EpiCept reports cash on hand expected to last into early 2007

By Jennifer Lanning Drey

Eugene, Ore., May 24 - EpiCept Corp. believes that the $11.6 million it raised through a private stock and warrant offering in February provided enough cash for the company to pursue its clinical milestones through early 2007, according to Robert W. Cook, chief financial officer for EpiCept.

EpiCept's portfolio consists of eight clinical product candidates in various stages of development, including three late-stage analgesic product candidates and three topical pain product candidates that are in phase 2 development.

"This balanced portfolio allows us to pursue large market opportunities and to do so in a way that minimizes our dependence on any one product opportunity," said Jack Talley, chief executive officer, speaking, like Cook, during a conference call Wednesday.

The analgesic product candidates, which combine the clinical benefits associated with topical delivery of pain medication and the low development risks inherent in utilizing Food and Drug Administration-approved drugs, are expected to successfully enter the marketplace, said Talley during the call.

The most promising of the analgesic candidates is the company's EpiCept NP-1 Cream, designed to provide long-term relief from pain associated with peripheral neuropathies, and EpiCept is scaling up production of the product in preparation for phase 3 clinical trials that are scheduled to begin next year, he said.

In addition, EpiCept's LidoPain SP, a sterile patch intended to provide sustained topical delivery of lidocaine to post-surgical and post-traumatic sutured wounds, is undergoing a pivotal-scale trial in Europe that is expected to produce results by the third quarter. Adolor Corp., EpiCept's North American partner, is conducting a phase 2 trial for LidoPain SP in the United States.

The company also plans to begin pivotal-scale clinical trials later this year on LidoPain BP, an analgesic non-sterile patch designed to provide sustained topical delivery of lidocaine for the treatment of acute or recurrent lower back pain.

'Measured' approach for oncology

EpiCept said it will take a "measured financial approach" in the development of Ceplene, its oncology product used for the treatment of acute myeloid leukemia. The drug is expected to be approved in Europe in the fourth quarter.

"We believe this product's potential in Europe balances well with the broad process of our analgesic product candidates," said Talley.

The company is also extending its measured approach toward its apoptosis discovery program, and is trying to determine the program's potential to either secure a partner, provide compounds for in-house development or attract the capital needed to continue to sustain it.

The apoptosis discovery program is working to advance EPC2407 - a small-molecule apoptosis inducer discovered at the company - toward an Investigational New Drug filing later this year for treatment of certain types of cancer.

$56.6 million Q1 loss

EpiCept reported a net loss for the first quarter of $56.6 million, or $2.59 per share, compared to a net loss of $1.9 million, or $1.11 per share, in the same quarter of 2005.

The loss includes expenses resulting from its merger with Maxim Pharmaceuticals Inc., whose operating expenses are included in EpiCept's consolidated statement of operations beginning Jan. 5.

Of EpiCept's $43.1 million in operating expenses for the first quarter, $33.7 million was attributable to in-process research and development, a non-cash charge resulting from the company's merger accounting with Maxim, according to a news release.

The company's purchase of Maxim was valued at $45.1 million, including merger costs of $3.7 million.

EpiCept recognized deferred revenue in the first quarter of $0.3 million from upfront licensing fees and milestone payments received from its partners Adolor and Endo, and $19,000 in royalties with respect to acquired Maxim technology, according to the release.

On March 31, the company's cash and marketable securities totaled $15.5 million. Cash and equivalents at Dec. 31, 2005 were $403,000.

During the balance of 2006, EpiCept expects its rate of cash use to moderate as it resolves obligations assumed at the merger and implements moves intended to reduce costs, Cook said in Wednesday's call.

Based in Englewood Cliffs, N.J., EpiCept is a biopharmaceutical company focused on topical treatments for pain.

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