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EpiCept Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 15, 2011 04:58PM

EpiCept Corp. (EPCT) filed Quarterly Report for the period ended 2011-06-30. Epicept Corp. has a market cap of $34.07 million; its shares were traded at around $0.45 with and P/S ratio of 34.28.



Highlight of Business Operations:

The Meda AB agreement entitles us to a $3.0 million upfront payment, a $2.0 million payment upon launch of Ceplene® in a major country in the European Union, and milestone payments and royalties on sales of Ceplene®. The $3.0 million upfront payment received in the first quarter of 2010 and the $2.0 million payment upon launch of Ceplene® in a major country in the European Union received in the second quarter of 2010 have been deferred and are being recognized as revenue ratably over the life of the commercialization agreement with Meda AB.

Cost of goods sold. Cost of goods sold was $0.3 million and $0.1 million for the three months ended June 30, 2011 and 2010, respectively. Cost of goods sold related solely to the costs of sales of Ceplene®, including manufacturing costs and royalty expense related to sales of Ceplene®. During the second quarter of 2011, we expensed $0.3 million of Ceplene® inventory as we believe such inventory will not be sold prior to reaching its product expiration date.

For the three months ended June 30, 2011, we recorded other expense, net of $0.3 million as compared with other expense, net of $0.8 million for the three months ended June 30, 2010. Other income (expense), net was positively impacted by a $0.9 million change in foreign exchange (loss) gain, which was partially offset by higher interest expense of $0.3 million primarily related to the prepayment of our February 2009 convertible debt.

Revenues.We recognized revenue of approximately $0.5 million during the six months ended June 30, 2011 compared with $0.4 million during the six months ended June 30, 2010. For each of six months ended June 30, 2011 and 2010, revenue consisted primarily of the recognition of upfront licensing fees and milestone payments received from our strategic alliances, royalties with respect to certain technology and product revenues from the sales of Ceplene® to Meda. We recognize revenue primarily from our agreement with Endo using the proportional performance method with respect to LidoPAIN BP, from our agreement with Meda using the milestone method and on a straight line method over the life of the last to expire patent with Myrexis, DURECT and GNI. We recognized revenue of $15,000 and $17,000 for the six months ended June 30, 2011 and 2010, respectively, from royalties with respect to acquired Maxim technology.

Cost of goods sold. Cost of goods sold was $0.4 million and $0.1 for the six months ended June 30, 2011 and 2010, respectively. Cost of goods sold related solely to the costs of sales of Ceplene®, including manufacturing costs and royalty expense related to sales of Ceplene®. During the first six months of 2011, we expensed $0.4 million of Ceplene® inventory as we believe such inventory will not be sold prior to reaching its product expiration date.

Selling, general and administrative expense. Selling, general and administrative expense decreased by 9%, or $0.4 million, from $3.8 million for the six months ended June 30, 2010 to $3.4 million for the six months ended June 30, 2011. The decrease was primarily attributable to lower salary and salary related expenses of $0.3 million and lower promotion and advertising expenses of $0.3 million. The decrease was partially offset by higher legal expenses and a legal reserve that has been established to cover potential liability with respect to a complaint that has been filed against us. Selling expenses have been significantly reduced compared to the first half of 2010, and we expect general and administrative expenses to remain at approximately current levels over the next few quarters.

Read the The complete Report



Stocks Discussed: EPCT,
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