FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the period ended June 30, 2003
Commission File Number: 001-12033
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 of Form 20-F or Form 40-F:
Form 20-F X Form 40-F ___
Indicate by check mark if the registrant is submitting Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(l): ___
Indicate by check mark if the registrant is submitting Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): ___
Indicate by check mark whether by furnishing the information contained in
this Form, the registrant 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
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-______________
[GRAPHIC OMITTED] [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 CLIA certified reference laboratory
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. In October 2002, NicAlert(TM) 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. In 2002,
Nymox was issued an important U.S. patent for 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 O157:H7 contamination in
meat and other food and drink products. Nymox is developing NX-1207, a novel
treatment for benign prostatic hyperplasia. The Company filed an Investigational
New Drug application with the FDA in 2002, and has begun the Phase I stage U.S.
clinical testing of NX-1207 in humans. Nymox also has several other drug
candidates and diagnostic technologies in development.
Message to Shareholders
-----------------------
Nymox is pleased to present its results for the second quarter of 2003.
Nymox has global patent rights for the use of statins in the prevention and
treatment of Alzheimer's disease. On April 9, Nymox announced that recent
medical studies had bolstered the importance of Nymox's patent rights for statin
use in Alzheimer's disease. An NIH-sponsored multi-center study of 3712
individuals presented at the 55th Annual Meeting of the American Academy of
Neurology found that the rate of cognitive decline in Alzheimer's disease
overall was lower in individuals taking statin drugs. The study was part of the
Cardiovascular Health Study, a large longitudinal study of people 65 years or
older. The authors of the study were Charles Bernick of Las Vegas, NV, Ronit
Katz and Nicholas Smith of Seattle, WA, Stephen Rapp of Winston-Salem, NC,
Rafeeque Bhadelia of Boston, MA, Michelle Carson of Baltimore, MD and Lewis
Kuller of Pittsburgh, PA. The authors concluded that the study results suggested
"that statins may exert their effect by modulating the course of Alzheimer's
disease. The potential benefits of statin drug use in the treatment or
prevention of Alzheimer's disease have
been widely recognized, both in the media (see, for example, The Wall Street
Journal, April 17 and July 18, 2002) and in medical research.
On April 29, Nymox announced that a newly published study had added support to
the potential of statin drugs for Alzheimer's disease (AD). The study was
reported in the April issue of the Archives of Neurology (April 21, 2003;
60:510-515) and was authored by Drs. Gloria Vega, Myron Weiner, Anne Lipton,
Klaus von Bergmann, Dieter Lutjohann, Carol Moore and Doris Svetlik at the
University of Texas Southwestern Medical Center at Dallas and at the University
of Bonn Medical Center, Bonn, Germany. In the study, 31 people with Alzheimer's
disease (AD) were given one of three different statin drugs for six weeks. The
study found that the patients taking statins lowered levels of an important
product of brain cholesterol metabolism by 21.4 percent. Other recent reports
indicated that this form of cholesterol was elevated in patients with AD. The
authors concluded that statin drugs "may be potentially beneficial in treatment
of AD."
On April 10, Nymox announced positive results for NXC-4720, its treatment for E.
coli O157 contamination. NXC-4720 was shown in controlled studies to
successfully retard E. coli growth and contamination of meat products. Studies
showed that infected beef was cleared of E. coli by NXC-4720. Furthermore,
NXC-4720 treated beef was able to withstand subsequent attempts at E. coli
contamination. There were no observable significant toxicological side effects
of the treatments. Nymox now plans to advance NXC-4720 for accelerated
commercial development.
On April 17, Nymox announced the appointment of Brian Doyle BSC, MBA as its new
Senior Manager for Global Sales and Marketing. Mr. Doyle, in addition to
immunology R&D experience, comes to Nymox with highly successful career sales
results in the high tech sector. His experience includes global sales strategy
and implementation, hands-on account management, personnel management, and
marketing.
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 (AD) process.
We are in the early stages of making the tests available to doctors throughout
the U.S.. The CLIA certified test costs $295 and is performed by the company's
clinical reference laboratory in New Jersey.
Data from prospective and retrospective double blind controlled independent
studies of the AlzheimAlert(TM) test was presented at the Fourth Manhattan
Alzheimer's Disease Conference on May 27, in New York. The studies indicate that
the AlzheimAlert(TM) test values accurately distinguish verified AD patients
from controls, suggesting that it may become an important tool for monitoring
emerging therapies for AD. In the studies, large numbers of clinically normal
persons from all ages were administered the test, in addition to groups of AD
patients from several institutions. Individuals with symptoms of dementia for
less than a year had considerably lower AlzheimAlert(TM) scores than those with
longer duration symptoms.
2
On May 1, Nymox announced that the Company's NicAlert (TM) had been used by the
Quebec Public Health Department of Nunavik in Canada to check the current
smoking status of potential winners of a 2003 Regional Quit to Win Challenge.
Smoking is a major problem in the Nunavik region of Canada, where a recent study
reported that 80% of teenagers between the ages of 14 and 16 smoke. Serge Dery,
M.D., Director of Public Health, said "The NicAlert(TM) strip has been used by
the Public Health Department of Nunavik to check current smoking status of
potential winners of the 2003 Regional Quit to Win Challenge."
On May 22, Nymox announced that a team of Swiss researchers led by Dr. Karl
Klingler of the Hirslanden Lung Center, Zurich, Switzerland found that
NicAlert(TM) is "easy to use, cost-effective and accurate". The researchers
presented their findings to the Assembly of Pneumologists in St.Gallen,
Switzerland. The researchers conducted a study to evaluate the use of
NicAlert(TM) in conjunction with nicotine replacement therapy (NRT) in smoking
cessation and reduction programs. The study found significant smoking reduction
over the four-month trial period when NRT was combined with individual cotinine
levels as measured by NicAlert(TM). The authors of the study were Karl Klingler,
Jurg Barandun, Thomas Scherer, Beat Walder, Harald Rinde and Jorge Wernli.
On June 9, Nymox and health4u AG (Allschwil, Switzerland) announced that Nymox's
NicAlert(TM) product was successfully used in a smoking cessation program
organized by the popular weekly Swiss TV health program,
"Gesundheitssprechstunde," created and moderated by Dr. S. Stutz. The program
which started on World No Tobacco Day, May 31st, 2003, builds on medical
information on smoking consequences, techniques and therapies on how to stop
smoking as well as physiotherapy, nutrition and exercise programs. NicAlert(TM)
was used to measure the cotinine levels of the participants on the 2nd day and
on the final day of the program. Participants were curious to know their initial
cotinine levels and to find out how the anti-smoking program impacted on their
cotinine levels. In spite of being heavy smokers, many of them expressed
confidence about their ability to stop smoking. Dr. Karl Klingler an eminent
respiratory expert from Zurich who is leading the program, stated that the
measurement of cotinine is an important part of a successful smoking cessation
or reduction program. "Only what is measured can be improved. There is a
definite need for a well controlled intervention that can lead to significant
healthcare benefits and cost reductions," said Dr. Klingler. "We found out in
our trials and practice that a drop of 2 NicAlert(TM) levels can be achieved
after 1-2 weeks stopping smoking. Maintaining this level and reducing it further
in most cases requires an NRT or alternative nicotine replacement therapies.
NicAlert is very useful to assure a sustainable reduction or smoking cessation
by allowing a stepwise control of the nicotine reduction of up to two
NicAlert(TM) levels. 96% of this group of patients stopped smoking at the end of
the program. This program was implemented already 5 times with an average
success-rate of 95% at the end of the program and 65% after one year of people
having stopped smoking. This is very fulfilling, because we are able to
contribute substantially to a better quality of life and increased life
expectancy."
On June 25, Nymox and the American Respiratory Alliance jointly announced that
NicAlert(TM) will be used as the official test agent in several smoking
cessation programs
3
to be offered by the American Respiratory Alliance. Founded over 90 years ago,
the American Respiratory Alliance provides programs, information and services
about respiratory health for adults with chronic lung diseases, children with
asthma and their parents, adults and adolescents who would like to quit smoking,
and health professionals and others who require the most current information on
lung diseases and health. The Alliance provides tobacco prevention, cessation
and education programs to youth and adults through school programs and self-help
and group activities. The Alliance also provides supportive materials to
quitters. Health and wellness projects include cessation help for pregnant women
and awareness programs about second hand smoke and other environmental and
occupational hazards to lung heath. Christine Weaver, Executive Director of the
American Respiratory Alliance, said, "We are confident NicAlert will prove to be
an invaluable tool in helping to measure the effectiveness of our smoking
cessation programs. NicAlert offers a cost-effective way of quickly, easily and
accurately determining tobacco exposure." The YMCA of Pittsburgh will be among
the first locations for many of these programs.
On May 27, Nymox announced that its scientists had uncovered a major new
molecular clue to the mystery of Alzheimer's disease. In a presentation at the
4th Manhattan Alzheimer's Disease Conference in New York City, it was reported
that toxic amounts of a new substance referred to as "spherotoxin" were
discovered in human brains. The spherotoxin substance is a newly delineated
molecular "culprit" for much of the damage in AD brain. Spherotoxin is present
in high concentrations in spherons; the latter have been implicated in AD
pathogenesis. The amount of spherotoxin in the brain was found to be
approximately 100 times more than the concentration, which produced significant
nerve cell death in tissue culture and animal experiments. The Company also
announced that the Nymox team had created a new drug for Alzheimer's which they
will be filing with the U.S. Food and Drug Administration as an investigational
new drug (IND) application later in the year. Also, the major potential
importance of statin drugs in Alzheimer's disease (AD) was bolstered by studies
presented at the Fourth Manhattan Alzheimer's Disease Conference in New York. At
the meeting, Dr. Larry Sparks of the Roberts Laboratory for Neurodegenerative
Disease presented data from extensive studies supporting the underlying
mechanism for the potential value of statins in the treatment of AD.
On June 10, Nymox announced progress in its collaboration on oncology product
developments with Dr. Jack Wands and colleagues at Brown University. Nymox
reported that the sponsored research and development agreement has moved ahead
significantly. The Company is involved in compound development for oncological
indications, including currently incurable solid tumors.
On June 19, Nymox announced that the Company's management anticipates filing as
many as 4 Investigational New Drug applications (INDs) for new products in the
next 12 months. The Company's IND for NX-1207, its prostate drug, was accepted
by the FDA and the new drug is currently in U.S. clinical trials.
4
We wish to thank our over 4,000 shareholders for their valued strong support.
Nymox is confident that it will meet or surpass its significant milestones, and
we welcome the important challenges ahead.
/s/ Paul Averback, MD
---------------------
Paul Averback MD
President
August 14, 2003
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in US dollars)
Overview
The following discussion should be read in conjunction with the consolidated
financial statements of the Company.
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 judgment.
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 Profile for a discussion of the Company's research and development
projects and its product pipeline.
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 has generally derived 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. Deferred revenue presented in the balance sheet
represents amounts billed to and received from customers in advance of revenue
recognition.
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
6
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 future 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 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 property and equipment,
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 June 30, 2003, 2002
and 2001.
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 $7.8
million as of December 31, 2002, due to uncertainties related to our ability to
utilize some of our future tax assets, primarily consisting of net operating
losses carried forward and other unclaimed deductions, 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. 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 $75,326 for the three months and $108,870 for
the six months ended June 30, 2003, compared with $172,958 and $235,263 for the
same periods in 2002. The reduction in revenues from bulk orders for
AlzheimAlert (decrease 52%) and NicAlert (decrease 57%) accounted for the
decrease in the first half of 2003, compared to 2002.
7
Research and Development
------------------------
Research and development expenditures were $635,455 for the three months and
$1,164,018 for the six months ended June 30, 2003, compared with $380,045 and
$914,935 for the same periods in 2002. The increase is attributable to higher
spending in the development of the therapeutic products in the Company's
pipeline. During the first six months of 2003, research tax credits amounted to
$33,019 compared to $9,789 for the same period in 2002. The increase is
attributable to an increase in expenses that are eligible for government
incentives.
Marketing Expenses
------------------
Marketing expenditures decreased to $33,124 for the three months and $80,881 for
the six months ended June 30, 2003, compared to $56,520 and $141,002 for the
same periods in 2002. The decrease is attributable to planned reductions in
costs relating to marketing agreements.
Administrative Expenses
-----------------------
General and administrative expenses increased to $674,678 for the six months
ended June 30, 2003, compared with $610,231 for the same period in 2002, due to
higher professional fees for legal work. For the second quarter of 2003, general
and administrative expenses ($411,425) were constant compared to the second
quarter of 2002 ($413,983).
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 2003
expenses (75% in 2002) were in U.S. dollars. Foreign exchange fluctuations had
no meaningful impact on the Company's results in 2003 or 2002.
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 $14,583 per
month and ongoing research funding payments to a U.S. medical facility totaling
$373,500 over the next eighteen months.
Results of Operations
---------------------
Net losses for the six month period ended June 30, 2003 were $2,051,379, or
$0.09 per share, compared to $1,726,595, or $0.08 per share, for the same period
in 2002. The weighted average number of common shares outstanding for the six
months ending June 30, 2003 were 23,363,511 compared to 22,481,717 for the same
period in 2002.
8
Financial Position
Liquidity and Capital Resources
-------------------------------
As of June 30, 2003, cash totaled $185,947 and receivables including tax credits
totaled $94,692. Two further cash placements totaling $460,000 have been
received subsequent to June 30, 2003.
In January 2003, the Corporation signed a common stock private purchase
agreement whereby the investor is committed to purchase up to $5 million of the
Corporation's common shares over a twenty-four month period commencing January
2003. As at August 8, 2003, five drawings have been made under this purchase
agreement, for total proceeds of $2,360,000. Specifically, on January 30, 2003,
107,382 common shares were issued at a price of $3.725 per share. On March 3,
2003, 245,098 common shares were issued at a price of $4.08 per share. On June
6, 2003, 167,224 common shares were issued at a price of $2.99 per share. On
July 8, 2003, 80,128 common shares were issued at a price of $3.12 per share. On
August 8, 2003, 77,778 common shares were issued at a price of $2.70 per share.
The Company can draw down a further $2,640,000 over the remaining 18 months of
the agreement. The Company intends to access financing under this agreement when
appropriate to fund its research and development. The Company believes that
funds from operations as well as from existing financing agreements will be
sufficient to meet the Company's cash requirements for the next twelve months.
This report 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
Consolidated Financial Statements of
(Unaudited)
NYMOX PHARMACEUTICAL
CORPORATION
Periods ended June 30, 2003, 2002 and 2001
10
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Financial Statements
(Unaudited)
Periods ended June 30, 2003, 2002 and 2001
Financial Statements
Consolidated Balance Sheets............................................ 12
Consolidated Statements of Operations.................................. 13
Consolidated Statements of Deficit..................................... 14
Consolidated Statements of Cash Flows.................................. 15
Notes to Consolidated Financial Statements............................. 16
11
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
June 30, 2003, with comparative figures as at December 31, 2002
(in US dollars)
June 30, December 31,
2003 2002
(Unaudited) (Audited)
----------- ------------
Assets
Current assets:
Cash $ 185,947 $ 660,629
Accounts and other receivables 45,017 101,364
Research tax credits receivable 49,675 47,165
Inventory 83,459 53,208
Prepaid expenses and deposits 17,500 17,500
----------- ------------
381,598 879,866
Long-term receivables 70,000 70,000
Property and equipment 168,615 185,293
Patents and intellectual property 3,121,432 3,223,498
----------- ------------
$ 3,741,645 $ 4,358,657
=========== ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 677,997 $ 870,925
Notes payable 222,436 544,872
Deferred revenue 5,930 55,930
----------- ------------
906,363 1,471,727
Non-controlling interest 800,000 800,000
Shareholders' equity:
Share capital (note 2) 30,513,600 28,407,600
Warrants and options 336,438 336,438
Additional paid-in capital 85,200 85,200
Deficit (28,899,956) (26,742,308)
----------- ------------
2,035,282 2,086,930
Contingencies (note 6)
Subsequent event (note 7)
$ 3,741,645 $ 4,358,657
=========== ============
See accompanying notes to unaudited consolidated financial statements.
12
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
Periods ended June 30, 2003, 2002 and 2001
(in US dollars)
Three months ended June 30, Six months ended June 30,
-------------------------------------- ----------------------------------------
2003 2002 2001 2003 2002 2001
-------------------------------------- ----------------------------------------
Revenue:
Sales $ 75,326 $ 172,958 $ 126,468 $ 108,870 $ 235,263 $ 187,765
Interest 372 1,140 4,816 855 3,772 11,559
Research contract - - 30,000 - - 30,000
---------- ---------- ---------- ---------- ---------- ----------
75,698 174,098 161,284 109,725 239,035 229,324
Expenses:
Research and
development 635,455 380,045 354,862 1,164,018 914,935 678,646
Less investment tax
credits (29,461) (3,908) (2,191) (33,019) (9,789) (3,551)
---------- ---------- ---------- ---------- ---------- ----------
605,994 376,137 352,671 1,130,999 905,146 675,095
General and
administrative 411,425 413,983 339,406 674,678 610,231 491,540
Marketing 33,124 56,520 82,103 80,881 141,002 160,081
Cost of sales 42,013 99,405 41,975 65,087 119,006 65,328
Depreciation and
amortization 99,470 95,994 97,660 197,156 190,408 192,542
Interest and bank
charges 6,561 8,537 1,326 12,303 32,737 2,861
---------- ---------- ---------- ---------- ---------- ----------
1,198,587 1,050,576 915,141 2,161,104 1,998,530 1,587,447
Gain on disposal of capital
assets - 32,900 - - 32,900 -
---------- ---------- ---------- ---------- ---------- ----------
Net loss $(1,122,889) $ (843,578) $ (753,857) $(2,051,379) $(1,726,595) $(1,358,123)
========== ========== ========== ========== ========== ==========
Loss per share (basic
and diluted) (note 3) $ (0.05) $ (0.04) $ (0.03) $ (0.09) $ (0.08) $ (0.06)
========== ========== ========== ========== ========== ==========
Weighted average
number of common
shares outstanding 23,524,888 22,581,750 21,758,020 23,363,511 22,481,717 21,642,846
========== ========== ========== ========== ========== ==========
See accompanying notes to unaudited consolidated financial statements.
13
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Deficit
(Unaudited)
Periods ended June 30, 2003, 2002 and 2001
(in US dollars)
Three months ended June 30, Six months ended June 30,
-------------------------------------- ----------------------------------------
2003 2002 2001 2003 2002 2001
-------------------------------------- ----------------------------------------
Deficit, beginning of
period $(27,748,311) $(24,051,464) $(20,639,359) $(26,742,308) $(23,153,447) $(19,982,999)
Net loss (1,122,889) (843,578) (753,857) (2,051,379) (1,726,595) (1,358,123)
Share issue costs (28,756) (47,104) (7,319) (106,269) (62,104) (59,413)
------------ ------------ ------------ ------------ ------------ ------------
Deficit, end of period $(28,899,956) $(24,942,146) $(21,400,535) $(28,899,956) $(24,942,146) $(21,400,535)
============ ============ ============ ============ ============ ============
See accompanying notes to unaudited consolidated financial statements.
14
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Cash Flows (Unaudited) Periods ended June 30, 2003,
2002 and 2001 (in US dollars)
Three months ended June 30, Six months ended June 30,
-------------------------------------- ----------------------------------------
2003 2002 2001 2003 2002 2001
-------------------------------------- ----------------------------------------
Cash flows from operating
activities:
Net loss $(1,122,889) $ (843,578) $ (753,857) $(2,051,379) $(1,726,595) $(1,358,123)
Adjustments for:
Depreciation and
amortization 99,470 95,994 97,660 197,156 190,408 192,542
Write-down of
deferred share
issue costs - 35,398 - - 70,796 -
Services paid with
common shares - 32,420 - - 32,420 -
Gain on disposal
of capital assets - (32,900) - - (32,900) -
Net change in operating
assets and liabilities 97,626 24,363 108,201 (219,342) 226,167 (40,220)
----------- ----------- ----------- ----------- ----------- -----------
(925,793) (688,303) (547,996) (2,073,565) (1,239,704) (1,205,801)
Cash flows from financing
activities:
Proceeds from issuance
of share capital 500,000 360,000 109,091 2,106,000 1,479,000 848,364
Share issue costs (28,756) (47,104) (3,274) (106,269) (62,104) (46,265)
Repayment of notes
payable - (396,775) - (322,436) (396,775) -
Proceeds from issuance
of notes payable - 364,517 396,775 - 364,517 396,775
----------- ----------- ----------- ----------- ----------- -----------
471,244 280,638 502,592 1,677,295 1,384,638 1,198,874
Cash flows from investing
activities:
Additions to property
and equipment,
and intangibles (59,310) (53,702) (94,389) (78,412) (151,738) (149,081)
Proceeds on disposal
of property and
equipment - 32,900 - - 32,900 250
----------- ----------- ----------- ----------- ----------- -----------
(59,310) (20,802) (94,389) (78,412) (118,838) (148,831)
----------- ----------- ----------- ----------- ----------- -----------
Net (decrease) increase
in cash (513,859) (428,467) (139,793) (474,682) 26,096 (155,758)
Cash, beginning of period 699,806 943,550 549,746 660,629 488,987 565,711
----------- ----------- ----------- ----------- ----------- -----------
Cash, end of period $ 185,947 $ 515,083 $ 409,953 $ 185,947 $ 515,083 $ 409,953
=========== =========== =========== =========== =========== ===========
Supplemental disclosure to
statements of cash flows:
(a) Interest paid $ 6,561 $ 8,537 $ 1,326 $ 12,303 $ 25,737 $ 2,861
(b) Non-cash
transactions:
Acquisition of
Serex, Inc. by
issuance of
common shares - - - - 3,098 -
Amortization of
deferred share
issue costs
charged to deficit - - 4,045 - - 13,148
See accompanying notes to unaudited consolidated financial statements.
15
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Periods ended June 30, 2003, 2002 and 2001
(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 tobacco products. The Corporation is 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 0157: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.
Management believes that funds from operations as well as the existence of
committed financing facilities will be sufficient to meet the Corporation's
requirements for the next year.
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 June 30, 2003 and the
unaudited consolidated statements of operations, deficit and cash
flows for the three- and six-month periods ended June 30, 2003, 2002
and 2001 reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results of the
interim periods presented. The results for any quarter are not
necessarily 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,
2002. 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, 2002.
16
1. Basis of presentation (continued):
(b) New accounting standards:
(i) Guarantees:
On January 1, 2003, the Corporation adopted the new
recommendations of the Canadian Institute of Chartered
Accountants ("CICA"), Accounting Guideline 14, Disclosure of
Guarantees which clarifies disclosure requirements for certain
guarantees. The guideline does not provide guidance on the
measurement and recognition of a guarantor's liability for
obligations under guarantees. The guideline defines a guarantee
to be a contract (including an indemnity) that contingently
requires the Corporation to make payments to a third party based
on (i) changes in an underlying interest rate, foreign exchange
rate, equity or commodity instrument, index or other variable,
that is related to an asset, a liability or an equity security of
the counterparty, (ii) failure of another party to perform under
an obligating agreement or (iii) failure of another party to pay
its indebtedness when due.
The adoption of this standard did not have an impact on the
Corporation's financial statements.
(ii) Long-lived assets:
In December 2002, the CICA issued Handbook Section 3063,
Impairment or Disposal of Long-lived Assets and revised Section
3475, Disposal of Long-lived Assets and Discontinued Operations.
Together, these two Sections supersede the write-down and
disposal provisions of Section 3061, Property, Plant and
Equipment as well as Section 3475, Discontinued Operations.
Section 3063 amends existing guidance on long-lived asset
impairment measurement and establishes standards for the
recognition, measurement and disclosure of the impairment of
long-lived assets held for use by the Corporation. It requires
that an impairment loss be recognized when the carrying amount of
an asset to be held and used exceeds the sum of the undiscounted
cash flows expected from its use and disposal; the impairment
recognized is measured as the amount by which the carrying amount
of the asset exceeds its fair value. Section 3475 provides a
single accounting model for long-lived assets to be disposed of
by sale. Section 3475 provides specified criteria for classifying
an asset as held-for-sale to be measured at the lower of their
carrying amounts or fair value, less costs to sell. Section 3475
also broadens the scope of businesses that qualify for reporting
as discontinued operations to include any disposals of a
component of an entity, which comprises operations and cash flows
that can be clearly distinguished from the rest of the
Corporation, and changes the timing of recognizing losses on such
operations. The new standards contained in Section 3063 on the
impairment of long-lived assets held for use are applicable for
years beginning on or after April 1, 2003. The revised standards
contained in Section 3475 on disposal of long-lived assets and
discontinued operations are applicable to disposal activities
initiated by the Corporation's commitment to a plan on or after
May 1, 2003. The Corporation does not expect that the adoption of
these standards will have a material effect on its financial
statements.
17
2. Share capital:
Share capital transactions during the period were as follows:
Number Dollars
Balance, December 31, 2002 23,020,954 $28,407,600
Issued for cash pursuant to common stock
private purchase agreement 519,704 1,900,000
Issued for cash pursuant to the exercise
of warrants 100,000 206,000
---------- -----------
Balance, June 30, 2003 23,640,658 $30,513,600
========== ===========
Common stock private purchase agreement:
----------------------------------------
In January 2003, the Corporation entered into a Common Stock Private
Purchase Agreement with an investment company (the "Purchaser") that
establishes the terms and conditions for the purchase of common shares by
the Purchaser. In general, the Corporation can, at its discretion, require
the Purchaser to purchase up to $5 million of common shares over a
twenty-four month period based on notices given by the Corporation.
The number of shares to be issued in connection with each notice shall be
equal to the amount specified in the notice divided by 97% of the average
price of the Corporation's common shares for the five days preceding the
giving of the notice. The maximum amount of each notice is $500,000 and the
minimum amount is $150,000. The Corporation may terminate the agreement
before the 24-month term if it has issued at least $3 million of common
shares under the agreement.
In 2003, the Corporation issued 519,704 common shares to the Purchaser for
aggregate proceeds of $1,900,000 under this agreement. At June 30, 2003,
the Corporation can require the Purchaser to purchase up to $3,100,000 of
common shares over the remaining 18 months of the agreement.
Exercise of warrants:
---------------------
In February 2003, the Corporation also issued 100,000 common shares
pursuant to the exercise of Series K warrants and received proceeds of
$206,000.
18
3. Stock-based compensation:
If the fair value-based accounting method had been used to measure and
account for stock-based compensation costs relating to exempt options
issued to employees in the three and six-month periods ended June 30, 2003
and 2002, the net earnings and related earnings per share figures would
have been as follows:
Three months ended June 30 Six months ended June 30
-------------------------- ------------------------------
2003 2002 2003 2002
-------------------------- ------------------------------
Reported net loss $(1,122,889) $ (843,578) $ (2,051,379) $(1,726,595)
Pro forma adjustments to
compensation expense (2,627) - (2,627) -
----------- ----------- ------------ -----------
Pro forma net loss $(1,125,516) $ (843,578) $ (2,054,006) $(1,726,595)
=========== =========== ============ ===========
Pro forma loss per share
(basic and diluted) $ (0.05) $ (0.04) $ (0.09) $ (0.08)
=========== =========== ============ ===========
4. Canadian/US reporting differences:
(a) Consolidated statements of operations:
The reconciliation of earnings reported in accordance with Canadian
GAAP with U.S. GAAP is as follows:
Three months ended June 30, Six months ended June 30,
--------------------------------------- -------------------------------------
2003 2002 2001 2003 2002 2001
--------------------------------------- -------------------------------------
Net loss, Canadian GAAP $(1,122,889) $ (843,578) $ (753,857) $(2,051,379) $(1,726,595) $(1,358,123)
Adjustments:
Amortization of
patents (i) 2,352 2,354 2,352 4,705 4,707 4,705
Stock-based
compensation
options granted to
non-employees (ii) (10,285) (10,285) (285) (20,570) (20,570) (15,595)
----------- ----------- ----------- ----------- ----------- -----------
(7,933) (7,931) 2,067 (15,865) (15,863) (10,890)
----------- ----------- ----------- ----------- ----------- -----------
Net loss, U.S. GAAP $(1,130,822) $ (851,509) $ (751,790) $(2,067,244) $(1,742,458) $(1,369,013)
=========== =========== =========== =========== =========== ===========
Loss per share, U.S. GAAP $ (0.05) $ (0.04) $ (0.03) $ (0.09) $ (0.08) $ (0.06)
=========== =========== =========== =========== =========== ===========
19
4. Canadian/US reporting differences (continued):
(a) Consolidated statements of earnings (continued):
The weighted average number of common shares outstanding for purposes
of determining basic and diluted loss per share is the same as that
disclosed for Canadian GAAP purposes.
(b) Consolidated shareholders' equity:
The reconciliation of shareholders' equity reported in accordance with
Canadian GAAP with U.S. GAAP is as follows:
June 30, December 31,
2003 2002
------------- -------------
(Audited)
Shareholders' equity, Canadian GAAP $ 2,035,282 $ 2,086,930
Adjustments:
Amortization of patents (i) (124,420) (129,125)
Stock-based compensation - options
granted to non-employees (ii):
Cumulative compensation expense (1,322,293) (1,301,723)
Additional paid-in capital 1,374,856 1,354,286
Change in reporting currency (iii) (62,672) (62,672)
------------- -------------
(134,529) (139,234)
------------- -------------
Shareholders' equity, U.S. GAAP $ 1,900,753 $ 1,947,696
============= =============
(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
prior to January 1, 2002 has been recorded in the accounts based on
the fair value of the stock options at the grant date.
(iii) The Corporation adopted the US dollar as its reporting currency
effective January 1, 2000. For Canadian GAAP purposes, the financial
information for prior periods has been translated into US dollars at
the December 31, 1999 exchange rate. For United States GAAP reporting
purposes, assets and liabilities for periods prior to January 1, 2000
have been translated into US dollars at the ending exchange rate for
the respective period and the statement of operations at the average
exchange rate for the respective period.
20
5. Segment disclosures:
Geographic segment information is as follows:
United
Canada States
------ ------
Revenues:
2003 $ 3,170 $ 106,555
2002 3,772 235,263
2001 41,739 187,585
Net loss:
2003 (1,639,182) (412,197)
2002 (1,417,277) (309,318)
2001 (1,063,458) (294,665)
Property and equipment, patents and intellectual property:
June 30, 2003 2,987,901 302,146
December 31, 2002 (audited) 3,102,806 305,985
Total assets:
June 30, 2003 3,046,662 694,983
December 31, 2002 (audited) 3,791,072 562,786
6. Contingencies:
Litigation:
-----------
In December 2000, an investment company 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 private placement that
was finalized in March 2000 and to damages of $4 million for lost
opportunity to sell these shares. The Corporation believes that the
company'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.
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. Subsequently, in
October 2002, the former employee filed a complaint in the New Jersey
Superior Court concerning the termination of her employment with the
Corporation. The complaint claims unspecified damages. The Corporation
believes these claims are without merit and intends to defend the matter
vigorously.
7. Subsequent event:
In July 2003 and August 2003, the Corporation issued 157,906 common shares
for aggregate proceeds of $460,000 under the common stock private purchase
agreement referred to in note 2.
21
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.
NYMOX PHARMACEUTICAL CORPORATION
(Registrant)
By: /s/ Paul Averback
-----------------------------------------
Paul Averback
President and Chief Executive Officer
Date: August 14, 2003
22