* Says INNO-206 cuts tumor cells in animal model * Says drug shows comparable toxicity

* Shares up as much as 27 pct (Adds analyst comment)

July 13 (Reuters) - Drug-maker CytRx Corp (CYTR.O: Quote, Profile, Research) said its experimental treatment for breast cancer caused a "dramatic destruction" of implanted tumors in an animal model, sending its shares to a new 52-week high.

The company said tumors in animals treated with INNO-206 shrank to about one-half their initial volume by the end of 43 days.

"The market has reacted so much because this compound showed such great efficacy in the animal data and because of the potential for being a very large drug," Rodman & Renshaw analyst Simos Simeonidis said.

Simeonidis expects INNO-206 to be a very large product as it is a pro-drug to doxorubicin, a common cancer treatment that has sales in hundreds of millions of dollars.

A pro-drug is a compound which when taken in gets converted into the active ingredient of a drug.

Shares of the Los Angeles-based company touched a high of $1.24 earlier in the session. They were trading up 12 percent at $1.10 Monday on Nasdaq.

Shares of RXi Corp (RXII.O: Quote, Profile, Research), 45 percent of which is owned by CytRx, rose as much as 19 percent to $4.20 in the morning session, before shedding some of their gains to trade up nearly 3 percent at $3.62 on Nasdaq. (Reporting by Vidya L Nathan in Bangalore; Editing by Anil D'Silva)