EpiCept Corporation Reports 2005 Operating And Financial Results

ENGLEWOOD CLIFFS, N.J., March 15 /PRNewswire-FirstCall/ -- EpiCept Corporation today announced operating and financial results for the year ended December 31, 2005. The announcement marks EpiCept's first financial report since it became a publicly-traded company after its merger with Maxim Pharmaceuticals, Inc. which was completed on January 4, 2006.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020513/NYM112LOGO )

"As a result of the transaction, EpiCept emerged as a well differentiated specialty pharmaceutical company with a balanced portfolio focused on the topical delivery of analgesics and treatments for certain types of cancer," said Jack Talley, CEO of EpiCept. "Following our recent financing transaction, we now have the resources we need to move forward to the important milestones we anticipate in 2006, including the outcomes of several clinical trials by EpiCept and our licensees, the initiation of important clinical trials sponsored by EpiCept, as well as the expected submission of our Marketing Authorization Application for Ceplene in Acute Amyloid Leukemia in Europe."

Financial and Operating Highlights

Merger with Maxim Pharmaceuticals: EpiCept Became a Public Company

After its merger with Maxim, EpiCept became a publicly-traded company and started trading on the Nasdaq National Market and the Stockholm Exchange in January 2006. The new company combines a relatively lower-risk product pipeline of commercially promising topical pain therapies with the upside potential of a late-stage cancer product and the biopharmaceutical discovery capabilities for apoptosis inducers designed to address unmet medical needs in oncology.

In connection with the merger, EpiCept issued approximately 5.8 million shares of its common stock to Maxim stockholders in exchange for all of the outstanding shares of Maxim, with Maxim stockholders receiving 0.203969 of a share of EpiCept common stock for each share of Maxim common stock. EpiCept stockholders retained approximately 72% of our common stock, and the former Maxim stockholders received approximately 28% of outstanding shares of EpiCept's common stock at the closing of the merger.

EpiCept raised $11.6 million in a private placement

In February 2006, EpiCept announced that it raised $11.6 million in gross proceeds through a private placement of common stock and warrants. In connection with the private placement, EpiCept issued approximately 4.1 million shares of its common stock at $2.85 per share and five-year warrants to purchase up to approximately 1.0 million shares of common stock at an exercise price of $4.00 per share. As a result of the private placement, the number of EpiCept common shares currently outstanding is approximately 24.5 million shares.

Milestone Payment from Adolor

In September 2005, EpiCept announced it had received a milestone payment from Adolor Corporation (http://www.adolor.com) in connection with Adolor's initiation of a U.S. Phase II trial of a sterile lidocaine patch trademarked by EpiCept as LidoPAIN(R) SP, a product candidate for the treatment of post- surgical incisional pain.

EpiCept is currently conducting its own pivotal scale Phase III trial of LidoPAIN SP in Europe. The clinical trial is a randomized, double-blind, placebo-controlled trial in which at least 500 patients who underwent hernia repair will receive a LidoPAIN SP patch or placebo patch. EpiCept expects to report the outcome of this trial later in 2006.

2005 Net Loss Narrowed

For the year ending December 31, 2005, EpiCept's net loss attributable to common shareholders narrowed 6 percent to $8.5 million, or $4.95 per basic and diluted share, from $9.0 million, or $5.35 per basic and diluted share, for the year ended December 31, 2004. The Company reported revenues of $828,000 in 2005, compared to $1.1 million in 2004. Since December 31, 2005, cash available from the merger with Maxim and the proceeds of the private placement after applicable fees and expenses, increased EpiCept's available cash and cash equivalents by approximately $26 million.

Financial Impact of Merger

As a result of the merger, EpiCept will report the consolidated financial statements beginning with the quarter ending March 31, 2006. EpiCept will account for the merger as an asset acquisition. The total purchase price of the transaction is approximately $45.2 million, of which approximately $26.7 million was allocated to acquired in-process research and development and was immediately expensed upon the closing of the merger.

In connection with the merger, EpiCept's Series A, B and C Preferred Stock were converted into approximately 4.5 million shares of common stock. The Company also issued 2.7 million shares of common stock upon conversion of approximately $12.3 million of previously outstanding notes and loans. In addition, approximately 4.0 million shares of common stock were issued in connection with the exercise of certain warrants. As a result of the conversions of preferred stock and notes and loans, EpiCept incurred approximately $13.0 million in expenses at the closing of the merger from beneficial conversion features representing the difference in fair value between the Company's common stock at the closing and the respective conversion rates of the preferred stock and notes and loans.

Portfolio Update

EpiCept has a balanced portfolio of product candidates in clinical development:

- One oncology product being prepared for European registration, - Three topical pain products in or ready to commence pivotal scale trials, - Three topical pain products in Phase II development, and - One oncology product in Phase I for brain cancer and solid tumors. Pain: Late-Stage Product Candidates - EpiCept NP-1 Cream - a prescription topical analgesic cream containing a patented formulation combining two FDA-approved drugs. The product is designed to provide long-term relief from the pain of peripheral neuropathies, which affect more than 15 million people in the U.S., according to a 2004 Datamonitor report. EpiCept plans to commence a Phase III clinical trial in the U.S. during 2006. LidoPAIN SP - a sterile prescription analgesic patch designed to provide sustained topical delivery of lidocaine to a post-surgical or post- traumatic sutured wound while also providing a sterile protective covering for the wound. According to Datamonitor's study "Postoperative Pain," published in April 2004, more than 53 million surgical procedures are conducted annually in the U.S. In July 2003, EpiCept entered into an agreement with Adolor for the development and commercialization of the product in North America. EpiCept believes that, if approved, LidoPAIN SP would be the first sterile prescription analgesic patch on the market. A 500 patient Phase III clinical trial commenced in Europe during the fourth quarter of 2004. EpiCept expects to complete this trial and announce the results later in 2006. If successful, this trial will form the basis for an application for marketing approval in Europe in 2007. - LidoPAIN BP - a prescription analgesic non-sterile patch designed to provide sustained topical delivery of lidocaine for the treatment of acute or recurrent lower back pain. In the U.S., 80% of the population will experience significant back pain at some time. Back pain ranks second only to headaches as the most frequent pain people experience. It is the leading reason for visits to neurologists and orthopedists and the second most frequent reason for physician visits overall. Both acute and chronic back pain are typically treated with NSAIDs, muscle relaxants or opioid analgesics. These drugs can subject the patient to systemic toxicity, significant adverse side effects and drug to drug interactions. EpiCept believes that, if approved, LidoPAIN BP would minimize adverse side effects and the need for treatment with NSAIDs, muscle relaxants and narcotic analgesics. EpiCept has completed Phase II clinical trials in the U.S. and plans to commence a pivotal Phase IIb clinical trial in the U.S. during 2006. In December 2003, EpiCept entered into an agreement with Endo Pharmaceuticals (http://www.endo.com) for the commercialization of LidoPAIN BP worldwide and granted Endo access to certain intellectual property owned by EpiCept relative to the planned commercialization of Lidoderm(R) for chronic back pain, if approved. Cancer: Ceplene

Ceplene is EpiCept's registration-stage compound for the treatment of Acute Myeloid Leukemia (AML), the most common type of leukemia in adults with an estimated 11,920 new cases reported annually in the U.S. In 2004, the company reported positive results from a randomized and controlled Phase III trial investigating Ceplene plus IL-2 (interleukin-2) in the treatment of patients with Acute Myeloid Leukemia (AML). Results demonstrated that subjects treated with Ceplene plus IL-2 experienced a statistically significant increase in the primary endpoint of leukemia-free survival compared with subjects in the control arm.

Based on this study, EpiCept is planning a filing for approval in Europe in 2006. Ceplene has been granted orphan drug status for the treatment of AML.

Cancer: MPC-6827

In December 2003, EpiCept entered into a license agreement with Myriad Genetics under which Myriad was granted the exclusive worldwide right to develop and commercialize the MX90745 series of apoptosis inducers. Under the terms of the agreement, Myriad is responsible for all clinical development and commercialization of compounds from this series. In April 2005, the company received a milestone payment from Myriad in connection with Myriad's lead development candidate, MPC-6827, entering into Phase I clinical studies in solid tumors and metastatic brain cancer. The license agreement includes additional development milestone payments and royalties on sales of MPC-6827.

The MX90745 series of apoptosis inducers was discovered utilizing EpiCept's proprietary, live-cell, caspase-based high throughput screening platform which facilitates the identification of novel, small molecule compounds capable of inducing apoptosis in a variety of cancer cell types. The efficacy-based characteristics inherent to the screening technology have identified compounds that selectively induce apoptosis through a multitude of underlying mechanisms of action. Accordingly, the EpiCept portfolio of potential drug candidates identified through the screening technology includes a number of compounds that induce apoptosis through known molecular targets, as well as novel molecular targets not previously associated with activation of apoptosis.

Conference Call

EpiCept will host a conference call to discuss these results tomorrow, March 16, 2006, at 8:30 a.m. Eastern Standard Time.

To listen to the conference call, please dial: 800-498-5196 (United States and Canada) 973-409-9254 (International) The access code for the call is 7149670

A webcast of this conference can be accessed at http://www.epicept.com. The webcast will be archived for 90 days.

A playback of the call will be available from approximately 1:00 p.m. Eastern Standard Time on March 16, 2006 through March 23, 2006 and may be accessed by dialing:

877-519-4471 (United States and Canada) 973-341-3080 (International) Please reference reservation number 7149670 About EpiCept Corporation

EpiCept is an emerging pharmaceutical company focused on unmet needs in the treatment of pain and cancer. The company has a staged portfolio with several pain therapies in late-stage clinical trials, and a lead oncology compound (for AML) with demonstrated efficacy in a Phase III trial; the compound is intended for commercialization in Europe. EpiCept is based in New Jersey, and the company's R&D team in San Diego is pursuing a drug discovery program focused on novel approaches to apoptosis.

Forward Looking Statements

This news release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Such forward-looking statements include statements regarding the proposed transaction, the efficacy, safety, and intended utilization of the Company's respective product candidates, the conduct and results of future clinical trials, and plans regarding regulatory filings, future research and clinical trials and plans regarding partnering activities. Factors that may cause actual results to differ materially include the risk that product candidates that appeared promising in early research and clinical trials do not demonstrate safety and/or efficacy in larger-scale or later clinical trials, the risk that EpiCept will not obtain approval to market its products, the risks associated with reliance on outside financing to meet capital requirements, and the risks associated with reliance on collaborative partners for further clinical trials, development and commercialization of product candidates. 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. These factors and others are more fully discussed in EpiCept's periodic reports and other filings with the SEC.

EPCT-GEN

CONTACT: Robert W. Cook, EpiCept Corporation, +1-201-894-8980,rcook@epicept.com; or Lev Janashvili, Feinstein Kean Healthcare,+1-617-761-6731, lev.janashvili@fkhealth.com

Web site: http://www.epicept.com/