Strategy à la grande Nation


One of the largest biotech companies in France, NicOx develops therapies based on the release of nitric oxide. With an estimated market worth of more than a400m, it also has one of the country’s highest valuations. NicOx has described 2008 as a “transformational year”; the company is awaiting the results of Phase III studies for its lead compound naproxcinod, a potential blockbuster for treating osteoarthritis. EuroBiotechNews spoke with CEO Michele Garufi about sentiment for biotech stocks in France in general, and the special situation enjoyed by NicOx.

Of all the countries in Europe, France had the largest IPO window last year, but no companies have gone public since the spring of 2007. What is biotech sentiment like in France at the moment?

Sentiment is similar to that in most other countries. Financings are rare, and many firms have had to postpone their venture rounds or IPOs. But on the other hand, the situation offers good valuations for private equity to invest in biotech.

With Rothschild, one French VC investor was able to close a150m in funds within just three months...

Obviously their performance in the past has been good, so their investors trusted them. But generally I would say that the market has become more picky. If you have good news, and a successful track record in the portfolio then you get the money. The days when investors went into a sector and spread money around just to cover a large portion of a technology or any kind of application are over. Unfortunately, French companies have not generally qualified for large VC rounds this year.

You’re a board member of Novexel, a spinoff of Sanofi-Aventis, which has closed the largest Series B-round ever among European biotech companies. Is pharma proximity today a precursor for the trust of VCs?

Indeed, Novexel is generally seen as one of the most, if not the most promising private company in France, and that’s not only due to excellent projects but also due to an experienced management that has worked in pharma companies. It is necessary to have a business-oriented management. In Europe, that attitude isn’t very common among people from the academic side. This is a clear difference to the US.

What measures could bring a change?

Changing a widespread attitude is always difficult. Academics have to understand that they might be able to invent a technology, but not manage a company on their own. They often have no connection to pharma, and no connection to finance. When professors want to do everything, they increase the chance of failing. Luckily for us, NicOx was based on a scientific idea,but all of the founders had a pharma background. Of course, we made a lot of mistakes, but perhaps fewer than others did.

Do you keep an eye on academic ideas? Can they serve as in-licensing opportunities?

NicOx is at a different stage of maturity.On one side, our technology is very prolific, and can produce a large number of new projects. On the other, we are completing a Phase III programme for our most advanced compound Naproxcinod to treat ostheoarthritis. Thus we’re looking to expand the company by acquiring projects that are close to market. Hopefully, we will have completed the regulatory package for Naproxcinod with about 2,700 patients by the end of the year. Then we’ll file with the FDA, and in parallel aggressively pursue talks for the acquisition of products or companies. We’ve already identified a few interesting targets.

What are your timelines?

If the data is positive, we have 18-24 months to build up the NicOx portfolio. To preserve cash resources, we’re evaluating alternative licensing avenues: cross licensings, co-promotions or licensing for a defined time.

What compounds are you looking for?

We’re looking for products that can be sold to rheumatologists, orthopaedists or primary care, the same doctors who would prescribe Naproxcinod. With one potential blockbuster we are looking for products that will generate US-$100-200m a year.

Have you learned from the mistakes made by other biotech companies?

Sure. We have seen other companies fail because they took too much risk. We will leverage risk by marketing the product in cooperation with a partner. And as I said,we’ll be building up a company that sells not one but three products. As the costs to sell three products instead of one are not accretive, we can create synergies in the salesforce and balance risk at the same time.

Naproxcinod would have to be sold to general practicioners, requiring a large sales force. How can you realise a partnership like that?

We’ll share the commercial rights with the partner, especially in the US, but also in Europe. NicOx could perhaps cover up 25%-30% of the promotional costs, and pay for a similar proportion of the sales representatives. There could be two sales forces that sell the product under the same trademark. We think Naproxcinod can be sold perfectly in the US with 1,500 sales staff, and about 20%-25% of them could be paid by NicOx. If the product makes a billion dollars, we would then receive $200m. We plan to close the partnership within the next year.

Isn’t NicOx swimming against the stream with that strategy? Many biotech concentrate on development and leave the marketing to big pharma...

That’s certainly one strategy, but it’s not ours. We have a potential blockbuster at the end of Phase III. In my opinion – from a strategic point of view – it’s wrong to grow a company just to sell it. My vision is to build up a stand-alone pharma company. However, as a public company you always run a chance of being acquired.

Naproxcinod is a modified version of the generic Naproxen. What’s its advantage?

Naproxen is a generic so-called nonsteroidal anti-inflammatory drug that is used to treat osteoarthritis of the knee. However, these compounds are known to lead to higher blood pressure, and that can be harmful over longer periods. Naproxcinod in contrast is a unique, first-in-class New Chemical Entity that has been designed by NicOx to release naproxen and a nitric oxide donator moiety and has been shown to maintain blood pressure at normal levels. The timing of naproxcinod development was very fortunate as Vioxx and other
COX-2 inhibitors had to be removed as a resut of cardiovascular problems. This created a huge market opportunity for naproxcinod. Today, with Celebrex, there is only one branded drug left on the market for osthearthritis sufferers. Naproxcinod might be the next.

What are the potential peak sales?

We project revenues of about US-$1bn in the US alone. Worldwide it could be more than $2bn.

NicOx recently suffered a setback in its partnership with Pfizer for a glaucoma treatment. Would approval of Naproxcinod stimulate the French sector despite that?

PF-03187207 is still a registerable drug and Pfizer are currently conducting a Phase II study in Japan. Concerning Naproxcinod: yes, an approval will definitively stimulate the French biotech industry, and I would personally be very glad of that. By the way, speaking as an Italian, it would be very nice to have some success in France, which has become my professional home country.


Michele Garufi was born in 1954 in Italy
and earned his degree in pharmaceutical
chemistry from the University of Milan in
1977. Before co-founding NicOx in 1996,
where he has filled the roles of Chairman &
CEO since launch, Garufi was responsible
for the creation and management of various
pharmaceutical companies in Spain and
Germany. Until March 1996, he was Vice
President of the International Division and
Director of Licensing at Recordati Italy and
Managing Director of Recordati’s subsidiary
in Spain. He previously served as Director,
International Division at Italfarmaco (1988-
1992), Assistant to the General Manager at
Poli Chimica (1984-1988), and Assistant to
the President at Medea Research (1983).
Michele Garufi is also a co-founder and
Board member of Scharper Srl, a privatelyheld
Italian pharmaceutical firm based in



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