CFOs Play Musical Chairs at Biopharm Company

Finance chiefs are changed at both the company and its subsidiary.
David Katz and Stephen TaubSeptember 12, 2007

Less than a week after switching CFOs at one of its subsidiaries, CytRx Corp. did the same thing at the home office. On Wednesday, the biopharmaceutical research and development company said that Mitchell Fogelman was the company’s new CFO, with Matthew Natalizio leaving to pursue other opportunities.

The previous Friday, the company’s subsidiary, RXi Pharmaceuticals, made the same move, replacing James Warren with Stephen DiPalma as the finance chief. The company said in separate press releases that Natalizio was leaving to “pursue other interests,” while the move involving Warren was a “planned departure.”

Steven Kriegsman, CytRx’s president and CEO, told that the changes at the two outfits were “just coincidental” and that there was “no connection between the two moves.” At the same time, he said, “we definitely made some key moves in the financial area to upgrade our profile in bringing on some high-level people.”

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The Los Angeles-based company is growing, having executed a $37 million private placement in April and opened up a new laboratory in San Diego, according to Kriegsman. “It was time to bring on very sophisticated talent,” he said. The company is developing drugs to treat Lou Gehrig’s disease, diabetic ulcers, and strokes.

He noted that although 86 percent of RXI shares are owned by CytRx, the subsidiary is a separately run company. CytRx intends to divest itself of about half its shares via a dividend to shareholders, enabling RXi to be listed as a public issuer on NASDAQ, according to Kreigsman.

During the past 25 years, Fogelman, the new finance chief at CytRx, worked at International Aluminum Corp., which was taken private in early 2007. Most recently, he served as International Aluminum’s senior vice president-finance and administration, CFO, and corporate secretary. Natalizio, whose phone extension was no longer listed in the company directory, couldn’t be reached.

On Tuesday the CytRx and Fogelman signed an employment agreement that runs through December 31, 2008. Under the agreement, Fogelman will be paid an annual base salary of $250,000 that can go up but not down and is eligible for a bonus. The company also granted Fogelman a ten-year option to buy 150,000 shares of CyTrx common stock $3.40 per share, which equaled the closing market price of the common stock on Tuesday.

“Mitch is a highly accomplished senior financial executive with proven leadership and managerial skills in a public company environment,” Kriegsman stated in a release. “He brings a full breadth of financial operations expertise, as well as proven capabilities in developing and implementing strategic plans.”

Earlier this month, James Warren, then the CFO of RXi, said he was leaving to “pursue other opportunities,” according to the company. He was replaced by Stephen DiPalma, who has 20 years of finance experience, most recently as co-founder, president and chief executive officer of Catalyst Oncology, Inc., which was recently merged with DiagnoCure Inc.

Tod Wolff, RXI’s president and CEO, said that both he and Warren had joined the company as consultants in August 2006 and that Warren’s departure has been “amicable.” Warren is still available to advise the company, Wolff said.