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NicOx Reports First Quarter 2008 Financial Results
Date:5/14/2008

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.

Key operational highlights - first quarter 2008

-- NicOx initiated two large Ambulatory Blood Pressure Monitoring (ABPM)

studies for naproxcinod in hypertensive patients with osteoarthritis.

These two large clinical pharmacology studies in the United States will

assess the blood pressure profile of naproxcinod in comparison to

ibuprofen and naproxen, using the Ambulatory Blood Pressure Monitoring

(ABPM) technique. These two trials are 12 and 16 weeks in duration and

together are expected to recruit around 420 osteoarthritis patients

with controlled hypertension. Results of both studies are projected in

the fourth quarter of 2008

-- Pfizer Inc signed an extension of its March 2006 ophthalmology research

agry shares 9,458 9,457

Other reserves 148,056 159,757

Minority interests in equity 0 0

Total Equity 157,514 169,214

LIABILITIES

Non-current liabilities

Provisions for other liabilities and charges 212 201

Deferred income tax liabilities 120 120

Finance lease 17 19

Total non-current liabilities 349 340

Current liabilities

Provisions for other liabilities and charges 0 0

Finance lease 6 10

Trade payables 9,842 13,858

Deferred revenue 3,077 1,481

Current Income tax payable 114 51

Social security and other taxes 2,738 4,197

Other liabilities 99 310

Total current liabilities 15,876 19,907

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY 173,739 189,461

eement with NicOx. This agreement grants Pfizer the exclusive right

to apply NicOx' proprietary nitric oxide-donating technology to drug

discovery research across the field of ophthalmology. The most advanced

project under this agreement is focused on nitric oxide-donating

prostaglandin analogs for the treatment of glaucoma and has produced

encouraging results for various compounds in a validated in vivo model

of abnormally high intraocular pressure (IOP), compared to a commonly

used reference drug

-- The Company continued to take the necessary steps to ensure the

successful commercialization of naproxcinod and signed an agreement for

the commercial manufacture of naproxcinod drug substance with the fine

chemical company Archimica. The aim of this agreement is to ensure that

commercial supplies of an appropriate scale will be available to ensure

the successful launch of naproxcinod

-- In January, NicOx announced that Pfizer initiated phase 2 clinical

development for PF-03187207 in Japan. PF-03187207 is an investigational

nitric oxide-donating prostaglandin analog for the treatment of

glaucoma. This dose ranging phase 2 study will recruit 120 patients and

is expected to report results in the third quarter of 2008

-- In May, following the end of the first quarter, NicOx announced the

results of a U.S. phase 2 trial for PF-03187207. This dose ranging

study conducted by Pfizer Inc, compared the safety and efficacy of

PF-03187207 to Xalatan(R) (latanoprost) in patients with primary open

angle glaucoma and ocular hypertension. On the primary endpoint,

PF-03187207 showed a 12% improvement over Xalatan(R) 0.005%, which did

not reach statistical significance, although a statistically

significant advantage over Xalatan(R) 0.005% was observed on a number

of secondary endpoints (p<0.05). Based on these results, Pfizer has

taken the decision not to launch a global phase 3 development program

for PF-03187207, although Pfizer has indicated that it would consider

continuing the development of PF-03187207 for potential registration in

Asia, including Japan, depending on the results of the ongoing Japanese

phase 2 study

-- In May, NicOx announced that Merck & Co., Inc. initiated the first in a

series of planned clinical studies, in mild to moderate hypertensive

patients, under the companies' collaborative agreement to develop new

nitric oxide-donating antihypertensive agents using NicOx' proprietary

technology. Three drug candidates have now been selected from the

companies' joint research program, of which two have completed initial

dose ranging studies in healthy volunteers, under the exploratory

clinical study paradigm, with encouraging results.

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:
-- euro 0.09 million corresponding to the initial payment of euro 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

-- euro 0.75 million corresponding to the funding of the research

collaboration, pursuant to the above referenced agreement signed with

Pfizer in March 2006

-- euro 0.56 million corresponding to the initial payment of euro 9.2

million received from Merck following the signature of a collaboration

agreement for new antihypertensive drug candidates in March 2006

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).

NicOx SA - IFRS FINANCIAL CONSOLIDATED STATEMENTS

CONSOLIDATED STATEMENT OF OPERATIONS

For the period ended March 31

2008 2007

(in thousands of euro)

Revenues 1,404 8,746

Cost of sales (529) (598)

Research and development expenses (14,632) (7,353)

Administrative and selling expenses (2,312) (2,152)

Other income

1,561 1,866

Operating result (14,508) 509

Net financial income 1,617 1,354

Result before income tax (12,891) 1,863

Income tax expense (67) (68)

Net Result (12,958) 1,795

NicOx SA - - IFRS FINANCIAL CONSOLIDATED STATEMENTS

CONSOLIDATED BALANCE SHEET

For the period ended

March 31 2008 Dec 31 2007

(in thousands of euro)

ASSETS

Non-current assets

Property, plant & equipment 3,027 2,720

Intangible assets 681 464

Non-current financial instruments 14,397 14,402

Loan 2,613 0

Government subsidies receivable 6,828 5,264

Other financial assets 184 186

Deferred income tax assets 10 10

Total non-current assets 27,740 23,046

Current assets

Trade receivables 2,222 2,224

Government subsidies receivables 133 133

Other current assets 1,574 2,564

Prepaid expenses 2,724 3,083

Current financial instruments 15,066 14,967

Cash and cash equivalents 124,280 143,444

Total current assets 145,999 166,415

TOTAL ASSETS 173,739 189,461

EQUITY

Capital and Reserves attributable to equity holders of the

Company

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SOURCE NicOx S.A.
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