EpiCept Corporation Reports Third Quarter Results, Provides Business Update
Conference Call Begins at 9:00 A.M. Eastern Time Today
TARRYTOWN, N.Y.--(BUSINESS WIRE)--EpiCept Corporation (Nasdaq and OMX Nordic
Exchange: EPCT) today announced operating and financial results for the three
and nine months ended September 30, 2009, and provided an update on Ceplene® and
several of the Company's key product candidates. Ceplene® (histamine
dihydrochloride) administered with low-dose interleukin-2 (IL-2) is the
Company's treatment for the remission maintenance and prevention of relapse in
adult patients with Acute Myeloid Leukemia (AML) in first remission.
“We achieved a number of important regulatory and commercial milestones during
the quarter, particularly the acceptance for review of our NDS for Ceplene® in
Canada, and our continuing efforts to build recognition and adoption in Europe
of Ceplene® plus IL-2 as an effective treatment for AML patients,” said Jack
Talley, president and chief executive officer of EpiCept. “The hiring last week
of a senior vice president, sales and marketing, a newly created position, is
validation of our commitment to maximize the commercial success of Ceplene®. We
look forward to building upon these milestones in the fourth quarter as we
advance EpiCept forward in its evolution as a commercial enterprise,” Mr. Talley
concluded.
Business Update
Ceplene® - approved in the European Union for the remission maintenance and
prevention of relapse of patients with AML in first remission; AML is the most
deadly form of leukemia in adults.
The Company continues to aggressively pursue potential licensees for the
European marketing rights to Ceplene®. EpiCept is actively engaged in diligence
discussions with several interested parties at this time.
In June 2009 EpiCept announced a Named Patient Program for Ceplene® in Europe
and certain other markets through a partnership with IDIS. During the third
quarter, EpiCept joined the Corporate Partners program of the European
LeukemiaNet Foundation (ELN) and established a Scientific Advisory Board (SAB)
in collaboration with ELN to foster adoption of Ceplene®/IL-2 in Europe. ELN is
an EU-funded organization of physicians, scientists and patients with interest
in leukemia that aims to improve the treatment and knowledge of leukemia in
Europe. Membership of EpiCept's Ceplene® SAB consists of key opinion leaders who
collectively practice in all of the major countries in the European Union.
EpiCept recently announced the appointment of Bernard Tyrrell as senior vice
president, sales and marketing. Mr. Tyrrell has considerable oncology experience
from his prior tenure at Astra Zeneca and Otsuka. He has been given
responsibility for developing and implementing a commercialization strategy for
Ceplene® in North America, and planning and initiating efforts to build
recognition of Ceplene® in Europe prior to the conclusion of a marketing
agreement and formal commercial launch there.
During the third quarter, the Company continued patient enrollment into its
post-approval clinical study with Ceplene® following Ethics Committee and
Competent Authority approvals in Sweden, Belgium and France. This study will
enroll up to 150 patients at approximately 25 centers across Europe with sites
in Sweden, Belgium, France, the U.K., Spain 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®/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.
EpiCept also completed during the quarter a study demonstrating the
pharmacoeconomic benefits of Ceplene® for the remission maintenance of AML
patients in first remission. The study concluded that the budget impact to adopt
the use of Ceplene® plus low-dose IL-2 for AML is well within the established
per-patient reimbursement threshold for a new drug in the UK. EpiCept believes
these findings, which were presented in two separate poster presentations at the
Twelfth Annual European Congress of the International Society of
Pharmacoeconomics and Outcomes Research, will guide the pricing and
reimbursement rationale for Ceplene® in the European Union.
The Company's New Drug Submission (NDS) for Ceplene® was recently screened and
accepted for review by Health Canada. Health Canada's performance target for the
completion of review and a decision is within 300 days. EpiCept also announced
that its marketing partner recently filed an application for marketing approval
for Ceplene® with the Israeli Ministry of Health.
EpiCept continues its preparation of a New Drug Application (NDA) that will be
filed with the U.S. Food and Drug Administration (FDA). The Company is
generating certain non-clinical data that the FDA requested be part of the
submission. The Company intends to file the NDA once this data has been
obtained.
EpiCept is also continuing its efforts to expand the uses for which Ceplene® may
be an effective treatment for other hematologic diseases. The Company is working
with investigators to initiate a clinical trial of Ceplene® for the remission
maintenance of patients suffering from myelodsyplastic syndrome, a bone marrow
disease that may progress to AML. This trial is expected to commence enrollment
near year end, after receipt of relevant ethics committee approvals.
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 2009 EpiCept reported
positive top-line results from a 360-patient Phase IIb trial of NP-1 in patients
with post-herpetic neuralgia. In this trial NP-1 achieved statistically
significant pain relief compared with placebo and was statistically comparable
in pain relief to the market leader gabapentin. 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. The partnering effort commenced in the second quarter
2009 and 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
preclinical in vitro and in vivo studies, crinobulin was shown to induce tumor
cell apoptosis and selectively inhibit growth of proliferating cell lines,
including multi-drug resistant cell lines. 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 making
preparations to initiate a Phase Ib trial for the compound in combination with
other chemotherapeutic agents.
Azixa™ - a compound discovered by EpiCept and licensed to Myriad Genetics, Inc.
as part of an exclusive, worldwide development and commercialization agreement.
Myriad Pharmaceuticals, Inc., a public company formed from a spin off of the
pharmaceutical assets of Myriad Genetics, is currently conducting Phase II
trials for Azixa. Myriad Pharmaceuticals has announced its intention to disclose
the outcome of at least one of its ongoing Phase II Azixa trials at the meeting
of the American Association for Cancer Research being held November 15-18, 2009.
If successful these results could lead to Phase III registration trials for the
compound, which would trigger a milestone payment to EpiCept.
Financial Highlights
For the third quarter of 2009, the net loss attributable to common stockholders
was $4.8 million, or $0.04 per share, compared with a net loss attributable to
common stockholders of $6.2 million, or $0.09 per share, for the third quarter
of 2008. For the nine months ended September 30, 2009, the net loss attributable
to common stockholders was $34.4 million, or $0.30 per share, compared with a
net loss attributable to common stockholders of $20.0 million, or $0.36 per
share, for the nine months ended September 30, 2008. As of September 30, 2009,
EpiCept had cash and cash equivalents of $9.5 million and 132.1 million shares
outstanding.
Selling, General and Administrative Expense
Selling, general and administrative expenses in the third quarter of 2009 were
$1.9 million, down 28%, or $0.7 million, from $2.6 million in the third quarter
of 2008. The decrease was primarily attributable to lower non-cash compensation,
lender fees and legal fees. Selling, general and administrative expenses in the
first nine months of 2009 were $5.6 million, down 24%, or $1.8 million from $7.4
million in the first nine months of 2008.
Research and Development Expense
Research and development (R&D) expenses in the third quarter of 2009 were $3.2
million, up 15%, or $0.4 million, from $2.8 million in the third quarter of
2008. The increase was primarily attributable to higher clinical trial expenses
of $1.0 million as a result of our open-label trial of Ceplene® and fees paid to
terminate a license agreement, partially offset by lower salary and salary
related expenses. Our clinical effort during the third quarter of 2009 was
focused on the open-label trial of Ceplene® that will meet our post-approval
requirements with the EMEA. During the third quarter of 2008, our clinical
efforts were focused on the completion of the clinical trials of NP-1 and
preparation for the reexamination of our marketing application for Ceplene®. For
the nine months ended September 30, 2009, R&D expenses were $9.2 million, down
4%, or $0.4 million, from $9.6 million for the nine months ended September 30,
2008.
Other Income (Expense)
Other income (expense) during the third quarter of 2009 amounted to net income
of $0.2 million, compared with net expense of $0.8 million in the third quarter
of 2008. Other income, net in the third quarter of 2009 was primarily
attributable to a $0.3 million foreign exchange gain. Other expense, net in the
third quarter of 2008 was primarily attributable to a $0.6 million foreign
exchange loss. Other expense, net for the nine months ended September 30, 2009
was $19.8 million, up $16.7 million, from $3.1 million for the nine months ended
September 30, 2008. Other expense, net for the nine months ended September 30,
2009 consisted of $10.5 million in amortization of debt issuance costs and
discount and $9.4 million in interest expense related to the conversions of the
Company's February 2009 debt, and a $0.3 million decrease in the fair value of
certain warrants and derivatives. Other expense, net for the nine months ended
September 30, 2008 was primarily attributable to a $2.0 million loss on the
extinguishment of debt ($1.7 million non-cash loss) and interest expense of $1.1
million.
Net Cash Used in Operating Activities
Net cash used in operating activities for the first nine months of 2009 was
$25.7 million, compared with $11.9 million for the first nine months of 2008.
For the first nine months of 2009, cash was used primarily to fund the Company's
loss from operations, expenses related to our convertible debt financing and
increased payments to vendors. Cash used for the first nine months of 2009
included interest expense of $9.4 million as a result of the conversion of $24.5
million of the Company's 7.5556% convertible subordinated notes due 2014 into
approximately 27.2 million shares of EpiCept's common stock, which was paid from
escrowed cash established from the proceeds of the financing to make interest
payments. The Company also used $1.1 million to acquire inventory of Ceplene®
for use by IDIS and for commercial sale in Europe. The 2009 net loss was
partially offset by non-cash charges of $10.5 million of amortization of
deferred financing costs and discount on loans, $1.0 million of non-cash
stock-based compensation and $0.3 million of depreciation and amortization
expenses.
Net Cash Used in Investing Activities
Net cash used in investing activities for the first nine months of 2009 was $0.1
million, compared with net cash provided by investing activities of $0.3 million
for the first nine months of 2008. During the first nine months of 2009, cash
was used to establish restricted cash for a $9.4 million make-whole interest
payment resulting from the issuance of $25.0 million principal aggregate amount
of 7.5556% convertible senior subordinated notes. As the result of the
conversion of $24.5 million in aggregate principal amount of the 7.5556% notes,
the Company released $9.3 million from restricted cash to pay the interest on
these notes.
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the first nine months of 2009 was
$34.5 million compared with $9.9 million for the first nine months of 2008.
During the first nine months of 2009, the Company issued $25.0 million principal
aggregate amount of 7.5556% convertible senior subordinated notes, netting the
Company $14.0 million after $1.6 million in transaction costs and the
establishment of an escrow account for $9.4 million in make-whole interest. In
June 2009 the Company raised $9.6 million in gross proceeds, $8.9 million net of
$0.7 million in transaction costs, in connection with the issuance of common
stock and warrants. The Company also received proceeds of $3.8 million related
to the exercise of approximately 10.1 million common stock warrants in the first
nine months of 2009, of which $0.8 million was received during the third
quarter.
Liquidity
EpiCept's management believes that existing cash and cash equivalents will be
sufficient to meet projected operating and debt service requirements into the
second quarter of 2010. Additional funding for the Company's operations is
anticipated to be derived from sales of Ceplene® in Europe, fees from the
Company's strategic partners including a marketing partner for Ceplene® in
Europe, strategic relationships for other product candidates including NP-1 or
other financing arrangements. See our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2009 for a further discussion of the Company's
liquidity and cash position.
Conference Call
EpiCept will host a conference call to discuss these results today at 9:00 a.m.
Eastern time. To participate in the live call, please dial from the U.S. or
Canada (877) 809-8594 or from international locations (706) 758-9407 (please
reference access code 39485985). The conference call will also be broadcast live
on the Internet and can be accessed at www.epicept.com. The webcast will be
archived for 90 days.
A telephone reply of the call will be available for seven days by dialing from
the U.S. and Canada (800) 642-1687 or from international locations (706)
645-9291 (please reference reservation number 39485985).
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 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
EpiCeptTM 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, contains 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 we
are unable to find a suitable marketing partner for Ceplene® on attractive
terms, a timely basis or at all, 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 our securities may be delisted by The Nasdaq Capital Market and
that any appeal of the delisting determination may not be successful, the risk
that Myriad's development of Azixa™ will not be successful, 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 we will not be able to find a
buyer for our ASAP technology, 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.
*Azixa is a registered trademark of Myriad Genetics, Inc.
Selected financial information follows:
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Balance Sheet Data
(in $000s)
September 30, December 31,
2009 2008
Cash and cash equivalents $ 9,492 $ 790
Restricted cash 251 71
Property and equipment, net 390 502
Total assets $ 11,962 $ 2,271
Accounts payable and other accrued liabilities $ 4,046 $ 5,995
Deferred revenue 9,713 9,990
Notes and loans payable 2,440 3,552
Total stockholders' deficit (5160 ) (17,730 )
Total liabilities and stockholders' deficit $ 11,962 $ 2,271
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statements of Operations Data
(in $000s except share and per share data)
For Three Months Ended For Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenue $ 116 $ 78 $ 322 $ 169
Operating expenses:
Selling, general and administrative 1,897 2,628 5,652 7,465
Research and development 3,239 2,812 9,221 9,598
Total operating expenses 5,136 5,440 14,873 17,063
Loss from operations (5,020 ) (5,362 ) (14,551 ) (16,894
)
Other income (expense):
Interest income 11 9 26 29
Foreign exchange gain 268 (567 ) 361 (182 )
Interest expense (72 ) (243 ) (19,905 ) (1,094 )
Loss on extinguishment of debt — — — (1,975 )
Change in value of warrants and derivatives — — (305 )
113
Other income (expense), net 207 (801 ) (19,823 ) (3,109
)
Net loss before income taxes (4,813 ) (6,163 ) (34,374 ) (20,003
)
Income taxes — — (4 ) (3 )
Net loss $ (4,813 ) $ (6,163 ) $ (34,378 ) $ (20,006 )
Basic and diluted loss per common share $ (0.04 ) $ (0.09 ) $ (0.30
) $ (0.36 )
Weighted average common shares outstanding 131,222,881 69,406,850
116,482,878 56,325,365
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statements of Cash Flows Data
(in $000s)
Nine Months Ended September 30,
2009 2008
Net cash used in operating activities $ (25,714 ) $ (11,936 )
Net cash (used in) provided by investing activities (65 ) 297
Net cash provided by financing activities 34,489 9,927
Effect of exchange rate changes on cash (8 ) 50
Net increase (decrease) in cash and cash equivalents 8,702 (1,662 )
Cash and cash equivalents at beginning of period 790 4,943
Cash and cash equivalents at end of period $ 9,492 $ 3,281
EpiCept Corporation and Subsidiaries
(Unaudited)
Selected Consolidated Statements of Stockholders Deficit Data
(in $000s)
Nine Months Ended September 30,
2009 2008
Stockholders' deficit at beginning of period $ (17,730 ) $ (14,177 )
Net loss for the period (34,378 ) (20,006 )
Stock-based compensation expense 1,003 1,934
Foreign currency translation adjustment (451 ) 235
Share, option and warrant issuance 21,896 16,106
Issuance of common stock as payment of loan 24,500 —
Stockholders' deficit at end of period $ (5,160 ) $ (15,908 )
EPCT-GEN
EpiCept Corporation:
Robert W. Cook, 914-606-3500
mail@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 Corporation Reports Third Quarter Results, Provides Business Update
| Source: Immune Pharmaceuticals Inc
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