UPDATE 2-NicOx slumps as FDA panel sinks hopes for key drug

* Stock off 45 pct after rebuff from FDA advisory panel

* Investors question future of naproxcinod pain drug
* CEO says still believes it can get to market in U.S.

(Adds CEO interview, fund manager comment; updates shares)

By Marie Maitre and Ben Hirschler

PARIS/LONDON, May 13 (BestGrowthStock) – NicOx (NCOX.PA: ) shares
slumped 45 percent and hit a four-year low on Thursday after a
U.S. panel rejected the company’s pain drug naproxcinod, dealing
a body blow to France’s top biotechnology group.

A Food and Drug Administration (FDA) advisory panel voted
16-1 against approval, saying data from the company’s small
trials was not sufficient to support safe use of the drug.
[ID:nN12207861]

FDA staff had already questioned the benefits of the drug
for osteoarthritis patients in documents prepared ahead of the
meeting, hitting NicOx shares on Tuesday, but the final verdict
from the panel was worse than many investors had expected.

“What was supposed to be the most important day in the
company’s history ended in what we can only describe as a
debacle,” said Rodolphe Besserve, a biotech analyst at Societe
Generale.

Besserve said further long-term clinical outcome studies,
lasting three to five years, might be needed to prove the value
of naproxcinod but these were probably not worth doing and NicOx
should now consider stopping the project.

Brokerage Natixis downgraded the stock to “reduce” from
“buy”, while Cheuvreux cut it to a “sell”.

However, Chief Executive Michele Garufi is not giving up.

“I have no sign that this is dead,” he told Reuters in a
telephone interview. “This is a product that can be approved.”

TALKING TO FDA

Naproxcinod is NicOx’s first drug and its biggest hope. The
company had been planning to partner with a larger drugmaker to
market the product, which it has described in the past as a
potential $1 billion-a-year seller.

NicOx shares were down 45 percent at 2.90 euros by 1245 GMT,
after touching a low of 2.34.

CEO Garufi said NicOx would continue talking with the FDA
and would not withdraw its application, taking heart from the
fact that the panel noted the need for additional pain
medications and that the drug was more effective than a placebo.

“We will resume contact with the FDA to talk because we
don’t agree with some interpretations and conclusions, and to
see what we must do,” he said.

At the same time, however, Garufi said he would curb
investments linked to the launch of the drug and “take all
necessary measures to further reduce costs”.

The FDA, which typically follows recommendations from its
advisory panels, will make its final decision on whether to
approve naproxcinod by July 24.

The company is also seeking approval in Europe.

NicOx’s business is based around the idea that nitric
oxide-releasing versions of established medicines, such as
naproxcinod, can offer significant benefits over the original —
for example, by lowering blood pressure risk.

Andy Smith, head of the Axa Framlington biotech fund and a
long-time sceptic, said this idea had now been undermined.

“The platform of nitric oxide donation in these indications
has been terminally devalued,” he said.

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(Editing by Hans Peters and Karen Foster)

UPDATE 2-NicOx slumps as FDA panel sinks hopes for key drug