November 18, 2009 / 7:36 AM / 10 years ago

UPDATE 3-NicOx in fundraising to speed naproxcinod launch

* Raises 30 mln euros in oversubscribed private placement

* Aims to raise 100 mln in total following rights issue

* Government fund subscribed for 20 mln, owns 5.1 pct stake

* Rights issue to follow as soon as market permits

* FDA naproxcinod marketing decision due on July 24, 2010

(Releads, adds analyst, background, closing shares)

By Caroline Jacobs

PARIS, Nov 18 (Reuters) - NicOx (NCOX.PA) has raised 30 million euros in a private placement, fetching nearly a third of the 100 million euros it is aiming for to brace for the launch of its touted blockbuster anti-inflammatory naproxcinod.

The French biotechnology company’s oversubscribed private placement to institutional investors was backed for 20 million euros by the French government’s strategic investment fund, which is now among NicOx’s main shareholders with 5.1 percent.

Under the two-stage capital increase, announced on Wednesday, NicOx has become the latest company to attract cash from the FSI government fund, created during the financial crisis to back companies in key industries.

NicOx has for more than a year been looking for a partner with a big sales force to help it market its arthritis treatment in the United States to as many doctors as possible.

As a potential rival to Pfizer’s (PFE.N) blockbuster Celebrex, some analysts see naproxcinod sales of at least $1 billion a year, if it wins approval. The U.S. Food and Drug Administration is due to give its marketing decision on July 24.

Some analysts said that although the funding was positive, it was insufficient to enter the world’s biggest drug market and at a later stage to launch the drug in other parts of the world.

“Even with this funding they still need a partner, but so far nothing is clear,” said a Paris-based analyst who declined to be named. “It seems to be more complicated than expected ... NicOx remains a risky bet.”

NicOx placed some 4.1 million shares at 7.50 euros each, representing a discount of 7.4 percent to the closing share price of 8.099 euros on Nov. 17. Institutional investor demand for the private placement outstripped the offer, NicOx said.

The private placement was managed by Lazard-Natixis and UBS Investment Bank.

DILUTIVE IMPACT

NicOx shares rose as much as 9.5 percent but then fell by as much as 5.5 percent. They closed 3.8 percent lower at 7.79 euros, showing a 0.4 percent rise so far this year and giving the company a market value of 371 million euros.

Following the first round of fundraising, NicOx plans to carry out a rights issue, selling shares to existing shareholders as soon as market conditions permit, it said.

With FSI as its new shareholder, NicOx agreed that the French government fund can propose a new member candidate to its board of directors at NicOx’s shareholder meeting.

The FSI also “has expressed its intention to subscribe to the rights issue for the full amount of its rights and may subscribe for an additional amount on a reducible basis,” NicOx said in a statement.

Analyst Pierre Corby at brokerage Aurel Leven noted the dilutive impact of the fund raising as well as the continued lack of a partner.

“But the refinancing could also be seen as NicOx having confidence in its product and that management expects to sign a partnership once the labelling of the drug is known,” he said.

Annie Cheng, analyst at Bryan Garnier, said a stronger cash position would favour NicOx’s partner search. Her “buy” rating and 9 euro share target are under review.

Chief Executive Michele Garufi has said he expected to do a deal this year or next. He told Reuters in June the 84.6 million euros in cash at end March was enough to run the business until the end of 2010. NicOx had 66.8 million euros on Sept. 30.

NicOx remains on track to submit a marketing application to he European Medicines Agency before the end of 2009. (Additional reporting by James Regan and Noelle Mennella; Editing by David Holmes) ($1=.6680 Euro)

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