SOPHIA ANTIPOLIS, France, July 26 /PRNewswire-FirstCall/ -- NicOx S.A. (Eurolist: NICOX) today reported financial results for the six months ended June 30, 2006 and announced its decision to develop NCX 4016 in phase 2 trials as an insulin sensitizing agent for the treatment of type 2 diabetes (see separate press release).
NicOx more than doubled its financial resources during the first half of 2006. Financial instruments and cash and cash equivalents stood at euro 97.6 million on June 30, 2006, compared to euro 42.6 million on December 31, 2005.
Revenues for the first half of 2006 increased 208% to euro 3.7 million, compared to euro 1.2 million during the same period in 2005. Operating expenses increased to euro 19.0 million for the first six months of 2006, compared to euro 8.6 million for the same period of 2005, commensurate with the successful advancement of naproxcinod into phase 3 studies and the early completion of patient enrolment in the first trial. Net loss increased by euro 7.8 million to euro 14.7 million during the first half of 2006, compared to euro 6.9 million for the corresponding period of 2005.
Key highlights of the first six months of 2006: -- Completion of patient enrolment ahead of schedule in the first phase 3 trial for naproxcinod (HCT 3012) in patients with osteoarthritis of the knee -- Initiation of a clinical study comparing the 24-hour blood pressure profile of naproxcinod and naproxen in hypertensive subjects -- Signature of a major new agreement granting Pfizer Inc exclusive rights to apply NicOx’ proprietary nitric oxide-donating technology across the entire field of ophthalmology, bringing euro 23 million in upfront and equity investment -- Signature of a major new agreement with Merck & Co., Inc., to collaborate on the development of new nitric oxide-donating antihypertensive drugs, resulting in a euro 9.2 million upfront payment -- Successful completion of a private placement with net proceeds of euro 43.0 million
“NicOx has worked hard to successfully achieve all of the Company’s milestones in the first half of 2006, the most notable of which has been the completed enrolment of the first phase 3 trial for naproxcinod in the United States, in addition to the signature of major research agreements with Merck and Pfizer,” said Michele Garufi, Chairman and CEO of NicOx. “The Merck agreement is a clear example of our strategy of favoring partnering opportunities where NicOx retains co-commercialization rights to its pipeline products for specialist physicians. We will aim to leverage such agreements to build focused and self-sustaining sales teams, which could eventually promote a number of products aimed at cardiologists and rheumatologists.
We need to ensure our pipeline is capable of producing multiple marketed products to guarantee our future viability as a commercial company. In this respect, the significant strengthening of our balance sheet and market capitalization in the first six months of this year will allow us to accelerate R&D in core areas and provide more flexibility for acquiring external opportunities.”
Completed patient enrollment in the first phase 3 study for naproxcinod
Naproxcinod is NicOx’ lead product, in phase 3 clinical development for the treatment of the signs and symptoms of osteoarthritis. In May, NicOx announced that it had fully enrolled the first trial ahead of schedule. This double-blind, placebo-controlled study is designed to confirm the efficacy of naproxcinod in treating the signs and symptoms of osteoarthritis, in addition to using controlled cuff-measurements by healthcare professionals to confirm that it has no detrimental effect on blood pressure. Results are anticipated in the fourth quarter of 2006. Naproxcinod is the first product in a new class of molecules known as COX-Inhibiting Nitric Oxide-Donators (CINODs) and this innovative approach was recently reflected by the acceptance of the naproxcinod non-proprietary name by the World Health Organization (WHO).
NicOx announced the initiation of an additional clinical study in the United States in May, which is designed to provide complementary blood pressure data to the phase 3 trial, by recording the blood pressure of hypertensive subjects over 24-hours using an automatic mobile device (ambulatory blood pressure monitoring, ABPM). This study has a double-blind, cross-over design, in which 60 subjects are receiving naproxcinod, followed by naproxen, and 60 are receiving the compounds in the opposite order. The enrolment of 120 subjects is proceeding ahead of projected timelines.
Staffan Stromberg, Vice President of Drug Development at NicOx, commented: “We are very pleased that the phase 3 program for naproxcinod is advancing ahead of schedule. Naproxcinod represents the first member of the innovative CINOD class and is metabolized in the body to generate naproxen, an anti-inflammatory agent with known efficacy, and a nitric oxide-donating moiety. We believe naproxcinod could provide a safer and better tolerated alternative to existing anti-inflammatory drugs, in particular due to the known role of nitric oxide in blood pressure control and its beneficial effect in protecting the gastrointestinal tract. We look forward to the results of the first phase 3 trial in the fourth quarter of this year.”
Signature of a major new ophthalmology agreement with Pfizer
In March, NicOx announced it had signed a major new agreement with Pfizer Inc, granting it exclusive rights to apply its proprietary nitric oxide- donating technology across the entire field of ophthalmology. NicOx has received euro 23 million from Pfizer, euro 8 million as an upfront payment and euro 15 million as an equity investment, and may receive total potential milestones in excess of euro 300 million, plus royalties. This followed excellent preclinical results from the selected development candidate from the Companies’ existing collaboration in glaucoma.
Signature of a major new agreement with Merck & Co., Inc. in the antihypertensive field
Also in March, NicOx announced a major agreement to develop nitric oxide- donating antihypertensive agents with Merck & Co., Inc. NicOx received an upfront payment of euro 9.2 million and may be eligible for further milestones of euro 279 million, plus royalties. NicOx has the option to co-promote products resulting from the agreement, on a fee for detail basis, to specialists in the United States and certain major European countries. NicOx’ previous research collaboration with Merck demonstrated that nitric oxide donation can improve the efficacy of antihypertensive agents in in vivo models.
Initiation of phase 2a trial for NCX 1000
In June, NicOx announced randomization of the first patient in a phase 2a trial for NCX 1000 in portal hypertension, a serious complication of chronic liver disease. NCX 1000 is a patented, nitric oxide-donating derivative of ursodeoxycholic acid (UDCA), which is being developed with Axcan Pharma Inc.
Initiation of phase 2 program for TPI-1020
In May, NicOx’ partner Topigen Pharmaceuticals, Inc., announced the initiation of the phase 2 development program for TPI-1020 (formerly NCX 1020) in respiratory disorders. TPI-1020 is a novel, inhaled, nitric oxide-donating derivative of budesonide which Topigen aims to develop as a treatment for chronic obstructive pulmonary disease (COPD).
Selection of development candidate in Ferrer dermatology collaboration
Also in May, NicOx announced that NCX 1047 had been selected as the development candidate in its dermatology collaboration with Grupo Ferrer Internacional, S.A. The aim of this collaboration is to develop a synthetic nitric oxide-donating corticosteroid with the potential for an improved risk- benefit ratio.
Successful fund raising of euro 43.0 million by private placement
NicOx successfully completed a private placement, reserved for companies and investment funds with experience of investing in the pharmaceutical and biotechnology sectors. Both United States and European investors participated in the financing, which resulted in net proceeds of euro 43.0 million.
Organization Development
The Company’s Head of Research and development, Dr. Ali Raza, has decided to leave NicOx for personal reasons. Dr. Raza joined NicOx in June 2005 and has played an important role in organizing and managing the R&D department during its expansion in 2005 and 2006. Following the most recent recruitments, NicOx employed 26 people in research and 31 in development on June 30, 2006, compared to 17 people in research and 25 in development on June 30, 2005. Ennio Ongini, VP of Research, Staffan Stromberg, VP of Drug Development and Maarten Beekman, VP of Clinical Development will continue to manage operations in their respective areas of responsibility. An executive search is underway to find a replacement for Dr. Raza.
Analysis of NicOx’ operating results for the first six months of 2006
Revenues
The Group’s revenues reached euro 3.7 million during the first six months of 2006, compared to euro 1.2 million during the same period in 2005. This significant increase in revenues comes from the following amounts that were recognized as revenues during the first six months of 2006:
-- Euro 1.8 million corresponding to the initial payment of euro 8 million received from Pfizer (euro 5 million as a technology exclusivity fee and euro 3 million in research funding) following the signature of a new agreement in March 2006 that granted Pfizer the option to obtain an exclusive worldwide license to develop and commercialize new drug candidates in the field of ophthalmology. -- Euro 1.7 million corresponding to the initial payment of euro 9.2 million received from Merck following the signature of a license and development agreement in March 2006 for new antihypertensive drug candidates. -- Euro 0.1 million corresponding to the allocation over the first half of 2006 of a portion of the USD 2 million license and option payments, which were received from Axcan partially in December 2002 and the balance in January 2003.
These sums, initially recorded as deferred revenues, have been deferred from February 2003 for Axcan and March 2006 for Pfizer and Merck, 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.
Operating expenses
Consolidated operating expenses increased by euro 10.4 million during the first half of 2006 to reach euro 19 million, compared to euro 8.6 million during the same period in 2005. This increase results primarily from higher research and development expenses.
Research and development expenses amounted to euro 14.4 million during the first half of 2006, compared to euro 6.3 million during the same period in 2005 (this includes euro 0.8 million allocated to the cost of sales in 2006 and euro 0.7 million in 2005). This significant increase is due essentially to development expenses and is primarily explained by costs from the phase 3 for naproxcinod, including expenses relating to external collaborations with clinical research organizations and suppliers involved in the clinical development and the manufacturing of this compound.
Administrative and selling expenses amounted to euro 4.6 million in the first six months of 2006, compared to euro 2.3 million during the same period of 2005. 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 correspond to business development and communication activities.
Operating loss
The operating loss amounted to euro 15.3 million for the six months to June 30, 2006 compared to euro 7.4 million in the six months to June 30, 2005. This significant increase is explained by the strong progression in operational expenses as indicated above.
Other results
Net financial income amounted to euro 0.7 million for the six months to June 30, 2006, compared to euro 0.6 million in the first half of 2005 and represents mainly returns on the financial investment of the Group’s cash, cash equivalents and current financial instruments.
The income tax expense incurred by the Group during the first half of 2006 relates principally to its Italian subsidiary and amounted to euro 0.1 million, almost identical to the income tax expense recorded on June 30, 2005.
Net loss
Net loss increased euro 7.8 million during the first half of 2006 to euro 14.7 million, compared to euro 6.9 million on June 30, 2005. This large increase in consolidated net loss, notwithstanding the increase in revenues recognized over the period, is due to the significant increase in operational expenses during the first half of 2006.
Liquidity and Capital Resources
The debts incurred by the Group are mainly short-term operating debts. On June 30, 2006, its current liabilities amounted to euro 22.1 million, including euro 14 million of deferred revenues relating to payments received under license and development agreements, euro 5.1 million in accounts payable to suppliers and external collaborators, euro 1.6 million in accrued compensation for employees, euro 0.8 million in taxes payable and euro 0.6 million in provisions for contingent liabilities.
The Group has no loans outstanding and long-term financial leasing commitments amounted to euro 0.03 million on June 30, 2006.
On June 30, 2006, the Group’s financial instruments and cash and cash equivalents amounted to euro 97.6 million compared to euro 42.6 million on December 31, 2005. The Group 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.
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, naproxcinod, in phase 3 development for the treatment of osteoarthritis, and NCX 4016, in phase 2 for cardiometabolic disorders. 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 56 34 * jbirt@fd- us.com / Julia Phillips * Tel +44 (0)20 7831 3113 * julia.phillips@fd.com
CONSOLIDATED INCOME STATEMENT 6 month period ending on June 30, 2006 June 30, 2005 (euro thousands except for per share data) Revenues 3 682 1 173 Cost of goods sold (770) (678) Research and development costs (13 612) (5 597) Administrative and selling expenses (4 573) (2 338) Operating loss (15 273) (7 440) Net financial income 664 628 Pre-tax loss (14 609) (6 812) Income tax (132) (109) Net loss (14 741) (6 921) Attributable: - To parent company shareholders (14 741) (6 921) - To the minority shareholders - - Earnings per share (0,39) (0,22) Diluted earnings per share (0,39) (0,22) CONSOLIDATED BALANCE SHEET June 30, 2006 December 31, 2005 (euro thousands) ASSETS Non current assets Property, plant & equipment 1 478 1 444 Intangible assets 156 190 Government subsidies receivable 722 266 Other financial assets 108 148 Deferred taxes - - Total non current assets 2 464 2 048 Current assets Trade receivables 2 142 2 172 Government subsidies owed 708 708 Other current assets 1 686 1 724 Prepaid expenses 2 182 1 535 Current financial instruments 13 734 7 109 Cash and cash equivalents 83 836 35 476 Total current assets 104 288 48 724 TOTAL ASSETS 106 752 50 772 LIABILITIES & SHAREHOLDERS’ EQUITY Shareholders’ equity attributable to parent company shareholders Contributed capital 7 610 6 429 Other reserves 76 837 32 606 Minority interests - - Total shareholders’ equity 84 447 39 035 Non-current debt Provisions for contingent liabilities 80 61 Deferred taxes 84 70 Finance lease 9 20 Total non-current debt 173 151 Current debt Provisions for contingent liabilities 550 354 Finance lease 21 20 Trade payables 5 119 7 931 Prepaid income 14 050 558 Income and payroll taxes owed 2 392 2 709 Other liabilities - 14 Total current liabilities 22 132 11 586 TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY 106 752 50 772
NicOx S.A.
CONTACT: Karl Hanks, Manager of Corporate Relations and Market Analysis ofNicOx, +33-0-497-15-22-03, hanks@nicox.com; or Investors in the UnitedStates - 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 forNicOx S.A.
Web site: http://www.nicox.com//
