Ceplene Launch Plans for EU Progressing

Regulatory News:

EpiCept Corporation (Nasdaq and OMX Nordic Exchange: EPCT) today announced operating and financial results for the second quarter and six months ended June 30, 2008. For the second quarter of 2008, EpiCept’s net loss attributable to common stockholders was $7.8 million, or $0.15 per share, compared with a net loss attributable to common stockholders of $7.0 million, or $0.22 per share, for the second quarter of 2007. For the six months ended June 30, 2008, EpiCept’s net loss attributable to common stockholders was $13.8 million, or $0.28 per share, compared to $14.7 million, or $0.45 per share, for the six months ended June 30, 2007. As of June 30, 2008, EpiCept had approximately 59.3 million shares outstanding.

“The second quarter was challenging for the Company as we filed and then prepared to present the grounds for the re-examination of the negative opinion of Ceplene^® issued by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA) in March,” stated Jack Talley, President and CEO of EpiCept. “Our liquidity was negatively affected by the earlier decision on Ceplene^®. This required us to reduce expenses and renegotiate our loan with our senior secured lender. However, with the overwhelming support for Ceplene we received from key opinion leaders in hematology across Europe we were able to successfully prevail in our appeal, and as a result we believe we are now in a much more favorable position to improve the Company’s liquidity while we simultaneously make preparations to launch Ceplene in Europe through a marketing partner.”

EpiCept today provided an update on several of its key product candidates:

• Ceplene^® - is intended for the remission maintenance and prevention of relapse of patients with Acute Myeloid Leukemia (AML) in first remission, the most common type of leukemia in adults. In July 2008, the CHMP issued a positive opinion regarding the marketing authorization application (MAA) for Ceplene^®. EpiCept is working with the EMEA to finalize the product labeling, the package insert or SPC, the risk management plan and the phamacovigilance plan for post introduction monitoring of adverse reactions. EpiCept expects final marketing authorization to occur in September/October 2008. Several marketing partners are under consideration for the licensing of the European marketing rights to Ceplene at this time. First commercial introduction of Ceplene is expected to occur in Europe in the first quarter of 2009.
• EpiCept NP-1 - a prescription topical analgesic cream designed to provide long-term relief from the pain of peripheral neuropathies, which affect more than 15 million people in the U.S alone. In February 2008, EpiCept reported encouraging results from a Phase II trial for NP-1 in Diabetic Peripheral Neuropathy (DPN), which the Company believes support the advancement of NP-1 to a pivotal Phase III trial in DPN. EpiCept NP-1 is currently being studied in two additional clinical trials: a Phase III trial in chemotherapy-induced peripheral neuropathy (CPN) being conducted by the National Cancer Institute (NCI)-funded Community Clinical Oncology Program, and a Phase II comparative trial versus gabapentin and placebo in post-herpetic neuralgia (PHN). Enrollment for the PHN trial is complete and top line results are expected in the fourth quarter of 2008.
• EPC2407 - a vascular disruption agent (VDA) that also has potent direct apoptotic activity on cancer cells. In April 2008, the Company announced that it is evaluating the pharmacodynamic effects of EPC2407 with different dosage schedules and expects to initiate a Phase Ib combination trial for the compound with other chemotherapeutic agents in 2009.
• Azixa™ - a compound discovered by EpiCept and licensed to Myriad Genetics, Inc. as part of an exclusive, worldwide development and commercialization agreement. EpiCept received a milestone payment in March 2008 as a result of Myriad’s dosing of the first patient in the first of its three Phase II trials. EpiCept will earn an additional milestone payment upon the dosing of the first patient in the first Phase III trial.

Financial and Operating Highlights

General and Administrative Expense

General and administrative expense decreased by 33%, or $1.1 million, from $3.3 million in the second quarter of 2007 to $2.2 million in the second quarter of 2008. The decrease was primarily attributable to lower personnel, accounting, public reporting and investor relations costs for the second quarter of 2008 as compared to the same period in 2007. In addition, for the second quarter of 2007, we incurred a $0.4 million charge for liquidating damages as a result of a registration statement not being declared effective by the required date and a $0.3 million charge relating to a release and settlement agreement with our senior secured lender. General and administrative expense decreased by 27%, or $1.8 million from $6.6 million for the six months ended June 30, 2007 to $4.8 million for the six months ended June 30, 2008.

Research and Development (R&D) Expense

Research and development expense was $3.3 million in the second quarter of 2008, unchanged from the second quarter of 2007. During the second quarter of 2008, EpiCept’s clinical efforts were focused primarily on the completion of the clinical trials of NP-1 and preparation for the reexamination of the negative determination issued by the CHMP regarding EpiCept’s MAA for Ceplene®. During the second quarter of 2007, EpiCept commenced two clinical trials of NP-1 and continued our Phase I clinical trial of EPC 2407. EpiCept also reviewed the Day 80 report and the Day 120 List of Questions related to the Ceplene MAA, and commenced preparation of our response to the EMEA. For the six months ended June 30, 2008, research and development expenses decreased by 3%, or $0.2 million from $7.0 million for the six months ended June 30, 2007 to $6.8 million for the six months ended June 30, 2008.

Other Expense, Net

Other expense, net increased by $1.7 million to $2.2 million in the second quarter of 2008 from $0.5 million in the second quarter of 2007. The increase in other expense, net was primarily attributable to a $2.0 million non-cash loss on the extinguishment of debt recorded in the second quarter of 2008. In June 2008, EpiCept entered into a second amendment to the original debt agreement with its senior secured lender, which was considered a substantial modification. As a result of the modification to the original debt agreement, EpiCept recorded the new debt at its fair value and recorded a loss on the extinguishment of the original debt of $2.0 million.

Cash from Operations

Net cash used in operating activities for the first six months of 2008 was $7.8 million as compared to $10.5 million in the first six months of 2007. During the first six months of 2008, cash was used primarily to fund EpiCept’s net loss for the period, partially offset by non-cash charges of $1.7 million related to the extinguishment of debt, $1.3 million of FAS 123R stock-based compensation and $0.1 million of depreciation and amortization expenses. Deferred revenue increased by $1.0 million as a result of receiving a $1.0 million milestone payment from Myriad.

Nasdaq Listing Update

On August 6, 2008, the Company received a letter from the Nasdaq Office of the General Counsel stating that the Nasdaq Hearings Panel had granted the Company’s request for continued listing on The Nasdaq Stock Market, subject to the Company’s ability to (i) maintain a market value of listed securities above $35 million for ten (10) consecutive trading days, on or before August 29, 2008, and (ii) comply with all requirements for continued listing on The Nasdaq Stock Market. The market value of the Company’s listed securities has exceeded $35 million for each of the six consecutive trading days ending August 8, 2008. The Company has until October 13, 2008 to regain compliance with Marketplace Rule 4320(e)(2)(E)(ii), which requires that the closing bid price of the Company’s common stock be a minimum of $1.00.

About EpiCept Corporation

EpiCept is focused on unmet needs in the treatment of cancer and pain. The Company's broad portfolio of pharmaceutical product candidates includes Ceplene^®, a cytokine immunomodulator that recently received a positive opinion from the CHMP in Europe for the remission maintenance of AML patients, and several pain therapies in clinical development. In addition, EpiCept's ASAP technology, a proprietary live cell high-throughput caspase-3 screening technology, can efficiently identify new cancer drug candidates and molecular targets that selectively induce apoptosis in cancer cells. Two oncology drug candidates currently in clinical development that were discovered using this technology have also been shown to act as vascular disruption agents in a variety of solid tumors.

Forward-Looking Statements

This news release and any oral statements made with respect to the information contained in this news release, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements which express plans, anticipation, intent, contingency, goals, targets, future development and are otherwise not statements of historical fact. These statements are based on EpiCept's current expectations and are subject to risks and uncertainties that could cause actual results or developments to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Factors that may cause actual results or developments to differ materially include: the risks associated with the adequacy of our existing cash resources, our need to raise additional financing to continue to meet our capital needs and our ability to continue as a going concern, the risks associated with our ability to continue to meet our obligations under our existing debt agreements or that we may default on our loans or that our lenders may declare the Company in default or that our secured lender would seek to sell our assets, the risk that the Company’s securities may be delisted by The Nasdaq Capital Market or the OMX Nordic Exchange, the risk that we do not receive final regulatory marketing approval by the European Commission for Ceplene^®, the risk that Ceplene^®, if approved, will not be launched in the first quarter of 2009 or achieve significant commercial success, the risk that we are unable to find a suitable marketing partner for Ceplene^® on attractive terms, a timely basis or at all, the risk that Myriad’s development of Azixa™ will not be successful, the risk that Azixa™ will not receive regulatory approval or achieve significant commercial success, the risk that we will not receive any significant payments under our agreement with Myriad, the risk that the development of our other apoptosis product candidates will not be successful, the risk that our ASAP technology will not yield any successful product candidates, the risk that clinical trials for NP-1 or EPC2407 will not be successful, the risk that NP-1 or EPC2407 will not receive regulatory approval or achieve significant commercial success, the risk that our other product candidates that appeared promising in early research and clinical trials do not demonstrate safety and/or efficacy in larger-scale or later stage clinical trials, the risk that we will not obtain approval to market any of our product candidates, the risks associated with dependence upon key personnel, the risks associated with reliance on collaborative partners and others for further clinical trials, development, manufacturing and commercialization of our product candidates; the cost, delays and uncertainties associated with our scientific research, product development, clinical trials and regulatory approval process; our history of operating losses since our inception; the highly competitive nature of our business; risks associated with litigation; risks associated with prior material weaknesses in our internal controls; and risks associated with our ability to protect our intellectual property. These factors and other material risks are more fully discussed in EpiCept’s periodic reports, including its reports on Forms 8-K, 10-Q and 10-K and other filings with the U.S. Securities and Exchange Commission. You are urged to carefully review and consider the disclosures found in EpiCept’s filings, which are available at www.sec.gov or at www.epicept.com. You are cautioned not to place undue reliance on any forward-looking statements, any of which could turn out to be wrong due to inaccurate assumptions, unknown risks or uncertainties or other risk factors.

EPCT-GEN

*Azixa is a registered trademark of Myriad Genetics, Inc.

Selected financial information follows:

EPCT-GEN

EpiCept Corporation:
Robert W. Cook, 914-606-3500
rcook@epicept.com
or
Media:
Feinstein Kean Healthcare
Greg Kelley, 617-577-8110
gregory.kelley@fkhealth.com
or
Investors:
Lippert/Heilshorn & Associates
Kim Sutton Golodetz, 212-838-3777
kgolodetz@lhai.com
or
Bruce Voss, 310-691-7100
bvoss@lhai.com