March 03, 2008 01:24 ET

Financial results for full year 2007: NicOx significantly advances clinical programs

SOPHIA ANTIPOLIS, FRANCE--(Marketwire - March 3, 2008) -

NicOx S.A. (Euronext Paris: COX) today announced its financial results for 2007 and provided an overview of its activities during the year. NicOx also announced today the initiation of two large Ambulatory Blood Pressure Monitoring (ABPM) studies for naproxcinod (see separate press release).

Key highlights 2007:

- Initiation of the two remaining pivotal phase 3 trials for naproxcinod (the 302 and 303 studies) and completion of enrollment in the 302 study

- Presentation of the naproxcinod phase 3 results at the American College of Rheumatology (the 301 study) and data from an Ambulatory Blood Pressure Monitoring trial at the American Heart Association (the 104 study)

- Initiation of a phase 2 proof-of-concept study designed to compare the safety and efficacy of PF-03187207 to Pfizer Inc's Xalatan

- Start of clinical development for the first nitric oxide-donating antihypertensive by Merck & Co., Inc.

- Initiation of a phase 2 proof-of-concept study for TPI 1020 in Chronic Obstructive Pulmonary Disease (COPD), following promising top-line results in a phase 2a study in asthmatic smokers

- Establishment of NicOx' United States (U.S.) headquarters in Warren, New Jersey, as a base for Commercial Affairs and Clinical Operations in North America

- Strengthening of the Company's executive management team, through the appointment of Pascal Pfister, MD as Chief Scientific Officer (CSO), and Sanjiv Sharma as Vice President Commercial Affairs

"We envision that 2008 will be a transformational year for NicOx. We expect to complete the pivotal phase 3 program for naproxcinod, including a pooled analysis of the Office Blood Pressure Measurements, ahead of a projected New Drug Application filing in mid-2009," said Michele Garufi, Chairman and CEO of NicOx. "In our view, naproxcinod is very well positioned in the face of increasing regulatory demands and its commercial potential has increased substantially during 2007, due to set backs suffered by possible competitors."

Financial summary of 2007

NicOx achieved a significant increase in revenues during 2007 reaching EUR 20.6 million, compared to EUR 9.6 million in 2006. This increase is primarily due to payments from Merck & Co., Inc. and Pfizer Inc. Operating expenses totaled EUR 57.8 million in 2007, compared to EUR 36.3 million in 2006. The majority of these expenses are associated with the phase 3 development of naproxcinod. Naproxcinod is NicOx' lead drug candidate, a unique, first in class, COX- Inhibiting Nitric Oxide Donator (CINOD), for the treatment of the signs and symptoms of osteoarthritis. In 2007, NicOx' net loss increased by EUR 7.4 million to reach EUR 32.1 million, compared to EUR 24.7 million in 2006.

On December 31, 2007, the Company had cash, cash equivalents and financial instruments of EUR 172.8 million, compared to EUR 81.7 million on December 31, 2006. This significant increase is primarily due to the capital increase that was completed in February 2007, with net proceeds of EUR 120.7 million.

"We have seen a controlled increase in operating expenses during 2007 and have budgeted for a further increase during 2008, which is primarily due to the clinical development and launch preparation costs for naproxcinod," said Eric Castaldi, Chief Financial Officer of NicOx. "Nevertheless, our strong balance sheet should allow us to leverage the unique potential of naproxcinod, while exploring other late stage product opportunities which could mitigate the risk associated with our planned transition into an integrated pharmaceutical company. We are firmly convinced that NicOx enters 2008 in the strongest position it has ever held and we look to the future with great optimism."

Considerable progress in the pivotal phase 3 program for naproxcinod

NicOx is developing naproxcinod in phase 3 clinical studies, which are designed to demonstrate that it is safe, well tolerated and effective for treating the signs and symptoms of osteoarthritis, in addition to having no detrimental effect on blood pressure, in contrast to existing Non-Steroidal Anti- Inflammatory Drugs (NSAIDs).

The phase 3 efficacy program consists of 3 pivotal studies, which are being conducted for regulatory submissions in the U.S. and Europe:

- The 301 study was conducted in patients with osteoarthritis of the knee and has provided successful efficacy and blood pressure results which were presented at the American College of Rheumatology (ACR) in November 2007. A 52-week open- label safety extension of this study has now been completed and data are currently being analyzed

- The 302 study started enrolling patients with osteoarthritis of the knee in the U.S. in April 2007 and the enrollment of 1020 patients was successfully completed in December 2007. 26-week efficacy and safety results are anticipated in the third quarter of 2008

- The 303 study was initiated in June 2007 in the U.S. and Europe, in patients with osteoarthritis of the hip. This study is expected to complete enrollment in the second quarter of 2008 and 13-week efficacy and safety results are anticipated in 4Q'08.

As in the 301 study, patients in the ongoing 302 and 303 studies are undergoing controlled, standardized Office Blood Pressure Measurements (OBPM) at each visit to the treatment center. Following the completion of the phase 3 program, NicOx plans to perform a predefined statistical analysis on the pooled OBPM data from the phase 3 studies, which should be complete in the fourth quarter of 2008. NicOx projects the submission of a New Drug Application (NDA) for naproxcinod to the U.S. Food and Drug Administration (FDA) in mid-2009.

NicOx has previously completed a clinical study for naproxcinod, which used the 24-hour ABPM monitoring technique to assess the blood pressure profile of naproxcinod in healthy volunteers with stable hypertension (the 104 study) and results of this trial were presented at the American Heart Association (AHA) in November 2007. Today, NicOx announced the initiation of two further studies using the ABPM technique in osteoarthritis patients (see separate press release).

Damian Marron, Executive Vice President of Corporate Development at NicOx, declared: "Beyond naproxcinod, our nitric oxide-donating technology has delivered a broad pipeline of drug candidates in phase 1 and 2, which have highly differentiated profiles and are rapidly advancing through the clinic. These compounds are being developed for serious and prevalent diseases, such as hypertension, glaucoma and COPD, where there is a clear need for improved drugs. According to our forecasts, they have the potential to generate considerable revenues in the mid-to-long term."

Phase 2 proof-of-concept study for PF-03187207 in glaucoma

In March 2007, Pfizer Inc initiated the first phase 2 proof-of-concept clinical study for PF-03187207 in the U.S. and top-line results are expected during April 2008, following the completion of the data analysis. The objective of this study is to compare the safety and efficacy of PF-03187207 to Xalatan (latanoprost). Xalatan is a proprietary Pfizer product and the leader in worldwide glaucoma sales, with approximately $1.6 billion of franchise sales in 2007. A second phase 2 proof of concept study was initiated in Japan in January 2008. In February 2007, NicOx and Pfizer presented promising preclinical results from a prototype compound, which is a nitric oxide-donating prostaglandin F2-alpha analog, at the Association for Ocular Pharmacology and Therapeutics 8th Scientific Meeting.

NicOx and Pfizer have also made good progress in the major collaborative agreement signed in March 2006, which granted Pfizer exclusive rights to apply NicOx' nitric oxide-donating technology across the entire field of ophthalmology. This collaboration involves several separate projects focused on major ocular diseases and encouraging results have been observed in the most advanced program. During 2007, NicOx received EUR 3.0 million from Pfizer in research funding for the second year of this collaboration and Pfizer has subsequently signed a one-year extension of the research phase of this agreement, which will result in NicOx receiving a further EUR 3 million in research funding in March 2008.

Clinical program initiated for new nitric oxide-donating anti-hypertensive agents

In July 2007, the program to develop new nitric oxide-donating antihypertensive agents entered clinical development, with the initiation of the first in a series of planned studies for the first selected drug candidate. These clinical studies are covered by a major agreement between NicOx and Merck & Co., Inc., which covers nitric oxide-donating derivatives of several major classes of antihypertensive agents. Merck and NicOx selected the first candidate in January 2007 and IND-enabling toxicology studies were subsequently initiated and an IND was filed in May. The achievement of these milestones resulted in NicOx receiving EUR 10.0 million in payments from Merck during 2007.

TPI 1020 advanced into a phase 2 proof-of-concept study by Topigen

In November 2007, TOPIGEN Pharmaceuticals Inc. dosed the first patients in a phase 2 proof-of-concept study for TPI 1020 (formerly NCX 1020) in Chronic Obstructive Pulmonary Disease (COPD). This study is expected to provide the first assessment of TPI 1020's potential activity in COPD. TPI 1020 is a novel respiratory anti-inflammatory, which was licensed by Topigen from NicOx.

In September 2007, TPI 1020 delivered promising top-line results from a phase 2a study in asthmatic smokers. These results showed a good safety and tolerability profile for TPI 1020, in addition to certain anti-inflammatory effects which could be potentially beneficial in COPD. Topigen is responsible for all further development costs for this program and has rights to TPI 1020 for North America and an option to obtain rest of world rights.

NCX 4016

NCX 4016 is a nitric oxide-donating derivative of acetyl-salicylic acid, which has generated encouraging preliminary results in type 2 diabetes patients in three clinical studies. The planned program for NCX 4016 in type 2 diabetes was put on hold in 2007, due to unexpected in vitro test results observed for NCX 4015, a potential, specific metabolite of NCX 4016. NicOx has not received any further results suggesting a potential concern with NCX 4015.

Following an in-depth internal evaluation of the projected NCX 4016 development timeline and costs, the Company has decided to discontinue NCX 4016 and focus its resources on the development of naproxcinod and other compounds in its pipeline.

Other important achievements and updates

- In February 2007, NicOx successfully completed a capital increase with preferential subscription rights for existing shareholders, which raised net proceeds of EUR 120.7 million. There was demand for new ordinary shares totaling EUR 227 million, with the offering therefore being covered 1.75 times

- In November 2007, Orexo AB acquired the rights to NCX 1510 through its merger with Biolipox AB (see Orexo Press Release of November 23, 2007). NCX 1510 is a nitric oxide-donating drug candidate for the treatment of allergic rhinitis. A nasal spray formulation of this compound using Orexo's NLA technology has completed phase 2a clinical development and Orexo is seeking possible partnerships to further advance the development of its NLA program, which includes candidates other than NicOx' NCX 1510. A potential partnership and further development of the NLA program may include NCX 1510 or could exclude NCX 1510 and instead focus on other formulations of Orexo's NLA technology

- In October 2007, NicOx and Ferrer Grupo International jointly presented clinical and preclinical results from their collaboration at the 21st World Congress of Dermatology

- In July 2007, NicOx appointed Pascal Pfister MD as Chief Scientific Officer (CSO). Dr. Pfister reports to Michele Garufi, Chairman and CEO, and has overall responsibility for NicOx' Research and Development (R&D) activities. Dr. Pfister brings extensive experience and leadership to NicOx from his 19 year career at Novartis and Sandoz

- In October 2007, NicOx opened its U.S. headquarters in Warren, New Jersey, where the Company has based its newly established Commercial Affairs and North American Clinical Operations departments. This followed the appointment of Sanjiv Sharma as Vice President of Commercial Affairs in April 2007, who is also head of the U.S. Office. Sanjiv brings extensive marketing and sales management experience to NicOx, from his previous positions at Biovail Pharmaceutical Inc. and Sanofi-Aventis and its predecessor companies

Review of the financial results on December 31, 2007 and 2006:


In 2007, NicOx' revenues increased by EUR 11.0 million to reach EUR 20.6 million, compared to EUR 9.6 million in 2006. This significant increase results from the following payments that were entirely recognized as revenues in 2007:

- EUR 5.0 million received from Merck in January 2007, following the initiation of toxicology studies on the first development candidate which had been recently selected, in the context of the agreement signed with Merck in March 2006

- EUR 1.0 million received from Pfizer in April 2007, following the review of an Investigational New Drug (IND) submission by the U.S. FDA for a new experimental medicine for the treatment of glaucoma, developed under the collaboration agreement signed between Pfizer and NicOx in August 2004

- EUR 5.0 million received from Merck in July 2007, following the initiation of the first in a series of planned clinical studies for the first selected drug candidate, in accordance with the companies' major collaborative agreement to develop new nitric oxide-donating antihypertensive agents using NicOx' proprietary technology

These amounts, received by the Company, result from a firm commitment by the other contracting party and have been immediately recognized in revenues because NicOx will not have continuing involvement in the future development of the compounds that are the subject of the collaboration agreements mentioned above.

During the financial year 2007, NicOx also recognized the following sums, initially recorded as prepaid income, in revenues:

- EUR 2.5 million corresponding to the initial payment of EUR 5.0 million from Pfizer as a technology exclusivity fee, following the March 2006 agreement that granted Pfizer rights to an exclusive worldwide license to develop and commercialize new drug candidates using NicOx' proprietary technology in the field of ophthalmology

- EUR 3.0 million corresponding to the funding of the research collaboration, pursuant to the above referenced agreement signed with Pfizer in March 2006.

- EUR 3.8 million corresponding to the initial payment of EUR 9.2 million received from Merck following the signature in March 2006 of a collaboration agreement for new antihypertensive drug candidates

- EUR 0.3 million corresponding to the allocation of the remaining balance of the US$ 2 million license and option payments received from Axcan following the termination of the development of NCX 1000 in May 2007

The initial March 2006 payments from Pfizer and Merck listed above were deferred over the estimated duration of NicOx' involvement in the research and development programs provided for under the terms of the corresponding agreements. The terms surrounding the duration of NicOx' involvements in these programs are revised periodically, if necessary. The payments received from Pfizer for the funding of the research activities are deferred over a period of 12 months from the date of invoice.

Operating expenses

Consolidated operating expenses totaled EUR 57.8 million in 2007, compared to EUR 36.3 million in 2006, of which, 80.4% were attributable to research and development expenses and 19.6% to selling and administrative expenses during 2007, compared to 78.7% and 21.3% respectively in 2006.

Research and development expenses reached EUR 46.5 million in 2007, compared to EUR 28.6 million in 2006 (including EUR 2.2 million allocated to cost of sales in 2007 and EUR 1.6 million in 2006). These expenses are primarily due to the costs associated with the phase 3 development of naproxcinod, such as expenses related to contract research organizations and suppliers involved in naproxcinod's clinical development and manufacturing activities. At this time, the cost of sales principally corresponds to the expenses incurred by NicOx in performing research activities under the contracts signed with Pfizer and Merck. Operational subsidies from the research tax credit, which are deducted from research and development expenses, amounted to EUR 3.9 million in 2007 compared to EUR 1.2 million in 2006. On December 31, 2007, the Company employed 84 people in research and development, compared to 64 people on December 31, 2006.

Administrative and selling expenses amounted to EUR 11.3 million in 2007, compared to EUR 7.7 million in 2006. General and administrative expenses were EUR 3.2 million in 2007 and were primarily the result of personnel expenses in administrative and financial functions, as well as the remuneration of corporate officers, including stock option, gratuitous share and warrant attributions. These expenses also included structural costs such as leases, property service charges, and maintenance costs (excluding structural costs related to research and development activities), legal and accounting fees and other external administrative costs.

Selling expenses, which reached EUR 8.1 million in 2007, were the result of market analysis activities for naproxcinod, as well as business development and communication activities. The increase in selling expenses is also due to the hiring of new personnel following the creation, in 2007, of a commercial department whose primary function is to develop commercial strategies for NicOx' product portfolio. On December 31, 2007, the Company employed 33 people in selling, general, and administrative departments, compared to 25 people on December 31, 2006.

Operating loss

The operating loss amounted to EUR 37.2 million in 2007, compared to EUR 26.7 million in 2006. This increase results primarily from the strong increase in operating expenses as indicated above.

Other results

Net financial income amounted to EUR 5.2 million in 2007, compared to EUR 2.2 million in 2006. Net financial income has benefited from the increase in the Company's cash, cash equivalents, and financial instruments following the capital increase completed in February 2007.

The income tax expense incurred by NicOx in 2007 relates principally to its Italian subsidiary and amounts to EUR 0.1 million compared to EUR 0.3 million in 2006.

Net loss

The net loss increased by EUR 7.4 million in 2007 to reach EUR 32.1 million, compared to EUR 24.7 million in 2006. This increase in the consolidated net loss remains limited, as the strong increase in operational expenses has been offset to a large extent by the significant increase in revenues recognized over the financial year, the significant increase in the research tax credit and its impact on the research and development expenses and the increase in the net financial income following the investment of the net proceeds of the rights offering completed in February 2007.

Balance sheet items and net burn rate

The indebtedness incurred by NicOx is mainly short-term operating debt. On December 31, 2007, the Company's current liabilities amounted to EUR 19.9 million, including EUR 13.9 million in accounts payable to suppliers and external collaborators, EUR 2.5 million in taxes payable, EUR 1.6 million in accrued compensation for employees EUR 1.5 million in deferred revenues due to payments received under collaboration agreements, EUR 0.3 million for other liabilities and EUR 0.1 million in corporate taxes payable.

NicOx had no outstanding loans on December 31, 2007.

On December 31, 2007, the Company's current and non-current financial instruments and cash and cash equivalents amounted to EUR 172.8 million, compared to EUR 81.7 million on December 31, 2006. This significant increase in financial instruments, cash and cash equivalents is primarily attributed to the capital increase with preferential rights completed in February 2007, the net proceeds of which amounted to EUR 120.7 million. The Company uses its liquid assets principally to cover research and development expenses, expenses relating to the development of relationships with pharmaceutical companies, with a view to encouraging new partnerships, and corporate expenses related to general and administrative and promotional activities.

The net burn rate, defined with reference to the cash flow statement, represents the net cash the Company spent in conducting its operational activities, excluding net proceeds resulting from its investment and financing activities. The Company's net burn rate in 2007 amounted to EUR 29.5 million, compared to EUR 17.8 million in 2006. This significant increase in the net burn rate, notwithstanding the increase in payments relating to collaboration and development agreements received by the Company, for an aggregate amount of EUR 14.0 million in 2007, is explained by the significant increase in the operational expenses incurred by the Company in 2007. NicOx expects its burn rate to continue to further increase very strongly over the coming financial years, as a result of the anticipated expenses related to the clinical development and the launch preparation activities for its drug candidate naproxcinod, currently in phase 3 clinical development.

NicOx (Bloomberg: COX:FP, Reuters: NCOX.PA) is a product-driven biopharmaceutical company dedicated to the development and future commercialization of investigational drugs for unmet medical needs. NicOx is applying its proprietary nitric oxide-donating technology to develop an internal portfolio of New Chemical Entities (NCEs) in the therapeutic areas of inflammatory and cardio-metabolic disease.

Resources are focused on the development of naproxcinod, a proprietary NCE and the first compound in the COX-Inhibiting Nitric Oxide-Donating (CINOD) class of anti-inflammatory agents, which is in phase 3 clinical studies for the treatment of the signs and symptoms of osteoarthritis, with final phase 3 results anticipated in 2008.

Beyond naproxcinod, NicOx has a pipeline containing multiple nitric oxide- donating NCEs, which are in development internally and with partners, including Pfizer Inc and Merck & Co., Inc., for the treatment of prevalent and underserved diseases, such as atherosclerosis, hypertension, glaucoma and Chronic Obstructive Pulmonary Disease (COPD).

NicOx S.A. is headquartered in France and is listed on the Euronext Paris Stock Exchange (Compartment B: Mid Caps).

This press release contains certain forward-looking statements. Although the Company believes its expectations are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those anticipated in the forward-looking statements. For a discussion of risks and uncertainties which could cause actual results, financial condition, performance or achievements of NicOx S.A. to differ from those contained in the forward-looking statements, please refer to the Risk Factors ("Facteurs de Risque") section of the Document de Reference filed with the AMF, which is available on the AMF website ( or on NicOx S.A.'s website (


NicOx: Karl Hanks - Director of Investor Relations and Corporate Communications - Tel +33 (0)4 97 24 53 42 -

Investors in the United States - Burns McClellan: Lisa Burns -

Juliane Snowden - Tel +1 212 213 0006 -

Media in the United States - FD: Jonathan Birt - Tel +1 212 850 56 34 - jbirt@fd-

Media in Europe - Citigate Dewe Rogerson: David Dible - Tel +44 (0)207 282 2949 -

Sylvie Berrebi - Tel +44 77 67 77 15 33 -


|                         | |Fiscal year ended   | |         |
|                         | |December 31         | |         |
|                         | |2007                | |    2006 |
|                         | |(€ thousands except | |         |
|                         | |for per share data) | |         |
|Revenues                 | |20,620              | |   9,630 |
|Cost of sales            | |(2,151)             | | (1,605) |
|Research and development | |(44,345)            | |(26,966) |
|expenses                 | |                    | |         |
|Administrative and       | |(11,322)            | | (7,717) |
|selling expenses         | |                    | |         |
|Operating loss           | |(37,198)            | |(26,658) |
|Net financial income     | |5,183               | |   2,223 |
|Loss before income tax   | |(32,015)            | |(24,435) |
|Income tax expense       | |(129)               | |   (261) |
|Loss for the year        | |(32,144)            | |(24 696) |
|Attributable to:         | |                    | |         |
|- Equity holders of the  | |(32,144)            | |(24 696) |
|Company                  | |                    | |         |
|- Minority interests     | |-                   | |       - |
|Earnings per share for   | |(0,69)              | |  (0,69) |
|profit attributable to   | |                    | |         |
|the equity holders of the| |                    | |         |
|Company during the year  | |                    | |         |
|Diluted earning per share| |(0,69)              | |  (0,69) |
|                         |Fiscal year ended   | |       |
|                         |December 31         | |       |
|                         |2007                | |  2006 |
|                         |(€ thousands)       | |       |
|ASSETS                   |                    | |       |
|Non-current assets       |                    | |       |
|Property, plant &        |2,720               | | 1,900 |
|equipment                |                    | |       |
|Intangible assets        |464                 | |   214 |
|Non-current financial    |14,402              | |     - |
|instruments              |                    | |       |
|Government subsidies     |5,264               | | 1,521 |
|receivable               |                    | |       |
|Other financial assets   |186                 | |   141 |
|Deferred income tax      |10                  | |    11 |
|assets                   |                    | |       |
|Total non-current assets |23,046              | | 3,787 |
|Current assets           |                    | |       |
|Trade receivables        |2,224               | | 2,142 |
|Government subsidies     |133                 | |   708 |
|receivables              |                    | |       |
|Other current assets     |2,564               | | 1,670 |
|Prepaid expenses         |3,083               | | 1,362 |
|Current financial        |14,967              | |27,602 |
|instruments              |                    | |       |
|Cash and cash equivalents|143,444             | |54,138 |
|Total current assets     |166,415             | |87,622 |
|TOTAL ASSETS             |189,461             | |91,409 |
|EQUITY                   |                    | |       |
|Capital and Reserves     |                    | |       |
|attributable to equity   |                    | |       |
|holders of the Company   |                    | |       |
|Ordinary shares          |9,457               | | 7,610 |
|Other reserves           |159,757             | |66,302 |
|Minority interests in    |-                   | |     - |
|equity                   |                    | |       |
|Total Equity             |169,214             | |73,912 |
|LIABILITIES              |                    | |       |
|Non-current liabilities  |                    | |       |
|Provisions for other     |201                 | |   118 |
|liabilities and charges  |                    | |       |
|Deferred income tax      |120                 | |   110 |
|liabilities              |                    | |       |
|Finance lease            |19                  | |    34 |
|Total non-current        |340                 | |   262 |
|liabilities              |                    | |       |
|Current liabilities      |                    | |       |
|Provisions for other     |-                   | |    17 |
|liabilities and charges  |                    | |       |
|Finance lease            |10                  | |    17 |
|Trade payables           |13,858              | | 6,188 |
|Deferred revenue         |1,481               | | 8,102 |
|Current Income tax       |51                  | |   209 |
|payable                  |                    | |       |
|Social security and other|4,197               | | 2,702 |
|taxes                    |                    | |       |
|Other liabilities        |310                 | |     - |
|Total current liabilities|19,907              | |17,235 |
|TOTAL LIABILITIES &      |189,461             | |91,409 |
|SHAREHOLDERS' EQUITY     |                    | |       |
NicOx S.A.,

Les Taissounières - Bât HB4 - 1681 route des Dolines - BP313, 06906 Sophia Antipolis cedex, France. Tel. +33 (0)4 97 24 53 00 -

Fax +33 (0)4 97 24 53 99

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