222                                                                |   | (1) | 77,778 |   | 1.21 |   | 4/07/18 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 62,500                                                                |   | (1) | 87,500 |   | 3.40 |   | 9/11/17 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                  |   |   |   |   |   |   |   |
| Jack      R. Barber, Ph.D.                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2,778                                                                 |   | (1) | 97,222 |   | 0.37 |   | 11/21/18 |
| Chief      Scientific Officer                                                                                                                                                                                                                                                                                                                                                                                                |   | 22,222                                                                |   | (1) | 77,778 |   | 1.21 |   | 4/07/18 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 111,111                                                               |   | (1) | 88,889 |   | 4.51 |   | 4/18/17 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 83,333                                                                |   | (1) | 16,667 |   | 1.38 |   | 6/16/16 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 150,000                                                               |   | (1) | 20,846 |   | 0.79 |   | 5/17/15 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 100,000                                                               |   | (2) | — |   | 1.13 |   | 7/06/14 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                  |   |   |   |   |   |   |   |
| Benjamin      S. Levin                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2,778                                                                 |   | (1) | 97,222 |   | 0.37 |   | 11/21/18 |
| General      Counsel, Vice President — Legal Affairs                                                                                                                                                                                                                                                                                                                                                                   |   | 22,222                                                                |   | (1) | 77,778 |   | 1.21 |   | 4/07/18 |
| and Secretary                                                                                                                                                                                                                                                                                                                                                                                                                |   | 55,556                                                                |   | (1) | 44,444 |   | 4.51 |   | 4/18/17 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 75,000                                                                |   | (1) | 15,000 |   | 1.38 |   | 6/16/16 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 150,000                                                               |   | (1) | — |   | 0.79 |   | 5/17/15 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 160,000                                                               |   | (2) | — |   | 1.39 |   | 7/15/14 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                  |   |   |   |   |   |   |   |
| Shi      Chung Ng, Ph.D.                                                                                                                                                                                                                                                                                                                                                                                                     |   | —                                                               |   | (2) | 50,000 |   | 0.37 |   | 11/21/18 |
| Senior      Vice President – Research and Development                                                                                                                                                                                                                                                                                                                                                                  |   | 50,000                                                                |   | (2) | 100,000 |   | 4.13 |   | 4/30/17 |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                  |   |   |   |   |   |   |   |

| (1) | These      options vest in 36 equal monthly installments, subject to the option      holder’s remaining in our continuous employ through such      dates. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | These      options vest in three annual installments, subject to the option holder’s      remaining in our continuous employ through such  dates. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr.      Fogelman resigned from the company on December 31,  2008. |
|-----|--------------------------------------------------------------------|

----

----

----

|                                                                                                                                                                                                                               |   |                      |   | Termination      w/o Cause orfor Good Reason |   |                            |   |            |   |                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|----------------------------------------------|--------|---------------------------------|--------|-----------------|--------|----------------------|
|  Name                                     |   |  Benefit             |   | Before      Change inControl ($)             |   | After      Change inControl ($) |   |  Death ($) |   |  Disability ($) |   | Change      inControl ($) |
| Steven      A. Kriegsman                                                                                                                                                                                                           |   | Severance      Payment(4) |   | 1,000,000                                    |   | 1,000,000                       |   | 1,000,000       |   | 1,000,000            |   |  — |
| President      and Chief Executive      Officer                                                                                                                                                                                    |   | Stock      Options (1)    |   | —                                      |   | —                         |   |  —   |   |  —        |   |  — |
|                                                                                                                                                                                                                               |   | Health      Insurance (2) |   | 80,609                                       |   | 80,609                          |   |  —   |   | 80,609               |   | 80,609 |
|                                                                                                                                                                                                                               |   | Life      Insurance       |   | 10,000                                       |   | 10,000                          |   |  —   |   | 10,000               |   |  — |
|                                                                                                                                                                                                                               |   | Bonus                     |   | 300,000                                      |   | 300,000                         |   | 300,000         |   | 300,000              |   |  — |
|                                                                                                                                                                                                                               |   | Tax      Gross Up (3)     |   | —                                      |   | —                         |   |  —   |   |  —        |   |  — |
| Jack      R. Barber, Ph.D.                                                                                                                                                                                                         |   | Severance      Payment(4) |   | 180,000                                      |   | 180,000                         |   |  —   |   |  —        |   |  — |
| Chief      Scientific Officer                                                                                                                                                                                                      |   | Stock      Options (1)    |   | —                                      |   | —                         |   |  —   |   |  —        |   |  — |
| Benjamin      S. Levin                                                                                                                                                                                                             |   | Severance      Payment    |   | 137,500                                      |   | 137,500                         |   |  —   |   |  —        |   |  — |
| General      Counsel, Vice President      — Legal Affairs      and Secretary                                                                                                                                                 |   | Stock      Options (1)    |   | —                                      |   | —                         |   |  —   |   |  —        |   |  — |
|                                                                                                                                                                                                                               |   |                      |   |                                         |   |                            |   |            |   |                 |   |   |
| Shi      Chung Ng, Ph.D.(4)                                                                                                                                                                                                        |   | Severance      Payment(4) |   | 137,500                                      |   | 137,500                         |   |  —   |   |  —        |   |  — |
| Senior      Vice President – Drug      Development                                                                                                                                                                           |   | Stock      Options (1)    |   | —                                      |   | —                         |   |  —   |   |  —        |   |  — |
|                                                                                                                                                                                                                               |   |                      |   |                                         |   |                            |   |            |   |                 |   |   |

| (1) | Represents      the aggregate value of stock options that vest and become exercisable      immediately upon each of the triggering events listed as if such events      took place on December 31, 2008, determined by the aggregate difference      between the stock price as of December 31, 2008 and the exercise prices of      the underlying options. The value is $0, since the stock price at December      31, 2008 was below the exercise price of all underlying      options. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Represents      the cost as of December 31, 2008 for the family health benefits provided      to Mr. Kriegsman for a period of twoyears. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr.      Kriegsman’s employment agreement provides that if a change in control (as      defined in our 2000 Long-Term Incentive Plan) occurs during the term of      the employment agreement, and if, during the term and within two years      after the date on which the change in control occurs, Mr. Kriegsman’s      employment is terminated by us without “cause” or by him for “good reason”      (each as defined in his employment agreement), then, to the extent that      any payment or distribution of any type by us to or for the benefit of Mr.      Kriegsman resulting from the termination of his employment is or will be      subject to the excise tax imposed under Section 4999 of the Internal      Revenue Code of 1986, as amended, we will pay Mr. Kriegsman, prior to the      time the excise tax is payable with respect to any such payment (through      withholding or otherwise), an additional amount that, after the imposition      of all income, employment, excise and other taxes, penalties and interest      thereon, is equal to the sum of (i) the excise tax on such payments plus      (ii) any penalty and interest assessments associated with such excise tax.      Based on Mr. Kriegsman’s past compensation and the estimated payment that      would result from a termination of his employment following a change in      control, we have estimated that a gross-up payment would not be required.      “Good reason” as defined in Mr. Kriegsman’s employment agreement includes      any change in Mr. Kriegsman’s duties or title that are inconsistent with      his position as Chief ExecutiveOfficer. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Severance      payments are prescribed by our employment agreements with the named      executive officers and represent a factor of their annual base      compensation ranging from six months to two  years. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (5)      Mr. Fogelman, our Chief Financial Officer during the year, resigned from      the Company on December 31, 2008 and was not paid any termination payments      or benefits. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  Name      (1)                                                                                                                   |   | Fees      Earned or Paid      in Cash ($)(2) |   | Option      Awards($) (3) |   |  Total      ($) |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|--------|---------------------------|--------|----------------------|
| Max      Link, Ph.D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 118,000                                           |   | 11,225                    |   | 129,225              |
| Chairman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                              |   |                      |   |                 |
| Marvin      R. Selter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 106,500                                           |   | 11,225                    |   | 117,725              |
| Vice      Chairman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                              |   |                      |   |                 |
| Louis      Ignarro, Ph.D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 40,500                                            |   | 11,225                    |   | 51,725               |
| Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                              |   |                      |   |                 |
| Joseph      Rubinfeld, Ph.D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 74,000                                            |   | 11,225                    |   | 85,225               |
| Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                              |   |                      |   |                 |
| Richard      L. Wennekamp                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 83,500                                            |   | 11,225                    |   | 94,725               |
| Director                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                              |   |                      |   |                 |

| (1) | Steven      A. Kriegsman does not receive additional compensation for his role as a      Director. For information relating to Mr. Kriegsman’s compensation as      President and Chief Executive Officer, see the Summary Compensation Table      above. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The      amounts in this column represent cash payments made to Non-Employee      Directors for attendance at meetings during the  year. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | In      July 2008, we granted stock options to purchase 25,000 shares of our      common stock at an exercise price equal to the current market value of our      common stock to each non-employee director, which had a grant date fair      value of $11,225 calculated in accordance with SFAS 123(R). Pursuant to      SEC rules, the amounts shown exclude the impact of estimated forfeitures      related to service-based vesting conditions. The amount recognized for      these awards was calculated using the Black Scholes option-pricing model,      and reflect grants from our 2000 Long-Term Incentive Plan, which is      described in Note 12 of the Notes to Consolidated Financial      Statements. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

SECURITY

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Shares      ofCommon Stock |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|
| Name of Beneficial      Owner                                                                                                                                     |   | Number                     |   | Percent |
| Louis      Ignarro, Ph.D.(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 568,916                    |   | * |
| Steven      A. Kriegsman(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 5,947,497                  |   | 6.2% |
| Max      Link, Ph.D.(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 189,519                    |   | * |
| Joseph      Rubinfeld, Ph.D.(4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 127,000                    |   | * |
| Marvin      R. Selter(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 472,451                    |   | * |
| Richard      L. Wennekamp(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 120,000                    |   | * |
| Jack      R. Barber, Ph.D.(7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 561,112                    |   | * |
| Shi      Chung Ng, Ph.D.(8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 106,953                    |   | * |
| Benjamin      S. Levin(9)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 511,676                    |   | * |
| All      executive officers and directors as a group (eleven      persons)(10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 8,677,902                  |   | 8.8% |

| (1) | Includes      477,000 shares subject to options orwarrants. |
|-----|-------------------------------------------------------------|

| (2) | Includes      1,926,397 shares subject to options or warrants. Mr. Kriegsman’s address      is c/o CytRx Corporation, 11726 San Vicente Boulevard, Suite 650, Los      Angeles, CA 90049. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes      134,543 shares subject to options orwarrants. |
|-----|-------------------------------------------------------------|

| (4) | Includes      127,000 shares subject to options orwarrants. |
|-----|-------------------------------------------------------------|

| (5) | The      shares shown are owned, of record, by the Selter Family Trust or Selter      IRA Rollover. Includes 115,000 shares subject to options or warrants owned      by Mr. Selter. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Includes      115,000 shares subject to options orwarrants. |
|-----|-------------------------------------------------------------|

| (7) | Includes      561,112 shares subject to options orwarrants. |
|-----|-------------------------------------------------------------|

| (8) | Includes      106,935 shares subject to options orwarrants. |
|-----|-------------------------------------------------------------|

| (9) | Includes      511,676 shares subject to options or  warrants. |
|-----|---------------------------------------------------------------|

| (10) | Includes      4,147,459 shares subject to options orwarrants. |
|------|---------------------------------------------------------------|

----

CERTAIN

| ·   | that      all related person transactions, all material terms of the transactions,      and all the material facts as to the related person’s direct or indirect      interest in, or relationship to, the related person transaction must be      communicated to the Audit Committee;and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | that      all related person transactions, and any material amendment or      modification to any related person transaction, be reviewed and approved      or ratified by the Audit Committee, as required by NASDAQ Marketplace      Rules. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | information      provided by members of our board of directors in connection with the      required annual evaluation of director  independence; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | pertinent      responses to the Directors’ and Officers’ Questionnaires submitted      periodically by our officers and directors and provided to the Audit      Committee by our management; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | background      information on nominees for director provided by the Nominating and      Corporate Governance Committee of our board of directors;    and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | any      other relevant information provided by any of our directors or      officers. |
|--------------------|----------------------------------------------------------------------------------------|

----

| ·   | “related      person” has the meaning given to such term in Item 404(a) of Securities      and Exchange Commission Regulation S-K (“Item 404(a)”);  and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | “related      person transaction” means any transaction for which disclosure is required      under the terms of Item 404(a) involving the Company and any related      persons. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PRINCIPAL

----

----

EXHIBITS

----

| ExhibitNumber |   |   Description                                                                                                                                 |   |  Footnote |
|---------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
| 3.1           |   | Amended      and Restated Certificate of Incorporation, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  (a)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 3.2           |   | Restated      By-Laws, as amended                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  (a)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.1           |   | Shareholder      Protection Rights Agreement dated April 16, 1997 between CytRx Corporation      and American Stock Transfer &Trust Company as Rights    Agent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  (b)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.2           |   | Amendment      No. 1 to Shareholder Protection Rights Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  (e)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.3           |   | Amendment      No. 2 to Shareholder Protection Rights Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  (r)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.4           |   | Warrant      issued on May 10, 2004 to MBN Consulting, LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  (i)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.5           |   | Form      of Common Stock Purchase Warrant between CytRx Corporation and each of the      investors in the October 4, 2004 private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |  (j)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.6           |   | Form      of Common Stock Purchase Warrant between CytRx Corporation and each of the      investors in the January 2005 private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |  (k)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 4.7           |   | Form      of Common Stock Purchase Warrant between CytRx Corporation and each of the      investors in the March 2006 private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |  (p)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.1*         |   | 1994      Stock Option Plan, as amended and restated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  (c)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.2*         |   | 1998      Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  (d)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.3*         |   | 2000      Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  (e)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.4*         |   | Amendment      No. 1 to 2000 Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  (g)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.5*         |   | Amendment      No. 2 to 2000 Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  (g)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.6*         |   | Amendment      No. 3 to 2000 Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  (h)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.7*         |   | Amendment      No. 4 to 2000 Long-Term Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  (h)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.8*         |   | 2008      Stock Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.9†   |   | License      Agreement dated December 7, 2001 by and between CytRx Corporation and      Vical Incorporated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  (f)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.10†  |   | Agreement      between CytRx Corporation and Dr. Robert Hunter regarding SynthRx, Inc      dated October 20, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  (h)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.11         |   | Office      Lease between The Kriegsman Group and Douglas Emmett, dated April 13,      2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  (h)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.12         |   | Assignment      to CytRx Corporation effective July 1, 2003 of Office Lease between The      Kriegsman Group and Douglas Emmett, dated April 13, 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |  (h)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.13         |   | Asset      Sale and Purchase Agreement dated October 4, 2004, by and among CytRx      Corporation, Biorex Research & Development, RT and BRX Research and      Development Company Ltd                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |  (j)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.14         |   | Sublease      dated March 14, 2005 between Innovive Pharmaceuticals, Inc. and Friedman,      Billings, Ramsey Group, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |  (l)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.15*        |   | Amended      and Restated Employment Agreement dated May 17, 2005 between CytRx      Corporation and Steven A. Kriegsman                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  (m)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.16         |   | First      Amendment to Office Lease dated October 14, 2005, by and between CytRx      Corporation and Douglas Emmett 1993, LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |  (n)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.17†  |   | License      Agreement dated December 28, 2005 between Innovive Pharmaceuticals, Inc.      and Nippon Shinyaku Co., Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  (l)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.18†  |   | License      Agreement dated April 17, 2006 between Innovive Pharmaceuticals, Inc. and      KTB Tumorforschungs GmbH                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  (o)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.19         |   | Royalty      Agreement dated August 28, 2006 between CytRx Corporation and Kenneth      Council, as Trustee of the ALS Charitable Remainder Trust                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  (q)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.20†  |   | License      Agreement dated December 6, 2006 between Innovive Pharmaceuticals, Inc.      and TMRC Co., Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |  (s)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.21         |   | Contribution      Agreement, dated as of January 8, 2007, between CytRx Corporation and RXi      Pharmaceuticals Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |  (t)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.22         |   | Voting      agreement, dated as of January 10, 2007, between CytRx Corporation and the      University of Massachusetts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |  (t)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.23         |   | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  (t)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.24         |   | Form      of Purchase Agreement, dated as of April 17, 2007, by and between CytRx      Corporation and each of the selling stockholders named    therein                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |  (u)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.25         |   | Contribution      Agreement, dated as of April 30, 2007, between CytRx Corporation and RXi      Pharmaceuticals Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |  (t)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.26         |   | Lease      dated July 20, 2007, between CytRx Corporation and BMR-3030 Bunker Hill      Street LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |  (v)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.27         |   | Agreement      and Plan of Merger, dated as of June 6, 2008, among CytRx      Corporation, CytRx Merger Subsidiary, Inc., Innovive Pharmaceuticals,      Inc., and Steven Kelly                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |  (w)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.28         |   | Loan      and Security Agreement, dated as of June 6, 2008, between CytRx      Corporation and Innovive Pharmaceuticals, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |  (w)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.29         |   | Second      Amendment to Office Lease dated June 30, 2008, by and between CytRx      Corporation and Douglas Emmett 1993, LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.30         |   | Amendment      to Contribution Agreement, dated July 28, 2008, between CytRx      Corporation and RXi Pharmaceuticals Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |  (x)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.31         |   | Amendment      to Stockholders Agreement, dated July 28, 2008, among CytRx      Corporation, RXi Pharmaceuticals Corporation, and Michael P. Czech, PhD.,      Gregory J. Hannon, Ph.D., Craig C. Mello, PhD., and Tariq M. Rana,      Ph.D.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |  (x)      |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.32         |   | Sub-Sublease      dated December 4, 2008, by and between CytRx Oncology Corporation and Red      Pine Advisors LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.33*        |   | Employment      Agreement dated January 1, 2009, between CytRx Corporation and Jack R.      Barber                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.34*        |   | Employment      Agreement dated January 1, 2009, between CytRx Corporation and Shi Chung      Ng                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.35*        |   | Employment      Agreement dated January 1, 2009, between CytRx Corporation and Benjamin S.      Levin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.36*        |   | Employment      Agreement dated January 1, 2009, between CytRx Corporation and Scott      Wieland                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.37*        |   | Employment      Agreement dated January 1, 2009, between CytRx Corporation and John Y.      Caloz                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 10.38         |   | Investment      Banking Agreement, dated January 29, 2009, by and between CytRx      Corporation and Legend Securities, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 23.1          |   | Consent      of BDO Seidman, LLP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |           |
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |           |
| 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 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 Financial 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 Registrant’s Form 10-K filed on April 1,      2008 |
|-----|------------------------------------------------------------------------------------------------|

| (b) | Incorporated      by reference to the Registrant’s 8-K filed on April 17,    1997 |
|-----|-----------------------------------------------------------------------------------------|

| (c) | Incorporated      by reference to the Registrant’s 10-Q filed on August 14,    1997 |
|-----|-------------------------------------------------------------------------------------------|

| (d) | Incorporated      by reference to the Registrant’s Proxy Statement filed on April 30,      1998 |
|-----|-------------------------------------------------------------------------------------------------------|

| (e) | Incorporated      by reference to the Registrant’s Form 10-K filed on March 27,      2001 |
|-----|-------------------------------------------------------------------------------------------------|

| (f) | Incorporated      by reference to the Registrant’s Form 8-K filed on December 21,      2001 |
|-----|---------------------------------------------------------------------------------------------------|

| (g) | Incorporated      by reference to the Registrant’s Proxy Statement filed June 11,      2002 |
|-----|---------------------------------------------------------------------------------------------------|

| (h) | Incorporated      by reference to the Registrant’s 10-K filed on May 14,  2004 |
|-----|--------------------------------------------------------------------------------------|

| (i) | Incorporated      by reference to the Registrant’s 10-Q filed on August 16,    2004 |
|-----|-------------------------------------------------------------------------------------------|

| (j) | Incorporated      by reference to the Registrant’s 8-K filed on October 5,    2004 |
|-----|------------------------------------------------------------------------------------------|

| (k) | Incorporated      by reference to the Registrant’s 8-K filed on January 21,    2005 |
|-----|-------------------------------------------------------------------------------------------|

| (l) | Incorporated      by reference to the Innovive Pharmaceuticals Form 10 filed on April 20,      2006 |
|-----|-----------------------------------------------------------------------------------------------------|

| (m) | Incorporated      by reference to the Registrant’s 10-Q filed on August 15,    2005 |
|-----|-------------------------------------------------------------------------------------------|

| (n) | Incorporated      by reference to the Registrant’s 8-K filed on October 20,    2005 |
|-----|-------------------------------------------------------------------------------------------|

| (o) | Incorporated      by reference to the Innovive Pharmaceuticals 10-Q filed on November 14,      2006 |
|-----|-----------------------------------------------------------------------------------------------------|

----

| (p) | Incorporated      by reference to the Registrant’s 8-K filed on March 3,  2006 |
|-----|--------------------------------------------------------------------------------------|

| (q) | Incorporated      by reference to the Registrant’s 10-Q filed on November 13,      2006 |
|-----|-----------------------------------------------------------------------------------------------|

| (r) | Incorporated      by reference to the Registrant’s 10-K filed on April 2,    2007 |
|-----|-----------------------------------------------------------------------------------------|

| (s) | Incorporated      by reference to the Innovive Pharmaceuticals 10-K filed on March 21,      2007 |
|-----|--------------------------------------------------------------------------------------------------|

| (t) | Incorporated      by reference to the Registrant’s 10-Q filed on May 10,  2007 |
|-----|--------------------------------------------------------------------------------------|

| (u) | Incorporated      by reference to the Registrant’s 8-K filed on April 18,    2007 |
|-----|-----------------------------------------------------------------------------------------|

| (v) | Incorporated      by reference to the Registrant’s 10-Q filed on August 9,    2007 |
|-----|------------------------------------------------------------------------------------------|

| (w) | Incorporated      by reference to the Registrant’s 8-K filed on June 9,  2008 |
|-----|-------------------------------------------------------------------------------------|

| (x) | Incorporated      by reference to the Registrant’s 10-Q filed on August 11,      2008 |
|-----|---------------------------------------------------------------------------------------------|

----

----

| CytRx      Corporation                                                                  |   | Page |
|-----------------------------------------------------------------------------------------|--------|------|
| Consolidated Balance Sheets                                                             |   | F-2  |
| Consolidated Statements of      Operations                                              |   | F-3  |
| Consolidated Statements of Stockholders’      Equity                              |   | F-4  |
| Consolidated Statements of CashFlows                                                    |   | F-5  |
| Notes to Consolidated Financial    Statements                                           |   | F-7  |
| Reports of Independent Registered Public Accounting      Firm                           |   | F-23 |
| Financial Statement Schedule Schedule II — Valuation      and Qualifying Accounts |   | F-25 |

----

BALANCE

|                                                                                                                                                                                    |   | December 31, |         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------------|
|                                                                                                                                                                                    |   | 2008         |         |   | 2007 |   |
| ASSETS                                                                                                                                                                                  |   |         |         |   |   |   |
| Current      assets:                                                                                                                                                                    |   |         |         |   |   |   |
| Cash      and cash equivalents                                                                                                                                                          |   | $            | 25,041,772   |   |   | $ | 50,498,261 |   |
| Short-term      investments, at amortized cost                                                                                                                                          |   |         | —      |   |   |   | 9,951,548 |   |
| Accounts      receivable                                                                                                                                                                |   |         | 127,280      |   |   |   | 101,217 |   |
| Income      taxes recoverable                                                                                                                                                           |   |         | 215,623      |   |   |   | — |   |
| Prepaid      expenses and other current assets                                                                                                                                          |   |         | 486,609      |   |   |   | 930,596 |   |
| Total      current assets                                                                                                                                                               |   |         | 25,871,284   |   |   |   | 61,481,622 |   |
| Equipment      and furnishings, net                                                                                                                                                     |   |         | 1,835,052    |   |   |   | 1,573,290 |   |
| Molecular      library, net                                                                                                                                                             |   |         | 103,882      |   |   |   | 193,946 |   |
| Goodwill                                                                                                                                                                                |   |         | 183,780      |   |   |   | 183,780 |   |
| Other      assets                                                                                                                                                                       |   |         | 330,032      |   |   |   | 713,398 |   |
| Total      assets                                                                                                                                                                       |   | $            | 28,324,030   |   |   | $ | 64,146,036 |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                                         |   |         |         |   |   |   |   |   |
| Current      liabilities:                                                                                                                                                               |   |         |         |   |   |   |   |   |
| Accounts      payable                                                                                                                                                                   |   | $            | 668,422      |   |   | $ | 1,946,215 |   |
| Accrued      expenses and other current liabilities                                                                                                                                     |   |         | 2,556,904    |   |   |   | 3,700,866 |   |
| Deferred      revenue, current portion                                                                                                                                                  |   |         | 1,817,600    |   |   |   | 8,399,167 |   |
| Total      current liabilities                                                                                                                                                          |   |         | 5,042,926    |   |   |   | 14,046,248 |   |
| Deferred      revenue, non-current portion                                                                                                                                              |   |         | 7,582,797    |   |   |   | 7,167,381 |   |
| Total      liabilities                                                                                                                                                                  |   |         | 12,625,723   |   |   |   | 21,213,629 |   |
| Minority      interest                                                                                                                                                                  |   |         | —      |   |   |   | 2,708,368 |   |
| Commitment      and contingencies                                                                                                                                                       |   |         |         |   |   |   |   |   |
| Stockholders’      equity:                                                                                                                                                        |   |         |         |   |   |   |   |   |
| Preferred      Stock, $.01 par value, 5,000,000 shares authorized, including 15,000      shares of Series A Junior Participating Preferred Stock; no shares issued      and outstanding |   |         | —      |   |   |   | — |   |
| Common      stock, $.001 par value, 175,000,000 shares authorized; 93,978,448 and      90,397,867 shares issued and outstanding at December 31, 2008 and 2007,      respectively        |   |         | 93,978       |   |   |   | 90,398 |   |
| Additional      paid-in capital                                                                                                                                                         |   |         | 210,007,468  |   |   |   | 203,905,691 |   |
| Treasury      stock, at cost (633,816 shares held, at December 31, 2008 and 2007,      respectively)                                                                                    |   |         | (2,279,238   | ) |   |   | (2,279,238 | ) |
| Accumulated      deficit                                                                                                                                                                |   |         | (192,123,901 | ) |   |   | (161,492,812 | ) |
| Total      stockholders’ equity                                                                                                                                                   |   |         | 15,698,307   |   |   |   | 40,224,039 |   |
| Total      liabilities and stockholders’ equity                                                                                                                                   |   | $            | 28,324,030   |   |   | $ | 64,146,036 |   |

----

CYTRX

|                                                                                              |   | Years Ended December 31, |        |
|---------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                              |   | 2008                     |        |   | 2007 |   |   | 2006 |   |
| Revenue:                                                                                          |   |                     |        |   |   |   |   |   |   |
| Service      revenue                                                                              |   | $                        | 6,166,150   |   |   | $ | 7,241,920 |   |   | $ | 1,858,772 |   |
| Licensing      revenue                                                                            |   |                     | 100,000     |   |   |   | 101,000 |   |   |   | 101,000 |   |
| Grant      revenue                                                                                |   |                     | —     |   |   |   | 116,118 |   |   |   | 105,930 |   |
|                                                                                              |   |                     | 6,266,150   |   |   |   | 7,459,038 |   |   |   | 2,065,702 |   |
| Expenses:                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
| Research      and development                                                                     |   |                     | 10,465,591  |   |   |   | 18,823,802 |   |   |   | 9,781,007 |   |
| General      and administrative                                                                   |   |                     | 10,932,522  |   |   |   | 14,822,142 |   |   |   | 9,657,257 |   |
| In-process      research and development                                                          |   |                     | 8,012,154   |   |   |   | — |   |   |   | — |   |
| Depreciation      and amortization                                                                |   |                     | 624,980     |   |   |   | 272,229 |   |   |   | 227,704 |   |
|                                                                                              |   |                     | 30,035,247  |   |   |   | 33,918,173 |   |   |   | 19,665,968 |   |
| Loss      before other income                                                                     |   |                     | (23,769,097 | ) |   |   | (26,459,135 | ) |   |   | (17,600,266 | ) |
| Other      income:                                                                                |   |                     |        |   |   |   |   |   |   |   |   |   |
| Interest      and dividend income                                                                 |   |                     | 1,203,629   |   |   |   | 2,663,542 |   |   |   | 996,647 |   |
| Other      income (expense), net                                                                  |   |                     | 219,489     |   |   |   | 1,496,979 |   |   |   | (3,205 | ) |
| Equity      in loss of affiliate – RXi Pharmaceuticals                                      |   |                     | (3,915,514  | ) |   |   | — |   |   |   | — |   |
| Minority      interest in loss of subsidiary                                                      |   |                     | 88,375      |   |   |   | 448,671 |   |   |   | — |   |
| Net      loss before provision for income taxes                                                   |   |                     | (26,173,118 | ) |   |   | (21,849,943 | ) |   |   | (16,606,824 | ) |
| Provision      for income taxes                                                                   |   |                     | (873,003    | ) |   |   | (40,000 | ) |   |   | (145,000 | ) |
| Net      loss                                                                                     |   |                     | (27,046,121 | ) |   |   | (21,889,943 | ) |   |   | (16,751,824 | ) |
| Deemed      dividend for anti-dilution adjustments made to outstanding common stock      warrants |   |                     | (756,954    | ) |   |   | — |   |   |   | (488,429 | ) |
| Net      loss applicable to common stockholders                                                   |   | $                        | (27,803,075 | ) |   | $ | (21,889,943 | ) |   | $ | (17,240,253 | ) |
| Basic      and diluted loss per share                                                             |   | $                        | (0.30       | ) |   | $ | (0.26 | ) |   | $ | (0.25 | ) |
| Basic      and diluted weighted average shares outstanding                                        |   |                     | 91,383,934  |   |   |   | 84,006,728 |   |   |   | 68,105,626 |   |

----

CYTRX

|                                                                             |   |          |          |   | Additional |    |          |        |   |    |        |   |   |    |         |
|----------------------------------------------------------------------------------|--------|---------------|---------------|--------|------------|---------|---------------|-------------|--------|---------|-------------|--------|--------|---------|--------------|
|                                                                             |   | Common Stock  |          |   | Paid-In    |    |          | Accumulated |   |    | Treasury    |   |   |    |         |
|                                                                             |   | Shares Issued |          |   | Amount     |    |          | Capital     |   |    | Deficit     |   |   | Stock   |         |   | Total |   |
| Balance      at December 31, 2005                                                |   |          | 59,283,960    |   |       |  $ | 59,284        |        |   |  $ | 131,790,932 |   |   |  $ | (122,362,616 | ) |   |  $ | (2,279,238 | ) |   |  $ | 7,208,362 |   |
| Common      stock and warrants issued in connection with private      placements |   |          | 10,650,795    |   |       |    | 10,651        |        |   |    | 12,393,709  |   |   |    | —      |   |   |   | — |   |   |   | 12,404,360 |   |
| Issuance      of stock options/warrants for services and licenses                |   |          | 149,928       |   |       |    | 150           |        |   |    | 1,930,098   |   |   |    | —      |   |   |   | — |   |   |   | 1,930,248 |   |
| Options      and warrants exercised                                              |   |          | 703,903       |   |       |    | 704           |        |   |    | 358,489     |   |   |    | —      |   |   |   | — |   |   |   | 359,193 |   |
| Deemed      dividend                                                             |   |          | —       |   |       |    | —       |        |   |    | 488,429     |   |   |    | (488,429     | ) |   |   | — |   |   |   | — |   |
| Net      loss                                                                    |   |          | —       |   |       |    | —       |        |   |    | —     |   |   |    | (16,751,824  | ) |   |   | — |   |   |   | (16,751,824 | ) |
| Balance      at December 31, 2006                                                |   |          | 70,788,586    |   |       |    | 70,789        |        |   |    | 146,961,657 |   |   |    | (139,602,869 | ) |   |   | (2,279,238 | ) |   |   | 5,150,339 |   |
| Common      stock and warrants issued in connection with private      placements |   |          | 8,615,000     |   |       |    | 8,615         |        |   |    | 34,239,442  |   |   |    | —      |   |   |   | — |   |   |   | 34,248,057 |   |
| Issuance      of stock options/warrants for services and licenses                |   |          |  — |   |       |    |  — |        |   |    | 2,402,035   |   |   |    | —      |   |   |   | — |   |   |   | 2,402,035 |   |
| Options      and warrants exercised                                              |   |          | 10,994,281    |   |       |    | 10,994        |        |   |    | 18,778,180  |   |   |    | —      |   |   |   | — |   |   |   | 18,789,174 |   |
| Issuance      of stock options by subsidiary                                     |   |          | —       |   |       |    | —       |        |   |    | 1,524,377   |   |   |    | —      |   |   |   | — |   |   |   | 1,524,377 |   |
| Net      loss                                                                    |   |          | —       |   |       |    | —       |        |   |    | —     |   |   |    | (21,889,943  | ) |   |   | — |   |   |   | (21,889,943 | ) |
| Balance      at December 31, 2007                                                |   |          | 90,397,867    |   |       | $       | 90,398        |        |   | $       | 203,905,691 |   |   | $       | (161,492,812 | ) |   | $ | (2,279,238 | ) |   | $ | 40,224,039 |   |
| Issuance      of stock options/warrants for services and licenses                |   |          | —       |   |       |    | —       |        |   |    | 2,029,209   |   |   |    | —      |   |   |   | — |   |   |   | 2,029,209 |   |
| Options      and warrants exercised                                              |   |          | 1,006,402     |   |       |    | 1,006         |        |   |    | 975,782     |   |   |    | —      |   |   |   | — |   |   |   | 976,788 |   |
| Common      stock issued in connection with the acquisition ofInnovive           |   |          | 2,574,179     |   |       |    | 2,574         |        |   |    | 2,339,832   |   |   |    | —      |   |   |   | — |   |   |   | 2,342,406 |   |
| Deemed      dividend for anti-dilution adjustment                                |   |          | —       |   |       |    | —       |        |   |    | 756,954     |   |   |    | (756,954     | ) |   |   | — |   |   |   | — |   |
| Dividend      of RXi stock                                                       |   |          | —       |   |       |    | —       |        |   |    | —     |   |   |    | (2,828,014   | ) |   |   | — |   |   |   | (2,828,014 | ) |
| Net      loss                                                                    |   |          | —       |   |       |    | —       |        |   |    | —     |   |   |    | (27,046,121  | ) |   |   | — |   |   |   | (27,046,121 | ) |
| Balance      at December 31, 2008                                                |   |          | 93,978,448    |   |       | $       | 93,978        |        |   | $       | 210,007,468 |   |   | $       | (192,123,901 | ) |   | $ | (2,279,238 | ) |   | $ | 15,698,307 |   |

----

CYTRX

|                                                                                                  |   | Years Ended December 31, |        |
|-------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                                  |   | 2008                     |        |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities:                                                            |   |                     |        |   |   |   |   |   |   |
| Net      loss                                                                                         |   | $                        | (27,046,121 | ) |   | $ | (21,889,943 | ) |   | $ | (16,751,824 | ) |
| Adjustments      to reconcile net loss to net cash provided by (used in) operating      activities:   |   |                     |        |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                    |   |                     | 624,980     |   |   |   | 272,229 |   |   |   | 227,704 |   |
| Retirement      of fixed assets                                                                       |   |                     | 262         |   |   |   | — |   |   |   | — |   |
| Non-cash      earned on short-term investments                                                        |   |                     | (48,452     | ) |   |   | (172,055 | ) |   |   | — |   |
| Loss      on retirement of equipment                                                                  |   |                     | —     |   |   |   | — |   |   |   | 2,864 |   |
| Minority      interest in loss of subsidiary                                                          |   |                     | (88,374     | ) |   |   | (448,671 | ) |   |   | — |   |
| Equity      in loss of unconsolidated subsidiary                                                      |   |                     | 3,915,514   |   |   |   | — |   |   |   | — |   |
| Non-cash      gain on transfer of RXi common stock                                                    |   |                     | (226,579    | ) |   |   | — |   |   |   | — |   |
| Non-cash      expense on the acquisition of Innovive’s in-process research and      development |   |                     | 8,012,154   |   |   |   | — |   |   |   | — |   |
| Stock      option and warrant expense                                                                 |   |                     | 2,103,752   |   |   |   | 3,511,541 |   |   |   | 1,284,032 |   |
| Common      stock issued for services                                                                 |   |                     | 244,860     |   |   |   | 3,089,639 |   |   |   | 262,500 |   |
| Non-cash      stock compensation related to research and development                                  |   |                     | —     |   |   |   | — |   |   |   | 411,530 |   |
| Changes      in assets and liabilities:                                                               |   |                     |        |   |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                              |   |                     | 238,131     |   |   |   | 4,713 |   |   |   | 66,930 |   |
| Income      taxes recoverable                                                                         |   |                     | (215,623    | ) |   |   | — |   |   |   | — |   |
| Prepaid      expenses and other current assets                                                        |   |                     | 478,965     |   |   |   | (1,214,836 | ) |   |   | 100,295 |   |
| Accounts      payable                                                                                 |   |                     | (1,181,116  | ) |   |   | 757,086 |   |   |   | 139,530 |   |
| Deferred      revenue                                                                                 |   |                     | (6,166,151  | ) |   |   | (7,241,919 | ) |   |   | 22,533,467 |   |
| Accrued      expenses and other current liabilities                                                   |   |                     | (56,146     | ) |   |   | 978,388 |   |   |   | 1,082,557 |   |
| Total      adjustments                                                                                |   |                     | 7,636,177   |   |   |   | (463,885 | ) |   |   | 26,111,409 |   |
| Net      cash provided by (used in) operating activities                                              |   |                     | (19,409,944 | ) |   |   | (22,353,828 | ) |   |   | 9,359,585 |   |
|                                                                                                  |   |                     |        |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Proceeds      (purchase) from sale of short-term investments                                          |   |                     | 10,000,000  |   |   |   | (9,779,493 | ) |   |   | — |   |
| Deconsolidation      of subsidiary                                                                    |   |                     | (10,359,278 | ) |   |   | — |   |   |   | — |   |
| Cash      outlay in the acquisition of Innovive, relating to its accounts      payable                |   |                     | (5,669,749  | ) |   |   | — |   |   |   | — |   |
| Purchases      of equipment and furnishings                                                           |   |                     | (994,326    | ) |   |   | (1,269,313 | ) |   |   | (41,133 | ) |
| Net      cash used in investing activities                                                            |   |                     | (7,023,353  | ) |   |   | (11,048,806 | ) |   |   | (41,133 | ) |
|                                                                                                  |   |                     |        |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Net      proceeds from exercise of stock options and warrants                                         |   |                     | 976,808     |   |   |   | 18,789,173 |   |   |   | 359,191 |   |
| Net      proceeds from issuances of common stock                                                      |   |                     | —     |   |   |   | 34,248,058 |   |   |   | 12,404,360 |   |
| Capital      contributions from minority interest                                                     |   |                     | —     |   |   |   | 482,271 |   |   |   | — |   |
| Net      cash provided by financing activities                                                        |   |                     | 976,808     |   |   |   | 53,519,502 |   |   |   | 12,763,551 |   |
|                                                                                                  |   |                     |        |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                             |   |                     | (25,456,489 | ) |   |   | 20,116,868 |   |   |   | 22,082,003 |   |
| Cash      and cash equivalents at beginning of year                                                   |   |                     | 50,498,261  |   |   |   | 30,381,393 |   |   |   | 8,299,390 |   |
| Cash      and cash equivalents at end of year                                                         |   | $                        | 25,041,772  |   |   | $ | 50,498,261 |   |   | $ | 30,381,393 |   |
|                                                                                                  |   |                     |        |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                                                |   |                     |        |   |   |   |   |   |   |   |   |   |
| Cash      received during the years for interest received                                             |   | $                        | 1,203,629   |   |   | $ | 2,491,487 |   |   | $ | 996,647 |   |
| Cash      paid during the years for income taxes                                                      |   | $                        | 1,093,764   |   |   | $ | 183,461 |   |   | $ | — |   |
| Supplemental      disclosures of non-cash investing activities:                                       |   |                     |        |   |   |   |   |   |   |   |   |   |
| Fair      market value of options and warrants provided for goods and      services                   |   | $                        | —     |   |   | $ | — |   |   | $ | 705,794 |   |
| Acquisition      of property and equipment through accrued liabilities                                |   | $                        | 130,955     |   |   | $ | 233,974 |   |   | $ | — |   |
|                                                                                                  |   |                     |        |   |   |   |   |   |   |   |   |   |

----

| In-process      research and development                  |   | $      | 8.0    |   |
|-----------------------------------------------------------|--------|--------|--------|--------|
| Leasehold      interests                                  |   |   | 0.1    |   |
| Prepaid      expenses                                     |   |   | 0.3    |   |
| Accounts      payable                                     |   |   | (6.1   | )      |
| Net      assets acquired through issuance of common stock |   | $      | 2.3    |   |
|                                                      |   |   |   |   |

----

CYTRX

----

----

| ·   | Level      1 – quoted prices in active markets for identical assets or      liabilities. |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | Level      2 – other significant observable inputs for the assets or liabilities      through corroboration with market data at the measurement      date. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level      3 – significant unobservable inputs that reflect management’s best      estimate of what market participants would use to price the assets or      liabilities at the measurementdate. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           |   | Level I |   |   | Level II |   |    | Level III |   |   | Total   |   |
|--------------------------------|--------|---------|--------|--------|----------|--------|---------|-----------|--------|--------|---------|--------|
| Cash      and cash equivalents |   | $       | 25,042 |   |     | $      | — |      |   | $      | — |   |   | $ | 25,042 |   |

----

----

----

----

|                                       |   | 2008   |   |   | 2007   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|
| Equipment      and furnishings             |   | $      | 2,606  |   |   | $      | 1,965 |   |
| Less      — accumulated depreciation |   |   | (771   | )      |   |   | (392 | ) |
| Equipment      and furnishings, net        |   |   | 1,835  |   |   |   | 1,573 |   |
|                                       |   |   |   |   |   |   |   |   |
| Molecular      library                     |   | $      | 447    |   |   | $      | 447 |   |
| Less      — accumulated amortization |   |   | (343   | )      |   |   | (253 | ) |
| Molecular      library, net                |   | $      | 104    |   |   | $      | 194 |   |

|                                      |   | 2008   |    |   | 2007   |   |
|-------------------------------------------|--------|--------|---------|--------|--------|--------|
| Professional      fees                    |   | $      | 531     |   |   | $      | 907 |   |
| Research      and development costs       |   |   | 1,662   |   |   |   | 873 |   |
| Wages,      bonuses and employee benefits |   |   | 196     |   |   |   | 1,255 |   |
| Income      taxes                         |   |   | — |   |   |   | 30 |   |
| Other                                     |   |   | 168     |   |   |   | 636 |   |
| Total                                     |   | $      | 2,557   |   |   | $      | 3,701 |   |

----

|                   |   | Non-Cancelable      |    |   |                     |   |    |     |   |
|------------------------|--------|---------------------|---------|--------|--------------------------|--------|---------|----------|--------|
|                   |   | OperatingLeases (1) |    |   | EmploymentAgreements (2) |   |    | Subtotal |   |   | Research      andDevelopment (3) |   |   | Total |   |
| 2009                   |   | $                   | 521     |   |                     | $      | 1,610   |     |   | $ | 2,131 |   |   | $ | 1,758 |   |   | $ | 3,889 |   |
| 2010                   |   |                | 376     |   |                     |   | — |     |   |   | 376 |   |   |   | 49 |   |   |   | 425 |   |
| 2011                   |   |                | 253     |   |                     |   | — |     |   |   | 253 |   |   |   | 49 |   |   |   | 302 |   |
| 2012                   |   |                | 124     |   |                     |   | — |     |   |   | 124 |   |   |   | 149 |   |   |   | 273 |   |
| 2013 and    thereafter |   |                | — |   |                     |   | — |     |   |   | — |   |   |   | 532 |   |   |   | 532 |   |
| Total                  |   | $                   | 1,274   |   |                     | $      | 1,610   |     |   | $ | 2,884 |   |   | $ | 2,537 |   |   | $ | 5,421 |   |

| (1) | Operating      leases are primarily facility lease related obligations, as well as      equipment and software lease obligations with third party      vendors. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Employment      agreements include management contracts, which have been revised from time      to time, provide for minimum salary levels, adjusted annually at the      discretion of the Company’s Compensation Committee, as well as for minimum      bonuses that are payable. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Research      and development obligations relate primarily to clinical trials. Most of      these purchase obligations arecancelable. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

----

| Income Statement Data (unaudited, in      thousands) |   | Year Ended December 31,2008 |    |
|------------------------------------------------------|--------|-----------------------------|---------|
| Sales                                                |   | $                           | — |   |
| Gross      profit                                    |   |                        | — |   |
| Loss      from continuing operations                 |   |                        | (14,553 | ) |
| Net      Loss                                        |   |                        | (14,373 | ) |

| Balance Sheet Data (unaudited, in      thousands) |   | December 31, 2008 |   |
|---------------------------------------------------|--------|-------------------|--------|
| Current      assets                               |   | $                 | 9,929  |   |
| Noncurrent      assets                            |   |              | 430    |   |
| Current      liabilities                          |   |              | 1,387  |   |
| Stockholders’      equity                   |   |              | 8,968  |   |

----

|                                          |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Weighted      average risk free interest rate |   |   | 2.68   | %      |   |   | 4.41   | %      |   |   | 4.91 | % |
| Dividend      yields                          |   |   | 0      | %      |   |   | 0      | %      |   |   | 0 | % |
| Weighted      average volatility              |   |   | 102    | %      |   |   | 108    | %      |   |   | 112 | % |
| Expected      lives (years)                   |   |   | 6      |   |   |   | 6      |   |   |   | 6 |   |

----

|                                                                          |   | Stock Options |      |   | Weighted Average Exercise Price |   |
|-------------------------------------------------------------------------------|--------|---------------|-----------|--------|---------------------------------|--------|
|                                                                          |   | 2008          |      |   | 2007                            |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Outstanding      — beginning of year                                    |   |          | 4,932,273 |   |                            |   | 4,500,208 |   |   |   | 4,097,542 |   |   | $ | 2.46 |   |   | $ | 1.66 |   |   | $ | 1.70 |   |
| Granted                                                                       |   |          | 2,021,500 |   |                            |   | 1,685,500 |   |   |   | 783,500 |   |   |   | 0.79 |   |   |   | 4.02 |   |   |   | 1.36 |   |
| Exercised                                                                     |   |          | (54,737   | )      |                            |   | (1,030,932 | ) |   |   | (82,500 | ) |   |   | 0.92 |   |   |   | 1.76 |   |   |   | 0.97 |   |
| Forfeited                                                                     |   |          | (473,096  | )      |                            |   | (222,503 | ) |   |   | (296,667 | ) |   |   | 2.08 |   |   |   | 1.24 |   |   |   | 1.59 |   |
| Expired                                                                       |   |          | (16,000   | )      |                            |   | — |   |   |   | (1,667 | ) |   |   | 1.00 |   |   |   | — |   |   |   | 1.00 |   |
| Outstanding      — end of year                                          |   |          | 6,409,940 |   |                            |   | 4,932,273 |   |   |   | 4,500,208 |   |   |   | 1.99 |   |   |   | 2.46 |   |   |   | 1.66 |   |
| Exercisable      at end of year                                               |   |          | 4,109,839 |   |                            |   | 3,210,320 |   |   |   | 3,316,994 |   |   | $ | 2.07 |   |   | $ | 1.93 |   |   | $ | 1.84 |   |
| Weighted      average fair value of stock options granted during the    year: |   | $             | 0.63      |   |                            | $      | 3.34 |   |   | $ | 1.16 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                           |   | Stock Options |      |   | Weighted      AverageGrant      Date FairValue per Share |   |
|--------------------------------|--------|---------------|-----------|--------|----------------------------------------------------------|--------|
|                           |   | 2008          |      |   | 2007                                                     |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Nonvested      at January 1,   |   |          | 1,721,952 |   |                                                     |   | 1,183,214 |   |   |   | 1,736,553 |   |   | $ | 2.92 |   |   | $ | 0.99 |   |   | $ | 1.16 |   |
| Granted                        |   |          | 2,021,500 |   |                                                     |   | 1,685,500 |   |   |   | 783,500 |   |   |   | 0.63 |   |   |   | 3.34 |   |   |   | 1.16 |   |
| Vested                         |   |          | (970,256  | )      |                                                     |   | (924,259 | ) |   |   | (1,040,172 | ) |   |   | 2.10 |   |   |   | 1.67 |   |   |   | 1.29 |   |
| Pre-vested      forfeitures    |   |          | (473,096  | )      |                                                     |   | (222,503 | ) |   |   | (296,667 | ) |   |   | 1.74 |   |   |   | 1.06 |   |   |   | 1.39 |   |
| Nonvested      at December 31, |   |          | 2,300,100 |   |                                                     |   | 1,721,952 |   |   |   | 1,183,214 |   |   | $ | 1.52 |   |   | $ | 2.92 |   |   | $ | 0.99 |   |

| Range      of Exercise Prices |                   |   |   Number of Options |   |      | Weighted      Average Remaining      Contractual      Life(years) |   |   |  Weighted      Average Exercise Price |   |   | Number      of Options      Exercisable |   |   |  Weighted      Average Contractual Life |   |      |  Weighted      Average Exercise Price |   |
|-------------------------------|------------------------|--------|-------------------------------|--------|-----------|-------------------------------------------------------------------|--------|--------|--------------------------------------------|--------|--------|-----------------------------------------|--------|--------|----------------------------------------------|--------|-----------|--------------------------------------------|--------|
| $                             | 0.35      — 1.00 |   |                          |   | 1,780,412 |                                                              |   |   | 8.29                                       |   |   | $                                       | 0.58   |   |                                         |   | 878,937   |                                       |   |   | 8.29 |   |   | $ | 0.76 |   |
| $                             | 1.01      — 2.00 |   |                          |   | 1,994,004 |                                                              |   |   | 7.34                                       |   |   |                                    | 1.39   |   |                                         |   | 1,328,829 |                                       |   |   | 7.34 |   |   |   | 1.44 |   |
| $                             | 2.01      — 3.00 |   |                          |   | 1,120,499 |                                                              |   |   | 4.57                                       |   |   |                                    | 2.46   |   |                                         |   | 1,102,499 |                                       |   |   | 4.57 |   |   |   | 2.46 |   |
| $                             | 3.01      — 4.00 |   |                          |   | 530,025   |                                                              |   |   | 8.71                                       |   |   |                                    | 3.43   |   |                                         |   | 301,693   |                                       |   |   | 8.71 |   |   |   | 3.40 |   |
| $                             | 4.01      — 4.65 |   |                          |   | 985,000   |                                                              |   |   | 8.35                                       |   |   |                                    | 4.42   |   |                                         |   | 497,881   |                                       |   |   | 8.35 |   |   |   | 4.43 |   |
|                          |                   |   |                          |   | 6,409,940 |                                                              |   |   | 7.39                                       |   |   | $                                       | 1.99   |   |                                         |   | 4,109,839 |                                       |   |   | 7.39 |   |   | $ | 2.07 |   |

----

|                                                                          |   | Stock Options |      |   | Weighted Average Exercise Price |   |
|-------------------------------------------------------------------------------|--------|---------------|-----------|--------|---------------------------------|--------|
|                                                                          |   | 2008          |      |   | 2007                            |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Outstanding      — beginning of year                                    |   |          | 1,067,000 |   |                            |   | 2,358,000 |   |   |   | 2,108,000 |   |   | $ | 1.44 |   |   | $ | 1.66 |   |   | $ | 1.74 |   |
| Granted                                                                       |   |          | 350,000   |   |                            |   | — |   |   |   | 250,000 |   |   |   | 0.35 |   |   |   | — |   |   |   | 1.11 |   |
| Exercised                                                                     |   |          | —   |   |                            |   | (728,500 | ) |   |   | — |   |   |   | — |   |   |   | 1.86 |   |   |   | — |   |
| Forfeited                                                                     |   |          | (402,000  | )      |                            |   | (562,500 | ) |   |   | — |   |   |   | 1.85 |   |   |   | 1.85 |   |   |   | — |   |
| Expired                                                                       |   |          | (20,000   | )      |                            |   | — |   |   |   | — |   |   |   | 0.30 |   |   |   | — |   |   |   | — |   |
| Outstanding      — end of year                                          |   |          | 995,000   |   |                            |   | 1,067,000 |   |   |   | 2,358,000 |   |   |   | 0.91 |   |   |   | 1.44 |   |   |   | 1.67 |   |
| Exercisable      at end of year                                               |   |          | 445,000   |   |                            |   | 817,000 |   |   |   | 1,441,447 |   |   | $ | 1.18 |   |   | $ | 1.54 |   |   | $ | 1.68 |   |
| Weighted      average fair value of stock options granted during the    year: |   | $             | 0.33      |   |                            | $      | 0 |   |   | $ | 0.95 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                          |   | 2008   |   |   | 2007   |   |    | 2006   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| Weighted      average risk free interest rate |   |   | 2.68   | %      |   |   | — |   |   |   | 4.31 | % |
| Dividend      yields                          |   |   | 0      | %      |   |   | — |   |   |   | 0 | % |
| Weighted      average volatility              |   |   | 123    | %      |   |   | — |   |   |   | 108 | % |
| Expected      lives (years)                   |   |   | 10     |   |   |   | — |   |   |   | 6 |   |

|                           |   | Stock Options |    |   | Weighted Average Grant      Date      Fair Value per Share |   |
|--------------------------------|--------|---------------|---------|--------|------------------------------------------------------------|--------|
|                           |   | 2008          |    |   | 2007                                                       |   |   | 2008 |   |   | 2007 |   |
| Nonvested      at January 1,   |   |          | 250,000 |   |                                                       |   | 916,663 |   |   | $ | 1.00 |   |   | $ | 1.44 |   |
| Granted                        |   |          | 350,000 |   |                                                       |   | — |   |   |   | 0.33 |   |   |   | — |   |
| Vested                         |   |          | (50,000 | )      |                                                       |   | (104,163 | ) |   |   | 0.33 |   |   |   | 1.63 |   |
| Pre-vested      forfeitures    |   |          | — |   |                                                       |   | (562,500 | ) |   |   | — |   |   |   | 1.63 |   |
| Nonvested      at December 31, |   |          | 550,000 |   |                                                       |   | 250,000 |   |   | $ | 0.58 |   |   | $ | 1.00 |   |

----

|                                                                  |   | Warrants |       |   | Weighted Average Exercise Price |   |
|-----------------------------------------------------------------------|--------|----------|------------|--------|---------------------------------|--------|
|                                                                  |   | 2008     |       |   | 2007                            |   |   | 2006 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Outstanding      — beginning of year                            |   |     | 13,031,515 |   |                            |   | 23,360,165 |   |   |   | 18,508,949 |   |   | $ | 1.87 |   |   | $ | 1.83 |   |   | $ | 1.94 |   |
| Granted                                                               |   |     | —    |   |                            |   | — |   |   |   | 6,112,870 |   |   |   | — |   |   |   | — |   |   |   | 1.54 |   |
| Exercised                                                             |   |     | (951,665   | )      |                            |   | (10,233,650 | ) |   |   | (1,261,654 | ) |   |   | 0.97 |   |   |   | 1.77 |   |   |   | 1.16 |   |
| Forfeited                                                             |   |     | —    |   |                            |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Expired                                                               |   |     | (1,445,002 | )      |                            |   | (95,000 | ) |   |   | — |   |   |   | 2.60 |   |   |   | 2.25 |   |   |   | — |   |
| Outstanding      — end of year                                  |   |     | 10,634,848 |   |                            |   | 13,031,515 |   |   |   | 23,360,165 |   |   |   | 1.40 |   |   |   | 1.87 |   |   |   | 1.83 |   |
| Exercisable      at end of year                                       |   |     | 10,634,848 |   |                            |   | 13,031,515 |   |   |   | 23,360,165 |   |   | $ | 1.40 |   |   | $ | 1.87 |   |   | $ | 1.83 |   |
| Weighted      average fair value of warrants granted during the year: |   | $        | —    |   |                            | $      | — |   |   | $ | 1.54 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                     |                   |   | Warrants Outstanding        |   |       |                                                                    |   |   |                                 |   |
|--------------------------|------------------------|--------|-----------------------------|--------|------------|-------------------------------------------------------------------------|--------|--------|--------------------------------------|--------|
| Range of Exercise Prices |                   |   |  Number      of Shares |   |       | Weighted      Average      Remaining      Contractual      Life (years) |   |   | Weighted Average      Exercise Price |   |   | Warrants      Number      of Shares      Exercisable |   |   | Exercisable      Weighted      Average Exercise Price |   |
| $                        | 1.16      — 1.28 |   |                        |   | 3,907,569  |                                                                    |   |   | 2.03                                 |   |   | $ | 1.20 |   |   |   | 3,907,569 |   |   | $ | 1.20 |   |
| $                        | 1.51      — 1.62 |   |                        |   | 6,701,790  |                                                                    |   |   | 1.04                                 |   |   |   | 1.51 |   |   |   | 6,701,790 |   |   |   | 1.51 |   |
| $                        | 1.84      — 2.67 |   |                        |   | 25,489     |                                                                    |   |   | 2.71                                 |   |   |   | 2.41 |   |   |   | 25,489 |   |   |   | 2.41 |   |
|                     |                   |   |                        |   | 10,634,848 |                                                                    |   |   | 1.41                                 |   |   | $ | 1.40 |   |   |   | 10,634,848 |   |   | $ | 1.40 |   |

|                                                 |   | Years Ended December 31, |    |
|------------------------------------------------------|--------|--------------------------|---------|
|                                                 |   | 2008                     |    |   | 2007 |   |
| Research      and development — employee       |   | $                        | 28,000  |   |   | $ | 120,000 |   |
| General      and administrative — employee     |   |                     | 369,000 |   |   |   | 931,000 |   |
| Total      employee stock-based compensation         |   | $                        | 397,000 |   |   | $ | 1,051000 |   |
|                                                 |   |                     |    |   |   |   |   |   |
| Research      and development — non-employee   |   | $                        | 121,000 |   |   | $ | 1,043,000 |   |
| General      and administrative — non-employee |   |                     | — |   |   |   | — |   |
| Total      non-employee stock-based compensation     |   | $                        | 121,000 |   |   | $ | 1,043,000 |   |

----

|                                  |   | December 31, |    |
|---------------------------------------|--------|--------------|---------|
|                                  |   | 2008         |    |   | 2007 |   |
| Deferred      tax assets:             |   |         |    |   |   |   |
| Net      operating loss carryforwards |   | $            | 34,407  |   |   | $ | 39,919 |   |
| Tax      credit carryforwards         |   |         | 6,071   |   |   |   | 3,114 |   |
| Equipment,      furnishings and other |   |         | 4,358   |   |   |   | 4,124 |   |
| Deferred      revenue                 |   |         | 3,744   |   |   |   | 6,200 |   |
| Total      deferred tax assets        |   |         | 48,580  |   |   |   | 53,357 |   |
| Deferred      tax liabilities         |   |         | (407    | ) |   |   | (111 | ) |
| Net      deferred tax assets          |   |         | 48,173  |   |   |   | 53,246 |   |
| Valuation      allowance              |   |         | (48,173 | ) |   |   | (53,246 | ) |
|                                  |   | $            | — |   |   | $ | — |   |

----

|                                                    |   | Years ended December 31, |   |
|---------------------------------------------------------|--------|--------------------------|--------|
|                                                    |   | 2008                     |   |   | 2007 |   |   | 2006 |   |
| Federal      benefit at statutory rate                  |   | $                        | (8,899 | ) |   | $ | (7,781 | ) |   | $ | (5,646 | ) |
| State      income taxes, net of Federal taxes           |   |                     | (1,525 | ) |   |   | (908 | ) |   |   | (968 | ) |
| Permanent      differences                              |   |                     | 16,272 |   |   |   | 65 |   |   |   | 143 |   |
| Provision      related to change in valuation allowance |   |                     | (5,073 | ) |   |   | 9,416 |   |   |   | 34 |   |
| Net      change in research and development tax credits |   |                     | (2,207 | ) |   |   | (1,125 | ) |   |   | 5,059 |   |
| Other,      net                                         |   |                     | 2,304  |   |   |   | 373 |   |   |   | (637 | ) |
|                                                    |   | $                        | 872    |   |   | $ | 40 |   |   | $ | 145 |   |

|                                                                                             |   | Quarters Ended                             |    |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                                                             |   | March 31                                   |    |   | June 30 |   |   | September 30 |   |   | December 31 |   |
|                                                                                             |   | (In      thousands, except per share data) |    |
| 2008                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |
| Total      revenues                                                                              |   | $                                          | 2,181   |   |   | $ | 1,740 |   |   | $ | 917 |   |   | $ | 1,428 |   |
| Net      loss                                                                                    |   |                                       | (5,374  | ) |   |   | (5,826 | ) |   |   | (12,316 | ) |   |   | (3,530 | ) |
| Deemed      dividend for anti-dilution adjustments made to outstanding      commonstock warrants |   |                                       | (757    | ) |   |   | — |   |   |   | — |   |   |   | — |   |
| Net      loss applicable to common stockholders                                                  |   | $                                          | (6,131  | ) |   | $ | (5,826 | ) |   | $ | (12,316 | ) |   | $ | (3,530 | ) |
| Basic      and diluted loss per share applicable to common stock                                 |   | $                                          | (0.07   | ) |   | $ | (0.06 | ) |   | $ | (0.14 | ) |   | $ | (0.04 | ) |
|                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                                                                             |   |                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      revenues                                                                              |   | $                                          | 1,563   |   |   | $ | 2,371 |   |   | $ | 2,046 |   |   | $ | 1,479 |   |
| Net      loss                                                                                    |   |                                       | (4,546  | ) |   |   | (6,285 | ) |   |   | (4,597 | ) |   |   | (6,462 | ) |
| Deemed      dividend for anti-dilution adjustments made to outstanding      commonstock warrants |   |                                       | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Net      loss applicable to common stockholders                                                  |   | $                                          | (4,546  | ) |   | $ | (6,285 | ) |   | $ | (4,597 | ) |   | $ | (6,462 | ) |
| Basic      and diluted loss per share applicable to common stock                                 |   | $                                          | (0.06   | ) |   | $ | (0.07 | ) |   | $ | (0.05 | ) |   | $ | (0.07 | ) |

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REPORT

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CYTRX

|                                                                                |   |                                   |       |   | Additions                               |    |    |                                |   |    |             |    |
|-------------------------------------------------------------------------------------|--------|----------------------------------------|------------|--------|-----------------------------------------|---------|---------|-------------------------------------|--------|---------|------------------|---------|
|   Description                                                             |   | Balance      at Beginning      of Year |       |   | Charged      to Costs      and Expenses |    |    | Charged      to Other      Accounts |   |    |  Deductions |    |   | Balance      at End of Year |   |
| Reserve      Deducted in the Balance Sheet from the Asset to Which it      Applies: |   |                                   |       |   |                                    |    |    |                                |   |    |             |    |   |   |   |
| Allowance      for Deferred Tax Assets                                              |   |                                   |       |   |                                    |    |    |                                |   |    |             |    |   |   |   |
| Year      ended December 31, 2008                                                   |   | $                                      | 53,246,000 |   |                                    | $       | — |                                |   | $       | (5,073,000       | )  |   | $ | — |   |   | $ | 48,173,000 |   |
| Year      ended December 31, 2007                                                   |   | $                                      | 43,830,000 |   |                                    | $       | — |                                |   | $       | 9,416,000        |    |   | $ | — |   |   | $ | 53,246,000 |   |
| Year      ended December 31, 2006                                                   |   | $                                      | 43,796,000 |   |                                    | $  | — |                                |   | $  | 34,000           |    |   | $  | — |   |   | $  | 43,830,000 |   |

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