Is EPCT ready to run? Print E-mail
By Andrew Greenbull   
Thursday, 22 October 2009 03:00

It has been over a month since I first introduced EpiCept (NASDAQ:EPCT), and as we can see their shares have been trading in a narrow range. But I feel we are witnessing the calm before the storm. Daily volume is down from the all time average highs but nevertheless the stock price is still at a reasonable level. Low volume plus tons of catalysts can serve as the auspice for the next explosion.

Ceplene has already received marketing authorization in the EU and has submitted an NDS in Canada. When the NDS news came out, shares of EPCT jumped 30%. EPCT is also planning to file an NDA with the FDA by the end of this year, and I am expecting an even bigger move when this news is released.

The Canada NDS response For Ceplene is due any day now. My instincts tell me we are in for a pleasant surprise.

In the short term another big catalysts will be Azixa(AKA:MPC-6827). EPCT’s collaborative partner, Myriad Pharmaceuticals will attend 2009 CNS & AANS Joint Meeting on Friday, October 23rd, and there will most likely be an update for Azixa, that’s the one we have been waiting on for a long time. Could a milestone payment be on the way?

Besides these short term catalysts, I believe that EPCT has a brilliant long term future: Ceplene is the only drug in the market for maintenance of first remission in patients with Acute Myeloid Leukemia. Approximately 75-80 percent of patients who achieve their first complete remission of this disease will relapse. Ceplene® is EpiCept’s achievement of a six plus year study to prevent leukemic relapses and prolong leukemia-free survival while maintaining a good quality of life for patients during treatment.

In addition, from the most recent quarterly report, we can see that the negotiation of the EU market partnership will be concluded by the end of the year (10Q: P32).

There is one thing I have to explain here: When a very promising drug like Ceplene gets approved, normally a marketing agreement is not hard to reach, but it took EPCT one year to process this. There must be a more complicated reason we will uncover soon.

The super sales channel in the EU belongs to GSK and Novartis. Although the partner is still confidential, Novartis has the better chance, because Ceplene® is administered in conjunction with low dose interleukin-2(Proleukin) which is the brand name drug of Novartis.

In my opinion, I don’t think that Novartis wants to form a low level relationship with EPCT by simply signing a sales partner agreement. For a better understanding of this issue, let’s take a look at Novartis’ buyout deal with Chiron Corporation. Some of you might know why I mention Chiron here: Proleukin was not developed by Novartis but Chiron. When Novartis realized the huge potential of Proleukin, it tossed $5.1 billion on the table and as a result Chiron is now a part of Novartis.

I don’t think Novartis will let EPCT go as far as they did Chiron but will take them with an early buyout. It is necessary for Novartis to move quickly here: EPCT’s current market cap is only 100 million, and it will most likely cost Novartis no more than 500 million now instead of perhaps hundreds of millions more a few years down the road. Moreover, EPCT has a phase 3 candidate NP-1 in hand, which has showed a very positive effect in the previous stage study. If Novartis could snatch EPCT while it is still available, it can then pose a threat to Pfizer and Eli Lilly in their multi-billion dollar nerve pain market.

Where is EPCT heading? Only time will tell, but, for this long time follower, their future certainly looks bright.

Disclosure: Andrew Greenbull is Long EPCT

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