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[DewDiligence]

NicOx soars on $385 mln eye drug deal with Pfizer

http://yahoo.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?storyID=urn:newsml:reuters.com:20060302...

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Thu Mar 2, 2006 7:47 AM ET
By Ben Hirschler, European Pharmaceuticals Correspondent

LONDON, March 2 (Reuters) - French biotechnology company NicOx <NCOX.PA> has signed an eye treatment agreement with Pfizer Inc. < PFE > worth up to 323 million euros ($385.8 million), sending its stock soaring on Thursday.

The deal is the largest for the small firm, which specialises in developing nitric oxide-releasing versions of drugs that offer therapeutic advantages over traditional formulations.

NicOx shares were suspended limit-up in Paris, due to an excess of buyers over sellers, with the stock indicated 85 percent higher at 6.20 euros by 1230 GMT [!]

"The news announced will have a resounding impact on the share price," CM-CIC Securities analyst Francois Hamon said in a research note.

"The scope and size of this agreement are signs that Pfizer has been impressed by the technology and the NO (nitric oxide) treatments."

NicOx said Pfizer would make payments of 23 million euros in the first year of the collaboration, of which 15 million will be in the form of an equity investment in NicOx at a 4.9 percent premium to the share price at the time of purchase. NicOx is also entitled to milestone payments in excess of 300 million euros in the ophthalmology field -- where Pfizer has the exclusive right to apply its technology -- plus royalties on any drugs that make it to market.

Milestone payments on the first product could total 102 million euros, depending on its progress in development.

NicOx first announced it was working with Pfizer on an early-stage research project in an unspecified area in 2004.

The decision by Pfizer, the world's biggest drug maker, to endorse NicOx's technology via a licensing deal is a boost for NicOx, which has had a rocky ride in recent years.

PROMISE IN GLAUCOMA

The company suffered a major setback in 2003 when AstraZeneca Plc < AZN > abandoned development of a new line of painkillers from the French group, although NicOx is continuing to pursue the research on pain treatment on its own.

The work with Pfizer on ophthalmology is still at the pre-clinical stage but a first compound has been selected to take into human tests for the treatment of glaucoma.

Michele Garufi, chairman and CEO of NicOx, told Reuters in a telephone interview he expected development of the treatment to be "very fast".

The company has released promising animal test results of the experimental compound against glaucoma -- an eye disorder which can lead to loss of peripheral vision and eventually total blindness -- that showed it was significantly more effective than an existing treatment.

The findings indicated that nitric oxide-donation could significantly improve the control of pressure inside the eye, Garufi said.

Nicox on Wednesday reported a 2005 net loss of 15.5 million euros compared with 13.8 million in 2004. Up until Thursday, shares in the company had lost around 5 percent of their value since the start of 2006, broadly in line with a 3 percent decline in the French pharma and biotech sector.

But Garufi said investors had been unduly pessimistic about the stock and said he was hopeful of signing more lucrative deals.

"We are very confident," he said. "In 2006, we are working for other research and licensing deals."
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