SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the quarter ended September 30, 2002
Nymox Pharmaceutical Corporation
9900 Cavendish Blvd., St. Laurent, QC, Canada, H4M 2V2
(Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20F or Form 40F)
Form 20 F [X] Form 40 F [ ]
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934)
Yes [ ] No [X]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
/s/ Paul Averback
---------------------------------------
NYMOX PHARMACEUTICAL CORPORATION
(Registrant)
Date: November 14, 2002
[NYMOX LOGO]
CORPORATE PROFILE
Nymox Pharmaceutical Corporation is a biotechnology company with three unique
proprietary products on the market, and a significant R&D pipeline of products
in development. Nymox is a leader in the research and development of products
for the diagnosis and treatment of Alzheimer's disease, an affliction of more
than 15 million people around the world. Nymox developed and is currently
offering its AlzheimAlert(TM) test, a urinary test that is the world's only
accurate, non-invasive aid in the diagnosis of Alzheimer's disease. Nymox also
developed and markets NicAlert(TM) and NicoMeter(TM), tests that use urine or
saliva to detect use of and exposure to tobacco products. On October 23, 2002,
Nymox announced that its NicAlert(TM) product had received clearance from the
U.S. Food and Drug Administration (FDA). Nymox also is developing treatments
aimed at the causes of Alzheimer's disease. One program targets spherons, which
Nymox researchers believe are a source of the senile plaques found in the brains
of patients with Alzheimer's disease. Another distinct program targets the brain
protein (neural thread protein) detected by its AlzheimAlert(TM) test and
implicated in widespread brain cell death seen in Alzheimer's disease. Nymox
also has the rights to the use of statin drugs for the treatment and prevention
of Alzheimer's disease. Nymox is developing new antibacterial agents for the
treatment of urinary tract and other bacterial infections in humans and for the
treatment of E. coli 0157:H7 contamination in meat and other food and drink
products. Nymox is developing a novel treatment for benign prostatic
hyperplasia. Nymox also has several other drug candidates and diagnostic
technologies in development.
Message to Shareholders
Nymox is pleased to present its results for the third quarter of 2002.
Nymox offers a proprietary product called AlzheimAlert(TM), which is a state of
the art urine test designed to aid physicians in the diagnosis of Alzheimer's
disease. AlzheimAlert(TM) is Nymox's unique patented urinary test for neural
thread protein, a key protein involved in the Alzheimer's disease process. We
are in the early stages of making the tests available to doctors throughout the
U.S. through a medical field force of over 60 medical representatives. The test
costs $295 and is performed by the company's clinical reference laboratory in
New Jersey.
On July 23, Nymox announced that recent scientific studies were providing a
significant new link between NTP, the brain protein detected by the Nymox
AlzheimAlert(TM) urine test, and key aspects of the Alzheimer's disease process.
The studies were conducted at Brown University by Dr. Suzanne de la Monte and
colleagues and were presented on Wednesday, July 24, at the 8th International
Conference on Alzheimer's Disease and Related Disorders held in Stockholm,
Sweden.
In the studies, the role of AD7c-NTP in AD neurodegeneration was characterized
in neuronal cells in culture. Dr. de la Monte and colleagues at Brown University
examined NTP
1
expression, cell viability, and gene expression. They found that AD7c-NTP, the
specific protein measured in the AlzheimAlert(TM) test, was particularly
associated with the accumulation of harmful protein complexes in the dying nerve
cells associated with the neurodegeneration of AD. Phospho-tau is the main
component of neurofibrillary tangles, one of the hallmarks of AD. These new
results point to an important connection of NTP to phospho-tau accumulation in
Alzheimer's disease.
On July 29, Nymox announced that positive results of a successful clinical study
of the Company's AlzheimAlert(TM) test were presented at the 54th Annual Meeting
of the American Association for Clinical Chemistry. Michael Munzar MD, the
Medical Director of Nymox, presented the paper on the study. The Annual Meeting
of the American Association for Clinical Chemistry, an international
scientific/medical society of clinical laboratory professionals, physicians and
research scientists, is one of the pre-eminent scientific conferences for
laboratory and clinical chemistry in the world.
The results of the multi-center double blind retrospective study showed that
AlzheimAlert(TM) could accurately distinguish between patients with Alzheimer's
disease and healthy subjects without the disease. The study also showed that
cases of Alzheimer's disease of longer duration had significantly higher NTP
values than cases of more recent clinical onset. The paper's authors are Dr.
Munzar; Suzanna Levy, Ph.D. of Mount Sinai School of Medicine, New York; Robert
Rush, Ph.D. of Bendiner & Schlesinger, New York; and Maggie Focht, Matt
McConville and Paul Averback MD of Nymox.
On August 22, Nymox announced that a large new prospective study of its
AlzheimAlert(TM) urine test had begun at State University of New York. The
investigation is being led by Dr. Smita Kittur, M. D., the Director of the
Alzheimer's Programs at SUNY Upstate Medical Center and the Syracuse VA Medical
Center. Dr. Kittur trained in neurology at the Johns Hopkins School of Medicine,
and she is also board certified in neurology and genetics. She was a Senior
Staff fellow in Gerontology Research at the Natural Institute of Aging. Dr.
Kittur has extensive peer-review publications in the fields of neurology,
genetics and Alzheimer's disease. On September 13, Nymox announced that a large
new prospective study of its AlzheimAlert(TM) urine test has begun in Phoenix at
21st Century Neurology, a large neurology treatment and research facility. The
investigation is being led by Stephen S. Flitman, M. D., the Medical Director at
21st Century Neurology. Dr. Flitman specializes in cognitive and memory
disorders, and is the Medical Director for 21st Century Neurology, focusing on
clinical research and modern approaches to neurological diseases such as
Alzheimer's disease and Parkinson's disease, and unusual behavioral disorders in
adults and children.
Nymox also markets two other proprietary products; NicAlert(TM) and
NicoMeter(TM), which are inexpensive, simple-to-use test strips used to
determine whether a person is using or exposed to tobacco products. NicAlert(TM)
and NicoMeter(TM) can be applied to many situations such as athletic and school
testing, insurance testing, workplace environment testing, research studies and
smoking cessation. NicoMeter(TM) is used with urine and the new NicAlert(TM) is
used for urine and saliva detection. Nymox provides NicAlert(TM) at $7.99 per
test. The Company is currently negotiating a number of new marketing initiatives
for NicAlert(TM). NicAlert(TM) and NicoMeter(TM) are currently being used in
research programs into tobacco use and exposure across the U.S., and in Japan.
The tests are a new improvement of a product, which has been used for many years
by experts in the field at institutions such as the University of Texas, Brown
University,
2
and MD Anderson and by reference laboratories such as Smith Kline Beecham.
NicAlert(TM) and NicoMeter(TM) have the distinct advantage of being the only
point-of-care semi-quantitative tobacco product exposure tests available in the
world.
On August 15, Nymox announced that its NicAlert(TM) test had been found "to be
an invaluable part" of the innovative, on-site tobacco cessation programs run by
the Wellness Council of West Virginia that promote tobacco cessation and
restriction for employees at their work sites. The Wellness Council of West
Virginia runs the Worksite Wellness Tobacco Policy Program under a grant
provided by the West Virginia Tobacco Prevention Program.
According to Debbie Marion, Program Director of the Worksite Wellness Tobacco
Policy Program, they have successfully used NicAlert(TM) on-site in order to
provide "a concrete example to individual tobacco users of the presence of
nicotine in their bodies." This "in turn makes them more receptive to cessation
counseling at that point. In addition, we have found NicAlert to be useful in
raising awareness of environmental smoke exposure issues at many sites," said
Debbie Marion. "Many of our companies find these demonstrations to be useful in
facilitating an atmosphere conducive to tobacco cessation and tobacco
restriction implementation. One of our most dramatic examples of the
effectiveness of these NicAlert demonstrations is from our experience with one
of the largest law firms in our state. As a result of our attendance and
NicAlert demonstration at their employee health fair, the company took immediate
action to close the employee smoking room. This response was due to a
non-smoker's NicAlert results, and subsequent concerns addressed to management."
The Wellness Council said they have been receiving almost daily requests about
NicAlert(TM) from other health agencies, businesses and organizations.
New guidelines for the prevention of heart disease and stroke recommend no
exposure to tobacco smoke, including environmental tobacco smoke (ETS), more
commonly known as second-hand smoke. The recommendation of no exposure to
tobacco smoke contained in the American Heart Association Guidelines for Primary
Prevention of Cardiovascular Disease and Stroke: 2002 Update is the latest in a
series of research studies and practice guidelines linking second-hand smoke
exposure to increased risk of heart disease and stroke. Second-hand smoke is
also a known human carcinogen according to the National Institute of
Environmental Health Sciences. In response to these public health concerns,
there has been a growing movement among municipalities and states to ban smoking
in the workplace, restaurants and bars and other public places.
On September 10, Nymox announced that a large new prospective study of its
NicAlert(TM) test had begun at Clinical Research Centers of Tennessee. The
investigation is being led by Wayne Wells M.D.. Dr. Wells is Medical Director
and Chief Investigator of Clinical Research Centers of Tennessee. Dr. Wells is
Board Certified in Family Practice and Geriatrics. He has been involved in
medical practice for over 18 years. He was formerly attending Physician at State
University of New York Health Science Center at Brooklyn, and Chairman of the
Department of Medicine at University Medical Center in Lebanon, Tennessee.
Clinical Research Centers of Tennessee is currently conducting research programs
in association with 57 medical centers, clinics and private practices statewide.
On September 12, Nymox announced that the Company is pursing marketing
opportunities and initiatives for its products through its new partner,
Health4u, an innovative marketing
3
company based in Allschwil near Basel, Switzerland. Health4u is a
patient-oriented marketing services company, specializing in innovative
approaches to healthcare and quality of life issues (info@health4u.ch;
www.health4u.ch). The Managing Partner of Health4u AG is Jorge Wernli, a former
senior marketing executive at Ciba-Geigy (Novartis). Nymox and Health4u have
developed a website for NicAlert(TM) (www.nicalert.ch) and have launched
NicAlert(TM) in Switzerland. "The NicAlert(TM) product is currently being tested
in a number of schools, youth nursery homes, and manufacturing companies as part
of their health test programs", said Mr. Wernli.
On September 16, Nymox announced that its tobacco exposure test, NicAlert(TM),
was used in a nationwide stop-smoking campaign in Switzerland. The Swiss
campaign, "let it be," is jointly run by the Swiss Federal Office of Public
Health, the Swiss Association for Smoking Prevention, the Swiss League Against
Cancer and the Swiss Lung Association. NicAlert(TM) was used to test the winners
of a month-long stop-smoking contest that awarded prizes ranging from CHF 500
($340) to CHF 5000 ($3400) to some of the over 4,000 people who participated.
On September 18, Nymox announced that its NicAlert(TM) test is being used in
large studies at the Lung-Center Hirslanden in Zurich, Switzerland. Dr. Karl
Klingler from the Lung-Center Hirslanden Zurich, Switzerland, said "Effective
smoking cessation and/or reduction is the single most important intervention in
medicine to improve public health and reduce healthcare cost. Among the top 10
diseases listed by WHO, lung cancer and COPD (Chronic Obstructive Pulmonary
Disease) are strongly related to smoking with increasing incidence in the
smoking and non-smoking population". Dr. Klingler added, "Accurate measurement
is a key success factor to achieve objectives in an effective way: NicAlert and
Nicometer have proven to be cost-effective, easy-to-use point-of care devices on
the road to stop and/or reduce the population's exposure to tobacco smoking".
During the year, we continued to make progress in our several major drug
development programs. Nymox's R&D activities have been increasingly productive
in the past year in generating patentable products and company patent
applications. In the past eighteen months, the company and its affiliates have
drafted, filed and prosecuted over fourteen U.S. patent applications, as well as
a substantially larger number of foreign patent applications.
On July 24, Nymox announced that its U.S. patent application for the use of
statin drugs for Alzheimer's disease has been officially allowed. There have
been numerous highly publicized studies on the benefit of statin drug use and
Alzheimer's disease (see the Wall Street Journal, April 17 and July 18, 2002).
Many international authorities believe that statins (a class of cholesterol
lowering drugs) offer the best hope yet for controlling Alzheimer's disease.
On July 31, 2002), Nymox announced that studies presented at the 8th
International Conference on Alzheimer's Disease and Related Disorders in
Stockholm, Sweden reported new evidence linking high cholesterol levels with
Alzheimer's disease and showing the benefit of statins in lowering the risk of
acquiring the fatal illness. Statins are a class of drugs known as HMG CoA
reductose inhibitors, which lower cholesterol. The current global market for
statin drugs is over $14 billion per year.
4
The relationship between cholesterol and Alzheimer's disease and the potential
use of statins as a therapeutic was a major topic at the conference. One
epidemiological study of 2,378 participants conducted by Dr. R. Green and
colleagues at Boston University School of Medicine found individuals taking
statins had a 39 % lower risk of developing Alzheimer's disease. This finding
confirmed the data reported in the Archives of Neurology (Wolozin et al., Arch
Neurol 2000; 57:1439-43).
Another study conducted by Dr. B. Austen and colleagues at St. George's Hospital
Medical School in London found that using statins in cell cultures lowered
cholesterol levels and dramatically reduced beta-amyloid production.
Beta-amyloid is a constituent of senile plaques, the pathological hallmark of
Alzheimer's disease. Many other studies at the Stockholm meeting explored links
between cholesterol and Alzheimer's disease and the potential therapeutic uses
of statins.
On September 25, Nymox announced that one of its leading Alzheimer's disease
drug candidates had shown significant progress in key preclinical studies. The
Company has made formal plans to target the drug NXD-9062 for human trials.
We wish to thank our over 4,000 shareholders for their valued strong support.
Nymox is confident that it will continue to meet or surpass its important
milestones and we welcome the challenges ahead.
Paul Averback MD - C.E.O. & President
November 14, 2002
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in US dollars)
The following discussion should be read in conjunction with the consolidated
financial statements of the Company.
Overview
The business activities of the Company since inception have been devoted
principally to research and development. Accordingly, the Company has had
limited revenues from sales and has not been profitable to date. We refer to the
Corporate Overview for a discussion of the Company's research and development
projects and its product pipeline.
Critical Accounting Policies
In December 2001, the Securities and Exchange Commission ("SEC") released
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies".
According to the SEC release, accounting policies are among the "most critical"
if they are, in management's view, most important to the portrayal of the
company's financial condition and most demanding on their calls for judgement.
Our accounting policies are described in the notes to our consolidated financial
statements. We consider the following policies to be the most critical in
understanding the judgements that are involved in preparing our financial
statements and the matters that could impact our results of operations,
financial condition and cash flows.
Revenue Recognition
The Corporation applies guidance from SAB 101 (Staff Accounting Bulletin 101)
issued by the Securities and Exchange Commission in the recognition of revenue.
The Company derives its revenue from product sales, research contracts, license
fees and interest. Revenue from product sales is recognized when the product or
service has been delivered or obligations as defined in the agreement are
performed. Revenue from research contracts is recognized at the time research
activities are performed under the agreement. Revenue from license fees,
royalties and milestone payments is recognized upon the fulfillment of all
obligations under the terms of the related agreement. These agreements may
include upfront payments to be received by the Corporation. Upfront payments are
recognized as revenue on a systematic basis over the period that the related
services or obligations as defined in the agreement are performed. Interest is
recognized on an accrual basis.
The Company currently markets AlzheimAlert(TM) as a service provided by our CLIA
certified reference laboratory in New Jersey. Physicians send urine samples
taken from their patients to our laboratory where the AlzheimAlert(TM) test is
performed. The results are then reported back to the physicians. We recognize
the revenues when the test has been performed. The Company sometimes enters into
bulk sales of its diagnostic products to customers under which it has a
continuing obligation to perform related testing services at its laboratory.
Although the Company receives non-refundable upfront payments under these
agreements, revenue is recognized in the period that the Company fulfils its
obligation or over the term of the arrangement. For research contracts and
licensing revenues, the Company usually enters
6
into an agreement specifying the terms and obligations of the parties. Revenues
from these sources are only recognized when there are no longer any obligations
to be performed by the Company under the terms of the agreement.
Valuation of Capital Assets
The Company reviews the unamortized balance of intellectual property rights and
patents on an annual basis and recognizes any impairment in carrying value when
it is identified. Factors we consider important, which could trigger an
impairment review include:
o Significant changes in the manner of our use of the acquired assets or the
strategy for our overall business; and
o Significant negative industry or economic trends.
No impairment losses were recognized for the periods ended September 30, 2002,
2001 and 2000.
Valuation of Future Income Tax Assets
Management judgement is required in determining the valuation allowance recorded
against net future tax assets. We have recorded a valuation allowance of $6.4
million as of December 31, 2001, due to uncertainties related to our ability to
utilize some of our future tax assets, primarily consisting of net operating
losses carried forward, before they expire. In assessing the realizability of
future tax assets, management considers whether it is more likely than not that
some portion or all of the future tax assets will not be realized. The ultimate
realization of future tax assets is dependent upon the generation of future
taxable income and tax planning strategies. Since the Company is a development
stage enterprise, the generation of future taxable income is dependent on the
successful commercialization of its products and technologies.
Results of Operations
Revenues
Revenues from sales amounted to $306,104 for the nine months ended September 30,
2002, compared with $300,893 for the same period in 2001. In addition, there is
$5,930 of deferred revenue, which will be recognized in the next quarter.
Revenues from sales for the quarter amounted to $70,841 compared to $83,128 for
the third quarter of 2001. Interest revenue was $974 in the third quarter of
2002 compared to $2,894 for the same period in 2001, due to lower average cash
balances.
Research and Development
Research and development expenditures were $1,241,631 for the nine months ended
September 30, 2002, compared with $1,145,390 for the same period in 2001. The
increase is attributable to higher spending in the development of the
therapeutic products in the Company's pipeline. During the first nine months of
2002, research tax credits amounted to $13,225 compared to $8,619 for the same
period in 2001.
7
Marketing Expenses
Marketing expenditures decreased to $197,491 for the nine months ended September
30, 2002, in comparison to expenditures of $219,773 for the same period in 2001.
The decrease is attributable to reduced costs relating to marketing agreements.
Administrative Expenses
General and administrative expenses amounted to $960,620 for the nine months
ended September 30, 2002, compared with $715,518 for the same period in 2001,
principally due to write-offs of deferred share issuance costs ($88,495), as
explained in note 2(b) of the interim consolidated financial statements, as well
as increased professional fees (net increase $82,636) and Director's and
Officers insurance premiums ($77,281).
Foreign Exchange
The Company incurs expenses in the local currency of the countries in which it
operates, which include the United States and Canada. Approximately 75% of 2002
expenses (75% in 2001) were in U.S. dollars. Foreign exchange fluctuations had
no meaningful impact on the Company's results in 2001 or 2000.
Inflation
The Company does not believe that inflation has had a significant impact on its
results of operations.
Long-Term Commitments
Nymox has no financial obligations of significance other than long-term lease
commitments for its premises in the United States and Canada of $14,414 per
month and ongoing research funding payments to a U.S. medical facility totaling
$541,000 over the next two years.
Results of Operations
Net losses for the nine month period ended September 30, 2002 were $2,526,276,
or $0.11 per share, compared to $2,053,707, or $0.09 per share, for the same
period in 2001. The weighted average number of common shares outstanding for the
nine months ending September 30, 2002 were 22,574,262 compared to 21,744,831 for
the same period in 2001. Net losses for the quarter ended September 30, 2002
were $799,681, or $0.04 per share, compared to $695,584, or $0.03 per share, for
the same period in 2001. The weighted average number of common shares
outstanding for the quarter ending September 30, 2002 were 22,756,334 compared
to 21,945,479 for the same period in 2001.
Financial Position
Liquidity and Capital Resources
As of September 30, 2002, cash totaled $379,229 and receivables totaled
$155,197. In November 1999, the Corporation signed a common stock purchase
agreement whereby the investor is committed to purchase up to $12 million of the
Corporation's common shares over a thirty-month period commencing July 2000,
when the initial draw-down was effected. As at December 31, 2001, four drawings
have been made under this Share Purchase Agreement, for total proceeds of
$1,436,364. Specifically, on August 16, 2000, 152,616 common shares were issued
at a volume weighted average price of $3.2924 per share; on October 12, 2000,
8
137,889 common shares were issued at a volume weighted average price of $3.6261
per share, on February 7, 2001, 161,696 common shares were issued at a volume
weighted average price of $2.0240 and on May 31, 2001, 56,108 common shares were
issued at a volume weighted average price of $1.9466. The Company intends to
access financing under this agreement when appropriate to fund its research and
development. At September 30, 2002, the Company has $1.5 million of financing
available under this facility. The agreement expires in January, 2003.
The Company intends to raise additional capital in 2002 and 2003 in order to
pursue its development. To September 30, 2002, the Company completed five
private placements and issued 536,074 common shares for total proceeds of
$2,282,400. On January 24, 74,074 shares were issued at a price of $4.05 in a
private placement for total proceeds of $300,000. On March 18, 195,000 shares
were issued at a price of $4.20 in a private placement for total proceeds of
$819,000. On June 18, 90,000 shares were issued at a price of $4.00 in a private
placement for total proceeds of $360,000. On July 17, 86,000 shares were issued
at a price of $4.68 in a private placement for total proceeds of $403,000. On
September 9, 91,000 shares were issued at a price of $4.40 in a private
placement for total proceeds of $400,400. The Company believes that funds from
operations as well as from existing and additional equity facilities will be
sufficient to meet the Company's cash requirements for the next twelve months.
This message contains certain "forward-looking statements" as defined in
the United States Private Securities Litigation Reform Act of 1995 that
involve a number of risks and uncertainties. There can be no assurance that
such statements will prove to be accurate and the actual results and future
events could differ materially from management's current expectations. Such
factors are detailed from time to time in Nymox's filings with the
Securities and Exchange Commission and other regulatory authorities.
9
kpmg
Consolidated Financial Statements of
(Unaudited)
NYMOX PHARMACEUTICAL
CORPORATION
Periods ended September 30, 2002, 2001 and 2000
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Financial Statements
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
Financial Statements
Consolidated Balance Sheets........................................... 1
Consolidated Statements of Operations................................. 2
Consolidated Statements of Deficit.................................... 3
Consolidated Statements of Cash Flows................................. 4
Notes to Consolidated Financial Statements............................ 5
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
September 30, 2002, with comparative figures as at December 31, 2001
(in US dollars)
September 30, December 31,
2002 2001
--------------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash $ 379,229 $ 488,987
Accounts and other receivables 111,463 122,459
Research tax credits receivable 43,734 30,509
Inventory 68,569 17,567
Prepaid expenses 17,500 55,000
--------------------------------------------------------------------------------
620,495 714,522
Capital assets:
Property and equipment 196,473 217,083
Patents and intellectual property 3,181,302 3,154,441
--------------------------------------------------------------------------------
3,377,775 3,371,524
Deferred share issuance costs 17,700 106,195
--------------------------------------------------------------------------------
$ 4,015,970 $ 4,192,241
================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 554,587 $ 295,393
Note payable 344,872 396,775
Deferred revenue 5,930 55,325
--------------------------------------------------------------------------------
905,389 747,493
Non-controlling interest 800,000 800,000
Shareholders' equity:
Share capital and other:
Share capital (note 2) 27,694,475 25,376,557
Warrants and options 421,638 421,638
Deficit (25,805,532) (23,153,447)
--------------------------------------------------------------------------------
2,310,581 2,644,748
Contingencies (note 5)
Subsequent events (note 6)
--------------------------------------------------------------------------------
$ 4,015,970 $ 4,192,241
================================================================================
See accompanying notes to unaudited consolidated financial statements.
1
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
Three months ended September 30, Nine months ended September 30,
--------------------------------------------------------------------------------------------------------------------
2002 2001 2000 2002 2001 2000
--------------------------------------------------------------------------------------------------------------------
Revenue:
Sales $ 70,841 $ 83,128 $ 50,096 $ 306,104 $ 300,893 $ 123,584
Research contract - 97,402 - - 97,402 -
Interest 974 2,894 19,627 4,746 14,453 53,859
------------------------------------------------------------------------------------------------------------------
71,815 183,424 69,723 310,850 412,748 177,443
Expenses:
Research and
development 326,696 466,744 499,538 1,241,631 1,145,390 1,608,346
Less investment
tax credits (3,436) (5,068) (299) (13,225) (8,619) (7,952)
------------------------------------------------------------------------------------------------------------------
323,260 461,676 499,239 1,228,406 1,136,771 1,600,394
General and
administrative 350,389 223,978 262,606 960,620 715,518 1,080,350
Depreciation and
amortization 101,528 99,505 77,818 291,936 292,047 170,946
Marketing 56,489 59,692 122,528 197,491 219,773 262,243
Cost of sales 40,281 32,627 21,863 159,287 97,955 65,587
Interest and bank
charges (451) 1,530 9,543 32,286 4,391 12,393
------------------------------------------------------------------------------------------------------------------
871,496 879,008 993,597 2,870,026 2,466,455 3,191,913
Gain on disposal of
capital assets - - - 32,900 - -
--------------------------------------------------------------------------------------------------------------------
Net loss $ (799,681) $ (695,584) $ (923,874) $ (2,526,276) $ (2,053,707) $ (3,014,470)
====================================================================================================================
--------------------------------------------------------------------------------------------------------------------
Loss per share
(basic and diluted) $ (0.04) $ (0.03) $ (0.04) $ (0.11) $ (0.09) $ (0.15)
====================================================================================================================
--------------------------------------------------------------------------------------------------------------------
Weighted average
number of common
shares outstanding 22,756,334 21,945,479 21,028,767 22,574,262 21,744,831 20,732,514
====================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
2
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Deficit
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
Three months ended September 30, Nine months ended September 30,
--------------------------------------------------------------------------------------------------------------------
2002 2001 2000 2002 2001 2000
--------------------------------------------------------------------------------------------------------------------
Deficit, beginning
of period $(24,942,146) $(21,400,535) $(17,999,396) $(23,153,447) $(19,982,999) $(15,605,816)
Net loss (799,681) (695,584) (923,874) (2,526,276) (2,053,707) (3,014,470)
Share issue costs (63,705) (24,999) (25,114) (125,809) (84,412) (328,098)
--------------------------------------------------------------------------------------------------------------------
Deficit, end of
period $(25,805,532) $(22,121,118) $(18,948,384) $(25,805,532) $(22,121,118) $(18,948,384)
====================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
3
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
Three months ended September 30, Nine months ended September 30,
--------------------------------------------------------------------------------------------------------------------------------
2002 2001 2000 2002 2001 2000
--------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating
activities:
Net loss $ (799,681) $ (695,584) $ (923,874) $ (2,526,276) $ (2,053,707) $ (3,014,470)
Adjustments for:
Depreciation and amortization 101,528 99,505 77,818 291,936 292,047 170,946
Write-down of deferred share
issue costs 17,699 - - 88,495 - -
Services paid with common
shares - - - 32,420 - -
Gain on disposal of capital
assets - - - (32,900) - -
Change in operating assets
and liabilities (32,099) (53,272) (207,094) 194,068 (93,492) (245,810)
------------------------------------------------------------------------------------------------------------------------------
(712,553) (649,351) (1,053,150) (1,952,257) (1,855,152) (3,089,334)
Cash flows from financing
activities:
Proceeds from issuance of
share capital 803,400 1,004,640 500,000 2,282,400 1,853,004 4,500,000
Share issue costs (63,705) (24,999) (15,000) (125,809) (71,264) (365,365)
Repayment of note payable (19,645) - - (396,775) - (346,428)
Issuance of short-term debt - - - 344,872 396,774 -
------------------------------------------------------------------------------------------------------------------------------
720,050 979,641 485,000 2,104,688 2,178,514 3,788,207
Cash flows from investing
activities:
Additions to capital assets (143,351) (73,305) (99,524) (295,089) (222,385) (264,836)
Proceeds on disposal of
capital assets - - - 32,900 250 -
------------------------------------------------------------------------------------------------------------------------------
(143,351) (73,305) (99,524) (262,189) (222,135) (264,836)
--------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash (135,854) 256,985 (667,674) (109,758) 101,227 434,037
Cash, beginning of period 515,083 409,953 1,551,074 488,987 565,711 449,363
--------------------------------------------------------------------------------------------------------------------------------
Cash, end of period $ 379,229 $ 666,938 $ 883,400 $ 379,229 $ 666,938 $ 883,400
================================================================================================================================
Supplemental disclosure to
statements of cash flows:
(a) Interest paid $ - $ 1,530 $ 9,543 $ - $ 4,391 $ 12,393
(b) Non-cash transactions:
Acquisition of Serex, Inc.
by issuance of common
shares - - 191,261 3,098 - 849,086
Shares issued for services - - - 32,420 - -
================================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
4
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
-------------------------------------------------------------------------------
Nymox Pharmaceutical Corporation (the "Corporation"), incorporated under the
Canada Business Corporations Act, including its subsidiaries, Nymox Corporation,
a Delaware Corporation, and Serex Inc. of New Jersey, is a biopharmaceutical
corporation which specializes in the research and development of products for
the diagnosis and treatment of Alzheimer's disease. The Corporation is currently
marketing AlzheimAlertTM, a urinary test that aids physicians in the diagnosis
of Alzheimer's disease. The Corporation also markets NicAlertTM and NicoMeterTM,
tests that use urine or saliva to detect use of or exposure to tobacco products.
The Corporation is also developing therapeutics for the treatment of Alzheimer's
disease, new treatments for benign prostate hyperplasia, and new anti-bacterial
agents for the treatment of urinary tract and other bacterial infections in
humans, including a treatment for E-coli O157:H7 bacterial contamination in meat
and other food and drink products.
Since 1989, the Corporation's activities and resources have been primarily
focused on developing certain pharmaceutical technologies. The Corporation is
subject to a number of risks, including the successful development and marketing
of its technologies. In order to achieve its business plan and the realization
of its assets and liabilities in the normal course of operations, the
Corporation anticipates the need to raise additional capital and/or achieve
sales and other revenue generating activities.
The Corporation is listed on the NASDAQ Stock Market.
1. Basis of presentation:
(a) Interim financial statements:
The consolidated financial statements of the Corporation have been
prepared under Canadian generally accepted accounting principles. The
unaudited consolidated balance sheet as at September 30, 2002 and the
unaudited consolidated statements of operations, deficit and cash
flows for the three- and nine-month periods ended September 30, 2002,
2001 and 2000 reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of the
interim periods presented. The Corporation's revenues and expenses are
subject to seasonal variations. Consequently, the results for any
quarter are not traditionally indicative of the results for the full
year. The interim consolidated financial statements follow the same
accounting policies and methods of their application as described in
note 2 of the annual consolidated financial statements for the year
ended December 31, 2001. The interim consolidated financial statements
do not include all disclosures required for annual financial
statements and should be read in conjunction with the most recent
annual consolidated financial statements of the Corporation as at and
for the year ended December 31, 2001.
5
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
1. Basis of presentation (continued):
(b) New accounting standards:
(i) Stock-based compensation:
Effective January 1, 2002, the Corporation adopted the new
recommendations of the Canadian Institute of Chartered
Accountants ("CICA"), Handbook Section 3870, with respect to the
accounting for stock-based compensation and other stock-based
payments. The new recommendations require that all stock-based
payments to non-employees, and employee awards that are direct
awards of stock, call for settlement in cash or other assets, or
are stock appreciation rights that call for settlement by the
issuance of equity instruments, granted on or after January 1,
2002, be accounted for using the fair value method. For all other
stock-based employee compensation awards, the CICA has not
prescribed specific methods, and therefore the Corporation has
chosen to continue to follow its existing policy of using the
settlement method of accounting as permitted under the new
standard. Under this method, no compensation expense is
recognized when stock options are issued to employees. Any
consideration received from the plan participants upon exercise
of stock options is credited to share capital.
The new standard requires that the Corporation disclose the pro
forma effect of accounting for all stock-based awards granted
during the three- and nine-month periods ended September 30, 2002
under the fair value-based method. As no options were granted
during these periods, no such disclosure was required.
There is no impact on the Corporation's consolidated financial
position, results of operations and cash flows as a result of
adopting these recommendations.
(ii) Goodwill and other intangible assets:
Effective January 1, 2002, the Corporation adopted the new
recommendations of the CICA, Handbook Section 3062, with respect
to the accounting for goodwill and other intangible assets. The
standard changes the accounting for goodwill from an amortization
method to an impairment-only approach. In addition, the standard
requires acquired intangible assets to be separately recognized
if the benefit of the intangible assets is obtained through
contractual or other legal right, or if the intangible assets can
be sold, transferred, licensed, rented or exchanged.
6
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
1. Basis of presentation (continued):
(b) New accounting standards (continued):
(ii) Goodwill and other intangible assets (continued):
There was no impact on the Corporation's consolidated financial
position, results of operations and cash flows as a result of
adopting these recommendations. In addition, there has been no
change in the estimated useful life of the other intangible
assets which continue to be amortized using the straight-line
method at the following annual rates:
-----------------------------------------------------------------
Intellectual property rights 10%
Patents 17 years
-----------------------------------------------------------------
2. Share capital:
(a) Share capital transactions during the period were as follows:
----------------------------------------------------------------------
Number Dollars
----------------------------------------------------------------------
Balance, December 31, 2001 22,297,525 $ 25,376,557
Issued for cash pursuant to private
placements 536,074 2,282,400
Issued to acquire additional shares
of Serex, Inc. (i) 932 3,098
Issued in exchange for pre-clinical
services (ii) 7,923 32,420
----------------------------------------------------------------------
Balance, September 30, 2002 22,842,454 $ 27,694,475
----------------------------------------------------------------------
(i) During the period, the Corporation issued 932 common shares and
574 Series J warrants to purchase an additional 5,000 shares of
Serex, Inc. that it did not previously own. The Corporation owns
approximately 98% of Serex, Inc. The warrants are exercisable at
$3.70 per share and expire on July 31, 2005.
(ii) During the period, the Corporation issued 7,923 common shares as
payment for certain services totalling $32,420.
7
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
2. Share capital (continued):
(b) The costs incurred in connection with the common stock purchase
agreement described in note 6 (c) of the Corporation's annual
consolidated financial statements, were accounted for as deferred
share issuance costs to be amortized to the deficit over the
thirty-month draw-down period. Amortization is calculated for each
draw-down based on the percentage of the actual draw-down over the
total facility. During the period, the Corporation wrote off deferred
share issuance costs in the amount of $88,495 against earnings for the
portion of the facility that can no longer be utilized by the
Corporation. The facility expires in January 2003.
3. Canadian/US Reporting Differences:
(a) Consolidated statements of earnings:
The reconciliation of earnings reported in accordance with Canadian
GAAP with U.S. GAAP is as follows:
Three months ended September 30, Nine months ended September 30,
--------------------------------------------------------------------------------------------------------------------------------
2002 2001 2000 2002 2001 2000
--------------------------------------------------------------------------------------------------------------------------------
Net loss, Canadian GAAP $ (799,681) $ (695,584) $ (923,874) $ (2,526,276) $ (2,053,707) $ (3,014,470)
Adjustments:
Amortization of patents (i) 2,095 26,150 (214) 6,802 52,496 4,178
Stock-based compensation
options granted to
non-employees (ii) (10,285) - - (30,855) (15,595) -
--------------------------------------------------------------------------------------------------------------------------------
(8,190) 26,150 (214) (24,053) 36,901 4,178
--------------------------------------------------------------------------------------------------------------------------------
Net loss, U.S. GAAP $ (807,871) $ (669,434) $ (924,088) $ (2,550,329) $ (2,016,806) $ (3,010,292)
================================================================================================================================
--------------------------------------------------------------------------------------------------------------------------------
Loss per share, U.S. GAAP $ (0.04) $ (0.03) $ (0.04) $ (0.11) $ (0.09) $ (0.15)
================================================================================================================================
8
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
3. Canadian/US Reporting Differences (continued):
(b) Consolidated shareholders' equity:
The reconciliation of shareholders' equity reported in accordance with
Canadian GAAP with U.S. GAAP is as follows:
----------------------------------------------------------------------
September 30, December 31,
2002 2001
----------------------------------------------------------------------
Shareholders' equity, Canadian GAAP $ 2,310,581 $ 2,644,748
Adjustments:
Amortization of patents (i) (131,733) (138,535)
Stock-based compensation - options
granted to non-employees (ii):
Cumulative compensation expense (1,291,438) (1,260,583)
Additional paid-in capital 1,344,001 1,313,146
Change in reporting currency (iii) (62,672) (62,672)
----------------------------------------------------------------------
(141,842) (148,644)
----------------------------------------------------------------------
Shareholders' equity, U.S. GAAP $ 2,168,739 $ 2,496,104
======================================================================
(i) In accordance with APB Opinion 17, Intangible Assets, the
patents are amortized using the straight-line method over the
legal life of the patents from the date the patent was secured.
For Canadian GAAP purposes, the patents are amortized commencing
in the year of commercial production of the developed products.
(ii) In accordance with FAS 123, Accounting for Stock-Based
Compensation, compensation related to the stock options granted
to non-employees has been recorded in the accounts based on the
fair value of the stock options at the grant date. Under
Canadian GAAP, no compensation expense was recorded for stock
options granted to non-employees before January 1, 2002.
(iii) The Company adopted the US dollar as its reporting currency
effective January 1, 2000. For Canadian GAAP purposes, the
financial information for 1999 has been translated into US
dollars at the December 31, 1999 exchange rate. For United
States GAAP reporting purposes, assets and liabilities for all
periods presented have been translated into US dollars at the
ending exchange rate for the respective period and the statement
of earnings at the average exchange rate for the respective
period.
9
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
4. Segment disclosures:
Geographic segment information was as follows:
United
Canada States
---------------------------------------------------------------------------
Revenues:
2002 $ 5,334 $ 305,516
2001 142,036 270,712
2000 53,859 123,584
Net loss:
2002 (2,162,745) (363,531)
2001 (1,626,369) (427,338)
2000 (1,879,670) (1,134,800)
Identifiable assets:
September 30, 2002 3,510,701 505,268
December 31, 2001 (audited) 3,629,455 562,786
===========================================================================
5. Contingencies:
(a) Litigation:
A shareholder has served the Corporation with a Statement of Claim
filed with the Ontario Superior Court of Justice claiming to be
entitled to the issuance of 388,797 additional shares in accordance
with repricing provisions contained in a 2000 private placement
agreement and to damages of $4,000,000 for lost opportunity to sell
these shares. The Corporation believes that the shareholder's
interpretation of the repricing provisions in the March 2000 agreement
is incorrect and intends to defend the action vigorously. Accordingly,
no provision related to this matter has been recorded in these
financial statements.
(b) Demand for arbitration:
In March 2002, a former employee filed a demand for arbitration with
the American Arbitration Association concerning the termination of her
employment with the Corporation. The employee is claiming damages of
up to $498,000 plus attorney's fees and costs, based upon alleged
violations of New Jersey law and breach of an employment agreement.
The Corporation believes these claims are without merit and intends to
defend the matter vigorously. Accordingly, no provision related to
this matter has been recorded in these financial statements.
10
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended September 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
6. Subsequent events:
On October 23, 2002, the Company announced that its NicAlertTM product has
received 510(K) clearance from the US Food and Drug Administration (FDA).
On November 1, 2002, the Company announced that its US patent was issued
for the use of statin drugs for the treatment and prevention of Alzheimer's
disease.
11