-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SvjFGMkjurKTMd6uI6xjctnayGszI74/HhZ2/uNTiIrkJTqbwIkv05TyjtPKwBUM Acb5dKC/q1ikrUSuk7s2pg== 0000909518-07-000764.txt : 20070815 0000909518-07-000764.hdr.sgml : 20070815 20070815120008 ACCESSION NUMBER: 0000909518-07-000764 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070814 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070815 DATE AS OF CHANGE: 20070815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EPICEPT CORP CENTRAL INDEX KEY: 0001208261 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51290 FILM NUMBER: 071058647 BUSINESS ADDRESS: STREET 1: 777 OLD SAW MILL RIVER RD. CITY: TARRYTOWN STATE: NY ZIP: 10591 BUSINESS PHONE: 914-606-3500 MAIL ADDRESS: STREET 1: 777 OLD SAW MILL RIVER RD. CITY: TARRYTOWN STATE: NY ZIP: 10591 8-K 1 mm08-1407_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AUGUST 14, 2007 Date of Report (Date of earliest event reported) EPICEPT CORPORATION ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 000-51290 52-1841431 ------------------------------------------------------------------------ (State or other jurisdiction (Commission (IRS Employer of incorporatio File Number) Identification No.) 777 OLD SAW MILL RIVER ROAD TARRYTOWN, NEW YORK 10591 ------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (914) 606-3500 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On August 14, 2007, EpiCept Corporation (the "Registrant") issued a press release announcing its operating and financial results for the second quarter ended June 30, 2007. A copy of the press release is being furnished as Exhibit 99.1 to this Form 8-K. ITEM 7.01 REGULATION FD DISCLOSURE On August 14, 2007, the Registrant held a conference call with investors, analysts and others discussing its second fiscal quarter financial results, including a question and answer period. A transcript of that conference call is being furnished with this Current Report on Form 8-K and is attached to this report as Exhibit 99.2. A copy of the call will also be archived for 90 days on www.epicept.com. This information furnished hereunder, including the related Exhibit 99.2, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any disclosure document of the Company, except as shall be expressly set forth by specific reference in such document. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Press release of EpiCept Corporation, dated August 14, 2007, announcing the operating and financial results for the second quarter ended June 30, 2007. 99.2 Transcript of EpiCept Corporation conference call held on August 14, 2007. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EPICEPT CORPORATION /s/ ROBERT W. COOK ------------------------------------ Name: Robert W. Cook Title: Chief Financial Officer Date: August 14, 2007 3 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 99.1 Press release of EpiCept Corporation, dated August 14, 2007, announcing the operating and financial results for the second quarter ended June 30, 2007. 99.2 Transcript of EpiCept Corporation conference call held on August 14, 2007. 4 EX-99 2 mm08-1407_8ke991.txt EX.99.1 August 14, 2007 Page 6 EXHIBIT 99.1 ------------ [EPICEPT CORPORATION LOGO] CONTACTS EPICEPT CORPORATION: INVESTORS: Robert W. Cook LIPPERT/HEILSHORN & (914) 606-3500 ASSOCIATES rcook@epicept.com Kim Sutton Golodetz - ------------------ (212) 838-3777 MEDIA: kgolodetz@lhai.com FEINSTEIN KEAN HEALTHCARE ------------------ Greg Kelley or (617) 577-8110 Bruce Voss gregory.kelley@fkhealth.com (310) 691-7100 bvoss@lhai.com -------------- EPICEPT CORPORATION REPORTS SECOND QUARTER 2007 OPERATING AND FINANCIAL RESULTS PROGRESS CONTINUES WITH HIGH POTENTIAL ONCOLOGY AND PAIN MANAGEMENT PROGRAMS IN SECOND QUARTER TARRYTOWN, N.Y. - (AUGUST 14, 2007) - EpiCept Corporation (Nasdaq and OMX Nordic Exchange: EPCT) today announced operating and financial results for the second quarter and six months ended June 30, 2007. For the second quarter of 2007, EpiCept reported a net loss attributable to common stockholders of $7.0 million, or $.22 per basic and diluted share, compared to $7.3 million, or $.30 per basic and diluted share, for the first three months ended June 30, 2006. For the six months ended June 30, 2007, EpiCept reported a net loss attributable to common stockholders of $14.7 million, or $.45 per basic and diluted share, compared to $63.9 million, or $2.76 per basic and diluted share, for the six months ended June 30, 2006. On June 29, 2007, EpiCept announced that it had entered into a definitive agreement with institutional investors to raise $10.0 million in gross proceeds through the sale of EpiCept common stock and warrants. The financing closed in early July. EpiCept's estimated cash at the end of the second quarter was $9.7 million after consideration of the proceeds of the financing less applicable fees and expenses. Shares outstanding as of June 30, 2007 amounted to 32,426,409. "We continue to make steady progress towards advancing our balanced pipeline of cancer and pain programs and achieving the key milestones that we believe will bring long-term value to our investors," stated Jack Talley, President and Chief Executive Officer. "As we continue to work to advance Ceplene towards approval in Europe, significant accomplishments have also been achieved with both our earlier stage cancer compounds and our promising pain programs. During the second quarter, this included the acceleration of a Phase I trial for EPC2407; the initiation of two clinical studies for EpiCept NP-1; as well as the announcement of a new Phase III study of EpiCept NP-1 for the treatment of chemotherapy induced peripheral neuropathy. This study will be conducted under the direction of the National Cancer Institute-funded Community Clinical Oncology Program. We are pleased with the progress we have achieved to date in 2007 and are excited to continue our diligent pursuit of important value driving milestones." August 14, 2007 Page 2 EpiCept will provide an update on recent progress made with several of its key product candidates during a conference call on August 14, 2007: >> Ceplene(TM) - a registration-stage compound for the treatment of Acute Myeloid Leukemia (AML), the most common type of leukemia in adults, currently undergoing regulatory review by the European Medicines Agency for the Evaluation of Medicinal Products (EMEA). EpiCept is now preparing its responses to the "Day 120" list of questions from the EMEA and expects to submit its responses and meet with regulators in September 2007. >> EpiCept NP-1 - a prescription topical analgesic cream designed to provide long-term relief from the pain of peripheral neuropathies, which affect more than 15 million people in the U.S. Two Phase IIb trials for NP-1 are currently underway, one in diabetic peripheral neuropathy (DPN) and the second in peripheral herpetic neuropathy (PHN). The Company expects to be able to share preliminary results from the DPN trial by the fourth quarter of 2007, with preliminary results from the PHN trial expected in the first quarter of 2008. On July 23, 2007, EpiCept announced that the National Cancer Institute (NCI)-funded Community Clinical Oncology Program (CCOP) will conduct a Phase III study of NP-1 in chemotherapy induced peripheral neuropathy (CPN) at approximately 25 U.S. sites. The trial is expected to be initiated before the end of the third quarter of 2007. >> EPC2407 - a vascular disruption agent (VDA) that also has potent direct apoptotic activity on cancer cells. EpiCept recently announced the acceleration of the Phase I trial for EPC2407, resulting from the addition of a third U.S. cancer center at which the trial will be conducted. Completion of the trial is now expected to occur ahead of schedule, with trial results anticipated in 2007. EpiCept expects to initiate a second Phase I efficacy trial as a combination therapy following the outcome of the mono-therapy trial. Additionally, an update will be provided on the following partnered product: >> Azixa(TM) - a compound discovered by EpiCept and licensed to Myriad Genetics, Inc. as part of an exclusive, worldwide development and commercialization agreement. In the June 15, 2007 edition of Cancer Research, a journal published by the American Association of Cancer Research (AACR), study results were published that demonstrate that Azixa is effective in treating multiple types of human tumors in animal models, reveal a mechanism by which Azixa, also known as MPC-6827, exerts its effects, and show that MPC-6827 is not affected by cellular proteins known to be involved in cancer drug resistance. Myriad has announced it will conduct two Phase II human clinical trials of Azixa, one in patients with primary brain cancer and the other in melanoma that has spread to the brain. EpiCept will receive a milestone payment from Myriad upon the dosing of the first patient in either of these Phase II trials. August 14, 2007 Page 3 FINANCIAL AND OPERATING HIGHLIGHTS GENERAL AND ADMINISTRATIVE (G&A) EXPENSE The Company's G&A expense decreased by $0.2 million from $3.6 million for the three months ended June 30, 2006 to $3.4 million for the second quarter of 2007. The decrease was primarily attributable to lower premises, legal, and insurance expenses for the three months ended June 30, 2007 as compared to the same period in 2006. G&A expense decreased by $2.7 million from $9.3 million for the six months ended June 30, 2006 to $6.6 million for the six months ended June 30, 2007. The decrease was primarily attributable to lower stock-based compensation charges, premises, legal, and insurance expenses for the six months ended June 30, 2007 as compared to the same period in 2006. RESEARCH AND DEVELOPMENT (R&D) EXPENSE R&D expense decreased by $0.9 million, from $4.2 million for the three months ended June 30, 2006 to $3.3 million for the three months ended June 30, 2007. During the second quarter of 2007, EpiCept's clinical activity increased as the Company proceeded with two clinical trials of NP-1, which commenced in April, and continued its Phase I clinical trial of EPC2407. Consulting expenses also increased as EpiCept reviewed the Day 80 report and the Day 120 List of Questions related to the Ceplene MAA and commenced preparation of its response to the EMEA. During the second quarter of 2006, our research and development efforts concentrated on preparing EPC2407 for an IND filing and commencement of clinical trials, the continuation of our Phase III clinical trial for LidoPAIN SP, and preparation of Ceplene MAA filing with the EMEA. Depreciation and premises expenses declined by $0.4 million in the second quarter of 2007 compared to 2006. For the six months ended June 30, 2007, R&D expenses decreased by $0.9 million from $7.9 million for the six months ended June 30, 2006 to $7.0 million for the six months ended June 30, 2007. RESULTS OF PRIVATE PLACEMENT On June 29, 2007, EpiCept announced that it had entered into definitive agreements with institutional investors to raise $10 million in gross proceeds through the sale of EpiCept common stock and warrants. In connection with the private placement, EpiCept issued approximately 5.1 million shares of common stock at $1.95 per share and five-year warrants to purchase up to approximately 2.56 million shares of common stock at an exercise price of $2.93 per share. The warrants will not become exercisable until six months after the closing. Shares outstanding after the private placement amounted to 37,554,626. CONFERENCE CALL INFORMATION To participate in the live call to be held on Tuesday, August 14 2007 at 8:30 a.m. EDT, please dial (888)802-7346 from the U.S. or Canada or (973) 582-2785 from international locations (please reference access code 9106229). The conference call will also be broadcast live on the Internet and may be accessed at http://www.epicept.com. The webcast will be archived for 90 days. A telephone replay of the call will be available for seven days by dialing (877) 519-4471 from the U.S. and Canada or (973) 341-3080 from international locations (please reference reservation number 9106229). August 14, 2007 Page 4 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, contains 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 or that Ceplene, if approved, will not achieve significant commercial success, the risk that Myriad's development of Azixa will not be successful, the risk that Azixa will not receive regulatory approval or achieve significant commercial success, the risk that we will not receive any significant payments under our agreement with Myriad, the risk that the development of our other apoptosis product candidates will not be successful, the risk that our ASAP technology will not yield any successful product candidates, the risk that clinical trials for NP-1 will not be successful, that NP-1 will not receive regulatory approval or 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 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 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; competition; litigation; risks associated with prior material weaknesses in our internal controls; 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. *Azixa is a registered trademark of Myriad Genetics, Inc. August 14, 2007 Page 5 SELECTED FINANCIAL INFORMATION FOLLOWS: EPICEPT CORPORATION AND SUBSIDIARIES (UNAUDITED) SELECTED CONSOLIDATED BALANCE SHEET DATA JUNE 30, DECEMBER 31, 2007 2006 (IN $000s) Cash and cash equivalents $ 1,885 (1) $ 14,097 Property and equipment, net 954 1,316 Total assets $ 5,425 $ 18,426 Accounts payable and other accrued liabilities $ 7,483 $ 5,925 Deferred Revenue 6,887 7,121 Notes and loans payable 11,185 12,805 Total stockholders' deficit (21,286) (9,373) Total liabilities and stockholders' deficit $ 5,425 $ 18,426 EPICEPT CORPORATION AND SUBSIDIARIES (UNAUDITED) SELECTED CONSOLIDATED STATEMENT OF OPERATIONS DATA (IN $000S EXCEPT SHARE AND PER SHARE DATA)
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED ---------------------------- ---------------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2007 2006 2007 2006 ------------ ------------ ------------ ------------ REVENUE $ 100 $ 218 $ 259 $ 513 ------------ ------------ ------------ ------------ OPERATING EXPENSES: General and administrative 3,354 3,588 6,648 9,279 Research and development 3,280 4,221 7,012 7,903 Acquired in-process research and development -- (266) -- 33,448 ------------ ------------ ------------ ------------ Total operating expenses 6,634 7,543 13,660 50,630 ------------ ------------ ------------ ------------ Loss from operations (6,534) (7,325) (13,401) (50,117) ------------ ------------ ------------ ------------ OTHER INCOME (EXPENSE): Interest income 18 103 64 204 Miscellaneous income -- 50 -- 50 Foreign exchange gain 63 85 108 94 Interest expense (591) (234) (1,207) (5,171) Change in value of warrants and derivatives -- -- (278) (7) ------------ ------------ ------------ ------------ Other income (expense), net (510) 4 (1,313) (4,830) ------------ ------------ ------------ ------------ NET LOSS BEFORE INCOME TAXES (7,044) (7,321) (14,714) (54,947) Income taxes -- -- (4) -- ------------ ------------ ------------ ------------ NET LOSS $ (7,044) $ (7,321) $ (14,718) $ (54,947) Deemed dividends and redeemable convertible preferred stock dividends -- -- -- (8,964) ------------ ------------ ------------ ------------ NET LOSS $ (7,044) $ (7,321) $ (14,718) $ (63,911) Basic and diluted loss per common share $ (0.22) $ (0.30) $ (0.45) $ (2.76) ============ ============ ============ ============ Weighted average common shares outstanding 32,404,185 24,525,026 32,399,800 23,180,927 ============ ============ ============ ============
August 14, 2007 Page 6 EPICEPT CORPORATION AND SUBSIDIARIES (UNAUDITED) SELECTED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30, JUNE 30, 2007 2006 (IN $000S) Net cash used in operating activities $(10,546) $(13,563) Net cash (used in) provided by investing activities (137) 10,453 Net cash (used in) provided by financing activities (1,528) 10,015 Effect of exchange rate changes on cash (1) 20 -------- -------- Net (decrease) increase in cash and cash equivalents (12,212) 6,925 Cash and cash equivalents at beginning of period 14,097 403 -------- -------- Cash and cash equivalents at end of period $ 1,885 (1) $ 7,328 ======== ======== (1) EpiCept's estimated cash at the end of the second quarter was $9.7 million after consideration of the proceeds from the private placement less applicable fees and expenses. # # # EPCT-GEN EX-99 3 mm08-1407_8ke992.txt EX.99.2 EXHIBIT 99.2 ------------ EPICEPT MODERATOR: GREG KELLEY AUGUST 14, 2007 8:30 A.M. ET OPERATOR: Good morning, ladies and gentlemen, my name is Tiara and I will be your conference operator today. At this time, I would like to welcome everyone to the EpiCept second quarter 2007 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer period. If you would like to post a question during this time, please press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. It is now my pleasure to turn the floor over to your host, Mr. Greg Kelly, sir, you may begin your conference. GREG KELLY: Thank you, Operator. Good morning, and welcome to today's EpiCept second quarter 2007 earnings conference call. Today's call will 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 an 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 risks that Ceplene will not receive regulatory approval or marketing authorization in the EU. Or that Ceplene, if approved, will not achieve significant commercial success. The risk that Myriad's development of Azixa will not be successful. The risk that Azixa will not receive regulatory approval or achieve significant commercial success. The risk that EpiCept will not receive any significant payments under its agreement with Myriad. The risk that the development of its other apoptosis product candidates will not be successful. The risks that the company's ACSAPP (ph) technology will not yield any successful product candidates. The risk that clinical trials for NP-1 will not be successful. That NP-1 will not receive regulatory approval or achieve significant commercial success. The risk that the company's 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 dependence upon key personnel. The risks associated with reliance on collaborative partners and others for further clinical trials, development, manufacture and commercialization of the product candidates, the cost, delays, and uncertainties associated with its scientific research, product development clinical trials, and regulatory approval process. It's history or operating losses since inception, competition, litigation, risks associated with prior material weakness in its internal controls. And risks associated with the company's ability to process, protect its intellectual property. These factors and other material risks are more fully discussed in EpiCept's periodic reports including its reports on Form 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. I will now hand the call over to Jack Talley, President and CEO of EpiCept. Jack, please go ahead. JACK TALLEY, PRESIDENT, CEO, EPICEPT: Good morning, and thank you for joining us today. 1 I'd like to take this opportunity to provide you with an update on the continued progress being made at EpiCept towards building shareholder value. Following this update I will ask Bob Cook, our Chief Financial Officer, to review our financials for the second quarter, which will then be followed by a Q&A session. I am pleased to report that we continue to make solid progress in both our cancer and pain programs during the second quarter. Starting with our cancer program, we continue to be on track with the next steps required under the application review process in Europe for Ceplene, our lead oncology product candidate for the remission maintenance treatment of acute myeloid leukemia or AML. We are diligently working to prepare our responses to the day 120 list of questions, supplied to us by the EMEA from the marketing authorization application for Ceplene. And expect to submit our responses as well as meet with regulators in September. There are a total of 39 questions from the EMEA to which we are responding. These include some routine clarification questions, and others which have necessitated further analysis of the existing Ceplene database or in some cases, additional data collection and analysis. Just to highlight a few of these areas. One question relates to the quality of life for patients in the treatment arm, that being Ceplene but plus low down Proleukin, versus the standard of care, which his still no treatment. This required an additional analysis of data prospectively collected during the study. Here, we found that patients in the active treated arm had a statistically equivalent quality of life compared to the control arm patients. This is remarkable testimony to how well tolerated the Ceplene plus low dose Proleukin regiment is for these patients. Another question relates to whether leukemia free survival can be a surrogate marker for overall survival. In this case, the data indicates that improved leukemia free survival at 24 months or two years, was indeed, a predictor for improved overall survival at 60 months or five years. These two outcomes appear to be directly correlated. Lastly, to better understand the overall survival of patients in the study, additional data collection and analysis was undertaken as follow up of patients in the Ceplene study. Although this study was not powered to predict an overall improvement in survival, we found that the long term survival of the treated first remission patients at 60 months nearly reaches statistical significance compared to control patients with a p value of 0.07. The sum total of the day 120 questions, further analysis of the existing database, additional data collection, our robust responses, complimentary data from third party sources, and other regulatory activities, has contributed to the overall impression at EpiCept that we are buoyant about the prospects for Ceplene being approved in Europe next year. If the application continues to follow the anticipated EU regulatory timeline, the next important event and the pathway to a European approval is expected to be the day one 81 oral explanation, which should occur in the first quarter of 2008, after which the CHMP's recommendation as to the approvability of the compound will then be forwarded to the European commission for a final decision. Our enthusiasm for the potential of Ceplene continues to be very strong, based in large part on the clinical data, which forms the basis of the MAA application for this drug. The primary end point from a 320 patient trial in AML demonstrated a nearly six month improvement in disease free survival in patients in their first remission. The improvement in disease free survival in these patients increases at three years from 26 percent in the standard of care group, which receives no treatment, to approximately 40 percent in the treated group. With a greater than 53 percent improvement in the long term disease free survival for patients, Ceplene has shown a therapeutic benefit to maintain remission with a remarkably well tolerated self administered therapy that has not been achieved before in this disease. In other news, relative to our building an oncology franchise at EpiCept, I am pleased to report that we will be sponsoring a symposium at this year's ASH, or American Society of Hematology meeting in Atlanta. Our symposium titled improving outcomes in AML, will be featured Friday evening December seventh. For more details on the variety of activities, we have planned for the ASH meeting will be disclosed as we get closer to the meeting. 2 The second quarter was also a time of notable accomplishments for our earlier stage cancer programs. Last month, we announced the acceleration of the Phase I trial for EPC2407, a novel small molecule vascular disruption agent and apoptosis inducer for the treatment of cancer patients with advanced, solid tumors, and lymphomas. With the addition of a new study center, Tower Cancer Research Foundation in Los Angeles, the Phase I trial for EPC2407 will now be conducted at three U.S. cancer centers, which should allow us to complete the trial ahead of schedule, and be in a position to report results later this year. Just yesterday, we dosed another new patient in the study. This is the first patient in the fourth dosing cohort in this phase one monotherapy trial. We continue to be pleased with the safety profile of the drug, and hope to see confirmed evidence of anti cancer activity later this year. We expect to initiate a second Phase I efficacy trial for EPC2407 as a combination therapy in patients with well vascularized solid tumors and intend to choose a vascularized solid tumor target for the compound's Phase II trials as the clinical profile from the ongoing monotherapy trial emerges. Overall, we are pleased with the progress being made with this important new candidate cancer therapy. Important developments also occurred in the second quarter with Azixa, our other early stage cancer compound currently in clinical development by Myriad. Azixa was discovered at EpiCept and is part of our MX90745 series of apoptosis inducers. This series, including Azixa, was licensed to Myriad as part of an exclusive worldwide development and commercialization agreement. In June findings demonstrated that Azixa shows broad efficacy against multiple tumor types and in drug resistant cell lines was published in Cancer Research, a noted journal published by the American Association of Cancer Research. We believe these results, which demonstrate Azixa'a potential to offer significant anti tumor activity even in tumors expressing multi drug resistant phenotypes are very significant and further validate the commercial potential of the compound. Myriad has continued to move Azixa forward, and we anticipate receiving a milestone payment from Myriad, related to the compound's advancement as early as later this month. When taken together, the positive developments associated with Azixa and EPC2407 reinforce the value of our ACSAPP (ph) technology which is responsible for discovering these two compounds. ACSAPP (ph) or anti cancer screening apoptosis program is the proprietary technology we use to rapidly test and generate product candidates for cancer. In addition to Azixa and EPC2407, we also have two other compounds undergoing pre clinical studies, both of which we believe may also have strong potential. Moving on to our pain program. We were pleased to announced important new developments in the second quarter, related to EpiCept NP-1 cream, which we believe to be the largest market potential pain candidate in our portfolio. In July, we announced the National Cancer Institute funded community clinical oncology program or CCOP decided to cosponsor a Phase III trial of EpiCept NP-1 for the treatment of chemotherapy induced or CPN. The attract CPN Phase III study will be conducted within a network of approximately 25 sites under the direction of CCOP and will study the effects of NP-1 cream on CPN, a painful condition resulting from the toxicity of a number of chemotherapeutic agents, and for which treatment is considered a serious unmet medical need. We believe these study results will help to build upon the body of evidence demonstrating that NP-1 can provide long term relief from the pain of peripheral neuropathy's a condition that effects more than 15 million people in the United States. As this study commences, we are also continuing on schedule, with two other Phase IIB trials for NP-1. This includes a double blind 200 patient placebo controlled study in patients with diabetic peripheral neuropathy or DPN. And a double blind 500 patient placebo and active control trial in post-herpetic neuropathy or PHN. The active control in this study is gabapentin, a market leader in the treatment of neuropathic pain. 3 The results of these trials are intended to broaden NP-1 labeling within peripheral neuropathies and raise the product candidate's future market potential. Preliminary results for the DPN trial are expected by the fourth quarter of 2007 with preliminary results for the PHN active control trial expected in the first quarter of 2008. As the recent developments I have shared with you, today, indicate, we are continuing to make important progress with both our cancer, and pain program. Much work remains to be done this year, however, and we are continuing to vigorously pursue the clear goals before us, supported by our commercially promising pipeline, strong strategic partnerships and our talented and dedicated employees. With this brief update of our portfolio complete, I will now turn the call over to Bob Cook, who will walk us through the numbers for the second quarter. Please go ahead, Bob. BOB COOK: Thanks, Jack. I would like to briefly review our second quarter 2007 financial results. For the second quarter of 2007, our net loss attributable to common stockholders totaled $7 million or 22 cents per share, compared to with a net loss attributable to common stock holders at 7.3 million, or 30 cents per share for the second quarter of 2006. For the six months ended June 30, 2007, EpiCept reported a net loss attributable to common stockholders of 14.7 million or 45 cents per basic and diluted share, compared to a loss of 63.9 million, or $2.76 per basic and diluted share for the six months ended June 30, 2006. EpiCept completed the acquisition of Maxim Pharmaceuticals in January 2006, which was the primary factor in the reported loss in the first half of that year. R&D expense decreased by $0.9 million from 4.2 million for the three months ended June 30 '06, to 3.3 million for the three months ended June 30 '07. During the second quarter of 2007, EpiCept's clinical activity increased as the company proceeded with two clinical trials of NP-1 which commenced in April and continued its Phase I clinical trial of EPC2407. Consulting expenses also increased, as we reviewed the day 80 report, and the day 120 list of questions, related to the Ceplene MAA, and commenced preparation of our response, to the EMEA. Depreciation and premises expense declined by 0.4 million for the second quarter of '07 compared to '06. For the six months ended June 30, 2007, R&D expenses decreased by 0.9 million from 7.9 million to 7.0 million for the six months ended June 30, '07. Our general and administrative expense decreased by 0.2 million from 3.6 million for the second quarter of '06 to 3.4 million for the second quarter of '07. This decrease was primarily attributable to lower premises legal and insurance expense during the second quarter of '07, compared to the comparable 2006 period. For the six months ended June 30, 2007, G&A expense decreased by 2.7 million from 9.3 million for the six months ended June 30, '06 to 6.6 million for the six months at June 30, '07. This decrease was primarily attributable to lower stock based compensation charges, premises, legal and insurance expenses. Stock based compensation charges during the first half 2007 amounted of 1.2 million or a decrease of 1.8 million from the first half of '06. Our cash flow used in operating activities for the six months ended June 30, 2007 amounted to $10.5 million, compared to $13.6 million used during the six months ended June 30, 2006. For the first half of 2007, we spent less than our estimate of average 2007 net cash used in operations of approximately $2 million per month. On June 29, 2007, we announced that we had entered into definitive agreements with institutional investors, to raise $10 million in gross proceeds through the sale of EpiCept common stock and warrants. In connection with the private placement, we issued approximately $5.1 million shares of EpiCept common stock at $1.95 per share and five year warrants to purchase up to approximately 2.56 million shares of common stock at an exercise price of $2.93 per share. The warrants will not become exercisable until six months after closing. This transaction closed in early July. 4 Our estimated cash at the end of the second quarter 2007 after consideration of the proceeds of the financing, less applicable fees and expenses was $9.7 million. Shares out standing as of June 30, 2007, amounted to 32,426,409. Shares out standing immediately after the conclusion of the financing amounted to 37,554,626. Thank you very much for your attention. Operator, please open up the call for questions. OPERATOR: At this time, I would like to remind everyone, if you would like to pose a question, press star then the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Once again, if you do have a question, please press star one at this time. Your first question is coming from Navdeep Jaikaria from Rodman & Renshaw. SEAN WU (ph): Hello. Actually, this is Sean Wu (ph) standing in for Navdeep. Jack, congratulations on a great quarter. I think your oncology program is (INAUDIBLE) is really shaping up. I actually kind of (INAUDIBLE). First, you guys have two pre clinical compounds that have been showing a lot of promise. Do you have any kind of timeline mode I mean to clinical settings? Or are you looking for somebody to license them? JACK TALLEY: We're continuing to - thanks Sean (ph) comment, for the comment, very much. We are continuing to develop these compounds internally. They are chemically distinct from either Azixa or EPC2407, although they do come from the ACSAPP (ph) technology so they are apoptosis inducers per se. And there has been some outside interest from large pharma as looking at these compounds. But at this moment, we're intending to continue to use internal resources towards bringing this - these compounds - if they continue to look promising, into the clinic. I would not expect that the first one to be in the clinic before the second half of next year, though, just given the timelines and all of the activities necessary leading up to an IND filing. SEAN WU (ph): OK, this makes sense. In terms of your AML - Ceplene for AML, if - you appear to be very confident, let's say opportunistic of the prospect of that. Do you have any kind of plan to commercialize it yourself? Or you may just try to enlist a partner for this? JACK TALLEY: We are continuing to evaluate both options in terms of launching the drug ourselves, or sharing it with a European oncology player. Both are on the table, as we speak, and we may end up doing both, which is a third possibility as well. We have not finalized that strategic decision. Our efforts at the moment are dedicated towards getting the response to the day 120 list of questions into to the EMEA. That's going to occur on or about the first week of September. And then, a little more than a week later than that, we are going to be meeting with the European regulators, the Rapator (ph) and Co-Rapator (ph) to go over those responses to the questions. Those are the primary activities on Ceplene. SEAN WU (ph): Excellent. May I ask the final question to Cook - Bob. So you burned about $12 million in the first half. With the two Phase II trials, with NP-1 ramping up, do you see your cash burn for the later part of the year to be higher than this? Or you are trying to maintain the same level? If higher, how much higher? BOB COOK: We had indicated at the beginning of the year, that we expected our average monthly cash burn for operating expenses to be approximately $2 million. For the first half of the year, we've run just a little bit under that. And going forward, I think that we will probably come in just a little bit below the average of $2 million per month average for the rest of the year. So whether it's in the 10-and-a-half million range, or a little bit higher than that, I don't think we'll quite average the two million for the entire year, but it's likely to be in the range that we've seen for the first six months. SEAN WU (ph): Your cash balance is the 1.885 shown in the press release, plus 9.7 some newly raised (ph), is that correct? BOB COOK: No. The - what we've said is that we closed - we signed the transaction at the end of June and actually funded - the vast majority of it actually funded in July. So if you account for the proceeds of the transactions, and sort of back it up to June 30, then the cash balance at June 30 would be 9.7. 5 SEAN WU (ph): OK. I will put it (INAUDIBLE). All right. Thanks a lot. BOB COOK: OK. Thanks, Sean (ph). SEAN WU (ph): All right. I'll be back in the queue. OPERATOR: Thank you. As a reminder, if you do have a question, please press star one at this time. Once again, that is star one to ask a question. There appears to be no further questions at this time. JACK TALLEY: OK. Thank you for your participation in this morning's call. We continue to be keenly focused on executing on the important value drivers that lie before us in the months ahead. We expect the remainder of 2007 to continue to be a time of exciting and important progress. And we look forward to continuing to update you on all key developments. Thank you. Operator, you can end the call. OPERATOR: Thank you. This concludes today's EpiCept second quarter 2007 earnings conference call. You may now disconnect and have a great day. END 6 -----END PRIVACY-ENHANCED MESSAGE-----