Epicept May Have Potential, But How Long Are Investors Willing to Wait?

Includes: EPCT, MYGN
by: VFC's Stock House

When the European Commission decided to approve Ceplene last October, Epicept (OTC:EPCT) looked to be as safe an investment as any since the only thing that stood in the way of Epicept and a revenue stream was the search for a marketing partner.

Now, seven months later, shares of Epicept trade for a mere sixty cents on minuscule volume and investors are beginning to wonder if EPCT is still worth the wait.

The biggest question, in the minds of investors, is why, seven months after approval, has the company not landed a marketing partner for Ceplene?

The length of time without a partner should raise some eyebrows, but it is far too early to give up just yet.

Ceplene, the company's treatment for remission maintenance in patients with Acute Myeloid Leukemia, is, after all, an approved product.

According to the most recent quarterly report, Epicept is in advanced negotiations with a prospective partner to license the European marketing rights for Ceplene. That means that an announcement could come at any time.

In the current economic conditions, many firms are unwilling to spend the up-front money that would assuredly accompany a partnership agreement and the board at Epicept may be holding out while market conditions improve in order to secure the deal that most benefits the company. Another possibility is, however, that potential marketing partners may not see Ceplene as a profitable enterprise and the longer Epicept takes to announce a deal, the more likely this scenario becomes.

However, the fact that inventory of Ceplene has already been produced and shipped to the European Union in preparation for a product launch later this year indicates that a partner is, in fact, close to being announced.

Epicept is also taking the necessary steps required to file a New Drug Application (NDA) in the United States and Canada sometime this year.

If Ceplene alone is not worth a sixty cent investment, the potential of Azixa just may be. Azixa, a treatment for metastatic brain cancer, was discovered by Epicept and licensed to Myriad Genetics (NASDAQ:MYGN). Currently, Myriad is testing the effectiveness of the compound in three Phase II trials. If those Phase II results are positive, Epicept will be due a royalty payment from Myriad upon the launch of a Phase III trial. If Azixa makes it to market, Epciept will be due a royalty on sales. The potential of Azixa is intriguing. In the past, updates regarding its progress have run the EPCT stock price to as high as four dollars.

The risk of an investment in Epicept does not stop there. In addition to Ceplene and Azixa, Epicept has a product portfolio, in various stages of clinical trials, that includes treatments for pain and various cancer indications.

While investors grow impatient for an announcement of a marketing partner for Ceplene, it is far too early to give up on a company with as much potential in the pipeline as Epicept has.

With a solid product pipeline, the potential of Azixa and an already approved drug, EPCT is well worth the risk of a sixty cent investment. The possible rewards, in the short term, could be a double or a triple in price; the long term even higher.

The real benefit, as is always good to remember when investing in biotechs and pharmaceutical companies, is the benefit that these treatments could provide to the patients that need them.

Disclosure: VFC is long EPCT.