EpiCept Corporation Reports Third Quarter 2010 Operating and Financial
Results
CONFERENCE CALL BEGINS AT 9:00 A.M. EASTERN TIME
TARRYTOWN, N.Y.--(BUSINESS WIRE (http://www.businesswire.com/))--
Regulatory News:
EpiCept Corporation (Nasdaq and Nasdaq OMX Stockholm Exchange: EPCT)
today announced operating and financial results for the three and nine
months ended September 30, 2010, and provided an update with respect to
the Company's key business initiatives.
“During the third quarter, we were disappointed to receive a refusal to
file letter from the U.S. Food and Drug Administration (FDA) for our New
Drug Application (NDA) for Ceplene®,” stated Jack Talley, EpiCept
President and CEO. “However, we are pleased that our recent meeting with
the FDA and our agreement with them on the outline of a Phase III trial
provide a clear regulatory path for approval of Ceplene® in the U.S. We
expect such a trial to commence in 2011. Also, we have filed an
application with the FDA to grant Ceplene® fast track status, which
should permit an expedited review of the Ceplene® NDA once it is filed,
among other benefits.”
Business Update
· Ceplene® - approved in the European Union for administration with
low-dose interleukin-2 (IL-2) for the remission maintenance and
prevention of relapse of patients with Acute Myeloid Leukemia (AML) in
first remission; AML is the most deadly form of leukemia in adults. The
product has been licensed to Meda AB of Sweden to market and sell in
Europe and certain Pacific Rim countries.
In August 2010, EpiCept received a refusal to file letter from the FDA
on the New Drug Application to market Ceplene® with low-dose
interleukin-2 (IL-2) for the prevention of relapse of AML patients in
first remission. In October 2010, EpiCept reached an agreement with the
FDA on a regulatory path forward for Ceplene®. A new trial will be
required to demonstrate Ceplene's activity in conjunction with low-dose
IL-2 as remission maintenance therapy for AML patients in first complete
remission. EpiCept has reached agreement with the FDA for a two-arm,
randomized, open-label trial that will compare the efficacy of Ceplene®
plus low-dose IL-2 to standard of care in this indication. Based on FDA
guidance, the primary endpoint of the trial will be overall patient
survival. EpiCept's previous Phase III trial demonstrated a
statistically significant prolongation of the primary endpoint of
leukemia free survival and an advantage in increased overall survival of
more than an extra year of life in patients in their first complete
remission. Ceplene® has been granted orphan drug status in the United
States, which provides seven years of marketing exclusivity from the
approval date.
Meda launched marketing activities during the second quarter of 2010 in
the United Kingdom, Germany and Austria and is seeking reimbursement
approval in Spain, Italy and France as well as several other countries
in the European Union. Approval from many of these countries is expected
beginning in the next few months. Meda continues to make progress in its
long term strategy to position Ceplene® as the standard of care in AML
relapse prevention by continuing to gain commitments by key leading
physicians to treat their patients with Ceplene® and by incorporating
the use of Ceplene® into treatment guidelines in major countries. Sales
of Ceplene® were not material in the third quarter of 2010 and are not
expected to grow significantly until 2012.
During the third quarter of 2010, EpiCept's appeal of a decision by
Health Canada not to provide data protection for Ceplene® was denied by
a federal court in Canada. Lack of data protection in Canada for an
innovative drug such as Ceplene® eliminates any right to sales
exclusivity by EpiCept and enables competition to seek approval to sell
generic equivalents immediately. EpiCept expects to appeal the court's
decision and may withdraw its New Drug Submission until the appeals
process is completed. If the application is withdrawn, EpiCept retains
the right to re-file the application at any time over the next five
years without prejudice.
EpiCept is continuing patient enrollment into its post-approval clinical
study with Ceplene®. The Company plans to enroll up to 150 patients at
approximately 30 centers across Europe with sites in Sweden, Belgium,
France, the U.K., Spain, Germany and Italy. The two primary objectives
of the study are to further demonstrate the clinical pharmacology of
Ceplene® by assessing certain immunologic biomarkers in AML patients in
first remission, and to measure the effect of Ceplene® and low-dose IL-2
on minimal residual disease in the same patient population. The Company
intends to use this data to meet its post-approval commitment and to
seek a refinement of Ceplene's European labeling. The data will also
have value to prescribing hematologists. Enrollment into the trial is on
track and data is expected to be reported beginning in late 2011.
· EpiCeptTM NP-1 - a prescription topical analgesic cream designed to
provide long-term relief from the pain of peripheral neuropathies, which
affect more than 15 million people in the U.S. alone. In October 2010,
the Company presented interim data on 370 patients from its Phase IIb
trial for EpiCept™ NP-1 in chemotherapy-induced peripheral neuropathy
(CPN), which is being conducted by National Cancer Institute
(NCI)-funded Community Clinical Oncology Program. The interim results
demonstrated that NP-1 provided a statistically significant reduction in
pain in patients whose cancers were treated with taxanes, 94% of whom
were breast cancer patients. CPN may affect 50% of women undergoing
treatment for breast cancer.
The double-blind, randomized placebo-controlled study has enrolled
approximately 485 patients suffering from painful CPN for at least 28
days following the conclusion of chemotherapy. The primary endpoint of
the six-week trial is change in average daily neuropathy intensity
scores from baseline to the endpoint. Secondary endpoints include the
percentage of patients whose neuropathy intensity decreases at least 30%
from baseline as well as various other measures. Top line data from the
study is expected to become available by year end 2010.
EpiCept intends to partner NP-1 prior to the commencement of the Phase
III program in order to share the costs and development risk, and
ultimately to have that partner market the product globally upon
approval. Partner negotiations have reached an advanced stage.
· CrolibulinTM - a vascular disruption agent that has demonstrated
potent anti-tumor activity in both preclinical and early clinical
studies. The NCI is co-funding a new Phase Ib trial to assess safety and
efficacy of crolibulinTM in association with standard of care in certain
solid tumors. The protocol for this trial is currently under review. The
trial is expected to commence during the fourth quarter of 2010 and is
progressing on schedule.
· Azixa™* - a compound discovered by EpiCept and licensed to Myrexis,
Inc. (formerly Myriad Pharmaceuticals, Inc.), as part of an exclusive,
worldwide development and commercialization agreement. Azixa™ is
currently being evaluated in Phase II trials. In June 2010, Myrexis
reported results from two of the Phase II trials, in metastatic melanoma
in combination with temozolomide and in recurrent glioblastoma in
combination with carboplatin, at the annual meeting of the American
Society for Clinical Oncology (ASCO). Myexis will present a poster with
updated results from an ongoing, open-label Phase 2 monotherapy study of
Azixa™ in treatment-experienced patients with glioblastoma multiforme
(GBM) at the 2010 Society for Neuro-Oncology Scientific Meeting and
Education Day on November 19, 2010 in Montreal, Canada. The presentation
will focus on the subset of enrolled patients with the poorest prognosis
who had relapsed following both first- and second-line chemotherapy,
including Avastin® (bevacizumab).
The dosing of the first patient in a Phase III trial for Azixa™ triggers
a milestone payment to EpiCept.
Financial and Operating Highlights
For the third quarter of 2010, the net loss attributable to common
stockholders was $3.2 million, or $0.06 per share, compared with a net
loss attributable to common stockholders of $4.8 million, or $0.11 per
share, for the third quarter of 2009. For the nine months ended
September 30, 2010, the net loss attributable to common stockholders was
$12.6 million, or $0.27 per share, compared with a net loss attributable
to common stockholders of $34.4 million, or $0.89 per share, for the
nine months ended September 30, 2009. As of September 30, 2010, EpiCept
had cash and cash equivalents of $3.6 million and 50.4 million shares
outstanding.
Third Quarter and Nine Months 2010 vs. Third Quarter and Nine Months
2009
Revenue
The Company recognized revenue of $0.3 million during the third quarter
of 2010, compared with $0.1 million during the third quarter of 2009.
The Company recognized revenue of $0.7 million during the nine months
ended September 30, 2010, compared with $0.3 million during the nine
months ended September 30, 2009. For the third quarter of 2010, revenue
consisted primarily of the recognition of license fee payments
previously received from the Company's strategic alliances, revenues
from the sales of Ceplene® to Meda and product royalties. For the third
quarter of 2009, revenue consisted primarily of the recognition of
license fee payments previously received from the Company's strategic
alliances.
Selling, General and Administrative Expense
Selling, general and administrative expense in each of the third
quarters of 2010 and 2009 was $1.9 million. Selling, general and
administrative expense in both of the nine months ended September 30,
2010 and 2009 was $5.6 million. EpiCept expects selling, general and
administrative expenses to decline modestly over the next few quarters.
Research and Development (R&D) Expense
R&D expense in the third quarter of 2010 decreased by approximately 36%,
or $1.1 million, to $2.1 million compared with $3.2 million in the third
quarter of 2009. R&D expense for the nine months ended September 30,
2010 decreased by approximately 28%, or $2.5 million, to $6.7 million
compared with $9.2 million for the nine months ended September 30, 2009.
The decrease in R&D expense was primarily related to lower salary and
salary-related expenses and facility costs related to closing the
research facility in San Diego in 2009, lower license fees and lower
clinical trial expenses for Ceplene®, partially offset by higher
regulatory fees for Ceplene®. A substantial portion of the Company's R&D
expense in 2010 related to regulatory costs associated with the
Company's NDA filing of Ceplene®.
Other Income (Expense)
Other income (expense) during the third quarter of 2010 amounted to net
income of $0.8 million, compared with net income of $0.2 million in the
third quarter of 2009. The primary component of other income (expense)
in both quarters is foreign exchange gain. Other income (expense) for
the nine months ended September 30, 2010 amounted to net expense of $0.5
million, compared with net expense of $19.8 million for the nine months
ended September 30, 2009. Other expense, net for the nine months ended
September 30, 2010 was impacted by a $0.4 million foreign exchange loss
incurred as a result of the increased strength of the U.S. dollar
compared with the euro. Interest expense of $19.9 million was recorded
in the first nine months of 2009, which included $10.5 million in
amortization of debt issuance costs and debt discount related to the
conversion of $24.5 million of the Company's 7.5556% convertible
subordinated notes due 2014 into approximately 9.1 million shares of its
common stock.
Liquidity
As of September 30, 2010 EpiCept had approximately $3.6 million in cash
and cash equivalents. On October 29, 2010, the Company was notified by
the Internal Revenue Service that its application for the Qualifying
Therapeutic Discovery Project Program was certified and a grant in the
amount of $0.7 million was approved. Grant funds are expected to be
received in November 2010. On November 8, 2010, the Company announced
that it entered into definitive agreements for the purchase of
approximately 3.3 million shares of its common stock at $0.61 per share,
and five-year warrants to purchase up to approximately 1.3 million
shares of common stock at an exercise price of $0.56 per share. EpiCept
will receive approximately $1.9 million in net proceeds from the
offering, which is expected to close on or about November 10, 2010. The
Company believes that its cash at September 30, 2010 plus the proceeds
from the public offering and the grant from the Internal Revenue Service
is sufficient to fund operations into the first quarter of 2011.
On November 6, 2010 the Company provided an update with respect to its
financing plans. The key element of the plan is a non-equity financing
transaction that, if completed, will support the Company's operations
through at least year-end 2011. The Company anticipates that the
transaction, which is subject to completion of due diligence and
execution of mutually-satisfactory documentation, will close before
year-end, but should the transaction not close or the proceeds be less
than anticipated the Company may determine to seek additional or
alternative sources or types of financing, including equity financing.
EpiCept may delay or cancel some of its planned activities until results
of the financing plan become more apparent.
EpiCept plans to out-license its NP-1 compound to a third party who will
agree to complete clinical development and commercialize the product
upon receipt of necessary regulatory approvals. Discussions with
prospective partners are progressing, however at this time it is not
possible to determine whether or when such an agreement might be
concluded or the amount of any fees that may be paid to EpiCept in
connection with the agreement.
Conference Call
EpiCept will host a conference call to discuss these results and answer
questions on November 9, 2010 beginning at 9:00 a.m. Eastern Standard
Time.
To participate in the live call and be able to participate in the
question and answer session, please dial from the United States or
Canada (877) 809-8594 or from international locations (706) 758-9407
(please reference access code 23440601) prior to the start of the
conference. The conference call will also be broadcast live in
listen-only mode on the Internet and may be accessed at
www.epicept.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=http
%3A%2F%2Fwww.epicept.com&esheet=6503676&lan=en-US&anchor=www.epicept.com
&index=1&md5=fed4865dd0e692f34fb33012301b8cb0). The web cast will be
archived for 90 days.
A telephone replay of the call will be available for seven days by
dialing from the United States or Canada (800) 642-1687 or from
international locations (706) 645-9291 (please reference reservation
number 23440601).
About EpiCept Corporation
EpiCept is focused on the development and commercialization of
pharmaceutical products for the treatment of cancer and pain. The
Company's lead product is Ceplene®, which has been granted full
marketing authorization by the European Commission for the remission
maintenance and prevention of relapse in adult patients with Acute
Myeloid Leukemia (AML) in first remission. The Company has two oncology
drug candidates currently in clinical development that were discovered
using in-house technology and have been shown to act as vascular
disruption agents in a variety of solid tumors. The Company's pain
portfolio includes EpiCept™ NP-1, a prescription topical analgesic cream
in late-stage clinical development designed to provide effective
long-term relief of pain associated with peripheral neuropathies.
Forward-Looking Statements
This news release and any oral statements made with respect to the
information contained in this news release contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements include statements
which express plans, anticipation, intent, contingency, goals, targets,
future development and are otherwise not statements of historical fact.
These statements are based on our current expectations and are subject
to risks and uncertainties that could cause actual results or
developments to be materially different from historical results or from
any future results expressed or implied by such forward-looking
statements. Factors that may cause actual results or developments to
differ materially include: the risk that Ceplene® will not receive
regulatory approval or marketing authorization in the United States or
Canada, the risk that Ceplene® will not achieve significant commercial
success, the risk that any required post-approval clinical study for
Ceplene® will not be successful, the risk that we will not be able to
maintain our final regulatory approval or marketing authorization for
Ceplene®, the risk that the financing will not successfully close or
that the proceeds thereof will be materially less than anticipated, the
risks associated with the adequacy of our existing cash resources and
our ability to continue as a going concern, the risks associated with
our ability to continue to meet our obligations under our existing debt
agreements, the risk that Azixa™ will not receive regulatory approval or
achieve significant commercial success, the risk that we will not
receive any significant payments under our agreement with Myrexis, the
risk that the development of our other apoptosis product candidates will
not be successful, the risk that clinical trials for EpiCeptTM NP-1 or
crolibulinTM will not be successful, the risk that EpiCept™ NP-1 or
crolibulinTM will not receive regulatory approval or achieve significant
commercial success, the risk that we will not be able to find a partner
to help conduct the Phase III trials for EpiCept™ NP-1 on attractive
terms, a timely basis or at all, the risk that our other product
candidates that appeared promising in early research and clinical trials
do not demonstrate safety and/or efficacy in larger-scale or later stage
clinical trials, the risk that we will not obtain approval to market any
of our product candidates, the risks associated with dependence upon key
personnel, the risks associated with reliance on collaborative partners
and others for further clinical trials, development, manufacturing and
commercialization of our product candidates; the cost, delays and
uncertainties associated with our scientific research, product
development, clinical trials and regulatory approval process; our
history of operating losses since our inception; the highly competitive
nature of our business; risks associated with litigation; the risk that
our securities may be delisted from Nasdaq; and risks associated with
our ability to protect our intellectual property. These factors and
other material risks are more fully discussed in our periodic reports,
including our reports on Forms 8-K, 10-Q and 10-K and other filings with
the U.S. Securities and Exchange Commission. You are urged to carefully
review and consider the disclosures found in our filings which are
available at
www.sec.gov (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%
2F%2Fus.lrd.yahoo.com%2F_ylt%3DAgfqFPfVOEK5M4_Rv8aJvhTjba9_%3B_ylu%3DX3o
DMTEzM2pvaWgxBHBvcwMyBHNlYwNuZXdzYXJ0Ym9keQRzbGsDd3d3c2VjZ292%2FSIG%3D15
t064n6f%2F**http%253A%2Fcts.businesswire.com%2Fct%2FCT%253Fid%3Dsmartlin
k%2526url%3Dhttp%25253A%25252F%25252Fwww.sec.gov%2526esheet%3D6170045%25
26lan%3Den_US%2526anchor%3Dwww.sec.gov%2526index%3D2%2526md5%3D61ec7b720
44301e411e3335754ee5c07&esheet=6503676&lan=en-US&anchor=www.sec.gov&inde
x=2&md5=8e60fc2a4e10ded09cceb09db01b8972) or at
www.epicept.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=http
%3A%2F%2Fus.lrd.yahoo.com%2F_ylt%3DAhBuoawHw6iS3RhJOH9dNNfjba9_%3B_ylu%3
DX3oDMTE2OGhhcWs4BHBvcwMzBHNlYwNuZXdzYXJ0Ym9keQRzbGsDd3d3ZXBpY2VwdGNv%2F
SIG%3D1659oglun%2F**http%253A%2Fcts.businesswire.com%2Fct%2FCT%253Fid%3D
smartlink%2526url%3Dhttp%25253A%25252F%25252Fwww.epicept.com%2526esheet%
3D6170045%2526lan%3Den_US%2526anchor%3Dwww.epicept.com%2526index%3D3%252
6md5%3D8b3a48c3367e26fcfbd15295b6d82118&esheet=6503676&lan=en-US&anchor=
www.epicept.com&index=3&md5=9e65529889ae376a7d1d1d133d3b1602). You are
cautioned not to place undue reliance on any forward-looking statements,
any of which could turn out to be wrong due to inaccurate assumptions,
unknown risks or uncertainties or other risk factors.
*Azixa is a registered trademark of Myrexis, Inc.
Selected financial information follows:
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Balance Sheet Data
(in $000s)
September 30,
December 31,
2010
2009
Cash and cash equivalents $ 3,580 $
5,142
Inventory 1,579
1,315
Property and equipment, net 255 360
Total assets 6,725
7,514
Accounts payable and other accrued liabilities 4,764
4,054
Deferred revenue 14,038
9,622
Notes and loans payable 1,417
1,952
Total stockholders' deficit (14,194)
(9,079)
Total liabilities and stockholders' deficit $ 6,725 $
7,514
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Operations Data
(in $000s except share and per share data)
For Three Months Ended
For Nine Months Ended
September 30,
September 30,
2010 2009
2010 2009
Product net revenues 16 —
80 —
Licensing and other revenues 241 116
623 322
Total net revenues $ 257 $ 116
$ 703 $ 322
Operating expenses:
Cost of product net revenues 333 —
423 —
Selling, general and administrative 1,855 1,897
5,632 5,652
Research and development 2,077 3,239
6,669 9,221
Total operating expenses 4,265 5,136
12,724 14,873
Loss from operations (4,008) (5,020)
(12,021) (14,551)
Other income (expense):
Interest income 2 11
5 26
Foreign exchange gain (loss) 887 268
(357) 361
Interest expense (49) (72)
(187) (19,905)
Change in value of warrants and derivatives — —
— (305)
Other income (expense), net 840 207
(539) (19,823)
Net loss before income taxes (3,168) (4,813)
(12,560) (34,374)
Income taxes — —
(5) (4)
Net loss $ (3,168 $ (4,813
$ (12,565 $ (34,378)
Basic and diluted loss per common share $ (0.06 $ (0.11)
$ (0.27 $ (0.89)
Weighted average common shares outstanding * 50,393,488
43,740,960 46,298,964 38,827,626
* Reflects a 1:3 reverse split effected in January 2010.
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Cash Flows Data
(in $000s)
Nine months
Ended Sept. 30,
2010
2009
Net cash used in operating activities $ (7,279) $
(25,714)
Net cash provided by (used in) investing activities 45
(65)
Net cash provided by financing activities 5,673
34,489
Effect of exchange rate changes on cash (2)
(8)
Net increase (decrease) in cash and cash equivalents (1,562)
8,702
Cash and cash equivalents at beginning of period 5,142
790
Cash and cash equivalents at end of period $ 3,580 $
9,492
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Stockholders Deficit Data
(in $000s)
Nine
Months Ended Sept. 30,
2010
2009
Stockholders' deficit at beginning of period $
(9,079) $ (17,730)
Net loss for the period
(12,565) (34,378)
Stock-based compensation expense 684
1,003
Foreign currency translation adjustment 468
(451)
Share, option and warrant issuance 6,259
21,896
Exercise of options and warrants 39
—
Conversion of convertible subordinated notes into common stock —
24,500
Stockholders' deficit at end of period $
(14,194) $ (5,160)
EPCT-GEN
EpiCept Corporation:
Robert W. Cook, 914-606-3500
rcook@epicept.com (rcook@epicept.com)
or
Media:
Feinstein Kean Healthcare
Greg Kelley, 617-577-8110
gregory.kelley@fkhealth.com (gregory.kelley@fkhealth.com)
or
Investors:
Lippert/Heilshorn & Associates
Kim Sutton Golodetz, 212-838-3777
kgolodetz@lhai.com (kgolodetz@lhai.com)
or
Bruce Voss, 310-691-7100
bvoss@lhai.com (bvoss@lhai.com)
EpiCept Corporation Reports Third Quarter 2010 Operating and Financial Results
| Source: Immune Pharmaceuticals Inc
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