PRE-EFFECTIVE AMENDMENT NO. 3
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 American 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: 17,934,382 shares as of February 1, 1997.
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
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 calendar year 1997, 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.") To that effect, the
Company is in the process of hiring approximately fifteen sales
representatives for the United States market. The sales
representatives will be paid on a commission basis with base
salaries totalling approximately CAN$80,000 per month in the
aggregate.
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$220,000 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 be approximately
CAN$100,000 per month, which number includes the minimum commission
payments to the Company's United States sales force. 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$380,000 per month. Operating expenses may be increased in fiscal
1997 if the Company raises additional capital.
The Company is a party to a research and license agreement with
Massachusetts General Hospital ("MGH"). Under the agreement, the
Company is obligated to make certain regularly scheduled payments to
MGH as research grants in exchange for royalties from any sales of
resulting products. (See "Patents and Proprietary Information.")
1997 research grants will total US$397,000. The Company also will
pay MGH $US94,176 for patent costs incurred by MGH in 1996, which
amount the Company and MGH have agreed will be paid no later than May
15, 1997. For 1998 through the year 2002, subject to some early
termination rights of the Company, NYMOX is obligated to pay MGH
$US172,000 per year, which amount is payable in quarterly
installments of US$43,000.
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 Company intends to complete
toxicity testing on one compound, NX D2858, in the near term and,
depending on the results of such testing, seek regulatory approval
for clinical testing of NX D2858.
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 rights to 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 and related therapeutic products. 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 current US facility in Rockville, Maryland comprises 2,000
square feet of leased space. The Company presently is
negotiating a new lease for its US facility. The proposed lease
property also is located in Rockville, Maryland and comprises
5.504 square feet of space, at a per square foot rental rate
comparable to that of the current leased premises. As proposed,
the lease would have an initial term of three years. If these
lease negotiations are terminated, or if any of the current
leases are 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.
Name No. Shares Percent of Class
Dr. Paul Averback 12,643,895 70.5
All directors and officers as a group 12,707,470 70.9
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 of the
Company owned by Dr. Paul Averback and his wife were placed in escrow
by the Montreal Trust Company of Canada, of which 7,681,554 shares
(the "Escrowed Shares") presently remain in escrow. The Escrowed
Shares generally 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 escrow
arrangement provides for automatic release upon the following terms:
Release Date Number of Shares
December 18, 1996 3,840,777
(Released As Scheduled)
December 18, 1997 3,840,777
December 18, 1998 3,840,777
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.
High (CDN$) Low (CDN$) Volume (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 17.75 10.00 543,799
1997 1st quarter (to 14.90 12.50 81,948
February 14)
According to information furnished to the Company by the
transfer agent for the common shares, as of February 17, 1997,
there were approximately 61 holders of record of the common
shares with addresses in the United States and such holders
owned an aggregate of 225,336 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
their 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.
<PAGE>
<TABLE>
NYMOX PHARMACEUTICAL CORPORATION
Selected Financial Data
(expressed in Canadian dollars)
For the years ended July 31,
<CAPTION> December 31, September 30,
1991 1992 1993 1994 1995 1995 1996
(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 $4,228,789
Capital Assets 12,576 12,576 12,576 12,576 338,953 366,155 1,039,339
Total Assets 239,403 239,403 251,352 239,403 350,916 2,634,252 5,268,128
Liabilities 161,263 167,532 9,000 45,376 121,589 151,297 66,314
Shareholders' Equity 72,140 71,871 242,352 194,027 229,327 2,482,955 5,201,814
Revenues - 0 - - 0 - - 0 - - 0 - - 0 - - 0 - 114,556
Research & Development 8,484 36,769 32,519 55,325 371,939 571,215 1,318,052
Expenditures (note 1)
Net Loss 8,484 37,769 34,519 58,325 377,570 693,846 2,327,231
Loss Per Share (note 2) - 0 - - 0 - - 0 - - 0 - 0.03 0.04 0.13
US GAAP (note 3)
Net Loss 21,827 51,112 47,862 71,668 393,841 1,639,194 2,345,625
Loss per share (note 2) - 0 - - 0 - - 0 - - 0 - 0.03 0.11 0.13
Shareholders' equity 45,454 31,842 188,980 127,312 146,341 2,391,515 5,091,980
</TABLE>
Notes:
1) Amounts shown are net of investment tax credits.
2) For periods prior to the reverse acquisition of NYMOX by DMS,
the number of shares outstanding is assumed to be 15,000,000
representing the number of shares issued by NYMOX to DMS in
September 1995. The Company has never paid dividends on its
common stock.
3) Reference is made to Notes 10 and 11 of the Company's audited
financial statements as of and for the five month period ended
December 31, 1995 for a reconciliation of differences between
Canadian and US GAAP.
At July 31, 1996, the exchange rate between the CAN$ and US $ was
CAN$1.3747 to US$1. The following table sets forth certain information
regarding such exchange rate for the periods set forth below.
At or for the Period Ended
July 31, December 31, March 31,
(12 months) (5 months) (3 months)
CAN$ to US$1 1992 1993 1994 1995 1995 1995 1996
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
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$371,939 for the year ended July 31, 1995. The increased expenses
are entirely attributable to the payment of the first of three
installments due to MGH for research funding. The first payment
amounted to CAN$ 234,675.
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
(CAN$55,000), moving expenses (CAN$20,000) and sundry office expenses
(CAN$41,000). The Company also hired its Chief Financial Officer
during this period which accounted for approximately CAN$14,000 of
the increase in the period ended December 1, 1995.
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
(CAN$489,000) and the opening of the Rockville, Maryland laboratory
during the year (CAN$188,000), as well as increased expenditures
related to laboratory expenses (CAN$145,000). The Company also paid
its second installment under its research agreement with MGH, in the
amount of CAN$274,675, which was CAN$40,000 higher than the 1995
payment. Gross research and development expenditures were partially
offset by research tax credits available to the Company in Quebec.
Total current operating expenses are approximately CAN$380,000 per
month. Of that amount, the Company is currently spending
approximately CAN$220,000 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 CAN$1,071,752 for the
nine-month period ended September 30, 1996 compared CAN$134,631 in
the five-month period ended December 31, 1995. The increase is
attributable to the hiring of additional non-research personnel,
which amounted to approximately CAN$125,000 and to costs incurred in
the Company's Rockville, Maryland laboratory which amounted to
approximately CAN$70,000. 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 (CAN$166,000) and publicity-related costs
(CAN$260,000). The remaining increase relates to sundry office
expenses.
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,
consisting of investments in laboratory equipment (CAN$566,000),
computer software and hardware (CAN$26,000) and furniture and
fixtures (CAN$17,000). Of the total capital expenditures
approximately CAN$105,000 related to investments at the U.S.
laboratory in Maryland. 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 ongoing
research funding payments due to MGH. 1997 research grants will
total US$397,000. The Company also will pay MGH $US94,176 for patent
costs incurred by MGH in 1996, which amount the Company and MGH have
agreed will be paid no later than May 15, 1997. For 1998 through the
year 2002, subject to some early termination rights of the Company,
NYMOX is obligated to pay MGH $US172,000 per year, which amount is
payable in quarterly installments of US$43,000.
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 aging. 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., Vice President and 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, 1996 for each executive officer of the
Company and for the directors and executive officers as a group.
SUMMARY COMPENSATION TABLE
(in Canadian dollars)
Fiscal Year ended Fiscal Year ended
12/31/95 12/31/96
Name and Other Cash Other Cash
Principal Position Salary Compensation Salary Compensation
Dr. Paul Averback, $50,000 -- $100,000(1) --
President and
Director
Dr. Hossein A. $90,000 -- $110,000(2) --
Ghanbari,
Vice President and
Director
Mr. Roy Wolvin, $14,700 -- $70,200 --
Secretary-Treasury
and Director
Dr. Iraj Beheshti, -- -- $122,000 --
Vice President,
Director of
Clinical Reference
Laboratories
All directors and $154,700 -- $402,200 --
executive officers
as a group
______________________________
(1) Dr. Averback's current annual salary is $150,000.
(2) Dr. Ghanbari's current annual salary is $120,000.
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 were 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 a total of
10,000 common shares have been exercised to date.
ii) One senior executive of the Company holds additional options to
acquire 200,000 common shares of the Company at a price of CAN$3.25
per share effective as of January 17, 1997, 1998 and 1999 (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. The first
tranche of such options vested January 17, 1997, entitling the option
holders to purchase a total of 10,000 shares at a price of CAN$13.75
per share.
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. The
first tranche of this option vested on January 17, 1997, entitling
the holder to purchase 20,000 shares at a price of CAN$13.75 per
share.
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 17,934,382 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: February 21, 1997
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheet
(Unaudited -- See Accompanying Notes)
September 30, 1996 with comparative figures as at December 31, 1995
(in Canadian dollars)
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 (Note 2) 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 (Note 3) 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 -- See Accompanying Notes)
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 assets 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 -- See Accompanying Notes)
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>
NYMOX PHARMACEUTICAL CORPORATION
Supplementary Disclosures to Unaudited Interim Financial Statements
1. Interim Financial Statements:
The unaudited consolidated balance sheet as at September 30, 1996 and
the unaudited consolidated statement of earnings and deficit and
changes in financial position for the quarter and the nine-month
period ended September 30, 1996 reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the
results of the interim periods presented. There are no adjustments
in these interim financial statements other than normal recurring
adjustments.
2. Capital assets
September 30, December 31,
1996 1995
Accumulated
depreciation
and Net book Net book
Cost amortization value value
Computer
software and
equipment $ 34,494 $ 5,175 $ 29,319 $ 8,534
Laboratory
equipment 579,334 45,259 534,075 12,680
Furniture and
fixtures 17,346 2,602 14,744 --
--------- -------- --------- ---------
$ 631,174 $ 53,036 $ 578,138 $ 21,214
========= ======== ========= =========
3. Capital stock:
In April 1996, the Company completed private placements
totalling 877,300 common shares at price of $6.00 per share and
received aggregate net proceeds of $5,029,840. The net
proceeds were added to the Company's working capital and are
being used in part to accelerate the commercialization of the
Company's AD7C test in North America and Europe.
Changes in the Company's capital stock since December 31, 1995
are summarized as follows:
Shares Dollars
Issued and outstanding, December 31,
1995 17,047,082 $ 4,022,641
Issue of common shares as a result
of exercise of stock options 5,000 16,250
Issue of common shares as a result
of private placements 877,300 5,263,800
Share issue costs -- (233,960)
---------- ----------
Issued and outstanding,
September 30, 1996 17,929,382 $ 9,068,731
========== ===========
4. Canadian/U.S. GAAP Differences
(a) Reconciliation of earnings reported in accordance with Canadian
GAAP with United States GAAP:
Net loss - Canadian GAAP $ (2,327,231)
Adjustment:
Amortization of patents (18,394)
----------
Net loss - U.S.-GAAP $ (2,345,625)
==========
(b) Reconciliation of shareholders' equity reported in accordance
with Canadian GAAP with United States GAAP.
Shareholders' equity - Canadian GAAP $ 5,201,814
Amortization of patents:
Cumulative effect to beginning of
period (91,440)
Current period effect (18,394)
----------
(109,834)
Shareholders' equity - U.S. GAAP $ 5,091,980
==========
<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 audits 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 Canadian generally accepted accounting principles (which
differ in certain material respects from accounting principles generally
accepted in the U.S. (Notes 10 and 11)).
/s/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 taxes currently recoverable (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 -
Prepaid expenses and deposits 44,523 -
--------- ---------
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 accumulated during the
development stage (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 in December 1995. The
Corporation had no operations from its date of incorporation through
to the acquisition as described below. The 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 owning substantially all the shares of the
Corporation. This transaction was accounted for under the purchase
method with DMS as the accounting acquirer.
Immediately following the acquisition, the Corporation acquired from
two shareholders, who are unrelated to the Corporation, a controlling
interest in 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 rendering 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 Corporation
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 statements 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.
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
cost 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
The capitalized amounts with respect to patents relate to direct
costs incurred in connection with securing patents.
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
---------- ---------
Income taxes currently recoverable $ (12,000) $ -
========== =========
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, which expire in
the year 2005, in the amount of approximately $40,000, the benefits of
which have not been recorded in these financial statements. If
recognized in the future, the benefit of the investment tax credits
will be recorded as a reduction of the related expense or asset, as
appropriate.
6. Capital stock
All share information has been presented as if the acquisition of DMS
(see Note 1) took place August 1, 1989.
Authorized
An unlimited number of common shares
December 31 July 31
1 9 9 5 1 9 9 5
Issued and outstanding
17,047,082 common shares
(July 31, 1995 - 15,000,000) $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. Such shares were
recorded in these financial statements at $865,370, which is an
amount equal to the book value of the DMS shares.
A total of 468,447 common shares were issued in connection with the
Monterey transactions. The shares were recorded at $1.
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 15,000,000, respectively.
Options
During the period ended December 31, 1995, 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 2,000,000 common shares. No
options were granted prior to December 31, 1995.
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
(i) Leased premises
The Corporation 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 and nil for the year ended July 31, 1995.
(ii) 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. The Corporation
has an exclusive license to patents from this facility covering
rights to AD7C diagnostics. Under this license, the medical
facility benefits from research funding and collaboration from
the Corporation and is entitled to royalties of 4% on worldwide
sales of the AD7C test.
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
1 9 9 5 1 9 9 5
(5 months) (12 months)
Net loss - Canadian GAAP $ 693,846 $ 377,570
Realized loss on sale of
Monterey (i) 936,894 -
Amortization of patents 8,454 16,271
--------- ---------
Net loss - US GAAP $1,639,194 $ 393,841
========= =========
Loss per share - 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
1 9 9 5 1 9 9 5
(5 months) (12 months)
Shareholders' equity - Canadian GAAP $ 2,482,955 $ 229,327
--------- ----------
Realized loss on sale of
Monterey (i) (936,894) -
Amortization of Patents (ii)
Cumulative effect to beginning of
the period (82,986) (66,715)
Current period (8,454) (16,271)
--------- ----------
Increase in deficit (1,028,334) (82,986)
--------- ----------
Fair value of shares issued to
minority shareholders - increase
in capital stock value (i) 936,894 -
--------- ----------
Shareholders' equity - US GAAP $2,391,515 $ 146,341
========= ==========
(i) In accordance with US GAAP, the Monterey transactions described
in note 1 would be accounted for, under the purchase method, as
an acquisition of 100% of Monterey for consideration comprising
cash of $383,000 and common shares of the company having a fair
value of $936,894. The sale of Monterey for cash of $383,000
results in a realized loss of $936,894.
(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.
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 and, the
following disclosures are required:
Cumulative
since the Cumulative
date of since
inception of date of the
the Corporation Corporation
to December 31, to July 31,
1995 1995
(unaudited) (unaudited)
Research and development $ 1,189,627 $618,412
General and administrative 1,180,596 100,617
Income taxes currently
recoverable (12,000) -
Cash inflow (outflow)
Operating activities (2,214,639) (514,454)
Investing activities (367,555) (338,953)
Financing activities 4,749,738 865,370
Statement of Shareholders' equity cumulative since the date of
inception of the Corporation (see footnote 1).
<TABLE>
<CAPTION>
Consideration Accumulated
Shares Cash Other Deficit Total
(1)
<S> <C> <C> <C> <C> <C>
Common shares issued
during year ended
July 31, 1990 2,500,000 $200,000 $ - $ - $200,000
Net loss for the year ended
July 31, 1990 - - - (126,719) (126,719)
--------- ------- --------- ---------- --------
Balance at July 31, 1990 2,500,000 200,000 - (126,719) 73,281
Common shares issued during
year ended July 31, 1991 - - - - -
Net loss for the year ended
July 31, 1991 - - - (24,827) (24,827)
--------- -------- --------- ---------- --------
Balance at July 31, 1991 2,500,000 200,000 - (151,546) 48,454
Common shares issued during
year ended July 31, 1992 9,375 37,500 - - 37,500
Net loss for the year ended
July 31, 1992 - - - (53,112) (53,112)
--------- -------- --------- ---------- --------
Balance at July 31, 1992 2,509,375 237,500 - (204,658) 32,842
Common shares issued during
year ended July 31, 1993 201,250 205,000 - - 205,000
Common shares cancelled
during year ended July 31,
1993 (500,000) - - - -
Net loss for the year ended
July 31, 1993 - - - (48,862) (48,862)
--------- -------- --------- ---------- ---------
Balance at July 31, 1993 2,210,625 442,500 - (253,520) 188,980
Common shares issued during
year ended July 31, 1994 2,500 10,000 - - 10,000
Net loss for the year ended
July 31, 1994 - - - (71,668) (71,668)
--------- -------- --------- ---------- ---------
Balance at July 31, 1994 2,213,125 452,500 - (325,188) 127,312
Common shares issued during
year ended July 31, 1995 78,078 412,870 - - 412,871
Net loss for the year ended
July 31, 1995 - - - (393,841) (393,841)
--------- -------- --------- ---------- ----------
Balance at July 31, 1995 2,291,203 865,370 - (719,029) 146,342
Adjustment necessary to
increase the number of
common shares 12,708,797 - - - -
Adjusted number of common
shares of the Corporation
to reflect the legal
acquisition by the
Corporation of DMS 15,000,000 865,371 - (719,029) 146,342
Common shares issued during
period ended December 31,
1995 2,047,082 3,157,270 936,894 (2) - 4,094,164
Net loss for the period ended
December 31, 1995 - - - (1,639,194) (1,639,194)
Share issue costs - - - (209,797) (209,797)
--------- --------- ---------- --------- ---------
Balance at December 31, 1995 17,047,082 $4,022,641 $936,894 $(2,568,020) $2,391,515
========== ========= -------- ========= =========
$4,959,535
=========
</TABLE>
(1) The shareholders' equity between August 1, 1989 and July 31, 1995
presented is that of DMS. The shareholders' equity presented after
July 31, 1995, is that of the Corporation after the acquisition
described in Note 1.
(2) See Note 10(i)
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 July 31
1 9 9 5 1 9 9 5
(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 Corporation 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 been
recognized in the financial statements since the Corporation has
had a history of cumulative losses in recent years. The ultimate
realization of these losses depends on the successful
commercialization of the Corporation'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 Corporation 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 1,245,000 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.
e) Impairment of long-lived assets and long-lived assets to be
disposed of
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed of." ("FAS No. 121") was issued, effective
January 1, 1996. FAS No. 121 requires that in the event certain
facts and circumstances indicate an asset may be impaired, an
evaluation of recoverability must be performed to determine whether
or not the carrying amount of the asset is required to be written
down. The Corporation does not expect the adoption of this
statement to have a material effect on its financial condition and
results of operations.
<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
------ ------
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
BERGERON & SENECAL
Chartered Accountants.
Brossard, Quebec, Canada
July 8, 1995.
$ $
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
statutory rates $(22,164) $(13,117)
Non-recognition of
losses 22,164 13,117
-------- --------
TOTAL -0- -0-
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
Amortization of patents (i): $194,027 $242,352
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
incorporation 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 deferred 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 July 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
(filed previously)
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 (filed previously)
3.5 10.5 Research and License Amendment between The
General Hospital Corporation and the Registrant,
dated February 14, 1997
Exhibit 10.5
RESEARCH AND LICENSE AGREEMENT
AMENDMENT
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 1 Taft Court, Suite 101,
Rockville, Maryland, (NYMOX) to amend their existing AGREEMENT (dated
September 1, 1995) to include the following changes:
1. The definitions of TECHNOLOGY, FIELD OF RESEARCH, LICENSE FIELD,
and PRODUCT are extended from "diagnostic" to "diagnostic and
therapeutic." The word "diagnostic" is replaced by the words "diagnostic
and therapeutic" in
a) paragraph 2 ("TECHNOLOGY") of the preamble;
b) paragraph 1.4 ("FIELD OF RESEARCH");
c) paragraph 1.9 ("LICENSE FIELD");
and the word "diagnostic" is replaced by the words "diagnostic or
therapeutic" in
d) paragraph 1.14 ("PRODUCT").
2. In accordance with paragraph 2.4(c) of the AGREEMENT, the
Research Plan appended hereto as Appendix F is added to the AGREEMENT as a
RESEARCH PROPOSAL (hereinafter the "ADDITIONAL RESEARCH PROPOSAL").
GENERAL and PRINCIPAL INVESTIGATORS will conduct the ADDITIONAL RESEARCH
PROPOSAL beginning on the date of the execution of this Amendment ("the
Amendment Effective Date"), and continuing thereafter, unless sooner
terminated, for the next five (5) years. NYMOX may elect to terminate the
ADDITIONAL RESEARCH PROPOSAL, effective either three (3) years or four (4)
years after the Amendment Effective Date, upon one (1) year's prior notice
to GENERAL.
3. NYMOX agrees to support said ADDITIONAL RESEARCH PROPOSAL with
annual grants of one hundred seventy two thousand ($172,000) dollars, in
accordance with the budget contained in Appendix F, in addition to the
consideration stipulated in item 2.2 of the AGREEMENT. NYMOX will pay
GENERAL the further grants in accordance with the following schedule:
Forty-three thousand dollars ($43,000) within ten (10)
days of the execution of this AMENDMENT; forty-three
thousand dollars ($43,000) on or about the first day
of each calendar quarter for the next eleven (11)
consecutive quarters; forty three thousand dollars
($43,000) on or about the first day of each calendar
quarter for an additional eight (8) quarters, in the
event that GENERAL and NYMOX agree to continue for the
fourth and fifth year.
4. NYMOX hereby notifies GENERAL of, and GENERAL hereby
acknowledges, NYMOX's request pursuant to paragraph 6.1 of the AGREEMENT
for GENERAL to grant NYMOX a license as defined in paragraphs 6.2 and 6.3
of the AGREEMENT to the PATENT RIGHTS listed in Appendix E of the
AGREEMENT. In accordance with paragraph 6.8 of the AGREEMENT, the parties
shall meet within one (1) year of the Amendment Effective Date to
designate reasonable objectives and the time periods in which objectives
are to be met by NYMOX, its AFFILIATES or SUBLICENSEES to develop PRODUCTS
for commercial sale. These objectives shall include distinct objectives
for the development both of diagnostic PRODUCTS and therapeutic PRODUCTS.
5. The third paragraph of Section 6.8 of the AGREEMENT is hereby
amended as follows:
If NYMOX (i) fails to meet the objectives established by
agreement of the parties for development either of diagnostic PRODUCTS or
therapeutic PRODUCTS 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 in the portion of the field, diagnostics or
therapeutics, in which the objectives have not been met or convert such
licenses to non-exclusive licenses in the applicable portion of the field
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.
6. NYMOX acknowledges that it is currently in arrears to GENERAL
for Patent Costs totaling ninety four thousand one hundred seventy six
dollars ($94,176) for costs prior to the EFFECTIVE DATE of the AGREEMENT
and for the period October 1, 1995 through June 30, 1996. NYMOX agrees to
pay GENERAL said amount, in full, within ninety (90) days of the execution
of this AMENDMENT.
IN WITNESS WHEREOF, GENERAL, and NYMOX have caused this instrument to
be executed.
NYMOX CORPORATION THE GENERAL HOSPITAL CORPORATION
By: /s/ Hossein Ghanbari By: /s/Marcia H. Anderegg
Title: Sr. Vice President Title: Marcia Hawboldt Anderegg
for Research and Assistant Director
Development and Office of Technology Affairs
Strategic Planning
Date: 2/14/97 Date: 2/13/97
