SOPHIA ANTIPOLIS, France, March 1 /PRNewswire-FirstCall/ -- NicOx S.A. (Eurolist: NICOX, the Company or the Group) today reported financial results for the twelve months ended December 31, 2005. Revenues increased 442% to euro 6.5 million in 2005, from euro 1.2 million in 2004, driven by the recognition of payments from partnership agreements with Pfizer, Merck and Topigen. Operational expenses increased by euro 7.0 million to euro 22.8 million in 2005, from euro 15.8 million in 2004, primarily due to research and development costs associated with NicOx’ lead compounds, HCT 3012 and NCX 4016. 2005 net loss increased by only euro 1.7 million to euro 15.5 million, from euro 13.8 million in 2004.
Net cash burn decreased 41%, from euro 13.5 million in 2004, to euro 8.0 million in 2005, driven by the payments from partnership agreements. As of December 31, 2005, the Company had cash, cash equivalents and current financial instruments of euro 42.6 million, compared to euro 51.7 million on December 31, 2004.
Key highlights of 2005: * Initiation of a phase 3 trial for HCT 3012 in osteoarthritis of the knee. This study is planned to enroll approximately 820 patients at 120 clinical centers in the United States. * Completion of a phase 2 trial for NCX 4016 in peripheral arterial obstructive disease (PAOD). Significant advantage demonstrated in a pre-defined subgroup of patients with type 2 diabetes. * Signature of a new agreement with Topigen Pharmaceuticals for the development of NCX 1020 in chronic obstructive pulmonary disease (COPD). * Exercise of Pfizer’s option to acquire a license to the proprietary nitric oxide-donating compounds covered by the companies’ ophthalmology agreement and selection of a lead development compound.
Michele Garufi, Chairman and CEO of NicOx, commented: “The entry of HCT 3012 into phase 3 is a significant achievement for a product focused research and development company like NicOx. As we move forward, we intend to enter into a partnership agreement with a pharmaceutical company to maximize the potential of HCT 3012. However, we aim to retain co-marketing rights in certain territories and for select prescriber groups, in line with our goal of becoming an integrated company with sales and marketing capabilities.
Notably, the costs associated with advancing our lead compound into the final stages of clinical testing in 2005 were offset by revenues from our partners. Our significant progress included the signature of a new agreement with Topigen in the respiratory area and the exercise of Pfizer’s option in our ophthalmology collaboration, in addition to extended and expanded agreements with Merck and Ferrer. We will continue our partnering activities
in 2006 in order to fully exploit the potential of our nitric oxide-donating technology.
We will continue to concentrate our internal research and development activities on inflammatory and cardiometabolic disorders, including focused investment on our most advanced and promising clinical candidates. In 2006, we also plan to take steps to strengthen our pipeline in these core therapeutic domains. This will involve a careful consideration of external programs that could fit with the NicOx pipeline, in addition to the continued advancement of in-house research programs.”
HCT 3012 -- phase 3 in osteoarthritis
During 2005, NicOx’ lead compound, HCT 3012, entered phase 3 clinical development in the United States for treating the signs and symptoms of osteoarthritis. HCT 3012 is a novel, proprietary, nitric oxide-donating derivative of naproxen, which NicOx aims to develop as the treatment of choice for patients with osteoarthritis, above all for the 40% who are estimated to have co-existing hypertension (high blood pressure).
The first trial in this phase 3 program is a randomized, double blind study in patients with osteoarthritis of the knee, which is planned to recruit 820 patients at approximately 120 clinical centers in the United States. The initial patients were randomized to study drug treatment in December 2005 and enrollment has continued to proceed as planned in 2006. This study is designed to confirm the efficacy of HCT 3012, in addition to showing that it has no detrimental effect on blood pressure. Two doses of HCT 3012 will be compared to naproxen and placebo on three standard primary endpoints, which measure efficacy at 13-weeks. A non-inferiority comparison of HCT 3012 and naproxen will be a secondary endpoint of the study. A number of secondary endpoints will compare the blood pressure effect of HCT 3012 to naproxen and placebo, in addition to the number of patients who need to initiate, switch or increase the dose of their antihypertensive medication. Results from this study are anticipated at the end of the fourth quarter of 2006.
An additional trial is expected to start during the first half of 2006, which will employ ambulatory blood pressure monitoring (ABPM) to provide a description of the blood pressure profile of HCT 3012 and naproxen over a 24- hour period in hypertensive subjects.
There is a strong need for safer products for the treatment of osteoarthritis due to the continuing concerns regarding the cardiovascular safety of COX-2 inhibitors and to a lesser extent all non-steroidal anti- inflammatory drugs (NSAIDs). This was reflected by the approximately 20% decrease in the prescriptions for the NSAID class in the United States during 2005, revealing that a significant number of doctors and patients have decided to discontinue treatment completely. In April 2005 the U.S. Food and Drug Administration (FDA) requested that the product labeling for all NSAIDs, both non-selective and COX-2 selective inhibitors, should carry a “black-box” warning highlighting cardiovascular and gastrointestinal risks. In contrast, in October, the EMEA issued a press release stating that, on the basis of the data reviewed, there are no new cardiovascular safety concerns with non- selective NSAIDs. However, both the EMEA and FDA stated that NSAIDs should be used with caution in patients with hypertension.
Dr. Ali Raza, Head of Research and Development at NicOx, commented: “The clinical data showing that COX-2 selective inhibitors may increase the incidence of serious cardiovascular adverse events appears to have created a strong need for safer products, highlighted by the fact that many osteoarthritis patients are having their treatment withdrawn. These safety concerns are particularly relevant for osteoarthritis patients with cardiovascular risk factors such as hypertension. The ongoing phase 3 program aims to confirm that HCT 3012 has no detrimental effect on blood pressure, in contrast to existing NSAIDs. This would be an important differentiating factor in the current market environment.”
NCX 4016 -- phase 2 in cardiometabolic disorders
In November 2005, NicOx announced the results of a 442 patient phase 2 study for NCX 4016 in Leriche-Fontaine stage II peripheral arterial obstructive disease (PAOD). Although the primary endpoint, based on patients’ maximum walking distance, was not met in the overall patient population, NCX 4016 showed a statistically significant advantage over placebo in a pre- defined sub-group of patients with type 2 diabetes, which represented around 30% of the study population. NicOx is currently evaluating the potential future development of NCX 4016 in the light of these interesting results and promising data from two exploratory phase 2a trials in patients with cardiovascular complications of type 2 diabetes.
Partnered programs
New license and development agreement with Topigen
In October, NicOx signed a license and development agreement with Topigen, concerning NCX 1020 in chronic obstructive pulmonary disease (COPD) and other respiratory disorders, for which NicOx received an upfront payment of euro 2 million. Topigen will manage and fund the further development of this product and NicOx stands to receive potential further milestone payments and commercial success fees of euro 52.9 million, in addition to a share in future revenues.
Pfizer exercises option in ophthalmology
In November, Pfizer selected a development candidate in its ophthalmology collaboration with NicOx and exercised its option to acquire a license to the nitric oxide-donating compounds covered by the agreement. NicOx has received euro 4 million from Pfizer in connection with this agreement (euro 3 million of which was paid in 2005) and stands to receive a further euro 33 million, plus royalties, if the collaboration results in the successful commercial development of a product.
Extension of research alliance with Merck
In November, Merck and Co., Inc. extended its research collaboration with NicOx, which is focused on an undisclosed therapeutic area. NicOx received a payment of euro 0.9 million in connection with this extension of the collaboration.
Expansion of collaboration with Ferrer in Dermatology
In September, NicOx expanded its collaboration with Grupo Ferrer Internacional, S.A., for the research, development and marketing of nitric oxide-donating corticosteroids in dermatology.
Comments on consolidated IFRS accounts for 2005
Revenues
Revenues reached euro 6.5 million in 2005, compared to euro 1.2 million in 2004. This significant increase in revenues for 2005 comes from the following payments that were entirely recognized as revenues during the year:
* euro 2 million corresponding to the payment received from Pfizer in November 2005 following the exercise of the exclusive worldwide license provided for under the agreement signed in August 2004. * euro 2 million corresponding to the initial payment received from Topigen in November 2005 following the signature of the license and development agreement. * euro 0.9 million corresponding to the payment received from Merck following the extension, in November 2005, of the collaboration agreement signed in August 2003.
These amounts received by the Group result from a firm commitment by the other contracting party. They have been immediately recognized in revenues because the Group will not have continuing involvement in the future development of the compounds which are the subject of the collaboration agreements mentioned above.
NicOx has also recognized the following sums in revenues: * euro 0.3 million corresponding to the allocation over 2005 of a portion of the USD 2 million license and option payments received from Axcan partially in December 2002 and the balance in January 2003. * euro 1.3 million from the initial payments amounting to euro 2 million that relate to the research and development agreement signed with Pfizer in August 2004, of which euro 1 million was paid upon the signature of the agreement and euro 1 million in March 2005.
These sums, initially recorded as deferred revenues, have been deferred from February 2003 for Axcan and September 2004 for Pfizer, over the estimated duration of the Group’s involvement in the development programs provided for under the corresponding agreement, the duration of which are revised periodically.
Operational expenses
Consolidated operational expenses increased by euro 7 million during the year to reach euro 22.8 million for 2005, compared to euro 15.8 million in 2004. This increase results primarily from higher research and development expenses.
Research and development expenses amounted to euro 17.9 million in 2005, compared to euro 11.5 million in 2004 (including euro 1.8 million allocated to the cost of sales in 2005 and euro 2.2 million in 2004). This 57% increase is due exclusively to development expenses and is primarily explained by the entry of HCT 3012 into phase 3 during 2005 and the completion of a large phase 2 study for NCX 4016 during the last quarter of the year.
This progression in development expenses comes mainly from the increased expenses relating to external collaborations with clinical research organizations involved in the clinical development work on the two compounds in NicOx’ product portfolio mentioned above, including the expenses related to the manufacturing of these compounds, and from the strengthening of the internal teams managing the advancement of these activities. On December 31, 2005, The Group employed 19 people in research and 32 in development, compared to 17 people in research and 23 in development on December 31, 2004.
In 2005, NicOx invoiced its partners Axcan and Topigen, for certain research and development expenses at cost, amounting to euro 0.5 million, as provided for under the collaboration agreements. In the consolidated IFRS accounts these proceeds (recognized as revenues in the French statutory accounts) are not included in the scope of IAS 18 and have been directly deducted from research and development expenses.
Finally, government grants, including research tax credits of euro 0.2 million and euro 0.1 million received in 2005 and 2004 respectively, were deducted from research and development expenses. On December 31, 2005, the Group had a research tax credit receivable of euro 1 million.
General and administrative expenses amounted to euro 3.5 million in 2005 compared to euro 2.9 million in 2004. General and administrative expenses mainly relate to personnel expenses in administrative and financial functions and to the remuneration of corporate officers. These expenses also include structural costs (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 totaled euro 1.4 million in both 2005 and 2004. These expenses correspond to business development and communication activities.
Operational loss
The operational loss amounted to euro 16.3 million in 2005 compared to euro 14.6 million in 2004. This limited increase, despite the strong progression in operational expenses, is explained by the significant increase in the revenues recorded in 2005.
Other results
Net financial income amounted to euro 1.1 million in 2005, compared to euro 1.0 million in 2004 and represents mainly returns on the financial investments of the Group’s cash, cash equivalents and current financial instruments.
The income tax expense incurred by the Group in 2005 relates principally to its Italian subsidiary and amounted to euro 0.2 million in 2005, almost identical to the income tax expense recorded in 2004.
Net loss
Net loss increased euro 1.7 million in 2005 to euro 15.5 million, compared to euro 13.8 million in 2004. This moderate increase in consolidated net loss, notwithstanding the considerable increase in operational expenses, is due to the large increase in revenues recognized over the period.
All the debts the Group has incurred are current debts. As of December 31, 2005, current liabilities amounted to euro 11.6 million, including: euro 7.9 million in accounts payable to suppliers and external collaborators, euro 1.6 million in accrued compensation to employees, euro 1.1 million in taxes payable, euro 0.6 million in deferred revenues relating to payments received under certain license and development agreements, and euro 0.4 million in provisions.
The Company has no loans outstanding and financial leasing commitments amounted to euro 0.04 million, as of December 31, 2005.
As of December 31, 2005, the Group’s current financial instruments and cash and cash equivalents amounted to euro 42.6 million, compared to euro 51.7 million on December 31, 2004. These sums are principally utilized 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 Group’s net burn rate from operational activities, defined with reference to its cash flow statement, represents the net cash that the Group spent in conducting its activities, excluding investing and financing activities. The Group’s net burn rate for 2005 amounted to euro 8.0 million, compared to euro 13.5 million in 2004. This decrease is mainly due to the significant increase in payments received from license and development agreements (euro 5.9 million in 2005, compared to euro 1.0 million in 2004) and the reimbursement by the French government of a portion of the research tax credit receivable, amounting to euro 1.8 million in 2005, compared to euro 1.2 million in 2004.
NicOx (Bloomberg: COX:FP, Reuters: NCOX.LN) is a product-driven biopharmaceutical company dedicated to the development of nitric oxide- donating drugs to meet unmet medical needs. NicOx is targeting the therapeutic areas of inflammatory and cardio-metabolic diseases. Resources are focused on two lead compounds, HCT 3012, in phase 3 development for the treatment of osteoarthritis, and NCX 4016, in phase 2 for Peripheral Arterial Obstructive Disease (PAOD). NicOx has strategic partnerships with some of the world’s leading pharmaceutical companies, including Pfizer Inc. and Merck and Co., Inc. NicOx S.A. is headquartered in Sophia-Antipolis, France, and 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.
CONTACTS:
NicOx: Karl Hanks * Manager of Corporate Relations and Market Analysis * Tel +33 (0)497 15 22 03 * hanks@nicox.com * http://www.nicox.com
Investors in the United States -- Burns McClellan: Lisa Burns * lburns@burnsmc.com / Laura Siino * lsiino@burnsmc.com * Tel +1 212 213 0006
Financial Dynamics: Jonathan Birt * Tel +1 212 850 5634 * jbirt@fd-us.com / Julia Phillips * Tel +44 (0)20 7831 3113 * julia.phillips@fd.com
CONSOLIDATED STATEMENTS OF OPERATIONS At 31 December 2005 2004 (In thousands of euros, except shares data) Revenues 6,528 1,182 Cost of sales (1,775) (2,234) Research and development expenses (16,201) (9,245) Selling, general and administrative expenses (4,888) (4,290) Operating loss (16,336) (14,587) Financial income, net 1,056 1,011 Loss before income tax (15,280) (13,576) Income tax expense (228) (207) Net loss (15,508) (13,783) Attributable to: Equity holders of the Company (15,508) (13,783) Minority interests - - Basic earning per share attributable to equity holders of the Company (0.48) (0.43) Diluted earning per share attributable to equity holders of the Company (0.48) (0.43) CONSOLIDATED BALANCE SHEET At 31 December 2005 2004 (in thousands of euros) ASSETS Non-current assets Property, plants and equipment 1,444 1,539 Intangible assets 190 235 Government grants receivable 266 781 Other financial assets 148 136 Deferred income tax assets 13 47 Total non-current assets 2,061 2,738 Current assets Trade receivables 2,172 2,668 Government grants receivable 708 1,848 Other current assets 1,724 1,245 Prepaid expenses 1,535 1,090 Current financial instruments 7,109 28,389 Cash and cash equivalents 35,476 23,335 Total current assets 48,724 58,575 TOTAL ASSETS 50,785 61,313 EQUITY AND LIABILITIES Equity attributable to equity holders of the Company Share capital 6,429 6,429 Other reserves 32,606 47,609 Minority interests - - Total Equity 39,035 54,038 Non-current liabilities Provisions for other liabilities and charges 61 53 Deferred income tax liabilities 83 69 Obligation under finance lease 20 3 Total Non-current liabilities 164 125 Current liabilities Provisions for other liabilities and charges 354 388 Obligation under finance lease 20 6 Trade payables 7,931 2,929 Deferred revenues 558 2,231 Salaries, wages and tax liabilities 2,709 1,589 Other liabilities 14 7 Total current liabilities 11,586 7,150 TOTAL EQUITY AND LIABILITIES 50,785 61,313
NicOx S.A.
CONTACT: Karl Hanks, Manager of Corporate Relations and Market Analysis,of NicOx S.A., +33-0-497-15-22-03, hanks@nicox.com; or Investors in theUnited States: Lisa Burns, lburns@burnsmc.com, or Laura Siino,lsiino@burnsmc.com, both of Burns McClellan, +1-212-213-0006; or JonathanBirt, +1-212-850-5634, jbirt@fd-us.com, or Julia Phillips,+44-0-20-7831-3113, julia.phillips@fd.com, both of Financial Dynamics
Web site: http://www.nicox.com//
