EpiCept Corporation: Investment Case Hinges On Partnership Deal

EpiCept’s (EPCT) investment case centres on rapidly finding a development/commercial partner for AmiKet, its topical product for chemotherapy-induced peripheral neuropathy. It is also seeking a new partner for Azixa, to which it recently regained all rights. The company has cash until Q113, following the recent sale of Ceplene rights, but its share price remains depressed by financial concerns. Nevertheless, the potential upside from an AmiKet deal – which might come about via an M&A transaction – could reward investors. Following the Ceplene transaction, we calculate an rNPV of $29m, approximately three times the current EV.


AmiKet focus of BD activity
Securing a partnership for AmiKet, which is in development for the treatment of chemotherapy-induced peripheral neuropathy (CIPN), is now a critical event for EpiCept. AmiKet has an attractive commercial profile that should draw licensing interest from speciality pharma companies interested in cancer supportive care.

Ceplene sold, Azixa brought back
EpiCept’s sale of Ceplene rights in the territories previously licensed to Meda, though painful, brought in a much-needed $2.6m injection of cash. This leaves EpiCept with ownership of Ceplene in North and South America and Israel only. Meanwhile, all rights to Azixa have now reverted to EpiCept after the termination of the development and, subsequently, the licensing deal by Myrexis.

Financials: Funded to Q113
The sale of the EU/Pacific rim Ceplene rights to Meda boosted cash to $4.8m as of the end of June. This has been helped by $0.8m net raised in September from the exercise of previously issued warrants. This should extend the cash runway to Q113.

Valuation: Risk-adjusted NPV of $29m
We have adjusted our valuation for EpiCept to reflect the sale of Ceplene EU rights, and assign a new risk-adjusted NPV of $29m. This is still nearly three times the current EV of c $10.4m (market cap of $11.1m and an outstanding senior secured loan of $4.1m minus $4.8m of cash), suggesting there is an attractive risk-reward ratio assuming that AmiKet can be licensed.

To Read the Entire Report Please Click on the pdf File Below.