EpiCept Corporation Reports Second 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 six
months ended June 30, 2010, and provided an update with respect to the
Company's key business initiatives.
“The filing of the New Drug Application (NDA) for Ceplene® with the U.S.
Food and Drug Administration (FDA) was the highlight of our second
quarter,” commented Jack Talley, President and Chief Executive Officer
of EpiCept. “Also during the quarter our commercial partner Meda moved
very quickly to launch Ceplene® in the United Kingdom and Germany, and
filed applications for reimbursement in France, Italy and Spain. It will
take time for Ceplene's adoption to become widespread throughout Europe,
but we believe Meda is implementing a marketing strategy that ultimately
will maximize Ceplene's impact in Europe in the treatment of AML
patients in first remission and provide meaningful financial returns to
both Meda and EpiCept,” he added.
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 June 2010, EpiCept submitted an NDA with the FDA to market Ceplene®
with low-dose IL-2 for the prevention of relapse of AML patients in
first remission. Ceplene® has been granted orphan drug status in the
United States, which provides seven years of marketing exclusivity from
the approval date. Marketing applications are also under regulatory
review in Canada and Israel.
EpiCept intends to market Ceplene® in the United States. During the
second quarter of 2010 the company added a senior director of marketing
to assist in the design and implementation of a U.S. marketing and
launch strategy. Significant pre-approval activities are underway in
order to facilitate a timely commercial launch of Ceplene® upon receipt
of regulatory approval. A marketing strategy is being devised that is
tailored to current treatment paradigms in the U.S. and also reflects
the experiences from the European strategy being executed by Meda.
EpiCept believes that it can effectively reach target physicians in the
U.S. with a specialty sales force.
Adoption of Ceplene is likely to be an ongoing process. Modifications to
treatment patterns in orphan diseases like AML are heavily influenced by
a small number of key academic thought-leaders at major institutions
with nationally recognized expertise. Each market requires time to build
awareness, acceptance and adoption of the treatment. Meda launched
marketing activities during the second quarter of 2010 in the United
Kingdom, Germany and Austria. In each of these markets Meda has tailored
a specific strategy for gaining acceptance and generating usage of
Ceplene®/IL-2. Sales of Ceplene® are expected to be modest in 2010 and
2011 and to grow significantly thereafter.
In the U.K., Meda has deployed a team of medical science liaisons to
call on Key Opinion Leaders (KOLs) to educate them on Ceplene's clinical
benefits. The KOLs will help to establish new treatment guidelines and
include the product on national cooperative group studies that will
provide exposure and credibility. At several leading hematology centers
in England, agreements have been completed to allow applications for
inclusion of Ceplene®/IL-2 on their respective formularies, which once
accepted will allow hematologists to prescribe Ceplene® for their
patients. Progress has been made at both private and National Health
Service hospitals. Meda has also applied to the Scottish Medicines
Council for approval to sell Ceplene® in Scottish medical centers.
Formulary approvals are expected to occur over the remainder of 2010.
In Germany, the marketing strategy is similarly focused on KOLs. The
strategy requires the involvement of KOLs to use Ceplene® initially in
their clinical trials while key Meda account managers implement a sales
and marketing program based on one-on-one meetings, placement of journal
advertisements, and product presence at national and international
congresses.
Ceplene® is expected to be rolled out to other countries in the European
Union over the next 12 months. Applications for product reimbursement
have been submitted and must be approved by the remaining Big Five
European countries of France, Italy and Spain before a formal commercial
launch can occur. These approvals are expected to be received before the
end of the year.
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 beginning in late 2011.
EpiCept's efforts to expand the uses for Ceplene® in other hematologic
diseases via a study led by Groupe Francophone des Myélodysplasies
continued during the quarter. A study that will examine the effects of
Ceplene® and low-dose IL-2 in combination with Vidaza® (azacitidine) in
the treatment of patients with higher risk myelodysplastic syndrome
(MDS), a bone marrow disease that can progress to AML, is nearing
commencement. This study is expected to enroll patients beginning later
this year.
· 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. EpiCeptTM NP-1 is
currently being studied in a chemotherapy-induced peripheral neuropathy
trial being conducted by the National Cancer Institute (NCI)-funded
Community Clinical Oncology Program. The 400-patient enrollment target
in this study has been exceeded and top-line data should be available
before year-end 2010. EpiCept intends to partner NP-1 prior to the
commencement of the Phase III program, and ultimately to have that
partner market the product globally upon approval. Partnership
discussions are continuing.
·
CrolibulinTM - a vascular disruption agent that has demonstrated potent
anti-tumor activity in both preclinical and early clinical studies. The
Company is anticipating the initiation this year of 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 Myrexis,
Inc. (formerly Myriad Pharmaceuticals, Inc.), as part of an exclusive,
worldwide development and commercialization agreement. Myrexis is
currently conducting Phase II trials for Azixa™ and provided an update
on the progress of the trials at the meeting of the American Society of
Clinical Oncology (ASCO) in June 2010. In the Glioblastoma multiforme
study, six subjects achieved stable disease and two subjects had
achieved partial responses. One subject's partial response duration was
7.8 months; the additional patient's response was, at the time of the
ASCO report, 16 months in duration and has been classified as almost a
complete response. Additional data collection is ongoing in this study.
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 second quarter of 2010, the net loss attributable to common
stockholders was $4.9 million, or $0.11 per share, compared with a net
loss attributable to common stockholders of $7.1 million, or $0.18 per
share, for the second quarter of 2009. For the six months ended June 30,
2010, the net loss attributable to common stockholders was $9.4 million,
or $0.21 per share, compared with a net loss attributable to common
stockholders of $29.6 million, or $0.81 per share, for the six months
ended June 30, 2009.
For the six months ended June 30, 2009, other expense, net amounted to
$20.0 million consisting primarily of interest expense incurred 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 its common stock. As of June 30, 2010, EpiCept had cash and
cash equivalents of $8.3 million and 50.4 million shares outstanding.
Second Quarter and Six Months 2010 vs. Second Quarter and Six Months
2009
Revenue
The Company recognized revenue of $0.3 million during the second quarter
of 2010, compared with $0.1 million during the second quarter of 2009.
The Company recognized revenue of $0.4 million during the six months
ended June 30, 2010, compared with $0.2 million during the six months
ended June 30, 2009. For the second quarter of 2010, revenue consisted
primarily of the recognition of license fee payments previously received
from Meda, Myrexis, Endo Pharmaceuticals and Durect, revenues from the
sales of Ceplene® to Meda and product royalties. For the second quarter
of 2009, revenue consisted primarily of the recognition of license fee
payments previously received from Myrexis, Endo Pharmaceuticals and
Durect.
Selling, General and Administrative Expense
Selling, general and administrative expense in each of the second
quarters of 2010 and 2009 was $1.7 million. Selling, general and
administrative expense in both of the six months ended June 30, 2010 and
2009 was $3.8 million. Selling expense is expected to increase during
the year and to offset reductions in general and administrative expenses
as the Company prepares to market Ceplene® in the U.S. upon receipt of
marketing approval.
Research and Development (R&D) Expense
R&D expense in the second quarter of 2010 decreased by approximately
32%, or $1.2 million, to $2.6 million compared with $3.8 million in the
second quarter of 2009. R&D expense for the six months ended June 30,
2010 decreased by approximately 12%, or $1.4 million, to $4.6 million
compared with $6.0 million for the six months ended June 30, 2009. The
decrease in R&D expense was primarily related to lower salary and
salary-related expenses and facility costs related to closing our
research facility in San Diego in 2009, partially offset by higher
regulatory fees and clinical trial expenses for Ceplene®. A substantial
portion of the Company's R&D expense in 2010 related to regulatory costs
associated with our NDA filing of Ceplene® and follow-up with respect to
our NDS in Canada.
Other Income (Expense)
Other income (expense) during the second quarter of 2010 amounted to net
expense of $0.8 million, compared with net expense of $1.6 million in
the second quarter of 2009. Other income (expense) for the six months
ended June 30, 2010 amounted to net expense of $1.4 million, compared
with net expense of $20.0 million for the six months ended June 30,
2009. The primary component of other income (expense) in both quarters
is interest expense and foreign exchange loss. The first six months of
2009 included $19.8 million of interest expense, 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. Other expense, net for the six months ended June 30, 2010
was impacted by a $1.2 million foreign exchange loss incurred as a
result of the increased strength of the U.S. dollar compared with the
euro.
Liquidity
As of June 30, 2010 EpiCept had $8.3 million in cash and cash
equivalents. In May 2010 the Company received a $2 million payment from
Meda in connection with the first commercial sale of Ceplene® in a major
European country. In June 2010, the Company sold approximately 6.1
million shares of common stock and warrants to purchase approximately
11.0 million shares of common stock for gross proceeds of $6.7 million,
or $6.2 million net of $0.5 million in transactions costs. We also
raised proceeds of $0.1 million from sales of our common stock through
our At-the-Market program through June 30, 2010. The Company believes
that existing cash resources are sufficient to fund operations into the
fourth quarter of 2010. We expect to receive cash from certain licensing
activities and upon achievement of specified clinical milestones. We may
seek alternative sources of financing, such as issuing additional debt
or equity, should these funds be insufficient to timely meet the
Company's liquidity requirements.
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. The Company has agreed to suspend the use of
its At-the-Market program for a minimum of 90 days from the date of its
June 2010 common stock offering.
Conference Call
EpiCept will host a conference call to discuss these results and answer
questions on August 6, 2010 beginning at 9:00 a.m. Eastern 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 92351485) 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=6388280&lan=en-US&anchor=www.epicept.com
&index=1&md5=37a734de605bc772368df5bb658c67f7). 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 92351485).
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 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; 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=6388280&lan=en-US&anchor=www.sec.gov&inde
x=2&md5=dad80c382960c9bba475b68b684a32fc) 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=6388280&lan=en-US&anchor=
www.epicept.com&index=3&md5=25406eae43a3aa16d6c48ac5bdda287b). 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)
June 30,
December 31,
2010
2009
Cash and cash equivalents $ 8,347 $
5,142
Inventory 1,621
1,315
Property and equipment, net 290
360
Total assets 11,429
7,514
Accounts payable and other accrued liabilities 5,276
4,054
Deferred revenue 14,257
9,622
Notes and loans payable 1,350
1,952
Total stockholders' deficit (10,211 )
(9,079 )
Total liabilities and stockholders' deficit $ 11,429 $
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
June 30, For Six Months Ended June 30,
2010
2009 2010 2009
Product net revenues 53
— 65 —
Licensing and other revenues 198
91 381 206
Total net revenues $ 251 $
91 $ 446 $ 206
Operating expenses:
Cost of product net revenues 62
— 90 —
Selling, general and administrative 1,721
1,728 3,777 3,755
Research and development 2,552
3,813 4,592 5,983
Total operating expenses 4,335
5,541 8,459 9,738
Loss from operations (4,084 )
(5,450 ) (8,013 ) (9,532 )
Other income (expense):
Interest income 1
8 3 15
Foreign exchange (loss) gain (728 )
382 (1,244 ) 92
Interest expense (78 )
(1,714 ) (138 ) (19,833 )
Change in value of warrants and derivatives —
(305 ) — (305 )
Other income (expense), net (805 )
(1,629 ) (1,379 ) (20,031 )
Net loss before income taxes (4,889 )
(7,079 ) (9,392 ) (29,563 )
Income taxes —
— (5 ) (4 )
Net loss $ (4,889 ) $
(7,079 ) $ (9,397 ) $ (29,567 )
Basic and diluted loss per common share $ (0.11 ) $
(0.18 ) $ (0.21 ) $ (0.81 )
Weighted average common shares outstanding * 44,274,642
39,727,916 44,217,770 36,330,240
* Reflects a 1:3 reverse split effected in January 2010.
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Cash Flows Data
(in $000s)
Six Months
Ended June 30,
2010
2009
Net cash used in operating activities $ (2,755 )
$ (20,877 )
Net cash provided by (used in) investing activities 45
(64 )
Net cash provided by financing activities 5,916
34,254
Effect of exchange rate changes on cash (1 )
(4 )
Net increase (decrease) in cash and cash equivalents 3,205
13,309
Cash and cash equivalents at beginning of period 5,142
790
Cash and cash equivalents at end of period $ 8,347
$ 14,099
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statement of Stockholders Deficit Data
(in $000s)
Six
Months Ended June 30,
2010
2009
Stockholders' deficit at beginning of period $
(9,079 ) $ (17,730 )
Net loss for the period
(9,397 ) (29,567 )
Stock-based compensation expense
437 689
Foreign currency translation adjustment
1,439 (113 )
Share, option and warrant issuance
6,350 18,823
Exercise of options and warrants 39
—
Conversion of convertible subordinated notes into common stock —
24,500
Stockholders' deficit at end of period $
(10,211 ) $ (3,398 )
# # #
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 Second Quarter 2010 Operating and Financial Results
| Source: Immune Pharmaceuticals Inc
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