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EpiCept Reports Third Quarter 2012 Operating And Financial Results

Third Quarter and Nine Months 2012 vs. Third Quarter and Nine Months 2011

Revenue

The Company recognized revenue of $0.9 million during the third quarter of 2012, compared with $0.3 million during the third quarter of 2011. The Company recognized revenue of $7.7 million during the nine months ended September 30, 2012, compared with $0.7 million during the nine months ended September 30, 2011. For the third quarter of 2012, revenue consisted primarily of license fee payments, including the recognition of the remaining deferred revenue previously received from Myrexis amounting to $0.7 million. For the third quarter of 2011, revenue consisted primarily of the recognition of license fee payments previously received from strategic alliances.

Cost of Goods Sold

Cost of goods sold in the third quarter of 2011 consisted solely of the costs from the sale of Ceplene ® to Meda AB. Cost of goods sold was $0.4 million for each of the nine months ended September 30, 2012 and 2011, which consisted solely of the costs from the sale of Ceplene ® to Meda AB.

Selling, General and Administrative (SG&A) Expense

SG&A expense in the third quarter of 2012 decreased by approximately 55%, or $1.1 million, to $0.9 million, compared with $2.0 million in the third quarter of 2011. The decrease was primarily attributable to lower legal expenses, lower salary and salary-related expenses and lower investor relations expenses. SG&A expense for the nine months ended September 30, 2012 decreased by approximately 31%, or $1.7 million, to $3.7 million, compared with $5.4 million for the nine months ended September 30, 2011. The Company expects SG&A expenses to trend slightly higher as it proceeds to conclude the merger with Immune Pharmaceuticals.

Research and Development (R&D) Expense

R&D expense in the third quarter of 2012 decreased by 58%, or $1.5 million, to $1.1 millionfrom $2.6 million in the third quarter of 2011. R&D expense for the nine months ended September 30, 2012 decreased by approximately 46%, or $2.9 million, to $3.4 million, compared with $6.3 million for the nine months ended September 30, 2011. The decrease was primarily attributable to lower clinical trial costs for Ceplene ®, lower salary and salary-related expenses and lower patent expenses. The Company’s clinical efforts for the nine months ended September 30, 2012 and 2011 were focused on the open-label trial of Ceplene ®, the responsibility for which has now been transferred to Meda AB. Research and development expense is expected to remain at approximately current levels over the next few quarters.

Other Income (Expense)

Other income (expense) during the third quarter of 2012 was net expense of $47,000, compared with net expense of $1.0 million in the third quarter of 2011. Other expense for the nine months ended September 30, 2012 was $2.0 million, compared with other expense of $0.8 million for the nine months ended September 30, 2011. The primary components of other expense in 2012 were warrant amendment expense of $0.9 million, interest expense of $1.0 million related primarily to the Company’s senior secured term loan and a foreign exchange loss. The primary component of other expense, net for the nine months ended September 30, 2011 was interest expense of $0.9 million.

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