EpiCept Reports First Quarter 2012 Operating and Financial Results


CONFERENCE CALL BEGINS AT 9:00 A.M. EASTERN TIME TODAY
TARRYTOWN, N.Y.--(BUSINESS WIRE (http://www.businesswire.com/))--
Regulatory News:

EpiCept Corporation (Nasdaq OMX Stockholm Exchange and OTCQX: EPCT) today
announced operating and financial results for the three months ended March 31,
2012, and provided an update on the Company’s key business initiatives.

“EpiCept achieved an important milestone with respect to AmiKet™ during the
first quarter of 2012,” stated Jack Talley, President and CEO of EpiCept.
“Following a successful meeting with the U.S. Food and Drug Administration (FDA)
in December 2011 regarding the Phase III program for AmiKet™, we were awarded
Fast Track Status last month by the FDA in the treatment of chemotherapy-induced
peripheral neuropathy (CIPN). In the meantime, our efforts to identify and
execute a strategy to exploit AmiKet™’s commercial opportunity have progressed
to the point where multiple parties are considering becoming involved in
advancing the development program, including a potential sale of the Company. We
are focused on securing a positive outcome to this effort as quickly as
possible.”

Business Highlights

  · Applied for Fast Track Status for AmiKet™ in February 2012 for the treatment
of CIPN, which was awarded by the FDA in April. Also held a meeting with the
European Medicines Agency (EMA) to review the Phase III requirements for
obtaining marketing approval in the European Union (EU).
  · The Phase I safety portion of the National Cancer Institute (NCI)-sponsored
trial of crolibulin™ in combination with cisplatin in anaplastic thyroid cancer
(ATC) is nearing conclusion, after which the Phase II randomized efficacy proof
-of-concept study is expected to commence.
  · SunTrust Robinson Humphrey was engaged in January 2012 to assist in
exploring strategic options to exploit the commercial opportunity of AmiKet™.
The engagement is focused on the identification and execution of a strategy that
will optimize AmiKet™’s value for the Company’s stockholders, which includes the
evaluation of potential transactions involving the sale of the Company.
  · The Company believes that its cash is sufficient to fund operations into the
third quarter of 2012. The Company has reduced certain R&D and G&A expenses in
2012 compared with 2011 and raised cash via a repricing of expiring stock
purchase warrants in January 2012, a $2.0 million registered direct financing in
February 2012 and a $1.1 million registered direct financing in April 2012.

Product Portfolio Update

  · AmiKet™ - 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. During the fourth quarter of 2011, EpiCept
received permission from the FDA to commence Phase III clinical development of
AmiKet™ for the treatment of CIPN and was encouraged to apply for Fast Track
designation, which was granted in April 2012. The FDA further advised that a
Special Protocol Assessment (SPA) would be available upon formal submission and
agreement as to the Phase III trial protocol. The FDA waived several expensive
and time consuming non-clinical toxicology studies, and indicated that a single,
four-arm, factorial trial may suffice for regulatory approval if combined with
other pivotal clinical data in another neuropathy such as diabetic peripheral
neuropathy. EpiCept also met with the EMA regarding AmiKet™ in CIPN during the
first quarter of 2012 to review the requirements for marketing approval in the
EU and is awaiting receipt of the agency’s formal guidance. Discussions with
several prospective parties to finance the Phase III development in the U.S.
and/or Europe are continuing.
  · Ceplene®- approved in the EU and Israel 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
deadliest 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.
Ceplene®is licensed to Megapharm Ltd. to market and sell in Israel.
Ceplene® is currently on the list of pre-approved products for reimbursement in
Germany, England, Sweden, Denmark and Italy (a temporary approval);
additionally, it is available on a named-patient basis in many other countries
in the EU. Reimbursement is being negotiated in France and Spain, among other
countries in the EU. Meda continues to make progress in its long-term strategy
to position Ceplene® as the standard of care in AML relapse prevention by
securing inclusion of Ceplene® in clinical trials that are being conducted by
key opinion leaders and by incorporating the use of Ceplene® into treatment
guidelines in major countries. Following Ministry of Health approval of labeling
and other reimbursement matters expected this year, Megapharm Ltd. is expected
to commence the commercial launch of Ceplene® in Israel, until which time it is
available there on a named-patient basis. Sales of Ceplene® were not material in
the first quarter of 2012.

  · CrolibulinTM- a vascular disruption agent that has demonstrated potent anti
-tumor activity in both preclinical and early clinical studies. In December 2010
the NCI initiated a Phase Ib/II trial with crolibulinTMto assess safety and
efficacy in combination with cisplatin in patients with anaplastic thyroid
cancer (ATC). Trial enrollment has progressed to the third and final dosing
cohort for the Phase Ib portion of this trial. The Phase II randomized proof-of
-concept efficacy portion of the trial is anticipated to begin later in 2012.
  · F573 (previously known as EP1013) - a di-peptide small-molecule compound
licensed by EpiCept to GNI Group Ltd. in China, Japan and other key Asian
territories that has demonstrated a potent inhibitory effect on caspases, a
class of enzymes involved in cell death and inflammation. Drug efficacy has been
shown in animal models relating to liver failure, brain ischemia and myocardial
infarction. Data published in the Chinese Pharmacological Bulletin (2102 Volume
28 (1):136-139) during the first quarter of 2012 concluded that F573 is a new
therapeutic drug candidate for the treatment of late-stage viral infection
-induced hepatitis. F573 delivered intravenously demonstrated a therapeutic
effect in a study involving 60 mice with acute liver injury, including a
reduction in TNF-aand cell apoptosis. As part of its license agreement with GNI
Group Ltd., EpiCept received a small upfront fee upon signing the agreement in
2008 and is eligible to receive milestone payments of more than $12 million
based on the clinical advancement of F573 in in the licensed territories, as
well as royalties on commercial sales. EpiCept retains the commercial rights to
F573/EP1013 in all other markets. The next potential milestone payment would
occur in conjunction with initiation of a Phase I trial in any of the
territories outlined in the agreement. In July 2011, Shanghai Genomics, a wholly
owned subsidiary of GNI Group Ltd., filed an Investigational New Drug (IND)
application for F573 in China.
  · Azixa™* - a compound discovered by EpiCept and licensed to Myrexis, Inc. as
part of an exclusive, worldwide development and commercialization agreement.
AzixaTMhas received orphan drug status in the U.S. for the treatment of
glioblastoma multiforme (GBM). Myrexis announced in February 2012 that it has
suspended company-wide operations pending the outcome of an internal evaluation
of available strategic alternatives to enhance shareholder value. EpiCept is
closely monitoring developments and intends to enforce its rights as appropriate
under its license agreement with Myrexis.

Financial and Operating Highlights

EpiCept’s net loss attributable to common stockholders for the first quarter of
2012 was $4.7 million, or $0.06 per share, compared with a net loss attributable
to common stockholders of $2.5 million, or $0.04 per share, for the first
quarter of 2011. The net loss attributable to common stockholders for the first
quarter of 2012 includes $1.2 million of deemed dividends on convertible
preferred stock.

First Quarter 2012 vs. First Quarter 2011

Revenue

The Company recognized revenue of $0.2 million during each of the first quarters
of 2012 and 2011. Revenue consisted primarily of the recognition of license fee
payments previously received from the Company’s partners, as sales of
Ceplene®continued to be immaterial.

Cost of Goods Sold

Cost of goods sold in the first quarter of 2011 consisted primarily of a $0.1
million expense for Ceplene®inventory the Company believes will not be sold
prior to reaching its product expiration date. Cost of goods sold in the first
quarter of 2012 was immaterial.

Selling, General and Administrative (SG&A) Expense

SG&A expense was $1.4 million in each of the first quarters of 2012 and 2011.
The Company expects general and administrative expenses to remain at
approximately current levels over the next few quarters, which should result in
an approximate 20% reduction in SG&A expense by year-end 2012 when compared with
2011.

Research and Development (R&D) Expense

R&D expense in the first quarter of 2012 decreased by 24%, or $0.4 million, to
$1.3 million from $1.7 million in the first quarter of 2011. The decrease was
primarily attributable to lower regulatory fees for Ceplene®. The Company’s
clinical and regulatory efforts in the first quarter of 2012 were focused on its
open-label trial of Ceplene®that is intended to meet its post-approval
requirements with the EMA, the Fast Track application to the FDA and its meeting
with the EMA regarding the Phase III development of AmiKet™ for the EU. The
Company expects R&D expense to trend lower over the next few quarters as a
result of a reduction in staff and reduced clinical and regulatory activity.

Other Income (Expense)

Other income (expense) during the first quarter of 2012 amounted to net expense
of $1.0 million compared with net income of $0.5 million in the first quarter of
2011. The primary components of other expense in 2012 were warrant amendment
expense of $0.9 million and interest expense of $0.4 million related primarily
to the Company’s senior secured term loan, which was partially offset by foreign
exchange gains. The primary component of other income in 2011 was foreign
exchange gains.

EpiCept expects to release its interim results for the period ending June 30,
2012 on or about August 10, 2012.

Liquidity

EpiCept had approximately $5.1 million in cash and cash equivalents as of March
31, 2012. In April 2012 the Company received approximately $1.0 million cash,
net of $0.1 million in transaction costs, from the issuance of 1,065 shares of
the Company’s Series B 0% Convertible Preferred Stock, at a price of $1,000 per
share, and warrants to purchase 3.1 million shares of the Company’s Common
Stock. The Shares of Series B Preferred Stock are convertible into an aggregate
of 6.3 million shares of the Company’s Common Stock. The Company believes that
its current cash is sufficient to fund operations into the third quarter of
2012.

The Company engaged SunTrust Robinson Humphrey in January 2012 to assist in
exploring strategic alternatives to maximize the commercial opportunity of
AmiKet™ for the treatment of CIPN following taxane-based therapy. The engagement
is focused on the identification and implementation of a strategy designed to
optimize AmiKet™’s value for the Company’s stockholders, which includes the
evaluation of potential transactions involving the sale of the Company. EpiCept
is considering various financing opportunities to obtain additional cash
resources to fund operations and clinical trials, including the sale or
licensing of assets and the sale of equity securities. While the Company expects
to receive cash from sales of Ceplene®to Meda and royalties on the sales of
Ceplene®by Meda and Megapharm, such cash payments are not expected to provide
meaningful funding for the Company’s operations in 2012.

Conference Call

EpiCept will host a conference call to discuss these results and answer
questions on May 9, 2012 beginning at 9:00 a.m. Eastern 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 78786585). 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%2
F 
www.epicept.com&esheet=50270398&lan=en
-US&anchor=www.epicept.com&index=1&md5=c5c8a3e1309e1cb553e15e2599e29eda). The
webcast 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 (855) 859-2056 or from international locations (404)
537-3406 (please reference reservation number 78786585).

About EpiCept Corporation

EpiCept is focused on the development and commercialization of pharmaceutical
products for the treatment of pain and cancer. The Company's pain portfolio
includes AmiKet™, a prescription topical analgesic cream in late-stage clinical
development designed to provide effective long-term relief of pain associated
with peripheral neuropathies. The Company's lead oncology 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 other oncology
drug candidates 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.

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 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 clinical trials for AmiKet™ or
crolibulinTM will not be successful, the risk that AmiKet™ 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 AmiKet™ 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 (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fus.
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rd.yahoo.com%2F_ylt%3DAgfqFPfVOEK5M4_Rv8aJvhTjba9_%3B_ylu%3DX3oDMTEzM2pvaWgxBHBv
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-US&anchor=www.sec.gov&index=2&md5=d2ca3e24986daba40178779194fa8edd) or at
www.epicept.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2
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us.lrd.yahoo.com%2F_ylt%3DAhBuoawHw6iS3RhJOH9dNNfjba9_%3B_ylu%3DX3oDMTE2OGhhcWs4
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8&lan=en
-US&anchor=www.epicept.com&index=3&md5=f7fec6bfb380bd511de31b3f8e61c7fa). 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)
                            March 31,           December 31,
                            2012                2011

Cash and cash               $          5,081                    $  6,378
equivalents
Inventory                              374                         360
Property and equipment,                102                         120
net
Total assets                $          6,162                    $  7,521

Accounts payable and        $          3,042                    $  3,333
other accrued
liabilities
Deferred revenue                       12,724                      12,947
Notes and loans payable                7,230                       8,022
Total stockholders’                    (17,141  )                  (17,146  )
deficit
Total liabilities and       $          6,162                    $  7,521
stockholders’ deficit

EpiCept
Corporation and
Subsidiaries
(Unaudited)
Selected
Consolidated
Statement of
Operations Data
(in $000s except
share and per
share data)

                      Three Months
                      Ended March
                      31,
                      2012                      2011

Revenue               $             241                 $  238
Costs and
expenses:
Cost of goods                       1                      90
sold
Selling, general                    1,430                  1,394
and
administrative
Research and                        1,296                  1,684
development
Total costs and                     2,727                  3,168
expenses
Loss from                           (2,486      )          (2,930      )
operations
Other income
(expense):
Interest income                     2                      2
Foreign exchange                    256                    504
gain
Interest expense                    (363        )          (39         )
Warrant amendment                   (935        )          —
expense
Other income                        (1,040      )          467
(expense), net
Net loss before                     (3,526      )          (2,463      )
income taxes
Income tax                          (2          )          (3          )
expense
Net loss              $             (3,528      )       $  (2,466      )
Deemed dividends                    (1,175      )          —
on convertible
preferred stock
and warrant re
-pricing
Loss attributable     $             (4,703      )       $  (2,466      )
to common
stockholders

Basic and diluted     $             (0.06       )       $  (0.04       )
loss per common
share
Weighted average                    77,056,424             60,102,966
common shares
outstanding

EpiCept Corporation and
Subsidiaries
(Unaudited)
Selected Consolidated
Statement of Cash Flows
Data
(in $000s)

                               Three Months
                               Ended March
                               31,
                               2012                  2011

Net cash used in operating     $             (3,069  )       $  (3,420  )
activities
Net cash used in investing                   —                  (1      )
activities
Net cash provided by                         1,781              11,200
financing activities
Effect of exchange rate                      (9      )          (2      )
changes on cash
Net (decrease) increase in                   (1,297  )          7,777
cash and cash equivalents
Cash and cash equivalents                    6,378              2,435
at beginning of year
Cash and cash equivalents      $             5,081           $  10,212
at end of year

EpiCept Corporation and
Subsidiaries
(Unaudited)
Selected Consolidated
Statement of Stockholders’
Deficit Data
(in $000s)

                                 Three Months
                                 Ended March
                                 31,
                                 2012                   2011

Stockholders’ deficit at         $             (17,146  )       $  (14,135  )
beginning of year

Net loss for the period                        (3,528   )          (2,466   )
Stock-based compensation                       245                 236
expense
Foreign currency translation                   (264     )          (531     )
adjustment
Share and warrant issuance                     1,833               10,873
Warrant amendment expense                      935                 —
Exercise of warrants                           784                 —

Stockholders’ deficit at end     $             (17,141  )       $  (6,023   )
of year

# # #

*Azixa is a registered trademark of Myrexis, 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:
LHA
Kim Sutton Golodetz, 212-838-3777
kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
bvoss@lhai.com
@LHA_IR_PR

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