PRELIMINARY PROXY STATEMENT FOR MERGER FILED WITH SEC
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,
2013, and provided an update on the Company’s planned merger with Immune
Pharmaceuticals, Ltd. (Immune).
Robert Cook, Interim President and CEO of EpiCept, commented, “With the filing
of the preliminary proxy, we have achieved an important interim step towards
completing the merger with Immune, which is now anticipated to occur in the
third quarter of 2013. “In the meantime,” he added, “while we are intently
focused on completing the merger we are continuing activities with respect to
our product pipeline. During the quarter and with Immune’s assistance, we
restarted our efforts to partner AmiKet™ for Phase III development. In addition,
the clinical trial of crolibulin being run by the National Cancer Institute is
nearing the commencement of Phase II, and Phase I results will be reported at
this year’s meeting of the American Society of Clinical Oncology (ASCO) at the
end of the month.”
Business Highlights
· AmiKet™ is a prescription topical analgesic cream designed to provide long
-term relief from the pain of peripheral neuropathies, which affects more than
15 million people in the U.S. During the first quarter of 2013, EpiCept re
-energized its efforts, with assistance from Immune, to partner AmiKet™ for
Phase III development and discussions with several prospective partners have
commenced. EpiCept has been granted permission by the U.S. Food and Drug
Administration (FDA) to commence Phase III development and Fast Track
designation was granted in April 2012. The FDA also agreed that a Special
Protocol Assessment is available with respect to the protocol for the first
Phase III trial in chemotherapy-induced peripheral neuropathy (CIPN). EpiCept
has also received formal scientific advice from the Committee for Medicinal
Products for Human Use (CHMP) of the European Medicines Agency (EMA) for the
Phase III clinical and nonclinical development and subsequent Marketing
Authorization Approval (MAA) filing of AmiKet™ in the treatment of CIPN.
· Crolibulin™ is a vascular disruption agent (VDA) that has demonstrated
potent anti-tumor activity in both preclinical and early clinical studies. In
December 2010 the National Cancer Institute initiated a Phase Ib/II trial for
crolibulin™ to assess safety and efficacy in combination with cisplatin in
patients with anaplastic thyroid cancer. The Phase I safety portion of the trial
has completed, and the results will be presented at the upcoming ASCO meeting in
Chicago. The Phase II randomized efficacy proof-of-concept study is expected to
commence in the third quarter of 2013.
Financial and Operating Highlights
EpiCept’s net loss attributable to common stockholders for the first quarter of
2013 was $1.3 million, or $0.01 per share, compared with a net loss attributable
to common stockholders of $4.7 million, or $0.06 per share, for the first
quarter of 2012. The net loss attributable to common stockholders for the first
quarter of 2012 included $1.2 million of deemed dividends on convertible
preferred stock.
First Quarter 2013 vs. First Quarter 2012
Revenue
The Company recognized revenue of $0.4 million and $0.2 million during the first
quarters of 2013 and 2012, respectively. Revenue consisted primarily of the
recognition of license fee payments previously received from the Company’s
partners, with $0.3 million related to the sale of Ceplene®during the first
quarter of 2013.
Cost of Goods Sold
Cost of goods sold in the first quarter of 2013 of $0.1 million consisted
primarily of the cost for Ceplene®inventory sold during the quarter. Cost of
goods sold in the first quarter of 2012 was immaterial.
Selling, General and Administrative (SG&A) Expense
SG&A expense in the first quarter of 2013 decreased by 43%, or $0.6 million, to
$0.8 million from $1.4 million in the first quarter of 2012. The Company expects
general and administrative expenses to remain at approximately current levels
through the close of the merger with Immune.
Research and Development (R&D) Expense
R&D expense in the first quarter of 2013 decreased by 77%, or $1.0 million, to
$0.3 million from $1.3 million in the first quarter of 2012. This decrease was
primarily related to a $0.5 million reduction in clinical trial expenses in
connection with the sale of EpiCept’s rights to Ceplene®in Europe and certain
Pacific Rim countries in June 2012 and a $0.3 million reduction in salary
-related expenses resulting from a reduction of staff in 2012. The Company
expects R&D expense to remain at approximately current levels through the close
of the merger with Immune.
Other Income (Expense)
Other income (expense) in the first quarter of 2013 amounted to net expense of
$0.2 million compared with net expense of $1.0 million in the first quarter of
2012. The primary component of other expense in 2013 was interest expense
related primarily to the Company’s senior secured term loan. 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 gain of
$0.3 million.
Liquidity
EpiCept had approximately $0.3 million in cash and cash equivalents as of March
31, 2013. In addition, EpiCept’s lender has restricted $0.7 million of the
Company’s cash, with which EpiCept is required to make monthly interest payments
on its senior secured term loan. The Company received $0.4 million of net cash
from Immune during the first quarter of 2013 through the issuance of
approximately 3.2 million shares of EpiCept common stock, received an additional
$0.1 million in April and May 2013 through the issuance of approximately 0.7
million shares of common stock to Immune and an additional $0.1 million in May
2013 by entering into a loan pursuant to the merger agreement with Immune.
EpiCept now anticipates the merger with Immune will close during the third
quarter of 2013, subject to satisfaction of certain customary closing
conditions. However, as additional funds will be required prior to the merger
closing, EpiCept is coordinating with Immune in considering various transactions
to obtain additional cash resources to fund operations, including additional
funding from Immune and the sale or licensing of assets. EpiCept believes that
adequate funding to continue operations through the merger closing will be
available from Immune. If, however, EpiCept is unable to obtain funding from
Immune on a timely basis, EpiCept may be forced to further reduce expenses or
curtail operations. Any funding obtained from third parties during the period
leading up to the closing of the merger will not affect the merger ownership
ratio.
EpiCept’s obligations under its outstanding loan with MidCap Financial LLC are
expected to be assumed by the combined company upon closing. Currently, interest
only is being paid on the loan on a monthly basis. EpiCept and Immune have
agreed to indicative terms and conditions offered by MidCap Financial related to
the loan’s restructure upon the merger closing. Negotiations are currently
ongoing regarding the treatment of the loan prior to the closing of the merger.
EpiCept expects to report interim results for the three months ending June 30,
2013 on or about August 15, 2013.
Additional Merger Information
The terms of the merger agreement between EpiCept and Immune provide that, upon
the closing of the transaction, EpiCept will issue shares of its common stock to
Immune shareholders in exchange for all outstanding shares of Immune and issue
options and warrants to purchase shares of its common stock in exchange for
certain options and warrants to purchase shares of Immune. EpiCept shareholders
will own approximately 19% of the combined company and Immune shareholders will
own approximately 81%, calculated on an adjusted fully diluted basis. The merger
ratio initially excludes the exercise or conversion of certain EpiCept options
and warrants whose exercise/conversion prices equal or exceed $0.60 per EpiCept
share.
The combined company will be named Immune Pharmaceuticals Inc. and have dual
headquarters in Herzliya-Pituach, Israel and in the New York City area, with
research laboratories in Rehovot, Israel. Daniel Teper, PharmD, Chief Executive
Officer of Immune Pharmaceuticals Ltd., will be the Chairman and CEO of the
combined company. Dr. David Sidransky, Director of Head and Neck Research
Division, Professor of Oncology at the Johns Hopkins School of Medicine, and a
former Vice Chairman of the Board of Directors of ImClone Systems, will be the
Vice Chairman of the Board of the combined company. The board of directors of
the combined company will consist of Dr. Daniel Teper, Dr. David Sidransky, the
remainder of the current board of directors of Immune, which consists of Herve
de Kergrohen, Isaac Kobrin, Pierre Albouy and Ana Stancic, and Robert W. Cook,
our current Interim President, Chief Executive Officer and Chief Financial
Officer, who will also serve as the Chief Financial Officer of the combined
company following the Merger. The combined company plans to assume EpiCept’s
common stock listings on the OTCQX and on the NASDAQ OMX Stockholm Exchange.
In connection with the proposed merger transaction, EpiCept has filed a
preliminary proxy statement with the U.S. Securities and Exchange Commission
(SEC) and will file a definitive proxy statement with the SEC seeking
appropriate stockholder approval. STOCKHOLDERS OF EPICEPT AND OTHER INVESTORS
ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS TO THE PRELIMINARY PROXY STATEMENT), WHICH IS AVAILABLE NOW, AND THE
DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THE
DEFINITIVE PROXY STATEMENT) WHEN IT BECOMES AVAILABLE, REGARDING THE PROPOSED
TRANSACTION BECAUSE IT CONTAINS AND WILL CONTAIN IMPORTANT INFORMATION.
EpiCept's stockholders can obtain a copy of the preliminary proxy statement, and
will be able to obtain a copy of the definitive proxy statement when it becomes
available, as well as other filings containing information about Immune and
EpiCept, without charge, at the SEC's Internet site
(www.sec.gov (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fww
w
.sec.gov&esheet=50635840&lan=en
-US&anchor=www.sec.gov&index=1&md5=a592b3f58a2f37112f09b3959269d2fb)). Copies of
the preliminary proxy statement, and the definitive proxy statement when it
becomes available, and any filings with the SEC that are incorporated by
reference in the proxy statement can also be obtained, without charge, by
directing a request to EpiCept Corporation, 777 Old Saw Mill River Rd,
Tarrytown, NY 10591, Attention: Investor Relations, Telephone: (914) 606-3500.
Participants in the Solicitation
EpiCept and its directors and executive officers and Immune and its directors
and executive officers may be deemed to be participants in the solicitation of
proxies from the stockholders of EpiCept in connection with the proposed
transaction. Computer Share AB will assist EpiCept in soliciting proxies from
Swedish stockholders. Information regarding the direct and indirect interests of
these directors and executive officers and Computer Share AB in EpiCept, Immune
and the merger transaction is included in the preliminary proxy statement, and
will be included in the definitive proxy statement when it becomes available, of
EpiCept referred to above. Additional information regarding the directors and
executive officers of EpiCept is also included in EpiCept's Annual Report on
Form 10-K for the fiscal year ended December 31, 2012, which was filed with the
SEC on March 5, 2013. This document is available free of charge at the SEC's web
site
(www.sec.gov (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fww
w
.sec.gov&esheet=50635840&lan=en
-US&anchor=www.sec.gov&index=2&md5=7e3a54c015f4d06f3130cc42d73d1ae5)) and from
Investor Relations at EpiCept at the address described above.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended (the "Act"). The securities issued in exchange for all of the
outstanding shares of Immune will not be and have not been registered under the
Act and may not be offered or sold in the United States absent registration or
an applicable exception from registration requirements.
The merger agreement and any accompanying issuance of shares by Immune
Pharmaceuticals are not, under any circumstances, to be construed as an
advertisement or a public offering of securities in Israel. Any public offer or
sale of securities in Israel may be made only in accordance with the Israeli
Securities Act-1968 (which requires, inter alia, the filing of a prospectus in
Israel or an exemption therefrom).
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 product Ceplene®, when used
concomitantly with low-dose IL-2, is intended as remission maintenance therapy
in the treatment of AML for adult patients who are in their first complete
remission. The Company sold all of its rights to Ceplene®in Europe and certain
Pacific Rim countries and a portion of its remaining Ceplene®inventory to Meda
AB in June 2012. Ceplene®is licensed to MegaPharm Ltd. to market and sell in
Israel and EpiCept has retained its rights to Ceplene®in all other countries,
including countries in North and South America. 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.
About Immune Pharmaceuticals Ltd.
Immune Pharmaceuticals Ltd. is an Israel- and U.S.-based biopharmaceutical
company focused on the development of next-generation antibody therapeutics to
address unmet medical needs in the treatment of inflammatory diseases and
cancer. Immune licensed worldwide rights for systemic indications of
bertilimumab from iCo Therapeutics (TSX: ICO) in June 2011, while iCo retained
rights to all ophthalmic indications. iCo originally licensed exclusive
worldwide rights to bertilimumab in 2006 from MedImmune Limited (formerly known
as Cambridge Antibody Technology Limited), the global biologics unit of
AstraZeneca. Additionally, Immune has licensed from Yissum, the Technology
Transfer Company of the Hebrew University of Jerusalem, injectable applications
of the antibody nanoparticle conjugate technology (NanomAbs®) developed by Prof.
Shimon Benita. For more information, visit the Immune website at
www.immunepharmaceuticals.com (http://cts.businesswire.com/ct/CT?id=smartlink&ur
l
=http%3A%2F%2Fwww.immunepharmaceuticals.com&esheet=50635840&lan=en
-US&anchor=www.immunepharmaceuticals.com&index=3&md5=38216ac3ca194c62ee4c1031145
3
60dc).
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. You are urged
to consider statements that include the words “may,” “will,” “would,” “could,”
“should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,”
“anticipates,” “intends,” “continues,” “forecast,” “designed,” “goal” or the
negative of those words or other comparable words to be uncertain and forward
-looking. Such forward-looking statements include statements that 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 we may be unable to complete the proposed
merger transaction with Immune Pharmaceuticals; 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 clinical trials
for AmiKet™ or crolibulin™ will not be successful; the risk that AmiKet™,
Azixa®or crolibulin™ 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 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 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.
l
rd.yahoo.com%2F_ylt%3DAgfqFPfVOEK5M4_Rv8aJvhTjba9_%3B_ylu%3DX3oDMTEzM2pvaWgxBHBv
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wMyBHNlYwNuZXdzYXJ0Ym9keQRzbGsDd3d3c2VjZ292%2FSIG%3D15t064n6f%2F**http%253A%2Fct
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.businesswire.com%2Fct%2FCT%253Fid%3Dsmartlink%2526url%3Dhttp%25253A%25252F%2525
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Fwww.sec.gov%2526esheet%3D6170045%2526lan%3Den_US%2526anchor%3Dwww.sec.gov%2526i
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dex%3D2%2526md5%3D61ec7b72044301e411e3335754ee5c07&esheet=50635840&lan=en
-US&anchor=www.sec.gov&index=4&md5=f05a1f7d32d8ddd8e9a6eb37a203bd09) or at
www.epicept.com (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2
F
us.lrd.yahoo.com%2F_ylt%3DAhBuoawHw6iS3RhJOH9dNNfjba9_%3B_ylu%3DX3oDMTE2OGhhcWs4
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HBvcwMzBHNlYwNuZXdzYXJ0Ym9keQRzbGsDd3d3ZXBpY2VwdGNv%2FSIG%3D1659oglun%2F**http%2
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3A%2Fcts.businesswire.com%2Fct%2FCT%253Fid%3Dsmartlink%2526url%3Dhttp%25253A%252
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2F%25252Fwww.epicept.com%2526esheet%3D6170045%2526lan%3Den_US%2526anchor%3Dwww.e
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icept.com%2526index%3D3%2526md5%3D8b3a48c3367e26fcfbd15295b6d82118&esheet=506358
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0&lan=en
-US&anchor=www.epicept.com&index=5&md5=2c6c3b400fb67f144c99470fb8929690). 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,
2013 2012
Cash and cash $ 317 $ 172
equivalents
Property and equipment, 49 56
net
Total assets $ 1,257 $ 1,328
Accounts payable and $ 4,120 $ 3,513
other accrued
liabilities
Deferred revenue 7,736 7,810
Notes and loans payable 4,012 3,975
Total stockholders’ (14,611 ) (13,969 )
deficit
Total liabilities and $ 1,257 $ 1,328
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,
2013 2012
Revenue $ 376 $ 241
Costs and expenses:
Cost of goods sold 143 1
Selling, general and administrative 810 1,430
Research and development 330 1,296
Total costs and expenses 1,283 2,727
Loss from operations (907 ) (2,486 )
Other income (expense):
Interest income — 2
Foreign exchange gain — 256
Interest expense (188 ) (363 )
Warrant amendment expense — (935 )
Other income (expense), net (188 ) (1,040 )
Net loss before income taxes (1,095 ) (3,526 )
Income tax expense (5 ) (2 )
Net loss $ (1,100 ) $ (3,528 )
Deemed dividends on convertible — (1,175 )
preferred stock and warrant re
-pricing
Loss attributable to common $ (1,100 ) $ (4,703 )
stockholders
Basic and diluted loss per common $ (0.01 ) $ (0.06 )
share
Weighted average common shares 106,638,450 77,056,424
outstanding
EpiCept Corporation and
Subsidiaries
(Unaudited)
Selected Consolidated
Statement of Cash Flows
Data
(in $000s)
Three Months Ended March 31,
2013 2012
Net cash used in operating $ (454 ) $ (3,069 )
activities
Net cash provided by 187 —
investing activities
Net cash provided by 410 1,781
financing activities
Effect of exchange rate 1 (9 )
changes on cash
Net increase (decrease) in 145 (1,297 )
cash and cash equivalents
Cash and cash equivalents 172 6,378
at beginning of period
Cash and cash equivalents $ 317 $ 5,081
at end of period
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Stockholders’ Deficit Data
(in $000s)
Three Months Ended March 31,
2013 2012
Stockholders’ deficit at beginning of period $ (13,969 ) $ (17,146 )
Net loss for the period (1,100 ) (3,528 )
Stock-based compensation expense 47 245
Foreign currency translation adjustment 1 (264 )
Share and warrant issuance 410 1,833
Warrant amendment expense — 935
Exercise of warrants — 784
Stockholders’ deficit at end of period $ (14,611 ) $ (17,141 )
As of May 15, 2013, EpiCept had 113,754,030 common shares outstanding.
iCept 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
EpiCept Reports First Quarter 2013 Operating and Financial Results
| Source: Immune Pharmaceuticals Inc
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