West Coast Editor

Privately held pain drug firm EpiCept Corp. entered a deal to pay about $136 million in stock to take over Maxim Pharmaceuticals Inc., and the agreement is expected to close in the fourth quarter.

Larry Stambaugh, CEO of Maxim, noted in a conference call that the company earlier had disclosed plans for a "strategic transaction" that would "leverage and build on [the company's] assets" - and this is it.

Maxim's stock (NASDAQ:MAXM) closed Tuesday at $1.54, up 20 cents, or 14.9 percent.

The buyout would leave EpiCept's shareholders with about 72 percent of the merged company, which will keep as CEO Jack Talley from EpiCept and leave the headquarters in Englewood, N.J., though Maxim's San Diego facility will continue operating.

After the buyout, EpiCept will trade on Nasdaq under the symbol "EPCT," and the "MAXM" ticker no longer will be active.

Talley said the deal will provide the newly created firm with a "broad and well-balanced pipeline," less reliant on the success of any single compound, and he looks forward to a "steady stream of milestones during the next year."

Maxim made news at the start of this year when the FDA said the firm's lead product, Ceplene (histamine dihydrochloride), needed another Phase III trial before it could be approved for acute myeloid leukemia. From there, the company reduced its work force to save cash. (See BioWorld Today, Feb. 10, 2005.)

In a Phase III trial as a remission-free maintenance therapy for AML, Ceplene yielded a statistically significant improvement in leukemia-free survival (p=0.0096), but the drug missed its endpoints in Phase II trials in hepatitis C and renal-cell carcinoma, disclosed along with the February news.

Things look better for Ceplene overseas, and EpiCept plans to submit the compound for marketing clearance in the European Union in the first half of next year.

From partner Adolor Corp., of Exton, Pa., EpiCept expects a milestone payment this year when a Phase II trial with the sustained-delivery lidocaine patch LidoPAIN SP for post-surgical or post-traumatic sutured wounds begins, and another payment next year when the Phase III program begins.

Data from a Phase III trial in Europe with LidoPAIN SP are expected in the second quarter of next year and could form the basis of a regulatory filing there. Also next year, the firm aims to kick off a Phase IIb trial with its similar product, LidoPAIN BP, for acute lower back pain, a program to be jointly overseen by EpiCept and Endo Pharmaceuticals Inc., of Chadds Ford, Pa., which licensed the product in late 2003.

Still to come this year is a licensing deal for one of the lead apoptosis compounds from Maxim, and EpiCept expects to independently move one of those candidates into a Phase I trial in the first half of 2006, when the firm also plans to begin a pivotal Phase III trial of EpiCept NP-1, a topical analgesic cream for long-term relief from pain caused by peripheral neuropathies.

Ben Tseng, Maxim's vice president of research, will become EpiCept's chief scientific officer upon closing of the deal, and the board of the merged firm will consist of five current EpiCept directors and two current Maxim directors.

Maxim's financial adviser in the deal is Piper Jaffray & Co., of New York, with Cooley Godward LLP, of Reston, Va., acting as legal adviser for the firm. For EpiCept, Wachovia Securities, of New York, and Weil, Gotshal & Manges LLP, of Washington, are serving in those roles, respectively.

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