HERZLIYA-PITUACH, Israel—New York-based EpiCept Corp. andthe privately held Israeli company Immune Pharmaceuticals Ltd. have enteredinto a definitive merger agreement under which Immune shareholders will receiveapproximately 77.5 percent ownership calculated on an adjusted fully dilutedbasis, and EpiCept shareholders will retain approximately 22.5 percentownership of the combined company.
Dr. Daniel Teper will become the chairman and CEO of thecombined company, which will be named Immune Pharmaceuticals Inc. The company'sboard of directors will include no more than six current Immune directors andat least one director from EpiCept. The transaction is expected to close inearly 2013, pending the satisfaction of closing conditions and the approval ofa majority of EpiCept's shareholders.
The merging companies complement each other nicely in termsof in-house expertise in cancer therapeutics. Immune's focus is on antibodytherapeutics in oncology and inflammation, while EpiCept is focused on thedevelopment and commercialization of pharmaceutical products for the treatmentof cancer and pain.
The combined company will focus on further developing andcommercializing antibody therapeutics and other pharmaceuticals forinflammatory diseases and cancer. Upon completion of the merger, Immune willboast a diversified portfolio including four clinical-stage drug candidateswith multiple indications in treating inflammatory diseases and cancer.
Immune's lead product candidate is a fully human monoclonalantibody called bertilimumab, which targets the chemokine eotaxin-1 that isinvolved in eosinophilic inflammation, angiogenesis and neurogenesis. Immune isinitiating a Phase II clinical trial of bertilimumab for the treatment ofulcerative colitis. Immune also brings to the merger its version of a newgeneration of antibody-drug conjugates known as NanomAbs.
EpiCept brings to the table its portfolio of oncology drugcandidates and vascular disruptive agents. Perhaps the company's most excitingproduct is its Phase III clinical development candidate AmiKet, a topicalanalgesic cream designed to provide long-term relief of chemotherapy-inducedneuropathic pain. AmiKet has U.S. Food and Drug Administration Fast Trackdesignation and Phase III Special Protocol Assistance, as well as a definedclinical path through the European Medicines Agency. EpiCept's interest in amerger deal, however, derives at least in part from the relatively high cost ofcompleting development of AmiKet—expected to be in the $20 million to $25million range, according Cook. Immune will continue EpiCept's effort to securea financial partner to help see the development of AmiKet to completion.
"It is an attractive, complementary fit for both ouremployees and facilities," says Robert Cook, interim CEO of EpiCept anddesignated chief financial officer of Immune post-closing. "This transactiondoesn't get us development dollars, but it gives us a much longer runway to getthat completed. It provides EpiCept's shareholders with the fuel to continuethe effort we've been pursuing for many years."
Immune's interest in the merger stemmed from the young,privately held Israeli pharmaceutical company's interest in achieving the "nextstep" in financing, with an eye toward going public both in Israel and in theUnited States, which would be aided greatly by a merger with a listed U.S.company. In its search for potential merger candidates, Immune sought a companywith a compatible product portfolio and executives that could strengthen itsmanagement team.
The management teams of both companies see the merger as anopportunity to strengthen one another as well as their respective staffs andfacilities in the United States and in Israel.
"The staffs of the two companies are more complementary thanoverlapping," says Teper. "There is no plan to reduce staff in any significantmanner. We have a unique opportunity to bring our two management teams togetherto create a strong, seasoned team with just the right combination of experienceand entrepreneurial spirit."