Document:

EX-10.3

 

    Filed
    Pursuant to Rule 424(b)(5)

    Registration No. 333-145561
    

 

    PROSPECTUS
    SUPPLEMENT

    (To
    Prospectus Dated September 18, 2007)
    

 

    

 

 

    Up to
    5,529,954 Shares of Common Stock, par value $0.0001 per
    share

    Warrants to Purchase 2,764,978 Shares of Common Stock, par
    value $0.0001 per share

 

    This prospectus supplement and the accompanying prospectus
    relate to the sale of up to 5,529,954 shares of our common
    stock and warrants to purchase up to 2,764,978 shares of
    our common stock and the issuance of up to 2,764,978 shares
    of our common stock upon exercise of the warrants. Purchasers
    will receive warrants to purchase up to 2,764,978 shares of
    common stock at an exercise price of $.48 per share for each
    share of common stock they purchase in this offering. Units will
    not be issued or certificated. The shares of common stock and
    the warrants will be issued separately.

 

    You should carefully read this prospectus supplement and the
    accompanying prospectus, together with the documents we
    incorporate by reference, before you invest in our securities.

 

    Our common stock is dual-listed on The Nasdaq Capital Market and
    the OMX Nordic Exchange under the ticker symbol
    “EPCT.” The last reported sale price of our common
    stock on The Nasdaq Capital Market on July 31, 2008 was
    $0.48 per share. See “Risk Factors — Our
    common stock may be delisted from The Nasdaq Capital Market or
    the OMX Nordic Exchange, which may make it more difficult for
    you to sell your shares” for information regarding the
    potential de-listing of our common stock.

 

	 	 	 	 	 	 	 	 	 
	
 
	
 
	
    Per Unit
	
 
	
    Total

	 

	

    Public offering price

	
 
	
    $
	
    .54
	
 
	
 
	
    $
	
    3,000,000
	
 

	

    Placement agent’s fees

	
 
	
    $
	
    .04
	
 
	
 
	
    $
	
    210,000
	
 

	

    Proceeds, before expenses, to EpiCept Corporation

	
 
	
    $
	
    .50
	
 
	
 
	
    $
	
    2,790,000
	
 

 

    We retained Rodman & Renshaw, LLC as placement agent
    to use its reasonable best efforts to solicit offers to purchase
    our securities in this offering. The placement agent is not
    purchasing or selling any securities pursuant to this prospectus
    supplement or the accompanying prospectus. We expect that
    delivery of the securities being offered pursuant to this
    prospectus supplement will be made to purchasers on or about
    August 5, 2008.

 

    Investing in our securities involves a high degree of risk
    and the purchasers of the securities may lose their entire
    investment. See “Risk Factors” beginning on
    page S-5
    to read about factors you should consider before buying our
    securities.

 

    Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus supplement and the
    accompanying prospectus is truthful or complete. Any
    representation to the contrary is a criminal offense.

 

 

    RODMAN & RENSHAW, LLC

 

    The date of this Prospectus Supplement is August 1, 2008.

 

 

    You should rely only on the information contained or
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus. We have not authorized anyone to
    provide you with different or additional information. We are not
    making an offer of these securities in any state where the offer
    is not permitted. You should not assume that the information
    provided by this prospectus supplement is accurate as of any
    date other than the date on the front of this prospectus
    supplement. Our business, financial condition, results of
    operations and prospects may have changed since then.

 

 

    TABLE OF
    CONTENTS

 

 

    Prospectus
    Supplement

 

	 	 	 	 	 
	

    ABOUT THIS PROSPECTUS SUPPLEMENT

	
 
	 
	
    S-ii
	 

	

    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

	
 
	 
	
    S-ii
	 

	

    ABOUT EPICEPT

	
 
	 
	
    S-1
	 

	

    THE OFFERING

	
 
	 
	
    S-4
	 

	

    RISK FACTORS

	
 
	 
	
    S-5
	 

	

    USE OF PROCEEDS

	
 
	 
	
    S-10
	 

	

    DESCRIPTION OF THE WARRANTS

	
 
	 
	
    S-11
	 

	

    PLAN OF DISTRIBUTION

	
 
	 
	
    S-12
	 

	

    LEGAL MATTERS

	
 
	 
	
    S-12
	 

	

    WHERE YOU CAN FIND MORE INFORMATION

	
 
	 
	
    S-13
	 

	

    INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

	
 
	 
	
    S-13
	 

	
 
	
 
	 
	
 
	 

	
 

	

    Prospectus

	
 
	
 
	
	
 
	 
	

    ABOUT THIS PROSPECTUS

	
 
	 
	
    i
	 

	

    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

	
 
	 
	
    ii
	 

	

    ABOUT EPICEPT

	
 
	 
	
    1
	 

	

    RISK FACTORS

	
 
	 
	
    2
	 

	

    USE OF PROCEEDS

	
 
	 
	
    2
	 

	

    RATIO OF EARNINGS TO FIXED CHARGES

	
 
	 
	
    2
	 

	

    SECURITIES WE MAY OFFER

	
 
	 
	
    2
	 

	

    DESCRIPTION OF CAPITAL STOCK

	
 
	 
	
    3
	 

	

    DESCRIPTION OF DEBT SECURITIES THAT WE MAY OFFER

	
 
	 
	
    7
	 

	

    DESCRIPTION OF WARRANTS

	
 
	 
	
    13
	 

	

    DESCRIPTION OF UNITS

	
 
	 
	
    14
	 

	

    PLAN OF DISTRIBUTION

	
 
	 
	
    15
	 

	

    LEGAL MATTERS

	
 
	 
	
    17
	 

	

    EXPERTS

	
 
	 
	
    17
	 

	

    WHERE YOU CAN FIND MORE INFORMATION

	
 
	 
	
    17
	 

	

    INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

	
 
	 
	
    18
	 

    

    S-i

 

    ABOUT
    THIS PROSPECTUS SUPPLEMENT

 

    This document is in two parts. The first part is this prospectus
    supplement, which describes the terms of this offering of our
    common stock and warrants and also adds to and updates
    information contained in or incorporated by reference into the
    accompanying prospectus. The second part is the accompanying
    prospectus, which gives more information about us and the type
    of securities we may offer from time to time under our shelf
    registration statement. To the extent there is a conflict
    between the information contained, or referred to, in this
    prospectus supplement, on the one hand, and the information
    contained, or referred to, in the accompanying prospectus or any
    document incorporated by reference therein, on the other hand,
    the information in this prospectus supplement shall control. We
    have not authorized any broker, dealer, salesperson or other
    person to give any information or to make any representation
    other than those contained or incorporated by reference in this
    prospectus supplement and the accompanying prospectus. You must
    not rely upon any information or representation not contained or
    incorporated by reference in this prospectus supplement or the
    accompanying prospectus. This prospectus supplement and the
    accompanying prospectus do not constitute an offer to sell or
    the solicitation of an offer to buy common stock and warrants,
    nor do this prospectus supplement and the accompanying
    prospectus constitute an offer to sell or the solicitation of an
    offer to buy common stock and warrants in any jurisdiction to
    any person to whom it is unlawful to make such offer or
    solicitation in such jurisdiction. You should not assume that
    the information contained in this prospectus supplement and the
    accompanying prospectus is accurate on any date subsequent to
    the date set forth on the front of the document or that any
    information we have incorporated by reference is correct on any
    date subsequent to the date of the document incorporated by
    reference, even though this prospectus supplement and any
    accompanying prospectus is delivered or common stock and
    warrants are sold on a later date.

 

    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

    This prospectus supplement and the registration statement of
    which it forms a part, any accompanying prospectus and the
    documents incorporated by reference into these documents contain
    forward-looking statements within the meaning of
    Section 27A of the Securities Act and Section 21E of
    the Securities Exchange Act of 1934. We use words such as
    “anticipates,” “believes,”
    “plans,” “expects,” “future,”
    “intends,” “will,” “foresee” and
    similar expressions to identify these forward-looking
    statements. In addition, from time to time we or our
    representatives have made or may make forward-looking statements
    orally or in writing. Furthermore, such forward-looking
    statements may be included in various filings that we make with
    the Securities and Exchange Commission, or SEC, or press
    releases or oral statements made by or with the approval of one
    of our authorized executive officers. These forward-looking
    statements are subject to certain known and unknown risks and
    uncertainties, as well as assumptions, that could cause actual
    results to differ materially from those reflected in these
    forward-looking statements. Factors that might cause actual
    results to differ include, but are not limited to, those
    discussed in the section entitled “Risk Factors”
    beginning on
    page S-6
    of this prospectus supplement. Readers are cautioned not to
    place undue reliance on any forward-looking statements contained
    herein, which reflect management’s opinions only as of the
    date hereof. Except as required by law, EpiCept undertakes no
    obligation to revise or publicly release the results of any
    revision to any forward-looking statements. You are advised,
    however, to consult any additional disclosures we have made or
    will make in our reports to the SEC on
    Forms 10-K,
    10-Q and
    8-K. All
    subsequent written and oral forward-looking statements
    attributable to us or persons acting on our behalf are expressly
    qualified in their entirety by the cautionary statements
    contained in this prospectus supplement.

    

    S-ii

 

    ABOUT
    EPICEPT

 

    This summary description of us and our business highlights
    selected information contained elsewhere in this prospectus
    supplement, the accompanying prospectus, or incorporated herein
    or therein by reference. This summary may not contain all of the
    information that you should consider before buying securities in
    this offering. You should carefully read this entire prospectus
    supplement, the accompanying prospectus, including each of the
    documents incorporated herein or therein by reference, before
    making an investment decision. As used herein,
    “EpiCept” “we,” “us,” and
    “our” refer to EpiCept Corporation and its
    subsidiaries.

 

    Our lead product is
    Ceplene®,
    which when used in conjunction with low-dose interleukin-2 is
    intended as remission maintenance therapy in the treatment of
    acute myeloid leukemia, or AML, for adult patients who are in
    their first complete remission. On July 24, 2008 the
    Committee for Medicinal Products for Human Use, or CHMP, issued
    a positive opinion regarding the marketing authorization for
    Ceplene®
    in the European Union. This positive opinion was issued
    following our request to have the initial negative opinion
    issued in March 2008 re-examined by the CHMP. The formal
    marketing authorization from the European Commission is usually
    obtained within 67 days from the date of the CHMP’s
    opinion.

 

    In addition to
    Ceplene®,
    we have a portfolio of four product candidates in various stages
    of development: two oncology compounds, a pain product candidate
    for the treatment of peripheral neuropathies and another pain
    product candidate for the treatment of acute back pain. This
    portfolio of oncology and pain management product candidates
    lessens our reliance on the success of any single product
    candidate. Our strategy is to focus our development efforts on
    innovative cancer therapies and topically delivered analgesics
    targeting peripheral nerve receptors.

 

    Our pain product candidate, EpiCept NP-1, is a prescription
    topical analgesic cream designed to provide effective long-term
    relief of pain associated with peripheral neuropathies. We
    recently concluded a Phase II clinical study of NP-1 in
    patients suffering from diabetic peripheral neuropathy, or DPN,
    and we expect to receive the results in the third or fourth
    quarter of 2008. We also have ongoing clinical trials for
    peripheral herpetic neuropathy, or PHN, and chemotherapy induced
    neuropathy, or CIN. LidoPAIN BP, licensed to Endo
    Pharmaceuticals, is currently in Phase II development for
    the treatment of acute back pain. Our portfolio of pain product
    candidates targets moderate-to-severe pain that is influenced,
    or mediated, by nerve receptors located just beneath the
    skin’s surface. Our pain product candidates utilize
    proprietary formulations and several topical delivery
    technologies to administer U.S. Food and Drug
    Administration, or FDA, approved pain management therapeutics
    directly on the skin’s surface at or near the site of the
    pain.

 

    We have completed our first Phase I clinical trial for EPC2407,
    a novel small molecule vascular disruption agent, or VDA, and
    apoptosis inducer for the treatment of patients with advanced
    solid tumors and lymphomas.
    Azixatm
    (MPC-6827), an apoptosis inducer with VDA activity licensed by
    us to Myriad Genetics, Inc. as part of an exclusive, worldwide
    development and commercialization agreement, is currently in
    Phase II clinical trials in patients with primary
    glioblastoma, melanoma that has metastasized to the brain and
    non-small-cell lung cancer that has spread to the brain.

 

    None of our product candidates has been approved by the
    U.S. Food and Drug Administration or any comparable agency
    in another country and we have yet to generate product revenues
    from any of our product candidates in development.

 

    Our executive offices are located at 777 Old Saw Mill River
    Road, Tarrytown, NY 10591, our telephone number at that location
    is
    (914) 606-3500,
    and our website can be accessed at www.epicept.com.
    Information contained in our website does not constitute part of
    this prospectus supplement or the accompanying prospectus.

 

    Recent
    Developments

 

    Liquidity.  We believe that our existing cash
    resources together with the net proceeds from this offering will
    be sufficient to meet our projected operating and debt service
    requirements into August 2008 but will not be sufficient to meet
    our obligations thereafter, including but not limited to, our
    obligations to make interest and principal payments under
    (1) our senior secured loan from Hercules Technology Growth
    Capital

    

    S-1

 

    (“Hercules”), which has a balance of $4.1 million
    at August 1, 2008 and is secured by a pledge of
    substantially all of our assets, including our intellectual
    property, and (2) our €1.5 million (approximately
    $2.4 million) of outstanding indebtedness that matures in
    December 2008. In addition, we have deferred, and will have to
    continue to defer, payments to certain of our vendors which will
    cause our accounts payable balance to increase. We are seeking
    to raise additional capital as soon as possible. However, our
    efforts may not be successful. If we do not raise additional
    funds before the end of August 2008 we will be unable to meet
    our operating and debt service obligations, including the
    payment of the interest and principal on our senior secured
    loan. If we default on the payment of the interest and principal
    on our indebtedness, our senior lender may seek to accelerate
    our senior secured loan and exercise their rights and remedies
    under their loan and security agreement, including the sale of
    our property and other assets. See “Risk
    Factors — We have limited liquidity and, as a
    result, may not be able to meet our operating and debt service
    requirements including our obligations under our senior secured
    loan” and “Risk Factors — We need to
    raise additional capital as soon as possible and we may not be
    able to do so.”

 

    Ceplene®.  Ceplene®
    is our lead product, which when used in conjunction with
    low-dose interleukin-2 is intended as remission maintenance
    therapy in the treatment of acute myeloid leukemia, or AML, for
    adult patients who are in their first complete remission. On
    July 24, 2008, the CHMP of the European Medicines Agency
    (EMEA) issued a positive opinion regarding the marketing
    authorization for
    Ceplene®,
    for the remission maintenance and prevention of relapse in
    patients with AML in first remission.
    Ceplene®
    is to be administered in conjunction with low-dose interleukin-2
    (IL-2). This positive opinion was issued following a request
    made by us to have the initial negative opinion of March 2008
    re-examined by the CHMP.
    Ceplene®
    has been designated as an orphan medicinal product, and as such
    is entitled to 10 years of marketing exclusivity in the EU.

 

    We presented at an oral explanation hearing at the CHMP’s
    plenary meeting on July 22, 2008. Following this oral
    explanation, the CHMP recommended that
    Ceplene®
    be granted a full marketing authorization under the provision of
    Exceptional Circumstances. As part of granting of the marketing
    authorization under Exceptional Circumstances, we have agreed to
    perform two post-approval clinical studies. One of the studies
    seeks to further elucidate the clinical pharmacology of
    Ceplene®
    by assessing certain biomarkers in AML patients in first
    remission. The other study will assess the effect of
    Ceplene/IL-2 on the development of minimal residual disease in
    the same patient population.

 

    The CHMP’s recommendation will now be forwarded to the
    European Commission for issuing a marketing authorization in the
    form of a Commission Decision, which normally occurs within
    67 days. The marketing authorization with unified clinical
    usage for
    Ceplene®
    granted under the Centralized Procedure will be valid for the
    entire European Union as well as in Iceland, Liechtenstein and
    Norway.

 

    See “Risk Factors — If we do not receive
    final regulatory marketing approval by the European Commission
    for
    Ceplene®,
    our business will be harmed.”

 

    Senior Secured Loan.  In May 2008, we amended
    the Hercules loan agreement such that we are required to meet
    certain obligations to obtain financing by June 2008 and July
    2008. Hercules has agreed to waive such obligations in
    consideration of the prepayment and loan and warrant amendments
    described below. In connection with that amendment, we paid
    Hercules an amendment fee of $50,000. We further amended the
    senior secured loan on June 23, 2008. In connection with
    that amendment, we paid $500,000 from our restricted account to
    Hercules to be applied to the interest and principal at our
    senior secured loan to repay a portion of the $5.4 million
    balance of our senior secured loan outstanding as of
    June 10, 2008 and used $250,000 of the proceeds of the
    June 23, 2008 offering to pay Hercules for amendment fees
    and expense reimbursements. The remaining loan balance bears
    interest at a rate per annum of 15.0% (an increase from 11.7%)
    We have also agreed that $200,000 under the senior secured loan
    shall be due and payable on the earliest to occur of (a) an
    equity financing in which we receive net proceeds of $5,000,000,
    (b) the date the senior secured loan becomes due and
    payable whether by acceleration or otherwise, and
    (c) August 15, 2008. We have further agreed that the
    payment of the $1,000,000 (less the $200,000 previously
    paid) under the senior secured loan shall be due and payable on
    the earliest to occur of (i) an equity financing in which
    we receive net proceeds of $5,000,000, (ii) the date the
    senior secured loan becomes due and payable whether by
    acceleration or otherwise, and (iii) September 15,
    2008. The

    

    S-2

 

    maturity date of the loan was amended to be April 1, 2009
    and the balance of the loan (less $1,000,000) is required to be
    paid in ten (10) equal monthly installments beginning
    July 1, 2008. In addition, we agreed that we would pay the
    senior secured loan prior to making any principal payments under
    our €1.5 million outstanding indebtedness which
    matures in December 2008. In the amendments, we have agreed to
    pay Hercules (a) fees and expense reimbursements of
    $250,000, which has been paid, (b) a $250,000 fee upon the
    receipt of statistically significant results for the primary
    endpoint(s) in our current clinical trial for NP-1 and
    (c) a $500,000 fee upon a positive decision on the
    reexamination of
    Ceplene®
    by the EMEA scheduled for the end of July 2008. In addition, if
    the reexamination is not successful and the results of our NP-1
    trial are not positive, our senior secured loan has been amended
    to provide that would constitute a material adverse effect and
    our senior secured lender could assert an event of default. In
    connection with a second amendment to the warrant agreement with
    Hercules, the terms of the warrants issued to Hercules were
    adjusted to grant Hercules the right to purchase an aggregate of
    2.2 million shares of our common stock at an exercise price
    of $0.30 per share. In connection with the second amendment
    to the loan agreement, we issued Hercules warrants to purchase
    an aggregate of 3.8 million shares of our common stock at
    an exercise price of $0.39 per share and an aggregate of
    1.0 million shares of the our common stock at an exercise
    price of $0.41 per share. The senior secured lender may, at
    its option, convert up to $1,900,000 of the outstanding
    principal amount of the loan into up to 3,689,320 shares of
    our common stock valued at $0.515 per share. We have granted the
    senior secured lender registration rights with respect to the
    shares issuable upon conversion of the senior secured loan and
    upon exercise of its warrants. We may not be able to meet our
    obligations under our senior secured loan and our senior secured
    lender may assert that an event of default has occurred at any
    time and seek to accelerate the loan and exercise their rights
    and remedies under the loan and security agreement including the
    sale of our intellectual property or other assets. See
    “Risk Factors — We have limited liquidity
    and, as a result, may not be able to meet our operating and debt
    service requirements including our obligations under our senior
    secured loan.”

 

    Nasdaq Delisting.  On April 8, 2008, we
    announced that the Nasdaq Listing Qualifications Department
    notified us on April 4, 2008 that we were not in compliance
    with the market value requirement because the market value of
    our listed securities fell below $35,000,000 for ten consecutive
    business days (pursuant to Rule 4310(c)(3)(B) of the Nasdaq
    Marketplace Rules). Pursuant to Nasdaq Marketplace
    Rule 4310(c)(8)(C), we were provided a period of 30
    calendar days, or until May 5, 2008, to regain compliance.

 

    On April 16, 2008, we received a letter from the Nasdaq
    Listings Qualification Department stating that we were not in
    compliance with the continued listing requirements of The Nasdaq
    Capital Market because the bid price of our common stock has
    closed below the minimum $1.00 per share requirement for 30
    consecutive business days (pursuant to Marketplace
    Rule 4310(c)(4)).

 

    On May 7, 2008 we were notified by the Nasdaq Listing
    Qualifications Department that we had not regained compliance
    with the continued listing requirements of The Nasdaq Capital
    Market. As a result, the Nasdaq Listing Qualifications
    Department has determined that our securities are subject to
    delisting from The Nasdaq Capital Market.

 

    On May 14, 2008, we requested a hearing before a Nasdaq
    Listing Qualifications Panel to review this determination.
    Nasdaq has requested that we also address the bid price
    requirement during the hearing. Our securities will remain
    listed on The Nasdaq Capital Market pending the Panel’s
    decision. The hearing was held on June 12, 2008 and the
    Panel’s decision is scheduled to be announced within 30 to
    45 days after the hearing but may be announced sooner. In
    the event that our securities are delisted from The Nasdaq
    Capital Market, our securities may be eligible to trade on the
    over-the-counter market, although we can not assume that will be
    the case. We have received a notice from the OMX Nordic Exchange
    that our common stock has been moved to the observation segment
    effective June 2, 2008 due to the fact that there is a
    material adverse uncertainty regarding our financial situation.
    The delisting of our common stock by The Nasdaq Capital Market
    may result in the delisting of our common stock on the OMX
    Nordic Exchange in Sweden and the delisting of our common stock
    on The Nasdaq Capital Market or the OMX Nordic Exchange would
    adversely affect the market price and liquidity of our common
    stock and warrants, your ability to sell your shares of our
    common stock and warrants and our ability to raise capital. See
    “Risk Factors — Our common stock may be
    delisted from The Nasdaq Capital Market or the OMX Nordic
    Exchange, which will make it more difficult for you to sell your
    shares.”

    

    S-3

 

    THE
    OFFERING

 

			
	
    Common stock being offered by us in this offering		
    5,529,954 shares of common stock
	 
	
    Warrants offered by us in this offering		
    Warrants to purchase 2,764,978 shares of common stock
	 
	
    Common stock issuable upon exercise of the warrants		
    2,764,978 shares of common stock
	 
	
    Common stock to be outstanding after this offering(1)		
    67,295,757 shares of common stock
	 
	
    Use of proceeds		
    Any net proceeds we may receive will be used to repay a portion
    of our senior secured loan. The remaining proceeds will be used
    to meet our working capital needs and general corporate
    purposes. See “Use of Proceeds.”
	 
	
    Nasdaq Capital Market and OMX Nordic Exchange symbol		
    EPCT
	 
	
    Risk factors		
    Investing in our common stock and warrants involves a high
    degree of risk and the purchasers of our common stock, warrants
    and the underlying common stock may lose their entire
    investment. See “Risk Factors” and the other
    information included and incorporated by reference in this
    prospectus supplement and the accompanying prospectus for a
    discussion of risk factors you should carefully consider before
    deciding to invest in our securities.

 

 

			
	
    (1) 		
    The number of shares of our common stock to be outstanding after
    this offering is based on the number of shares of our common
    stock outstanding as of July 30, 2008. This number does not
    include, as of July 30, 2008:

 

			
	 	    •  
	
    5,750,355 shares of our common stock issuable upon exercise
    of options outstanding, at a weighted average exercise price of
    $4.12 per share, including 1,932,496 shares issuable upon
    the exercise of options granted during 2008 to certain of our
    directors, our named executive officers and other employees;

	 
	 	    •  
	
    387,165 shares of restricted common stock and common stock
    units granted to certain of our directors, our named executive
    officers and other employees;

	 
	 	    •  
	
    1,953,694 shares of our common stock reserved for issuance
    under our 2005 Equity Incentive Plan and our 2005 Employee Stock
    Purchase Plan;

	 
	 	    •  
	
    31,148,719 shares of our common stock issuable upon the
    exercise of warrants purchased in certain private placements at
    a weighted average exercise price of $1.43 per share;

	 
	 	    •  
	
    1,000,000 shares of common stock that may be issued in the
    future under our Standby Equity Distribution Agreement with YA
    Global Investments, L.P., dated as of December 21, 2006,
    pursuant to which no shares have been issued;

	 
	 	    •  
	
    2,764,978 shares of our common stock issuable upon exercise
    of the Warrants; and

	 
	 	    •  
	
    3,689,320 shares issuable to our senior secured lender upon
    conversion of its senior secured note.

    

    S-4

 

    RISK
    FACTORS

 

    Investment in our securities involves a high degree of risk
    and purchasers of our securities may lose their entire
    investment. You should carefully consider the specific risks
    described below and under the caption “Risk Factors”
    in any of our filings with the SEC pursuant to
    Section 13(a), 14 or 15(d) of the Securities and Exchange
    Act of 1934, as amended, or the Exchange Act, which are
    incorporated herein by reference, before making an investment
    decision. Each of the risks described in these headings could
    adversely affect our business, financial condition, results of
    operations and prospects, and could result in a complete loss of
    your investment. For more information, see “Where You Can
    Find More Information” and “Incorporation of Certain
    Documents By Reference.”

 

    Risks
    Related to our Financial Condition and Business

 

    We
    have limited liquidity and, as a result, may not be able to meet
    our operating and debt service requirements including our
    obligations under our senior secured loan.

 

    We believe that our existing cash resources together with the
    net proceeds from this offering will be sufficient to meet our
    projected operating and debt service requirements into August
    2008 but will not be sufficient to meet our obligations
    thereafter, including but not limited to, our obligations to
    make interest and principal payments under (1) our senior
    secured loan from Hercules, which has a balance of
    $4.1 million at August 1, 2008, and is secured by a
    pledge of substantially all of our assets, including our
    intellectual property and (2) our €1.5 million
    (approximately $2.4 million) of outstanding indebtedness
    that matures in December 2008. In addition, we have deferred,
    and will continue to defer, payments to certain of our vendors
    which will cause our accounts payable balance to increase. We
    are seeking to raise additional capital as soon as possible.
    However, our efforts may not be successful. If we do not raise
    additional funds before the end of August 2008, we will be
    unable to meet our operating and debt service obligations,
    including the payment of interest and principal on our senior
    secured loan. If we default on the payment of the interest and
    principal on our indebtedness or if our senior secured lender
    otherwise asserts that there has been a material adverse change
    in our business that constitutes an event of default, they may
    seek to accelerate our senior secured loan and exercise their
    rights and remedies under their loan and security agreement,
    including the sale of our property and other assets. In
    addition, we may be forced to file a bankruptcy case or have an
    involuntary bankruptcy case filed against us or otherwise
    liquidate our assets. Any of these events would materially and
    adversely effect our business, financial condition, results of
    operations, the value of our common stock and warrants and our
    ability to raise capital and could result in the termination of
    our collaborative and licensing arrangements. See “Risk
    Factors — We need to raise additional capital as
    soon as possible and we may not be able to do so.”

 

    We
    need to raise additional capital as soon as possible and we may
    not be able to do so.

 

    We are seeking to raise, as soon as possible, additional equity
    capital, incur additional indebtedness or enter into
    collaboration and licensing agreements to enable us to continue
    to fund our operating and debt service requirements and to meet
    our commitments under our existing indebtedness. Equity capital,
    if available, may be dilutive or may have rights and preferences
    that adversely impact the value of our common stock and
    warrants. Debt financing, if available, may contain restrictive
    covenants that could limit our flexibility in conducting future
    business activities. Given our available cash resources,
    existing indebtedness and results of operations, obtaining debt
    financing may not be possible. To the extent we raise additional
    capital through collaborative and licensing arrangements, it may
    be necessary for us to relinquish valuable rights to our product
    candidates that we might otherwise seek to develop or
    commercialize independently. If we do not receive final
    regulatory marketing approval by the European Commission for
    Ceplene®
    or the results of our NP-1 Phase II clinical trial are not
    positive or do not support further clinical development of NP-1,
    our ability to raise additional capital would be materially and
    adversely affected.

 

    Our common stock may be delisted by The Nasdaq Capital Market
    and the OMX Nordic Exchange due to our failure to maintain
    various listing standards and our financial condition. The
    delisting of our common stock would adversely affect the market
    price and liquidity of our common stock and warrants and our
    ability

    

    S-5

 

    to raise capital through the sale of equity securities. In
    addition, if our common stock is delisted, we will not be able
    to offer and sell securities utilizing our existing shelf
    registration statement on
    Form S-3,
    which would make it more difficult for us to raise capital
    through public offerings of equity and debt securities. After
    this offering, due to restrictions under U.S. securities
    laws, we will have limited ability to utilize our existing shelf
    registration statement to raise additional capital for a period
    of one year unless the market value of our common stock and
    warrants increases substantially, which would delay or prevent
    us from raising capital in public offerings. There can be no
    assurance that our efforts to raise additional funds will be
    successful, or that sufficient funds will be available on
    satisfactory terms. If we are not successful in obtaining
    additional funds before the end of August 2008, we will be
    required to curtail our operations, we will not be able to meet
    our operating and debt service requirements, and our lenders
    would likely seek to accelerate our indebtedness and, in the
    case of Hercules, seek to exercise their rights and remedies
    under their loan and security agreement, including their right
    to assert an event of default, demand repayment, accelerate our
    debt and sell our intellectual property and other assets. In
    such an event, we may be forced to file a bankruptcy case or
    have an involuntary bankruptcy case filed against us. Any of
    these circumstances would materially and adversely affect our
    business, financial condition, results of operations, the value
    of our common stock and warrants and our ability to raise
    capital and could result in the termination of our collaborative
    and licensing arrangements.

 

    We
    have a history of losses and have never generated revenues from
    product sales and we expect to incur substantial losses in the
    future.

 

    We have incurred significant losses since our inception, and we
    expect that we will experience net losses and negative cash flow
    for the foreseeable future. Since our inception in 1993, we have
    incurred significant net losses in each year. Our losses have
    resulted principally from costs incurred in connection with our
    development activities and from general and administrative costs
    associated with our operations. Our net loss for the fiscal year
    ended December 31, 2007 and 2006 and the three months ended
    March 31, 2008, was $28.7 million, $65.5 million,
    and $6.1 million, respectively. As of December 31,
    2007 and 2006, our accumulated deficit was $170.8 and
    $142.2 million, respectively, and as of March 31, 2008
    our accumulated deficit was $176.9 million. We may never
    generate sufficient net revenue to achieve or sustain
    profitability.

 

    We expect to continue to incur increasing expenses over the next
    several years as we:

 

			
	 	    •  
	
    continue to conduct clinical trials for our product candidates;

	 
	 	    •  
	
    seek regulatory approvals for our product candidates;

	 
	 	    •  
	
    develop, formulate and commercialize our product candidates;

	 
	 	    •  
	
    implement additional internal controls and reporting systems and
    develop new corporate infrastructure;

	 
	 	    •  
	
    acquire or in-license additional products or technologies or
    expand the use of our technologies; and

	 
	 	    •  
	
    maintain, defend and expand the scope of our intellectual
    property.

 

    We expect that we will have large fixed expenses in the future,
    including significant expenses for research and development and
    general and administrative expenses. We will need to generate
    significant revenues to achieve and maintain profitability. If
    we cannot successfully develop, obtain regulatory approvals for,
    and commercialize our product candidates, we will not be able to
    generate significant revenue from product sales or achieve
    profitability in the future. As a result, our ability to achieve
    and sustain profitability will depend on our ability to generate
    and sustain substantially higher revenue while maintaining
    reasonable cost and expense levels.

 

    We may
    not be able to continue as a going concern.

 

    Our recurring losses from operations and our stockholders’
    deficit raise substantial doubt about our ability to continue as
    a going concern and, as a result, our independent registered
    public accounting firm has included an explanatory paragraph in
    its report on our consolidated financial statements for the year
    ended December 31, 2007, which are incorporated herein by
    reference, with respect to this uncertainty. We will need to
    raise additional capital to continue to operate as a going
    concern. In addition, the perception that we may

    

    S-6

 

    not be able to continue as a going concern may cause others to
    choose not to deal with us due to concerns about our ability to
    meet our contractual obligations and may adversely affect our
    ability to raise additional capital.

 

    Risks
    Relating to
    Ceplene®

 

    If we
    do not receive final regulatory marketing approval by the
    European Commission for
    Ceplene®,
    our business will be harmed.

 

    Even though the CHMP issued a positive opinion regarding the
    marketing authorization for
    Ceplene®,
    for the remission maintenance and prevention of relapse in
    patients with AML in first remission, the EMEA has not yet
    granted marketing authorization for
    Ceplene®.
    There is no assurance that we will receive marketing approval in
    Europe by the EMEA. The formal marketing authorization from the
    European Commission is usually obtained within 67 days from
    the date of the CHMP’s opinion.

 

    Additionally, the CHMP recommended that
    Ceplene®
    be granted a full marketing authorization under the provision of
    Exceptional Circumstances. As part of granting of the marketing
    authorization under Exceptional Circumstances, we have agreed to
    perform two post-approval clinical studies. One of the studies
    seeks to further elucidate the clinical pharmacology of
    Ceplene®
    by assessing certain biomarkers in AML patients in first
    remission. The other study will assess the effect of
    Ceplene/IL-2 on the development of minimal residual disease in
    the same patient population. We can not provide any assurance
    that these additional studies will be successful. If these
    studies prove to be unsuccessful, or if we do not make a
    sufficient effort to complete the studies in a timely manner,
    our marketing authorization may be suspended or revoked, which
    will harm our business, financial condition and results of
    operations.

 

    We may
    not be able to successfully market and sell
    Ceplene®
    or find a collaborative partner to help market and sell
    Ceplene®.

 

    Even though the CHMP issued a positive opinion regarding the
    marketing authorization for
    Ceplene®,
    for the remission maintenance and prevention of relapse in
    patients with AML in first remission, we may not be able to
    effectively market and sell
    Ceplene®.
    Our strategy for commercializing
    Ceplene®
    currently anticipates that we will enter into collaborative
    arrangements with one or more pharmaceutical companies that have
    product development resources and expertise, established
    distribution systems and direct sales forces to successfully
    market
    Ceplene®
    in the European Union. If so, we will be reliant on one or more
    of these strategic partners to generate revenue on our behalf.

 

    We expect to incur substantial net losses, in the aggregate and
    on a per share basis, for the foreseeable future as we attempt
    to market and sell
    Ceplene®.
    We are unable to predict the extent of these future net losses,
    or when we may attain profitability, if at all. These net
    losses, among other things, have had and will continue to have
    an adverse effect on our stockholders’ equity. We
    anticipate that for the foreseeable future our ability to
    generate revenues and achieve profitability will be dependent on
    the successful commercialization of
    Ceplene®.
    There is no assurance that we will be able to obtain or maintain
    governmental regulatory approvals to market
    Ceplene®
    in Europe. If we are unable to generate significant revenue from
    Ceplene®,
    or attain profitability, we may not be able to sustain our
    operations.

 

    We will not be successful in marketing and selling
    Ceplene®
    in Europe, or may be delayed in doing so, in which case we would
    not receive revenue or royalties on the timeframe and to the
    extent that we currently anticipate.

 

    Ceplene®
    may fail to achieve market acceptance, which could harm our
    business.

 

    Even though the CHMP issued a positive opinion regarding the
    marketing authorization for
    Ceplene®,
    for the remission maintenance and prevention of relapse in
    patients with AML in first remission, physicians may choose not
    to prescribe this product, and third-party payers may choose not
    to pay for them. Accordingly, we may be unable to generate
    significant revenue or become profitable.

    

    S-7

 

    Acceptance of
    Ceplene®
    will depend on a number of factors including:

 

			
	 	    • 
	
    acceptance of
    Ceplene®
    by physicians and patients as a safe and effective treatment;

	 
	 	    • 
	
    availability of reimbursement for our products from government
    or healthcare payors;

	 
	 	    • 
	
    cost effectiveness of
    Ceplene®;

	 
	 	    • 
	
    the effectiveness of our
    and/or
    collaboration partners’ sales and marketing efforts;

	 
	 	    • 
	
    relative convenience and ease of administration;

	 
	 	    • 
	
    safety and efficacy;

	 
	 	    • 
	
    prevalence and severity of side effects; and

	 
	 	    • 
	
    availability of competitive products.

 

    If
    Ceplene®
    fails to achieve market acceptance, our business, financial
    condition and results of operations would be materially and
    adversely affected.

 

    We may
    be dependent upon collaborative arrangements for the further
    development and commercialization of
    Ceplene®.
    These collaborative arrangements may place the development and
    commercialization of
    Ceplene®
    outside of our control, may require us to relinquish important
    rights or may otherwise be on terms unfavorable to
    us.

 

    We may enter into collaborations with third parties to further
    develop and commercialize
    Ceplene®.
    We may not be able to enter into collaborative arrangements on
    attractive terms, on a timely basis or at all. Dependence on
    collaborators for the development and commercialization of
    Ceplene®
    subjects us to a number of risks, including:

 

			
	 	    • 
	
    we may not be able to control the amount and timing of resources
    that our collaborators devote to the development or
    commercialization of
    Ceplene®
    or to their marketing and distribution, which could adversely
    affect our ability to obtain milestone and royalty payments;

	 
	 	    • 
	
    disputes may arise between us and our collaborators that result
    in the delay or termination of the commercialization of our
    product candidates or that result in costly litigation or
    arbitration that diverts management’s attention and
    resources;

	 
	 	    • 
	
    our collaborators may experience financial difficulties;

	 
	 	    • 
	
    collaborators may not properly maintain or defend our
    intellectual property rights or may use our proprietary
    information in such a way as to expose us to potential
    litigation, jeopardize or lessen the value of our proprietary
    information, or weaken or invalidate our intellectual property
    rights;

	 
	 	    • 
	
    business combinations or significant changes in a
    collaborator’s business strategy may also adversely affect
    a collaborator’s willingness or ability to complete its
    obligations under any arrangement;

	 
	 	    • 
	
    a collaborator could independently move forward with a competing
    product candidate developed either independently or in
    collaboration with others, including our competitors; and

	 
	 	    • 
	
    the collaborations may be terminated or allowed to expire, which
    would delay product development and commercialization efforts.

 

    If we are not able to enter into collaborative arrangements on
    commercially attractive terms, on a timely basis or at all, or
    if any of the risks occur and we are unable to successfully
    manage such risks, our business, financial condition and results
    of operations would be materially and adversely affected.

    

    S-8

 

    Risks
    Related to this Offering

 

    Our
    common stock may be delisted from The Nasdaq Capital Market or
    the OMX Nordic Exchange, which may make it more difficult for
    you to sell your shares.

 

    We received a letter from the Nasdaq Listing Qualifications
    Department stating that we have not regained compliance with the
    continued listing requirements of The Nasdaq Capital Market
    because the market value of our listed securities fell below
    $35,000,000 for 10 consecutive trading days and we were unable
    to regain compliance. As a result, Nasdaq determined that our
    common stock will be delisted from The Nasdaq Capital Market on
    May 16, 2008. We appealed that determination which will
    stay the delisting of our common stock until the appeal is
    heard. In addition, we also received a letter from Nasdaq
    stating that we were not in compliance with the continued
    listing requirements of The Nasdaq Capital Market because the
    bid price of our common stock closed below the minimum of $1.00
    per share requirement for 30 consecutive business days. Nasdaq
    requested that we also address this requirement in our appeal.
    The hearing for our appeal was held on June 12, 2008 and
    the decision is scheduled to be announced within 30 to
    45 days after the hearing but may be announced sooner. We
    have also received a notice from the OMX Nordic Exchange that
    our common stock has been moved to the observation segment
    effective June 2, 2008 due to the fact that there is a
    material adverse uncertainty regarding our financial situation.
    The delisting of our common stock by The Nasdaq Capital
    Market may result in the delisting of our common stock on the
    OMX Nordic Exchange in Sweden and the delisting of our common
    stock on The Nasdaq Capital Market or the OMX Nordic Exchange
    would adversely affect the market price and liquidity of our
    common stock and warrants, your ability to sell your shares of
    our common stock, our ability to raise capital and, could cause
    our senior secured lender to assert that there has been a
    material adverse change in our business and declare an event of
    default of our senior secured loan.

 

    Our
    quarterly financial results are likely to fluctuate
    significantly, which could have an adverse effect on our stock
    price.

 

    Our quarterly operating results, which are expected to be losses
    for the foreseeable future, will be difficult to predict and may
    fluctuate significantly from period to period, particularly
    because we are a relatively small company with no approved
    products. The level of our revenues, if any, expenses and our
    results of operations at any given time could fluctuate as a
    result of any of the following factors:

 

			
	 	    •  
	
    research and development expenses incurred and other operating
    expenses;

	 
	 	    •  
	
    results of our clinical trials;

	 
	 	    •  
	
    our ability to obtain regulatory approval for our product
    candidates;

	 
	 	    •  
	
    our ability to achieve milestones under our strategic
    relationships on a timely basis or at all;

	 
	 	    •  
	
    timing of new product offerings, acquisitions, licenses or other
    significant events by us or our competitors;

	 
	 	    •  
	
    regulatory approvals and legislative changes affecting the
    products we may offer or those of our competitors;

	 
	 	    •  
	
    our ability to establish and maintain a productive sales force;

	 
	 	    •  
	
    demand and pricing of any products we may offer;

	 
	 	    •  
	
    physician and patient acceptance of our products;

	 
	 	    •  
	
    levels of third-party reimbursement for our products;

	 
	 	    •  
	
    interruption in the manufacturing or distribution of our
    products;

	 
	 	    •  
	
    the effect of competing technological and market developments;

	 
	 	    •  
	
    litigation involving patents, licenses or other intellectual
    property rights; and

    

    S-9

 

 

			
	 	    •  
	
    product failures or product liability lawsuits.

 

    Until we obtain regulatory approval for any of our product
    candidates, we cannot begin to market or sell them. As a result,
    it will be difficult for us to forecast demand for our products
    with any degree of certainty. It is also difficult to predict
    the timing of the achievement of various milestones under our
    strategic relationships. In addition, our operating expenses may
    continue to increase as we develop product candidates and build
    commercial capabilities. Accordingly, we may experience
    significant quarterly losses. Because of these factors, our
    operating results in one or more future quarters may fail to
    meet the expectations of securities analysts or investors, which
    would adversely affect the value of our common stock and
    warrants.

 

    Future
    sales of common stock by our existing stockholders may cause our
    stock price to fall.

 

    The market price of our common stock and warrants could decline
    as a result of sales by our existing and future stockholders,
    including the holders of our warrants and our senior secured
    lender, in the market or the perception that these sales could
    occur. These sales might also make it more difficult for us to
    sell equity securities at a time and price that we deem
    appropriate.

 

    Because
    we have broad discretion in how we use the proceeds from this
    offering, we may use the proceeds in ways in which you
    disagree.

 

    We intend to use the net proceeds to repay indebtedness and for
    general corporate purposes. See “Use of Proceeds.”
    With the exception of the proceeds that we will use to repay
    indebtedness, we have not allocated specific amounts of the net
    proceeds from this offering for any specific purpose.
    Accordingly, our management will have significant flexibility in
    applying the net proceeds of this offering. You will be relying
    on the judgment of our management with regard to the use of
    these net proceeds, and you will not have the opportunity, as
    part of your investment decision, to assess whether the proceeds
    are being used appropriately. It is possible that the net
    proceeds will be invested in a way that does not yield a
    favorable, or any, return for our company. The failure of our
    management to use such funds effectively could have a material
    adverse effect on our business, financial condition, operating
    results and cash flow.

 

    We
    have never paid dividends on our common stock, and we do not
    anticipate paying any cash dividends in the foreseeable
    future.

 

    We have never paid cash dividends on any of our classes of
    capital stock to date, and we intend to retain our future
    earnings, if any, to fund the development and growth of our
    business. In addition, the terms of existing or any future debt
    may preclude us from paying these dividends. As a result,
    capital appreciation, if any, of our common stock will be your
    sole source of gain for the foreseeable future.

 

    USE OF
    PROCEEDS

 

    We estimate that the net proceeds we will receive from this
    offering will be approximately $2.75 million after
    deducting the placement agent’s fee and estimated offering
    expenses. Investing in our common stock and warrants involves a
    high degree of risk and purchasers may lose their entire
    investment. We plan to use the net proceeds to repay a portion
    of our senior secured loan. We expect to use the remainder of
    the net proceeds to fund our operations and to make scheduled
    monthly payments on our senior secured debt. We believe our
    existing cash resources together with the estimated net proceeds
    from this offering will be sufficient to meet our projected
    operating and debt service requirements into August 2008.
    We may invest funds that we do not immediately require in
    short-term marketable securities.

    

    S-10

 

    DESCRIPTION
    OF THE WARRANTS

 

    The material terms and provisions of the warrants being
    offered pursuant to this prospectus supplement and the
    accompanying prospectus are summarized below. This summary is
    subject to, and qualified in its entirety by, the terms of the
    warrants as set forth in the form of warrant to be filed as
    exhibits to our current report on
    Form 8-K
    which we will file with the SEC on or about August 1,
    2008.

 

    The warrants represent the right to purchase up to
    2,764,978 shares of common stock at an initial exercise
    price equal to $.48 per share. Each warrant may be exercised at
    any time and from time to time on or after the six month
    anniversary of the date of issuance and through and including
    August 1, 2013.

 

    The warrants are subject to customary, pro rata anti-dilution
    provisions for stock splits or recapitalizations. This summary
    of certain terms and provision of the warrants are qualified in
    their entirety by reference to the detailed provisions of the
    warrants, the form of which was filed as an exhibit to a current
    report on
    Form 8-K
    filed on August 1, 2008 that is incorporated herein by
    reference.

 

    A warrant may be transferred by a holder without our consent
    upon surrender of the warrant to us, properly endorsed by the
    holder executing an assignment in the form attached to the
    Warrant.

 

    The exercise price and the number of shares of common stock are
    subject to adjustment in the event of stock splits, stock
    dividends on our common stock, stock combinations or similar
    events affecting our common stock. In addition, in the event we
    consummate any merger, consolidation, sale or other
    reorganization event in which our common stock is converted into
    or exchanged for securities, cash or other property or we
    consummate a sale of substantially all of our assets, then
    following that event, a sale of substantially all of our assets,
    then following that event, the holders of warrants will be
    entitled to receive upon exercise of the warrants the land and
    amount of securities, cash or other property which the holders
    would have received if they had exercised their warrants prior
    to such reorganization event.

    

    S-11

 

    PLAN OF
    DISTRIBUTION

 

    We are offering shares of common stock and warrants through the
    placement agent. Subject to the terms and conditions contained
    in the placement agent agreement, dated as of August 1,
    2008, Rodman & Renshaw, LLC has agreed to act as
    placement agent for the sale of shares of our common stock, par
    value $0.0001 per share, and warrants to purchase shares of our
    common stock offered in this prospectus supplement. The
    placement agent is not purchasing or selling any shares or
    warrants offered by this prospectus supplement and the
    accompanying prospectus, but has agreed to use reasonable
    “best efforts” to arrange for the sale of all of the
    shares and warrants offered by this prospectus supplement and
    the accompanying prospectus.

 

    The placement agent has arranged for the sale to one or more
    purchasers of the shares of common stock and warrants offered
    pursuant to this prospectus supplement and the accompanying
    prospectus through direct purchase agreements between the
    purchasers and us. In exchange for these placement agent
    services, we have agreed to pay the placement agent immediately
    upon the closing of the placement (i) a cash fee equal to
    7% of the securities offered under this prospectus supplement
    and accompanying prospectus and (ii) additional
    compensation in the form of warrants to purchase that number of
    shares which, equals 5% of the aggregate purchase price paid by
    each purchaser of the securities, on the same terms and
    conditions as the warrants offered pursuant to this prospectus
    supplement and accompanying prospectus however, the exercise
    price shall be 125% of the public offering price per share, the
    warrant will not have antidilution protections or be
    transferable for six months from the date of the offering
    except as permitted by NASD Rule 2710, and the number of
    shares underlying the Rodman warrant shall be reduced if
    necessary to comply with FINRA rules or regulations.

 

    Our obligation to issue and sell securities to the purchasers is
    subject to the conditions set forth in the purchase agreements,
    which may be waived by us in our discretion. A purchaser’s
    obligation to purchase securities is subject to conditions set
    forth in the purchase agreement as well, which also may be
    waived.

 

    From time to time, we may issue 2,764,978 shares of our
    common stock (subject to adjustment) upon exercise of the
    warrants. These shares may be sold by the holders thereof from
    time to time. The warrants are not listed on any exchange and an
    active trading market for the warrants may not develop.

 

    A warrant may be transferred by a holder without our consent
    upon surrender of the warrant to us, properly endorsed (by the
    holder executing an assignment in the form attached to the
    warrant).

 

    We currently anticipate that the sale of 5,529,954 shares
    of our common stock and 2,764,978 warrants will be
    completed on or about August 5, 2008. We estimate the total
    expenses of this offering which will be payable by us, excluding
    the fees payable to the placement agent, will be approximately
    $25,000.

 

    We have agreed to indemnify the placement agent and purchasers
    against liabilities under the Securities Act.

 

    The placement agent agreement with Rodman & Renshaw,
    LLC will be included as an exhibit to our Current Report on
    Form 8-K
    that will be filed with the SEC.

 

    In order to facilitate the offering of the securities, the
    placement agent may engage in transactions that stabilize,
    maintain or otherwise affect the market price of our securities.
    Any of these activities may maintain the market price of our
    securities at a level above that which might otherwise prevail
    in the open market. The placement agent is not required to
    engage in these activities and if commenced, may end any of
    these activities at any time. Neither we nor the placement agent
    make any representation or prediction as to the effect that
    these transactions may have on the market price of our
    securities. These transactions may occur on The Nasdaq Capital
    Market, the OMX Nordic Exchange or otherwise. Any such
    transactions will be conducted in compliance with
    Regulation M under the Securities Exchange Act of 1934.

 

    LEGAL
    MATTERS

 

    The validity of the issuance of the securities offered by this
    prospectus supplement have been passed upon for us by Weil,
    Gotshal & Manges LLP, New York, New York.

    

    S-12

 

    WHERE YOU
    CAN FIND MORE INFORMATION

 

    The documents incorporated by reference into this prospectus
    supplement are available from us upon request. We will provide a
    copy of any and all of the information that is incorporated by
    reference in this prospectus, without charge, upon written or
    oral request. If you would like to obtain this information from
    us, please direct your request, either in writing or by
    telephone, to:

 

    Investor Relations

    EpiCept Corporation

    777 Old Saw Mill River Road

    Tarrytown, NY 10591

    (914) 606-3500

 

    We file reports, proxy statements and other information with the
    SEC. Copies of our reports, proxy statements and other
    information may be inspected and copied at the SEC’s Public
    Reference Room at  100 F. Street, N.E.,
    Washington, D.C. 20549. Copies of these materials can also
    be obtained by mail at prescribed rates from the Public
    Reference Room of the SEC, 100 F. Street, N.E.,
    Washington, D.C. 20549. You may obtain information on the
    operation of the Public Reference Room by calling the SEC at
    1-800-SEC-0330.
    The SEC maintains an internet site that contains reports, proxy
    and information statements and other information regarding
    EpiCept and other issuers that file electronically with the SEC.
    The address of the SEC internet site is www.sec.gov. This
    information is also available on our website at www.epicept.com.

 

    Reports, proxy statements and other information regarding us may
    also be inspected at:

 

    The National Association of Securities Dealers

    1735 K Street, N.W.

    Washington, D.C. 20006

 

    We have filed a registration statement on
    Form S-3
    under the Securities Act with the SEC with respect to the
    securities to be sold hereunder. This prospectus supplement and
    the accompanying prospectus have been filed as part of that
    registration statement. This prospectus supplement does not
    contain all of the information set forth in the registration
    statement because certain parts of the registration statement
    are omitted in accordance with the rules and regulations of the
    SEC. The registration statement is available for inspection and
    copying as set forth above.

 

    INCORPORATION
    OF CERTAIN DOCUMENTS BY REFERENCE

 

    The SEC allows us to “incorporate by reference” into
    this prospectus supplement and the accompanying prospectus the
    information we have filed with the SEC. This means that we can
    disclose important information by referring you to those
    documents. All documents that EpiCept subsequently files with
    the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
    the Exchange Act, prior to the termination of this offering,
    will be deemed to be incorporated by reference into this
    prospectus supplement and the accompanying prospectus and to be
    a part hereof from the date of filing of such documents. Unless
    expressly incorporated into this prospectus supplement and the
    accompanying prospectus, a Current Report (or portion thereof)
    furnished, but not filed, on
    Form 8-K
    shall not be incorporated by reference into this prospectus
    supplement and the accompanying prospectus. Any statement
    contained in a document incorporated or deemed to be
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus shall be deemed to be modified or
    superseded for purposes of this prospectus supplement and the
    accompanying prospectus to the extent that a statement contained
    herein or in any other subsequently filed document which also is
    or is deemed to be incorporated by reference herein modifies or
    supersedes such statement. Any such statement so modified or
    superseded shall not be deemed, except as so modified or
    superseded, to constitute a part of this prospectus supplement
    and the accompanying prospectus. We are not, however,
    incorporating by reference any documents or portions thereof,
    whether specifically listed below or filed in the future, that
    are not deemed “filed” with the SEC, including
    information furnished pursuant to Item 2.02 or 7.01 of
    Form 8-K.

    

    S-13

 

 

    We incorporate by reference the following documents that we have
    filed with the SEC and any filings that we will make with the
    SEC in the future under Sections 13(a), 13(c), 14 or 15(d)
    of the Exchange Act until this offering is terminated:

 

			
	 	    •  
	
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2008;

	 
	 	    •  
	
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2007;

	 
	 	    •  
	
    Definitive Proxy Statement on Schedule 14A dated
    April 7, 2008 relating to our annual meeting of
    stockholders held on May 21, 2008;

	 
	 	    •  
	
    Additional Definitive Proxy Soliciting Materials on
    Schedule 14A dated April 9, 2008, relating to our
    annual meeting of stockholders held on May 21, 2008;

	 
	 	    •  
	
    Additional Definitive Proxy Soliciting Materials on
    Schedule 14A dated May 16, 2008, relating to our
    annual meeting of stockholders held on May 21, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed January 11, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed January 30, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed February 28, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed March 4, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed March 6, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed March 7, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed March 20, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed April 3, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed April 8, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed April 21, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed May 9, 2007;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed May 15, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed May 21, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed May 28, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed June 5, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed June 6, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed June 23, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed June 25, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed July 2, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed July 16, 2008;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed July 25, 2008; and

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed August 1, 2008

 

    Copies of these filings are available free of charge by writing
    to EpiCept Corporation, 777 Old Saw Mill River Road, Tarrytown,
    New York 10591, Attention: Robert W. Cook, Secretary, or by
    telephoning us at
    (914) 606-3500.

 

    Any statement made in this prospectus supplement and the
    accompanying prospectus concerning the contents of any contract,
    agreement or other document is only a summary of the actual
    document. You may obtain a copy of any document summarized in
    this prospectus supplement and the accompanying prospectus at no
    cost by writing to or telephoning us at the address and
    telephone number given above. Each statement regarding a
    contract, agreement or other document is qualified in its
    entirety by reference to the actual document.

    

    S-14

 

    PROSPECTUS

 

    
    

 

    $50,000,000

 

    Common Stock, par value $0.0001
    per share

    Preferred Stock, par value
    $0.0001 per share

    Debt Securities

    Convertible Debt
    Securities

    Warrants

 

 

    This prospectus relates solely to the offer and sale, from time
    to time, of equity and debt securities of EpiCept Corporation
    (“EpiCept” or the “Company”) by us. The
    securities are being offered on a continuous basis pursuant to
    Rule 415 under the Securities Act of 1933, as amended.

 

    We may offer the securities from time to time in amounts and on
    terms as we may determine, through public or private
    transactions or through other means described in the section
    entitled “Plan of Distribution” beginning on
    page 15.

 

    Each time our securities are offered, we will provide a
    prospectus supplement containing more specific information about
    the particular offering and attach it to this prospectus. The
    prospectus supplements may also add, update or change
    information contained in this prospectus. This prospectus may
    not be used to offer or sell securities without a prospectus
    supplement which includes a description of the method and terms
    of this offering.

 

    You should carefully read this prospectus and any accompanying
    prospectus supplement, together with the documents we
    incorporate by reference, before you invest in our securities.

 

    We may offer and sell these securities to or through one or more
    underwriters, dealers and agents, or directly to purchasers, on
    a continuous or delayed basis. The prospectus supplements will
    provide the specific terms of the plan of distribution.

 

    Our common stock is dual-listed on The Nasdaq Capital Market and
    the OMX Nordic Exchange under the ticker symbol
    “EPCT.” The last reported sale price of our common
    stock on August 31, 2007 was $1.64 per share. We have
    not yet determined whether any of the other securities that may
    be offered by this prospectus will be listed on any exchange,
    inter-dealer quotation system or over-the-counter system. If we
    decide to seek a listing for any of our other securities, that
    will be disclosed in a prospectus supplement.

 

 

    Investing in our securities involves risks. See
    “Risk Factors” beginning on page 2 to read about
    factors you should consider before buying our securities.

 

 

    Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.

 

    The date of this prospectus is September 18, 2007.

 

    You should rely only on the information contained or
    incorporated by reference in this prospectus. We have not
    authorized anyone to provide you with different or additional
    information. We are not making an offer of these securities in
    any state where the offer is not permitted. You should not
    assume that the information provided by this prospectus is
    accurate as of any date other than the date on the front of this
    prospectus. Our business, financial condition, results of
    operations and prospects may have changed since then.

 

    TABLE OF
    CONTENTS

 

	 	 	 	 	 
	

    ABOUT THIS PROSPECTUS

	
 
	
 
	
    i
	
 

	

    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

	
 
	
 
	
    ii
	
 

	

    ABOUT EPICEPT

	
 
	
 
	
    1
	
 

	

    RISK FACTORS

	
 
	
 
	
    2
	
 

	

    USE OF PROCEEDS

	
 
	
 
	
    2
	
 

	

    RATIO OF EARNINGS TO FIXED CHARGES

	
 
	
 
	
    2
	
 

	

    SECURITIES WE MAY OFFER

	
 
	
 
	
    2
	
 

	

    DESCRIPTION OF CAPITAL STOCK

	
 
	
 
	
    3
	
 

	

    DESCRIPTION OF DEBT SECURITIES THAT WE MAY OFFER

	
 
	
 
	
    7
	
 

	

    DESCRIPTION OF WARRANTS

	
 
	
 
	
    13
	
 

	

    DESCRIPTION OF UNITS

	
 
	
 
	
    14
	
 

	

    PLAN OF DISTRIBUTION

	
 
	
 
	
    15
	
 

	

    LEGAL MATTERS

	
 
	
 
	
    17
	
 

	

    EXPERTS

	
 
	
 
	
    17
	
 

	

    WHERE YOU CAN FIND MORE INFORMATION

	
 
	
 
	
    17
	
 

	

    INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

	
 
	
 
	
    18
	
 

 

    ABOUT
    THIS PROSPECTUS

 

    This prospectus is part of a registration statement on
    Form S-3
    that we filed with the Securities and Exchange Commission (the
    “Commission”) using a “shelf” registration
    process. Under this shelf registration process, we may, from
    time to time, offer
    and/or sell
    the securities referenced herein in one or more offerings. Each
    time our securities are offered, we will provide a prospectus
    supplement and attach it to this prospectus. The prospectus
    supplement will contain more specific information about the
    offering. The prospectus supplement may also add, update or
    change information contained in this prospectus. Any statement
    that we make in this prospectus will be modified or superseded
    by any inconsistent statement made by us in a prospectus
    supplement. You should read both this prospectus and any
    accompanying prospectus supplement together with the additional
    information described under the heading “Incorporation of
    Certain Documents by Reference.”

 

    You should rely only on the information contained in this
    prospectus, any applicable prospectus supplement and those
    documents incorporated by reference herein. We have not
    authorized anyone to provide you with information different from
    that contained in this prospectus or any prospectus supplement
    or incorporated herein or herein by reference. This prospectus
    may only be used where it is legal to sell these securities.
    This prospectus is not an offer to sell, or a solicitation of an
    offer to buy, in any state where the offer or sale is
    prohibited. The information in this prospectus, any prospectus
    supplement or any document incorporated herein or therein by
    reference is accurate as of the date contained on the cover of
    such documents. Neither the delivery of this prospectus or any
    prospectus supplement, nor any sale made under this prospectus
    or any prospectus supplement will, under any circumstances,
    imply that the information in this prospectus or any prospectus
    supplement is correct as of any date after the date of this
    prospectus or any such prospectus supplement.

    

    i

 

 

    SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

    This prospectus and the registration statement of which it forms
    a part, any prospectus supplement and the documents incorporated
    by reference into these documents contain forward-looking
    statements within the meaning of Section 27A of the
    Securities Act and Section 21E of the Securities Exchange
    Act of 1934. We use words such as “anticipates,”
    “believes,” “plans,” “expects,”
    “future,” “intends,” “will,”
    “foresee” and similar expressions to identify these
    forward-looking statements. In addition, from time to time we or
    our representatives have made or may make forward-looking
    statements orally or in writing. Furthermore, such
    forward-looking statements may be included in various filings
    that we make with the SEC, or press releases or oral statements
    made by or with the approval of one of our authorized executive
    officers. These forward-looking statements are subject to
    certain known and unknown risks and uncertainties, as well as
    assumptions, that could cause actual results to differ
    materially from those reflected in these forward-looking
    statements. Factors that might cause actual results to differ
    include, but are not limited to, those discussed in the section
    entitled “Risk Factors” beginning on page 2 of
    this prospectus. Readers are cautioned not to place undue
    reliance on any forward-looking statements contained herein,
    which reflect management’s opinions only as of the date
    hereof. Except as required by law, EpiCept undertakes no
    obligation to revise or publicly release the results of any
    revision to any forward-looking statements. You are advised,
    however, to consult any additional disclosures we make in our
    reports to the SEC on
    Forms 10-K,
    10-Q and
    8-K. All
    subsequent written and oral forward-looking statements
    attributable to us or persons acting on our behalf are expressly
    qualified in their entirety by the cautionary statements
    contained in this prospectus.

    

    ii

 

 

    ABOUT
    EPICEPT

 

    This summary description of us and our business highlights
    selected information about us contained elsewhere in this
    prospectus or incorporated herein by reference. This summary may
    not contain all of the information about us that you should
    consider before buying securities in this offering. You should
    carefully read this entire prospectus, any applicable prospectus
    supplement, including each of the documents incorporated herein
    or therein by reference, before making an investment decision.
    As used herein, “EpiCept” “we,”
    “us,” and “our” refer to EpiCept Corporation
    and its subsidiaries.

 

    We are a specialty pharmaceutical company focused on the
    development of pharmaceutical products for the treatment of
    cancer and pain. Our lead oncology product candidate is Ceplene,
    which had been submitted for European registration as remission
    maintenance therapy in the treatment of acute myeloid leukemia,
    or AML, specifically for patients who are in their first
    complete remission (CR-1). Two other oncology compounds are in
    development, one of which has commenced a Phase II clinical
    trial and the second of which entered clinical development in
    late 2006. Our mid-to-late stage pain product candidates are:
    EpiCept NP-1, a prescription topical analgesic cream designed to
    provide effective long-term relief of peripheral neuropathies;
    LidoPAIN SP, a sterile prescription analgesic patch designed to
    provide sustained topical delivery of lidocaine to a
    post-surgical or post-traumatic sutured wound while also
    providing a sterile protective covering for the wound; and
    LidoPAIN BP, a prescription analgesic non-sterile patch designed
    to provide sustained topical delivery of lidocaine for the
    treatment of acute or recurrent lower back pain. Our portfolio
    of pain management and oncology product candidates allows us to
    be less reliant on the success of any single product candidate.

 

    None of our product candidates has been approved by the
    U.S. Food and Drug Administration (“FDA”) or any
    comparable agency in another country and we have yet to generate
    product revenues from any of our product candidates in
    development.

 

    Our executive offices are located at 777 Old Saw Mill River
    Road, Tarrytown, NY 10591, our telephone number at that location
    is
    (914) 606-3500,
    and our website can be accessed at www.epicept.com. Information
    contained in our website does not constitute part of this
    prospectus.

    

    1

 

 

    RISK
    FACTORS

 

    Investment in our securities involves a high degree of risk.
    You should carefully consider the specific risks described under
    the heading “Risk Factors” in the applicable
    prospectus supplement and under the caption “Risk
    Factors” in any of our filings with the SEC pursuant to
    Sections 13(a), 14 or 15(d) of the Securities and Exchange
    Act of 1934, as amended, or the Exchange Act, which are
    incorporated herein by reference, before making an investment
    decision. Each of the risks described in these headings could
    adversely affect our business, financial condition, results of
    operations and prospects, and could result in a complete loss of
    your investment. For more information, see “Where You Can
    Find More Information” and “Incorporation of Certain
    Documents By Reference.” Risks related to specific
    securities will be described in the applicable prospectus
    supplement relating to those securities.

 

    USE OF
    PROCEEDS

 

    Unless we state otherwise in the applicable prospectus
    supplement accompanying this prospectus, we expect to add
    substantially all of the net proceeds of the sale of securities
    by us to our general funds for general corporate purposes,
    including capital expenditures, working capital, the repayment
    or reduction of long-term and short-term debt, and acquisitions
    of businesses, products, product rights or technologies. We may
    invest funds that we do not immediately require in short-term
    marketable securities.

 

    RATIO OF
    EARNINGS TO FIXED CHARGES

 

    The following table contains our consolidated ratio of earnings
    to fixed charges for the periods indicated. You should read
    these ratios in connection with our consolidated financial
    statements, including the notes to those statements,
    incorporated by reference in this prospectus.

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
    For the Six

    
	
 

	
 
	
 
	
    For the Year Ended December 31,
	
 
	
 
	
    Months Ended

    
	
 

	
 
	
 
	
    2002
	
 
	
 
	
    2003
	
 
	
 
	
    2004
	
 
	
 
	
    2005
	
 
	
 
	
    2006
	
 
	
 
	
    June 30, 2007
	
 

	 

	

    Ratio of earnings to fixed
    charges(1)

	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    N/A
	
 
	
 
	
 
	
    N/A
	
 

	

    Deficiency of earnings available

    to cover fixed charges

    (in
    thousands)(2)

	
 
	
    $
	
    (9,877
	
    )
	
 
	
    $
	
    (10,035
	
    )
	
 
	
    $
	
    (7,883
	
    )
	
 
	
    $
	
    (7,499
	
    )
	
 
	
    $
	
    (65,453
	
    )
	
 
	
    $
	
    (14,714
	
    )

 

 

			
	
    (1) 		
    In each of the periods presented, we incurred a net loss. Thus,
    our earnings were insufficient to cover our fixed charges.
	 
	
    (2) 		
    The deficiency of earnings is equivalent to net loss before
    income tax expense/benefit.

 

    SECURITIES
    WE MAY OFFER

 

    We may, from time to time offer under this prospectus,
    separately or together:

 

			
	 	    •  
	
    common stock

	 
	 	    •  
	
    preferred stock

	 
	 	    •  
	
    senior, subordinated or convertible debt securities

	 
	 	    •  
	
    warrants to purchase equity securities; and

	 
	 	    •  
	
    units

 

    The aggregate initial offering price of the offered securities
    will not exceed $50,000,000.

    

    2

 

 

    DESCRIPTION
    OF CAPITAL STOCK

 

    General

 

    Our restated certificate of incorporation authorizes
    75,000,000 shares of common stock, $0.0001 par value,
    and 5,000,000 shares of undesignated preferred stock,
    $0.0001 par value. The foregoing and the following
    description of capital stock give effect to the restated
    certificate of incorporation and by the provisions of the
    applicable Delaware law.

 

    Common
    Stock

 

    As of August 14, 2007, EpiCept had 37,544,993 shares
    of common stock outstanding that were held of record by
    approximately 95 stockholders.

 

    The holders of common stock are entitled to one vote per share
    on all matters to be voted upon by the stockholders. Subject to
    preferences that may be applicable to any outstanding preferred
    stock, the holders of common stock are entitled to receive
    ratably any dividends that may be declared from time to time by
    the board of directors out of funds legally available for that
    purpose. In the event of EpiCept’s liquidation, dissolution
    or winding up, the holders of common stock are entitled to share
    ratably in all assets remaining after payment of liabilities,
    subject to prior distribution rights of preferred stock then
    outstanding. The common stock has no preemptive or conversion
    rights or other subscription rights. There are no redemption or
    sinking fund provisions applicable to the common stock.

 

    Preferred
    Stock

 

    Our board of directors has the authority, without action by its
    stockholders, to designate and issue up to 5,000,000 shares
    of preferred stock in one or more series. The board of directors
    may also designate the rights, preferences and privileges of
    each series of preferred stock; any or all of which may be
    greater than the rights of the common stock. It is not possible
    to state the actual effect of the issuance of any shares of
    preferred stock upon the rights of holders of the common stock
    until the board of directors determines the specific rights of
    the holders of the preferred stock. However, these effects might
    include:

 

			
	 	    •  
	
    restricting dividends on the common stock;

	 
	 	    •  
	
    diluting the voting power of the common stock;

	 
	 	    •  
	
    impairing the liquidation rights of the common stock; and

	 
	 	    •  
	
    delaying or preventing a change in control of our company
    without further action by the stockholders.

 

    Whenever preferred stock is to be sold pursuant to this
    prospectus, we will file a prospectus supplement relating to
    that sale which will specify:

 

			
	 	    •  
	
    the number of shares in the series of preferred stock;

	 
	 	    •  
	
    the designation for the series of preferred stock by number,
    letter or title that will distinguish the series from any other
    series of preferred stock;

	 
	 	    •  
	
    the dividend rate, if any, and whether dividends on that series
    of preferred stock will be cumulative, noncumulative or
    partially cumulative;

	 
	 	    •  
	
    the voting rights of that series of preferred stock, if any;

	 
	 	    •  
	
    any conversion provisions applicable to that series of preferred
    stock;

	 
	 	    •  
	
    any redemption or sinking fund provisions applicable to that
    series of preferred stock;

	 
	 	    •  
	
    the liquidation preference per share of that series of preferred
    stock; and

	 
	 	    •  
	
    the terms of any other preferences or rights, if any, applicable
    to that series of preferred stock.

    

    3

 

 

    Warrants

 

    As of August 14, 2007, the following warrants were
    outstanding:

 

			
	 	    •  
	
    Upon the closing of the merger with Maxim Pharmaceuticals, Inc.
    on January 4, 2006, we issued warrants to purchase
    approximately 0.3 million shares at an exercise price range
    of $13.48 – $37.75 per share of our common stock in
    exchange for Maxim’s warrants.

	 
	 	    •  
	
    On February 9, 2006, we raised $11.6 million gross
    proceeds through a private placement of common stock and common
    stock purchase warrants. Five year common stock purchase
    warrants were issued to the investors granting them the right to
    purchase approximately 1 million shares of our common stock
    at a price of $4.00 per share.

	 
	 	    •  
	
    On August 30, 2006, we entered into a senior secured term
    loan in the amount of $10.0 million with Hercules
    Technology Growth Capital. Inc. Five year common stock purchase
    warrants were issued to Hercules granting them the right to
    purchase 0.5 million shares of our common stock at an
    exercise price of $2.65 per share. As a result of certain
    anti-dilution adjustments resulting from a financing consummated
    by us on December 21, 2006 and an amendment entered into on
    January 26, 2007, the terms of the warrants issued to
    Hercules Technology Growth Capital, Inc. were adjusted to grant
    Hercules the right to purchase an aggregate of 0.9 million
    shares of our common stock at an exercise price of $1.46 per
    share.

	 
	 	    •  
	
    On December 21, 2006, we raised approximately
    $10.0 million gross proceeds through a private placement of
    common stock and common stock purchase warrants. Five year
    common stock purchase warrants were issued to the investors
    granting them the right to purchase approximately
    3.9 million shares of our common stock at a price of $1.47
    per share.

	 
	 	    •  
	
    On June 28, 2007, we raised approximately
    $10.0 million gross proceeds through a private placement of
    common stock and common stock purchase warrants. Five year
    common stock purchase warrants were issued to the investors
    granting them the right to purchase approximately
    2.6 million shares of our common stock at an exercise price
    of $2.93 per share.

	 
	 	    •  
	
    On August 1, 2007, we issued five year common stock
    purchase warrants to Epitome Analgesics Inc. granting them the
    right to purchase approximately 0.3 million shares of our
    common stock at a price of $1.96 per share.

 

    Registration
    Rights

 

    In consideration for the termination of an existing registration
    rights agreement and in anticipation of the merger with Maxim,
    we entered into a registration rights agreement pursuant to
    which TVM III Limited Partnership, TVM IV GmbH & Co.
    KG, Private Equity Direct Finance, The Merlin Biosciences
    Fund L.P., The Merlin Biosciences Fund GbR, the
    Sanders Investors and Mr. John V. Talley were granted
    registration rights with respect to their shares of common stock
    following the completion of the merger with Maxim. These
    registration rights include customary demand and piggyback
    registration rights. There are a total of 4,578,151 shares
    of common stock that are subject to these registration rights.

 

    In connection with the each of the private placements conducted
    on February 9, 2006, August 30, 2006,
    December 21, 2006 and June 28, 2007, we entered into
    customary registration rights agreements granting the holders of
    common stock purchase warrants representing an aggregate of
    7,882,269 shares of common stock the right to require us to
    register the common stock issuable upon exercise of their
    warrants. The shares underlying the warrants sold in February
    2006, August 2006, December 2006 and June 2007 were already
    registered with the SEC. We are also required to file a
    registration statement for the common stock issuable to Cornell
    Capital Partners pursuant to the SEDA on or prior to the first
    sale of common stock thereunder to Cornell Capital Partners.

    

    4

 

    Anti-Takeover
    Provisions

 

    Provisions of Delaware law and the restated certificate of
    incorporation and amended bylaws to be in effect upon the
    closing of the merger could make the acquisition of EpiCept
    through a tender offer, a proxy contest or other means more
    difficult and could make the removal of incumbent officers and
    directors more difficult. We expect these provisions to
    discourage coercive takeover practices and inadequate takeover
    bids and to encourage persons seeking to acquire control of us
    to first negotiate with our board of directors. We believe that
    the benefits provided its ability to negotiate with the
    proponent of an unfriendly or unsolicited proposal outweigh the
    disadvantages of discouraging these proposals. EpiCept believes
    the negotiation of an unfriendly or unsolicited proposal could
    result in an improvement of its terms.

 

    Effects of Some Provisions of Delaware
    Law.  Upon the closing of the merger, we will be
    subject to Section 203 of the Delaware General Corporation
    Law, an anti-takeover law. In general, Section 203
    prohibits a publicly held Delaware corporation from engaging in
    a “business combination” with an “interested
    stockholder” for a period of three years following the date
    the person became an interested stockholder, unless:

 

			
	 	    •  
	
    prior to the date of the transaction, the board of directors of
    the corporation approved either the business combination or the
    transaction which resulted in the stockholder becoming an
    interested stockholder;

	 
	 	    •  
	
    the stockholder owned at least 85% of the voting stock of the
    corporation outstanding at the time the transaction commenced,
    excluding for purposes of determining the number of shares
    outstanding (a) shares owned by persons who are directors
    and also officers, and (b) shares owned by employee stock
    plans in which employee participants do not have the right to
    determine confidentially whether shares held subject to the plan
    will be tendered in a tender or exchange offer; or

	 
	 	    •  
	
    on or subsequent to the date of the transaction, the business
    combination is approved by the board and authorized at an annual
    or special meeting of stockholders, and not by written consent,
    by the affirmative vote of at least 66% of the outstanding
    voting stock which is not owned by the interested stockholder.

 

    Generally, a “business combination” for these purposes
    includes a merger, asset or stock sale, or other transaction
    resulting in a financial benefit to the interested stockholder.
    An “interested stockholder” for these purposes is a
    person who, together with affiliates and associates, owns or,
    within three years prior to the determination of interested
    stockholder status, did own 15% or more of a corporation’s
    outstanding voting securities, we expect the existence of this
    provision to have an anti-takeover effect with respect to
    transactions its board of directors does not approve in advance.
    We also anticipate that Section 203 may also discourage
    attempts that might result in a premium over the market price
    for the shares of common stock held by stockholders.

 

    Anti-Takeover Effects of Provisions of the Charter
    Documents.  Our restated certificate of
    incorporation provides for our board of directors to be divided
    into three classes serving staggered terms. Approximately
    one-third of the board of directors will be elected each year.
    The provision for a classified board could prevent a party who
    acquires control of a majority of the outstanding voting stock
    from obtaining control of the board of directors until the
    second annual stockholders meeting following the date the
    acquiring party obtains the controlling stock interest. The
    classified board provision could discourage a potential acquirer
    from making a tender offer or otherwise attempting to obtain
    control of us and could increase the likelihood that incumbent
    directors will retain their positions. Our restated certificate
    of incorporation to be in effect upon the closing of the merger
    also provides that directors may be removed with cause by the
    affirmative vote of the holders of 75% of the outstanding shares
    of common stock.

 

    Our amended and restated bylaws establish an advance notice
    procedure for stockholder proposals to be brought before an
    annual meeting of our stockholders, including proposed
    nominations of persons for election to the board of directors.
    At an annual meeting, stockholders may only consider proposals
    or nominations specified in the notice of meeting or brought
    before the meeting by or at the direction of the board of
    directors. Stockholders may also consider a proposal or
    nomination by a person who was a stockholder of

    

    5

 

    record on the record date for the meeting, who is entitled to
    vote at the meeting and who has given to our secretary timely
    written notice, in proper form, of his or her intention to bring
    that business before the meeting. Our amended bylaws do not give
    the board of directors the power to approve or disapprove
    stockholder nominations of candidates or proposals regarding
    other business to be conducted at a special or annual meeting of
    the stockholders. However, the amended and restated bylaws may
    have the effect of precluding the conduct of business at a
    meeting if the proper procedures are not followed. These
    provisions may also discourage or deter a potential acquirer
    from conducting a solicitation of proxies to elect the
    acquirer’s own slate of directors or otherwise attempting
    to obtain control of us.

 

    Under Delaware law, a special meeting of stockholders may be
    called by the board of directors or by any other person
    authorized to do so in the amended and restated certificate of
    incorporation or the amended and restated bylaws. The amended
    and restated bylaws authorize a majority of our board of
    directors, the chairman of the board or the chief executive
    officer to call a special meeting of stockholders. Because our
    stockholders do not have the right to call a special meeting, a
    stockholder could not force stockholder consideration of a
    proposal over the opposition of the board of directors by
    calling a special meeting of stockholders prior to such time as
    a majority of the board of directors believed or the chief
    executive officer believed the matter should be considered or
    until the next annual meeting provided that the requestor met
    the notice requirements. The restriction on the ability of
    stockholders to call a special meeting means that a proposal to
    replace the board also could be delayed until the next annual
    meeting.

 

    Delaware law provides that stockholders may execute an action by
    written consent in lieu of a stockholder meeting. However,
    Delaware law also allows us to eliminate stockholder actions by
    written consent. Elimination of written consents of stockholders
    may lengthen the amount of time required to take stockholder
    actions since actions by written consent are not subject to the
    minimum notice requirement of a stockholder’s meeting.
    However, we believe that the elimination of stockholders’
    written consents may deter hostile takeover attempts. Without
    the availability of stockholders’ actions by written
    consent, a holder controlling a majority of our capital stock
    would not be able to amend its bylaws or remove directors
    without holding a stockholders meeting. The holder would have to
    obtain the consent of a majority of the board of directors, the
    chairman of the board or the chief executive officer to call a
    stockholders meeting and satisfy the notice periods determined
    by the board of directors. The restated certificate of
    incorporation provides that stockholders may not act by written
    consent.

 

    Transfer
    Agent and Registrar

 

    The transfer agent and registrar for our common stock is
    American Stock Transfer and Trust Company, located at 59
    Maiden Lane, Plaza Level, New York, NY 10038.

    

    6

 

 

    DESCRIPTION
    OF DEBT SECURITIES THAT WE MAY OFFER

 

    The following summary of the terms of the debt securities
    describes general terms that apply to the debt securities. The
    debt securities offered pursuant to this prospectus will be
    unsecured obligations and will be either senior debt,
    subordinated debt
    and/or
    convertible debt. The particular terms of any debt securities
    will be described more specifically in each prospectus
    supplement relating to those debt securities. Where any
    provision in an accompanying prospectus supplement is
    inconsistent with any provision in this summary, the prospectus
    supplement will control.

 

    Debt securities will be issued under an indenture. We
    summarize the indenture below. Where we make no distinction in
    our summary between senior debt securities and subordinated debt
    securities the applicable information refers to any debt
    securities and the indenture. Since this is only a summary, it
    does not contain all of the information that may be important to
    you. A form of indenture relating to debt securities, along with
    a form of debt securities are exhibits to the registration
    statement of which this prospectus is a part. The form of
    executed indenture will be incorporated by reference from a
    current report on
    Form 8-K.
    We encourage you to read those documents, including the executed
    indenture because the executed indenture, and not this summary,
    will govern your rights as a holder of debt securities.

 

    General

 

    The indenture will not limit the aggregate principal amount of
    debt securities we may issue and will provide that we may issue
    debt securities thereunder from time to time in one or more
    series. The indenture will not limit the amount of other
    indebtedness or debt securities, other than certain secured
    indebtedness as described below, which we or our subsidiaries
    may issue. Under the indenture, the terms of the debt securities
    of any series may differ and we, without the consent of the
    holders of the debt securities of any series, may reopen a
    previous series of debt securities and issue additional debt
    securities of the series or establish additional terms of the
    series.

 

    Unless otherwise provided in a prospectus supplement, any senior
    debt securities will be our unsecured obligations and will rank
    equally with all of our other unsecured and senior indebtedness,
    and the subordinated debt securities will be unsecured
    obligations of ours and, as set forth below under
    “— Subordinated Debt Securities,” will be
    subordinated in right of payment to all of our senior
    indebtedness.

 

    Because many of our assets are held in subsidiaries established
    in connection with financing transactions, our rights and the
    rights of our creditors (including the holders of debt
    securities) and shareholders to participate in any distribution
    of assets of any subsidiary upon the subsidiary’s
    liquidation or reorganization or otherwise would be subject to
    the prior claims of the subsidiary’s creditors, except to
    the extent that we may be a creditor with recognized claims
    against the subsidiary.

 

    You should refer to the prospectus supplement that accompanies
    this prospectus for a description of the specific series of debt
    securities we are offering by that prospectus supplement. The
    terms may include:

 

			
	 	    •  
	
    the title and specific designation of the debt securities,
    including whether they are senior debt securities or
    subordinated debt securities, and if subordinated, the degree to
    which the subordinated debt securities will be senior or
    subordinated to our indebtedness in right of payment;

	 
	 	    •  
	
    any limit on the aggregate principal amount of the debt
    securities or the series of which they are a part;

	 
	 	    •  
	
    whether the debt securities are to be issuable as registered
    securities, as bearer securities or alternatively as bearer
    securities and registered securities, and if as bearer
    securities, whether interest on any portion of a bearer security
    in global form will be paid to any clearing organizations;

	 
	 	    •  
	
    the currency or currencies, or composite currencies, in which
    the debt securities will be denominated and in which we will
    make payments on the debt securities;

	 
	 	    •  
	
    the date or dates on which we must pay principal;

    

    7

 

 

			
	 	    •  
	
    the rate or rates at which the debt securities will bear
    interest or the manner in which interest will be determined, if
    any interest is payable;

	 
	 	    •  
	
    the date or dates from which any interest will accrue, the date
    or dates on which we must pay interest and the record date for
    determining who is entitled to any interest payment;

	 
	 	    •  
	
    the place or places where we must pay the debt securities and
    where any debt securities issued in registered form may be sent
    for transfer or exchange;

	 
	 	    •  
	
    the terms and conditions on which we may, or may be required to,
    redeem the debt securities;

	 
	 	    •  
	
    the terms and conditions of any sinking fund;

	 
	 	    •  
	
    the terms and conditions of modifications, amendments and
    waivers of any terms of the debt securities;

	 
	 	    •  
	
    if other than denominations of $1,000, the denominations in
    which we may issue the debt securities;

	 
	 	    •  
	
    the amount we will pay if the maturity of the debt securities is
    accelerated;

	 
	 	    •  
	
    whether we will issue the debt securities in the form of one or
    more global securities and, if so, the identity of the
    depositary for the global security or securities;

	 
	 	    •  
	
    events of default or covenants (including relating to merger,
    consolidations and sales of assets) that apply to the debt
    securities;

	 
	 	    •  
	
    whether the debt securities will be defeasible; and

	 
	 	    •  
	
    any other terms of the debt securities and any other deletions
    from or modifications or additions to the indenture in respect
    of the debt securities, including those relating to the
    subordination of any debt securities.

 

    Unless the applicable prospectus supplement specifies otherwise,
    the debt securities will not be listed on any securities
    exchange.

 

    Unless the applicable prospectus supplement specifies otherwise,
    we will issue the debt securities in fully registered form
    without coupons. If we issue debt securities of any series in
    bearer form, the applicable prospectus supplement will describe
    the special restrictions and considerations, including special
    offering restrictions and special federal income tax
    considerations, applicable to those debt securities and to
    payment on and transfer and exchange of those debt securities.
    Debt securities issued in bearer form will be transferable by
    delivery.

 

    Unless otherwise stated in the prospectus supplement, we will
    pay principal, premium, interest and additional amounts, if any,
    on the debt securities at the office or agency we maintain for
    that purpose (initially the corporate trust office of the
    trustee). We may pay interest on debt securities issued in
    registered form by check mailed to the address of the persons
    entitled to the payments or we may pay by transfer to their
    U.S. bank accounts. Interest on debt securities issued in
    registered form will be payable on any interest payment date to
    the registered owners of the debt securities at the close of
    business on the regular record date for the interest payment. We
    will name in the prospectus supplement all paying agents we
    initially designate for the debt securities. We may designate
    additional paying agents, rescind the designation of any paying
    agent or approve a change in the office through which any paying
    agent acts, but we must maintain a paying agent in each place
    where payments on the debt securities are payable.

 

    Unless otherwise stated in the prospectus supplement, the debt
    securities may be presented for transfer (duly endorsed or
    accompanied by a written instrument of transfer, if we or the
    security registrar so requires) or exchanged for other debt
    securities of the same series (containing identical terms and
    provisions, in any authorized denominations, and in the same
    aggregate principal amount) at the office or agency we maintain
    for that purpose (initially the corporate trust office of the
    trustee). There will be no service charge for any

    

    8

 

    transfer or exchange, but we may require payment sufficient to
    cover any tax or other governmental charge or expenses payable
    in connection with the transfer or exchange. We will not be
    required to:

 

			
	 	    •  
	
    issue, register the transfer of, or exchange, debt securities
    during a period beginning at the opening of business
    15 days before the day of mailing of a notice of redemption
    of any such debt securities and ending at the close of business
    on the day of such mailing or

	 
	 	    •  
	
    register the transfer of or exchange any debt security selected
    for redemption in whole or in part, except the unredeemed
    portion of any debt security being redeemed in part.

 

    We shall appoint the trustee as security registrar. Any
    transfer agent (in addition to the security registrar) we
    initially designate for any debt securities will be named in the
    related prospectus supplement. We may designate additional
    transfer agents, rescind the designation of any transfer agent
    or approve a change in the office through which any transfer
    agent acts, but we must maintain a transfer agent in each place
    where any payments on the debt securities are payable.

 

    Unless otherwise stated in the prospectus supplement, we will
    issue the debt securities only in fully registered form, without
    coupons, in minimum denominations of $1,000 and integral
    multiples of $1,000. The debt securities may be represented in
    whole or in part by one or more global debt securities. Each
    global security will be registered in the name of a depositary
    or its nominee and the global security will bear a legend
    regarding the restrictions on exchanges and registration of
    transfer. Interests in a global security will be shown on
    records maintained by the depositary and its participants, and
    transfers of those interests will be made as described below.
    Provisions relating to the use of global securities are more
    fully described below in the section entitled “Use of
    Global Securities.”

 

    We may issue the debt securities as original issue discount
    securities (bearing no interest or bearing interest at a rate
    which at the time of issuance is below market rates) to be sold
    at a substantial discount below their principal amount. We will
    describe certain special U.S. federal income tax and other
    considerations applicable to any debt securities that are issued
    as original issue discount securities in the applicable
    prospectus supplement.

 

    If the purchase price of any debt securities is payable in one
    or more foreign currencies or currency units, or if any debt
    securities are denominated in one or more foreign currencies or
    currency units, or if any payments on the debt securities are
    payable in one or more foreign currencies or currency units, we
    will describe the restrictions, elections, certain
    U.S. federal income tax considerations, specific terms and
    other information about the debt securities and the foreign
    currency or currency units in the prospectus supplement.

 

    We will comply with Section 14(e) under the Exchange Act,
    and any other tender offer rules under the Exchange Act that may
    then be applicable, in connection with any obligation to
    purchase debt securities at the option of the holders. Any such
    obligation applicable to a series of debt securities will be
    described in the related prospectus supplement.

 

    Subordinated
    Debt Securities

 

    Unless otherwise provided in the applicable prospectus
    supplement, the following provisions will apply for subordinated
    debt securities.

 

    Before we pay the principal of, premium, if any, and interest
    on, the subordinated debt securities, we must be current and not
    in default on payment in full of all of our senior indebtedness.
    Senior indebtedness includes all of our indebtedness as
    described below, except for:

 

			
	 	    •  
	
    obligations issued or assumed as the deferred purchase price of
    property;

	 
	 	    •  
	
    conditional sale obligations;

	 
	 	    •  
	
    obligations arising under any title retention agreements;

	 
	 	    •  
	
    indebtedness relating to the applicable subordinated debt
    securities;

	 
	 	    •  
	
    indebtedness owed to one of our subsidiaries; and

    

    9

 

 

			
	 	    •  
	
    indebtedness that, by its terms, is subordinate in right of
    payment to or equal with the applicable subordinated debt
    securities.

 

    Generally indebtedness means:

 

			
	 	    •  
	
    the principal of, premium, if any, and interest on indebtedness
    for money borrowed;

	 
	 	    •  
	
    the principal of, premium, if any, and interest on indebtedness
    evidenced by notes, debentures, bonds or other similar
    instruments;

	 
	 	    •  
	
    capitalized lease obligations;

	 
	 	    •  
	
    obligations issued or assumed as the deferred purchase price of
    property, all conditional sale obligations and all obligations
    arising under any title retention agreements;

	 
	 	    •  
	
    obligations for the reimbursement of any obligor on any letter
    of credit, banker’s acceptance or similar credit
    transaction (other than obligations with respect to certain
    letters of credit securing obligations entered into in the
    ordinary course of business);

	 
	 	    •  
	
    obligations of the type referred to in the bullet points above
    assumed for another party and dividends of another party for the
    payment of which, in either case, one is responsible or liable
    as obligor, guarantor or otherwise; and

	 
	 	    •  
	
    obligations assumed of the types referred to in the bullet
    points above for another party secured by any lien on any of
    one’s property or assets.

 

    Indebtedness does not include amounts owed pursuant to trade
    accounts arising in the ordinary course of business.

 

    Generally, we may not pay the principal of, premium, if any, or
    interest on the subordinated debt securities if, at the time of
    payment (or immediately after giving effect to such payment):

 

			
	 	    •  
	
    there exists under any senior indebtedness, or any agreement
    under which any senior indebtedness is issued, any default,
    which default results in the full amount of the senior
    indebtedness being declared due and payable; or

	 
	 	    •  
	
    the trustee has received written notice from a holder of senior
    indebtedness stating that there exists under the senior
    indebtedness, or any agreement under which the senior
    indebtedness is issued, a default, which default permits the
    holders of the senior indebtedness to declare the full amount of
    the senior indebtedness due and payable,

 

    unless, among other things, in either case:

 

			
	 	    •  
	
    the default has been cured or waived; or

	 
	 	    •  
	
    full payment of amounts then due for principal and interest and
    of all other obligations then due on all senior indebtedness has
    been made or duly provided for under the terms of any instrument
    governing senior indebtedness.

 

    Limited subordination periods apply in the event of non-payment
    defaults relating to senior indebtedness in situations where
    there has not been an acceleration of senior indebtedness.

 

    A failure to make any payment on the subordinated debt
    securities as a result of the foregoing provisions will not
    affect our obligations to the holders of the subordinated debt
    securities to pay the principal of, premium, if any, and
    interest on the subordinated debt securities as and when such
    payment obligations become due.

 

    The holders of senior indebtedness will be entitled to receive
    payment in full of all amounts due or to become due on senior
    indebtedness, or provisions will be made for such payment,
    before the holders of the subordinated debt securities are
    entitled to receive any payment or distribution of any kind
    relating to the

    

    10

 

    subordinated debt securities or on account of any purchase or
    other acquisition of the subordinated debt securities by us or
    any of our subsidiaries, in the event of:

 

			
	 	    •  
	
    insolvency or bankruptcy case or proceeding, or any
    receivership, liquidation, reorganization or other similar case,
    relating to us or our assets;

	 
	 	    •  
	
    any liquidation, dissolution or other winding up of Emeritus,
    whether voluntary or involuntary and whether or not involving
    insolvency or bankruptcy; or

	 
	 	    •  
	
    any assignment for the benefit of our creditors or any other
    marshalling of our assets and liabilities.

 

    In addition, the rights of the holders of the subordinated debt
    securities will be subrogated to the rights of the holders of
    senior indebtedness to receive payments and distributions of
    cash, property and securities applicable to the senior
    indebtedness until the principal of, premium, if any, and
    interest on the subordinated debt securities are paid in full.

 

    Because of these subordination provisions, our creditors who
    hold senior indebtedness or other unsubordinated indebtedness
    may recover a greater percentage of the debt owed to them than
    the holders of the subordinated debt securities.

 

    The indenture will not limit the aggregate amount of senior
    indebtedness that we may issue. If this prospectus is being
    delivered in connection with the offering of a series of
    subordinated debt securities, the accompanying prospectus
    supplement or the information incorporated in this prospectus by
    reference will set forth the approximate amount of senior debt
    outstanding as of a recent date.

 

    Convertible
    Debt Securities

 

    We will set forth in the prospectus supplement the terms on
    which a series of senior or subordinated debt securities may be
    convertible or exchangeable for our common, preferred or other
    capital stock, including the conversion or exchange rate, as
    applicable, or how it will be calculated, and the applicable
    conversion or exchange period. We will include provisions as to
    whether the conversion or exchange is mandatory, at the option
    of the holder or at our option. We may include provisions
    pursuant to which the number of our securities or the securities
    of a third-party that the holders of the series of debt
    securities receive upon conversion or exchange would, under the
    circumstances described in those provisions, be subject to
    adjustment, or pursuant to which those holders would, under
    those circumstances, receive cash, securities or other property
    upon conversion or exchange, for example in the event of our
    merger or consolidation with another entity.

 

    Use of
    Global Securities

 

    The debt securities of any series may be issued in whole or in
    part in the form of one or more global debt securities that will
    be deposited with a depositary or its nominee identified in the
    series prospectus supplement.

 

    The specific terms of the depositary arrangement covering debt
    securities will be described in the prospectus supplement
    relating to that series. We anticipate that the following
    provisions or similar provisions will apply to depositary
    arrangements relating to debt securities, although to the extent
    the terms of any arrangement differs from those described in
    this section, the terms of the arrangement shall supersede those
    in this section. In this section, the term debt securities will
    refer to both senior, subordinated and convertible debt
    securities.

 

    Upon the issuance of a global security, the depositary for the
    global security or its nominee will credit, to accounts in its
    book-entry registration and transfer system, the principal
    amounts of the debt securities represented by the global
    security. These accounts will be designated by the underwriters
    or agents with respect to such debt securities or by us if such
    debt securities are offered and sold directly by us. Only
    institutions that have accounts with the depositary or its
    nominee, and persons who hold beneficial interests through those
    participants, may own beneficial interests in a global security.
    Ownership of beneficial interests in a global security will be
    shown only on, and the transfer of those ownership interests
    will be effected only

    

    11

 

    through, records maintained by the depositary, its nominee or
    any such participants. The laws of some states require that
    certain purchasers of securities take physical delivery of such
    securities in definitive form. These laws may prevent you from
    transferring your beneficial interest in a global security.

 

    As long as the depositary or its nominee is the registered owner
    of a global security, the depositary or nominee will be
    considered the sole owner or holder of the debt securities
    represented by the global security. Except as described below,
    owners of beneficial interests in a global security will not be
    entitled to have debt securities registered in their names and
    will not be entitled to receive physical delivery of the debt
    securities in definitive form.

 

    We will make all payments of principal of, any premium and
    interest on, and any additional amounts with respect to, debt
    securities issued as global securities to the depositary or its
    nominee. Neither we nor the trustee, any paying agent or the
    security registrar assumes any responsibility or liability for
    any aspect of the depositary’s or any participant’s
    records relating to, or for payments made on account of,
    beneficial interests in a global security.

 

    We expect that the depositary for a series of debt securities or
    its nominee, upon receipt of any payment with respect to such
    debt securities, will credit immediately participants’
    accounts with payments in amounts proportionate to their
    respective beneficial interest in the principal amount of the
    global security for such debt securities as shown on the records
    of such depositary or its nominee. We also expect that payments
    by participants to owners of beneficial interests in such global
    security held through such participants will be governed by
    standing instructions and customary practices, as is now the
    case with securities held for the accounts of customers
    registered in “street name,” and will be the
    responsibility of such participants.

 

    The indenture provides that if:

 

			
	 	    •  
	
    the depositary notifies us that it is unwilling or unable to
    continue as depositary for a series of debt securities, or if
    the depositary is no longer legally qualified to serve in that
    capacity, and we have not appointed a successor depositary
    within 90 days of written notice,

	 
	 	    •  
	
    we determine that a series of debt securities will no longer be
    represented by global securities and we execute and deliver an
    order to that effect to the trustee, or

	 
	 	    •  
	
    an event of default with respect to a series of debt securities
    occurs and continues,

 

    the global securities for that series will be exchanged for
    registered debt securities in definitive form. The definitive
    debt securities will be registered in the name or names the
    depositary instructs the trustee. We expect that these
    instructions may be based upon directions the depositary
    receives from participants with respect to ownership of
    beneficial interests in global securities.

    

    12

 

 

    DESCRIPTION
    OF WARRANTS

 

    We may issue, either separately or together with other
    securities, warrants for the purchase of any, including any
    combination, of common stock, preferred stock or convertible
    preferred stock that we may sell under this prospectus.

 

    The warrants will be issued under warrant agreements to be
    entered into between us and a bank or trust company, as warrant
    agent, all to be set forth in the applicable prospectus
    supplement relating to any or all warrants with respect to which
    this prospectus is being delivered. Copies of the form of
    agreement for each warrant, which we refer to collectively as
    “warrant agreements,” including the forms of
    certificates representing the warrants, which we refer to
    collectively as “warrant certificates,” and reflecting
    the provisions to be included in such agreements that will be
    entered into with respect to a particular offering of each type
    of warrant, will be filed with the Commission and incorporated
    by reference as exhibits to the registration statement of which
    this prospectus is a part or as an exhibit to a current report
    on
    Form 8-K.

 

    The following description sets forth certain general terms and
    provisions of the warrants to which any prospectus supplement
    may relate. The particular terms of the warrants to which any
    prospectus supplement may relate and the extent, if any, to
    which the general provisions may apply to the warrants so
    offered will be described in the applicable prospectus
    supplement. To the extent that any particular terms of the
    warrants, warrant agreements or warrant certificates described
    in a prospectus supplement differ from any of the terms
    described in this section, then the terms described in this
    section will be deemed to have been superseded by that
    prospectus supplement. We encourage you to read the applicable
    warrant agreement and warrant certificate for additional
    information before you purchase any of our warrants.

 

    General

 

    The prospectus supplement will describe the terms of the
    warrants with respect to which this prospectus is being
    delivered, as well as the related warrant agreement and warrant
    certificates, including the following, where applicable:

 

			
	 	    •  
	
    the number of securities purchasable upon exercise of each
    warrant and the initial price at which the number of securities
    may be purchased upon such exercise;

	 
	 	    •  
	
    the designation and terms of the securities, if other than
    common stock, purchasable upon exercise of the warrants and of
    any securities, if other than common stock, with which the
    warrants are issued;

	 
	 	    •  
	
    the procedures and conditions relating to the exercise of the
    warrants;

	 
	 	    •  
	
    the date, if any, on and after which the warrants, and any
    securities with which the warrants are issued, will be
    separately transferable;

	 
	 	    •  
	
    the offering price, if any, of the warrants;

	 
	 	    •  
	
    the date on which the right to exercise the warrants will
    commence and the date on which that right will expire;

	 
	 	    •  
	
    if applicable, a discussion of the material United States
    federal income tax considerations applicable to the exercise of
    the warrants;

	 
	 	    •  
	
    whether the warrants represented by the warrant certificates
    will be issued in registered or bearer form and, if registered,
    where they may be transferred and registered;

	 
	 	    •  
	
    call provisions, if any, of the warrants;

	 
	 	    •  
	
    antidilution or other adjustment provisions, if any, of the
    warrants; and

	 
	 	    •  
	
    any other material terms of the warrants.

 

    The description of warrants in the prospectus supplement will
    not necessarily be complete and will be qualified in its
    entirety by reference to the warrant agreement and warrant
    certificate relating to the warrants being offered.

    

    13

 

    Exercise
    of Warrants

 

    Each warrant will entitle the holder to purchase for cash that
    number of securities at the exercise price set forth in, or to
    be determined as set forth in, the applicable prospectus
    supplement relating to the warrants. Unless otherwise specified
    in the applicable prospectus supplement, warrants may be
    exercised at the corporate trust office of the warrant agent or
    any other office indicated in the applicable prospectus
    supplement at any time up to the close of business, New York
    City time, on the expiration date set forth in the applicable
    prospectus supplement. After the close of business, New York
    City time, on the expiration date, unexercised warrants will
    become void. Upon receipt of payment and the warrant certificate
    properly completed and duly executed, we will, as soon as
    practicable, issue the securities purchasable upon exercise of
    the warrant. If less than all of the warrants represented by the
    warrant certificate are exercised, a new warrant certificate
    will be issued for the remaining amount of warrants.

 

    No Rights
    of Security Holder Prior to Exercise

 

    Before the exercise of their warrants, holders of warrants will
    not have any of the rights of holders of the securities
    purchasable upon the exercise of the warrants, and will not be
    entitled to, among other things, vote or receive dividend
    payments or similar distributions on the securities purchasable
    upon exercise.

 

    Exchange
    of Warrant Certificates

 

    Warrant certificates may be exchangeable for new warrant
    certificates of different denominations at the corporate trust
    office of the warrant agent or any other office indicated in the
    applicable prospectus supplement.

 

    DESCRIPTION
    OF UNITS

 

    We may issue units to purchase one or more of the Securities
    referenced herein. The terms of such units will be set forth in
    a prospectus supplement. The form of units and the applicable
    unit agreement will be filed with the Commission and
    incorporated by reference as exhibits to the registration
    statement of which this prospectus is a part or as an exhibit to
    a current report on
    Form 8-K.
    We encourage you to read the applicable unit agreement and unit
    before you purchase any of our units.

    

    14

 

 

    PLAN OF
    DISTRIBUTION

 

    We may, from time to time, sell any or all of their shares of
    common stock on The Nasdaq Capital Market or any other stock
    exchange, market or trading facility on which the shares are
    traded or in private transactions. These sales may be at fixed
    or negotiated prices.

 

    We may use any one or more of the following methods when selling
    our securities:

 

			
	 	    •  
	
    direct sales to purchasers;

	 
	 	    •  
	
    through underwriters or dealers;

	 
	 	    •  
	
    ordinary brokerage transactions and transactions in which the
    broker-dealer solicits purchasers;

	 
	 	    •  
	
    block trades in which the broker-dealer will attempt to sell the
    securities as agent but may position and resell a portion of the
    block as principal to facilitate the transaction;

	 
	 	    •  
	
    purchases by a broker-dealer as principal and resale by the
    broker-dealer for its account;

	 
	 	    •  
	
    an exchange distribution in accordance with the rules of the
    applicable exchange;

	 
	 	    •  
	
    privately negotiated transactions;

	 
	 	    •  
	
    settlement of short sales entered into after the effective date
    of the registration statement of which this prospectus is a part;

	 
	 	    •  
	
    broker-dealers may agree with us to sell a specified number of
    such securities at a stipulated price per share;

	 
	 	    •  
	
    through the writing or settlement of options or other hedging
    transactions, whether through an options exchange or otherwise;

	 
	 	    •  
	
    a combination of any such methods of sale; or

	 
	 	    •  
	
    any other method permitted pursuant to applicable law.

 

    If underwriters are used in the sale of any shares, the shares
    will be acquired by the underwriters for their own account and
    may be resold from time to time in one or more transactions,
    including negotiated transactions, at a fixed public offering
    price or at varying prices determined at the time of sale. The
    shares may be either offered to the public through underwriting
    syndicates represented by managing underwriters, or directly by
    underwriters. Generally, the underwriters’ obligations to
    purchase the shares will be subject to certain conditions
    precedent. The underwriters will be obligated to purchase all of
    the shares if they purchase any of the shares (other than any
    shares purchased upon exercise of any option to purchase
    additional shares).

 

    Broker-dealers engaged by us may arrange for other
    brokers-dealers to participate in sales. Broker-dealers may
    receive commissions or discounts from us (or, if any
    broker-dealer acts as agent for the purchaser of shares, from
    the purchaser) in amounts to be negotiated, but, except as set
    forth in a supplement to this Prospectus, in the case of an
    agency transaction not in excess of a customary brokerage
    commission in compliance with NASDR Rule 2440; and in the
    case of a principal transaction a markup or markdown in
    compliance with NASDR IM-2440.

 

    In connection with the sale of the common stock or interests
    therein, we may enter into hedging transactions with
    broker-dealers or other financial institutions, which may in
    turn engage in short sales of the Common Stock in the course of
    hedging the positions they assume. We may also sell shares of
    the common stock short and deliver these securities to close out
    their short positions, or loan or pledge the common stock to
    broker-dealers that in turn may sell these securities. We may
    also enter into option or other transactions with broker-dealers
    or other financial institutions or the creation of one or more
    derivative securities which require the delivery to such
    broker-dealer or other financial institution of shares offered
    by this prospectus, which shares such broker-dealer or other
    financial institution may resell pursuant to this prospectus (as
    supplemented or amended to reflect such transaction).

    

    15

 

    We and any broker-dealers or agents that are involved in selling
    the securities may be deemed to be “underwriters”
    within the meaning of the Securities Act in connection with such
    sales. In such event, any commissions received by such
    broker-dealers or agents and any profit on the resale of the
    securities purchased by them may be deemed to be underwriting
    commissions or discounts under the Securities Act. In no event
    shall any broker-dealer receive fees, commissions and markups
    which, in the aggregate, would exceed eight percent (8%).

 

    The Company will pay all fees and expenses incident to the
    registration of the shares. The Company may agree to indemnify
    any underwriters or agents against certain losses, claims,
    damages and liabilities, including liabilities under the
    Securities Act.

 

    Under applicable rules and regulations under the Exchange Act,
    any person engaged in the distribution of the resale shares may
    not simultaneously engage in market making activities with
    respect to the common stock for the applicable restricted
    period, as defined in Regulation M, prior to the
    commencement of the distribution.

    

    16

 

 

    LEGAL
    MATTERS

 

    The validity of the issuance of securities offered by this
    prospectus will be passed upon for us by Weil,
    Gotshal & Manges LLP, New York, New York.

 

    EXPERTS

 

    The consolidated financial statements and management’s
    report on the effectiveness of internal control over financial
    reporting incorporated in this prospectus by reference from the
    Company’s Annual Report on
    Form 10-K
    for the year ended December 31, 2006 have been audited by
    Deloitte & Touche LLP, an independent registered
    public accounting firm, as stated in their reports which are
    incorporated by reference (which reports (1) express an
    unqualified opinion on the consolidated financial statements and
    include explanatory paragraphs referring to the Company’s
    change in the method of accounting for stock-based compensation
    effective January 1, 2006 as discussed in Note 2 to
    the consolidated financial statements and to the Company’s
    ability to continue as a going concern as discussed in
    Note 1 to the consolidated financial statements,
    (2) express an unqualified opinion on management’s
    assessment regarding the effectiveness of internal control over
    financial reporting, and (3) express an unqualified opinion
    on the effectiveness of internal control over financial
    reporting), and have been so incorporated in reliance upon the
    reports of such firm given upon their authority as experts in
    accounting and auditing.

 

    WHERE YOU
    CAN FIND MORE INFORMATION

 

    The documents incorporated by reference into this prospectus are
    available from us upon request. We will provide a copy of any
    and all of the information that is incorporated by reference in
    this prospectus, without charge, upon written or oral request.
    If you would like to obtain this information from us, please
    direct your request, either in writing or by telephone, to:

 

    Investor Relations

    EpiCept Corporation

    777 Old Saw Mill River Road

    Tarrytown, NY 10591

    (914) 606-3500

 

    We file reports, proxy statements and other information with the
    SEC. Copies of our reports, proxy statements and other
    information may be inspected and copied at the SEC’s Public
    Reference Room at 100 F. Street, N.E., Washington, D.C.
    20549. Copies of these materials can also be obtained by mail at
    prescribed rates from the Public Reference Room of the SEC, 100
    F. Street, N.E., Washington, D.C. 20549. You may obtain
    information on the operation of the Public Reference Room by
    calling the SEC at
    1-800-SEC-0330.
    The SEC maintains an internet site that contains reports, proxy
    and information statements and other information regarding
    EpiCept and other issuers that file electronically with the SEC.
    The address of the SEC internet site is www.sec.gov. This
    information is also available on our website at www.epicept.com.

 

    Reports, proxy statements and other information regarding us may
    also be inspected at:

 

    The National Association of Securities Dealers

    1735 K Street, N.W.

    Washington, D.C. 20006

 

    We have filed a registration statement on
    Form S-3
    under the Securities Act with the SEC with respect to the
    securities to be sold hereunder. This prospectus has been filed
    as part of that registration statement. This prospectus does not
    contain all of the information set forth in the registration
    statement because certain parts of the registration statement
    are omitted in accordance with the rules and regulations of the
    SEC. The registration statement is available for inspection and
    copying as set forth above.

    

    17

 

 

    INCORPORATION
    OF CERTAIN DOCUMENTS BY REFERENCE

 

    The SEC allows us to “incorporate by reference” into
    this prospectus the information we have filed with the SEC. This
    means that we can disclose important information by referring
    you to those documents. All documents that EpiCept subsequently
    files with the SEC pursuant to Sections 13(a), 13(c), 14 or
    15(d) of the Exchange Act, prior to the termination of this
    offering, will be deemed to be incorporated by reference into
    this prospectus and to be a part hereof from the date of filing
    of such documents. Unless expressly incorporated into this
    prospectus, a Current Report (or portion thereof) furnished, but
    not filed, on
    Form 8-K
    shall not be incorporated by reference into this prospectus. Any
    statement contained in a document incorporated or deemed to be
    incorporated by reference in this prospectus shall be deemed to
    be modified or superseded for purposes of this prospectus to the
    extent that a statement contained herein or in any other
    subsequently filed document which also is or is deemed to be
    incorporated by reference herein modifies or supersedes such
    statement. Any such statement so modified or superseded shall
    not be deemed, except as so modified or superseded, to
    constitute a part of this prospectus. We are not, however,
    incorporating by reference any documents or portions thereof,
    whether specifically listed below or filed in the future, that
    are not deemed “filed” with the SEC, including
    information furnished pursuant to Item 2.02 or 7.01 of
    Form 8-K.

 

    We incorporate by reference the following documents that we have
    filed with the SEC and any filings that we will make with the
    SEC in the future under Sections 13(a), 13(c), 14 or 15(d)
    of the Exchange Act until this offering is terminated:

 

			
	 	    •  
	
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended June 30, 2007;

	 
	 	    •  
	
    Quarterly Report on
    Form 10-Q
    for the fiscal quarter ended March 31, 2007;

	 
	 	    •  
	
    Annual Report on
    Form 10-K
    for the fiscal year ended December 31, 2006;

	 
	 	    •  
	
    Definitive Proxy Statement on Schedule 14A dated
    March 2, 2007, relating to our special meeting of
    stockholders held on April 6, 2007;

	 
	 	    •  
	
    Definitive Proxy Statement on Schedule 14A dated
    April 23, 2007, relating to our annual meeting of
    stockholders held on May 23, 2007;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed February 5, 2007;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed April 9, 2007;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed April 10, 2007;

	 
	 	    •  
	
    Amended Current Report on
    Form 8-K
    filed April 11, 2007;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed May 30, 2007;

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed June 29, 2007; and

	 
	 	    •  
	
    Current Report on
    Form 8-K
    filed August 27, 2007.

 

    Copies of these filings are available free of charge by writing
    to EpiCept Corporation, 777 Old Saw Mill River Road, Tarrytown,
    New York 10591, Attention: Robert W. Cook, Secretary, or by
    telephoning us at
    (914) 606-3500.

 

    Any statement made in this prospectus concerning the contents of
    any contract, agreement or other document is only a summary of
    the actual document. You may obtain a copy of any document
    summarized in this prospectus at no cost by writing to or
    telephoning us at the address and telephone number given above.
    Each statement regarding a contract, agreement or other document
    is qualified in its entirety by reference to the actual document.

    

    18EX-10.1

Exhibit 10.1

AMENDMENT NUMBER SEVENTEEN TO

THE METLIFE PLAN FOR TRANSITION ASSISTANCE FOR OFFICERS

THE METLIFE PLAN FOR TRANSITION ASSISTANCE FOR OFFICERS (the “Plan”) is hereby amended as follows:

	 	1.	 	The Plan is hereby amended by restating subsection 1.4.05(b)(4) in its entirety
to read as follows:
	 
	 	 	 	“(4) the termination of employment of an Employee who has
entered into a written employment contract or severance agreement
with the Company or a MetLife Enterprise Affiliate.”
	 
	 	2.	 	The Plan is hereby amended by adding the following to subsection 1.4.09:
	 
	 	 	 	“(i) is an Employee but is not eligible to participate in
or receive benefits under the 2008 MetLife Dental Integration
Severance Plan.”
	 
	 	3.	 	This amendment shall be effective as of June 1, 2008.

IN WITNESS WHEREOF, the Company has caused this amendment to be executed by an officer thereunto
duly authorized on the date noted below the officer’s signature.

METROPOLITAN LIFE INSURANCE COMPANY

By: /s/ Debra Capolarello                    

Date: 6/3/08                                         

Witness:
/s/ Lucida Bullard

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