NicOx Reports 2004 Financial Results.

SOPHIA ANTIPOLIS, France -- NicOx S.A. (Eurolist:NICOX) today reported financial results for the year ended 31 December, 2004. Also announced today are the results of a phase IIa study, which suggest NCX 4016 is more effective than aspirin at preventing cardiovascular complications in diabetic patients (see separate press release).

Financial Highlights

--Total operating expenses EUR 16.5 million (EUR 21 million in 2003); R&D expenditure EUR 12.4 million (EUR 16.6 million in 2003)

--Net loss of EUR 14.2 million (EUR 19.5 million in 2003) and revenues of EUR 1.9 million (EUR 1.4 million in 2003)

--Cash reserves of EUR 50.6 million (EUR 33 million at 30 June, 2004; EUR 40.1 million at 31 December, 2003)

Development Highlights

--Positive end of phase II meeting with the Food and Drug Administration ("FDA") in the United States for the lead compound of the CINOD class, HCT 3012. Company to proceed with phase III development in the treatment of osteoarthritis following recommendation from US Clinical Consultancy Advisory Board

--NCX 4016 reached its primary efficacy endpoint in a phase IIa study in patients with symptomatic peripheral arterial obstructive disease

--NCX 1510 reached its primary efficacy endpoint in a phase IIa study in patients suffering from allergic rhinitis

--HCT 1026 found to significantly reduce beta-amyloid deposition in the brain of a mouse model of Alzheimer's Disease

Business Highlights

--EUR 26 million raised in a private placement

--Research, option, development and licensing agreement signed with Pfizer Inc. related to selected proprietary NicOx nitric oxide-donating compounds

--Licensing and co-development agreement signed with Ferrer Grupo for the research, development and marketing of certain new steroid derivatives for the treatment of dermatological diseases in selected markets

--Dr. Goran Ando appointed to company's Board of Directors

--Michele Garufi, Chairman and CEO of NicOx, commented: "NicOx has entered 2005 in a strong position, with a clear focus on the development of our lead products and solid cash resources to finance their development. We believe recent developments in the field of COX-2 inhibitors are encouraging for the profile of CINODs and we are working with our clinical advisors to put together the most appropriate phase III program for HCT 3012 in the light of these new findings. Furthermore we expect to receive phase IIb results for NCX 4016 in peripheral arterial obstructive disease during Q4. The quality and promise of our technology was underlined by the signing of a research and development agreement with Pfizer in August and with Ferrer in dermatology in April. A private placement in September received enthusiastic support, significantly increasing our US shareholder base and providing us the resources to move our lead projects through the clinic as rapidly as possible."

Research and Development Update

--HCT 3012: Completion of phase II program in osteoarthritis; planning for phase III development

In December, NicOx announced that the company had a positive end of phase II meeting with the FDA. HCT 3012 completed an extensive phase II clinical program including 2,709 patients in 5 separate clinical studies. This program demonstrated that HCT 3012 is a potent and safe anti-inflammatory with the potential for improved cardiovascular safety over NSAIDS and COX-2 selective NSAIDs. This profile is of particular relevance given the heightened awareness of potential cardiovascular risks of COX-2 selective NSAIDs.

Following the FDA Advisory Committee meeting on COX-2 inhibitors on February 18 2005 and indications that naproxen could be used as a comparator in clinical trials for new NSAIDs, NicOx will conduct a phase II clinical pharmacological study in the US versus naproxen in hypertensive patients. The company will move forward with the US clinical development program for the compound through phase III following the results of this study, which are expected around the end of the year. The phase III program is subject to a further meeting on manufacturing and formulation with the FDA and agreement on the details of the phase III studies.

--NCX 4016: phase IIa primary efficacy endpoint in PAOD and general safety confirmed

In January, NicOx announced that NCX 4016 reached its primary efficacy endpoint in a phase IIa study in patients with symptomatic peripheral arterial obstructive disease (PAOD). At the end of the study, NCX 4016 showed statistical significance on the primary endpoint of the study which was to reverse endothelium dysfunction induced by physical exercise as measured by flow mediated vasodilation. In contrast aspirin had no effect. Walking capacity, a secondary parameter defined by Initial Claudication Distance (ICD), showed a clinically meaningful increase with NCX 4016 compared to aspirin. Furthermore, the safety and overall tolerability of NCX 4016 were excellent.

--HCT 1026 shown to reduce key factor of Alzheimer's disease

In April, NicOx announced that HCT 1026, a novel NO-donating derivative of flurbiprofen, was found to significantly reduce beta-amyloid deposition in the brain of a mouse model of Alzheimer's Disease, the most common form of dementia in the elderly. The beta-amyloid deposits were reduced in size and had fewer inflammatory markers surrounding them, an indicator of decreased toxicity of those amyloid deposits that were present. No signs of side effects, such as noticeable changes of behavior, were observed during the treatment period. Body weight gain, which is usually adversely affected by gastrointestinal lesions, was normal.

--NCX 1510 Clinical phase II trial in rhinitis

In June, NicOx announced that NCX 1510 reached its primary efficacy endpoint in a phase IIa study in patients suffering from allergic rhinitis. NCX 1510 is the first compound to be selected from the ongoing research and co-development agreement between NicOx and Biolipox. In this double blind, three-way, crossover phase IIa clinical study carried out at Lund University in Sweden and involving 36 patients, NCX 1510 treatment showed statistically significant reduction in symptoms (primary endpoint) measured as a lower total nasal symptom score compared with placebo treatment. NCX 1510 demonstrated an equivalent efficacy to the standard systemic treatment. This result is particularly encouraging given the fact that NCX 1510 is administered locally (by spray) and hence could offer potential benefits for the patients in terms of reduced drug exposure and safety.

Business Review

--Successful financial offering of EUR 26 million

In September, NicOx raised EUR 26 million through a private placement, by issuance of 9,443,998 new shares. The share capital increase was reserved for 15 international institutional investors. Subscribers included U.S. and European investors. A significant portion of the financing will be dedicated to funding the clinical progress of HCT 3012 and NCX 4016.

--Research, option, development and licensing agreement with Pfizer

In August, NicOx signed an agreement that grants Pfizer an option to acquire an exclusive worldwide license covering early-stage nitric oxide-donating compounds in an undisclosed field. NicOx received a EUR 1 million upfront payment and will receive a further EUR 1 million payment in March 2005, with an additional EUR 35 million in milestone payments if the collaboration results in the successful commercial development of a product. During the first phase of the collaboration, Pfizer and NicOx will be jointly responsible for research programs under the supervision of a joint steering committee. NicOx will synthesize nitric oxide-donating compounds to be evaluated in a series of preclinical screening and characterization tests. Upon successful completion of the first phase of the collaboration, Pfizer will be responsible for funding the further development and future global commercialization of selected lead compounds.

--Strategic alliance with Ferrer in dermatology

In April, NicOx and Ferrer Grupo signed a licensing and co-development agreement for the research, development and marketing of certain new steroid derivatives for the treatment of dermatological diseases in selected markets. NicOx will receive undisclosed development milestones and commercial success fees plus royalties on any sales of products resulting from the agreement. NicOx will retain a right to co-market products directly in the European Union and EFTA, and retains all rights for the U.S. and Asia. Also in April, NicOx announced the successful completion of a phase IIa clinical study of the prototype compound NCX 1022 for the treatment of seborrheic dermatitis. NCX 1022 showed statistically significant improvement in clinical efficacy symptoms including erythema, scaling and pruritis in 40 patients with seborrheic dermatitis treated for 28 days. Furthermore the side effect profile was excellent, NCX 1022 showing no difference versus placebo in terms of local skin tolerability.

--Dr Goran Ando joins NicOx Board of Directors

In December, Dr. Goran Ando was appointed to the Board of Directors, replacing Bjorn Odlander. Dr. Ando served as Chief Executive Officer of Celltech Group plc until its acquisition by UCB in 2004. He joined Celltech from Pharmacia, where he was Executive Vice President and President of R&D, with additional responsibilities for manufacturing, IT, business development and M&A from 1995 until 2003. Prior to that, Dr. Ando spent six years at Glaxo Group starting in 1989 as Medical Director, moving to Deputy R&D Director and then R & D Director, and was a member of the Group Executive Committee.

--Strengthening of the management team

The company also took steps to further strengthen its Corporate Development Department. Damian Marron was promoted to Vice President, Business Development. Gavin Spencer was appointed as Licensing and Alliances Director, coming from Novartis Consumer Health, where he was Senior Manager of New Technology and Product Innovation and Karl Hanks joined NicOx from Cell Therapeutics Inc. as Manager of Corporate Relations and Market Analysis. Elizabeth Robinson, a co-founder of the company and Executive Vice President, Corporate Development, has moved to become board member of NicOx Srl and also will be a special adviser to the company on corporate matters.

2004 consolidated financial results

NicOx reported total revenues of EUR 1.9 million in 2004 compared to EUR 1.4 million in 2003. The 2004 revenues include EUR 0.5 million from the recognition of the $2 million license and option fee received from Axcan, and EUR 0.7 million from the recognition of the EUR 2 million upfront payments relating to the research agreement signed with Pfizer in 2004. With regards to the Pfizer upfront payment, EUR 1 million was paid upon signature of the agreement and an additional EUR 1 million is due 6 months following the execution of the agreement. These revenues, initially recorded as deferred revenues, are being recognized over the estimated duration of the Company's implication in development programs provided for under the agreement (as from February 2003 for Axcan and from September 2004 for Pfizer).

In 2004, NicOx also recognized revenues of EUR 0.7 million representing the reimbursement of certain research and development expenses under its collaboration agreement with Axcan.

Research and development expenses decreased by EUR 4.2 million to EUR 12.4 million in 2004, compared to EUR 16.6 million in 2003. This decrease is directly related to the Company's decision to reorganize its activities to focus on its most advanced drug candidates, particularly preparations for phase III clinical development of the lead CINOD compound HCT 3012. As a result of the reorganization, certain research, pre-clinical and clinical development programs were stopped or put on hold during 2004. On December 31, 2004, the Company employed 17 people in research and 23 in development compared to 20 in research and 24 in development on December 31, 2003.

Selling, general and administrative (SG&A) expenses totaled EUR 4.2 million in 2004, down from EUR 4.4 million in 2003. SG&A mainly relates to structural costs such as building and laboratory expenses and costs related to administrative, business and corporate development activities.

The Company's operational expenses decreased by EUR 4.5 million to EUR 16.5 million in 2004, compared to EUR 21 million in 2003. This reduction resulted principally from the decrease in research and development expenses.

The Company had net financial income of EUR 0.5 million in 2004, compared to EUR 0.3 million in 2003. Financial income does not include unrealized capital gains on marketable securities, which amounted to EUR 1.1 million as of December 31, 2004, compared to EUR 0.7 million as of December 31, 2003. This increase in non-accrued unrealized capital gains results from the investment in marketable securities of the net proceeds of the financial offering completed in September 2004.

The Company recorded a corporate tax of EUR 0.04 million in 2004, compared to EUR 0.2 million in 2003. As of December 31, 2004, the Company had accounts receivable from French research tax credits of EUR 2.7 million.

The Company's net loss was EUR 14.2 million in 2004, compared to EUR 19.5 million in 2003 reflecting the decrease in R&D expenditure.

As of December 31, 2004, the Company's cash and cash equivalents amounted to EUR 50.6 million compared to EUR 40.1 million as of December 31, 2003, as a result of the follow-on public offering completed in September 2004 which raised gross proceeds of EUR 26 million.

The Company's net burn rate, defined with reference to its cash flow statement, represents the net cash the Company spent in conducting its activities, excluding net proceeds resulting from the issuance of shares. The Company's net burn rate for 2004 amounted to EUR 13.8 million, compared to EUR 17.6 million in 2003.

A conference call for investors and analysts will be held today at 2:00pm (UK time). Please contact Claire Rowell on [phone] for details. Accompanying slides will be available on NicOx's web site at www.nicox.com .

NicOx S.A. is an emerging pharmaceutical company involved in the research and development of nitric oxide-donating drugs with superior efficacy and safety profiles in the inflammation, pain and cardiovascular therapeutic areas.

NicOx seeks to commercialize its products through partnerships and co-development agreements where it maintains future marketing rights for specialist products.

NicOx S.A. (Bloomberg: COX:FP, Reuters: NCOX.LN), headquartered in Sophia-Antipolis, France, 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.

CONSOLIDATED BALANCE SHEET


                                          As of December 31
                               ---------------------------------------
                                   2002        2003          2004
                               ------------ -----------  -------------

                                (in thousand of euro, except shares
                                                data)
ASSETS
Current assets:
  Cash and cash equivalents         57,311      40,093         50,619
  Accounts receivable                  812       1,163          2,899
  Research and development tax
   credit receivable                 4,309       3,801          2,690
  Inventory                          1,136         992            523
  Deferred tax receivable                -           -             47
  Other current assets               2,751       2,113          1,245
  Prepaid expenses                     839         623          1,090
                               ------------ -----------  -------------
      Total current assets          67,158      48,785         59,113
                               ------------ -----------  -------------

Long term assets:
  Fixed assets, net                  1,748       1,464          1,301
  Intangible assets, net               356         278            218
  Other long term assets               160         154            152
                               ------------ -----------  -------------
      Total Long term
       assets                        2,264       1,896          1,671
                               ------------ -----------  -------------

                               ============ ===========  =============
      Total Assets                  69,422      50,681         60,784
                               ============ ===========  =============

LIABILITIES AND SHAREHOLDER'S
 EQUITY
Current liabilities:
  Current portion of
   capitalized lease obligation         68          35              6
  Account payables                   4,201       3,391          2,929
  Taxes payable and accrued
   compensation                      1,426       2,161          1,590
  Related parties                        -           -              -
  Other liabilities                     18           -              7
                               ------------ -----------  -------------
      Total current
       liabilities                   5,713       5,587          4,532
                               ------------ -----------  -------------
                               ------------ -----------  -------------
Deferred revenue                       999       1,405          2,231
                               ------------ -----------  -------------

Long term liabilities:
  Deferred tax liability                17          10              -
  Capitalized lease obligation
   less current portion                 36           9              3
                               ------------ -----------  -------------
    Total long term
     liabilities                        53          19              3
                               ------------ -----------  -------------
                               ------------ -----------  -------------
Commitments and contingencies           46         161            441
                               ------------ -----------  -------------

Shareholder's equity:
  Common stock                       4,520       4,540          6,429
  Additional paid-in capital        92,020      92,389        114,777
  Restricted reserves                   75          68             68
  Accumulated deficit              (34,004)    (53,483)       (67,695)
  Cumulative translation
   adjustment                            -          (5)            (2)
                               ------------ -----------  -------------
      Total shareholder's
       equity                       62,611      43,509         53,577
                               ------------ -----------  -------------
                               ============ ===========  =============
      Total liabilities and
       shareholders' equity         69,422      50,681         60,784
                               ============ ===========  =============

CONSOLIDATED STATEMENT OF OPERATIONS

                                          As of December 31
                              ----------------------------------------
                                  2002         2003           2004
                              ------------ ------------  -------------

                                (In thousand of euro, except shares
                                                data)


Research and development
 revenues                           5,468        1,404          1,918
                              ------------ ------------  -------------
  Total revenues                    5,468        1,404          1,918
                              ------------ ------------  -------------

Research and development
 expenses                         (19,688)     (16,625)       (12,361)
Selling, general and
 administrative expenses           (4,535)      (4,368)        (4,172)
                              ------------ ------------  -------------
  Total operating expenses        (24,223)     (20,993)       (16,533)
                              ------------ ------------  -------------
  Loss from operations            (18,755)     (19,589)       (14,615)
                              ------------ ------------  -------------

      Net financial income          2,467          337            470
                              ------------ ------------  -------------
  Loss before income tax
   benefit                        (16,288)     (19,252)       (14,145)
                              ------------ ------------  -------------
      Corporate tax                   596         (227)           (37)
                              ============ ============  =============
  Net Loss                        (15,692)     (19,479)       (14,182)
                              ============ ============  =============

Number of shares outstanding   22,597,500   22,701,900     32,145,898
Earning (Loss) per share
 (basic and diluted)                (0.69)       (0.86)         (0.44)