EpiCept first quarter net loss decreases to $2.5 million

EpiCept CorporationMay 10 2011

“EpiCept made substantial progress with its most important clinical projects during the first quarter of 2011”

EpiCept Corporation (Nasdaq and Nasdaq OMX Stockholm Exchange: EPCT) today announced operating and financial results for the three months ended March 31, 2011, and provided an update with respect to the Company's key business initiatives.

"EpiCept made substantial progress with its most important clinical projects during the first quarter of 2011," stated Jack Talley, President and Chief Executive Officer of EpiCept. "We were delighted with the excellent clinical results for AmiKet™, formerly known as EpiCept™ NP-1, in the treatment of chemotherapy-induced neuropathy, particularly with respect to its activity in relieving the suffering of cancer patients who have undergone taxane therapy. We were also pleased to have received the support of key opinion leaders concerning the design of the Ceplene® Phase III confirmatory clinical trial." Mr. Talley added, "With the recent submission of the application for Special Protocol Assessment with the FDA along with a strengthened cash position, we believe we are well positioned to meet our important objectives for the rest of 2011."

Business Update

Financial and Operating Highlights

EpiCept's net loss for the first quarter of 2011 was $2.5 million, or $0.04 per share, compared with a net loss of $4.5 million, or $0.10 per share, for the first quarter of 2010. As of March 31, 2011, EpiCept had cash and cash equivalents of $10.2 million.

First Quarter 2011 vs. First Quarter 2010

Revenue

The Company recognized revenue of $0.2 million during each of the first quarters of 2011 and 2010. For each of the first quarters of 2011 and 2010, revenue consisted primarily of the recognition of license fee payments previously received from the Company's partners.

Cost of Goods Sold

Cost of goods sold in the first quarter of 2011 was $0.1 million, consisting primarily of a $0.1 million expense for Ceplene^® inventory the Company believes will not be sold prior to reaching its product expiration date.

Selling, General and Administrative Expense

Selling, general and administrative expense in the first quarter of 2011 decreased by 32%, or $0.7 million, to $1.4 million compared with $2.1 million in the first quarter of 2010. The decrease was primarily related to lower selling expenses and marketing salaries.

Research and Development (R&D) Expense

R&D expense in the first quarter of 2011 decreased by approximately 17%, or $0.3 million, to $1.7 million compared with $2.0 million in the first quarter of 2010. The decrease was primarily related to lower regulatory fees and clinical trial expenses for Ceplene^®.

Other Income (Expense)

Other income (expense) during the first quarter of 2011 amounted to net income of $0.5 million, compared with net expense of $0.6 million in the first quarter of 2010. The primary component of other income (expense) in both quarters is interest expense and foreign exchange gain (loss).

Liquidity

As of March 31, 2011 EpiCept had $10.2 million in cash and cash equivalents. In February 2011, the Company received approximately $6.6 million in net proceeds from the issuance of approximately 8.9 million shares of its common stock at $0.80 per share, and five-year warrants to purchase up to approximately 3.6 million shares of common stock at an exercise price of $0.75 per share. In March 2011, the Company received approximately $4.3 million in net proceeds from the issuance of approximately 7.1 million shares of its common stock at $0.65 per share, and five-year warrants to purchase up to approximately 5.3 million shares of common stock at an exercise price of $0.72 per share. The Company believes that its current cash is sufficient to fund operations into 2012.

The Company continues its efforts to secure a non-equity financing transaction that, if completed, will support its current operations through 2012. The Company may decide to seek additional or alternative sources or types of financing should the transaction not close or the proceeds be less than anticipated. The Company also may receive cash from certain licensing activities during 2011.