PRE-EFFECTIVE AMENDMENT NO. 1
to
FORM 20-F
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number
NYMOX PHARMACEUTICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
Canada
(Jurisdiction of incorporation or organization)
175 Bouchard
Suite 100
Dorval, Quebec
H9S 1B1
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b)
of the Act.
Title of each class Name of each exchange
on which registered
Common shares Montreal Stock Exchange
Securities registered or to be registered pursuant to Section 12(g)
of the Act.
None
(Title of Class)
Securities registered or to be registered pursuant to Section 15(d)
of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered
by the annual report: 17,929,382 shares as of June 1, 1996.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No X
Indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17 Item 18 X
<PAGE>
PART I
Item 1. Description of Business
Introduction
NYMOX Pharmaceutical Corporation ("NYMOX" or the "Company," which
terms include the Company's subsidiaries) is a development stage
biomedical company, based in Dorval, Quebec, which specializes in the
research and development of neurological diagnostics and
pharmaceuticals for the aging population with emphasis on Alzheimer's
disease. NYMOX is in the process of developing products which,
subject to approval of regulatory authorities, will be targeted for
the global market. NYMOX has completed the research and discovery
phase of its Alzheimer's diagnostic AD7C test and anticipates that it
will be seeking regulatory approval in 1997 to permit the Company to
sell the AD7C test kit to laboratories. Pending regulatory approval,
the Company is marketing the AD7C test through a reference laboratory
service. (See "Diagnostic Products" below.)
NYMOX was incorporated in May 1995 for the purpose of acquiring all
of the common shares of DMS Pharmaceuticals Inc.("DMS"), a private
company which has been carrying on research and development since
1989 on neurological diagnostics and pharmaceuticals for the aging
population with emphasis on Alzheimer's disease. This acquisition
was completed in September 1995 for a consideration of 15,000,000
common shares of NYMOX. Immediately following the acquisition of
DMS, NYMOX acquired for cash a controlling interest in Monterey
Capital Inc. ("Monterey"), an unaffiliated public company listed on
the Montreal Stock Exchange. Monterey was then merged with a newly
organized subsidiary of NYMOX and 468,447 common shares of NYMOX were
issued to the minority shareholders of Monterey in the merger.
Simultaneously, NYMOX completed a private placement of 1,578,635
common shares at a price of CAN$2.00 per share for net proceeds of
CAN$2,947,474 to finance its activities. In September 1995, all of
the stock of Monterey (which was then a wholly-owned subsidiary of
NYMOX) was sold to a person unrelated to NYMOX for the same amount as
paid by NYMOX in the transaction in which NYMOX acquired a
controlling interest in Monterey. The shares of NYMOX were listed on
the Montreal Stock Exchange on December 18, 1995. In April 1996,
NYMOX completed private placements totaling 877,300 common shares at
a per share price of CAN$6.00 for aggregate net proceeds of
CAN$5,029,840. The net proceeds of these placements were added to
the Company's working capital and are being used in part to
accelerate the commercialization of NYMOX's AD7C test in North
America and Europe.
As used herein, the terms "NYMOX" and the "Company" refer to NYMOX
Pharmaceutical Corporation and DMS, the predecessor of NYMOX
Pharmaceutical Corporation.
Plan of Operation
During the next twelve months, the Company intends to focus on
submitting its AD7C Test for FDA approval and to proceed with
marketing the test in both North America and Europe. Marketing and
sales in Europe will be accomplished through the Company's European
licensee, Laboratoires J. Simon. Until FDA approval is obtained,
marketing efforts in the United States will be restricted to
situations where the Company makes the test available to doctors and
serves as a reference laboratory. At such time, if any, that FDA
approval is obtained for the AD7C test, the Company will begin
marketing and commercial distribution to United States laboratories.
(See "Diagnostic Products" and "Governmental Regulation.")
The Company does not anticipate any material acquisitions of plant or
equipment during the remainder of the Company's current fiscal year.
Research and development expenses should remain at approximately
CAN$200,000 per month, which number includes approximately
CAN$123,000 in salaries of research and development personnel.
Salaries for non-R & D personnel are expected to remain stable at
CAN$17,000 per month. The Company anticipates that its total
operating expenses will remain relatively stable for the remainder of
the current fiscal year at the rate of CAN$280,000 per month.
Operating expenses may be increased in fiscal 1997 if the Company
raises additional capital.
The Company is contractually obligated to pay a total of $225,000
during fiscal 1997 to Massachusetts General Hospital ("MGH") as a
research grant pursuant to a research and license agreement between
the Company and MGH. (See "Patents and Proprietary Information.")
These payments will complete the Company's payment obligations with
respect to the MGH research and license agreement.
Effective August 1, 1995, the Company changed its fiscal year from a
July 31 year end to a December 31 year end. Company-sponsored
research and development expenditures amounted to CAN$1,433,552 for
the nine months ended September 30, 1996; CAN$571,215 for the five
month period ended December 31, 1995; and CAN$371,939 and CAN$55,325
for the fiscal years ended July 31, 1995 and 1994, respectively.
(See Item 9, "Management's Discussion and Analysis of Financial
Condition and Results of Operations.")
While the Company has sufficient funds to meet anticipated costs of
operations through fiscal 1997, additional capital will be sought in
order to expand marketing efforts to accelerate product development
and to cover upfront costs in connection with seeking and obtaining
regulatory approvals. The Company intends to raise such capital
through private placements to non-United States investors. The
Company anticipates some revenues from sales of its AD7C Test by the
Company's European licensee, Laboratoires J. Simon. There can be no
assurance, however, that any revenues will be realized from this
license arrangement in the Company's current fiscal year or at any
time in the future. (See "Marketing.")
Products in Development
The Company's primary purposes are (i) to develop certain products
based upon molecular systems incorporating extensive proprietary
technologies discovered, researched, and developed by the Company's
scientists and their collaborators over the past several years, and
(ii) to commercialize such products for use in the diagnosis,
prevention, and treatment of Alzheimer's disease. Such
commercialization efforts currently are being conducted with respect
to the AD7C test through reference laboratory services and licensing
arrangements. Following receipt of regulatory approvals, the Company
intends to engage in direct sales and marketing. None of the
Company's products are commercially available at the present time,
although the AD7C test is available in the U.S. and Canada through
the Company's reference laboratory service.
NYMOX research and development is categorized into four areas
including characterization of biochemical markers of Alzheimer's
disease from brain tissue, cerebrospinal fluid, and blood;
development of commercially significant immunoassays based on the
aforementioned characterizations; screening and clinical testing of
new compounds for the treatment of Alzheimer's disease; and general
research utilizing proprietary opportunities in parallel technologies
such as the commercial applications of technologies developed in the
previous categories (e.g., application of methods initially
formulated in Alzheimer's disease diagnostics or therapeutics
research applied to other uses and markets, such as other diseases).
NYMOX holds exclusive patent rights to several biochemical markers
from the brain and also has extensive know-how in the development of
these and other markers. In addition to AD7C, NYMOX has several
other assays at other stages of research.
NYMOX is currently developing new compounds for the possible
treatment of Alzheimer's disease. This research is at the
preclinical stage. Based on animal studies to date, the Company
plans in the near term to seek regulatory authority to begin human
(clinical) studies. (See "Development of Therapeutic Products.")
Diagnostic Products
Alzheimer's disease ("AD") is the most important cause of dementia in
persons 60 years of age and older. Despite the obvious need for an
accurate clinical test, the definitive diagnosis of AD is currently
possible only by pathologic examination of postmortem brain tissue.
Medical literature addressing AD routinely emphasizes the current
lack of a reliable antemortem diagnostic method, due to the lack of
biochemical markers confirming the disease. At present, antemortem
diagnosis is imperfect and is at best a process of exclusion of other
diagnoses.
Following extensive research with potential biochemical markers,
NYMOX has developed a test known as AD7C which the Company believes
reliably distinguishes Alzheimer's disease from normal individuals.
In company-funded trials to date, which have involved over 500
clinical samples, the test has been positive in approximately 80% to
90% of verified Alzheimer patients with a low positive rate in normal
controls (i.e., low false positives). These trials have been
confirmed by postmortem brain verification and, therefore, NYMOX
believes its AD7C test has the accuracy that is necessary for a test
to be useful. The trials are, however, not complete and there can be
no assurance that the level of success experienced to date will be
repeated with the remaining study participants. In addition, there
can be no assurances that regulatory authorities will accept NYMOX's
test methodology or results in support of product applications. (See
"Government Regulation.")
A screening test offering a low false positive rate in normal
patients would be a very useful aid to clinicians investigating
patients with subtle or marginal symptoms: mental, emotional,
cognitive, or behavioral. If the doctor can rule out Alzheimer's
with more assurance, a great deal of patient and family anguish and
anxiety will be avoided. A low test score will help the doctor be
more certain that Alzheimer's disease is not the cause of the
patient's symptoms. The Company is not aware of any other
biochemical test with a false positive rate as low as that of the
AD7C test.
Assuming that future trials show a false positive rate consistent
with that achieved by the AD7C test to date, the Company believes the
test will have substantial appeal to the medical community. A
reliable AD diagnostic test would significantly streamline both the
diagnostic work-up and follow-up management when used in conjunction
with sound clinical judgment by a qualified physician. The AD7C test
does not replace the doctor's diagnosis, which is a responsible
medical decision based on patient history, physical examination and
other relevant medical data. The test should be considered an
integral and important component to the diagnosis.
Regulatory approval is necessary before a test kit can be marketed
for commercial distribution to other laboratories and the Company is
in the process of applying for such approval. (See "Government
Regulation"). It is, however, possible under FDA procedures for the
AD7C test to be made available by NYMOX prior to FDA approval on the
basis that samples are taken by doctors and sent to NYMOX for
processing in its reference laboratories, which are currently in
Dorval, Quebec and Rockville, Maryland. The test will be performed
by NYMOX technical staff on patient samples sent by doctors and the
results will be reported to the doctor submitting the sample.
Development of Therapeutic Products
NYMOX currently is developing ten new compounds for the possible
treatment of Alzheimer's disease. All of the compounds are at the
stage of pre-clinical toxicity testing. Any such compounds
determined to be non-toxic will proceed to the clinical testing stage
of development as described below.
The only FDA-approved drug treatment in use today is tacrine (brand-
name Cognex). However, tacrine is effective only in managing the
symptoms of AD, it does not arrest the underlying disease process.
In contrast, NYMOX's research is aimed at compounds that could arrest
the progression of Alzheimer's disease and hence are targeted for
long-term use. Such compounds are not expected to show dramatic
immediate effects, however, because they would not provide
improvement per se on their own. Furthermore, adequate demonstration
of arrest of progression sufficient to satisfy regulatory authorities
may prove to be a difficult and comparatively long-term task. On the
other hand, these "arrest of progression" compounds could be combined
with shorter acting treatments, and, because there will be curtailed
persistence of injury, the latter drugs could be active longer.
Once a product receives regulatory approval to begin clinical
testing, four distinct development stages are followed:
i) Product Evaluation. The objective of product evaluation is to
conduct preliminary studies of potential screening candidates based
on in vitro screening methods to determine the feasibility of such
products for further testing, development and marketing.
ii) Optimization of Product Formulation. The activities in this
stage of development involve the Company in consultations with
investigators and scientific personnel. Preliminary selection of
screening candidates to become product candidates for further
development and further evaluation of drug efficacy is based on a
panel of research based biochemical measurements. Extensive
formulation work and in vitro testing are conducted for each of
various selected screening candidates and/or product candidates.
iii) Clinical Screening and Evaluation. During this phase of
development, portions of which may overlap with product evaluation
and optimization of product formulation, initial clinical screening
on product candidates is undertaken and full scale clinical trials
commence.
iv) Final Product Development. The activities to be undertaken in
final product development include making final clinical evaluations,
performing large-scale experiments to confirm the reproducibility of
clinical responses, fabricating clinical lots for any additional
extensive clinical testing that may be required, conducting any
further safety studies required by the FDA, performing process
development work to allow pilot scale production of the product,
completing production demonstration runs for each potential product,
filing new drug applications ("NDAs"), product license applications
("PLAs"), investigational device exemptions ("IDEs") (and required
supplements or amendments thereto) and undergoing comprehensive
regulatory approval programs and processes.
There can be no assurance that NYMOX will be able to complete
successful development and commercialization of any therapeutic
products.
Governmental Regulation
The design, development, testing, manufacturing and marketing of
pharmaceutical compounds are regulated by governmental regulatory
agencies. In the United States, the Federal Food, Drug and Cosmetic
Act, the Controlled Substances Act and other United States federal
statutes and regulations impose requirements on the testing,
manufacture and approval of the Company's products marketed in the
United States. Non-compliance with applicable requirements can
result in fines and other judicially imposed sanctions, including the
initiation of product seizures, injunction actions and criminal
prosecutions based on products or manufacturing practices that
violate statutory requirements. In addition, informal administrative
remedies can involve voluntary recall of products, as well as the
refusal of the government to enter into supply contracts or to
approve NDAs. The FDA also has the authority to withdraw approval of
drugs in accordance with statutory due process procedures. Similar
consumer protection regulation in other countries exists, and
approval will need to be acquired in each relevant market.
Laboratoires J. Simon is required by the terms of its license
agreement with the Company to assist the Company in obtaining the
necessary government approvals for the Company's marketing effort in
Europe.
In the United States, the FDA approval procedure is a two-step
process. During the initial product development stage, an
investigational new drug application (an "IND") for each product is
filed with the FDA. A 30-day waiting period after the filing of each
IND is required by the FDA prior to the commencement of initial
(Phase I) clinical testing in healthy subjects. If the FDA has not
commented on or questioned the IND within such 30-day period, initial
clinical studies may begin. If, however, the FDA has comments or
questions, the questions must be answered to the satisfaction of the
FDA before initial clinical testing can begin. In some instances,
this process could result in substantial delay and expense. Phase I
studies are intended to demonstrate the functional characteristics
and safety of a product.
After Phase I testing, extensive efficacy and safety studies in
patients must be conducted. After completion of the required
clinical testing, an NDA is filed, and its approval, which is
required for marketing in the United States, involves an extensive
review process by the FDA. The Company expects that most of its new
drug formulations will require NDA filings. There can be no
marketing in the United States of any product for which an NDA is
required until the NDA has been approved by the FDA. The NDA itself
is a complicated and detailed document and must include the results
of extensive clinical and other testing, the cost of which is
substantial. The FDA is required to review applications within 180
days of their filing. However, in the process of reviewing
applications, the FDA frequently requests that additional information
be submitted and starts the 180-day regulatory review period anew
when the requested additional information is submitted. The effect
of such request and subsequent submission can significantly extend
the time for the NDA review process. Until an NDA is actually
approved, there can be no assurance that the information requested
and submitted will be considered adequate by the FDA to justify
approval. The packaging and labelling of products are also subject
to FDA regulation. It is impossible to anticipate the amount of time
that is required until the NDA has been approved by the FDA.
Whether or not FDA approval has been obtained, approval of a
pharmaceutical product by comparable regulatory authorities must be
obtained in any foreign country prior to the commencement of
marketing of the product in that country. The approval procedure
varies from country to country and can involve additional testing,
and the time required may differ from that required for FDA approval.
Although there are some procedures for unified filings for certain
European countries, in general each country has its own procedures
and requirements, many of which are time-consuming and expensive.
Thus, there can be substantial delays in obtaining required approvals
from both the FDA and foreign regulatory authorities after the
relevant applications are filed. After such approvals are obtained,
further delays may be encountered before the products become
commercially available. If, subsequent to approval, new information
becomes available concerning the safety or effectiveness of any
approved product, labelling for the affected product may need to be
revised, or approval of that product may be withdrawn.
All facilities and manufacturing techniques used for the
manufacturing of products for clinical use or for sale in the United
States must be operated in conformity with good manufacturing
practice ("GMP") regulations, the FDA regulations governing the
production of pharmaceutical products.
In vitro diagnostic products, medical nutrition devices and certain
delivery systems are regulated or potentially regulated under the
Federal Food, Drug and Cosmetic Act as medical devices. As medical
devices, these products would be subject to premarketing and
postmarketing requirements applicable to such devices, including
those governing:
(1) clinical testing;
(2) prior FDA approval in the form of
(a) an FDA determination through the 510(k) process of
substantial equivalence to a marketed device or
(b) an approved premarket approval application ("PMA");
(3) postmarketing record and reporting obligations; and
(4) GMP obligations.
The failure to adhere to these requirements can result in a refusal
of permission to market, a withdrawal of permission to market and the
imposition of sanctions, including seizure, recall, notification,
injunction, and civil and criminal penalties. Additionally, as a
condition to marketing or continued marketing, the FDA may impose
certain postmarket surveillance and/or tracing requirements that may
significantly increase the regulatory costs associated with a
product. The PMA approval requirements are generally analogous to
the NDA approval requirements. The 510(k) process, while generally
less burdensome than the PMA requirements, requires affirmative FDA
approval and may be dependent upon the generation of safety and
effectiveness data, as well as manufacturing and quality assurance
data and information. The Company believes it has assembled all the
necessary information regarding the AD7C test in order to apply for
PMA approval, and expects to file that application with the FDA
within the next three to six months. The PMA requires documentation
of four categories of information required by the approval
application, specifically indications for use, a description of
device characteristics and manufacturing methods, facilities and
controls, a discussion of alternative practices and procedures
already available to the market, and summaries of safety reports and
both clinical and non-clinical studies. There can be no assurance
that the AD7C test or any other medical device that may be developed
by the Company in the future will obtain the necessary approvals or
that any approval will be obtained within a specified time framework.
Under the Federal Food, Drug and Cosmetic Act, it is possible for a
given product to be regulated both as a drug and a medical device
subject to the corresponding requirements applicable to the
respective categories.
The diagnostic and pharmaceutical products and services of the
Company will, to a significant degree, address conditions often
experienced by the elderly. Thus, in the United States, the Medicare
program, which funds health insurance for the aged and disabled, is
likely to be a source of reimbursement for these products and
services. Further, because a significant percentage of the elderly
are financially needy, the Medicaid program may also provide a source
of reimbursement for the Company's products and services.
In general, any restriction on reimbursement, coverage or eligibility
under either program could adversely affect reimbursement to the
Company for products and services provided to beneficiaries of the
Medicare and/or Medicaid programs. In response to rising health care
costs, several legislative proposals have been put forward in recent
years that would have substantially reduced overall federal Medicare
and Medicaid funding. Such proposals have included, for example,
provisions to reduce payment amounts for clinical diagnostic
laboratory tests under the Medicare program. Additionally, various
proposals would grant states substantially increased flexibility in
managing their Medicaid programs, subject to a cap on federal
spending. In response to such legislation, states may reduce
payments under their Medicaid programs by imposing additional limits
on coverage, eligibility and/or payments. Any legislative action to
reduce federal spending under either program could adversely affect
the amount of the Company's reimbursement under the programs and/or
the Company's ability to participate in the program as a provider or
supplier of services or products.
Moreover, the Company may be required to provide certain of its
products or services through reference laboratories. Such
laboratories are regulated under the Clinical Laboratories
Improvement Act of 1988 ("CLIA"). CLIA imposes requirements for
certification, licensure and maintenance of medical records regarding
the accuracy of the tests performed. Medicare and Medicaid
reimbursement may be conditioned upon compliance with the requirement
of CLIA. Additionally, the laboratories may be required to meet
applicable state law requirements for diagnostic facilities. Any
changes in CLIA or state law requirements in this regard could have
an impact on the Company's ability to obtain reimbursement from the
Medicare and Medicaid programs.
The Company's ability to obtain payment under the Medicare and
Medicaid programs may also be affected by regulatory action at the
federal or state level. For example, new products and services
developed by the Company will be subject to coverage determinations
under both programs. Medicare prohibits payment for any expenses
incurred for items or services that are not reasonable and necessary
for the diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member. Historically, HCFA
interpreted this section of the Act to exclude from Medicare coverage
those medical and health care services that are not demonstrated to
be safe and effective by acceptable clinical evidence. In 1989, HCFA
proposed a change to its criteria for coverage of new technologies.
The three-part test for coverage would require that the product or
service be medically effective, appropriately furnished, and cost
effective as compared to an equivalent service already covered by the
program. The final rule is expected in the near future. It is
unknown what criteria the final rule will adopt or whether the
Company's products and services will meet the new requirements.
Patents and Proprietary Information
NYMOX pursues a policy of seeking patent protection for valuable
patentable subject matter of its proprietary technology, and requires
all employees, consultants and other persons who may have access to
its proprietary technology to sign confidentiality agreements. NYMOX
believes that patent and trade secret protection is important in its
business, and that its success will depend, in part, on its ability
to obtain strong patents, to maintain trade secret protection and to
operate without infringing the proprietary rights of others. The
Company has certain patents issued and a number of applications
pending in the areas of therapeutics and diagnostics in the United
States. The Company possesses a diagnostic patent for the AD7C test,
which patent expires in the year 2013. The Company possesses several
patents for screening technologies used for finding therapeutic drugs
for Alzheimer's disease. These screening technologies consist of
biological systems and defined conditions used to determine if a drug
possesses a useful action that can predict its potential for use in
humans or animals. For example, the Company has patented screening
methods that show whether a potential drug can inhibit or reverse
some of the pathological changes of Alzheimer's disease. As a second
example, the Company has patented screening methods that show whether
a potential drug can modify in a useful way the amounts of chemical
markers of Alzheimer's disease in a subject. While no proven
therapeutic drugs for AD have yet been found using these screening
technologies, they are a useful component to the Company's
therapeutic product development. (See "Development of Therapeutic
Products.") The Company also possesses patents for unique proteins
which are related to Alzheimer's disease and which may, after further
research and clinical trials, prove useful in either diagnostic or
therapeutic applications. The Company has filed patent applications
for other technologies in the fields of diagnosis and therapeutics
similar to those described above. Similar patent applications have
also been filed in most European countries, Canada, Japan and
selected countries worldwide depending on the patent application in
question.
NYMOX currently has eight issued patents and patent applications in
the United States claiming brain markers and screening and diagnostic
technologies. NYMOX also has an exclusive license to patents from
the Massachusetts General Hospital covering rights to the AD7C
diagnostic. Under this license, the Massachusetts General Hospital
("MGH") benefits from research funding and collaboration from NYMOX
and is entitled to royalties of 4% from worldwide sales of the AD7C
test. NYMOX also has patent applications pending covering
therapeutics and diagnostics in Alzheimer's disease and related
conditions. NYMOX also has other patents in a number of countries
and has applications on file in numerous other countries.
The commercial success of products incorporating the technologies may
depend, in part, upon NYMOX's ability to obtain strong patent
protection. Although NYMOX patents, pending patent applications, and
patents obtained in the future covering the NYMOX technologies may be
of importance to future operations, there can be no assurance that
any additional patents will be issued or that any patents, now or
hereafter issued, will be of commercial benefit.
Numerous other companies are believed to be working in the fields of
diagnostics and therapeutics for Alzheimer's disease and related
conditions. These companies have obtained patents covering various
technologies. The Company believes that the patents issued to date
will not preclude the Company from developing and marketing its
technologies; however, it is impossible to predict at this time the
extent to which licenses from third parties will be necessary. If
licenses were to be needed from third parties there can be no
assurance that such license could be obtained or could be obtained on
commercially reasonable terms.
There has been, and the Company believes that there may be in the
future, significant litigation in the industry regarding patent and
other intellectual property rights and that, if the Company becomes
involved in such litigation, it could consume substantial resources.
Significant legal issues remain as to the extent to which patent
protection may be afforded in the field of biotechnology in the
United States, Canada and other countries, and the scope of any such
protection has not yet been broadly tested. The Company, therefore,
also relies upon trade secrets, know-how, and continuing
technological advancement to develop and maintain its competitive
position. Disclosure and use of the Company's know-how is generally
controlled under agreements with the parties involved. In addition,
the Company has confidentiality agreements with its key employees,
consultants, officers and directors. There can be no assurance,
however, that all confidentiality agreements will be honored, that
others will not independently develop equivalent technology, that
disputes will not arise as to the ownership of intellectual property,
or that disclosure of the Company's trade secrets will not occur.
Furthermore, there can be no assurance that others have not obtained
or will not obtain patent protection that will exclude the Company
from using its trade secrets and confidential information. To the
extent that consultants or research collaborators use intellectual
property owned by others in their work with the Company, disputes may
also arise as to the rights to related or resulting know-how or
inventions.
Competition
The pharmaceutical and biotechnology industries are characterized by
rapidly evolving technology and intense competition. The Company's
competitors include major pharmaceutical, diagnostic, chemical and
biotechnology companies, many of which have financial, technical and
marketing resources significantly greater than those of the Company.
In addition, many biotechnology companies have formed collaborations
with large, established pharmaceutical companies to support research,
development and commercialization of products that may be competitive
with those of the Company. Academic institutions, government
agencies and other public and private research organizations are also
conducting research activities and seeking patent protection and may
commercialize products on their own or through joint ventures. The
Company is aware of certain products manufactured or under
development by competitors that are used for the prevention,
treatment or detection of AD. The existence of these products, or
other products or treatments of which the Company is not aware, or
products or treatments that may be developed in the future, may
adversely affect the marketability of products developed by the
Company.
For certain of the Company's potential products, an important factor
in competition may be the timing of market introduction of the
Company's or competitors' products. The Company's competition will be
determined in part by the potential indications for which the
Company's products are developed and ultimately approved by
regulatory authorities. The development by competitors of new
treatment methods for those indications for which the Company is
developing products could render the Company's products non-
competitive or obsolete. The Company expects that competition among
products approved for sale will be based, among other things, on
product efficacy, safety, reliability, availability, price and
intellectual property protection.
In the field of AD diagnostics, the competition consists of other
proposed biochemical markers being tested and hypothesized to be of
use in either diagnosing or ruling out the diagnosis of Alzheimer's.
This distinction is highly relevant because the Company believes data
which refer only to AD cases is misleading. In reality, the
diagnosis is unknown prior to testing (hence the need for testing in
the first place), and therefore data on accuracy must reflect
positives and negatives. In other words, a test which diagnoses a
certain percentage of only the positives, and is uncertain or non-
contributory on the negatives will in fact have accuracy inversely
proportional to the number of normals. Therefore, in the usual
clinical setting where the vast majority of lab tests are normal
(i.e., negative), the accuracy of any test which only diagnoses a
proportion of the positives will turn out to be very small and
therefore not useful.
Marketing
NYMOX's commercial activities with respect to any product are subject
to regulatory approval in each national market. (See "Government
Regulation.") The Company has not yet begun to commercially market
or distribute any products although it is in the process of
implementing a reference laboratory service with respect to the AD7C
test. (See "Diagnostic Products.") Assuming regulatory approval,
the Company will employ a variety of marketing approaches depending
on the product and the market.
With respect to the AD7C test, the Company intends to retain primary
responsibility for all commercial activities conducted in North
America. The Company currently has established a AD7C Clinical
Reference Laboratory service at facilities in Rockville, Maryland
(U.S.) and Dorval, Quebec (Canada). Both laboratories are fully
operational and the U.S. laboratory has been CLIA certified, which is
a level of certification necessary in the United States medical
market. The Company intends to establish additional laboratory
facilities in other countries, although at present the company is
focussing its efforts on finding suitable overseas licensees who have
both the economic and scientific resources to effect a more rapid
penetration of the AD7C test in their home markets. The Company has
signed a non-exclusive license agreement with Laboratoires J. Simon
of Belgium to perform and market the AD7C test in Europe.
Laboratoires J. Simon is a leading supplier of laboratory services in
Europe, and is part of the SGS Group (Societe Generale de
Surveillance), the world's largest control and inspection
organization, based in Geneva, Switzerland. Additional license
relationships may be arranged in the future, although there can be no
assurance that the Company will be able to enter into agreements with
other licensees on terms acceptable to the Company or that any
license revenues will be derived from either Laboratoires J. Simon or
any other licensee.
NYMOX plans to market and sell certain of its therapeutic products,
if successfully developed and approved, directly or through co-
promotion arrangements or other licensing arrangements with third
parties. In cases where NYMOX has sole or shared marketing rights,
it plans to build a small, focused sales force if and when such
products approach marketing approval in some markets, including
Europe. Implementation of this strategy will depend on many factors,
including the market potential of any products the Company develops
as well as on the Company's financial resources. To the extent the
Company will enter into co-promotion or other licensing arrangements,
any revenues received by the Company will be dependent on the efforts
of third parties.
Item 2. Description of Property
a) NYMOX laboratories in Dorval, Quebec, Canada comprise 15,000
square feet of leased space. The lease agreement expires in
August 1997. The Company owns a full complement of equipment
used in all aspects of its R&D and its reference laboratories.
The US facility in Rockville, Maryland comprises 2,000 square
feet of leased space and is likewise fully equipped. These
leases expire in 1997. If any of these leases is not renewed,
the Company believes that equivalent space may be leased on
commercially reasonable terms.
b) Not applicable.
Item 3. Legal Proceedings
There are no material legal proceedings involving NYMOX or any of its
assets.
Item 4. Control of Registrant
a), b) The following table sets forth information as of November
1, 1996 regarding ownership of the common shares by Dr.
Paul Averback (see Item 10), who is the only person known
to the Company to own more than 10% of the common shares,
and by all directors and officers as a group.
Percent of
Name No. Shares Class
Dr. Paul Averback 12,643,895 70.5
All directors and officers 12,707,470 70.9
as a group
In addition, as of such date Dr. Averback's wife owned 1,190,297
common shares (6.6%) and 9022-1433 Canada Inc., a company owned by
Dr. Averback and his wife, owns 500,000 common shares (2.8%).
Pursuant to an escrow agreement (the "Escrow Agreement") dated
December 18, 1995 an aggregate of 11,522,331 common shares (the
"Escrowed Shares") of the Company owned by Dr. Paul Averback and his
wife are held in escrow by the Montreal Trust Company of Canada.
Except as provided hereinafter, the Escrowed Shares may not be sold,
assigned, hypothecated, pledged, charged, alienated, released from
escrow, transferred within escrow or otherwise in any manner dealt
with without the express consent, order, direction in writing of the
Montreal Exchange. The Escrowed Shares are eligible for automatic
release upon the following terms:
Release Date Number of
Shares
December 18, 1996 3,480,777
December 18, 1997 3,480,777
December 18, 1998 3,480,777
To the knowledge of the Company, no other shareholder beneficially
owns more than 10% of the shares of the Company.
c) Not applicable.
Item 5. Nature of Trading Market
The Common Shares of NYMOX have been listed and posted for trading on
the Montreal Exchange since December 18, 1995. The following table
sets out the high and low reported trading prices of the common
shares during the periods indicated.
Low Volume
High (CDN$) (CDN$) (Shares)
1995 December
(from December 18) $4.25 $ 2.30 662,261
1996 1st quarter 9.50 2.80 2,179,929
2nd quarter 19.40 8.00 1,758,384
3rd quarter 20.00 14.75 1,164,185
4th quarter (to 17.75 10.00 381,849
December 4)
According to information furnished to the Company by the transfer
agent for the common shares, as of October 30, 1996, there were
approximately 59 holders of record of the common shares with
addresses in the United States and such holders owned an aggregate of
224,261 shares.
Item 6. Exchange Controls and Other Limitations Affecting Security
Holders
a) Canada has no system of exchange controls. There are no exchange
restrictions on borrowing from foreign countries nor on the
remittance of dividends, interest, royalties and similar
payments, management fees, loan repayments, settlement of trade
debts or the repatriation of capital.
b) There are no limitations on the rights of non-Canadians to
exercise voting rights on their shares of NYMOX.
Item 7. Taxation
Canadian Federal Income Taxation
The following discussion is a fair summary of the principal Canadian
federal income tax considerations generally applicable to purchasers
of the Company's Common Stock pursuant to this prospectus who, for
purposes of the Income Tax Act (Canada) (the "Canadian Act"), deal at
arm's length with the Company, hold shares of Common Stock as capital
property, are not residents of Canada at any time when holding Common
Stock and do not use or hold and are not deemed to use or hold Common
Stock in or in the course of carrying on business in Canada and, in
the case of insurers who carry on an insurance business in Canada and
elsewhere, do not hold Common Stock that is effectively connected
with an insurance business carried on in Canada.
This summary is based on the current provision of the Canadian Act,
the regulations thereunder, the Canada-United States Income Tax
Convention (1980) (the "Treaty"), and the third protocol signed
August 31, 1994 (the "protocol"), as amended. This summary takes
into account specific proposals to amend the Canadian Act and the
regulations thereunder publicly announced by the Minister of Finance
prior to the date hereof and on counsel's understanding of the
current published administrative and assessing practices of Revenue
Canada, Taxation. This summary does not take into account Canadian
provincial income tax laws or the income tax laws of any country
other than Canada.
A shareholder of the company will generally not be subject to tax
pursuant to the Canadian Act on a capital gain realized on a
disposition of Common Stock unless the Common Stock is "taxable
Canadian property" to the shareholder for purposes of the Canadian
Act and the shareholder is not eligible for relief pursuant to an
applicable bilateral tax treaty. The Common Stock will not be
taxable Canadian property to a shareholder provided that the Company
is a "public corporation" within the meaning of the Canadian Act and
provided that such shareholder, or persons with whom such shareholder
did not deal at arm's length (within the meaning of the Canadian
Act), or any combination thereof, did not own 25% or more of the
issued shares of any class or series of the Company at any time
within five years preceding the date of disposition. The Company has
qualified and elected to be a "public corporation" within the meaning
of the Canadian Act. In addition, the Treaty will generally exempt a
shareholder who is a resident of the United States for purposes of
the Treaty from tax in respect of a disposition of Common Stock
provided that the value of the shares of the Company is not derived
principally from real property (including resource property) situated
in Canada.
Any dividend, including stock dividends, paid or credited, or deemed
to be paid or credited, by the Company to a shareholder will be
subject to Canadian withholding tax at the rate of 25% on the gross
amount of the dividend, subject to the provisions of any applicable
income tax convention. Pursuant to the Treaty, the rate of
withholding tax generally will be reduced to 15% in respect of
dividends paid to a shareholder who is a resident of the United
States for purposes of the Treaty and further reduced to 10% if the
beneficial owner of the shares is a corporation owning at least 10%
of the voting shares of the Company. Pursuant to the Protocol, the
rate of withholding tax will generally be reduced to 5% by the year
1997, if the beneficial owner of the shares is a corporation owning
at least 10% of the voting shares of the Company.
United States Federal Income Taxation
The following discussion of U.S. tax laws summarizes U.S. federal
income tax laws only and does not address state or local taxes. For
U.S. federal income tax purposes, an individual who is a citizen or
resident of the United States or a domestic corporation ("U.S.
Taxpayer") will recognize gain or loss on the sale of the Company's
Common Stock equal to the difference between the proceeds from such
sale and the adjusted cost basis in the Common Stock. The gain or
loss will be a capital gain or capital loss if the Company's Common
Stock is a capital asset in the hands of the U.S. Taxpayer.
For federal income tax purposes, a U.S. Taxpayer will be required to
include in his gross income, dividends received on the Company's
Common Stock. A U.S. Taxpayer who pays Canadian tax on a dividend on
the Common Stock will be entitled, subject to certain limitations, to
a credit (or alternatively, a deduction) against his federal income
tax liability. A domestic corporation that owns at least 10% of the
voting stock of the Company should consult its tax advisor as to
applicability of the dividends received deduction or deemed paid
foreign tax credit with respect to dividends paid on the Company's
Common Stock.
For any taxable year of the Company, if at least 75% of the Company's
gross income is "passive income" (as defined in the Internal Revenue
Code of 1986, as amended (the "Code")), or if at least 50% of the
Company's assets, by average fair market value, are assets that
produce or are held for the production of passive income, the Company
will be a Passive Foreign Investment Company, as defined in Section
1296 of the Code ("PFIC"). While the Company does not believe that
it is likely to be a PFIC in its current or future taxable years,
there can be no assurance that the Company will not be a PFIC for
such years because this depends, among other things, on the amount
and type of gross income that the Company will earn in the future and
the characterization of certain assets such as goodwill.
If the Company is a PFIC for any taxable year during which a U.S.
Taxpayer owns any Common Stock, the U.S. Taxpayer will be subject to
special U.S. federal income tax rules, set forth in Sections 1291 to
1297 of the Code, with respect to all of such U.S. Taxpayer's Common
Stock. For example, gifts, exchanges pursuant to corporate
reorganizations and use of the Common Stock as security for a loan
may be treated as a taxable disposition, and a stepped-up basis upon
the death of such a U.S. Taxpayer may not be available. Furthermore,
in the absence of an election by such U.S. Taxpayer to treat the
Company as a "qualified electing fund" (the "QEF election"), as
discussed below, the U.S. Taxpayer would be required to report any
gain on disposition of any Common Stock as ordinary income rather
than capital gain and to compute the tax liability on such gain and
on certain distributions as if the items had been earned pro rata
over the U.S. Taxpayer's holding period (or a certain portion
thereof) for the Common Stock and would be subject to the highest
ordinary income tax rate for each taxable year of the U.S. Taxpayer
in which the items were treated as having been earned. Such U.S.
Taxpayer would also be liable for interest (which may be non-
deductible by certain U.S. Taxpayers) on the foregoing tax liability
as if such liability had been due with respect to each such prior
year.
If the Company is a PFIC for any taxable year during which a U.S.
Taxpayer owns any Common Stock, the adverse taxation of disposition
gains and certain distributions may be avoided by any U.S. Taxpayer
who makes a QEF election on or before the due date (including
extensions) for filing such U.S. Taxpayer's tax return for the first
taxable year in which the Company is a PFIC and in which the U.S.
Taxpayer owns any capital stock. Such a U.S. Taxpayer would be taxed
on dividends and capital gains as if the Company had never been a
PFIC, with certain adjustments to avoid double taxation of any
amounts taxed as described in the following sentence. Although such
a U.S. Taxpayer is taxed on its pro-rata share of the Company's
earnings and profits for the Company's taxable year in which the
Company was (or was treated as) a PFIC and which ends with or within
such U.S. Taxpayer's taxable year, regardless of whether such amounts
are actually distributed by the Company, the Company believes that it
is not likely to have any earnings and profits for any taxable year
in the near future in which it might be a PFIC. Therefore, although
there can be no assurance concerning such future earnings and
profits, the Company believes that any U.S. Taxpayer who has made a
timely QEF Election would not have any income in such a year by
reason of the QEF election. Should such an election be made (and if
the Company is a PFIC, U.S. Taxpayers are strongly urged to consider
this special election), there are a number of specific rules and
requirements applicable thereto, and such an electing U.S. Taxpayer
is strongly urged to consult his own tax advisor in that regard.
The foregoing discussion is limited to Canadian federal taxation and
United States federal taxation and does not deal with provincial, or
state or local taxes. It is of a general and summary nature only and
is not intended to be, nor should it be considered to be, legal or
tax advice to any particular shareholder. Accordingly, prospective
investors should consult their own tax advisors as to the tax
consequences of receiving dividends from the Company or disposing of
heir common stock.
Item 8. Selected Financial Data
The following table sets forth selected financial data for the
Company (which data are comprised of the data of DMS prior to its
September 1995 acquisition by the Company), for the periods
indicated, derived from financial statements prepared in accordance
with Canadian Generally Accepted Accounting Principles that have been
audited by Deloitte & Touche, Montreal, Canada, in the case of the
periods ended July 31, 1995 and December 31, 1995, and by Bergeron &
Senecal, Brossard, Canada, in the case of the periods ended July 31,
1993 and 1994. The selected financial data for the periods ended
July 31, 1991 and 1992 and September 30, 1996 is unaudited. The data
set forth below should be read in conjunction with the Company's
financial statements and notes thereto and "Management's Discussion
and Analysis of Financial Conditions and Results of Operations"
included elsewhere herein.
<TABLE>
NYMOX PHARMACEUTICAL CORPORATION
Selected Financial Data
(expressed in Canadian dollars)
<CAPTION>
For the years ended July 31,
December 31, September 30,
1995 1996
1991 1992 1993 1994 1995 (5 months) (9 months)
<S> <C> <C> <C> <C> <C> <C> <C>
Canadian GAAP
Current Assets - 0 - $ - 0 - $ - 0 - $ - 0 - $ 11,963 $2,268,097 $4,228,789
Capital Assets 12,576 12,576 12,576 12,576 338,953 366,155 1,039,339
Total Assets 239,403 239,403 251,352 239,403 350,916 2,634,252 5,268,129
Liabilities 161,263 167,532 9,000 45,376 121,589 151,297 66,314
Shareholders' Equity 72,140 71,871 242,352 194,027 229,327 2,482,955 5,201,814
Revenues - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - 114,556
Research & Development
Expenditures (note 1) 8,484 36,769 32,519 55,325 371,939 571,215 1,318,052
Net Loss 8,484 37,769 34,519 58,325 377,570 693,846 2,327,231
Loss Per Share (note 2) - 0 - - 0 - - 0 - - 0 - 0.03 0.04 0.13
US GAAP (note 3)
Net Loss 21,827 51,112 47,862 68,668 393,841 1,649,159 2,345,625
Loss per share (note 2) - 0 - - 0 - - 0 - - 0 - 0.03 0.11 0.13
</TABLE>
Notes:
1) Amounts shown are net of investment tax credits.
2) For periods prior to the reverse acquisition of NYMOX by DMS,
the number of shares outstanding is assumed to be 15,000,000
representing the number of shares issued by NYMOX to DMS in
September 1995. The Company has never paid dividends on its
common stock.
3) Reference is made to Notes 10 and 11 of the Company's audited
financial statements as of and for the five month period ended
December 31, 1995 for a reconciliation of differences between
Canadian and US GAAP.
At July 31, 1996, the exchange rate between the CAN$ and US $ was
CAN$1.3747 to US$1. The following table sets forth certain information
regarding such exchange rate for the periods set forth below.
<TABLE>
<CAPTION>
At or for the Period Ended
July 31, December 31, March 31,
(12 months) (5 months) (3 months)
CAN$ to US $1 1992 1993 1994 1995 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Period end $1.1917 $1.2817 $1.3825 $1.3609 $1.3695 $1.4074 $1.3591
Average During Period $1.1659 $1.2563 $1.3465 $1.3775 $1.3548 $1.4069 $1.3691
High $1.2062 $1.2945 $1.3990 $1.4267 $1.3820 $1.4267 $1.3865
Low $1.1189 $1.1813 $1.2839 $1.3395 $1.3271 $1.3865 $1.3510
</TABLE>
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Company was formed for the purpose of acquiring all of the common
shares of DMS Pharmaceutical Inc. (DMS), a private company carrying
on research and development in the field of neurological diagnostics
and pharmaceuticals for the aging population. This acquisition was
completed during September 1995 for a consideration of 15,000,000
common shares of the Company, resulting in the shareholders of DMS
owning substantially all the shares of the Company. This transaction
was accounted for under the purchase method of accounting with DMS as
the acquiror.
Immediately following the acquisition, the Company acquired a
controlling interest in Monterey Capital Inc. ("Monterey"), an
unaffiliated public company engaged in the real estate business, for
cash of CAN$383,000. The purpose of the transaction was to cause
NYMOX to take over Monterey's public company status. The purchase
price was determined through arm's-length negotiations between the
parties. Monterey was then merged with a wholly-owned subsidiary of
the Company with the result that the non-controlling shareholders of
Monterey received 468,447 common shares of the Company. The
transaction was accounted for as a share issuance of the Company for
nominal consideration of CAN$1. It was not considered to be part of
the acquisition and sale of Monterey, as that transaction was an
intermediary step in meeting the objective of rendering the Company a
public company. Concurrently, the shares of the surviving company
carrying on the business of Monterey were sold to one of the former
Monterey shareholders for cash of CAN$383,000. The sale of the
surviving company did not give rise to a gain or loss, since the sale
price was equal to its carrying value.
Results of Operations
The Company is a development stage company, which has not, during the
periods presented in the Summary Financial Information above,
realized any revenues from operations. Revenues during the nine
month period ended September 30, 1996 have been derived from interest
earned on the cash and short-term investments received from the
private placements referred to above. The Company's overall loss for
the nine-month period ended September 30, 1996 amounted to
CAN$2,327,231, or $0.13/share, compared to CAN$693,846, or
$0.04/share for the five-month period ended December 31, 1995.
The Company intends to seek regulatory approval in 1997 to permit it
to commercially market the AD7C test.
Costs and Expenses
For Periods Prior to December 31, 1995:
Research and development expenditures averaged less than
CAN$50,000/year from the inception of the Company's operations to the
end of the 1994 fiscal year. For the year ended July 31, 1995
research and development expenditures amounted to CAN$371,939, a 572%
increase from fiscal 1993. The increase was largely attributable to
investments in personnel and supplies made by the Company in a
laboratory located in Tennessee and operated by the Company from
March 1995 to July 1995. This laboratory was closed in August 1995
and the personnel and supplies transferred to the Company's Montreal
facility. The Company continued to expand its research and
development program in the five-month period ended December 31, 1995
(the Company's new fiscal year-end). Research and development
expenditures amounted to CAN$ 571,215 in this period compared to
CAN$371,939 for the year ended July 31, 1995. The increased expenses
are largely attributable to the hiring of additional personnel and
increased laboratory-related expenses in Canada and the payment of
the first of three installments due to MGH for research funding.
General and administrative expenses were minimal from inception of
the Company to July 31, 1995, averaging less than CAN$5,000/year. In
the short fiscal period ended December 31, 1995, general and
administrative expenses amounted to CAN$134,631. The increase from
prior levels was due principally to the Company's move to new
premises during this period, which included costs related to rent,
moving expenses and sundry office expenses. The Company also hired
its Chief Financial Officer during this period.
Before the Company became a public corporation, investments in
capital resources were mostly limited to costs to secure patents.
Since NYMOX became public in December 1995, the Company has made a
significant investment in staffing and equipment. Additional costs
are being financed through proceeds of private placements completed
in December 1995 (net proceeds of CAN$2,947,474) and April 1996 (net
proceeds of CAN$5,029,840).
For Nine-month Period Ended September 30, 1996:
Research and development expenditures represent the Company's most
significant expenditure and amounted to CAN$1,433,552 for the nine-
month period ended September 30, 1996, compared with CAN$571,215 for
the five-month period ended December 31, 1995 and CAN$371,939 for the
year ended July 31, 1995. The increased expenses are largely
attributable to the hiring of additional personnel in Canada and the
opening of the Rockville, Maryland laboratory during the year, as
well as increased expenditures related to laboratory supplies. Gross
research and development expenditures were partially offset by
research tax credits available to the Company in Quebec. Total
current operating expenses are approximately $280,000 per month. Of
that amount, the Company is currently spending approximately
CAN$200,000 per month on research and development. This number is
expected to remain steady in 1997, although if the Company raises
additional capital it will devote a portion of that capital to
further expansion of research and development efforts. In such
event, research and development expenditures will increase.
General and administrative expenses amounted $1,071,752 for the nine-
month period ended September 30, 1996 compared $134,631 in the five-
month period ended December 31, 1995. The increase is attributable
to the hiring of additional non-research personnel and to costs
incurred in the opening of the Company's Rockville, Maryland
laboratory. This facility operates as a wholly-owned subsidiary of
the Company. The increase in expenses is also attributable in part
to costs related to shareholder relations and other expenses
associated with being a public corporation that were not incurred in
fiscal 1995.
Liquidity and Capital Resources
The Company has made some significant capital asset investments in
fiscal 1996. The Company invested over CAN$600,000 in additional
capital assets in the nine-month period ended September 30, 1996. As
a result, the corresponding depreciation of such assets rose
approximately CAN$50,000 compared to the five month period ended
December 31, 1995. The Company presently does not intend to make
additional significant capital asset investments in fiscal 1997
unless the Company raises additional capital.
At September 30, 1996, the Company's cash and cash equivalents were
CAN$4,014,580. The net proceeds from the two private placements
should, in management's estimation, be sufficient to meet the
Company's financial needs to at least the end of 1997, although the
Company plans to seek additional private placement capital in order
to accelerate product development and marketing and to meet certain
costs in connection with seeking and obtaining regulatory approvals.
NYMOX has no financial obligations of significance as at September
30, 1996 other than long-term lease commitments for its premises in
Canada and the United States of CAN$16,000 per month and research
funding payments due to MGH of US$225,000 in 1997.
The Company does not believe that inflation has had a significant
impact on its results of operations.
Item 10. Directors and Officers
a) The directors and executive officers of NYMOX are:
Dr. Paul Averback, M.D., D.A.B.P., President and Director (since
September 1995) of the Company, is the founder of the Company
and the inventor of much of its initial technology. Prior to
founding the Company, Dr. Averback served as President of the
Company's predecessor, DMS. He received his M.D. in 1975 and
taught pathology at universities, including Cambridge
University, England (1977-1980), during which time he initiated
his research on Alzheimer's disease. He has practiced medicine
in numerous Canadian institutions and from 1991 to 1995 was also
Medical Director of the Urgence Lachine medical center. Dr.
Averback has published extensively in the scientific and medical
literature.
Dr. Hossein A. Ghanbari, Ph. D., Vice President and Director
(since September 1995) of the Company, holds a Ph. D. in
biochemistry from Pennsylvania State University. From 1982 to
1992, he was employed with Abbott Laboratories, where he was
responsible for the first marketed diagnostic test for
Alzheimer's disease (on brain tissue). From 1992 to 1994, he
was Senior Vice-President, Research and Planning, of Molecular
Geriatrics Corporation, a biopharmaceutical company specialized
in diseases associated with ageing. Dr. Ghanbari is the author
of numerous specialized publications and is a member of many
international professional associations.
Mr. Roy M. Wolvin, Secretary-Treasurer and Director (since
September 1995) of the Company . Prior to September 1995, Mr.
Wolvin was Account Manager, private business, for a Canadian
chartered bank. Mr. Wolvin holds a degree in Economics from
the University of Western Ontario.
Mr. John L. Melikoff, Director (since September 1995) of the
Company is portfolio manager for Interinvest Consulting
Corporation, an international private company specialized in
fund management. He was, from 1990 to 1991, a registered
representative with McNeil Mantha and from 1984 to 1989, with
Prudential Bache Securities.
Dr. Colin B. Bier, Ph.d., Director (since December 1995) of the
Company. Dr. Bier is a leading authority on toxicology and
pharmaceutical and biotechnological regulatory affairs and has
extensive management experience in the biomedical sector. Dr.
Bier was formerly Vice-President and Director of Toxicology at
Bio-Research Laboratories, President and Chief Executive Officer
of ITR Laboratories and has consulted, managed and been
affiliated with numerous biochemical enterprises.
Dr. J. Kenneth Harrington, Ph.d., Director (since January 1996)
and Vice President, Global Business Development (since June
1996) of the Company, has over 30 years of experience with 3M's
Life Sciences businesses, including the positions of Vice-
President of Riker Pharmaceuticals and Group Director of 3M's
European pharmaceutical divisions. Dr. Harrington is a named
inventor on 42 US patents, and has been involved in over 100
successful FDA filings.
Dr. Iraj Beheshti, Ph.D., M.B.A., Vice President and Director
of Clinical Reference Laboratories. Dr. Beheshti was Co-Founder
and Director of Research and Development (1985-1988) and
President and CEO of London Diagnostics (1988-1993). Prior to
that he was Senior Scientist with Abbott Laboratories. Before
joining NYMOX, Dr. Beheshti was Director of Operations of Acute
Care and Outpatient Laboratories at the University of Minnesota
Medical School. Dr. Beheshti is an authority in the medical
diagnostics field and in affairs dealing with the U.S. Food and
Drug Administration. He has been involved in the successful
development and commercialization of numerous products,
including 14 FDA approved diagnostic kits.
Directors are elected at each annual meeting for a term of
office until the next annual meeting. Executive officers are
appointed by the Board of Directors and serve at the pleasure of
the Board. Other than Dr. Averback, no other officer or
director previously was affiliated with DMS.
b) There are no family relationships between any director or
executive officer and any other director or executive officer.
Item 11. Compensation of Officers and Directors
a) The table below provides compensation information for the fiscal
year ended December 31, 1995 for each executive officer of the
Company and for the directors and executive officers as a group.
SUMMARY COMPENSATION TABLE
Fiscal Year Other
Name and ended Salary Cash
Principal Position December 31, (CAN$) Compensation
Dr. Paul Averback, 1995 $50,000(1) --
President and Director
Dr. Hossein A. Ghanbari, 1995 $90,000(2) --
Vice President and Director
Mr. Roy Wolvin, 1995 $14,700(3) --
Secretary-Treasury and
Director
Dr. Iraj Beheshti, 1995 --(4) --
Vice President, Director of
Clinical Reference
Laboratories
All directors and executive 1995 $154,700 --
officers as a group
(1) Dr. Averback's current annual salary is CAN$150,000.
(2) Dr. Ghanbari's current annual salary is CAN$120,000.
(3) Mr. Wolvin's current annual salary is CAN$70,000.
(4) Dr. Beheshti's current annual salary is CAN$122,000.
No stock options were granted by NYMOX in 1995. See "Options to
Purchase Securities" in Item 12 for stock options granted
thereafter.
The Company does not currently have written employment contracts
with the above-named executive officers.
Directors of the Company are not paid any fee for board meeting
attendance but are reimbursed for expenses incurred in
connection with their office.
b) The Company does not have any pension plans or other type of
plans providing retirement or similar benefits for directors or
executive officers.
Item 12. Options to Purchase Securities from Registrant or Subsidiaries
There are no rights, warrants or options presently outstanding
pursuant to which additional common shares could be issued, with the
exception of options enabling certain directors, employees and
consultants of NYMOX to acquire common shares under the Company's
stock option plan.
The Company has created a stock option plan (the "Plan") for its key
employees, its officers and directors and certain consultants. The
Plan is administered by the Board of Directors of the Company (the
"Board"). The Board may from time to time designate individuals to
whom options to purchase common shares of the Company be granted and
the number of shares to be optioned to each. The total number of
common shares to be optioned to any one individual cannot exceed 5%
of the total issued and outstanding shares and the maximum number of
common shares which may be optioned under the Plan cannot exceed
2,000,000 shares without shareholder approval.
The option price per share for common shares which are the subject of
any option shall be fixed by the Board when such option is granted
and cannot involve a discount to the market price at the time the
option is granted. The period during which an option is exercisable
shall not exceed 10 years from the date the option is granted. The
options may not be assigned, transferred or pledged and expire within
three months of the termination of employment and six months of the
death of an individual.
Options to purchase up to 1,415,000 common shares have been granted
under the Plan by the Board of Directors on January 17, 1996 ( the
"Granting Date"). Of these, options to purchase 1,130,000 common
shares were granted to directors and officers of the Company and
options to purchase 285,000 shares were granted to non-executive
employees and consultants of the Company. Specifically:
i) options to purchase 645,000 common shares of the Company at a price
of CAN$3.25 per share were granted for a period of 10 years to a
total of 11 beneficiaries, of which options to purchase 5,000 common
shares have been exercised in 1996;
ii) one senior executive of the Company was granted additional options to
acquire 200,000 common shares of the Company at a price of CAN$3.25
per share effective as of each of the first three anniversary dates
of the Granting Date (for a total of 600,000 additional shares),
provided he still be associated with the Company;
iii) two directors of the Company were granted additional options to
acquire 5,000 common shares of the Company, effective as of each of
the first five anniversary dates of the Granting Date (for a total of
25,000 additional shares each), at the closing price of the common
shares of the Company on the Montreal Exchange on the trading day
immediately preceding such anniversary date, or at such other minimum
price allowed by the regulatory authorities having jurisdiction,
provided they still be associated with the Company;
iv) one director of the Company was granted additional options to acquire
20,000 common shares of the Company, effective as of each of the
first four anniversary dates of the Granting Date (for a total of
80,000 additional shares), at the closing price of the common shares
of the Company on the Montreal Exchange on the trading day
immediately preceding such anniversary date, or at such other minimum
price allowed by the regulatory authorities having jurisdiction; and
v) one senior executive of the Company was granted additional options to
acquire 10,000 common shares of the Company, effective as of each of
the first four anniversary dates of the Granting Date (for a total of
40,000 additional shares), at the closing price of the common shares
of the Company on the Montreal Exchange on the trading day
immediately preceding such anniversary date, or at such other minimum
price allowed by the regulatory authorities having jurisdiction.
All of the above options are effective for a period of 10 years from
the Granting Date. The options described in paragraphs ii) to v) are
subject to the approval of the Montreal Exchange.
In addition, on April 30, 1996, (A) options to purchase 115,000
common shares of the Company at a price of CAN$11.50 per share were
granted for a period of 10 years to a total of 5 beneficiaries; (B)
options to purchase 25,000 common shares of the Company at a price of
CAN$15.50 per share were granted on June 7, 1996 for a period of 10
years to one beneficiary. On August 13, 1996, one consultant of the
Company was granted options to acquire 50,000 common shares of the
Company for a period of ten years. Those options presently are
exercisable to the extent of 10,000 shares at a price of CAN$16.75
per share. The options will become exercisable to the extent of an
additional 10,000 shares on each of the first four anniversary dates
of the granting date, provided the consultant remains active with the
Company on each such vesting date. The exercise price is determined
as to each block at the vesting date and equals the closing price of
the common shares of the Company on the Montreal Stock Exchange on
the trading day immediately preceding such vesting date, or at such
other minimum price allowed by the regulatory authorities having
jurisdiction.
Item 13. Interest of Management in Certain Transactions
a) Dr. Paul Averback was the controlling shareholder of DMS. NYMOX
acquired all of the shares of DMS in September 1995 for a
consideration of 15,000,000 common shares of NYMOX, of which
13,093,559 were issued to Dr. Averback.
From time to time, Dr. Averback has advanced funds to NYMOX on
an interest free basis and without any specified date of
repayment. There have been no advances outstanding since
CAN$43,658 was repaid to Dr. Averback during the quarter ended
March 31, 1996. During the last three fiscal years, the highest
aggregate advance outstanding from Dr. Averback was CAN$43,658.
b) Dr. Hossein Ghanbari, a director and senior officer of the
Company has received a loan of CAN$56,000 from NYMOX to assist
him in the purchase of a home following his move from the United
States to assume his duties with the Company. This loan is
interest free and has no fixed terms of repayment.
PART II
Item 14. Description of Securities to be Registered
a) NYMOX's authorized capital is comprised of an unlimited number
of common shares of which 17,929,382 common shares are currently
issued and outstanding and 1,605,000 are reserved for issuance
under NYMOX's stock option plan. (See Item 12 "Options to
Purchase Securities from Registrant or Subsidiaries.")
Holders of common shares are entitled to receive notice of, and
to attend and vote at, all meetings of the shareholders of the
Company. Each share carries one vote at any meeting. Hence,
holders of a majority of common shares can elect all directors
of the Company and other shareholders would not be able to elect
any other director.
Holders of common shares are entitled to dividends as and when
declared by the directors and, upon liquidation, to receive such
assets of the Company as may be distributable to such holders.
The common shares have no preemptive rights and are not
convertible into any other security. There is no sinking fund
applicable to the common shares and the holders are not subject
to assessment by NYMOX.
The registrar and transfer agents of NYMOX are Montreal Trust
Company of Canada at their Montreal office.
b) Not applicable.
c) Not applicable.
PART III
Item 15. Defaults upon Senior Securities
Not applicable.
Item 16. Changes in Securities and Changes in Security for Registered
Securities
Not applicable.
PART IV
Item 17. Financial Statements
Not applicable.
Item 18. Financial Statements
The financial statements listed in Item 19 are incorporated by
reference in this Item.
Item 19. Financial Statements and Exhibits
a) Financial statements (which appear after the signature page
hereto):
At and For the Period Ended September 30, 1996:
Consolidated Balance Sheet -- September 30, 1996
Consolidated Statement of Earnings and Deficit
Consolidated Statements of Changes in Financial Position
Notes
At and For the Periods Ended July 31, 1995 and December 31, 1995:
Auditors' Reports
Consolidated Balance Sheets -- July 31, 1995 and December 31,
1995
Consolidated Statements of Loss and Deficit for Five Months
ended December 31, 1995 and Twelve Months ended
July 31, 1995
Consolidated Statements of Changes in Financial Position for
Five Months ended December 31, 1995 and Twelve Months ended
July 31, 1995
Notes to Consolidated Financial Statements
At and For the Periods Ended July 31, 1993 and 1994:
Auditors' Reports
Balance Sheets -- July 31, 1993 and 1994
Statements of Loss and Deficit for the years ended July 31, 1993
and 1994
Statements of Changes in Financial Position for the years ended
July 31, 1993 and 1994
Notes
b) The list of exhibits contained in the Exhibit Index is
incorporated by reference and the exhibits listed therein are
filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
NYMOX PHARMACEUTICAL CORPORATION
(Registrant)
/s/ PAUL AVERBACK
Title: President
Date: December 9, 1996
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheet
(Unaudited)
September 30, 1996 with comparative figures as at December 31, 1995
September 30, 1996 December 31, 1995
(unaudited) (audited)
Assets
Current assets:
Cash and term deposits $4,014,580 $ 2,167,575
Research and development
investment tax credits
receivable 115,500 0
Other receivables 42,709 44,523
Advance to director 56,000 12,342
--------- ---------
4,228,789 2,224,440
Capital assets 578,138 21,214
Patents 461,201 344,941
--------- ----------
$5,268,128 $ 2,590,595
========= ==========
Liability and Shareholders'
Equity
Current liability:
Accounts payable $ 66,314 $ 107,640
Shareholders' equity:
Capital stock 9,068,731 4,022,641
Deficit (3,866,917) (1,539,686)
---------- ----------
5,201,814 2,482,955
--------- ----------
$5,268,128 $ 2,590,595
========= ==========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statement of Earnings and Deficit
(Unaudited)
Quarter ended September 30, 1996, with figures for the nine-month period
ended September 30, 1996
(in Canadian dollars)
September 30, 1996 September 30, 1996
(3 months) (9 months)
Revenues:
Interest $ 42,463 $ 114,556
Expenses:
Research and development 764,478 1,433,552
Less investment tax credits (19,000) (115,500)
--------- ---------
745,478 1,318,052
General and administrative 756,175 1,071,752
Depreciation of capital asses 39,835 51,636
Financial 1,729 347
--------- ---------
1,543,217 2,441,787
--------- ---------
Net loss 1,500,754 2,327,231
Deficit, beginning of period 2,366,163 1,539,686
--------- ---------
Deficit, end of period $ 3,866,917 $ 3,866,917
========= =========
Net loss per share $ 0.08 $ 0.13
========= =========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statement of Changes in Financial Position
(Unaudited)
Quarter ended September 30, 1996, with figures for the nine-month period
ended September 30, 1996
(in Canadian dollars)
September 30, 1996 September 30, 1996
(3 months) (9 months)
Cash provided by (used in):
Operations:
Net loss $(1,500,754) $ (2,327,231)
Item not involving cash:
Depreciation of capital assets 39,835 51,636
Net changes in non-cash operating
working capital items 4,530 (198,670)
---------- ----------
(1,456,389) (2,474,265)
Financing:
Private placement 0 5,263,800
Options exercised 16,250 16,250
Share issue costs (67,100) (233,960)
--------- ----------
(50,850) 5,046,090
Investment:
Purchase of capital assets (452,637) (608,560)
Additions to patents (67,550) (116,260)
---------- ----------
(520,187) (724,820)
---------- ----------
(Decrease) increase in cash and
term deposits (2,027,426) 1,847,005
Cash and term deposits, beginning
of period 6,042,006 2,167,575
--------- ---------
Cash and term deposits, end of
period $4,014,580 $4,014,580
========= =========
<PAGE>
Auditors' report
To the Directors of
Nymox Pharmaceutical Corporation
We have audited the consolidated balance sheet of Nymox Pharmaceutical
Corporation as at December 31, and July 31, 1995 and the consolidated
statements of loss and deficit and of changes in financial position for
the five-month period ended December 31, 1995 and the twelve-month period
ended July 31, 1995. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audit in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an
audit to obtain reasonable assurance whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as at
December 31, and July 31, 1995 and the results of its operations and the
changes in its financial position for the five-month period ended
December 31, 1995 and the twelve-month period ended July 31, 1995 in
accordance with generally accepted accounting principles.
DELOITTE & TOUCHE
Chartered Accountants
Montreal (Quebec) Canada
January 22, 1996
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated statement of loss and deficit
five-month period ended December 31, 1995
(in Canadian dollars)
December 31 July 31
1 9 9 5 1 9 9 5
(5 months) (12 months)
Expenses
Research and development $ 571,215 $ 371,939
General and administrative 134,631 5,631
----------- ---------
Loss before income taxes 705,846 377,570
Income tax recovery (Note 5) (12,000) -
----------- ---------
Net loss 693,846 377,570
Deficit, beginning of period 636,043 258,473
Share issue costs 209,797 -
----------- ---------
Deficit accumulated during the
development stage, end of period $ 1,539,686 $ 636,043
=========== =========
Loss per share $ 0.04 $ 0.03
=========== =========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated balance sheet
as at December 31, 1995
(in Canadian dollars)
December 31 July 31
1 9 9 5 1 9 9 5
Current assets
Cash and cash equivalents $ 2,167,574 $ 11,963
Advance to a director 56,000 0
Prepaid expenses and deposits 44,523 0
----------- ---------
2,268,097 11,963
Capital assets (Note 4) 366,155 338,953
---------- ---------
$2,634,252 $ 350,916
========== =========
Current liabilities
Accounts payable and accrued
liabilities $ 107,639 $ 77,931
Advance from a director 43,658 43,658
---------- ---------
151,297 121,589
---------- ---------
Shareholders' equity
Capital stock (Note 6) 4,022,641 865,370
Deficit (1,539,686) (636,043)
---------- ---------
2,482,955 229,327
---------- ---------
$2,634,252 $ 350,916
========== =========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated statement of changes in financial position
five-month period ended December 31, 1995
(in Canadian dollars)
December 31 July 31
1 9 9 5 1 9 9 5
(5 months) (12 months)
Operating activities
Net loss $ (693,846) $(377,570)
Item not affecting cash
Amortization 1,400 -
Changes in non-cash working
capital items (70,815) 76,213
---------- ---------
(763,261) (301,357)
---------- ---------
Investing activities
Acquisition of capital assets (28,602) (99,550)
---------- ---------
Financing activities
Issue of shares 3,157,271 412,870
Share issue costs (209,797) -
---------- ---------
2,947,474 412,870
---------- ---------
Net cash inflow 2,155,611 11,963
Cash, beginning of period 11,963 -
---------- ---------
Cash, end of period $ 2,167,574 $ 11,963
========== =========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Notes to the consolidated financial statements
five-month period ended December 31, 1995
(in Canadian dollars)
1. Status and nature of activities
Nymox Pharmaceutical Corporation (the "Corporation") was incorporated
under the Canada Business Corporations Act on May 30, 1995 and became
a public company under applicable security laws on September 20, 1995.
The Corporation had no operations from its date of incorporation
through to the acquisition of DMS as described below. The fiscal year
end of the Corporation has been changed from July 31 to December 31.
The Corporation was formed for the purpose of acquiring all of the
common shares of DMS Pharmaceutical Inc. (DMS), a private company
carrying on research and development in the field of neurological
diagnostics and pharmaceuticals for the aging population. This
acquisition was completed during September 1995 for a consideration of
15,000,000 common shares of the Corporation, resulting in the
shareholders of DMS becoming the shareholders of the Corporation.
This transaction was accounted for under the purchase method with DMS
as the acquiror.
Immediately following the acquisition, the Corporation acquired a
controlling interest from two shareholders of Monterey Capital Inc.,
("Monterey") a public company, for cash of $383,000. The purchase
price was determined through negotiations between the parties.
Monterey was then amalgamated with a wholly-owned subsidiary of the
Corporation with the result that the non-controlling shareholders of
Monterey received 468,447 common shares of the Corporation. The
transaction was accounted for as a share issuance of the Corporation
for nominal consideration of $1. It was not considered to be part of
the acquisition and sale of Monterey, as that transaction was an
intermediary step in meeting the objective of rending the Corporation
a public company. Concurrently, the shares of the amalgamated company
carrying on the business of Monterey were sold to one of the
shareholders from which the Corproation acquired the controlling
interest for cash of $383,000. The sale of the amalgamated company
did not give rise to a gain or loss, since the sale price was equal to
its carrying value.
The consolidated financial statement do not include any results of
operations of the Monterey business.
2. Basis of presentation
The accompanying consolidated financial statements have been prepared
under Canadian generally accepted accounting principles and present
the historical financial information of the business of DMS described
above as though it had been carried on by the Corporation as a legal
entity since August 1, 1989. These consolidated financial statements
reflect the financial position and results of operations under the
continuity of interest method.
3. Significant accounting policies
Consolidation
The consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles and include the
accounts of the Corporation and its wholly-owned subsidiary.
Significant intercompany balances and transactions have been
eliminated on consolidation.
Research and development
The Corporation incurs costs which relate to the research and
development of neurological diagnostics and pharmaceuticals for the
aging population. Such costs, net of any government grants and
investment tax credits where applicable, are expensed as incurred.
The Corporation has not received any grants or investment tax credits
in the periods ended July 31 and December 31, 1995.
Cash and cash equivalents
Cash and cash equivalents represent unrestricted cash and highly
liquid investments with a maturity of three months or less.
Capital assets
Capital assets are recorded at cost. Amortization, which is applied to
the costs less residual value, is computed using the following methods
and rates:
Computer software and equipment Straight-line 20%
Equipment Straight line 20%
Patents Over the years remaining of the
initial 17-year life of the
patent, beginning in the year
of commercial production of the
developed products
4. Capital assets
December 31 July 31
1 9 9 5 1 9 9 5
Accumulated
Cost amortization Net book value
Computer software
and equipment $ 8,533 $ - $ 8,533 $ -
Equipment 14,080 1,400 12,680 12,576
Patents 344,941 - 344,941 326,376
Intellectual
property rights 1 - 1 1
--------- -------- -------- -------
$ 367,555 $ 1,400 $ 366,155 $338,953
========= ======== ======== =======
5. Income taxes
December 31 July 31
1 9 9 5 1 9 9 5
(5 months) (12 months)
Income tax recovery at statutory
rates $ (269,615) $ (143,477)
Non-recognition of losses 257,615 143,477
--------- ----------
$ (12,000) $ -0-
========= ==========
The Corporation and its subsidiary have losses carried forward
totalling approximately $1,338,000, which are available to reduce
future years' taxable income. The benefits of the losses carried
forward have not been reflected in these financial statements. These
losses expire as follows:
1996 $ 113,000
1997 11,000
1998 40,000
1999 36,000
2000 59,000
2001 377,000
2002 702,000
The Corporation has investment tax credits available in the amount of
approximately $40,000, the benefits of which have not been recorded in
these financial statements.
6. Capital stock
All share information has been presented as if the acquisition of DMS
(see Note 1) took place August 1, 1994.
Authorized
An unlimited number of common shares
December 31 July 31
1 9 9 5 1 9 9 5
Issued and outstanding
17,047,083 common shares
(July 31, 1995 - 15,000,001) $ 4,022,641 $ 865,370
=========== =========
The events more fully described in Note 1 to these financial
statements were completed with the following share transactions:
A total of 15,000,000 common shares were issued in exchange for
all of the issued and outstanding shares of DMS which shares had
a value for accounting purposes of $857,869. The stated value of
the common shares of the Corporation issued in this transaction
was $30,000,000.
A total of 468,447 common shares were issued in connection with
the Monterey transactions. The value for accounting purposes of
these shares is $1 and the stated value is $962,046.
During September 1995, the Corporation issued 1,578,635 common
shares for cash consideration of $3,157,270.
Loss per share
The weighted average number of common shares outstanding during the
five-month period ended December 31, 1995 and the twelve-month period
ended July 31, 1995 used to calculate the loss per share was
16,432,958 and 14,789,724, respectively.
Options
During the period, the Corporation adopted a plan to grant options to
acquire common shares to its employees, consultants, officers and
directors at prices and expiry dates to be determined by the board of
directors. The maximum number of shares issuable in respect of the
options is the lesser of 5% of the issued and outstanding common
shares and 2,000,000 common shares.
7. Subsequent event
On January 17, 1996, the Corporation granted options to acquire
1,245,000 common shares at a price of $3.25 per share and exercisable
to 2006.
In addition, the Board of Directors has granted options to acquire a
total of 170,000 common shares, which become vested at various dates
over the next five years at prices equal to the closing price of the
common shares on the Montreal Exchange at the date of vesting and are
exercisable to 2006.
8. Commitments
(a) Leased premises
The Company leases its Canadian premises under an operating lease
which expires on August 31, 1996 and which is renewable for a
period of one year under the same terms and conditions.
Future lease payments will aggregate $176,000 including the
following amounts over the next two years, as follows:
1996 $106,000
1997 70,000
The rent expense incurred in the period ended December 31, 1995
was $44,165.
(b) Research funding
The Corporation is committed to make annual research grants to an
unrelated medical facility in the US in the amounts of US$200,000
and US$225,000 in 1996 and 1997, respectively.
During the period ended December 31, 1995, an amount of
approximately US$175,000 was paid and expensed in connection with
the research grant described above.
9. Comparative figures
Certain comparative figures have been reclassified to conform with the
presentation adopted in the current period.
10. Canadian GAAP reconciliations with US GAAP
a) Reconciliation of earnings reported in accordance with Canadian
GAAP with United States GAAP.
December 31, July 31, 1995
1995 (12 months)
(5 months)
Net loss - Canadian GAAP $ 693,846.00 $ 377,570.00
Fair value of shares issued to
minority shareholders of
Monterey (i) 936,894.00
Amortization of patients 8,454.00 16,271.00
------------ -----------
Net loss - US GAAP $1,639,194.00 $ 393,841.00
============ ===========
EPSA - US GAAP (iii) $0.11 $0.03
============ ===========
b) Reconciliation of shareholders' equity reported in accordance
with Canadian GAAP with US GAAP
December 31, July 31, 1995
1995 (12 months)
(5 months)
Shareholders' equity - Canadian $2,482,955 $ 229,327
GAAP
Amortization of Patents (ii)
Cumulative effect to
beginning of the period (82,986) (66,715)
Current period (8,454) (16,271)
--------- ---------
(91,440) (82,986)
--------- ---------
Shareholders' equity - US GAAP $2,391,515 $ 146,341
========= =========
(i) The Monterey transaction described in Note 1, with respect to the
issuance of shares to the "Monterey" minority shareholders was
considered to be a transaction to render the Corporation public.
In accordance with US GAAP, share issuances are to be recorded at
fair value. As a result, the fair value of the shares issued
represent the cost to Corporation of "going public".
(ii) In accordance with APB 17, Intangible Assets, the Patents are
amortized on the straight-line basis over 17 years, the legal
life of the patent, from the date the patent was secured.
(iii) The number of shares used for purposes of calculating loss per
share in accordance with US GAAP was 15,000,000 for both
periods presented.
11. Other disclosures required under US GAAP
a) Development stage company
The Corporation specializes in the research and development of
neurological diagnostics and pharmaceuticals for the aging population
with emphasis on Alzheimer's disease. The Corporation is in the
process of developing unique patented products which are subject to
approval of regulatory authorities. The Corporation has completed the
research and discovery phase of its Alzheimer's diagnostic AD7C test
and anticipates that it will be seeking regulatory approval in 1997 to
permit the Company to sell an AD7C test kit to laboratories. It has
not had any revenues to date on the sale of any of its products under
development. Accordingly, the Corporation is a development stage
company as defined in statement of Financial Accounting Standards No.
7. Accordingly, the following disclosures are required:
Cumulative since the date of
inception of the Corporation
Research and development $ 1,189,627
General and administrative 1,180,602
Cash inflow (outflow)
Operating activities (2,211,074)
Investing activities (363,590)
Financing activities 4,742,238
The following table presents the movement in capital stock since
inception of the Corporation.
<TABLE>
<CAPTION>
Consideration
Issued
(cancelled)
Shares (i) Cash Other Per Share
<S> <C> <C> <C> <C>
Year ended July 31,
1990 16,366,948 $ 200,000 $ $ 0.01
1991 -- --- -0-
1992 61,376 37,500 0.61
1993 (3,273,390) --- 0.16
1993 1,317,539 205,000 0.61
1994 16,367 10,000 0.79
1995 511,669 405,370
----------- ---------- --------- -------
15,000,500 857,870 0.06
Five months
Ended December 31, 468,447 936,894 2.00(ii)
1995 1,578,582 3,157,270
----------- ---------- ---------
17,047,083 4,015,140 936,894
=========== --------- ---------
$4,952,034
=========
</TABLE>
(i) The number of shares is presented as if the shares of DMS were
issued by the Corporation since inception, on the basis of the
proportionate number of shares issued by the Corporation in
exchange for the shares of DMS at the time of the reverse
acquisition.
(ii) See note 8(a).
b) Income taxes
In accordance with statement of Financial Accounting Standards No.
109, the income tax effect of temporary differences that gave rise to
the net deferred tax asset is presented below.
Deferred tax asset
December 31,
1995 July 31, 1995
(5 months) (12 months)
Non-capital losses $ 508,000 $ 242,000
Less: Valuation
allowance 508,000 242,000
-------- ---------
Net deferred tax asset $ $
========= =========
As at December 31, 1995, the Company has $1,338,000 of non-capital
losses available to offset future years taxable income. The income
tax benefit of the non-capital losses has not recognized in the
financial statements since the company has had a history of cumulative
losses in recent years. The ultimate realization of these losses
depends on the successful commercialization of the Company's research.
There are no material deferred tax liabilities.
c) Financial instrument
Concentration of credit risk
The financial instrument that potentially subjects the Corporation to
significant credit risk consists of cash and cash equivalents invested
with various financial institutions.
The Corporation considers its exposure is limited due the nature of
the cash equivalents and the credit ratings of the financial
institutions with which the cash equivalents are invested.
d) Stock based compensation
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock Based Compensation," which will be effective for
the Company beginning January 1, 1996. SFAS No. 123 required expanded
disclosures of stock-based compensation arrangements with employees
and encourages (but does not require) compensation cost to be measured
based on the fair value of the equity instrument awarded. Companies
are permitted, however, to continue to apply APB Opinion No. 25, which
recognized compensation cost based on the intrinsic value of the
equity instrument awarded. The Corporation will continue to apply APB
Opinion No. 25 to its stock based compensation awards to employees and
will disclose the required pro forma effect on net income and earnings
per share.
The options referred to in Note 7 are exercisable at $3.25 per share,
which represents the fair market value at the date of grant.
Accordingly, the Corporation has not recognized any compensation costs
related to the options issued.
<PAGE>
AUDITOR'S REPORT
To the shareholders of
DMS PHARMACEUTICAL INC.
We have audited the balance sheet of DMS PHARMACEUTICAL INC. as at
July 31, 1994 and the statements of loss and deficit and changes in
financial position for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at July 31,
1994 and the results of its operations for the year then ended in
accordance with generally accepted accounting principles.
BERGERON & SENECAL
Chartered Accountants.
Brossard, Quebec, Canada
July 8, 1995.
<PAGE>
AUDITOR'S REPORT
To the shareholders of
DMS PHARMACEUTICAL INC.
We have audited the balance sheet of DMS PHARMACEUTICAL INC. as at
July 31, 1993 and the statements of loss and deficit and changes in
financial position for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at July 31,
1993 and the results of its operations for the year then ended in
accordance with generally accepted accounting principles.
BERGERON & SENECAL
Chartered Accountants.
Brossard, Quebec, Canada
July 8, 1995.
<PAGE>
DMS PHARMACEUTICAL INC.
BALANCE SHEET
As at July 31, 1994 and 1993
(in Canadian dollars)
1994 1993
$ $
ASSETS
FIXED ASSETS (Note 3) 12 576 12 576
------ ------
OTHER ASSETS
Subscription receivable -0- 11 949
Patents 226 826 226 826
Intellectual property rights 1 1
------- -------
226 827 238 776
------- -------
239 403 251 352
------- -------
<PAGE>
DMS PHARMACEUTICAL INC.
BALANCE SHEET
As at July 31, 1994 and 1993
(in Canadian dollars)
1994 1993
$ $
LIABILITIES
CURRENT
Accounts payable and accrued charges 12 000 9 000
ADVANCES FROM DIRECTORS, without specified
terms of repayment and interest rate 33 376 -0-
------- -------
45 376 9 000
------- -------
SHAREHOLDER'S EQUITY
CAPITAL STOCK (Note 4)
Authorized:
Unlimited number of common
shares with no par value,
Issued and fully paid:
2 213 125 common shares 452 500 442 500
DEFICIT (258 473) (200 148)
------- -------
194 027 242 352
239 403 251 352
------- -------
See accompanying notes to financial statements.
<PAGE>
DMS PHARMACEUTICAL INC.
STATEMENT OF LOSS AND DEFICIT
For the year ended July 31, 1994 and 1993
(in Canadian dollars)
1994 1993
$ $
REVENUES - -
EXPENSES
Research and development costs 55 325 32 519
Professional fees 500 500
Capital taxes 2 500 1 500
------- -------
58 325 34 519
------- -------
NET LOSS FOR THE YEAR (58 325) (34 519)
DEFICIT at beginning of year (200 148) (165 629)
------- -------
DEFICIT at end of year (258 473) (200 148)
------- -------
See accompanying notes to financial statements.
<PAGE>
DMS PHARMACEUTICAL INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the year ended July 31, 1994 and 1993
1994 1993
$ $
OPERATING ACTIVITIES
Net loss for the year (58 325) (34 519)
Increase in non cash working capital
balances 3 000 2 000
------- -------
Liquidities used for operating activities (55 325) (32 519)
------- -------
FINANCING ACTIVITIES
Increase (decrease) of advances from
directors 33 376 (160 532)
Common shares issued 10 000 205 000
-------- -------
Liquidities provided by financing
activities 43 376 44 468
-------- -------
INVESTMENT ACTIVITIES
Increase (decrease) of subscription
receivable and liquidities provided by
(used for) investment activities 11 949 (11 949)
------- -------
INCREASE IN CASH POSITION - -
CASH POSITION, at beginning of year - -
------- -------
CASH POSITION, at end of year - -
------- -------
See accompanying notes to financial statements.
<PAGE>
DMS PHARMACEUTICAL INC.
NOTES TO FINANCIAL STATEMENTS
As at July 31, 1994 and 1993
(in Canadian dollars)
1. STATUS AND NATURE OF BUSINESS
The company was incorporated under Part 1A of the Quebec Corporations'
Act. It is involved in research and development in Alzheimer disease.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Fixed assets:
Fixed assets are recorded at cost.
b) Patents:
Patents are recorded at cost. Amortization is provided by the
straight line method over a period of 17 years from the date of the
marketing of developed products.
3. FIXED ASSETS
1994 1993
$ $
Scientific equipment 11 445 11 445
Office equipment 1 131 1 131
------ ------
12 576 12 576
------ ------
4. CAPITAL STOCK
During the year, the company issued 2 500 common shares for a cash
consideration of $10 000.
5. INCOME TAXES
The income tax provision differs from the amount computed by applying
the expected Canadian federal and provincial rate to the net loss for
the year. The reasons for the difference and the related tax effect
are as follows:
1994 1993
Income tax recovery at $(22,164) $(13,117)
statutory rates 22,164 13,117
------- -------
Non-recognition of losses
Non-capital losses $ -0- $ -0-
Less: valuation allowance ===== =====
The Company has losses carried forward totalling approximately
$259,000, which are available to reduce future years' taxable income.
The benefit of the losses carried forward have not been reflected in
these financial statements and expire as follows:
1996 $113,000
1997 11,000
1998 40,000
1999 36,000
2000 59,000
--------
$259,000
========
6. CANADIAN/U.S. GAAP DIFFERENCES
(a) Reconciliation of Earning Reported in accordance with Canadian
GAAP with United States GAAP:
1994 1993
Net loss- Canadian GAAP $(58,325) $(34,519)
Amortization of patents (i) (13,343) (13,343)
-------- --------
Net loss- U.S. GAAP $(71,668) $(47,862)
======== ========
(b) Reconciliation of Shareholder's equity reported in accordance
with Canadian GAAP with United States GAAP:
1994 1993
Shareholder's equity - Canadian
GAAP $194,027 $242,352
Amortization of patents (i):
Cumulative effect to beginning of
the period (53,372) (40,029)
Current year effect (13,343) (13,343)
------- -------
(66,715) (53,372)
Shareholder's equity - US GAAP $127,312 $188,980
======= =======
(i) In accordance with APB 17, Intangible Assets, the patents are
amortized on a straight-line basis over 17 years, the legal
life of the patents, from the date the patent was secured.
(c) Other disclosures required under U.S. GAAP.
(i) Development Stage Company
The Company is a development stage company as defined in Statement
of Financial Accounting Standards No. 7. The following additional
disclosure is required under this pronouncement:
Cumulative since date of
invention to July 31,
1994 1993
Revenues $ --- $ ---
Research and development
expenditures 246,473 191,148
General and administrative
expenses 78,715 62,372
Cash inflows (outflows)
Operating activities $(213,098) $(203,098)
Investing activities (239,402) (239,402)
Financing activities 452,500 442,500
(ii) Income taxes
In accordance with Statement of Financial Accounting Standards No.
109, the following table summarizes the income tax effect that gives
rise to the defined tax asset:
1994 1993
Deferred tax asset:
Non-capital losses $ 98,000 $ 76,000
Less: valuation allowance (98,000) (76,000)
-------- --------
Net deferred tax asset
$ --- $ ---
As of December 31, 1994, the Company has $259,000 of non-capital losses
available to offset future years' taxable income. The income tax
benefit of the non-capital losses has not been recognized in these
financial statements since the Company has had a history of cumulative
losses in recent years. The ultimate realization of these losses
depends on the successful commercialization of the Company's research.
There are no material deferred tax liabilities.
<PAGE>
EXHIBIT INDEX
NYMOX PHARMACEUTICAL CORPORATION
Form 20-F Registration Statement
Exhibit No. Description
Form 20-F Edgar
1.1 3.1 Articles of Incorporation, as amended, of the
Registrant (filed previously)
1.2 3.2 Bylaws of the Registrant (filed previously)
3.1 10.1 Memorandum of Agreement between Paul Averback
and the Registrant (filed previously)
3.2 10.2 Share Option Plan of the Registrant (filed
previously)
3.3 10.3 Research and License Agreement between the
General Hospital Corporation and the
Registrant
3.4 10.4 Sole Non-Exclusive License and Supply
Agreement for the NYMOX AD7C/TM/ Diagnostic
Test for Alzheimer's Disease between
Laboratories J. Simon and the Registrant (to
be filed by amendment)
EXHIBIT 3.3
(EDGAR EXHIBIT 10.3)
RESEARCH AND LICENSE AGREEMENT
THIS AGREEMENT is between THE GENERAL HOSPITAL CORPORATION, a
not-for-profit Massachusetts corporation doing business as Massachusetts
General Hospital having its principal place of business at Fruit Street,
Boston, Massachusetts 02114 ("GENERAL") and NYMOX CORPORATION, a
corporation having its principal place of business at 2020 North Park,
Johnson City, Tennessee 37601 ("NYMOX").
WHEREAS, Jack Wands, M.D. and Suzanne de la Monte, M.D., of the
Laboratory of Molecular Hepatology of the Massachusetts General Hospital
Cancer Center of the GENERAL funded in part by the Department of Health
and Human Services, have discovered Neural Thread Protein, and developed
antibodies, probes, and other reagents, patents, and information
associated with this protein and are interested in the development of new
diagnostic strategies for Alzheimer's Disease and other neurodegenerative
diseases ("TECHNOLOGY");
WHEREAS, GENERAL and Drs. Wands and de la Monte desire to
continue their research pertaining to the TECHNOLOGY and are seeking
additional funds to continue such research;
WHEREAS, as a center for research and education, GENERAL is
interested in facilitating the use of this new TECHNOLOGY and in licensing
PATENT RIGHTS and RESEARCH INFORMATION as hereinafter defined and thus
benefiting the public and GENERAL by facilitating the development of
healthcare products, but is without capacity to commercially develop,
manufacture, and distribute any such product; and
WHEREAS, NYMOX has the capacity and know-how that will enhance
the usefulness of the results of the research performed by Dr. Wands and
Dr. de la Monte and desires to provide GENERAL with funding to continue
the research and to obtain the right to use the results of this research
under a license to PATENT RIGHTS in order to commercially develop,
manufacture, use and distribute products throughout the world;
NOW, THEREFORE, in consideration of the premises and of the
faithful performance of the covenants herein contained, the parties hereto
agree as follows:
1. DEFINITIONS
1.1 The term "AFFILIATE" as applied to NYMOX shall mean NYMOX
and any company or other legal entity other than NYMOX in whatever country
organized, controlling, or controlled by NYMOX. The term "control" means
possession, direct or indirect, of the powers to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
1.2 The term "AGREEMENT YEAR" shall mean the twelve (12) month
period beginning on the EFFECTIVE DATE and each succeeding twelve (12)
month period thereafter
for the term of the Agreement. If not otherwise specified, terms
involving time periods shall be applied pro rata according to any time
frame in which less than the full specified period is involved.
1.3 The term "EFFECTIVE DATE" shall mean September 1, 1995.
1.4 The term "FIELD OF RESEARCH" shall mean research pertaining
to the use of any form of neural thread protein, its antibodies, and any
cDNAs or genes or genomic fragments coding for neural thread protein, for
diagnostic purposes.
1.5 The term "FIRST COMMERCIAL SALE" shall mean in each country
the first sale of any PRODUCT by NYMOX, its AFFILIATES or SUBLICENSEES,
following approval of its marketing by the appropriate governmental agency
for the country in which the sale is to be made and when governmental
approval is not required, the first sale in that country.
1.6 The term "GENERAL MATERIAL" shall mean any material or
substance which has biological activity in the FIELD OF RESEARCH (i) which
relates to SPONSORED RESEARCH and is in the possession of the PRINCIPAL
INVESTIGATORS on the EFFECTIVE DATE and which GENERAL has the right to
transfer to NYMOX under the terms and conditions of this Agreement, or
(ii) which is discovered, produced or derived by an INVESTIGATOR in the
performance of SPONSORED RESEARCH.
1.7 The term "INVENTION" shall mean any new and useful process,
manufacture, or composition of matter which is in the FIELD OF RESEARCH
(a) which was conceived (i) prior to the EFFECTIVE DATE or (ii) in the
performance of SPONSORED RESEARCH; and (b) which is first reduced to
practice, constructively or actually (i) by an INVESTIGATOR in the
performance of SPONSORED RESEARCH or (ii) within one year of the
termination of the SPONSORED RESEARCH in which it was conceived by a
person who had been an INVESTIGATOR; and (c) in which GENERAL has rights
by virtue of (i) sole or joint inventorship by an INVESTIGATOR (or in the
case of an INVENTION first reduced to practice within said one year period
by a person who has been an INVESTIGATOR) or (ii) the terms of any
agreement that does not preclude granting rights to NYMOX hereunder.
1.8 The term "INVESTIGATOR" shall mean PRINCIPAL INVESTIGATORS,
any other member of GENERAL's Professional Staff, graduate student,
undergraduate student, or employee of GENERAL who shall perform SPONSORED
RESEARCH.
1.9 The term "LICENSE FIELD" shall mean the manufacture, use or
sale of PRODUCTS for diagnostic purposes.
1.10 The term "NYMOX MATERIALS" shall mean any material or
substance first discovered, produced or derived by an employee of NYMOX
prior to termination of the SPONSORED RESEARCH which pertains to the
SPONSORED RESEARCH, and in which NYMOX has ownership or licensable rights.
1.11 (a) The term "NET SALES PRICE" shall mean the gross billing
price of any PRODUCT received by NYMOX, its AFFILIATE or SUBLICENSEE for
the sale or distribution of any PRODUCT, less the following amounts
actually paid out by NYMOX, its AFFILIATE or SUBLICENSEE or credited
against the amounts received by them from the sale or distribution of
PRODUCT:
(i) discounts allowed;
(ii) returns;
(iii) transportation charges or allowances;
(iv) customs, duties and charges; and
(v) sales, transfer and other excise taxes or other
governmental charges levied on or measured by the sales
but no franchise or income tax of any kind whatsoever.
(b) Transfer of a PRODUCT to an AFFILIATE for sale by the
AFFILIATE shall not be considered a sale; in the case of such a transfer
the NET SALES PRICE shall be based on the gross billing price of the
PRODUCT by the AFFILIATE as invoiced to its customer.
(c) Every commercial use or disposition of any PRODUCT
(excluding any use for (i) use in assuring product testing or control,
(ii) promotional distribution to physicians or (iii) distribution to
researchers by or on behalf of NYMOX or any of its AFFILIATES or
SUBLICENSEES or (iv) obtaining regulatory approvals), in addition to a
bona fide sale to a bona fide customer (not to be construed as including
NYMOX or any such AFFILIATE or SUBLICENSEE) shall be considered a sale of
such PRODUCT at the NET SALES PRICE then payable in an arm's length
transaction.
(d) In the event any PRODUCT is sold as a component of a
combination of active functional elements, NET SALES PRICE for purposes of
determining royalty payments on such combination, shall be calculated by
multiplying the NET SALES PRICE of the combination by the fraction A over
A+B, in which "A" is the gross selling price of the PRODUCT portion of the
combination when sold separately during the ACCOUNTING PERIOD in which the
sale was made, and "B" is the gross selling price of the other active
functional elements of the combination sold separately during the
ACCOUNTING PERIOD in question. All gross selling prices shall be
calculated as the average gross selling price of the PRODUCT for the
ACCOUNTING PERIOD as hereafter defined in the country in which the sale is
made. In the event that no separate sale of either such above-designated
PRODUCT or such above designated active functional elements of the
combination is made during the ACCOUNTING PERIOD in which the sale was
made, NET SALES shall be calculated by multiplying NET SALES PRICE of such
combination by the fraction C over C+D, in which "C" is the standard
fully-absorbed cost of the PRODUCT portion of such combination, and "D" is
the standard fully absorbed cost of the other active functional
element(s), such costs being arrived at using the standard accounting
procedures of NYMOX which will be in accord with generally accepted
accounting practices. The "ACCOUNTING PERIOD" shall be the periods for
which royalty payments are due as provided for in paragraph 7.7.
1.12 The term "PATENT RIGHT" shall mean:
(a) (i) the United States Patent Application Serial No.
07/287,207 filed December 20, 1988 entitled "Method of Detecting
Neurological Disease or Dysfunction," (ii) the United States CIP Patent
Application Serial No. 07/451,975 filed on December 20, 1989, (iii) the
United States Patent Application Serial Number 08/055,778 filed May 3,
1993 as a file wrapper continuation, and, (iv) the United States Patent
Application Serial Number to be assigned, filed June 6, 1995 as a
divisional application;
(b) (i) the United States Patent Application Serial No.
08/050,559 filed on April 20, 1993 entitled "Neural Thread Protein Gene
Expression and Detection of Alzheimer's Disease, " (ii) the United States
CIP Patent Application Serial No. 08/230,139 filed on April 20, 1994,
(iii) the United States CIP Patent Application 08/340,426 filed on
November 14, 1994, (iv) the United States Patent Application Serial No.
08/454,557 filed on May 30, 1995 as a divisional application, and (v) the
United States Patent Application Serial No. 08/450,673 filed on May 30,
1995 as a divisional application;
(c) any United States patent application which contains one or
more claims to an INVENTION; and
(d) any division or continuation and any foreign patent
application or equivalent corresponding to such patent applications and
any Letters Patent or the equivalent thereof issuing thereon or reissue or
extension thereof.
1.13 The term "PRINCIPAL INVESTIGATORS" shall mean Jack Wands,
M.D. and Suzanne de la Monte, M.D.
1.14 The term "PRODUCT" shall mean any diagnostic article,
composition, apparatus, substance, chemical, material, method or service
(a) whose manufacture, use, or sale infringes one or more claims of any
PATENT RIGHT, or (b) which, in the absence of any PATENT RIGHT which would
be infringed by such manufacture, use or sale, (i) incorporates one or
more GENERAL MATERIALS or (ii) whose discovery, development, manufacture
or use employs any GENERAL MATERIAL, RESEARCH INFORMATION or PROCESS or
unpatented INVENTION or NYMOX MATERIAL.
1.15 The term "PROCESS" shall mean any process or method for
the production, manufacture or use of any PRODUCT.
1.16 The term "RESEARCH INFORMATION" shall mean any research
data, formulas, process information or other information pertaining to the
SPONSORED RESEARCH (a) known to PRINCIPAL INVESTIGATORS on the EFFECTIVE
DATE and which PRINCIPAL INVESTIGATORS are not under obligation to any
third party to maintain in confidence, or (b) thereafter produced by an
INVESTIGATOR in the performance of SPONSORED RESEARCH.
1.17 The term "RESEARCH PROPOSAL" shall mean the written
description of SPONSORED RESEARCH attached hereto as Appendix A on the
EFFECTIVE DATE or thereafter appended hereto as Appendix A and
incorporated herein pursuant to paragraph 2.4(c) and shall include a
reasonably detailed description of the goals and scope of such research,
and a budget that details the equipment, materials, personnel, and the
funds to be supplied by NYMOX to support the research described in such
proposal.
1.18 The term "SPONSORED RESEARCH" shall mean scientific
research pertaining to the FIELD OF RESEARCH funded in whole or in part by
NYMOX and performed by an INVESTIGATOR after the EFFECTIVE DATE pursuant
to a RESEARCH PROPOSAL attached as Appendix A.
1.19 The term "SUBLICENSEE" shall mean any non-AFFILIATE third
party licensed by NYMOX to make, have made, use or sell any PRODUCT or use
any PROCESS.
1.20 "VALID CLAIM" shall mean a claim of any PATENT RIGHT
which has not been finally rejected or declared invalid by a patent office
or by a court of competent jurisdiction in any unappealed and unappealable
decision.
1.21 The use herein of the plural shall include the singular,
and the use of the masculine shall include the feminine.
2. GENERAL' S RESEARCH AND NYMOX' S SUPPORT THEREOF
2.1 Beginning on the EFFECTIVE DATE and continuing
thereafter, unless sooner terminated, for the next three (3) years,
GENERAL shall:
(a) through the PRINCIPAL INVESTIGATORS and any other
INVESTIGATOR conduct SPONSORED RESEARCH and the grants and other amounts
paid by NYMOX pursuant to paragraphs 2.2(a) and 2.2(b) plus any additional
funds paid pursuant to paragraph 2.4(c) shall be used to support the
expenses of SPONSORED RESEARCH, in accordance with the RESEARCH PROPOSAL;
(b) promptly and systematically disclose to NYMOX RESEARCH
INFORMATION which NYMOX shall be entitled to use except to the extent such
use is covered by (i) a PATENT RIGHT under which NYMOX has elected not to
be licensed under this Agreement or (ii) any other patent, other than a
PATENT RIGHT, owned by GENERAL and not licensed to NYMOX;
(c) promptly and systematically describe to NYMOX GENERAL
MATERIALS, and at NYMOX's request provide such GENERAL MATERIALS to NYMOX
in accordance with paragraph 3.3, which NYMOX shall be entitled to use in
accordance with paragraph 3.4 except to the extent (i) such GENERAL
MATERIAL is covered by (A) a PATENT RIGHT under which NYMOX has elected
not to be licensed under this Agreement or (B) any other patent, other
than a PATENT RIGHT, owned by GENERAL and not licensed to NYMOX or (ii)
GENERAL does not have the right to grant to NYMOX the right to use such
GENERAL MATERIAL in accordance with paragraph 3.4;
(d) as to all SPONSORED RESEARCH:
(i) for the purpose of facilitating disclosure to NYMOX
of RESEARCH INFORMATION, INVENTIONS and GENERAL MATERIAL,
permit duly authorized employees of or representatives of
NYMOX to visit the PRINCIPAL INVESTIGATORS' laboratories
at the GENERAL or other GENERAL facilities where
SPONSORED RESEARCH is conducted at the reasonable
convenience of PRINCIPAL INVESTIGATORS or any other
pertinent INVESTIGATOR; and
(ii) promptly advise NYMOX of any INVENTION and provide
NYMOX with adequate advance notice of the intent to file,
filing allowance and issuance of any PATENT RIGHT, except
those filed by GENERAL at its own expense pursuant to
paragraph 5.1.
2.2 In consideration of said undertaking by PRINCIPAL
INVESTIGATORS, NYMOX shall at NYMOX's expense:
(a) beginning with the EFFECTIVE DATE, make annual research
grants to GENERAL for the support of SPONSORED RESEARCH in accordance with
budgets that shall be supplied to NYMOX by PRINCIPAL INVESTIGATORS (all
figures in U.S. dollars) in the following amounts:
One Hundred Seventy-Five Thousand Dollars ($175,000) in the
First AGREEMENT YEAR,
Two Hundred Thousand Dollars ($200,000) in the Second AGREEMENT
YEAR,
Two Hundred Twenty-Five Thousand Dollars ($225,000) in the Third
AGREEMENT YEAR,
or such greater amounts as shall be agreed to under paragraph
2.4(c).
(b) pay to the GENERAL the grants set forth in the foregoing
subparagraph (a) in advance in accordance with the following:
One Hundred Seventy-Five Thousand Dollars ($175,000) within
thirty (30) days of the execution of the Agreement as advance
payment for the First AGREEMENT YEAR,
One Hundred Thousand Dollars ($100,000) on or about March 1,
1996 as advance payment of one-half of the grant for the Second
AGREEMENT YEAR beginning on September 1, 1996;
One Hundred Thousand Dollars ($100,000) on or about September l,
1996 as advance payment of the second half of the grant for the
Second AGREEMENT YEAR;
One Hundred Twelve Thousand Five Hundred Dollars ($112,500) on
or about March 1, 1997; as advance payment of one-half of the
grant for the Third AGREEMENT YEAR beginning on September 1,
1997; and,
One Hundred Twelve Thousand Five Hundred Dollars ($112,500) on
or about September 1, 1997 as advance payment of the second half
of the grant for the Third AGREEMENT YEAR.
It is understood and agreed by the parties that, unless
otherwise agreed, the funds provided in advance by NYMOX shall not be
expended by the PRINCIPAL INVESTIGATORS prior to the start of the
AGREEMENT YEAR for which such finds were intended. In the event that the
SPONSORED RESEARCH is terminated in accordance with Article 10, any
advance funds paid to GENERAL in excess of the amounts due GENERAL under
Article 10 and the noncancellable expenses reasonably committed to or
incurred by GENERAL prior to the termination shall be returned to NYMOX.
(c) provide PRINCIPAL INVESTIGATORS and INVESTIGATORS with
NYMOX MATERIALS in accordance with the terms and conditions of paragraphs
3.1 and 3.5 and in reasonable amounts sufficient to allow PRINCIPAL
INVESTIGATORS to carry out the SPONSORED RESEARCH, and such other projects
as the parties may agree to conduct, to the extent reasonably available
for distribution by NYMOX; and,
(d) In consideration of the licenses granted pursuant to
Article 6 by GENERAL to NYMOX to PATENT RIGHTS listed in Appendix E, NYMOX
shall pay PATENT COSTS as set forth in paragraph 5.1.
2.3 (a) The grants paid by NYMOX pursuant to paragraphs
2.2(a), 2.2(b) or 2.4(c) shall be used to support the Total Direct Costs
("TDC"), as defined by the U.S. Department of Health and Human Services
("DHHS"), of SPONSORED RESEARCH, in accordance with the budgets that shall
be supplied to NYMOX by PRINCIPAL INVESTIGATORS and to pay all indirect
costs ("Indirect Costs") attendant to such TDC. The budgets shall be
adjusted as necessary to allow for payment of full Indirect Costs. The
Indirect costs shall be calculated as the product of the Modified Total
Direct Costs ("MTDC"), as defined by DHHS, of SPONSORED RESEARCH and the
GENERAL's research Indirect Cost Rate in effect at the time the attendant
MTDC are incurred. The Indirect Cost Rate shall be the Hospital Research
Rate on MTDC that is negotiated annually by GENERAL with the DHHS. In no
event shall any such adjustment require NYMOX to pay funds in excess of
those specified in paragraph 2.2 or which have been agreed to under
paragraph 2.4(c).
(b) If the research grants which NYMOX is obligated to pay
GENERAL during any AGREEMENT YEAR exceed the sum of the actual TDC of the
SPONSORED RESEARCH conducted during that AGREEMENT YEAR, and the total
Indirect Costs during that AGREEMENT YEAR, the excess shall be applied to
SPONSORED RESEARCH in a future AGREEMENT YEAR. Any interest earned by
GENERAL on funds paid by NYMOX prior to being expended shall belong to
GENERAL.
2.4(a) Each INVESTIGATOR may conduct research outside the FIELD
OF RESEARCH. INVESTIGATORS shall be free to seek funding for such research
from any source including a commercial sponsor other than NYMOX.
(b) INVESTIGATORS shall be free at any time to seek funding
for any research in the FIELD OF RESEARCH, including additional funding
for SPONSORED RESEARCH, from any state or federal agency, private or
public foundation except foundations owned or operated by a commercial
entity other than NYMOX, provided that the terms and conditions of the
funding agreement are not in conflict with the terms and conditions of
this Agreement including but not limited to NYMOX's rights in and to
SPONSORED RESEARCH.
(c) At any time during the term of this Agreement either
party may propose in writing additional research in the FIELD OF RESEARCH
not previously described in any RESEARCH PROPOSAL appended hereto as
Appendix A. Each such proposal shall include a description of the
additional research proposed and a budget of the costs to be funded by
NYMOX and a schedule of payment of such costs. Unless the parties shall
otherwise agree in writing, negotiations between them over any such
proposal shall not extend beyond the sixtieth (60) day next following the
date when the proposal shall have first been so made, and whenever such
negotiations shall end without agreement between the parties to proceed
with the proposed research, the party proposing the additional research
may go ahead without the other party and seek funding from any other
sponsor including but not limited to a commercial sponsor for such
proposal as set forth in subparagraph (d). When such proposal is accepted
by the GENERAL and NYMOX, it shall be appended hereto as a RESEARCH
PROPOSAL and shall be subject to the terms and conditions of this
Agreement unless otherwise specified, and the SPONSORED RESEARCH described
therein shall commence and budgeted amounts shall be paid as set forth in
the proposal or as otherwise agreed by the parties in writing. In no event
shall any additional research be added to SPONSORED RESEARCH nor shall the
direction of SPONSORED RESEARCH be altered without the concurrence of the
Director, Office of Technology Affairs of GENERAL.
(d) An INVESTIGATOR may not seek funding from another
commercial sponsor for an additional research proposal in the FIELD OF
RESEARCH unless and until such proposal has been submitted to NYMOX in
accordance with the foregoing subparagraph (c) and the parties have failed
to agree in writing to append such proposal hereto as a RESEARCH PROPOSAL
within the stipulated sixty (60) days. In the event of such failure to
agree an INVESTIGATOR shall be free to seek and accept funding from
another commercial sponsor for such research proposal, provided, that the
subject matter of the proposal is not so closely related scientifically to
SPONSORED RESEARCH that sponsorship of such proposal by such other
commercial sponsor (i) would in the opinion of GENERAL's Trustees'
Committee on Industrial Relations and Intellectual Property after
consultation with NYMOX create a conflict of interest for GENERAL or any
INVESTIGATOR performing SPONSORED RESEARCH or (ii) would result in an
agreement which is prohibited by paragraph 6.7 of this Agreement or (iii)
would conflict with the terms and conditions of this Agreement. A
"conflict of interest" for the purposes of this paragraph 2.4 means that
the sponsorship of such proposal by such other commercial entity is likely
to result in a product for the other commercial sponsor competitive with a
PRODUCT likely to result from the SPONSORED RESEARCH. In the event that
GENERAL's Trustees' Committee on Industrial Relations and Intellectual
Property is of the opinion that there is no "conflict of interest," NYMOX
shall be notified promptly in writing of such opinion. If NYMOX disagrees
with such opinion, NYMOX shall have the right to have the existence of a
"conflict of interest" determined by alternative dispute resolution
pursuant to paragraph 11.3(b) by submitting such issue to alternative
dispute resolution within thirty (30) days of receipt of such notice.
INVESTIGATORS shall not be free to seek such funding until the later of
the expiration of such thirty (30) day period, or if an alternative
dispute resolution is initiated, a determination by alternative dispute
resolution that there is no "conflict of interest."
3. TRANSMISSION OF AND RIGHTS TO USE GENERAL
MATERIALS AND NYMOX MATERIALS
3.1 GENERAL and PRINCIPAL INVESTIGATORS shall not distribute
NYMOX MATERIALS to any one other than INVESTIGATORS or use them for any
purpose other than SPONSORED RESEARCH without the prior written approval
of NYMOX.
3.2 During the life of this Agreement GENERAL agrees not to
grant to any third party commercial or for-profit entity the right to use
any GENERAL MATERIAL in the LICENSE FIELD without NYMOX's written consent
except where such GENERAL MATERIAL or its manufacture or its use is
claimed in a PATENT RIGHT (i) to which NYMOX fails to exercise an option
for a license pursuant to paragraph 6.1, or (ii) to which NYMOX's license
rights have been terminated, or (iii) which is licensed non-exclusively in
the LICENSE FIELD hereunder, or (iv) which is licensed co-exclusively in
the LICENSE FIELD hereunder, provided that in the case of such co-
exclusively licensed PATENT RIGHT, GENERAL shall have the right to grant
the right to use such GENERAL MATERIAL only to the party to which such
PATENT RIGHT is coexclusively licensed.
3.3 To the extent allowed by law and the requisite informed
consent of any person whose tissue contributes substantially to any
GENERAL MATERIALS, PRINCIPAL INVESTIGATORS promptly, upon NYMOX's request,
shall provide NYMOX with an amount of such GENERAL MATERIAL specified by
NYMOX and reasonably needed for the purposes of this Agreement including
those specified in paragraph 3.4 but in no event shall PRINCIPAL
INVESTIGATORS be obligated to provide NYMOX such GENERAL MATERIAL in an
amount that would interfere with PRINCIPAL INVESTIGATORS' ability to
conduct SPONSORED RESEARCH.
3.4 NYMOX shall have the right to use GENERAL MATERIALS
provided to it for (i) any commercial purposes solely in the LICENSE FIELD
including but not limited to the development, manufacture, sale and use of
any PRODUCT or practice of any PROCESS; (ii) for research and development
purposes in the FIELD OF RESEARCH so long as such uses that may lead to
publications are discussed with the PRINCIPAL INVESTIGATORS under whose
direction the GENERAL MATERIALS are produced prior to the use of the
transferred GENERAL MATERIALS for such purposes and the INVESTIGATOR who
produces the GENERAL MATERIALS is given the credit and recognition
customary for academic scientific publication by acknowledgment or co-
authorship as appropriate; and (iii) transfers to third parties, provided,
however, that in the case of transfer to third parties NYMOX has obtained
the consent of the PRINCIPAL INVESTIGATORS under whose direction the
GENERAL MATERIALS are produced for the following cases: (a) in the case of
GENERAL MATERIALS that have not been described by an INVESTIGATOR in a
journal that requires dissemination of the described materials as a
condition of publication, and which are being transferred to any party
allowed to publish the results of research performed using the described
materials, prior to the transfer, and (b) in all cases, prior to
depositing any GENERAL MATERIALS in any depository in support of any
patent application.
3.5 GENERAL MATERIALS provided to NYMOX and NYMOX MATERIALS
provided to INVESTIGATORS shall be accompanied by a copy of the Material
Transfer Letters set forth in Appendix B.
3.6 (a) During the period SPONSORED RESEARCH is being
performed hereunder, GENERAL and PRINCIPAL INVESTIGATORS shall not,
without NYMOX's prior written approval, distribute or knowingly allow to
be distributed GENERAL MATERIALS to for-profit entities except for use
outside the FIELD OF RESEARCH and LICENSE FIELD or to for-profit non-
exclusive licensees or co-exclusive licensees in the LICENSE FIELD or
persons known to be employed thereby or consulting or performing research
therefor in the FIELD OF RESEARCH unless, (I) a description of the GENERAL
MATERIAL is published in a journal that requires dissemination of the
described materials as a condition for publication, or (2) GENERAL and
NYMOX have mutually agreed not to seek PATENT RIGHTS claiming such GENERAL
MATERIAL or its manufacture or use. Under the circumstances described in
(1) or (2) of this paragraph 3.6, GENERAL and PRINCIPAL INVESTIGATORS
shall have the right to distribute such GENERAL MATERIAL, only to:
(i) scientists who agree in writing not to transfer such
GENERAL MATERIALS to any other person or entity or to use such
GENERAL MATERIALS for commercial purposes or for research for
commercial purposes; or
(ii) third persons solely for the purpose of obtaining
chemical, physical, or biological analysis or characterization
of such GENERAL MATERIALS, provided that such persons agree in
writing not to transfer or grant access to such GENERAL
MATERIALS or any non-public information regarding such GENERAL
MATERIALS to any other person or entity and to use such GENERAL
MATERIALS only for the purpose of the agreed upon analysis or
characterization and not to disclose such analysis or
characterization to any third party.
(b) During the period SPONSORED RESEARCH is being performed
hereunder, GENERAL and PRINCIPAL INVESTIGATORS shall have the right to
transfer GENERAL MATERIALS to not-for-profit entities or persons known to
be affiliated therewith provided that such entities or persons agree in
writing not to (i) transfer such GENERAL MATERIALS to any other person or
entity, (ii) use such GENERAL MATERIALS for commercial purposes, and (iii)
sequence or clone any genetic material or sequence in such GENERAL
MATERIALS or products thereof.
(c) In the event that a PRINCIPAL INVESTIGATOR is no longer
available to perform SPONSORED RESEARCH at GENERAL but continues to be
employed by a not-for-profit entity, it is understood that at said former
PRINCIPAL INVESTIGATOR's request GENERAL shall make available to said
former PRINCIPAL INVESTIGATOR, GENERAL MATERIALS, provided that in the
event that said former PRINCIPAL INVESTIGATOR is replaced by a new
PRINCIPAL INVESTIGATOR pursuant to paragraph 10.2, the amounts of such
GENERAL MATERIAL shall not interfere with the ability of said new
PRINCIPAL INVESTIGATOR to conduct SPONSORED RESEARCH at GENERAL, and
further provided that said former PRINCIPAL INVESTIGATOR agrees in writing
(i) not to use said GENERAL MATERIALS for commercial purposes or in
research sponsored by any for-profit entity and (ii) not to transfer said
GENERAL MATERIALS to any third party except under the same conditions set
forth in paragraphs 3.6(a) and 3.6(b) hereof.
(d) Prior to any such distribution of any such GENERAL
MATERIALS by reason of the conditions described in subparagraphs (a), (b)
or (c) above, GENERAL and NYMOX shall use reasonable efforts to consider
the patentability of such GENERAL MATERIALS and cooperate to file, where
appropriate, PATENT RIGHTS protecting such GENERAL MATERIALS prior to
their distribution.
4. CONFIDENTIALITY AND PUBLICATION RIGHTS
4.1 In the event that NYMOX discloses to any GENERAL
personnel any information which relates to the SPONSORED RESEARCH that
NYMOX considers confidential, the rights and obligations of the parties
with respect to such information shall be governed by the terms and
conditions set forth in Appendix C.
4.2 Recognizing GENERAL's desire to publish previously
unpublished RESEARCH INFORMATION and NYMOX's desire to develop the results
of SPONSORED RESEARCH for the earliest introduction to the public:
(a) GENERAL agrees to submit to NYMOX an early draft of each
document as follows:
(i) Each manuscript first disclosing RESEARCH INFORMATION or
an INVENTION or describing a GENERAL MATERIAL at least thirty
(30) days prior to its submission for publication; and
(ii) Each abstract disclosing RESEARCH INFORMATION or an
INVENTION or a GENERAL MATERIAL at least seven (7) days prior to
its submission for publication.
NYMOX shall have the right to advise GENERAL as to the patentability of
any INVENTIONS disclosed therein and of NYMOX's desire to have PATENT
RIGHTS claiming such INVENTIONS filed. GENERAL shall use reasonable
efforts to carry out such advice in accordance with the terms of this
Agreement. At the end of such thirty (30) day or seven (7) day period,
GENERAL shall have the right, at its discretion, to submit such manuscript
or abstract for publication.
(b) Nothing in this Agreement shall be construed to prohibit
or limit in any way:
(i) The filing by GENERAL of any report required by any
public authority pertaining to SPONSORED RESEARCH;
(ii) The non-public disclosure and discussion of RESEARCH
INFORMATION between the INVESTIGATORS and their academic
colleagues. GENERAL shall advise the INVESTIGATORS that when
making such non-public disclosures, consideration should be
given to GENERAL's and NYMOX's interest in obtaining the
benefits of worldwide patent coverage of any INVENTIONS included
in RESEARCH INFORMATION.
5. PATENTS
5.1 Each INVESTIGATOR who during the course of SPONSORED
RESEARCH shall make an INVENTION, solely or jointly, ("GENERAL INVENTOR")
shall promptly report such INVENTION to GENERAL. Each GENERAL INVENTOR
shall assign all of his rights, title and interest in an INVENTION to
GENERAL. Each employee of NYMOX who makes an INVENTION jointly with an
INVESTIGATOR, shall report such INVENTION to NYMOX and shall assign all
his rights, title and interest in such INVENTION to NYMOX. INVENTIONS made
jointly by the INVESTIGATOR and NYMOX employees shall be jointly owned.
NYMOX shall report such INVENTION in writing to GENERAL's Office of
Technology Affairs. GENERAL and NYMOX agree that for each PATENT RIGHT
jointly assigned to GENERAL and NYMOX, NYMOX and GENERAL each own a one-
half undivided interest in such PATENT RIGHT in each country in which it
is filed and GENERAL'S interest therein is subject to the license rights
granted to NYMOX under this Agreement. GENERAL and NYMOX shall each be
allowed to sell, license or otherwise transfer its rights to such PATENT
RIGHT without the consent of the other; however, GENERAL's rights in this
respect are subject to the terms and conditions of this Agreement and
NYMOX's licensing rights thereto.
Each party shall promptly advise the other in writing of each
INVENTION disclosed to it. Representatives of GENERAL and NYMOX shall then
discuss whether a patent application or applications pertaining to such
INVENTION should be filed and in which countries. If both parties mutually
agree that patent application(s) should be filed, applications assigned
solely to GENERAL shall be filed by GENERAL, applications assigned solely
to NYMOX shall be filed by NYMOX and jointly assigned applications shall
be filed as mutually agreed upon by the parties. The titles, serial
numbers and other identifying data of any patent applications claiming an
INVENTION filed after the EFFECTIVE DATE by mutual agreement of GENERAL
and NYMOX shall be listed in Appendix D and shall become PATENT RIGHTS.
Reasonable and customary patent costs incurred by GENERAL for
PATENT RIGHTS filed by mutual agreement ("PATENT COSTS") shall be
reimbursed in full by NYMOX upon NYMOX's receipt of GENERAL's notice of
payment of such PATENT COSTS, except as provided for below. Such PATENT
COSTS shall include but not be limited to the costs of preparing, filing,
prosecuting (including mutually agreed upon interferences or oppositions),
issuing or maintaining and working the PATENT RIGHTS. For PATENT COSTS not
reimbursed by NYMOX within thirty (30) days after receipt of GENERAL's
notice of payment of such costs, NYMOX shall pay GENERAL interest at the
rate of one and one half (1.5) percent per month compounded each month
that they remain unpaid. For PATENT RIGHTS in which other commercial
entities have acquired license rights, NYMOX shall reimburse the GENERAL
only for the same share of such costs as reimbursed by each of the other
commercial entities, but in no event shall NYMOX be required to reimburse
GENERAL for more than 50% of the PATENT COSTS for such PATENT RIGHTS.
It is understood that any PATENT RIGHTS listed in Appendix E on
the EFFECTIVE DATE shall be deemed to be "PATENT RIGHTS filed by mutual
agreement," and that existing PATENT COSTS in the amount of Thirteen
Thousand Eight Hundred Seventy Dollars and Sixty-Three Cents ($13,870.63)
and all PATENT COSTS incurred by GENERAL after the EFFECTIVE DATE shall be
reimbursed in full by NYMOX, except for PATENT RIGHTS in which other
commercial entities have or acquire license rights in which case NYMOX
shall reimburse GENERAL only for the same share of such costs as
reimbursed by each of the other commercial entities, but in no event shall
NYMOX be required to reimburse GENERAL for more than 50% of the PATENT
COSTS for such PATENT RIGHTS.
In the event NYMOX is not interested in having PATENT RIGHTS
filed with respect to a particular INVENTION made solely by GENERAL
INVENTOR(S), NYMOX shall advise GENERAL of such fact within ninety (90)
days from the date on which the INVENTION was disclosed to NYMOX by
GENERAL or sooner as specified by GENERAL if necessary to avoid the loss
of PATENT RIGHTS. GENERAL, at its own expense may then file and prosecute
such patent application in any country where NYMOX elects not to file, and
such patent applications and patents shall not be included with the rights
licensed to NYMOX pursuant to paragraphs 6.1, 6.2 and 6.3 of this
Agreement and GENERAL shall be free to license such patent application or
patent to any other party.
In the event that GENERAL does not wish to file a patent
application with respect to a particular INVENTION, or does not wish to
file patent applications with respect to specific countries, it shall
first without delay notify NYMOX, and NYMOX shall be free, where not
contrary to United States law, to file at its expense patent applications
in the name of GENERAL. If necessary, GENERAL shall render NYMOX, at
NYMOX's expense, all necessary assistance in order to facilitate such
filing. Any such application shall be considered a PATENT RIGHT for all
purposes of this Agreement.
5.2 With respect to any PATENT RIGHT filed by mutual
agreement of the parties, each patent application, office action, response
to office action, request for terminal disclaimer, and request for reissue
or reexamination of any patent issuing from such application shall be
provided to NYMOX sufficiently prior to the filing of such application,
response or request to allow for review and comment by NYMOX.
6. LICENSES
6.1 As to each PATENT RIGHT assigned in whole or in part to
GENERAL or in which GENERAL has a licensable right, GENERAL shall, upon
written request submitted by NYMOX within the eighteen (18) months next
following the U.S. filing date of such PATENT RIGHT, grant to NYMOX and
any AFFILIATE of NYMOX designated in writing by NYMOX, a license as
defined in the next succeeding paragraphs 6.2 and 6.3 under GENERAL's
rights; and, in the absence of such request by NYMOX, GENERAL may grant a
license to said PATENT RIGHT to any other person or persons on any terms.
The option to acquire a license hereunder does not apply to any PATENT
RIGHT that NYMOX has advised GENERAL's Office of Technology Affairs in
writing that NYMOX is not interested in having filed, prosecuted or
maintained.
6.2 To the extent not prohibited by the United States
government or by contractual obligations requiring GENERAL to license a
PATENT RIGHT to any other sponsor of research with respect to INVENTIONS
made jointly by a person who is not an INVESTIGATOR but who is a co-
inventor of a PATENT RIGHT with an INVESTIGATOR, at the written request of
NYMOX or any AFFILIATE of NYMOX in accordance with the foregoing paragraph
6.1, GENERAL hereby grants to NYMOX:
(a) an exclusive, worldwide, royalty-bearing license under
PATENT RIGHTS in the LICENSE FIELD (i) to make, have made, use, sell and
have sold PRODUCTS and (ii) to use PROCESS; and
(b) the right to grant sublicenses in the LICENSE FIELD to
any PATENT RIGHTS licensed exclusively hereunder or co-exclusively to
NYMOX pursuant to paragraph 6.3 provided that any SUBLICENSEE agrees to be
bound by the terms and conditions of this Agreement applicable to
SUBLICENSEES. If NYMOX has only a non-exclusive license to any PATENT
RIGHTS, GENERAL will, upon request of NYMOX, grant NYMOX the right to
grant sublicenses thereunder unless it has a reasonable basis for refusing
such grant.
6.3 To the extent and only to the extent that GENERAL is
prohibited from granting to NYMOX an exclusive license to any PATENT RIGHT
for the reasons set forth in paragraph 6.2, the license granted to NYMOX
under paragraph 6.2 shall be co-exclusive with such other sponsor where
exclusivity is prohibited by GENERAL's contractual obligations to such
other sponsor and non-exclusive where exclusivity is prohibited by the
United States government.
6.4 The above licenses to sell any PRODUCT includes the right
to grant to the purchaser of such PRODUCT from NYMOX its AFFILIATES, and
SUBLICENSEES the right to use such purchased PRODUCT in a method coming
within the scope of PATENT RIGHTS.
6.5 All licenses pursuant to paragraphs 6.2, 6.3 and 6.4
above to INVENTIONS conceived or first actually reduced to practice during
the course of research funded by a U.S. federal agency are subject to the
rights, conditions and limitations imposed by U.S. law. GENERAL agrees to
use its best efforts to diligently comply with the requirements of such
laws and applicable regulations. The words "exclusive license" as used
herein shall mean exclusive except for the royalty-free non-exclusive
license granted to the U.S. government by GENERAL pursuant to 35 USC
Section 202 (c)(4) for any PATENT RIGHT claiming an INVENTION subject to
35 USC Section 201 and the rights of GENERAL and INVESTIGATORS as set
forth in paragraph 6.6.
6.6 All licenses granted pursuant to paragraphs 6.2, 6.3 and
6.4 above are subject to GENERAL's and INVESTIGATOR's rights to use for
its internal research and patient care purposes any INVENTION claimed in
the licensed PATENT RIGHT, however, except as set forth in paragraph
2.2(c), such rights do not obligate NYMOX to supply PRODUCT or NYMOX
MATERIALS for such use.
6.7 GENERAL represents that on the date this agreement is
signed by GENERAL, that to the best of its knowledge (i) there is no
agreement in effect on the EFFECTIVE DATE between GENERAL or PRINCIPAL
INVESTIGATORS and any party (not including the United States Government)
which prohibits GENERAL from granting to NYMOX the exclusive licenses set
forth in paragraphs 6.2 and 6.3 and (ii) that all INVESTIGATORS are
obligated to assign all right, title and interest in INVENTIONS and PATENT
RIGHTS to GENERAL.
(a) Notwithstanding anything else to the contrary, GENERAL
agrees during the period SPONSORED RESEARCH is being performed not to
enter into an agreement with any third party commercial entity to fund
PRINCIPAL INVESTIGATORS or any INVESTIGATOR to conduct SPONSORED RESEARCH.
(b) GENERAL agrees to use reasonable care not to enter into
an agreement with a third party to acquire materials for use in SPONSORED
RESEARCH under terms that will prevent GENERAL from granting NYMOX sole
and exclusive rights to PATENT RIGHTS.
6.8 NYMOX, its AFFILIATES and SUBLICENSEES shall use
reasonable efforts to develop a PRODUCT as defined by paragraph 1.14(a) or
1.14(b)(i) selected by NYMOX for commercial sales and distribution or to
use PROCESSES for commercial purposes throughout the world. Prior to the
end of three (3) years from the date each PATENT RIGHT is first filed in
the United states or eighteen (18) months from the date NYMOX is granted a
license to such PATENT RIGHT pursuant to paragraph 6.1 and 6.2, whichever
shall occur first, GENERAL and NYMOX shall meet to designate reasonable
objectives and the time periods in which such objectives are to be met by
NYMOX, its AFFILIATES or SUBLICENSEES with respect to a PRODUCT selected
by NYMOX. By way of example, such objectives may include commencement of
animal toxicity studies, submission of a Notice of Claimed Investigational
Exemption for a New Drug with the U.S. Food and Drug Administration (the
"FDA"), commencement and diligent performance of human studies, and
submission of a Product License Application (a "PLA") with the FDA. If
such meeting occurs prior to the third anniversary of the first U.S.
filing date of such PATENT RIGHT and the parties agree that such
objectives cannot be designated at that time, the period to designate such
objectives may be extended for up to one (1) year. NYMOX shall exert
reasonable efforts to obtain such objectives. In the event NYMOX
subsequently indicates in writing to GENERAL that such objectives cannot
be met or fails to meet such objectives, NYMOX and GENERAL shall enter
into good faith negotiations to reconsider such objectives. In the event
that the parties cannot agree to the initial objectives by the fifth
anniversary or to modify objectives within ninety (90) days after
beginning good faith negotiations, the matter shall be submitted to
alternative dispute resolution pursuant to paragraph 11.3 to determine the
objectives and the time period therefor which should be met pursuant to
this paragraph 6.8. The alternative dispute resolver in setting and
determining the objectives shall consider the state of the technology; the
efforts exerted by NYMOX; the business circumstances of NYMOX, including
finances and manpower available to NYMOX; and technical and regulatory
problems. Thereafter, NYMOX shall exert reasonable efforts to achieve
such objectives.
In the event that NYMOX indicates that it cannot meet the
objectives whether set by the parties or by alternative dispute resolution
because of technological or regulatory problems, GENERAL shall not
unreasonably deny an extension of the objectives.
If NYMOX (i) fails to meet the objectives established by
agreement of the parties and fails to negotiate reconsideration of such
objectives or to request alternative dispute resolution or (ii) fails to
meet objectives established by alternative dispute resolution, GENERAL
shall have the right to terminate the licenses to such PATENT RIGHT
granted hereunder or convert such licensees to non-exclusive licenses by
providing to NYMOX sixty (60) days prior written notice. Prior to the
expiration of such sixty (60) day period, NYMOX may submit such action to
alternative dispute resolution to determine whether or not NYMOX has
exerted reasonable efforts pursuant to this paragraph 6.8, and once such
action has been submitted to alternative dispute resolution the licenses
and rights may only be modified or canceled in the event of a decision in
the alternative dispute resolution that NYMOX has not exerted such
reasonable efforts. If the alternative dispute resolver decides that
NYMOX has exerted reasonable efforts, the alternative dispute resolver
shall establish new objectives.
NYMOX shall ensure that, for any PRODUCT or PROCESS being
developed or commercialized by an AFFILIATE or SUBLICENSEE, such AFFILIATE
or SUBLICENSEE shall assume the obligations imposed on NYMOX under this
paragraph 6.8.
6.9 At the end of each AGREEMENT YEAR, after objectives are
established, NYMOX shall report in writing to the GENERAL on the progress
made toward the objectives established pursuant to Paragraph 6.8.
6.10 In the event NYMOX or any AFFILIATE or SUBLICENSEE
intends to sell any PRODUCT whose manufacture, use or sale is not subject
to one or more VALID CLAIMS of any PATENT RIGHT licensed to NYMOX, NYMOX
will notify the Director, Office of Technology Affairs of GENERAL in
writing of such intent not later than sixty (60) days prior to its
distribution of such PRODUCT, and shall discuss with GENERAL and
renegotiate as necessary a "Competitive" royalty as provided in paragraph
7.1(d).
7. ROYALTIES
7.1 On all sales of PRODUCTS anywhere in the world by NYMOX,
its AFFILIATES or SUBLICENSEES, NYMOX shall pay GENERAL royalties in
accordance with the following schedule subject to the provisions of
paragraph 7.1(d), such undertaking and schedule having been agreed to for
the purpose of reflecting and advancing the mutual convenience of the
parties.
(a) For each PRODUCT sold by NYMOX or its AFFILIATES or
SUBLICENSEES where such PRODUCT, its manufacture or use shall be subject
to a VALID CLAIM of any PATENT RIGHT licensed exclusively to NYMOX, the
royalty shall be four percent (4%) of the NET SALES PRICE; and
(b) For each PRODUCT sold by NYMOX or its AFFILIATES or
SUBLICENSEES where such PRODUCT, its manufacture or use shall be subject
to a VALID CLAIM of any PATENT RIGHT licensed non-exclusively to NYMOX the
royalty shall be one-half of the rate specified for such PRODUCT in (a)
above; and
(c) During each of the seven (7) years next following the
FIRST COMMERCIAL SALE anywhere in the world by NYMOX, its AFFILIATES, or
SUBLICENSEES of each PRODUCT whose manufacture, use or sale shall employ
or incorporate any GENERAL MATERIAL, RESEARCH INFORMATION or NYMOX
MATERIAL where such GENERAL MATERIAL, RESEARCH INFORMATION or NYMOX
MATERIAL is not subject to one or more VALID CLAIMS of any PATENT RIGHT in
the country in which such PRODUCT is manufactured, used or sold, NYMOX
shall pay GENERAL a royalty on the sale of such PRODUCT of one (l) percent
of the NET SALES PRICE of such PRODUCT; and
(d) Notwithstanding paragraphs 7.1(a), (b) and (c) and 7.2
below, if at the time NYMOX requests in writing a license pursuant to
paragraph 6.1 or notifies GENERAL in writing of its intent to distribute a
PRODUCT whose manufacture, use or sale is not subject to one or more VALID
CLAIMS of any PATENT RIGHT licensed to NYMOX pursuant to paragraph 6.10,
no royalty as specified in this paragraph 7.1 is "Competitive" as
hereinafter defined, GENERAL shall grant to NYMOX a license at the lowest
royalty rate that is competitive at the time GENERAL receives NYMOX's
written request. A royalty rate shall be regarded as "Competitive" if it
is within the range of royalty rates that GENERAL would charge in an arms
length transaction with a licensee which was not and had not been a
sponsor of research at GENERAL, taking into account the value of the
licensed technology at the time of GENERAL's receipt of a written request
for a license or notice of intent to distribute a PRODUCT by NYMOX.
7.2 If NYMOX is required to pay a royalty or royalties to any
third party to practice PATENT RIGHTS licensed hereunder, NYMOX may reduce
the amount paid to GENERAL hereunder by one-half of the amount paid to
such third party or parties, provided, however, that the aggregate of any
reduction in royalties under this paragraph 7.2 shall not exceed fifty
(50) percent of any royalty payment otherwise due GENERAL under paragraph
7.1.
7.3 If and whenever GENERAL shall as permitted herein license
any PATENT RIGHT to another licensee for the purpose of making, using or
selling PRODUCTS in the FIELD, at a royalty or royalties more favorable to
such licensee than herein provided for NYMOX, GENERAL shall give written
notice thereof to NYMOX and as of the effective date of such more
favorable royalty or royalties, NYMOX's obligation hereunder to pay
royalty or royalties to GENERAL shall be revised to the more favorable
rate.
7.4 In the event that the royalty paid to GENERAL is a
significant factor in the return realized by NYMOX so as to diminish
NYMOX's capability to respond to competitive pressures in the market,
GENERAL agrees to consider a reasonable reduction in the royalty paid to
GENERAL as to each such PRODUCT for the period during which such market
condition exists. Factors determining the size of the reduction will
include profit margin on PRODUCT and on analogous products, prices of
competitive products, total prior sales by NYMOX, and NYMOX's expenditures
in PRODUCT development.
7.5 NYMOX shall keep, and shall cause each of its AFFILIATES
and SUBLICENSEES, if any, to keep, full and accurate books of account
containing all particulars that may be necessary for the purpose of
calculating all royalties payable to the GENERAL. Such books of account
shall be kept at their principal place of business and, with all necessary
supporting data shall, during all reasonable times for the three (3) years
next following the end of the calendar year to which each shall pertain,
be open for inspection at reasonable times by GENERAL or its designee at
GENERAL's expense for the sole purpose of verifying royalty statements or
compliance with this Agreement.
7.6 With each semiannual payment, NYMOX shall deliver to
GENERAL a full and accurate accounting to include at least the following
information:
(a) Quantity of each PRODUCT sold or leased (by country)
by NYMOX, and its AFFILIATES or SUBLICENSEES;
(b) Total receipts for each PRODUCT (by country);
(c) Quantities of each PRODUCT (i) used by NYMOX and its
AFFILIATES or SUBLICENSEES unless such PRODUCT is used for the purposes
excluded by paragraph 1.11(c) or (ii) sold to the United States Government
for which the government requires a reduction in the NET SALES PRICE as a
result of its license under 35 USC Sec. 204.
(d) Names and addresses of all SUBLICENSEES of NYMOX;
and
(e) Total royalties payable to GENERAL.
7.7 In each year the amount of royalty due shall be
calculated semiannually as of June 30 and December 31 ("ACCOUNTING
PERIOD") and shall be paid semiannually within the sixty (60) days next
following such date, every such payment shall be supported by the
accounting prescribed in paragraph 7.5 and shall be made in United States
currency. Whenever for the purpose of calculating royalties conversion
from any foreign currency shall be required, such conversion shall be at
the rate of exchange thereafter published in the Wall Street Journal for
the business day closest to the last day of the applicable ACCOUNTING
PERIOD.
7.8 Only one royalty calculated at the highest applicable
royalty rate shall be due and payable to GENERAL by NYMOX for any PRODUCT
subject to royalty under this Agreement regardless of the number of PATENT
RIGHTS covering such PRODUCT, its manufacture and use.
7.9 If the transfer of or the conversion into United States
Dollar Equivalent of any such remittance in any such instance is not
lawful or possible, the payment of such part of the royalties as is
necessary shall be made by the deposit thereof, in the currency of the
country where the sale was made on which the royalty was based, to the
credit and account of GENERAL or its nominee in any commercial bank or
trust company located in that country, prompt notice of which shall be
given to NYMOX.
7.10 Any tax required to be withheld by NYMOX under the laws
of any foreign country for the account of GENERAL, shall be promptly paid
by NYMOX for and on behalf of GENERAL to the appropriate governmental
authority, and NYMOX shall use its best efforts to furnish GENERAL with
proof of payment of such tax. Any such tax actually paid on GENERAL's
behalf shall be deducted from royalty payments due GENERAL.
7.11 The royalty payments due under the Agreement shall, if
overdue, bear interest until payment at a per annum rate equal to one
percent (1%) above the prime rate in effect at the Bank of Boston on the
due date, not to exceed the maximum permitted by law. The payments of such
interest shall not preclude GENERAL from exercising any other rights it
may have as a consequence of the lateness of any royalty payment.
8. INFRINGEMENT
8.1 GENERAL will protect its PATENT RIGHTS from infringement
and prosecute infringers when, in its sole judgment, such action may be
reasonably necessary, proper and justified.
8.2 If NYMOX shall have supplied GENERAL with written
evidence demonstrating to GENERAL's reasonable satisfaction prima facie
infringement of a claim of a PATENT RIGHT by a third party, NYMOX may by
notice request GENERAL to take steps to protect the PATENT RIGHT, and
unless GENERAL shall within three (3) months of the receipt of such notice
either (i) cause infringement to terminate or (ii) initiate legal
proceedings against the infringer, NYMOX may, upon notice to GENERAL,
initiate legal proceedings against the infiinger at NYMOX's expense and in
GENERAL's name if so required by law. NYMOX's reasonable and customary
expenses for such legal proceedings shall be fully creditable against
royalties owed to GENERAL hereunder, provided that in no event shall any
royalty payment to GENERAL be reduced by more than 50%.
8.3 In the event one party shall initiate or carry on legal
proceedings to enforce any PATENT RIGHT against any alleged infringer, and
the other party shall fully cooperate with and supply all assistance
reasonably requested by the party initiating or carrying on such
proceedings. The party which institutes any suit to protect or enforce a
PATENT RIGHT shall have sole control of that suit and shall bear the
reasonable expenses (excluding legal fees) incurred by said other party in
providing such assistance and cooperation as is requested pursuant to this
paragraph. The party initiating or carrying on such legal proceedings
shall keep the other party informed of the progress of such proceedings
and said other party shall be entitled to counsel in such proceedings but
at its own expense. Any award paid by third parties as the result of such
proceedings (whether by way of settlement or otherwise) shall first be
applied to reimbursement of the unreimbursed legal fees and expenses
incurred by either party and then to the payment to GENES of the amount of
royalties which were applied to the expense of legal proceedings in
accordance with paragraph 8.2 above and then the remainder shall be
divided between the parties as follows;
(a) (i) If the amount is lost profits, NYMOX shall receive an
amount equal to the damages the court determines NYMOX has suffered as a
result of the infringement less the amount of any royalties that would
have been due GENERAL on sales of PRODUCT lost by NYMOX as a result of the
infringement had NYMOX made such sales; and
(ii) GENERAL shall receive an amount equal to the royalties it
would have
received if such sales had been made by NYMOX; or
(b) As to awards other than lost profits, seventy (70)
percent to the party initiating such proceedings and thirty (30) percent
to the other party.
8.4 For the purpose of the proceedings referred to in this
paragraph 8, GENERAL and NYMOX shall permit the use of their names and
shall execute such documents and carry out such other acts as may be
necessary.
9. INDEMNIFICATION AND INSURANCE
9.1 (a) NYMOX shall indemnify, defend and hold harmless
GENERAL and its trustees, officers, medical and professional staff
employees, and agents and their respective successors, heirs and assigns
(the "Indemnitees"), against any liability, damage, loss or expense
(including reasonable attorneys' fees and expenses of litigation) incurred
by or imposed upon the Indemnitees or any one of them in connection with
any claims, suits, actions, demands or judgments arising out of any theory
of product liability (including, but not limited to, actions in the form
of tort warranty, or strict liability) concerning any PRODUCT, PROCESS or
service made, used or sold pursuant to any right or license granted under
this Agreement or (ii) Arising out of any other activities to be carried
out pursuant to this Agreement.
(b) NYMOX's indemnification under (a) above shall not apply
to any liability, damage, loss or expense to the extent that it is
attributable to the negligent activities, reckless misconduct or
intentional misconduct of the Indemnitees.
(c) NYMOX agrees, at its own expense, to provide attorneys
reasonably acceptable to GENES to defend against any actions brought or
filed against any party indemnified hereunder with respect to the subject
of indemnity contained herein, whether or not such actions are rightfully
brought.
9.2 (a) Beginning at the time any such PRODUCT, PROCESS or
service is being commercially distributed or sold (other than for the
purpose of obtaining regulatory approvals) by NYMOX or by a SUBLICENSEE,
AFFILIATE or agent of NYMOX, NYMOX shall at its sole cost and expense,
procure and maintain policies of commercial general liability insurance in
amounts not less than $2,000,000 per incident and $2,000,000 annual
aggregate and naming the Indemnitees as additional insureds. Such
commercial general liability insurance shall provide (i) product liability
coverage and (ii) contractual liability coverage for NYMOX indemnification
under paragraph 9.1 of this Agreement. If NYMOX elects to self-insure all
or part of the limits described above (including deductibles or retentions
which are in excess of $250,000 annual aggregate) such self-insurance
program must be acceptable to the GENERAL and the Risk Management
Foundation of the Harvard Medical Institutions Inc. (RMF). The minimum
amounts of insurance coverage required under this paragraph 9.2 shall not
be construed to create a limit of NYMOX's liability with respect to its
indemnification under paragraph 9.1 of this Agreement.
(b) NYMOX shall provide GENERAL with written evidence of such
insurance upon request of GENERAL. NYMOX shall provide GENERAL with
written notice at least fifteen (15) days prior to the cancellation, non-
renewal or material change in such insurance; if NYMOX does not obtain
replacement insurance providing comparable coverage within such fifteen
(15) day period, GENERAL shall have the right to terminate this Agreement
effective at the end of such fifteen (15) day period without notice or any
additional waiting periods.
(c) NYMOX shall maintain such comprehensive general liability
insurance beyond the expiration or termination of this Agreement during
(i) the period that any PRODUCT, PROCESS, or service, relating to, or
developed pursuant to, this Agreement is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by
NYMOX or by a SUBLICENSEE, AFFILIATE or agent of NYMOX and (ii) a
reasonable period after the period referred to in (c) (i) above which in
no event shall be less than fifteen (15) years.
10. TERMINATION
10.1 The SPONSORED RESEARCH hereunder shall have an initial
term of three (3) years.
10.2 So long as the PRINCIPAL INVESTIGATORS are available to
direct the SPONSORED RESEARCH at GENERAL, NYMOX may not terminate
SPONSORED RESEARCH except in accordance with paragraph 10.1 or 10.3(a). If
for any reason the PRINCIPAL INVESTIGATORS shall no longer be available at
GENERAL, the parties agree to negotiate in good faith the continuance of
such SPONSORED RESEARCH. However, if a new PRINCIPAL INVESTIGATOR
acceptable to NYMOX cannot be agreed upon, NYMOX may terminate such
SPONSORED RESEARCH except for an obligation to continue for up to six (6)
months beyond notification of the departing PRINCIPAL INVESTIGATOR's
departure, salary support at the pretermination level of all Ph.D. or M.D.
personnel who have been committed to the SPONSORED RESEARCH on half-time
or greater basis, provided GENERAL uses reasonable efforts to reduce such
costs to NYMOX.
10.3 If either party shall materially default in performing
any of its obligations under this Agreement, the nondefaulting party may
give notice of the default to the defaulting party. Unless such default is
corrected within sixty (60) days after such notice, then:
(a) in the event that the default pertains to the obligations
of GENERAL to perform SPONSORED RESEARCH, NYMOX may immediately terminate
in writing its support of SPONSORED RESEARCH;
(b) in the event that the default pertains to the obligations
of NYMOX to support SPONSORED RESEARCH, GENERAL may, in writing,
immediately terminate the SPONSORED RESEARCH and may, in writing,
immediately terminate any unexercised license options to PATENT RIGHTS
(and, once GENERAL has given a notice that NYMOX has defaulted on such
support obligations, NYMOX shall not have the right to exercise any such
options unless and until the default is cured); and,
(c) in the event that the default pertains to the obligations
of NYMOX under Articles 6, 7 or 9 with respect to any licenses granted
hereunder, GENERAL may, in writing, immediately terminate such license.
10.4 NYMOX may at any time terminate any or all licenses
granted pursuant to paragraphs 6.2, 6.3 and 6.4 on a patent by patent
and/or country by country basis upon thirty (30) days prior written
notice.
10.5 Termination of the licenses granted NYMOX in accordance
with paragraphs 6.2, 6.3 and 6.4 shall not relieve NYMOX of the obligation
to pay the GENERAL any royalties due pursuant to paragraphs 7. l or 7.2
for the sale of PRODUCT prior to the effective date of such termination,
or affect the rights of the GENERAL to receive written statements
accounting for royalties payable and to inspect NYMOX's books and records
as provided for herein.
10.6 Unless sooner terminated, GENERAL shall have the right to
terminate the licenses and rights granted to NYMOX in any country under
this Agreement in the event that after the FIRST COMMERCIAL SALE of
PRODUCT in such country there is a continuous two (2) year period in which
no PRODUCT is sold in such country, provided that such sale is not
prevented by force majeure, government regulation or intervention, or
institution of a law suit by a third party.
10.7 Unless otherwise terminated, the royalty bearing licenses
under PATENT RIGHTS granted hereunder will continue on a country by
country basis until the last to expire of PATENT RIGHTS, the claims of
which but for this Agreement would be infringed by the manufacture, use or
sale of PRODUCT in the applicable country, at which time NYMOX shall have
a fully paid up license.
10.8 Upon any termination of any license under this Agreement,
for a period of one (1) year, NYMOX shall be entitled to finish any work-
in-progress and to sell any completed inventory of a PRODUCT covered by
this Agreement which remains on hand as of the date of the termination, so
long as NYMOX pays to GENERAL the royalties applicable to said subsequent
sales in accordance with the same terms and conditions as set forth in
this Agreement.
10.9 In the event that any license granted to NYMOX under this
Agreement is terminated, any sublicense under such license granted prior
to termination of said license shall remain in full force and effect,
provided that:
(i) the SUBLICENSEE is not then in breach of its sublicense
agreement;
(ii) the SUBLICENSEE agrees to be bound to GENERAL as the
licensor under the terms and conditions of this
sublicense agreement, as modified by the provisions of
this paragraph 10.9;
(iii) the SUBLICENSEE, at GENERAL's written request, assumes in
a signed writing the same obligations to GENERAL as those
assumed by NYMOX under Articles 9 and 11 hereof;
(iv) GENERAL shall have the right to receive the greater of
(a) any payments payable to NYMOX under such sublicense
agreement to the extent that they are reasonably and
equitably attributable to such SUBLICENSEE's right under
such sublicense to use and exploit PATENT RIGHTS,
RESEARCH INFORMATION and/or GENERAL MATERIALS, or (b) the
lowest royalty which is within the "Competitive Range" as
defined in paragraph 7.1(d) hereof, at the time GENERAL's
license to NYMOX is terminated;
(v) the SUBLICENSEE agrees to be bound by the due diligence
obligations of NYMOX pursuant to paragraph 6.8 hereof,
(whether set by the parties or by arbitration) in the
field and territory of the sublicense;
(vi) GENERAL has the right to terminate such sublicense upon
fifteen (15) days prior written notice to NYMOX and such
SUBLICENSEE in the event of any material breach by the
obligation to make payments described in clause (iv) of
this paragraph 10.9, unless such breach is cured prior to
the expiration of such fifteen (15) day period, and shall
further have the right to terminate such sublicense in
the event of SUBLICENSEE's failure to meet its due
diligence obligations pursuant to clause (v) hereof;
(vii) GENERAL shall not assume, and shall not be responsible to
such SUBLICENSEE for, any representations, warranties or
obligations of NYMOX to such SUBLICENSEE, other than to
permit such SUBLICENSEE to exercise any rights to PATENT
RIGHTS, RESEARCH INFORMATION and GENERAL MATERIALS that
are granted under such sublicense agreement consistent
with the terms of this Agreement.
10.10 (a) In the event of a termination of SPONSORED RESEARCH
hereunder for any reason, the provisions of Articles 5,6,7,8,9 and 11 and
paragraphs 10.3 through 10.10 and NYMOX's right to use RESEARCH
INFORMATION and GENERAL MATERIALS under paragraph 2.1(b) and (c) shall
survive such termination.
(b) In the event of termination of any license granted
hereunder, NYMOX's right to use GENERAL MATERIALS, the manufacture use or
sale of which is claimed in the PATENT RIGHTS to which NYMOX's license
shall have been terminated, shall be terminated; the obligations of the
parties with respect to SPONSORED RESEARCH shall survive; and all
provisions of this Agreement shall survive with respect to all other
licenses which have not been terminated; and the provisions of paragraphs
10.5, 10.8,10.9 and 10.10 and Articles 9 and 11 shall survive with respect
to the terminated license(s).
11. MISCELLANEOUS
11.1 This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof, and
supersedes and replaces all prior agreements, understandings, writings,
and discussions between the parties relating to said subject matter.
11.2 In order to facilitate implementation of this Agreement,
GENERAL and NYMOX are designating the following individuals to act on
their behalf with respect to this Agreement for the matters indicated
below:
(a) with respect to matters concerning the conduct of
SPONSORED RESEARCH, budgets, manuscripts for publication, written
transmittal of RESEARCH INFORMATION and MATERIALS: for GENERAL, PRINCIPAL
INVESTIGATORS; for NYMOX: Sr. Vice President for Research and Development
and Strategic Planning;
(b) with respect to any RESEARCH PROPOSAL submitted pursuant
to paragraph 2.4, the receipt of research payments made pursuant to
paragraph 2.2 or any RESEARCH PROPOSAL appended hereto, all royalty
payments, the form of any Confidentiality Agreement to be signed by an
INVESTIGATOR, the disclosure of any INVENTION or any correspondence
pertaining to any INVENTION or PATENT RIGHT: for GENERAL, the Director,
Office of Technology Affairs; for NYMOX: Sr. Vice President for Research
and Development and Strategic Planning;
(c) any amendment of or waiver under this Agreement, any
written notice or other communication pertaining to the Agreement: for
GENERAL, the Director, Office of Technology Affairs; for NYMOX: Sr. Vice
President for Research and Development and Strategic Planning;
(d) the above designations may be superseded from time to
time by alternative designations made by: for GENERAL, the General
Director; for NYMOX: CEO/President.
Any notice or communication required by the foregoing 11.2(a)-(d) shall be
deemed made if mailed first class postage prepaid to the individuals so
designated, except notices pertaining to breach or termination which shall
be made by prepaid, first class, certified mail, return receipt requested.
11.3(a) This Agreement shall be governed by and construed and
interpreted in accordance with the substantive laws of The Commonwealth of
Massachusetts and the United States of America, regardless of the choice
of law rules of any jurisdiction.
(b) For any and all claims, disputes, or controversies
arising under, out of, or in connection with this Agreement, including any
dispute relating to patent validity or infringement, which the parties
shall be unable to resolve within sixty (60) days, the party raising such
dispute shall promptly advise the other party of such claim, dispute, or
controversy in a writing which describes in reasonable detail the nature
of such dispute. By not later than five (5) business days after the
recipient has received such notice of dispute, each party shall have
selected for itself a representative who shall have the authority to bind
such party and shall additionally have advised the other party in writing
of the name and title of such representative. By not later than ten (10)
business days after the date of such notice of dispute, such
representatives shall schedule a date for engaging in an alternative
dispute resolution ("ADR") process with ENDISPUTE, Inc. of Cambridge,
Massachusetts or with any other party mutually acceptable to the parties.
Thereafter, the representatives of the parties shall engage in good faith
in an ADR process under the auspices of ENDISPUTE. If the representatives
of the parties have not been able to resolve the dispute within thirty
(30) business days after the termination of ADR, the parties shall have
the right to pursue any other remedies legally available to resolve such
dispute in either the Courts of the Commonwealth of Massachusetts or in
the United States District Court for the District of Massachusetts, to
whose jurisdiction for such purposes GENERAL and NYMOX each irrevocably
consents and submits. Notwithstanding the foregoing, nothing in this
paragraph 11.3(b) shall be construed to waive any rights or timely
performance of any obligations existing under this Agreement.
11.4 This Agreement may be amended and any of its terms or
conditions may be waived only by a written instrument executed by the
parties or, in the case of a waiver, by the party waiving compliance. The
failure of either party at any time or times to require performance of any
provision hereof shall in no manner affect its rights at a later time to
enforce the same. No waiver by either party of any condition or term shall
be deemed as a continuing waiver of such condition or term or another
condition or term.
11.5 This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
11.6 Any delays in or failures of performance by either party
under this Agreement shall not be considered a breach of this Agreement if
and to the extent caused by occurrences beyond the reasonable control of
the party affected, including but not limited to: Acts of God; acts,
regulations or laws of any government; strikes or other concerted acts of
workers; fires; floods; explosions; riots; wars; rebellion; and sabotage;
and any time for performance hereunder shall be extended by the actual
time of delay caused by such occurrence.
11.7 Neither party shall use the name of the other or of any
staff member, employee or student or any adaptation thereof in any
advertising, promotional or sales literature or publicity without the
prior written approval of, for GENERAL, the Director of Public Affairs at
GENERAL and for NYMOX, CEO/President.
11.8 This Agreement shall not be assignable by the GENERAL
without NYMOX's written consent except for the right to receive royalties
payable herein. NYMOX may at its own discretion and without approval by
the GENERAL transfer its interest or any part thereof under this Agreement
to a wholly-owned subsidiary or partnership of which NYMOX is the general
partner or any assignee or purchaser of the portion of its business
associated with the licenses and rights granted under this Agreement. In
the event of any such transfer, the transferee shall assume and be bound
by the provisions of this Agreement. Otherwise this Agreement shall be
assignable by NYMOX only with the consent in writing of GENERAL which
consent shall not be unreasonably withheld.
11.9 If any provision(s) of this Agreement are or become
invalid, are ruled illegal by any court of competent jurisdiction or are
deemed unenforceable under then current applicable law from time to time
in effect during the term hereof, it is the intention of the parties that
the remainder of this Agreement shall not be affected thereby provided
that a party's rights under this Agreement are not materially affected. It
is further the intention of the parties that in lieu of each such
provision which is invalid, illegal, or unenforceable, there be
substituted or added as part of this Agreement a provision which shall be
as similar as possible in economic and business objectives as intended by
the parties to such invalid, illegal or unenforceable provision, but shall
be valid, legal and enforceable.
IN WITNESS WHEREOF, GENERAL and NYMOX have caused this
instrument to be executed.
NYMOX CORPORATION THE GENERAL HOSPITAL CORPORATION
By: By:
Title: Sr. Vice President Title: Vice President for Patents,
for Research and Licensing and Industry Sponsored
Development and Research
Strategic Planning
Date: Date:
I have read the foregoing Agreement and agree to comply with the
obligations of the Principal Investigator stated therein. In addition, I
have read Appendix C and agree to comply with the obligations of GENERAL
stated therein.
Jack Wands, M.D. Suzanne de la Monte, M.D.
Date: Date:
<PAGE>
APPENDIX C
NYMOX PROPRIETARY INFORMATION
It is anticipated that in the performance of the SPONSORED
RESEARCH sponsored by NYMOX, the PRINCIPAL INVESTIGATORS and members of
the research team designated by him/her will be provided with or given
access by NYMOX to certain information which NYMOX considers proprietary.
The rights and obligations of the parties with respect to such information
are as follows:
1. PROPRIETARY INFORMATION. For the purposes of this
Agreement, "Proprietary Information" refers to information of any kind
which is disclosed by NYMOX to GENERAL and which, by appropriate marking,
is identified as confidential and proprietary at the time of disclosure.
In the event that proprietary information must be provided visually or
orally, obligations of confidence shall attach only to that information
which is confirmed by NYMOX in writing within ten (10) working days as
being confidential.
2. LIMITATIONS ON USE. GENERAL shall use NYMOX's Proprietary
Information solely for the purposes of the Research and License Agreement
between the parties. It is agreed by NYMOX and GENERAL that the transfer
of Proprietary Information shall not be construed as a grant of any right
or license with respect to the information delivered except as set forth
herein or in a duly executed license agreement.
3. CARE OF PROPRIETARY INFORMATION. NYMOX and GENERAL agree
that all Proprietary Information communicated by NYMOX and accepted by
GENERAL in connection with this Agreement shall be kept confidential by
GENERAL as provided herein unless specific written release is obtained
from NYMOX. GENERAL agrees to exert reasonable efforts (no less than the
protection given its own confidential information) to maintain such
Proprietary Information in confidence, to make such Proprietary
Information available only to those employees and students who require
access to it in the performance of this Agreement and to inform them of
the confidential nature of such information.
GENERAL shall be deemed to have discharged its obligations hereunder
provided GENERAL has exercised the foregoing degree of care and provided
further that GENERAL shall immediately, upon discovery of any disclosure
not authorized hereunder, notify NYMOX and take reasonable steps to
prevent any further disclosure or unauthorized use.
When the Proprietary Information is no longer required for the purpose of
this Agreement, GENERAL shall return it or dispose of it as directed by
NYMOX. GENERAL's obligations of confidentiality with respect to
Proprietary Information provided under this Agreement will expire five (5)
years after the date of this Agreement.
4. INFORMATION NOT COVERED It is agreed by NYMOX and GENERAL
that information shall not be deemed Proprietary Information in the event:
(a) it is publicly available prior to the date of the
Agreement or becomes publicly available thereafter
through no wrongful act of GENERAL;
(b) it was known to GENERAL prior to the date of
disclosure or becomes known to GENERAL thereafter from
a third party having an apparent bona fide right to
disclose the information;
(c) it is disclosed by GENERAL in accordance with the
terms of NYMOX's prior written approval;
(d) it is disclosed by NYMOX without restriction on
further disclosure;
(e) it is independently developed by GENERAL; or
(f) GENERAL is obligated to produce pursuant to an order
of a court of competent jurisdiction or a valid
administrative or Congressional subpoena, provided
that GENERAL (a) promptly notifies NYMOX and (b)
cooperates reasonably with NYMOX's efforts to contest
or limit the scope of such order.
<PAGE>
APPENDIX D
PATENT RIGHTS
[this page blank at execution of this Agreement]
<PAGE>
APPENDIX E
The following PATENT RIGHTS which shall be deemed to be "PATENT
RIGHTS filed by mutual agreement" in accordance with Article 5:
1. (i) the United States Patent Application Serial No.
07/287,207 filed December 20, 1988 entitled "Method of Detecting
Neurological Disease or Dysfunction," (ii) the United States CIP Patent
Application Serial No. 07/451,975 filed on December 20, 1989, (iii) the
United States Patent Application Serial Number 08/055,778 filed May 3,
1993 as a file wrapper continuation, and, (iv) the United States Patent
Application Serial Number to be assigned, filed June 6, 1995 as a
divisional application;
2. (i) the United States Patent Application Serial No.
08/050,559 filed on April 20, 1993 entitled "Neural Thread Protein Gene
Expression and Detection of Alzheimer's Disease, " (ii) the United States
CIP Patent Application Serial No. 08/230,139 filed on April 20, 1994,
(iii) the United States CIP Patent Application 08/340,426 filed on
November 14, 1994, (iv) the United States Patent Application Serial No.
08/454,557 filed on May 30, 1995 as a divisional application, and (v) the
United States Patent Application Serial No. 08/450,673 filed on May 30,
1995 as a divisional application; and
3. any division or continuation and any foreign patent
application or equivalent corresponding to the patent applications listed
in 1 and 2 above, and any Letters Patent or the equivalent thereof issuing
thereon or reissue or extension thereof.
EXHIBIT 3.4
(EDGAR EXHIBIT 10.4)
SOLE NON-EXCLUSIVE LICENSE AND
SUPPLY AGREEMENT FOR THE
NYMOX AD7C/TM/ DIAGNOSTIC TEST
FOR ALZHEIMER'S DISEASE
BY
AND
BETWEEN
NYMOX CORPORATION
AND
LABORATOIRES J. SIMON
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4 COMPENSATION TO NYMOX . . . . . . . . . . . . . . . . . . . 3
ARTICLE 5 PAYMENTS BY THE PARTIES . . . . . . . . . . . . . . . . . . 3
ARTICLE 6 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 7 EXPENSE REIMBURSEMENT . . . . . . . . . . . . . . . . . . . 5
ARTICLE 8 NYMOX OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 9 L-S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 10 USE OF TRADMARKS AND NAMES . . . . . . . . . . . . . . . . 7
ARTICLE 11 CONFIDENTIAL DISCLOSURE . . . . . . . . . . . . . . . . . . 8
ARTICLE 12 NYMOX EUROPEAN RIGHTS . . . . . . . . . . . . . . . . . . . 9
ARTICLE 13 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 9
ARTICLE 14 NON-COMPETE PROVISION . . . . . . . . . . . . . . . . . . . 10
ARTICLE 15 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . 10
EXHIBIT A PATENTS LICENSED . . . . . . . . . . . . . . . . . . . . . 13
EXHIBIT B TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBIT C EXCHANGE RATE CALCULATIONS . . . . . . . . . . . . . . . . 15
<PAGE>
SOLE NON-EXCLUSIVE LICENSE
AND SUPPLY AGREEMENT
FOR THE NYMOX AD7C/TM/ TEST
This Agreement, entered into on and effective as of October 1,1996, is by
and between Nymox Corporation, a Delaware Corporation, having offices at 1
Taft Court, Suite 101, Rockville, MD 20850 (hereinafter "Nymox") and
Laboratoires Simon S.A. having offices at Vieux chemin du Poete 10, B-1301
Wavre, Belgium (hereinafter "L-S") (together "the Parties"). Whenever the
word "L-S" is used in this Agreement it shall mean Laboratoires Simon S.A.
Whenever the word "Nymox" is used in this Agreement it shall mean Nymox
and it's "Affiliates" as that word is defined in ARTICLE 1 below, and
Nymox's Affiliates shall have all the rights and responsibilities given to
and required of Nymox in this Agreement.
Whereas, Nymox has developed the AD7C/TM/ Test to aid in the diagnosis of
Alzheimer's Disease and wishes to make the test available for sale in
Europe;
Whereas, L-S has testing facilities and capabilities for conducting the
Nymox AD7C/TM/ Test in Europe;
Whereas, L-S has the capability to conduct sales and related operations in
Europe;
Whereas, L-S has the capability to meet all regulatory requirements
legally to perform the AD7C/TM/ Test;
Whereas, Nymox can make patented technology, know-how and the supply of
patented reagents available to L-S;
Whereas, Nymox wishes to offer a sole non-exclusive license to L-S to use
it's patented technology, patented reagents, know-how and Trademarks to
quickly introduce the AD7C/TM/ Test to European markets;
Now, therefore, in consideration of the foregoing premises which are made
as part of this Agreement and mutual promises set forth in this Agreement,
the Parties agree as follows:
ARTICLE 1. DEFINITIONS
The terms defined in ARTICLE 1. shall have the following meanings
(applicable both to the singular and the plural forms):
1.1 "AD7C/TM/ Test" shall mean the Nymox AD7C/TM/ test for measuring
levels of Alzheimer's marker Neural Thread Protein (NTP) in cerebrospinal
fluid (CSF) in a reference laboratory authorized by Nymox. AD7C/TM/ Test
shall not be construed to mean a test kit utilizing Nymox AD7C/TM/ testing
technology and intended to be sold to third parties;
1.2 "Affiliate" shall mean any person, firm or corporation, legally
competent to perform the services and carry out the terms of this
Agreement, which controls, is controlled by or is under common control
with Nymox. Control shall mean either the direct or indirect ownership of
fifty (50%) percent or more of the voting stock of the subject entity;
1.3 "Sole non-exclusive license" shall mean a license without the right
to sublicense granted solely to L-S but with the right by Nymox to
exercise the same rights in the Territory as those conveyed to L-S by
license under this Agreement;
1.4 "Territory" shall mean the area comprised of the countries of
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain,
Sweden, Switzerland and the United Kingdom;
1.5 "Nymox Patents" shall mean the United States patents owned, licensed
to or applied for by Nymox and their foreign counterparts as listed in
Exhibit A;
1.6 "Trademarks" shall mean the Nymox trademarks owned, licensed to or
applied for by Nymox as listed in Exhibit B and their foreign
counterparts;
1.7 "Nymox Know-how" shall mean Nymox Confidential Information as defined
in ARTICLE 11.1, relating to the AD7C/TM/ Test, including but not limited
to, information relating to use and handling of patented reagents, to test
methods and to information generated by Nymox relating to regulatory
submissions whether or not actually included in such regulatory
submissions.
1.8 "Calendar Year" shall mean the twelve-month period beginning January
1 of each year and ending on December 31 of each year.
1.9 "Net Sales" shall mean the gross amount invoiced by L-S or its
affiliates on all sales to third Parties (exclusive of any intercompany
transfers or sales), less the reasonable and customary accrual-based
deductions from such gross amounts including (i) normal and customary
trade discounts, allowances and credits, the aggregate of which shall not
exceed two percent (2.0%) of gross sales; (ii) sales taxes and value added
taxes, if any, associated with the sale of the AD7C/TM/ Test; (iii)
chargeback payments or rebates granted to purchasers of the test whether
governmental or private organizations or persons.
ARTICLE 2. LICENSE
Nymox hereby grants a sole, non-exclusive license to use Nymox Patents,
Nymox Trademarks and Nymox Know-how to sell and perform the AD7C/TM/ Test
in the Territory. The compensation due shall be as described in ARTICLE 4
of the Agreement.
ARTICLE 3. TERM
3.1 - Term
The term of the Agreement shall be for the remainder of the 1996 Calendar
Year following the signing of this Agreement and the two subsequent
Calendar Years ending on December 31, 1998. After December 31, 1998, the
term may be renewed for periods of one year each so long as sales in the
Territory reach 75% of a forecast mutually agreed by the Parties prior to
the beginning of each Calendar Year. Such renewal will be subject to the
stipulations of ARTICLE 3.2.
3.2 - Term Renewal
Renewal of the Term will be automatic unless and until either Party
notifies the other Party that it wishes to let the Agreement lapse without
renewal. Notice of non-renewal must be given before July 1 of the
Calendar Year in which the notice is given or the Agreement shall continue
for the remainder of the year in which notice was given and for the
subsequent Calendar Year.
ARTICLE 4. COMPENSATION TO NYMOX
Compensation to Nymox by L-S shall be a royalty for use of proprietary
Nymox technology of seven (7%) of Net Sales of the AD7C/TM/ Test in the
Territory plus seventy three (73%) of Net Sales for each test performed
and billed to a client in any country of the Territory. Notwithstanding
the preceding sentence, total compensation to Nymox shall be no less than
seven hundred and fifty United States dollars (US$ 750.00) for each test
performed and billed to a client. Under certain conditions such as volume
discounts to "industrial" customers, or similar circumstances, Nymox
agrees to discuss the level of compensation due Nymox. Such discussions
will be undertaken on a case by case basis
ARTICLE 5. PAYMENTS BY THE PARTIES
5.1 - Payments
Compensation payments to Nymox by L-S and expense reimbursements payments
by Nymox to L-S or L-S to Nymox shall be made quarterly in United States
dollars and the Parties shall share exchange rate risks between the
Belgian Franc and the United States dollar by the method described and
illustrated in Exhibit C. Payments shall be made within 30 days of the
closing of the financial quarter by L-S or within 30 days of receipt of an
invoice by Nymox or L-S as the case may be.
5.2 - Audit
During the Term and for one year after its termination or expiration,
Nymox shall have the right, should it wish to do so, to retain an
independent certified public accounting firm, to which L-S has no
reasonable objection, to examine the relevant parts of books and records
of L-S to verify Net sales, charges to Nymox for personnel and other
expenses and monies due. L-S at its discretion may require the accounting
firm to sign a confidential disclosure agreement prior to the effective
execution of the audit. Said accounting firm shall only report its
results and shall not disclose to Nymox, any information other than that
necessary to verify the above information. Such audits, if requested,
shall be conducted during reasonable business hours and not more than once
per year. Notice of an audit date sufficient to allow L-S to organize its
records shall be given by the auditing firm. The cost of the audit will
be borne by Nymox unless the audit results in an adjustment of fifty
thousand United States dollars ($50,000) or more, in which case L-S will
be responsible for the both the amount of the adjustment and the cost of
the audit.
ARTICLE 6. TERMINATION
6.1 - Failure to Meet Forecast
Either Party shall be entitled to terminate the Agreement if Net Sales do
not reach fifty (50%) percent of the mutually agreed forecast for the
Calendar Year 1997 and at the end of each subsequent Calendar Year.
Notification of termination must be made before 1 March of the year
following the Calendar Year in which 50% of the Net Sales forecast was not
achieved and becomes effective 90 days following the date of the notice of
termination.
6.2 - Material Default
Subject to provisions elsewhere in this ARTICLE 6 specifically addressing
other termination provisions, this Agreement may be terminated by either
Party (the "non defaulting Party") with thirty (30) days prior written
notice upon default by the other Party (the "defaulting Party") of a
material obligation in this Agreement which would materially frustrate the
purpose and continuation of this Agreement. The defaulting Party shall
have 30 days to cure the default. If the default is not cured in thirty
(30) days, then the Agreement shall immediately terminate upon receipt of
additional notice sent by the non defaulting Party to the defaulting
Party.
6.3 - Rights after Termination
Termination of this Agreement, for whatever reason, shall not affect any
rights or obligations which may have accrued to either Party prior to the
effective date of termination including, in particular, the obligations of
compensation and expense reimbursement. In addition, L-S employees
associated in any way with the implementation of this Agreement remain the
sole responsibility of L-S unless the employee has agreed to transfer to
Nymox as contemplated in ARTICLE 12.2.
ARTICLE 7 EXPENSE REIMBURSEMENT
7.1 - Start Up Costs
Nymox and L-S shall each pay fifty (50%) percent of the Start Up Costs for
the implementation of this Agreement where Start Up Costs are defined as
personnel costs at the L-S location for Project Management and AD7C/TM/
Test Set up. These activities are estimated by L-S to require 100 person
hours of cumulative time over a 90 day period. It is agreed that no more
than ten thousand ($10,000) United States dollars will be charged for
Start Up Costs, said $10,000 or less to be shared equally between the
Parties. Start Up Costs specifically do not include costs for regulatory
activities in the Start Up period. Such costs will be reimbursed under
the stipulations of ARTICLE 7.2.
- Continuing Costs
Nymox will reimburse L-S for all expenses directly associated with
conducting the AD7C/TM/ Test. This includes technician wages and
benefits, required supervision time, AD7C/TM/ Test supplies, sample
collection, shipping and storage expenses, costs of analysis and
certification by L-S and required equipment purchases. Laboratory and
office space sufficient to meet the obligations of this Agreement will be
made available by L-S at L-S own cost. Nymox will also reimburse L-S for
reasonable indirect expenses incurred for regulatory and marketing
activities relating to the AD7C/TM/ Test. This includes personnel,
required travel, promotional materials and any other costs directly
related to regulatory and marketing activities necessary to sell and
perform the AD7C/TM/ Test in the countries of the Territory. Such
indirect expenses will be forecast on a quarterly basis and provided to
Nymox prior to the quarter in which they are to be incurred for approval
by Nymox. Such forecast indirect expenditures will not be made until and
unless written approval has been received from Nymox.
ARTICLE 8 NYMOX OBLIGATIONS
8.1 - AD7C/TM/ Test Supplies
Nymox will supply certain patented and non patented reagents, AD7C/TM/
Test protocols, quality control procedures and such other supplies as may
be required for L-S to conduct the AD7C/TM/ Test to Nymox specifications.
- Training
Nymox will conduct the initial training of L-S technicians and supervisory
personnel at the L-S location at Nymox expense. Additional training as
necessary from time to time will be carried out by Nymox at Nymox expense,
- Technical Support
Nymox will provide technical support for the AD7C/TM/ Test including
technical service support, interpretation support and confirmation tests
when requested by L-S and determined by Nymox to be necessary or
desirable. The expense for such confirmation test(s) will be borne by
Nymox.
8.4 - Clinical Research
Nymox agrees to set up, fund and administer clinical studies in at least
five sites in key countries of the Territory. Nymox will request L-S
advice on site locations but the final selection of the clinical sites is
reserved to Nymox. L-S will be offered a first right of refusal to
conduct said clinical studies relating to the AD7C/TM/ Test on behalf of
Nymox and to Nymox requirements and specifications.
8.5 - Marketing Information
Nymox will provide information including Nymox general marketing
strategies, promotional materials and relevant marketing studies for use
by L-S to develop plans and materials appropriate for marketing the
AD7C/TM/ Test to L-S markets in Europe.
- Market Research
Nymox will make the results of any relevant marketing research Nymox
conducts in Europe available to L-S for use in L-S marketing efforts.
8.7 - Promotional Materials
Nymox will provide timely guidance during the generation of L-S
promotional materials for the Nymox AD7C/TM/ Test and has the right of
final approval of the content of all such promotional materials to ensure
conformance with current knowledge and the latest clinical work. Nymox
will bear the cost of such promotional material per the stipulations of
ARTICLE 7.2.
8.8 - Marketing Plans
Nymox will develop and implement in a timely manner, marketing plans for
the academic markets including key teaching institutions in the Territory,
hospital and private laboratories, and the medical community in general.
8.9 - Marketing/Medical Service Employee
Nymox will hire, train, functionally manage and pay all costs for one or
more European Marketing/Medical Service employee(s) to serve all the
markets of the Territory with emphasis on the clinical sites and the
academic markets. L-S will assist in the hiring and training process.
The newly hired person(s) may become an employee of BP-S or of Nymox
whichever is more cost effective and administratively efficient.
ARTICLE 9 L-S OBLIGATIONS
- Space
L-S will provide, at its own cost, laboratory and office space necessary
to conduct all operations required to perform and market the AD7C/TM/ Test
in the Territory.
- AD7C/TM/ Test Performance
L-S will perform the AD7C/TM/ Test to Nymox specifications and provide for
sample collection and shipping, sample storage, results reporting,
billing, fee collections and all other related tasks necessary to receive
samples, perform the AD7C/TM/ Test and provide the result to the customer.
9.3 - Human Resource Management
L-S will administer and manage all local Human Resource matters associated
with the implementation of this Agreement including wages, social
benefits, transportation, etc. according to established L-S Human Resource
policies except Human resource matters associated with the
marketing/medical service employee administered and managed by Nymox as
far as this employee is not a L-S employee. In the latter case, this
employee shall sign a separate agreement with L-S agreeing to abide by all
relevant L-S Human Resource policies
9.4 - Regulatory and Health Econometric Activities
L-S, on behalf of and with Nymox assistance, approval and funding as
necessary, will have responsibility for regulatory issues in the Territory
such as health registrations, price and reimbursement applications, price
and reimbursement negotiations and to ensure that the AD7C/TM/ Test meets
the requirements of the new EEC directive regarding in vitro diagnostics.
L-S on behalf of and with Nymox assistance, approval and funding as
necessary will conduct any health econometric studies requested or
required by regulatory authorities to support registration applications.
Nymox will not hold L-S responsible for refusals by regulatory authorities
to register or reimburse the AD7C/TM/ Test unless L-S performs such
regulatory activities with demonstrable gross negligence.
9.5 - Marketing and Promotion
L-S will develop and implement in a timely manner, marketing and
promotional plans for the industrial markets such as pharmaceutical
companies, and L-S's normal markets of clinical pharmacology research and
drug development and such other markets in the Territory as agreed with
Nymox. L-S will market and promote the AD7C/TM/ Test as an integral part
of the L-S testing portfolio in the countries of the Territory.
ARTICLE 10 USE OF TRADEMARKS AND NAMES
10.1 - Trademark Ownership
The Trademarks listed in exhibit B are the exclusive property of Nymox.
L-S acknowledges that by reason of this Agreement, it shall not acquire
any ownership interest in the Trademarks. Nymox acknowledges that the
tradenames and trademarks owned by L-S are the exclusive property of L-S
and that Nymox does not acquire any ownership interest in L-S tradenames
or trademarks as a result of this Agreement.
10.2 - Trading Names, Trademarks and Logos
The Parties agree that both of their trading names and/or logos and Nymox
Trademarks shall appear on all promotional materials used for the AD7C/TM/
Test in the Territory. Each Party shall have the right to review and
approve the use of that Parties name and/or logo on any promotional or
advertising materials and such materials will be furnished to the other
Party in reasonable time to review and approve all such materials prior to
final publication. No distribution or use of such materials will take
place until after written consent is received by both parties New
Trademarks, logos or trading names and any revisions of such by the
Parties will be notified to the other Party in writing and such new or
revised Trademarks, logos or trading names will be utilized by the
receiving Party in a timely manner.
10.3 - Use of Trademarks and Names
L-S and its affiliates may use the Trademarks and the name Nymox
Corporation only to the extent required to fulfill its obligations under
this Agreement. Nymox may use the name Laboratoires Simon S.A. only to
the extent required to fulfill its obligations under this Agreement.
After a reasonable period of time not to exceed ninety (90) days, both
Parties shall cease all use of the other Party's names and trademarks upon
expiration or termination of this agreement
ARTICLE 11 CONFIDENTIAL DISCLOSURE
11.1 - Obligations
Each Party agrees not to use Confidential Information furnished by the
other Party for any purpose other than for the purpose of performance of
the ARTICLES of this Agreement. Confidential Information disclosed in
documentary form shall be clearly marked "Confidential" on its face by the
disclosing Party. Any information which is transmitted orally, visually
or in physical form shall be orally identified as such by the disclosing
Party at the time of disclosure and identified as such in writing to the
receiving Party within 45 days of disclosure.
Each Party will treat Confidential Information furnished by the other
Party with the same degree of care as if it were its own confidential
proprietary information and except as required for the purposes of
performance of the ARTICLES of this Agreement, will not disclose such
information to any third Party, with the exception of those instances when
such information is required to be disclosed by law, regulation or other
act of governmental authority.
Confidential Information is defined as all technical and business
information disclosed as "Confidential" by one Party to the other Party
and relating to the AD7C/TM/ Test except information which:
was known or used by the receiving Party as evidenced by its written
records made prior to the time of receipt hereunder;
either before or after the time of disclosure becomes known to the
public other than by an authorized act or omission of the receiving
Party;
lawfully is disclosed to the receiving Party by a third Party having
the right to disclose said Confidential Information or
that has been developed by the receiving Party independently of the
Confidential Information provided by the other Party as evidenced by
the receiving Party's written records.
11.2 - Duration
Each Party's obligations under this ARTICLE 11 shall be in force during
the term of this and any related Agreement entered into between the
Parties and shall survive five (5) years after the termination or
expiration of this Agreement
ARTICLE 12 NYMOX EUROPEAN RIGHTS
12.1 - Operations
Under the sole non-exclusive license granted to L-S in ARTICLE 2 and
should it deem it desirable to do so, Nymox has the right to establish
it's own European AD7C/TM/ operations including but not limited to a
European affiliate(s) with full operational capabilities to market and
perform the AD7C/TM/ Test. Nymox has the right to immediately market and
perform the AD7C/TM/ Test in the Territory if and when this Agreement
should expire or terminate for any reason or upon receipt of notice of
non-renewal by L-S.
12.2 - Employee Transfers
Should this Agreement expire for any of the reasons cited in ARTICLES 3 or
4, L-S agrees to allow Nymox, at Nymox discretion, to make the offer of a
job transfer to Nymox to all L-S personnel directly involved with
performing the AD7C/TM/ Test and to all L-S personnel devoting full time
to marketing the AD7C/TM/ Test. L-S will make reasonable efforts within
applicable Belgian law to encourage such transfers to occur. Should such
transfer of such a L-S employee to Nymox not occur for any reason, the
responsibility for the employee remains solely with L-S. Nymox is
prohibited from recruiting and hiring any other L-S personnel that are not
directly and substantially involved with performing or marketing the
AD7C/TM/ Test. If Nymox infringes this article, Nymox shall pay
compensation for the loss to L-S equal to twice the gross annual salary of
the employee hired by Nymox.
ARTICLE 13 REPRESENTATIONS AND WARRANTIES
13.1 - General Compliance
In the conduct of its business and performance of its obligations
hereunder, L-S represents that it will observe and comply with all
applicable laws, rules and regulations of EEC and countries of the
Territory and Nymox represents that it will comply with all applicable
laws, rules and regulations of the United States, Canada, the EEC and
countries of the Territory.
13.2 - Supplies Warranty
Nymox hereby represents and warrants that AD7C/TM/ Test materials supplied
by Nymox to L-S will meet the internal use and release specifications used
by Nymox for those materials at the time they are shipped and until
officially certified for use by the L-S Quality Control Department.
13.3 - Disclaimer of Warranty
Other than set forth in this ARTICLE 13, no express or implied warranties
are given by Nymox to L-S with respect to the AD7C/TM/ Test materials
supplied by Nymox and utilized by L-S pursuant to this Agreement, or to
the AD7C/TM/ Test purposes or results including but not limited to, the
implied warranties of merchantability and fitness for a particular purpose
13.4 - Liability Provisions
Nymox will not hold L-S liable for the whole or partial non-performance of
the terms of this Agreement which are the result of actions or non-actions
imposed by any governmental authority who may be reasonably assumed to be
so empowered. L-S, representatives, subordinates and subcontractors will
only be liable for direct losses or damage caused by or as a consequence
of a serious offense regarding their contractual obligations flowing from
this Agreement and proven by means of written evidence obtained on the
basis of a joint investigation among the parties involved. Nymox and L-S
agree that liability will be limited to five million Belgian Francs
(5,000,000 BF) per proven offense. Any complaint or claim against L-S and
its affiliates, representatives, subordinates or subcontractors by Nymox
must be submitted within 3 months of written notice by Nymox that it
intends to file such a complaint, otherwise the matter is ipso jure
forfeited.
ARTICLE 14 - NON-COMPETE PROVISION
14.1 - Non-Compete Provision
In recognition of the sole non-exclusive license granted to L-S by Nymox,
L-S agrees that L-S will not sell or make available to any customer or
third party in the Territory, a service or product competitive to the
Nymox AD7C/TM/ Test for the diagnosis of Alzheimer's Disease.
14.2 - Duration
L-S obligations under this ARTICLE 14 shall be in force during the term of
this Agreement and shall survive one hundred eighty (180) days after the
termination or expiration of this Agreement.
ARTICLE 15 MISCELLANEOUS
15.1 - Force Majeure
The performance by either Party of any covenants or obligations to be
performed under this Agreement (other than an obligation of either to pay
money to the other) shall be excused by reason of strikes or other labor
disturbances, riots, fires, floods, earthquakes, accidents, wars,
embargoes, delays of carriers, inability to obtain materials from sources
of supply, or acts, injunctions or restraints of governments or any cause
preventing such performance whether similar or dissimilar to the
foregoing, provided, however, that the Party affected shall exert its
reasonable diligent efforts to eliminate or cure or overcome any of such
causes and to resume performance of its covenants and obligations with all
deliberate speed.
15.2 - Public Statements
Neither Nymox nor L-S shall publicly disclose the specific terms of this
agreement. The transactions contemplated herein or performance hereunder
shall not be disclosed without first obtaining the written consent of the
other Party unless there has been a prior public disclosure of the
information by the other Party or with the other Party's consent. The
Parties shall mutually develop and approve in writing any release or any
external public relations communications or announcements regarding this
Agreement or any activities by either Party relating to this Agreement.
15.3 - Notices
Any notice or other communications required by this Agreement shall be in
writing and shall be effective if hand delivered or if sent by certified
or registered mail or by facsimile transmission to the following locations
until notified otherwise.
If to Nymox, to:
Attention: President
Nymox Pharmaceutical Corporation
175 boul. Bouchard
Dorval, Quebec H9S1B1
Canada
If to L-S, to:
Attention: Managing Director
Laboratoires Simon S.A.
Vieux chemin du Poete 10
B-1301 Wavre
Belgium
A notice will be deemed to have been given on the date of delivery to the
Party.
15.4 - Assignability
This Agreement shall not be assignable nor its rights hereunder
transferred in any way by either Party except by prior written consent of
the other Party which consent may be withheld on the other Party's sole
discretion, and with the exception that either Party may assign its rights
and obligations to any Affiliate of such Party, which assignment does not
relieve the assigning Party of its original responsibilities and
obligations under this Agreement.
15.5 - Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Maryland if Nymox is the claimant. The Agreement
shall be governed by and construed in accordance with the laws of Belgium
if L-S is the claimant and in that case only the Antwerp courts of Belgium
shall be competent to hear the case
15.6 - Language
Although this Agreement may be translated into other languages for its
implementation or other purposes, the English language version shall be
the governing version in any dispute or legal proceeding.
15.7 - Partial Invalidity
In case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement but this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never
been contained herein provided that the performance required under this
Agreement with such provision or provisions deleted remains substantially
consistent with the intent of the Parties.
15.8 - Entire Agreement
This Agreement contains the entire agreement between the Parties with
respect to the subject matter covered by this Agreement. No
representations, whether oral or written, made before, during and after
this Agreement is executed shall amend this Agreement. Any modification
or amendment to this Agreement shall be in writing and signed by an
authorized officer of each Party.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the dates set forth below:
ACCEPTED AND AGREED TO:
Nymox Corporation Laboratoires Simon S.A.
________________ ________________
Paul Averback Jean-Claude Tancredi
President Managing Director
________________ ________________
Date Date
<PAGE>
EXHIBIT A
Patents licensed to L-S under ARTICLE 2
U. S. Patent Number Patent Title
8,050,559 Neural Thread Protein Gene
Expression and Detection of
Alzheimer's Disease
7,289,207 Method of Detecting Neurological
Disease or Dysfunction
<PAGE>
EXHIBIT B
Trademarks licensed to L-S under ARTICLE 2
The Trademark NYMOX/TM/
The Trademark AD7C/TM/
The trademarks on this page are reasonable facsimiles of the actual
Trademarks. Nymox will furnish L-S with materials necessary for
reproduction of the actual Trademarks on L-S promotional materials.
<PAGE>
EXHIBIT C
Exchange Rate Calculations
In order to share exchange rate risks for the quarterly compensation and
expense reimbursement payments between the parties, the conversion rate
between the United States dollar (US$) and the Belgian franc (BF) will be
calculated as follows:
The daily conversion rate (to two decimal places) on the final working day
of each of the 3 months of the quarter as reported in the Wall Street
Journal will be summed and divided by three (3) to provide an average
conversion rate for the quarter. This average rate will then be used to
convert the compensation payments or expense reimbursements originally
calculated in Belgian Francs to United States dollars.
The following calculations are for illustrative purposes only and do not
purport to represent an actual business expectation or outcome.
Illustration
Quarter 1 Quarter 2
Month Rate Month Rate
Jan 32.26 Apr 32.65
Feb 32.52 May 32.41
Mar 32.52 June 32.53
Average Rate 32.43 BF 32.53 BF
1st Quarter Compensation in BF = 3,000,000 BF
1st Quarter Compensation in US$ = $92,507
1st Quarter Expenses in BF = 1,850,000 BF
1st Quarter Expenses in US$ = $57,046
2nd Quarter Compensation in BF = 3,500,000 BF
2nd Quarter Compensation in US$ = $107,593
2nd Quarter Expenses in BF = 1,900,000 BF
2nd Quarter Expenses in US$ = $58,408
