SOPHIA ANTIPOLIS, France, May 14 /PRNewswire-FirstCall/ -- NicOx S.A. (Eurolist: COX) today reported financial results for the first three months of 2008. On March 31, 2008, the Company had cash, cash equivalents and financial instruments of euro 153.7 million, compared to euro 201.2 million on March 31, 2007.
Revenues were euro 1.4 million in the first quarter of 2008, compared to euro 8.7 million for the corresponding period of 2007. The higher revenues achieved in Q1 2007 were principally due to two milestone payments from Merck & Co., Inc. and Pfizer Inc which were fully recognized during that period.
Operating expenses were euro 17.5 million in the first quarter of 2008, compared to euro 10.1 million in the first quarter of 2007. This increase in operating expenses was mainly due to the ongoing phase 3 clinical studies for naproxcinod, NicOx’ lead investigational drug and the first compound in the CINOD class, for the treatment of the signs and symptoms of osteoarthritis.
In the first quarter of 2008, NicOx recorded a net loss of euro 13 million. This compares to a net profit of euro 1.8 million for the first quarter of 2007.
Eric Castaldi, Chief Financial Officer of NicOx, declared: “In the first quarter of 2008, we have continued to focus our efforts on completing the clinical development of naproxcinod and taking the initial steps necessary for the product’s planned commercialization. An important part of our clinical development strategy is to confirm that naproxcinod has no detrimental impact on blood pressure in patients with osteoarthritis and the two new ABPM studies are designed to further highlight this key potential differentiating factor. Going forward we will be seeking partnership agreements for naproxcinod and we aim to retain certain commercialization rights in the US and selected EU markets, in order to fully exploit the drug’s commercial and strategic value and to aid NicOx’ planned transition to a fully integrated pharmaceutical business.
As anticipated, we have seen our operating expenses increase significantly during the first three months of 2008 as we continue to invest in the clinical development and launch preparations for naproxcinod. We have finished the first quarter of 2008 with a cash balance of over euro 150 million, providing us with the resources needed to take naproxcinod through to regulatory filing.”
Review of the consolidated financial results for the three months ended March 31, 2008 and 2007:
Revenues
For the three months ended March 31, 2008, NicOx’ revenues reached euro 1.4 million, compared to euro 8.7 million for the three months ended March 31, 2007. This significant decrease is explained by the fact that the company received euro 5.0 million from Merck and euro 1.0 million from Pfizer in 2007, which was entirely recognized as revenues in the first quarter of 2007.
In the first quarter of 2008, NicOx only recognized the following sums, initially recorded as prepaid income, in revenues:
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’ involvement 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 were euro 17.5 million for the three months ended March 31, 2008, compared to euro 10.1 million for the three months ended March 31, 2007 (adjusted to reflect the reclassification of the research tax credit subsidies into other income as indicated below), of which 87% was attributable to research and development expenses and 13% to selling and administrative expenses in the first quarter of 2008, compared to 79% and 21% respectively in the first quarter of 2007.
Research and development expenses reached euro 15.1 million during the first quarter of 2008, compared to euro 8 million during the same period in 2007 (including euro 0.5 million allocated to cost of sales in 2008 and euro 0.6 million in 2007). 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. On March 31, 2008, the Company employed 92 people in research and development, compared to 72 people on March 31, 2007.
Administrative and selling expenses totaled euro 2.3 million in the first quarter of 2008, compared to euro 2.1 million in the first quarter of 2007. General and administrative expenses were euro 1.5 million during the three months ended March 31, 2008 and were primarily the result of personnel expenses in administrative and financial functions, as well as the remuneration of corporate officers, including stock option, bonus 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 reached euro 0.8 million during the three months ended March 31, 2008 and correspond to the market analysis activities for naproxcinod, as well as the business development and communication activities of the Company. On March 31, 2008, the Company employed 35 people in its selling, general, and administrative departments, compared to 28 people on March 31, 2007.
Other income
In the three months ended March 31, 2008, other income amounted to euro 1.6 million, compared to euro 1.9 million in the same period of 2007. Other income corresponds to the operational subsidies from the research tax credits which were previously deducted from research and development expenses until December 31, 2007.
Operating result
The operating loss amounted to euro 14.5 million during the first quarter of 2008, compared to an operating profit of euro 0.5 million in the first quarter of 2007. This situation is explained primarily by the strong increase in operating expenses during the first quarter of 2008 and by the considerable decrease in revenues recognized during the period as indicated above.
Other results
Net financial income amounted to euro 1.6 million during the first quarter of 2008, compared to euro 1.4 million during the three months ended March 31, 2007.
The income tax expense incurred by NicOx during the first quarter of 2008 relates principally to its Italian subsidiary and amounts to euro 0.1 million, compared to euro 0.1 million during the same period of 2007.
Net result
The net loss reached euro 13 million during the first quarter of 2008, compared to a net profit of euro 1.8 million in the three months ended March 31, 2007. As indicated above, this situation results from the strong increase in operating expenses during the first quarter of 2008 and from the considerable decrease in the revenues recognized during this period.
Balance sheet items
The indebtedness incurred by NicOx is mainly short-term operating debt. On March 31, 2008, the Company’s current liabilities amounted to euro 15.9 million, including euro 9.9 million in accounts payable to suppliers and external collaborators, euro 3.1 million in deferred revenues due to payments received under collaboration agreements, euro 1.6 million in taxes payable, euro 1.1 million in accrued compensation for employees, euro 0.1 million in corporate taxes payable and euro 0.1 million for other liabilities.
In the first quarter of 2008, NicOx granted Archimica a loan totaling euro 6 million, payable in 9 monthly installments, as part of the financial terms of the manufacturing and supply agreement with this company. On March 31, 2008, the amount paid by NicOx under this agreement was euro 2.6 million.
On March 31, 2008, the Company’s current and non-current financial instruments and cash and cash equivalents amounted to euro 153.7 million, compared to euro 201.2 million on March 31, 2007. 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 encourage new partnerships, and corporate expenses related to general and administrative and promotional activities. NicOx expects its operating expenses to continue to 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) 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).
CONTACT: Karl Hanks, Director of Investor Relations and Corporate
Communication, NicOx, +33 (0)4 97 24 53 42, hanks@nicox.com, Investors in
the United States, Lisa Burns, lburns@burnsmc.com, Juliane Snowden,
+1-212-213-0006, jsnowden@burnsmc.com, both of Burns McClellan, Media in
the United States, Jonathan Birt, +1-212-850-5634, jbirt@fd-us.com, of FD,
Media in Europe, David Dible, +44 (0)207 282 2949,
david.dible@citigatedr.co.uk, Sylvie Berrebi, +44 (0)207 282 1050,
sylvie.berrebi@citigatedr.co.uk, both of Citigate Dewe Rogerson
Web site: http://www.nicox.com/
