Axcan Pharma Inc., a specialty pharmaceutical company involved in the research, development, production and marketing of innovative products, in the field of gastroenterology, reported that it had signed a co-development and license agreement with NicOx SA for NCX 1000, a nitric oxide-donating ursodiol derivative, for the treatment of chronic liver diseases including portal hypertension and Hepatitis 'C'.

Under the terms of this agreement Axcan has obtained from NicOx an exclusive license to commercialize NCX 1000 in Canada and Poland as well as an option to acquire the same exclusive rights for the United States market. The United States option is anticipated to be exercised following completion of proof of concept in Phase II clinical development. NicOx retains rights in the rest of the world including Europe with the exception of France where Axcan is granted co-exclusive rights. Axcan and NicOx will share the cost of the future development of NCX 1000 jointly through the completion of Phase II clinical studies. Axcan will thereafter conduct the required Phase III clinical studies and be responsible for regulatory filings in the exclusively licensed territories.

The scope of the collaboration covers the development and commercialisation of NCX 1000 for the treatment of liver diseases including portal hypertension and hepatitis C. The Parties may agree in the future to expand the agreement to include other projects in the area of liver and GI diseases.

Axcan will pay NicOx the sum of $0.5 million on or before December 31, 2002, as well as other options or milestone payments totaling US$ 18.5 million at various stages of development including the first US IND; completion of the proof of concept study in Phase IIa clinical development; successful completion of the first Phase III international study; US New Drug Application submission for portal hypertension; FDA approval for portal hypertension and; FDA filing for a second indication. Axcan also agreed to pay royalties of up to 12% on net sales of the product.

Leon F. Gosselin, chairman and CEO of Axcan Pharma, commented, "Treatment of late stage chronic liver disease represents a true unmet medical need. This combined Axcan - NicOx endeavour offers the opportunity to develop an effective therapy to decrease portal hypertension and ultimately delay the onset of liver cirrhosis, a result of chronic liver disease, which ranks in the top 15 causes of death worldwide. Globally, an estimated 170 million people are infected with Hepatitis C and 350 million with Hepatitis B. It is estimated that up to 25% of those who are chronically infected will develop portal hypertension and/or cirrhosis." Gosselin concluded, "The development plan is designed to give early proof of concept results, which minimizes the overall financial risk for both parties and renders the project non dilutive for Axcan."

Michele Garufi, chairman and CEO of NicOx, said: "We are very pleased to have reached this agreement on NCX 1000 with Axcan Pharma. Axcan is the ideal partner for the co-development of NCX 1000 because of its presence in the field of cholestatic liver disease and its worldwide expertise involving ursodiol. The combination of our nitric oxide-based technology together with the development expertise of Axcan will allow us to maximize the value of NCX 1000 which represents a promising approach for the treatment of portal hypertension and hepatitis C. It is important to underline that the structure of this agreement will help NicOx to meet its strategic objective to retain significant rights for specialists' products including NCX1000, allowing NicOx to market directly in Europe."

Preclinical data from several studies was presented during Digestive Disease Week on May 20, 2002 in San Francisco, California, demonstrating the effectiveness of NCX 1000 in lowering portal pressure in animals without adversely affecting systemic arterial pressure (Abstract No. M1318, S. Fiorucci et al) and suggest the potential of NCX 1000 to protect the liver from acetaminophen induced toxicity (Abstract No. 235, S. Fiorucci et al).

Preliminary studies carried out with NCX 1000 demonstrate that this compound is significantly effective in modulating inflammation and tissue damage in animal models of liver inflammation. NCX 1000 was found to inhibit apoptosis in vivo and in vitro, in models where ursodiol is non-effective and inhibits pro-inflammatory cytokine production from inflamed tissues.

Experimental animal data indicate an activity of NCX 1000 different from ursodiol in lowering portal blood pressure without affecting systemic blood pressure. This activity appears to be related to structural hepatic changes and to the influence on the dynamic component of portal hypertension. These studies suggest that the addition of the nitric oxide moiety has dramatically improved the potential pharmacological profile of ursodiol. Taken together, these early preclinical data suggest that NCX 1000, by releasing nitric oxide into the liver microcirculation, may provide a novel approach for the treatment of portal hypertension.