EpiCept Reports Fourth Quarter Financial Results, Provides Business Update
TARRYTOWN, N.Y.--(BUSINESS WIRE)-- EpiCept Corporation (Nasdaq and Nasdaq OMX
Stockholm Exchange: EPCT) today announced operating and financial results for
the fourth quarter and year ended December 31, 2009, and provided an update on
Ceplene® and several of the Company's key product candidates.
“Our ongoing market planning and product development activities during the
fourth quarter of 2009 and recent weeks were substantial, and we are very
pleased with the progress we made in advancing the development and
commercialization of a number of our products,” noted Jack Talley, EpiCept's
President and CEO. “Last month we announced the successful culmination of our
partnership negotiations for Ceplene® with the signing of an agreement with Meda
AB to market and sell Ceplene® in Europe and several Pacific Rim countries. We
also made progress with the New Drug Submission (NDS) for Ceplene® in Canada and
with the anticipated New Drug Application (NDA) filing in the U.S. We were also
pleased by the approval of our application to obtain orphan drug status in the
U.S. for NP-1 in post-herpetic neuralgia, as well as by the progress in our
discussions to partner NP-1 for Phase III development and commercialization.”
Business Update
Ceplene® - approved in the European Union 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.
On January 7, 2010 EpiCept announced that it had completed an agreement with
Meda AB of Sweden to market and sell Ceplene® in Europe and certain Pacific Rim
countries. EpiCept received $3 million upon signing the agreement and will
receive another $2 million upon commercial launch, which is expected in 2010.
Future payments include a $5 million fee upon achievement of a regulatory
milestone and up to $30 million in sales milestones. In addition an escalating,
double-digit royalty is payable on net sales of Ceplene® by Meda. EpiCept is
responsible for the manufacture and supply of Ceplene® for sale by Meda. EpiCept
and Meda are cooperating in the preparation for commercial launch in Europe with
a view towards launching the product as quickly as possible. In the interim,
Ceplene® remains available in Europe through the Named-Patient Program launched
in June 2009 through a partnership with IDIS.
EpiCept continued its association with European LeukemiaNet during the quarter.
The first meeting of the Scientific Advisory Board (SAB) the Company established
in collaboration with the foundation took place in November 2009. The SAB, which
is comprised of several key opinion leaders in AML who collectively practice in
all of the major countries in the European Union, gathered to formulate
strategies to increase physician awareness and understanding of the benefits of
Ceplene® in treating AML patients. In February 2010 EpiCept attended the
foundation's annual meeting and participated in discussions with the goal of
including Ceplene® in local European guidelines to treat AML patients in
remission. In January 2010 the Swedish AML Group included Ceplene® in its
guidelines entitled “National Guidelines for Diagnosis and Treatment of Acute
Myeloid Leukemia in Adults.”
EpiCept also continued its efforts to expand the uses for Ceplene® in other
hematologic diseases. A study led by Groupe Francophone des Myélodysplasies will
examine the effects of Ceplene® and low-dose IL-2 in combination with Vidaza®
(azacitidine) in the treatment of patients with higher risk myelodsyplastic
syndrome (MDS), a bone marrow disease that can progress to AML. These patients
will already have demonstrated a hematological response to Vidaza®. This trial
is expected to be completed this year and will be followed by a randomized Phase
II study to determine the efficacy, safety and tolerability of the addition of
Ceplene®/IL-2 to Vidaza® compared with Vidaza® alone in patients with higher
risk MDS.
A Phase I/II study that will research the effects of a regimen of Ceplene® and
low-dose IL-2 in combination with Gleevec® (imatinib mesylate) on the
eradication of minimal residual disease in adult patients with chronic myeloid
leukemia is being developed by the Nordic Chronic Myeloid Leukemia Study Group,
which is comprised of physicians and researchers in Sweden, Denmark, Norway and
Finland. The primary objective of the study will be to assess the safety of the
combination therapy of Ceplene®/IL-2 with Gleevec® given for six months, and to
assess the number of patients achieving and subsequently maintaining
disease-free survival after discontinuation of Gleevec®. This trial is expected
to commence enrollment later this year.
During the fourth quarter EpiCept continued 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 interleukin-2 (IL-2) on minimal
residual disease in the same patient population. Secondary objectives will
assess leukemia-free survival after a follow-up period of up to two years.
The Company's NDS for Ceplene® is currently under review by Health Canada, which
has established a performance target for the completion of review and a decision
by the fourth quarter 2010. The Company is appealing a denial for data
protection in Canada that it received in the fourth quarter 2009. A decision on
the appeal is expected prior to the decision date of the NDS application.
EpiCept continues its preparation of an NDA that will be filed with the U.S.
Food and Drug Administration (FDA). The Company intends to file the NDA once it
can incorporate certain manufacturing information that will become available
during the second quarter 2010. Ceplene has received orphan drug status in the
U.S. for the remission maintenance of AML.
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 January 2010 NP-1 received orphan
drug designation in the U.S. for the treatment of post-herpetic neuralgia. The
receipt of orphan drug status provides marketing exclusivity for seven years for
this indication . EpiCept intends to partner this compound prior to commencement
of a Phase III trial in order to share the costs and development risk, and
ultimately to have that partner market the product globally upon approval. This
effort has attracted the interest of several prospective partners. The Company
is seeking to complete a partnership in 2010.
Crinobulin (EPC2407) - a vascular disruption agent that has demonstrated potent
anti-tumor activity in both preclinical and early clinical studies. In May 2009
EpiCept announced the completion of a Phase Ia study that determined
crinobulin's maximum tolerated dose and provided evidence of clinical
symptomatic activity and radiographic evidence of efficacy in end-stage cancer
patients. The Company is preparing to initiate this year a Phase Ib trial for
the compound in combination with the standard dose of appropriate chemotherapy
in several solid tumor types.
Azixa™ - a compound discovered by EpiCept and licensed to Myriad as part of an
exclusive, worldwide development and commercialization agreement. Myriad is
currently conducting Phase II trials for Azixa™. In November 2009 Myriad
announced interim results of its trial of AzixaTM in melanoma metastases in
which 10 of the 22 patients treated achieved stable disease and two patients
achieved confirmed partial responses. The dosing of the first patient in a Phase
III trial for Azixa™ triggers a milestone payment to EpiCept.
Financial and Operating Highlights
EpiCept's net loss for the fourth quarter of 2009 was $4.4 million, or $0.10 per
share, and for the year was $38.8 million, or $0.97 per share. As of December
31, 2009, EpiCept had cash and cash equivalents of $5.1 million, and
approximately 44.1 million shares outstanding. EpiCept's loss per share and
shares outstanding reflect a 1:3 reverse split that was effected in January
2010.
Fourth Quarter 2009 vs. Fourth Quarter 2008
Revenue
The Company recognized revenue of $0.1 million during the fourth quarter of
2009, unchanged from the fourth quarter of 2008. For both quarters revenue
consisted primarily of the recognition of license fee payments previously
received from Myriad Genetics, Endo Pharmaceuticals and Durect.
General and Administrative Expense
General and administrative expense in the fourth quarter of 2009 decreased by
11%, or $0.2 million, to $1.9 million compared with $2.1 million in the fourth
quarter of 2008. The decrease was primarily related to lower professional fees
and compensation expenses, partially offset by higher promotion and advertising
expenses related to the upcoming commercial launch of Ceplene®.
Research and Development (R&D) Expense
Research and development expense in the fourth quarter of 2009 decreased by
approximately 21%, or $0.6 million, to $2.4 million compared with $3.0 million
in the fourth quarter of 2008. The decrease was primarily related to lower
facility and compensation expenses related to the closing of the Company's
research facility in San Diego.
Other Income (Expense)
Other income (expense) during each of the fourth quarters of 2009 and 2008
amounted to net expense of $0.3 million. The primary component of other income
(expense) in both quarters is interest expense and foreign exchange loss.
Full Year 2009 vs. Full Year 2008
Revenue
During the years 2009 and 2008, the Company recognized deferred revenue of $0.4
million and $0.3 million, respectively. During 2009 revenue was primarily
related to the recognition of deferred revenue from the Company's license
agreements with Myriad Genetics, Endo Pharmaceuticals and Durect, as well as
royalties with respect to certain technology and sales of Ceplene®. During 2008
revenue was primarily related to the recognition of deferred revenue from the
Company's license agreements with Myriad Genetics, Endo Pharmaceuticals and
Durect.
General and Administrative (G&A) Expense
General and administrative expense in 2009 decreased by approximately 21%, or
$2.1 million, to $7.5 million compared with $9.6 million in 2008. The decrease
in administrative expense can be attributed to a cost reduction effort
implemented in 2008 and continued into 2009. For 2009 stock-based compensation
expense amounted to $0.9 million, down $0.9 million from 2008. In addition, the
Company's legal, accounting and public reporting expense decreased $0.5 million
and the Company's facility, insurance and other administrative expenses
decreased $0.7 million for 2009, compared with 2008.
Research and Development (R&D) Expense
Research and development expense in 2009 decreased by approximately 8%, or $1.0
million, to $11.6 million compared with $12.6 million in 2008. The decrease was
primarily attributable to lower clinical trial and consulting expenses totaling
$0.4 million, lower compensation expenses of $1.1 million and lower patent
expenses of $0.2 million in 2009, compared with 2008, partially offset by $0.8
million in facility expense and $0.2 million in severance expenses related to
the closing of the Company's research facility in San Diego in 2009.
Other Income (Expense)
Other income (expense) during 2009 amounted to a net expense of $20.1 million
compared with a net expense of $3.4 million during 2008. The $16.7 million
increase in other expense, net was primarily related to $10.5 million in
amortization of debt issuance costs and discount and $9.3 million in interest
expense, which was paid from restricted cash, as a result of the conversion of
$24.5 million of the Company's 7.5556% convertible subordinated notes due 2014
into approximately 9.1 million shares of common stock in 2009. Other income
(expense) was positively impacted by a $0.5 million change in foreign exchange
gains though it was substantially offset by a $0.4 million decrease in the fair
value of certain warrants and derivatives. The Company experienced a loss on
extinguishment of debt of $2.0 million in 2008.
EpiCept also announced today that in its Annual Report on Form 10-K for the year
ended December 31, 2009, the Company's independent registered public accounting
firm is expected to express an unqualified opinion on the December 31, 2009
consolidated financial statements and will include an explanatory paragraph
expressing substantial doubt about the Company's ability to continue as a going
concern.
Liquidity
As of December 31, 2009 EpiCept had approximately $5.1 million in cash and cash
equivalents. In January 2010, the Company received $3 million from Meda in
connection with the signing of the Ceplene® European marketing and distribution
agreement. Meda is also required to pay an additional $2 million upon its
commercial launch of Ceplene® and a royalty on net sales. The Company believes
that its cash is sufficient to fund operations into the third quarter 2010. The
Company may receive cash from certain licensing activities during 2010 and upon
achievement of specified clinical milestones.
In February 2010 EpiCept established an “At-the-Market” offering program through
which the Company may, from time to time, offer and sell shares of its common
stock having an aggregate offering price of up to $15.0 million through its
sales agent. Sales of the shares, if any, will be made by means of ordinary
brokers' transactions on The Nasdaq Capital Market or, to the extent allowable
by law, the Nasdaq OMX Stockholm Exchange, at market prices. EpiCept may utilize
this program at such times and in such amounts to minimize any disruption to the
trading of its stock. In times of low trading volume the Company may severely
limit or refrain altogether from using the program. No offerings under this
program have yet occurred. The Company expects to use this facility to meet
liquidity needs that may arise in the event any of the anticipated cash inflows
are delayed or do not occur, and it may seek alternative sources of debt or
equity should funds raised through the program be insufficient to timely meet
the Company's liquidity requirements.
Conference Call
EpiCept will host a conference call to discuss these results and answer
questions on February 25, 2010 beginning at 9:00 a.m. Eastern Standard Time.
To participate in the live call, please dial from the United States or Canada
(877) 809-8594 or from international locations (706) 758-9407 (please reference
access code 58666579). The conference call will also be broadcast live in
listen-only mode on the Internet and may be accessed at www.epicept.com. 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 58666579).
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 be launched or 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 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 Myriad, 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 crinobulin will
not be successful, the risk that EpiCept NP-1 or crinobulin 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; 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 or at
www.epicept.com. 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.
Selected financial information follows:
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Balance Sheet Data
(in $000s)
December 31,
2009 2008
Cash and cash equivalents $ 5,142 $ 790
Property and equipment, net 360 502
Total assets $ 7,514 $ 2,271
Accounts payable and other accrued liabilities $ 4,054 $ 5,995
Deferred revenue 9,622 9,990
Notes and loans payable 1,952 3,552
Total stockholders' deficit (9,079 ) (17,730 )
Total liabilities and stockholders' deficit $ 7,514 $ 2,271
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Operations Data
(in $000s except share and per share data)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Revenue $ 92 $ 96 $ 414 $ 265
Operating expenses:
General and administrative 1,896 2,134 7,548 9,599
Research and development 2,382 3,025 11,603 12,623
Total operating expenses 4,278 5,159 19,151 22,222
Loss from operations (4,186 ) (5,063 ) (18,737 ) (21,957
)
Other income (expense):
Interest income 6 5 31 33
Gain (loss) on extinguishment of debt — — — (1,975 )
Foreign exchange gain (loss) (140 ) (144 ) 221 (327 )
Interest expense (116 ) (173 ) (20,021 ) (1,266 )
Change in value of warrants and derivatives — — (305 )
113
Other income (expense), net (250 ) (312 ) (20,074 )
(3,422 )
Net loss before income taxes (4,436 ) (5,375 ) (38,811 ) (25,379
)
Income taxes — — (4 ) (3 )
Net loss $ (4,436 ) $ (5,375 ) $ (38,815 ) $ (25,382 )
Basic and diluted loss per common share $ (0.10 ) $ (0.20 ) $ (0.97
) $ (1.23 )
Weighted average common shares outstanding * 44,031,387 26,384,237
40,139,299 20,685,711
* Reflects a 1:3 reverse split effected in January 2010.
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Cash Flows Data
(in $000s)
Year Ended December 31,
2009 2008
Net cash used in operating activities $ (29,453 ) $ (15,637 )
Net cash provided by (used in) investing activities (52 ) 292
Net cash provided by financing activities 33,874 11,144
Effect of exchange rate changes on cash (17 ) 48
Net increase (decrease) in cash and cash equivalents 4,352 (4,153 )
Cash and cash equivalents at beginning of year 790 4,943
Cash and cash equivalents at end of year $ 5,142 $ 790
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Stockholders Deficit Data
(in $000s)
Year Ended December 31,
2009 2008
Stockholders' deficit at beginning of year $ (17,730 ) $ (14,177 )
Net loss for the period (38,814 ) (25,382 )
Stock-based compensation expense 1,470 2,382
Foreign currency translation adjustment (293 ) 432
Share, option and warrant issuance 15,677 14,605
Exercise of options and warrants 3,823 2,560
Reclassification of warrants from liability to equity, net 2,288 —
Conversion of convertible subordinated notes into common stock 24,500 —
Issuance of common stock as payment of loan — 1,850
Stockholders' deficit at end of year $ (9,079 ) $ (17,730 )
*Azixa is a registered trademark of Myriad Genetics, Inc.
EPCT-GEN
EpiCept Corporation
Robert W. Cook, 914-606-3500
rcook@epicept.com
or
Media:
Feinstein Kean Healthcare
Greg Kelley, 617-577-8110
gregory.kelley@fkhealth.com
or
Investors:
Lippert/Heilshorn & Associates
Kim Sutton Golodetz, 212-838-3777
kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
bvoss@lhai.com
EpiCept Reports Fourth Quarter Financial Results, Provides Business Update
| Source: Immune Pharmaceuticals Inc
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