PRELIMINARY PROXY STATEMENT FOR MERGER FILED WITH SEC
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).
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)
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.
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
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.
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 equivalents
|
|
$
|
317
|
|
|
$
|
172
|
|
Property and equipment, net
|
|
|
49
|
|
|
|
56
|
|
Total assets
|
|
$
|
1,257
|
|
|
$
|
1,328
|
|
|
|
|
|
|
Accounts payable and other accrued liabilities
|
|
$
|
4,120
|
|
|
$
|
3,513
|
|
Deferred revenue
|
|
|
7,736
|
|
|
|
7,810
|
|
Notes and loans payable
|
|
|
4,012
|
|
|
|
3,975
|
|
Total stockholders’ deficit
|
|
|
(14,611
|
)
|
|
|
(13,969
|
)
|
Total liabilities and stockholders’ deficit
|
|
$
|
1,257
|
|
|
$
|
1,328
|
|
|
|
|
|
|
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 preferred stock and warrant
re-pricing
|
|
|
—
|
|
|
|
(1,175
|
)
|
Loss attributable to common stockholders
|
|
$
|
(1,100
|
)
|
|
$
|
(4,703
|
)
|
|
|
|
|
|
Basic and diluted loss per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.06
|
)
|
Weighted average common shares outstanding
|
|
|
106,638,450
|
|
|
|
77,056,424
|
|
|
|
|
|
|
|
|
|
|
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 activities
|
|
$
|
(454
|
)
|
|
$
|
(3,069
|
)
|
Net cash provided by investing activities
|
|
|
187
|
|
|
|
—
|
|
Net cash provided by financing activities
|
|
|
410
|
|
|
|
1,781
|
|
Effect of exchange rate changes on cash
|
|
|
1
|
|
|
|
(9
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
|
145
|
|
|
|
(1,297
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
172
|
|
|
|
6,378
|
|
Cash and cash equivalents at end of period
|
|
$
|
317
|
|
|
$
|
5,081
|
|
|
|
|
|
|
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.
<div class="copyright">
Copyright Business Wire 2013
</div>