July 28, 2005 03:00 ET

NicOx reports first-half 2005 financial results and provides a corporate update

Sophia-Antipolis cedex -- (MARKET WIRE) -- July 28, 2005 -- 28 July, 2005. Sophia Antipolis, France.

NicOx S.A. (Eurolist: NICOX) today reported financial results for the six months ended June 30, 2005 and provided a corporate update for the first half of the year. Revenues were E 1.2 million in the first 6 months of 2005, compared to E 0.3 million in the same period of 2004. Total operating expenses were E 8.6 million, compared to E 7.9 million in the first half of 2004 and the net loss was E 6.9 million, compared to E 7.2 million for the same period in 2004. The Company's cash position at June 30, 2005 was E 45.4 million, compared to E 51.7 million at 31 December, 2004.

The first half of the year was focused on the preparation of the phase III plan for HCT 3012. HCT 3012 is the lead compound in the CINOD (COX Inhibiting Nitric Oxide-Donating) class, which NicOx is developing for the treatment of the signs and symptoms of osteoarthritis. NicOx is working to prepare the optimal phase III program, in light of the recent developments in the field of COX-2 inhibitors and non-steroidal anti-inflammatory drugs (NSAIDs), and a meeting has been scheduled with the FDA to discuss the phase III clinical plan. With regard to NicOx' second lead compound, NCX 4016, enrollment of 450 patients has been completed in a phase II trial for peripheral arterial occlusive disease (PAOD) and results are expected in the fourth quarter of 2005.

To support its increasing involvement in late stage clinical development and due to the continued progress of partnered programs, NicOx undertook a concerted program of strengthening its Research and Development capabilities, through appointing three new members to the Executive Management team.

Michele Garufi, Chairman and CEO of NicOx, commented: "During the first six months of 2005 NicOx made excellent clinical and organizational progress. We maintained our focus in the areas of inflammatory and cardiovascular diseases and on the advancement of our two lead products, HCT 3012 and NCX 4016, into late stage development. To this end we have strengthened our R&D department, with a number of important senior appointments which have greatly reinforced the expertise and experience within NicOx. We are also extremely pleased with the momentum of our external collaborations, which continue to demonstrate the broad potential of our technology. We look forward to a number of important milestones in the second half of this year, including phase II results for NCX 4016 and the finalization of the phase III plan for HCT 3012 following our forthcoming discussion with the FDA."

HCT 3012: preparation of the phase III program

Preparation of the phase III trials for HCT 3012 and relevant supporting activities continued in the first half of 2005. The Company recently concluded a chemistry manufacturing controls (CMC) meeting with the FDA and has begun preparations for the manufacturing of clinical supplies for phase III. A second meeting has already been scheduled with the FDA to discuss the detailed clinical plan for phase III. The current projection is that the first phase III trial could start before the end of 2005, or at least within the first quarter of 2006, with this timing being dependent on the outcome of the FDA meeting.

The regulatory environment surrounding NSAIDs continued to evolve in the first half of this year, with implications for the phase III clinical plan and future market potential of HCT 3012. After the market withdrawal of the COX-2 selective NSAIDs rofecoxib and valdecoxib, following their association with an increased risk of serious cardiovascular events, the FDA released a new labeling template for the whole class on June 15, 2005 bearing a 'black-box' warning for cardiovascular and gastrointestinal risks. Additionally, a statement will be added to the warnings section of the labels, stressing that all these drugs can lead to onset of new hypertension (high blood pressure) or worsening of pre-existing hypertension and should be used with caution in patients with hypertension.

Ali Raza, Head of Research and Development, commented: "Based on the currently available data from placebo controlled trials, no marketed NSAID can be singled out as having assured cardiovascular safety and this has been reflected by the FDA's ruling that the whole class should carry a black-box warning for a potentially increased risk of serious cardiovascular events. These new safety concerns impact millions of people who rely on these drugs daily to treat the chronic pain and inflammation associated with osteoarthritis and other conditions. A significant proportion of these patients suffer from cardiovascular risk factors such as hypertension.

In phase II trials, HCT 3012 appeared to show no unwanted increase in blood pressure, in comparison to existing drugs. The potential significance of this finding was underlined by the FDA's new labeling template for the NSAID class, which linked the increase of blood pressure seen with these products to the increased potential for cardiovascular events. We are confident that we can differentiate HCT 3012 from marketed drugs in terms of blood pressure effect in the upcoming phase III trials and we look forward to discussing the details of the clinical plan with the FDA. A demonstration of a neutral effect on blood pressure, especially in hypertensive patients, will be an important step toward establishing wider cardiovascular safety for HCT 3012."

NCX 4016: ongoing phase II program

In January, NicOx announced completion of enrollment in a phase II trial for NCX 4016 in PAOD. 450 patients with Leriche Fontaine stage II disease were enrolled at 34 clinical sites in Europe. The primary endpoint of the trial is change in maximum treadmill walking distance after six months, an endpoint recognized by the FDA and other regulatory authorities for product approval in symptomatic PAOD. The study is expected to be completed in the second half of 2005 and results will be made available in the fourth quarter of 2005.

In March, NicOx announced results from a phase IIa study in 40 type II diabetes patients showing that NCX 4016 is significantly more effective than aspirin and placebo at preventing platelet activation induced by acute hyperglycemia. Patients with diabetes suffer from an increased risk of cardiovascular complications due to arteriosclerosis (hardening of the arteries) and although clinical guidelines recommend the use of aspirin, research suggests it may have reduced effectiveness in these patients.

Results are expected from a phase II trial for NCX 4016 in patients with type II diabetes and early nephropathy in the second half of 2005 and NicOx is working with its clinical advisors to implement a broadened development program for NCX 4016.

Earlier stage pipeline

NicOx and its partners have made significant advancements in research and development programs in the first half of 2005:

Pfizer Ophthalmology Collaboration

In March, NicOx announced it had received a payment of E 1 million from Pfizer, Inc., in connection with the ongoing research collaboration in ophthalmology. NicOx recently announced that several compounds have been selected for a final round of analysis by Pfizer, due to their superior activity compared to reference compounds in an in vivo eye disease model.

Biolipox - new trial demonstrates rapid onset of action for NCX 1510

In February, NicOx' partner Biolipox AB, announced new clinical results suggesting NCX 1510 has an onset of action of 5-10 minutes. NCX 1510 is in development for allergic rhinitis and the two Companies announced that a phase IIa trial had reached its primary efficacy endpoint in June 2004, based on a statistically significant reduction in a nasal symptom score compared to placebo.

NCX 1020 - promising phase IIa results

In March, NicOx announced good results from a phase IIa study in asthmatic patients, which showed a trend at the 4-hour time point in protecting against bronchoconstriction (constriction of the muscles surrounding the airways induced by methacholine challenge). The trial also revealed a promising pharmacokinetic profile, which suggests NCX 1020 may have the potential for reduced systemic side effects, compared to existing inhaled corticosteroids.

Positive results with nitric oxide-donating compound in bone disease

In July, NicOx announced positive results from a pilot phase II study for a nitric oxide-donating compound in osteopenia (patients with low bone density). The trial reached its primary endpoint, based on the decline of bone resorption markers, demonstrating the potential for nitric oxide-donation to provide a new approach to bone disorders such as osteoporosis.

Damian Marron, Vice President of Business Development, commented: "Nitric oxide-donation has demonstrated activity in a broad range of therapeutic areas, including those beyond NicOx' core focus in inflammatory and cardiovascular diseases. Internal resources are concentrated on our lead clinical programs. Therefore, we are working hard to exploit this wider potential through new and existing industry partnerships."

Expansion of the R&D Organization

During the first 6 months of the year NicOx appointed three senior executives with strong pharmaceutical and biopharmaceutical industry experience in a concerted effort to reinforce its existing Research and Development team. The Company's R&D team is now led by Dr. Ali Raza who spent 14 years at AstraZeneca, where he held a number of management positions, including Chair of the Global Product Team for CRESTOR® (rosuvastatin calcium), overseeing the product's development, registration and launch. Staffan Stroemberg was appointed as Vice President of Drug Development and Maarten Beekman as Vice President of Clinical Development. Both join Dr. Raza in being appointed to NicOx' Executive Management team.

First-half Financial Review

NicOx has prepared its financial statements for the first time, on 30 June 2005, according to International Financial Reporting Standards (IFRS) as they were in force on 30 June 2005. The impact of the transition from the previous French GAAP standards, to IFRS, on NicOx' financial situation, financial performance and cash flows, at the date of transition (1 January 2004) and at 31 December 2004, were published in April 2005, in the 2004 Document de Référence, which is filed with the AMF (Autorité des Marchés Financiers) and available on the NicOx web site. For the purpose of giving comparative information, the Group presents, in its consolidated half year results as of June 30 2005, the impact of the transition from the previous French GAAP standards to IFRS on its financial situation, its financial performance and its cash flows, as of 30 June 2004.

NicOx reported total research and development revenues of E 1.2 million in the first half of 2005, compared to E 0.3 million in the first half of 2004. This includes the recognition of deferred revenues from the Axcan and Pfizer agreements: E 0.2 million from the recognition of the $ 2 million license and option fee from Axcan and E 1 million from the recognition of the E 2 million upfront payments relating to the research agreement signed with Pfizer in 2004. With respect to the Pfizer agreement, E 1 million was paid upon signature and additional E 1 million in March 2005. These revenues were deferred from February 2003 for Axcan and September 2004 for Pfizer and are being recognized over the estimated duration of the Group's involvement in the development programs provided for under the agreements.

Research and development expenses increased by E 0.6 million to E 6.3 million, in the first half of 2005, compared to E 5.7 million in the first half of 2004.

Selling, general and administrative (SG&A) expenses totaled E 2.3 million in H1:05, up slightly from E 2.2 million in the corresponding period in 2004. SG&A mainly relates to structural costs such as building and laboratory expenses and costs related to administrative, business and corporate development activities.

The Group's operational expenses amounted to E 8.6 million for the first half of 2005, compared to E 7.9 million for the same period in 2004.

NicOx had net financial income of E 0.6 million in the first half of 2005, compared to E 0.5 million in the corresponding period in 2004.

The Group recorded a corporate tax of E 0.1 million in H1:05, approximately unchanged in comparison to the corresponding period in 2004. As of June 30, 2005, the Group had accounts receivable regarding a French research tax credit for E 2.7 million.

The net loss was E 6.9 million in the first half of 2005, compared to E 7.2 million in the first half of 2004.

As of June 30, 2005, the Group's cash and cash equivalents amounted to E 45.4 million, compared to E 51.7 million as of December 31, 2004. The Group uses its cash assets principally to cover research and development expenses, followed by general and administrative expenses and business development and promotional activities.

The Group's net burn rate for the first half of 2005 amounted to E 6.3 million, compared to E 6.7 million for the same period in 2004. The net burn rate is defined as the net cash the Group spent in conducting its activities, excluding any net proceeds resulting from the issuance of shares.

A conference call for investors and analysts will be held today at 10:00am (UK time). Please contact Claire Rowell on +44 (0)20 7269 7285 for details. Accompanying slides will be available on NicOx' web site at .

NicOx S.A. is an emerging pharmaceutical company involved in the research and development of nitric oxide-donating drugs with superior efficacy and safety profiles in the inflammation, pain and cardiovascular therapeutic areas.

NicOx seeks to commercialize its products through partnerships and co-development agreements where it maintains future marketing rights for specialist products.

NicOx S.A. (Bloomberg: COX:FP, Reuters: NCOX.LN), headquartered in Sophia-Antipolis, France, is a public company listed on the Eurolist of Euronext Paris (segment: Next Economy).

The elements included in this communication may contain forward looking statements subject to certain risks and uncertainties. Actual results of the company may differ materially from those indicated in the forward-looking statements because of different risks factors described in the company's document de reference.


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