TARRYTOWN, N.Y., Jan. 17 /PRNewswire-FirstCall/ -- EpiCept Corporation today announced that on January 10, 2007 it received an Additional Staff Determination letter from the Nasdaq Listings Qualification Department that the Company is not in compliance with Marketplace Rule 4350(i)(1)(D)(i) (the “Rule”), a continued listing requirement of The Nasdaq Global Market, in connection with the private placement previously announced by the Company on December 21, 2006 (the “Private Placement”). Failure to comply with a continued listing requirement subjects the Company’s stock to delisting from The Nasdaq Global Market.
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The Department’s letter to the Company indicated that the Private Placement is noncompliant with the Rule because the amount of common stock issued in connection with the Private Placement was greater than the 20% allowed to be sold at a price below the greater of the Company’s book or market value without shareholder authorization. The shares of common stock sold in the Private Placement were priced at the closing market price on December 21, 2006 and the warrants had an exercise price of $1.47 ($0.01 over that market price). The Company plans to regain compliance with the Rule by either seeking (i) shareholder approval of the noncompliant terms of the Private Placement or should that alone be insufficient (ii) modifying the terms of the warrants to provide that such warrants are not exercisable until the Company obtains shareholder approval of the noncompliant terms of the Private Placement and then seeking such shareholder approval.
In addition, the letter also indicated that Section 3(e) of the Common Stock Purchase Warrant violates the Rule in that it allows for adjustments to the exercise price that could result in the warrant exercise price dropping to a level that would be below the greater of book or market value. If not given the opportunity to obtain shareholder approval, the Company plans to regain compliance with the Rule by passing a resolution of the Board of Directors of the Company not to invoke the terms of the noncompliant Section 3(e).
Further, the letter indicated that the shares of common stock in the Private Placement would be aggregated with any potential shares to be issued in accordance with a Standby Equity Distribution Agreement also dated as of December 21, 2006 (the “SEDA”), based on the overlap of investors and timing of the agreements. It is the Company’s understanding that if it remedies the non-compliance of the Private Placement, that the Private Placement and the SEDA would not be aggregated. It is the Company’s plan (as outlined above) to obtain shareholder approval for the Private Placement.
Nasdaq may not agree to the plan and the Company may not be successful in implementing the plan, which could result in the Company’s common stock being delisted from The Nasdaq Global Market.
The Company responded to the letter on January 17, 2007.
The Nasdaq Listing Qualifications Panel conducted a hearing on December 14, 2006, relating to an earlier notification of the Company’s failure to maintain a market value of its listed securities over $50 million. The Private Placement and SEDA were part of the Company’s plan to regain compliance with that provision. The Company is awaiting the Panel’s decision, and the Panel may take the further noncompliance into consideration in rendering its decision. The Company’s securities remain listed on The Nasdaq Global Market pending the Panel’s decision. In the event the Company’s securities are delisted from The Nasdaq Global Market, the Company intends to apply to have its listing transferred to The Nasdaq Capital Market. The Company’s securities may also be eligible to trade on the over-the-counter market.
Jack Talley, President and CEO, stated, “We are confident that the long-term prospects for the Company are positive and we remain focused on meeting the compliance standards of the Nasdaq Global Market.”
About EpiCept Corporation
EpiCept is focused on unmet needs in the treatment of pain and cancer. EpiCept has a staged portfolio of pharmaceutical product candidates with several pain therapies in late-stage clinical trials, and a lead oncology compound (for acute myeloid leukemia, or AML) with demonstrated efficacy in a Phase III trial; a marketing authorization application for this compound has been submitted in Europe. EpiCept is based in Tarrytown, N.Y., and its research and development team in San Diego is pursuing a drug discovery program focused on novel approaches to apoptosis.
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 EpiCept’s 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 EU, 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 EpiCept will not obtain approval to market any of its product candidates, the risks associated with reliance on additional outside financing to meet its capital requirements, 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; competition; litigation; the potential delisting of our common stock by the Nasdaq Global Market; risks associated with the material weaknesses in our internal controls and the outcome of our SOX 404 audit; and risks associated with our ability to protect our intellectual property. These factors and other material risks are more fully discussed in EpiCept’s periodic reports, including its 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 EpiCept’s 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.
EPCT - GEN
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CONTACT: Robert W. Cook, +1-914-606-3500, rcook@epicept.com, of EpiCeptCorporation; Investors: Kim Sutton Golodetz, +1-212-838-3777,kgolodetz@lhai.com, or Bruce Voss, +1-310-691-7100, bvoss@lhai.com, both ofLippert/Heilshorn & Associates for EpiCept; Media: Francesca T. DeVellis,+1-617-577-8110, francesca.devellis@fkhealth.com, of Feinstein KeanHealthcare for EpiCept
Web site: http://www.epicept.com/
