EpiCept Corporation Merges With Immune Pharmaceuticals

EpiCept’s (EPCT) search for a strategic transaction has resulted in a planned reverse-merger with Immune Pharmaceuticals, a private, Israel-based biopharma company focused on antibodies for inflammatory disease and cancer. The resulting company – to be called Immune Pharmaceuticals Inc – will have bertilimumab, which is ready to enter Phase II trials for ulcerative colitis, as its lead product, together with three other clinical-stage programmes. EpiCept shareholders will end up with 22.5% of the new entity. EpiCept believes the deal offers its shareholders the best option to participate in economic value created by a potential future development/commercial partnership for AmiKet, its topical product for chemotherapy-induced peripheral neuropathy.


Merger to form Immune Pharmaceuticals Inc
The proposed transaction would effectively reverse-merge Epicept and Immune Pharmaceuticals. EpiCept will issue ordinary shares to acquire all of Immune’s outstanding shares, which would leave EpiCept’s shareholders with approximately 22.5% ownership of the resulting company (fully diluted). Registration statements have not yet been filed, so the exact financial terms are not known. However, the transaction will likely require in excess of 300m new shares to be issued. The deal is expected to close during Q113, following shareholder approval.

Immune develops next-generation antibodies
Immune is a privately held Israeli biopharmaceutical company focused on the development of antibody therapeutics for treating inflammatory diseases and cancer. Its lead product, bertilimumab (previously CAT-213), is licensed for non-ophthalmic indications from the Canadian biotech iCo Therapeutics (and originated at Cambridge Antibody Technology in the UK). Immune also has a technology, NanomAbs, for generating antibody drug conjugates, in preclinical studies.

Financials: Funded to Q113
EpiCept ended Q3 with $1.1m in cash and $1.1m in restricted cash. A pro forma cash figure for the new company is not yet known. However, it is likely that the new company would have to raise additional funds in the short term.

Valuation: EV of $9m
EpiCept has an EV of $9m, based on its market cap of $7m, a senior secured loan of $4.1m and Q3 cash/restricted cash of $2.2m. Our previously published rNPV for EpiCept alone, which principally reflected AmiKet, was $29m.

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