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Form 20 - F
[ ] Registration statement pursuant to section 12(b) or (g) of the
Securities Exchange Act of 1934 [Fee required]
or
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee required]
For the fiscal year ended December 31, 1998
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(s):
SEC Filer, 72731,356
Registrant: File Number: 001-12033
CIK: 0001018735
NYMOX PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
CANADA
(Jurisdiction of incorporation or organization)
9900 Cavendish Blvd.
Suite 306
St. Laurent, Quebec
H4M 2V2
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
None Not Applicable
Securities registered or to be registered pursuant to
section 12(g) of the Act
COMMON STOCK
(Title of Class)
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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: 19,727,904 shares as of December 31, 1998.
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 [X] No ___
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 subsidiary) is a development stage biopharmaceutical company,
based in Kensington, Maryland and Saint Laurent, Quebec, Canada with several
major pharmaceutical projects in development in addition to expertise in
diagnostic technology. The company specializes in the research and development
of therapeutics and diagnostics 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 development phase of its first
Alzheimer's diagnostic aid, the AD7C(TM) test, and is currently marketing the
test through its reference laboratory in Kensington, Maryland, and is also
launching AD7C(TM) through a licensing and marketing agreement with Specialty
Laboratories of Santa Monica, California. (See "Diagnostic Products" below.)
Nymox's AD7C(TM) test assists physicians in the diagnosis of Alzheimer's disease
("AD"), a terminal illness of the elderly that afflicts an estimated four
million people in the United
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States alone, and perhaps 15-20 million people worldwide. The test measures the
level of a brain protein which is elevated early in both the urine and
cerebrospinal fluid of patients with Alzheimer's disease. The test is accurate
and specific to Alzheimer's disease and enables physicians, patients and their
families to make informed social, legal and medical decisions early on about
treatment and care. Early diagnosis of Alzheimer's disease has become
increasingly important with new improvements in drug treatment and care. Even a
modest delay in institutionalization can mean huge social and financial savings.
Conversely, any testing procedure that could help rule out AD would eliminate
the tremendous uncertainty and anxiety patients and their families otherwise
face and would allow physicians to focus on the other, often reversible, causes
of cognitive changes. For the health care system, early diagnosis with the aid
of the AD7C(TM) test represents a potentially large cost-savings in terms of
repeated office visits, lab tests, scans and other procedures required by the
traditional methods of diagnosis.
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 had
been carrying on research and development since 1989 on neurological diagnostics
and pharmaceuticals for the aging population with emphasis on Alzheimer's
disease.
As used herein, the terms "NYMOX" and the "Company" refer to NYMOX
Pharmaceutical Corporation and DMS, the predecessor of NYMOX Pharmaceutical
Corporation and its wholly owned subsidiary Nymox Corporation.
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(TM) test through reference laboratory services and licensing arrangements.
NYMOX research and development is categorized into four areas including
characterization of biochemical markers of Alzheimer's disease from brain
tissue, cerebrospinal fluid, urine 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
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to AD7C(TM), NYMOX has several other markers 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 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(TM) 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(TM) test has the accuracy that is necessary for a test to be useful.
There can be no assurance that the level of success experienced to date will be
repeated in other studies. 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 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.
Assuming that future trials show a false positive rate consistent with that
achieved by the AD7C(TM) 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(TM) 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.
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To date, several studies published in peer-reviewed publications have confirmed
the accuracy of the AD7C(TM) test: see the Journal of Clinical Investigation
(1997; vol.100; pages 3093-3104), the Journal of Contemporary Neurology (1998;
art. 4a) and two publications in the Journal of Clinical Laboratory Analysis
(1998; vol.12:285-288) and (1998; vol.12:223-226). In addition, other peer-
reviewed studies are in press.
Regulatory approval is necessary before a test kit can be marketed for
commercial distribution to other laboratories. (See "Government Regulation"). It
is, however, possible under FDA procedures for the AD7C(TM) 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 laboratory in
Kensington, Maryland. The test is performed by NYMOX technical staff on patient
samples sent by doctors and the results are reported to the doctor submitting
the sample.
NYMOX has designed both a cerebrospinal fluid test and a urine test for
Alzheimer's disease. These tests have been developed from NYMOX's NTP (neuronal
thread protein) based technologies. Another new NYMOX assay system for
Alzheimer's disease which recognizes a distinctive brain antigen referred to as
35i9 is also in development.
Previously published research from Harvard (Developmental patterns of neuronal
thread protein gene expression in Down Syndrome, de la Monte, SM, Xu, YY,
Hutchins, GM, Wands, JR, Journal of Neurological Sciences, February 1996:
Vol.135. pages 118-125) has shown that AD7C-NTP was increased in Down syndrome
brain. New clinical testing data now suggests that the published research may be
reflected in a clinically significant way in patients with Down syndrome, and
that AD7C testing may prove to have importance for these patients.
DEVELOPMENT OF THERAPEUTIC PRODUCTS
In the field of neurodegenerative disease, including Alzheimer's disease, NYMOX
has developed two distinct new entities, NXD-3109 and NXD-1191, in addition to
the lead drug candidate NXD-2858. These entities are neurodegeneration
inhibitors which have been designed and tested in NYMOX proprietary screening
systems. To date, there has been no significant toxicity demonstrated and animal
testing results have been positive.
In a separate area of NYMOX R&D, the Company announced work on `spherons' which
Nymox researchers believe satisfy 20 important criteria of validity implicating
them in AD. Several experimental studies on its drug candidate for AD yielded
promising results. The lead compound NXD-2858 was designed by Nymox to inhibit
the formation of Alzheimer plaques from spherons, and therefore potentially slow
down or arrest the progression of the disease. The new studies demonstrated that
the drug is orally bioavailable, has good blood-brain barrier penetration, and
continued to show thus far no significant evidence of toxicity or significant
potential side effects. Studies have shown that spherons are unique protein
balls found in every person's brain, which correlate with amyloid plaques found
in AD brains (Journal of Alzheimer's Disease 1, 1-34, 1998, IOS Press and Drug
News &
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Perspectives; vol.11,no.8,1998).
NYMOX has also used the AD7C-NTP gene in tissue culture for identifying other
potential drug candidates for AD. Nymox's AD7C drug screening system is being
used to extend the pipeline of candidate drugs for neurodegenerative diseases
such as AD. The drug screening model is based on human neuronal cells which have
the AD7C-NTP gene inserted into them and where this gene has become an integral
part of the cell. The cells produce AD7C-NTP, subsequently start the process of
neuronal sprouting, going through a degenerative process, and then finally die
prematurely, compared to normal control cells. Compounds are then screened for
their ability to impede this premature cell death in this unique system. The
sequence of cellular events in this culture system correlates with the loss of
degenerating neurons in the AD brain, and therefore drug compounds that block or
inhibit this premature cell death in this system may be useful drug candidates
for AD. The technology underlying this NYMOX screening system was licensed in
1997 from the MGH in a sponsored research and licensing agreement.
The only FDA-approved drug treatments for Alzheimer's disease in use today are
tacrine (brand- name Cognex) and donezepil (brand name Aricept). However, these
compounds are effective only in managing the symptoms of AD, and do 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 consultations between the Company and 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
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screening of 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 ("NAS"), 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.
ANTI-INFECTIVES
In the field of infectious disease treatments, NYMOX has developed three new
entities. The first is NXB-4221, an antibacterial designed for the treatment of
difficult chronic and persistent urinary tract infections. The second is
NXB-5886, for the treatment of streptococcal infection. The third is NXT-1021,
for potential use against staphylococcus. NXB-4221, NXB-5886, and NXT-1021 have
all shown bactericidal effects in culture and have thus far been non-toxic.
Nymox has also developed a potent new antibacterial, NXC-4720, which has been
shown to be highly active against all known substrains of E. Coli 0157, the
bacteria implicated in what is often referred to as "Hamburger Disease".
NXC-4720 so far has been shown to destroy 0157 strains, including H7,
efficiently, rapidly and at a very low dose.
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 NAS.
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.
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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 labeling 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,
labeling 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
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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:
i) clinical testing;
ii) 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");
iii) postmarketing record and reporting obligations; and
iv) 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 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 nonclinical studies. There can be no
assurance that the AD7C(TM) 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
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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, the U.S. Congress implemented sweeping changes to the U.S.
Medicare and Medicaid systems in the Balanced Budget Act of 1997 and is
currently considering a number of other proposals that could significantly
impact on the level of funding for Medicare and Medicaid programs. Under the new
Part C: Medicare + Choice programs, beneficiaries can now opt for a variety of
health delivery models, including coordinated care plans, HMOs, preferred
provider organizations (PPOs) and provider sponsored organizations (PSOs),
private fee-for-service plans and medical savings account plans. In addition,
states now have the option to require Medicaid recipients to enroll with managed
health care plans without first obtaining a waiver, making it substantially
easier for the states to meet their Medicaid obligations through private managed
care organizations. All these health care delivery systems, including the
original Medicare and Medicaid systems, are subject to funding formulas and
spending caps and may compensate for these restrictions by limiting coverage,
eligibility and/or payments. The long-term impact of these legislative changes
in terms of their efficiency, effectiveness and financial viability in
delivering health care services to an aging population is uncertain at present.
Any legislative or regulatory actions to reduce or contain federal spending
under either the Medicare or Medicaid programs could adversely affect the
Company's ability to participate in either program as a provider or supplier of
services or products and the amount of reimbursement under these programs
potentially available to the Company.
Moreover, the Company currently provides its AD7C(TM) test through reference
laboratories and may provide certain of its other products or services through
such laboratories in the future. The Health Care Financing Administration (HCFA)
regulates clinical reference laboratories under the Clinical Laboratories
Improvement Act of 1988 (CLIA), which imposes requirements for certification,
licensure and maintenance of medical records about the accuracy of the tests
performed. The HCFA also establishes Conditions of Participation for reference
laboratories. Medicare and Medicaid reimbursement may be conditioned upon
compliance with these HCFA requirements. In addition, individual states may have
their own requirements for reference laboratories which offer diagnostic
services. Finally, the FDA has its own regulations governing in vitro diagnostic
products, including analyte-specific reagents used in clinical reference
laboratories. Any changes in HCFA or state law requirements or in the FDA
regulations could have an impact on the Company's ability to offer or market any
reference laboratory services and/or on its ability to obtain reimbursement from
the Medicare and Medicaid programs and providers.
Federal and state regulations and law and internal coverage policies of managed
care organizations may affect the Company's ability to obtain payments under the
various Medicare and Medicaid programs for its products and services. For
example, new
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products and services developed by the Company will be subject to coverage
determinations. The Medicare legislation prohibits payment under the original
Medicare program 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 provision in order to exclude from Medicare coverage those
medical and health care services that are not demonstrated to be safe and
effective by acceptable clinical evidence. HCFA is currently reviewing both its
national coverage policies and procedures in general and specifically its
coverage of diagnostic laboratory tests. HCFA is in the process of constituting
a Medicare Coverage Advisory Committee to provide advice on the effectiveness
and appropriateness of medical items and services that are eligible for coverage
under Medicare. A regulation governing specific aspects of national coverage and
administrative policies for clinical diagnostic laboratory tests is expected in
the late spring or summer of 1999. It is unknown what effect these changes will
have on the Company's ability to obtain Medicare coverage for its products and
services. Even if Medicare determines that coverage of one of the Company's
products or services is appropriate, there remains the issue as to the actual
amount of reimbursement that Medicare or a managed care organization will pay
for the product or service. There is no guarantee that the level of
reimbursement will be close to the retail price for the product or service that
the Company is charging or wishes to charge or commensurate with the costs of
developing and marketing the product or service.
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(TM) 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 arrest 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
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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 numerous patent applications in the United States claiming
brain markers and screening and diagnostic technologies. NYMOX also has patent
applications pending covering therapeutics and diagnostics in Alzheimer's
disease and related conditions. NYMOX has eight issued patents. NYMOX also has
other patents in a number of countries and has applications on file in numerous
other countries. NYMOX also has an exclusive license to patents from the
Massachusetts General Hospital covering rights to the AD7C(TM) diagnostic and
related therapeutic products. Under this license, the Massachusetts General
Hospital ("MGH") is entitled to royalties of 4% from worldwide sales of the
AD7C(TM) test.
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
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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 noncompetitive 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 that refers 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
13
<PAGE> 14
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 currently offers a reference laboratory service with respect to the
AD7C(TM) test. (See "Diagnostic Products.") Assuming regulatory approval, the
Company will employ a variety of marketing approaches depending on the product
and the market.
The Company currently has established an AD7C(TM) Clinical Reference Laboratory
service in Kensington, Maryland (U.S.). The laboratory is fully operational and
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
focusing its efforts on finding suitable overseas licensees who have both the
economic and scientific resources to effect a more rapid penetration of the
AD7C(TM) test in their home markets. The Company has signed a non-exclusive
licensing agreement with Specialty Laboratories of Santa Monica California
("Specialty") to perform and market the AD7C(TM) test in the United States.
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 Specialty Laboratories or any other licensee. The
company has elected, for now, not to renew the license agreement with SGS Lab
Simon for the cerebrospinal fluid test in light of the development of the
Company's urinary assay.
If successfully developed and approved, NYMOX plans to market and sell certain
of its therapeutic products 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 Kensington, Maryland comprise 8,649 square feet of
leased space. The lease agreements expire in March 31, 2000, June 30, 2001 and
December 31, 1999, respectively. The facility in Saint Laurent, Quebec, Canada
comprises 3,700 square feet of leased space. The lease agreement expires in
August 2000, with an option to renew for three years. The Company owns a full
complement of equipment used in all aspects of its R&D and its reference
laboratories. The Company
14
<PAGE> 15
believes that its facilities are adequate for its current needs and that
additional space, if required, would be available 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 March 31,1999 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.
<TABLE>
<CAPTION>
NAME NO. SHARES PERCENT OF CLASS
<S> <C> <C>
Dr. Paul Averback 12,643,895 63.8%
All directors and officers as a group 12,666,295 63.9%
</TABLE>
In addition, as of such date Dr. Averback's wife owned 1,154,297 common shares
(5.8%) and 9022-1433 Canada Inc., a company owned by Dr. Averback and his wife,
owns 500,000 common shares (2.5%).
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 and on The Nasdaq Stock Market since
November 25, 1997. The following tables set out the high and low reported
trading prices of the common shares on The Nasdaq Stock Market and the Montreal
Exchange during the periods indicated.
THE NASDAQ STOCK MARKET:
<TABLE>
<CAPTION> <C> <C> <C>
High (US$) Low (US$) Volume (Shares)
---------- --------- ---------------
1997 4th quarter $8.750 $6.250 134,276
1998 1st quarter $13.625 $5.688 5,561,919
2nd quarter $8.375 $5.750 4,412,450
3rd quarter $7.375 $2.563 2,078,081
4th quarter $6.250 $2.500 1,769,053
1999 1st quarter $5.875 $2.875 569,842
</TABLE>
15
<PAGE> 16
THE MONTREAL EXCHANGE:
<TABLE>
<CAPTION>
High (CDN$) Low (CDN$) Volume (Shares)
----------- ---------- ---------------
<C> <C> <C> <C>
1997 1st quarter $15.50 $10.95 347,969
2nd quarter $11.25 $ 6.00 477,108
3rd quarter $10.50 $ 7.50 326,504
4th quarter $12.40 $ 7.25 588,709
1998 1st quarter $19.00 $ 8.15 1,478,377
2nd quarter $11.70 $ 8.25 913,909
3rd quarter $10.40 $ 4.50 581,775
4th quarter $ 9.50 $ 4.05 662,379
1999 1st quarter $ 8.95 $ 4.30 551,796
</TABLE>
According to information furnished to the Company by the transfer agent for the
common shares, as of March 31, 1999, total shares outstanding were 19,807,904.
There were approximately 900 holders of record of the common shares and 4,128
beneficial shareholders in total of which 85 were holders of record of the
common shares and 1,186 were beneficial shareholders with addresses in the
United States and such holders owned an aggregate of 2,783,430 shares,
representing 14.1% of the outstanding shares of common stock.
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 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
16
<PAGE> 17
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
qualifies as 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%, if the beneficial owner of the shares is a corporation owning at least
10% of the voting shares of the Company.
The foregoing discussion is limited to Canadian federal taxation and does not
deal with provincial or local taxes or United States federal, 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.
17
<PAGE> 18
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 KPMG, Montreal, Canada in the case of the years ended
December 31, 1996,1997 and 1998, 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 period ended July 31, 1994. 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.
Effective August 1, 1995, the Company changed its fiscal year from a July 31
year-end to a December 31 year-end.
NYMOX PHARMACEUTICAL CORPORATION
Selected Financial Data
(expressed in Canadian dollars)
<TABLE>
<CAPTION>
July 31 July 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1994 1995 1995 1996 1997 1998
(5 months)
------- ------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
CANADIAN GAAP
Current Assets - 0 - 11,963 2,268,097 2,896,234 2,470,335 3,635,246
Capital & Other Assets 12,576 338,953 366,155 1,317,973 1,475,462 2,120,974
Total Assets 239,403 350,916 2,634,252 4,214,207 3,945,797 5,756,220
Liabilities 95,376 121,589 151,297 384,226 292,330 434,440
Shareholders' Equity 194,027 229,327 2,482,955 3,829,981 3,653,467 5,321,780
Revenues - 0 - - 0 - - 0 - 226,940 101,110 394,837
Research & Development
Expenditures (note 1) 55,325 371,939 571,215 2,116,000 2,412,349 3,013,237
Net Loss 58,325 377,570 693,846 3,699,064 4,999,455 6,903,611
Loss Per Share (note 2) - 0 - 0.03 0.04 0.21 0.27 0.36
US GAAP (note 3)
Net Loss 71,668 393,841 1,639,194 4,330,230 5,198,988 7,385,188
Loss per share (note 2) - 0 - 0.03 0.11 0.25 0.28 0.38
Shareholders' equity 127,312 146,341 2,391,515 3,107,375 2,731,328 3,918,064
</TABLE>
[FN]
Notes:
1) Amounts shown are net of investment tax credits.
2) For periods prior to December 31, 1995, 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 Note 10 of the Company's audited financial statements
as at and for the year ended December 31, 1998 and to Note 9 of the
Company's audited financial statements as at and for the year ended
December 31,1997 and to Note 8 of the Company's audited financial
statements as at and for the year ended December 31, 1996 for a
reconciliation of differences between Canadian and US GAAP.
</FN>
18
<PAGE> 19
As of March 31, 1999 the exchange rate is CAN$1.5087 to US$1.00. The following
table sets forth certain information regarding exchange rates for the periods
reflected in the preceding financial data.
FOR THE PERIOD ENDED
<TABLE>
<CAPTION>
July 31, July 31, Dec.31, Dec.31, Dec.31, Dec.31,
CAN$ TO US 1994 1995 1995 1996 1997 1998
(5 Months)
------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Period end $1.3825 $1.3609 $1.3695 $1.3618 $1.4291 $1.5333
Average During Period $1.3465 $1.3775 $1.3548 $1.3636 $1.3850 $1.4831
High $1.3990 $1.4267 $1.3820 $1.3747 $1.4291 $1.5685
Low $1.2839 $1.3395 $1.3271 $1.3383 $1.3400 $1.4198
</TABLE>
ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
The Company was formed for the purpose of acquiring all of the common shares of
DMS Pharmaceutical Inc. (DMS), a private company carrying on research and
development in the field of neurological diagnostics and pharmaceuticals for the
aging population. This acquisition was completed during September 1995 for a
consideration of 15,000,000 common shares of the Company, resulting in the
shareholders of DMS owning substantially all the shares of the Company. This
transaction was accounted for under the purchase method of accounting with DMS
as the acquiror.
Subsequently, 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. 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$5,263,800.
In May 1997, NYMOX completed a private placement totaling 696,491 units for a
total consideration of CAN$4,527,191. Each unit was comprised of one common
share of Nymox and one series A common share purchase warrant entitling the
holder to subscribe to one common share of NYMOX at a per share price of $8.50
until May 15, 1998.
In 1998, the Corporation completed private placements totaling 366,000 common
shares for total proceeds of CAN$3,131,500 with institutional and individual
investors. A total of 177,500 common share purchase warrants were issued as well
entitling the holder to subscribe to one common share of NYMOX at prices of
CAN$8.50 (50,000) and CAN$10.00 (127,500). All of the 696,491 Series A warrants
issued in connection with the
19
<PAGE> 20
1997 private placement were exercised in 1998 for total proceeds to the Company
of Can$5,920,174.
Subsequent to year-end, the Corporation completed private placements for a total
of 55,000 common shares at CAN$8.50 per share, for total proceeds of
CAN$467,500. In connection with these private placements, the Corporation issued
an additional 27,500 warrants exercisable at a price of $10.00 per share.
RESULTS OF OPERATIONS
The Company is a development stage company, which has, during the periods
presented in the Summary Financial Information above, realized limited revenues
from operations. Net losses for the period ended December 31, 1998 were
CAN$6,903,611, or CAN$0.36 per share, compared to CAN$4,999,455, or CAN$0.27 per
share, for the period ended December 31, 1997.
FOR THE YEAR ENDED DECEMBER 31, 1998:
Revenues on service fees for the AD7C(TM) test amounted to Can$151,263 for the
year ended December 31, 1998, compared with CAN$24,584 for the year ended
December 31, 1997. More than half of these revenues were generated in the last
two months of 1998 when the AD7C(TM) urine test service was launched through the
reference laboratory service. All of the service fee revenue was derived in the
United States. Interest revenue increased to CAN$243,574 in 1998 compared to
CAN$76,526 in 1997, derived from interest earned on the cash and short-term
investments received from the private placements referred to above.
Research and development expenditures amounted to CAN$3,019,015 for the year
ended December 31, 1998, compared with CAN$2,562,349 for the year ended December
31, 1997. The increase is principally attributable to increased expenditures on
reagents and clinical studies related to R&D in therapeutics and anti-infectives
(net increase CAN$476,677) at the Kensington, Maryland laboratory during the
year. In 1998, research tax credits amounted to CAN$5,778 compared to
CAN$150,000 in 1997. The reduction in tax credits is attributable to the
transfer of research and development activities to the United States.
Marketing expenses amounted to CAN$3,240,242 for the year ended December 31,
1998 compared to CAN$1,925,654 for the year ended December 31, 1997. A major
marketing effort in 1998 accounted for the increased expenditures; the effort
focused specifically on mass mailings and publicity (net increase CAN$827,189)
and presentations at conferences (net increase CAN$579,496). The Company will
significantly reduce expenditures in this area in 1999.
General and administrative expenses amounted to CAN$896,201 for the year ended
December 31, 1998, compared with CAN$589,524 in the year ended December 31,
1997.
20
<PAGE> 21
The increase is attributable to increases in professional fees (net increase
CAN$193,736) and increased costs related to shareholder relations (net increase
CAN$73,146).
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998, cash, short term investments and subscriptions
receivable totaled Can$3,465,705. In addition, proceeds of CAN$467,500 were
received in January 1999 from subsequent private placements.
Nymox has no financial obligations of significance other than long-term lease
commitments for its premises in Canada and the United States of CAN$37,117 per
month and ongoing research funding payments to a U.S. medical facility totaling
US$172,000 for 1999.
The Company invested CAN$563,063 in additional capital assets in the year ended
December 31, 1998 compared to CAN$260,183 in 1997, consisting of patent costs
(CAN$434,254), laboratory equipment (CAN$93,859) and computer equipment and
furnishings (CAN$34,956).
The Company does not believe that inflation has had a significant impact on its
results of operations.
The Company has given to the Chief Financial Officer the responsibility of
assessing the impact of and developing a remediation plan for the impact of the
Year 2000. The Company has relatively few suppliers due to the nature of its
business and the manner in which its business is conducted. The Company is in
the process of identifying and contacting key suppliers, partners and
collaborators to determine their stage of readiness for the Year 2000.
Confirmation of Year 2000 compliance has already been received from the
Company's payroll, accounting and most of its internal data processing systems
suppliers. The Company has alternative suppliers for each of the key areas of
research and office supplies, and may use them if required. The Company does not
interface electronically with any of its suppliers or service providers. The
Company is also finalizing an inventory of all the equipment and software
applications it uses that could be impacted in a material way by the year 2000
issue. Obsolete equipment is being retired from all of the Company's systems
that have been identified as being susceptible to the Year 2000. Management
believes that the conversion and testing of the systems can be achieved with the
Company's existing staff at minimal cost and anticipates that testing and
implementation of the necessary changes will be complete by September 1999.
FOR THE YEAR ENDED DECEMBER 31, 1997:
Research and development expenditures represented the Company's most significant
expenditure and amounted to CAN$2,562,349 for the year ended December 31, 1997,
compared with CAN$2,356,000 for the year ended December 31, 1996. The increased
expenses were largely attributable to increased expenditures related to
laboratory
21
<PAGE> 22
expenses (CAN$178,000) at the Kensington, Maryland laboratory during the year.
The Kensington facility was in operation for only 10 months in 1996. The Company
also paid its third installment under its research and license agreement with
Massachusetts General Hospital ("MGH") in the amount of CAN$311,310, which was
CAN$36,000 higher than the 1996 payment. Under the agreement, the Company was
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"). Gross research and development expenditures were
partially offset by research tax credits available to the Company in Quebec. In
1997, research tax credits amounted to CAN$150,000 compared to CAN$240,000 in
1996. The reduction was attributable to the transfer of certain research and
development activities to the United States.
Marketing expenses in 1997 amounted to CAN$1,925,654 for the year ended December
31, 1997 compared to CAN$1,253,894 for the year ended December 31, 1996.
Expenditures in 1997 consisted largely of the costs of establishing and
maintaining a sales and marketing force (CAN$1,135,000) and costs related to
marketing activities such as presentations at conferences, publicity, travel,
general expenses, printing and postage (Can$ 790,000). Expenditures in 1996,
consisted of publicity related costs in connection with pre-marketing of
AD7C(TM) (CAN$746,000), salaries (CAN$178,000) and other costs related to
marketing activities (CAN$330,000).
General and administrative expenses amounted to CAN$589,524 for the year ended
December 31, 1997 compared with CAN$497,179 in the year ended December 31, 1996.
The increase was attributable to legal costs and expenses related to United
States public company registration and the NASDAQ listing (CAN$119,600).
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company's cash and cash equivalents were
CAN$2,287,345. In April 1998, Nymox completed private placements totaling
217,000 common shares and 255,384 warrants were exercised for total proceeds of
CAN$4,037,864.
The Company invested CAN$260,000 in additional capital assets in the year ended
December 31, 1997 compared to over CAN$1,000,000 in 1996, consisting of patent
costs (CAN$210,000), laboratory equipment (CAN$30,000) and computers
(CAN$12,000).
FOR YEAR ENDED DECEMBER 31, 1996:
Research and development expenditures amounted to CAN$2,356,000 for the year
ended December 31, 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 were largely attributable to the hiring of additional
personnel in Canada (CAN$709,000) and the opening of the Kensington, Maryland
laboratory during the year (CAN$448,000), as well as increased expenditures
related to laboratory expenses (CAN$588,000). The Company also paid its second
installment under its research
22
<PAGE> 23
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.
General and administrative expenses, including marketing related expenses
amounted to CAN$1,751,073 for the year ended December 31, 1996 compared with
CAN$130,688 in the five-month period ended December 31, 1995. The increase was
attributable to the hiring of additional non-research personnel, which amounted
to approximately CAN$125,000 and to costs incurred in the Company's Kensington,
Maryland laboratory which amounted to approximately CAN$70,000. This facility
operates as a wholly-owned subsidiary of the Company. The increase in expenses
was 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$257,000) and publicity-related costs (CAN$746,000) in
connection with the pre-marketing of AD7C(TM). The remaining increase was
related to sundry office expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company made some significant capital asset investments in fiscal 1996. The
Company invested over CAN$1,000,000 in additional capital assets in the year
ended December 31, 1996, consisting of investments in laboratory equipment
(CAN$704,000), computer software and hardware (CAN$44,000), and furniture and
fixtures (CAN$19,000). The balance of capital expenditures consisted of patent
costs. Of the total capital expenditures, approximately CAN$142,000 related to
investments at the U.S. laboratory in Maryland. As a result, the corresponding
depreciation of such assets rose approximately CAN$79,000 compared to the five
month period ended December 31, 1995.
ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None; Not applicable. See "Note 8 - Fair Values" in financial report.
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 as well as in
private practice. Dr. Averback has published extensively in the scientific and
medical literature.
23
<PAGE> 24
Dr. Colin B. Bier, Ph.D., Director (since December 1995) of the Company, is a
leading authority on toxicology and pharmaceutical and biotechnological
regulatory affairs and has extensive management experience in the biomedical
sector. Dr. Bier was formerly Vice-President and Director of Toxicology at
Bio-Research Laboratories, President and Chief Executive Officer of ITR
Laboratories and has consulted, managed and been affiliated with numerous
biochemical enterprises.
Dr. J. Kenneth Harrington, Ph.D., Director (since January 1996) 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.
Martin Barnes , Director (since June 1997) of the Company is Managing Editor of
The Bank Credit Analyst. Prior to joining The Bank Credit Analyst Research Group
in 1987, Mr. Barnes was the Chief economist at Wood Mackenzie, a leading
Edinburgh brokerage firm (1977-1987) and an economist at British Petroleum in
London (1973-1977).
Mr. Roy M. Wolvin, Secretary-Treasurer (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.
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, 1997 for each executive officer of the Company and for the
directors and executive officers as a group.
SUMMARY COMPENSATION TABLE
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED
12/31/97 12/31/98
NAME AND OTHER CASH OTHER CASH
PRINCIPAL POSITION SALARY COMPENSATION SALARY COMPENSATION
- ------------------ ------ ------------ ------ ------------
<S> <C> <C> <C> <C>
Dr. Paul Averback, $150,000 - $150,000 -
President and Director
Dr. Hossein A. Ghanbari, $110,000 - $142,000 -
Vice-President and Director
Mr. Roy Wolvin, $ 70,200 - $ 70,200 -
Secretary-Treasury
Dr. Iraj Beheshti, $122,000 - $125,000 -
Vice-President, Director of
Clinical Reference Laboratories
All directors and executive
officers as a group $402,200 - $487,200 -
</TABLE>
24
<PAGE> 25
See "Options to Purchase Securities" in Item 12 for stock options granted.
The Company does not currently have written employment contracts with the
above-named executive officers.
Directors of the Company were not paid any fee for board meeting attendance but
were 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
<TABLE>
<CAPTION>
Total amount of common
stock subject to currently Purchase Price
exercisable options (Canadian Dollars) Expiration Date
- -------------------------- ------------------ ----------------
<S> <C> <C>
25,000 $ 4.90 September 30, 1999
30,000 $10.00 October 31, 1999
100,000 $ 7.00 November 9, 2002
1,200,000 $ 3.25 January 17, 2006
40,000 $13.75 January 17, 2006
40,000 $ 9.80 January 17, 2006
110,000 $11.50 April 30, 2006
10,000 $16.75 August 13, 2006
10,000 $ 9.00 August 13, 2006
10,000 $10.00 August 13, 2006
30,000 $ 9.00 October 31, 2007
30,000 $10.00 October 31, 1999
80,000 $10.00 October 31, 2007
17,000 $ 9.25 December 19, 2007
50,000 $10.00 January 22, 2009
Warrants
441,107 $ 8.50 May 15, 1998
60,000 $10.00 August 31, 1999
50,000 $ 8.50 August 31, 1999
95,000 $10.00 December 31, 1999
</TABLE>
The total number of shares subject to options at March 31, 1999 is 1,976,000, of
which options representing 1,727,000 are currently exercisable. Of those, the
total number of
25
<PAGE> 26
shares subject to options held by directors and officers of NYMOX is 475,000 of
which options representing 305,000 shares are currently exercisable.
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 and with the further exception of warrants
entitling the holders to acquire up to 205,000 common shares of the Company as
outlined in the above table.
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 2,500,000 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 70,000 common shares
have been exercised to date.
ii) One former senior executive of the Company was granted additional options
to acquire 200,000 common shares of the Company at a price of CAN$3.25 per
share effective as of each of January 17, 1997, 1998 and 1999 (for a total
of 600,000 additional shares which are now vested), 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), provided they still be associated with the Company. The first
tranche of such options vested January 17, 1997,
26
<PAGE> 27
entitling the option holders to purchase a total of 5,000 shares each at a price
of CAN$13.75 per share. The second tranche of such options vested January 17,
1998, entitling the option holders to purchase a total of 5,000 shares each at a
price of CAN$9.80 per share. The third tranche of such options vested January
17, 1999, entitling the option holders to purchase a total of 5,000 shares each
at a price of CAN$10.00 per share. The price for all unvested options has been
fixed at CAN$10.00 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), provided he still be associated with the Company as of the vesting
dates. 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. The
second tranche of such options vested January 17, 1998, entitling the holder to
purchase a total of 20,000 shares at a price of CAN$9.80 per share. The third
tranche of such options vested January 17, 1999, entitling the option holder to
purchase a total of 20,000 shares at a price of CAN$10.00 per share. The price
for all unvested options has been fixed at CAN$10.00 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), provided he still be associated with the Company as of the vesting
dates. The first tranche of such options vested on January 17, 1997, entitling
the holder to purchase 10,000 shares at a price of CAN$13.75 per share. The
second tranche of such options vested January 17, 1998, entitling the holder to
purchase a total of 10,000 shares at a price of CAN$9.80 per share. The third
tranche of such options vested January 17, 1999, entitling the option holder to
purchase a total of 10,000 shares at a price of CAN$10.00 per share. The price
for all unvested options has been fixed at CAN$10.00 per share.
All of the above options are effective for a period of 10 years from the
Granting Date.
Under the same plan, on April 30, 1996, 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 five beneficiaries of which options
representing 5,000 shares were subsequently canceled. 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 and were subsequently
canceled. On August 13, 1996, one consultant of the Company was granted options
to acquire 10,000 common shares of the Company at a price of CAN$16.75 for a
period of ten years. This consultant 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), provided the consultant remains active with the Company on each such
vesting date. The first tranche of such options vested on August 13, 1997,
entitling the holder to purchase 10,000 shares at a price of CAN$9.00 per share.
The second tranche of such options vested January 17, 1998, entitling the holder
to purchase a total of 10,000 shares at a
27
<PAGE> 28
price of CAN$10.00 per share. The price for all unvested options has been fixed
at CAN$10.00 per share.
Under the same plan, on October 31, 1997, options to purchase up to 230,000
common shares were granted to a total of six beneficiaries under the Plan by the
Board of Directors. Specifically:
(i) Options to purchase 30,000 common shares of the Company at a price of
CAN$9.00 per share were granted for a period of 10 years to a total of
five beneficiaries.
(ii) 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), provided they still be associated with the Company as of the
vesting dates. The first tranche of such options vested October 31, 1998,
entitling the holders to purchase a total of 5,000 shares each at a price
of CAN$10.00 per share. The price for all unvested options has been fixed
at CAN$10.00 per share.
(iii) A director, an executive and a key employee of the Company were 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), provided they still be
associated with the Company as of the vesting dates. The first tranche of
such options vested October 31, 1998, entitling the holders to purchase a
total of 10,000 shares each at a price of CAN$10.00 per share. The price
for all unvested options has been fixed at CAN$10.00 per share.
(iv) One consultant of the Company was granted options to acquire 30,000 common
shares of the Company at a price of $10.00 per share, such options to be
exercisable for a period of 24 months from the Granting Date.
On December 19, 1997, options to purchase up to 41,000 common shares at a price
of CAN$9.25 per share were granted for a period of ten years to a total of 15
beneficiaries under the Plan by the Board of Directors. All of the above options
vest over a period of three years from the Granting Date, with the exception of
5,000 options granted to one key employee which vested immediately.
On September 30, 1998, one consultant of the Company was granted options to
acquire 25,000 common shares of the Company at a price of $4.90 per share, such
options to be exercisable for a period of 12 months from the Granting Date.
On November 9, 1998, one consultant of the Company was granted options to
acquire 100,000 common shares of the Company at a price of $7.00 per share, such
options to be exercisable for a period of 4 years from the Granting Date.
On January 22, 1999, one executive of the Company was granted options to acquire
50,000 common shares of the Company at a price of $10.00 per share, such options
to be exercisable for a period of 10 years from the Granting Date.
28
<PAGE> 29
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS.
The Company holds notes receivable from a former director as follows:
1.CAN$56,000 non-interest bearing, payable on demand.
2.US$124,500 bearing interest at 9% per annum beginning Feb. 1,1999, payable on
demand.
Additional amounts owing: 3.US$17,979.70 non-interest bearing, payable on
demand.
PART II
ITEM 14. DESCRIPTION OF SECURITIES TO BE REGISTERED
a) Not applicable
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):
29
<PAGE> 30
At and for the year ended December 31, 1998:
Consolidated Balance Sheet -- December 31, 1998
Consolidated Statement of Earnings and Deficit
Consolidated Statements of Changes in Financial Position Notes
At and for the year ended December 31, 1997:
Consolidated Balance Sheet -- December 31, 1997
Consolidated Statement of Earnings and Deficit
Consolidated Statements of Changes in Financial Position Notes
At and for the year ended December 31, 1996:
Consolidated Balance Sheet -- December 31, 1996
Consolidated Statement of Earnings and Deficit
Consolidated Statements of Changes in Financial Position Notes
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)
By: /s/ Paul Averback
-----------------
Paul Averback
Title: President
Date: April 30, 1999
30
<PAGE> 31
Consolidated Financial Statements of
NYMOX PHARMACEUTICAL CORPORATION
Years ended December 31, 1998, 1997 and 1996
<PAGE> 32
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheets of Nymox Pharmaceutical
Corporation as at December 31, 1998 and 1997 and the consolidated statements of
earnings, deficit and changes in financial position for the years ended December
31, 1998, 1997 and 1996. 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 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,
1998 and 1997 and the results of its operations and the changes in its financial
position for the years ended December 31, 1998, 1997 and 1996 in accordance with
generally accepted accounting principles.
Chartered Accountants
Montreal, Canada
February 26, 1999
<PAGE> 33
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Financial Statements
Years ended December 31, 1998, 1997 and 1996
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Consolidated Balance Sheets................................. 1
Consolidated Statements of Earnings......................... 2
Consolidated Statements of Deficit.......................... 3
Consolidated Statements of Changes in Financial Position.... 4
Notes to Consolidated Financial Statements.................. 5
</TABLE>
<PAGE> 34
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheets
December 31, 1998 and 1997
(in Canadian dollars)
<TABLE>
<CAPTION>
1998 1999
------------ -----------
<S> <C> <C>
Assets
Current assets:
Cash (note 3) $ 714,298 $ 507,259
Short-term investments 2,113,907 1,780,086
Accrued interest 46,082 4,200
Receivable due from a financial
institution (note 6 (b)) 637,500 --
Accounts receivable 74,653 --
Research tax credits receivable 5,778 150,000
Notes receivables (note 4) 273,995 56,000
Other receivables 43,028 28,790
------------ ------------
3,909,241 2,526,335
Capital assets (note 5) 1,846,979 1,419,462
------------ ------------
$ 5,756,220 $ 3,945,797
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 434,440 $ 292,330
Shareholders' equity:
Capital stock (note 6) 23,011,556 13,852,632
Capital stock subscription -- 504,000
Deficit (17,689,776) (10,703,165)
------------ ------------
5,321,780 3,653,467
Commitments (note 7)
Subsequent event (note 13)
------------ ------------
$ 5,756,220 $ 3,945,797
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
On behalf of the Board:
_______________________ Director
_______________________ Director
1
<PAGE> 35
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Earnings
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------- --------------
<S> <C> <C> <C>
Revenue:
Interest $ 243,574 $ 76,526 $ 226,940
Service fees 151,263 24,584 --
------------ ------------- --------------
394,837 101,110 226,940
Expenses:
Research and development 3,019,015 2,562,349 2,356,000
Less research tax credits (5,778) (150,000) (240,000)
------------ ------------- --------------
3,013,237 2,412,349 2,116,000
Marketing 3,240,242 1,925,654 1,253,894
General and administrative 896,201 589,524 497,179
Depreciation and amortization 135,551 158,694 78,906
Interest and bank charges 13,217 14,344 8,025
------------ ------------- --------------
7,298,448 5,100,565 3,954,004
------------ ------------- --------------
Loss before income taxes (6,903,611) (4,999,455) (3,727,064)
Income taxes (note 8) -- -- 28,000
------------ ------------- --------------
Net loss $ (6,903,611) $ (4,999,455) $ (3,699,064)
============ ============= ==============
Loss per share $(0.36) $(0.27) $(0.21)
============ ============= ==============
Weighted average number of common
shares outstanding 19,304,435 18,370,873 17,654,862
============ ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 36
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Deficit
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
<TABLE>
<CAPTION>
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
Deficit, beginning of year $(10,703,165) $ (5,472,710) $(1,539,686)
Net loss (6,903,611) (4,999,455) (3,699,064)
Share issue costs (83,000) (231,000) (233,960)
------------ ------------ -----------
Deficit, end of year $(17,689,776) $(10,703,165) $(5,472,710)
============ ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 37
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Changes in Financial Position
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash provided by (used in):
Operations:
Net loss $(6,903,611) $(4,999,455) $(3,699,064)
Item not involving cash:
Depreciation and amortization 135,551 158,694 78,906
Net change in non-cash operating
working capital items (481,941) 58,421 (55,855)
----------- ----------- -----------
(7,250,001) (4,782,340) (3,676,013)
Financing:
Issuance of capital stock 8,654,924 4,549,941 5,280,050
Subscription to capital stock -- 504,000 --
Share issue costs (83,000) (231,000) (233,960)
----------- ----------- -----------
8,571,924 4,822,941 5,046,090
Investment:
Additions to capital assets (563,068) (260,183) (1,030,724)
Notes receivable (217,995) -- --
----------- ----------- -----------
(781,063) (260,183) (1,030,724)
Increase (decrease) in cash and
short-term investments 540,860 (219,582) 339,353
Cash and short-term investments,
beginning of year 2,287,345 2,506,927 2,167,574
----------- ----------- -----------
Cash and short-term investments,
end of year $ 2,828,205 $ 2,287,345 $ 2,506,927
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 38
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
1. ORGANIZATION AND BUSINESS ACTIVITIES:
Nymox Pharmaceutical Corporation (the "Corporation"), incorporated under
the Canada Business Corporations Act, is a development stage
biopharmaceutical corporation which specializes in the research and
development of neurological therapeutics and diagnostics for the aging
population, with an emphasis on Alzheimer's disease.
Since inception, the Corporation's activities have been primarily focused
on developing certain pharmaceutical technologies and obtaining outside
funding to support the continued development of its technologies. The
Corporation is subject to a number of risks, including the successful
development and marketing of its technologies. In order to achieve its
business plan, the Corporation anticipates the need to raise additional
capital. Management is confident that it will be able to obtain the
continued financial support of its shareholders and/or new external
financing to pursue its development.
The Corporation is listed on the Montreal Exchange and the NASDAQ Stock
Market.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Consolidation:
The consolidated financial statements of the Corporation have been
prepared under Canadian generally accepted accounting principles
("GAAP") and include the accounts of its wholly-owned US subsidiary,
Nymox Corporation. Intercompany balances and transactions have been
eliminated on consolidation.
Consolidated financial statements prepared under US GAAP would differ
in some respects from those prepared in Canada. A reconciliation of
earnings and shareholders' equity reported in accordance with Canadian
GAAP with US GAAP is presented in note 10.
(b) Short-term investments:
The Corporation's portfolio of short-term investments, which does not
include equity securities, consists principally of government
securities and commercial paper that are highly liquid and readily
convertible into cash. These are recorded at the lower of cost or
market value.
5
<PAGE> 39
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(c) Capital assets:
Capital assets are recorded at cost. Depreciation and amortization
are provided using the following methods and annual rates:
<TABLE>
<CAPTION>
Asset Method Rate
----- ------ ----
<S> <C> <C>
Computer equipment Straight-line 20%
Laboratory equipment Straight-line 20%
Office equipment and fixtures Straight-line 20%
</TABLE>
The capitalized amount with respect to patents relates to direct costs
incurred in connection with securing the patents. The cost of the
patents does not necessarily reflect their present or future value and
the amount ultimately recoverable is dependent upon the successful
commercialization of the related products. Accordingly, patents will
be amortized using the straight-line method commencing in the year of
commercial production of the developed products. The capitalized
amount will be amortized over the remaining years of the initial life
of the patent.
(d) Research and development expenditures:
Research expenditures, net of research tax credits, are expensed as
incurred. Development expenditures, net of tax credits, if any, are
expensed as incurred, except if they meet the criteria for deferral in
accordance with generally accepted accounting principles.
(e) Foreign exchange:
The Corporation's foreign subsidiary is considered to be an integrated
foreign operation. Foreign denominated monetary assets and liabilities
of the Canadian and foreign operations are translated at the rates of
exchange prevailing at the balance sheet dates. Other assets and
liabilities denominated in foreign currencies are translated at the
exchange rates prevailing when the assets were acquired or the
liabilities incurred. Sales and expenses are translated at the average
exchange rate prevailing during the year, except for depreciation and
amortization which are translated at the same rates as those used in
the translation of the corresponding assets. Foreign exchange gains
and losses are included in the determination of net earnings.
6
<PAGE> 40
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(f) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
(g) Loss per share:
The loss per share amounts has been calculated using the weighted
average number of common shares outstanding during the year. Fully
diluted loss per share has not been disclosed because the effect of
common shares issuable upon the exercise of options and warrants would
be anti-dilutive.
3. CASH:
Cash includes $542,953 of cash held in trust by the Corporation's legal
counsel at December 31, 1998. This amount, which was received from the
closing of various private placements in December 1998, was released to the
Corporation in January 1999.
4. NOTES RECEIVABLE:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Note receivable, unsecured, non-interest
bearing, payable on demand $ 56,000 $56,000
Note receivable, unsecured, bearing
interest at 9% per annum beginning
February 1, 1999, payable on demand 217,995 --
-------- -------
$273,995 $56,000
======== =======
</TABLE>
The notes are receivable from a director, who was no longer associated with
the Company as of March 1999.
7
<PAGE> 41
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
5. CAPITAL ASSETS:
<TABLE>
<CAPTION>
1998
--------------------------------------------
Accumulated Net book
Cost depreciation value
---------- ------------ ---------
<S> <C> <C> <C>
Computer equipment $ 78,438 $ 25,528 $ 52,910
Laboratory equipment 717,820 220,468 497,352
Office equipment and fixtures 38,956 11,687 27,269
Patents 1,276,318 6,871 1,269,447
Intellectual property rights 1 -- 1
---------- -------- ----------
$2,111,533 $264,554 $1,846,979
========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
1997
--------------------------------------------
Accumulated Net book
Cost depreciation value
---------- ------------ ---------
<S> <C> <C> <C>
Computer equipment $ 55,803 $ 15,174 $ 40,629
Laboratory equipment 734,041 217,299 516,742
Office equipment and fixtures 26,475 6,449 20,026
Patents 842,064 -- 842,064
Intellectual property rights 1 -- 1
---------- -------- ----------
$1,658,384 $238,922 $1,419,462
========== ======== ==========
</TABLE>
6. CAPITAL STOCK:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Authorized:
An unlimited number of common shares
Issued and outstanding:
19,727,904 common shares
(1997 -- 18,632,873) $23,011,556 $13,852,632
=========== ===========
</TABLE>
8
<PAGE> 42
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
6. CAPITAL STOCK (CONTINUED):
(a) Changes in the Corporation's capital stock are presented below:
<TABLE>
<CAPTION>
Shares Dollars
---------- -----------
<S> <C> <C>
Issued and outstanding, December 31, 1996 17,929,382 $ 9,302,691
Issue of common shares for cash (b) 696,491 4,527,191
Issue of common shares pursuant to exercise
of stock options 7,000 22,750
---------- -----------
Balance, December 31, 1997 18,632,873 13,852,632
Issue of common shares for cash (b) 366,000 3,131,500
Cancellation of shares (c) (460) --
Issue of common shares pursuant to exercise
of warrants 696,491 5,920,174
Issue of common shares pursuant to exercise
of stock options 33,000 107,250
---------- -----------
Balance, December 31, 1998 19,727,904 $23,011,556
========== ===========
</TABLE>
(b) Private placements:
In 1998, the Corporation completed private placements for 366,000
common shares for total aggregate proceeds of $3,131,500. At December
31, 1998, proceeds of $637,500 for the issuance of 75,000 common
shares were receivable. These funds were received by the Corporation
in January 1999.
In 1997, the Corporation completed a private placement of 696,491
common shares at a price of $6.50/share and received gross proceeds of
$4,527,191.
The share issue costs related to these private placements have been
charged against the deficit.
9
<PAGE> 43
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
6. CAPITAL STOCK (CONTINUED):
(c) Cancellation of shares:
During the year, the Corporation was advised by its transfer agent
that common shares of the Corporation, which had been issued on the
amalgamation of the Company with Monterey Capital Inc. in 1995, were
never claimed. These common shares have been cancelled.
(d) Warrants:
The Corporation has issued the following warrants to purchase common
shares:
<TABLE>
<CAPTION>
Exercise Outstanding at
price per Exercised December 31,
Warrants share Issued to date 1998 Expiry
-------- --------- ------ --------- -------------- ------
<S> <C> <C> <C> <C> <C>
Series A $ 8.50 696,491 696,491 -- --
Series B 8.50 50,000 -- 50,000 August 31, 1999
Series C 10.00 60,000 -- 60,000 August 31, 1999
Series D 10.00 67,500 -- 67,500 December 31, 1999
</TABLE>
The Series A warrants were issued in connection with the 1997 private
placement and were exercised in 1998. The Series B, C and D warrants
were issued in connection with various private placements completed in
1998. As at December 31, 1998, none of these warrants had been
exercised.
(e) Stock options:
The Corporation has established 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
Corporation. The Board may from time to time designate individuals to
whom options to purchase common shares of the Corporation may be
granted, the number of shares to be optioned to each, and the option
price per share. The option price per share cannot involve a discount
to the market price at the time the option is granted. The total
number of shares to be optioned to any one individual cannot exceed 5%
of the total issued and outstanding shares and the maximum number of
shares which may be optioned under the Plan cannot exceed 2,500,000
common shares without shareholder approval.
10
<PAGE> 44
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
6. CAPITAL STOCK (CONTINUED):
(e) Stock options (continued):
Changes in outstanding options were as follows for the last two
fiscal periods:
<TABLE>
<CAPTION>
Stock options
-------------
<S> <C>
Balance, December 31, 1996 1,575,000
Granted 271,000
Exercised (7,000)
Cancelled (5,000)
---------
Balance, December 31, 1997 1,834,000
Granted 125,000
Exercised (33,000)
Cancelled --
---------
Balance, December 31, 1998 1,926,000
=========
</TABLE>
The weighted average exercise prices of options granted, exercised
and cancelled during 1998 were $6.59/share (1997 - $9.42/share),
$3.25/share (1997 - $3.25/share) and nil/share (1997 - $11.50/share),
respectively. The weighted average exercise price of options
exercisable at December 31, 1998 is $5.95/share (1997 - $5.10/share).
At December 31, 1998, options outstanding were as follows:
<TABLE>
<CAPTION>
Options outstanding Exercise price per share Expiry date
------------------- ------------------------ -----------
<S> <C> <C>
25,000 $ 4.90 1999
30,000 $10.00 1999
100,000 $ 7.00 2002
40,000 $13.75 2006
40,000 $ 9.80 2006
110,000 $11.50 2006
10,000 $16.75 2006
40,000 $ 9.00 2006
5,000 $ 9.25 2007
1,200,000 $ 3.25 (i) 2006-2009
36,000 $ 9.25 (ii) 2006-2010
290,000 $10.00 (iii) 2006-2012
---------
1,926,000
=========
</TABLE>
11
<PAGE> 45
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
6. CAPITAL STOCK (CONTINUED):
(d) Stock options (continued):
(i) These options are effective and exercisable as follows:
<TABLE>
<S> <C>
Currently 1,000,000
1999 200,000
--------
1,200,000
=========
</TABLE>
(ii) These options are effective and exercisable as follows:
<TABLE>
<S> <C>
Currently 12,000
1999 12,000
2000 12,000
---------
36,000
=========
</TABLE>
(iii) These options become vested at various dates over the next five
years. During the year, the board of directors approved an
amendment to change the exercise price of these options to
$10.00/share. The exercise price was previously set at the
trading price of the shares on the date preceding each vesting
date. These options vest as follows:
<TABLE>
<S> <C>
Vested 1998 50,000
1999 90,000
2000 90,000
2001 50,000
2002 10,000
---------
290,000
=========
</TABLE>
12
<PAGE> 46
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
7. COMMITMENTS:
(a) Operating leases:
Minimum lease payments under operating leases for the Corporation's
premises for the next three years are as follows:
<TABLE>
<S> <C>
1999 $445,407
2000 151,582
2001 24,089
--------
$621,078
========
</TABLE>
(b) Research funding:
The Corporation is committed to make research grants to an unrelated
medical facility in the U.S. in the aggregate amount of approximately
$735,000 (US$516,000) in the next three years as follows:
<TABLE>
<S> <C>
1999 $245,000
2000 245,000
2001 245,000
--------
$735,000
========
</TABLE>
The Corporation has an exclusive license to patents from this facility
covering rights to AD7C diagnostics and therapeutics. 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, 1998, an amount of approximately
US$128,000 (1997 - US$172,000) was paid and expensed in connection
with the research grant described above.
13
<PAGE> 47
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
7. COMMITMENTS (CONTINUED):
(c) License agreements:
In January 1999, the Corporation granted a non-exclusive license to an
American corporation to utilize all proprietory technology, including
its rights to patents and know-how, necessary to conduct the AD7C(TM)
test in a reference laboratory. The Corporation will receive
compensation under the agreement based on the number of tests
conducted by the American company. The license, which is for the US
territory, is for an initial term of 24 months and is subject to
automatic renewal for two additional one-year terms.
8. INCOME TAXES:
Details of the components of income taxes are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Loss before income taxes:
Canadian operations $ (2,573,106) $ (2,489,752) $ (3,106,405)
U.S. operations (4,330,505) (2,509,703) (620,659)
------------ ------------ ------------
(6,903,611) (4,999,455) (3,727,064)
Basic income tax rate 38.0% 38.0% 38.0%
----------- ----------- -----------
Income tax recovery at statutory rates 2,623,000 1,900,000 1,416,000
Adjustments in income taxes resulting from:
Non-recognition of losses and other
unclaimed deductions (2,623,000) (1,900,000) (1,416,000)
Credit for losses - - 28,000
------------ ------------ ------------
Income taxes $ - $ - $ 28,000
============ ============ ============
</TABLE>
14
<PAGE> 48
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
8. INCOME TAXES (CONTINUED):
The Corporation has non-capital losses carried forward and accumulated
scientific research and development expenditures which are available to
reduce future years' taxable income. The related income tax benefit of
these items will be recorded in earnings when realized. These expire as
follows:
<TABLE>
<CAPTION>
Federal Provincial
---------- -----------
<S> <C> <C>
Non-capital losses:
1999 $ 40,000 $ --
2000 36,000 36,000
2001 58,000 58,000
2002 920,000 --
2003 1,990,000 1,276,000
2004 1,388,000 1,090,000
2005 3,024,000 3,024,000
Scientific research and development expenditures:
(Indefinitely) 1,671,000 4,200,000
</TABLE>
The Corporation also has investment tax credits available in the amount of
approximately $464,000 available to reduce future years' federal taxes
payable. The benefit of these credits will be recorded when realized. These
credits expire as follows:
<TABLE>
<S> <C>
2005 $ 26,000
2006 290,000
2007 148,000
</TABLE>
In addition, the Corporation's US subsidiary has losses carried forward of
approximately US$4,900,000 which expire as follows:
<TABLE>
<S> <C>
2011 $ 460,000
2012 1,730,000
2018 2,710,000
</TABLE>
15
<PAGE> 49
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
9. FINANCIAL INSTRUMENTS:
(a) Foreign currency risk management:
A substantial portion of the Corporation's expenses are derived in US
dollars. This results in financial risk due to fluctuations in the
value of the Canadian dollar relative to those foreign currencies.
For the most part, this exposure is reduced to the extent that the
Corporation generates revenues in US dollars. Fluctuations in payments
made for the Corporation's expenses could cause unanticipated
fluctuations in the Corporation's operating results.
(b) Credit risk:
Financial instruments that potentially subject the Corporation to
significant concentrations of credit risk consist principally of
short-term investments. The Corporation has investment policies that
require placement of short-term investments in financial institutions
evaluated as highly creditworthy.
(c) Fair value disclosure:
The Corporation has determined that the carrying value of its
short-term financial assets and liabilities, including cash and
short-term investments, accrued interest, accounts receivable,
subscriptions receivable, notes receivables and accounts payable and
accrued liabilities, approximates fair value due to the immediate or
short-term maturity of these financial instruments.
16
<PAGE> 50
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
10. CANADIAN/U.S. REPORTING DIFFERENCES:
(a) Consolidated statements of earnings:
The reconciliation of earnings reported in accordance with Canadian
GAAP and with U.S. GAAP is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net loss, Canadian GAAP $(6,903,611) $(4,999,455) $(3,699,064)
Adjustments:
Amortization of patents (i) (75,077) (49,533) (39,166)
Stock-based compensation - options
granted to non-employees (ii) (406,500) (150,000) (592,000)
------------ ------------ ------------
Net loss, U.S. GAAP $(7,385,188) $(5,198,988) $(4,330,230)
============ ============ ============
Loss per share, U.S. GAAP $ (0.38) $ (0.28) $ (0.25)
============ ============ ============
</TABLE>
(b) Consolidated shareholders' equity:
The reconciliation of shareholders' equity reported in accordance with
Canadian GAAP and with U.S. GAAP is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Shareholders' equity, Canadian GAAP $ 5,321,780 $ 3,653,467 $ 3,829,981
Adjustments:
Amortization of patents (i):
Cumulative effect to beginning
of the period (180,139) (130,606) (91,440)
Current period (75,077) (49,533) (39,166)
Stock-based compensation - options
granted to non-employees (ii):
Accumulative effect to beginning
of period (742,000) (592,000) --
Current period (406,500) (150,000) (592,000)
------------ ------------ ------------
Increase in deficit (1,403,716) (922,139) (722,606)
------------ ------------ ------------
Shareholders' equity, U.S. GAAP $ 3,918,064 $ 2,731,328 $ 3,107,375
============ ============ ============
</TABLE>
17
<PAGE> 51
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
10. CANADIAN/U.S. REPORTING DIFFERENCES (CONTINUED):
(b) Consolidated shareholders' equity (continued):
(i) In accordance with APB Opinion 17, Intangible Assets, the patents
are amortized using the straight-line method over 17 years, the
legal life of the patents, from the date the patent was secured.
(ii) In accordance with FAS 123, Accounting for Stock-Based
Compensation, compensation related to the stock options granted
to non-employees has been recorded in the accounts based on the
fair value of the stock options at the grant date. The fair
value of the stock options was estimated as described in
note 10 (c)(3).
(c) Other disclosures required by United States GAAP:
(1) Development stage company:
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(TM) test and is currently
offering testing services in their CLIA certified clinical
reference laboratory. It has had limited revenues to date on the
sale 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:
<TABLE>
<CAPTION>
Cumulative Cumulative
since the date of since the date of
inception of inception of
the Corporation the Corporation
to December 31, to December 31,
1998 1997
----------------- -----------------
<S> <C> <C>
Interest revenue $ 547,040 $ 303,466
Service fees 175,847 24,584
Gross research and development expenditures 9,126,991 6,107,976
Other expenses 9,888,251 5,527,963
Cash inflow (outflow):
Operating activities (17,922,963) (10,672,962)
Investing activities (2,439,525) (1,658,462)
Financing activities 23,190,693 14,618,769
============ ============
</TABLE>
18
<PAGE> 52
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
10. CANADIAN/U.S. REPORTING DIFFERENCES (CONTINUED):
(c) Other disclosures required by United States GAAP (continued):
(1) Development stage company (continued):
The statement of shareholders' equity since date of inception is
presented below.
<TABLE>
<CAPTION>
Consideration
--------------------- Accumulated
Shares Cash Other deficit Total
---------- ------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Year ended July 31, 1990:
Common shares issued 2,500,000 $200,000 $-- $-- $200,000
Net loss -- -- -- (126,719) (126,719)
---------- --------- -------- ----------- ----------
Balance, July 31, 1990 2,500,000 200,000 -- (126,719) 73,281
Year ended July 31, 1991:
Net loss -- -- -- (24,827) (24,827)
---------- --------- -------- ----------- ----------
Balance, July 31, 1991 2,500,000 200,000 -- (151,546) 48,454
Year ended July 31, 1992:
Common shares issued 9,375 37,500 -- -- 37,500
Net loss -- -- -- (53,112) (53,112)
---------- --------- -------- ----------- ----------
Balance, July 31, 1992 2,509,375 237,500 -- (204,658) 32,842
Year ended July 31, 1993:
Common shares issued 201,250 205,000 -- -- 205,000
Common shares cancelled (500,000) -- -- -- --
Net loss -- -- -- (48,862) (48,862)
---------- --------- -------- ----------- ----------
Balance, July 31, 1993 2,210,625 442,500 - (253,520) 188,980
Year ended July 31, 1994:
Common shares issued 2,500 10,000 -- -- 10,000
Net loss -- -- -- (71,668) (71,668)
---------- --------- -------- ----------- ----------
Balance, July 31, 1994 2,213,125 452,500 -- (325,188) 127,312
Year ended July 31, 1995:
Common shares issued 78,078 412,870 -- -- 412,870
Net loss -- -- - (393,841) (393,841)
---------- --------- -------- ----------- ----------
Balance, July 31, 1995 2,291,203 865,370 -- (719,029) 146,341
Period ended December 31, 1995:
Adjustment necessary to
increase the number of
common shares 12,708,797 -- -- -- --
---------- --------- -------- ----------- -----------
Adjusted number of
common shares 15,000,000 865,370 -- (719,029) 146,341
Common shares issued 2,047,082 3,157,271 936,894 -- 4,094,165
Net loss -- -- -- (1,639,194) (1,639,194)
Share issue costs -- (209,797) -- -- (209,797)
---------- --------- -------- ----------- ----------
Balance,
December 31, 1995 17,047,082 3,812,844 936,894 (2,358,223) 2,391,515
Year ended December 31, 1996:
Common shares issued 882,300 5,280,050 -- -- 5,280,050
Net loss -- -- -- (4,330,230) (4,330,230)
Share issue costs -- (233,960) -- -- (233,960)
---------- --------- -------- ----------- ----------
Balance December 31, 1996
carried forward 17,929,382 8,858,934 936,894 (6,688,453) 3,107,375
</TABLE>
19
<PAGE> 53
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
10. CANADIAN/U.S. REPORTING DIFFERENCES (CONTINUED):
(c) Other disclosures required by United States GAAP (continued):
(1) Development stage company (continued):
<TABLE>
<CAPTION>
Consideration Accumulated
------------------------ -----------------------------
Shares Cash Other deficit Total
---------- ---------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996
brought forward 17,929,382 $8,858,934 $936,894 $(6,688,453) $3,107,375
Year ended December 31, 1997:
Common shares issued 703,491 4,549,941 -- -- 4,549,941
Net loss -- -- (5,198,988) (5,198,988)
Share issue costs -- (231,000) -- -- (231,000)
Capital stock subscription -- 504,000 -- -- 504,000
---------- --------- -------- ----------- ----------
Balance, December 31, 1997 18,632,873 13,681,875 936,894 (11,887,441) 2,731,328
Year ended December 31, 1998:
Common shares issued 1,095,031 8,654,924 -- -- 8,654,924
Net loss -- -- -- (7,385,188) (7,385,188)
Share issue costs -- (83,000) -- -- (83,000)
---------- ----------- -------- ------------ -----------
Balance, December 31, 1998 19,727,904 $22,253,799 $936,894 $(19,272,629) $ 3,918,064
========== =========== ======== ============ ===========
</TABLE>
(2) Income taxes:
In accordance with Statement of Financial Accounting Standards
No. 109, the income tax effect of temporary differences that give
rise to the net deferred tax asset are presented below:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Scientific research and experimental development $ 860,000 $ 1,100,000
Non-capital losses 2,600,000 1,594,000
Investment tax credits 464,000 590,000
Share issue costs 162,000 196,000
Less valuation allowance (4,086,000) (3,480,000)
----------- -----------
Net deferred tax asset $ -- $ --
=========== ===========
</TABLE>
There are no material deferred tax liabilities.
20
<PAGE> 54
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
10. CANADIAN/U.S. REPORTING DIFFERENCES (CONTINUED):
(c) Other disclosures required by United States GAAP (continued):
(2) Income taxes (continued):
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income and tax planning strategies.
Since the Corporation is a development stage enterprise, the
generation of future taxable income is dependent on the
successful commercialization of its products and technologies.
(3) Stock-based compensation:
The Corporation applies APB Opinion 25, Accounting for Stock
Issued to Employees, in accounting for its stock option plan, and
accordingly, no compensation cost has been recognized for its
stock options in the financial statements. Had compensation cost
for the Corporation's stock option plan been determined based on
the fair value at the grant dates for awards under the plan
consistent with the method of FASB Statement 123, Accounting for
Stock-Based Compensation, the Corporation's net earnings and loss
per share would have been adjusted to the pro-forma amounts
indicated below for US GAAP:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C> <C> <C>
Net loss As reported (US GAAP) $(7,385,188) $(5,198,988)
Pro-forma (7,385,188) (5,990,365)
Loss per share As reported (US GAAP) (0.38) (0.28)
Pro-forma (0.38) (0.33)
</TABLE>
The fair value of each option grant was estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions: risk-free interest rate
of 5%, dividend yield of 0%, expected volatility of 50%, and
expected life of 5 years.
(4) Short-term investments:
Short-term investments are classified as held-to-maturity as the
Corporation has the positive intent and ability to hold these
securities to maturity. As the Corporation's short-term
investments include government securities and commercial paper,
the aggregate fair value approximates carrying value and there
are no significant unrealized gross holding gains or losses.
21
<PAGE> 55
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
10. CANADIAN/U.S. REPORTING DIFFERENCES (CONTINUED):
(c) Other disclosures required by United States GAAP (continued):
(5) Comprehensive income:
Effective January 1, 1998, the Corporation adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive
Income, which establishes new rules for the reporting and display
of comprehensive income and its components. The adoption of this
statement has no impact on the Corporation's net income or
shareholders' equity.
11. SEGMENT DISCLOSURES:
Geographic segment information was as follows:
<TABLE>
<CAPTION>
United
Canada States
-------- --------
<S> <C> <C>
Revenues:
1998 $243,574 $151,263
1997 76,526 24,584
1996 226,940 --
Net loss:
1998 (2,573,106) (4,330,505)
1997 (2,489,752) (2,509,703)
1996 (3,106,405) (620,659)
Identifiable assets:
1998 4,940,335 815,885
1997 3,579,849 365,948
</TABLE>
12. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000
Issue may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
22
<PAGE> 56
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(in Canadian dollars)
13. SUBSEQUENT EVENT:
In January 1999, the Corporation completed private placements for a total
of 55,000 common shares at $8.50 per share, and received gross proceeds of
$467,500. In connection with these private placements, the Corporation
issued an additional 27,500 Series D warrants exercisable at a price of
$10.00 per share, expiring on December 31, 1999.
23
<PAGE> 57
EXHIBIT INDEX
NYMOX PHARMACEUTICAL CORPORATION
Form 20-F Registration Statement
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C> <C>
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 SGS Lab Simon S.A. and the Registrant (filed
previously).
3.5 10.5 Research and License Amendment between the General
Hospital Corporation and the Registrant (filed previously).
3.6 10.6 Sole Non-Exclusive License and Supply Agreement for the
Nymox AD7C(TM) Diagnostic Test for Alzheimer's Disease
between Specialty Laboratories and the Registrant.
</TABLE>
SOLE NONEXCLUSIVE U.S. LICENSE AND
SUPPLY AGREEMENT FOR THE
NYMOX AD7C(TM) DIAGNOSTIC TEST
FOR ALZHEIMER'S DISEASE
ENTERED INTO ON JANUARY 19, 1999
B Y A N D B E T W E E N :
NYMOX CORPORATION
Licensor
31
<PAGE> 1
EXHIBIT INDEX
NYMOX PHARMACEUTICAL CORPORATION
Form 20-F Registration Statement
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C> <C>
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 SGS Lab Simon S.A. and the Registrant (filed
previously).
3.5 10.5 Research and License Amendment between the General
Hospital Corporation and the Registrant (filed previously).
3.6 10.6 Sole Non-Exclusive License and Supply Agreement for the
Nymox AD7C(TM) Diagnostic Test for Alzheimer's Disease
between Specialty Laboratories and the Registrant.
</TABLE>
SOLE NONEXCLUSIVE U.S. LICENSE AND
SUPPLY AGREEMENT FOR THE
NYMOX AD7C(TM) DIAGNOSTIC TEST
FOR ALZHEIMER'S DISEASE
ENTERED INTO ON JANUARY 19, 1999
B Y A N D B E T W E E N :
NYMOX CORPORATION
Licensor
31
<PAGE> 2
- and -
SPECIALTY LABORATORIES, INC.
Licensee
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
<S> <C> <C>
Page
ARTICLE 1. DEFINITIONS 3
ARTICLE 2. PURPOSE OF AGREEMENT 6
ARTICLE 3. CONFIDENTIALITY 6
ARTICLE 4. THE LICENSE 7
ARTICLE 5 COMPENSATION TO NYMOX 9
ARTICLE 6. REIMBURSEMENT AND PRICE 11
ARTICLE 7. MARKETING 12
ARTICLE 8. PERFORMANCE TARGETS/CONVERSION TO
NONEXCLUSIVE LICENSE 13
ARTICLE 9. TERMINATION 14
ARTICLE 10. IMPROVEMENTS 16
ARTICLE 11. RESPONSIBILITIES OF THE PARTIES 17
ARTICLE 12. QUALITY CONTROL 20
ARTICLE 13. EFFECT OF LICENSING AGREEMENT 21
ARTICLE 14. REPRESENTATIONS AND WARRANTIES 22
ARTICLE 15. MISCELLANEOUS PROVISIONS 23
EXHIBIT A: PATENTS LICENSED TO SPECIALTY 27
EXHIBIT B: TRADEMARKS LICENSED TO SPECIALTY 28
ARTICLE 1. DEFINITIONS
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The terms defined in this Article shall have the following meanings (applicable
to both the singular and plural forms) in this Agreement:
"AD7C(TM) Test" means the Nymox Corporation AD7C(TM) Alzheimer's disease test
for measuring the level of the biomarker Neural Thread Protein (NTP) in
cerebrospinal fluid (CSF), urine, blood or other bodily fluids or tissues.
"AD7C(TM) Test", as used herein, is not intended to include a test kit employing
the AD7C(TM) testing technology for Diagnostic Purposes and sold or intended to
be sold to third parties.
"Affiliate" means any person, firm or corporation legally competent to perform
the services and carry out the terms of this Agreement, which Controls, is
Controlled by or is under common Control with either Nymox Corporation or
Specialty Laboratories, Inc.
"Average Price" means:
(a) for AD7C(TM) Tests conducted for Diagnostic Purposes, the Net Revenue
for AD7C(TM)
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Tests conducted for Diagnostic Purposes during a Billing Month,
divided by the Number of Tests in that Billing Month; or
(b) for any Clinical Study Support contract executed by Specialty, the
price per AD7C(TM) Test as stipulated in the contract, or, if the
contract does not so stipulate, the Estimated Net Revenue divided by
the Estimated Number of Tests for that contract.
"Billing Month" (applicable only to the conduct of AD7C(TM) Tests by Specialty
for Diagnostic Purposes) means each calendar month during the period of this
Agreement, beginning with the month during which Launch occurs.
"Billing Quarter" (applicable only to the conduct of AD7C(TM) Tests by Specialty
for Clinical Study Support) means each calendar quarter during the period of
this Agreement, beginning with the quarter during which Launch occurs.
"Clinical Study Support" means the use or performance of the AD7C(TM) Test in
clinical trials of therapeutics in Phases 1, 2, 3 or 4 of an Investigational New
Drug trial.
"Competitor" means any person, firm or corporation, other than Nymox or
Specialty, that offers for sale a diagnostic test for Alzheimer's disease or
that Controls any corporation or partnership that offers a diagnostic test for
Alzheimer's disease.
"Confidential Information" means any technical, scientific or business
information provided by one Party to the other Party pursuant to this Agreement
or the July 8, 1998 Mutual Confidentiality Agreement between the Parties, in
connection with:
(a) this Agreement (including the negotiations and discussions leading
up to the execution of this Agreement, and the specific terms of the
Agreement),
(b) the AD7C(TM) Test and/or its efficacy, reagents, assays, operating
procedures, test methods and technology,
(c) training with respect to the AD7C(TM) Test,
(d) Improvements in connection with the AD7C(TM) Test,
(e) compensation calculations and/or payments under this Agreement
and/or any examination in connection therewith,
(f) Clinical Study Support information provided by Specialty to Nymox,
(g) marketing strategy, customer and contact lists, plans, or materials
concerning the AD7C(TM) Test,
(h) applications or submissions to any regulatory authority or third
party payer in connection with the AD7C(TM) Test, and/or
(i) arbitration proceedings pursuant to Paragraph 15.05.
"Confidential Information," other than the information described in
subparagraphs (a), (b) and (c) above, must either be disclosed in writing and
marked "Confidential" or, if orally or visually disclosed, must be confirmed in
writing as confidential within 30 days following the oral or visual disclosure.
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"Contract Year" means a twelve-month period beginning on the first day of the
sixth month after the Launch of the AD7C(TM) Test by Specialty or an anniversary
of that date.
"Control" means the direct or indirect ownership of fifty (50%) or more of the
voting stock of the subject entity.
"Diagnostic Purposes" means the use or performance of the AD7C(TM) Test
primarily to aid the diagnosis of a patient by a physician and not for Clinical
Study Support.
"Effective Date" means the date of signature by the last Party to sign this
Agreement.
"Estimated Net Revenue" means, for a Clinical Study Support contract, which does
not stipulate a price per AD7C(TM) Test, the reasonable estimate made by
Specialty in good faith of the gross amount due to Specialty pursuant to that
contract for the performance of AD7C(TM) Tests, less any deductions for:
(a) any discounts, credits, allowances and/or refunds provided for in the
contract;
(b) any established shipping, handling, or transportation charges to be
paid to an independent third party by Specialty; and
(c) any sales taxes separately billed or accounted for.
If Specialty provides other services, assays or tests pursuant to a Clinical
Study Support contract, only that portion of the gross amount which represents
payment for AD7C(TM) Tests shall be considered Estimated Net Revenue.
"Estimated Number of Tests" means, for a Clinical Study Support contract, which
does not stipulate a price per AD7C(TM) Test, the reasonable estimate made by
Specialty in good faith of the number of AD7C(TM) Tests to be performed by
Specialty pursuant to that contract, less returns, re- dos or any "no
charge"tests.
"Improvement" means any advance, improvement or modification, whether or not
patentable, in the conduct of the AD7C(TM) Test, including, but not limited to
modifications of the method of conducting the AD7C(TM) Test or reagents used
therein.
"Know-How" means the information, knowledge and trade secrets relating to the
AD7C(TM) Test, its reagents, assays, operating procedures, test methods and
technology.
"Launch" means the date of the first commercial performance of the AD7C(TM) Test
by Specialty for a third party.
"Minimum Test Volume" means 75% of the reasonable estimate made by Specialty in
good faith of the number of AD7C(TM) Tests it anticipates performing for
Diagnostic Purposes for a given Contract Year.
"Net Revenue" means the gross amount invoiced by Specialty in a given Billing
Month for the performance of AD7C(TM) Tests for Diagnostic Purposes, less:
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(a) any usual discount, credit and/or refund;
(b) any trade and discount allowances or credits actually given;
(c) any bad debts;
(d) any amount excluded or disallowed by Medicare, Medicaid or a third
party payer or insurance company;
(e) any established shipping, handling, or transportation charges paid to
an independent third party by Specialty; and
(f) any sales taxes separately billed or accounted for.
If invoices include charges for assays, services or amounts which are not
AD7C(TM) Tests, only that portion of the invoiced amount which represents
AD7C(TM) Tests shall be considered Net Revenue.
"Number of Tests" means the number of AD7C(TM) Tests invoiced by Specialty in
each Billing Month, Billing Quarter or Contract Year, as appropriate, less
returns, re-dos or any "no charge" invoices.
"Nymox" means Nymox Corporation and its Affiliates.
"Party" means either Nymox or Specialty, or both, as will be apparent from the
context.
"Patents" means and collectively includes: (a) all of the United States and
patent applications listed in Exhibit A to this Agreement, together with any
reissues, extensions, continuations, divisions and continuations-in-part
thereof, and (b) any additional patents or patent applications which Nymox may
own or which Nymox may have or acquire the rights to license during the term of
this Agreement and which contain one or more claims which cover any aspect of
the AD7C(TM) Test.
"Specialty" means Specialty Laboratories, Inc. and its Affiliates.
"Trademarks" means the trademarks listed in Exhibit B.
ARTICLE 2. PURPOSE OF AGREEMENT
The purpose of this agreement is to establish operations for the marketing and
conducting of the AD7C(TM) Test by Specialty in Specialty's reference
laboratories.
ARTICLE 3. CONFIDENTIALITY
3.01 USE OF CONFIDENTIAL INFORMATION
Each Party will not use Confidential Information provided by the other Party for
any purpose other than the performance of this Agreement.
3.02 PROHIBITION ON THE DISCLOSURE OF CONFIDENTIAL INFORMATION TO THIRD
PARTIES
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Each Party will treat Confidential Information provided by the other Party with
the same degree of care as if it were its own confidential proprietary
information and will not disclose such Confidential Information to any third
party except as required by law, regulation, legal process or other governmental
authority or pursuant to this Agreement.
3.03 EXCEPTIONS
A. Information Already Known or Independently Developed
Confidential Information shall not include information which:
(a) was known or used by the receiving Party, before disclosure, as
evidenced by its written or other tangible records made prior to the time of
receipt;
(b) has become known to the public other than through disclosure by the
receiving Party;
(c) a third Party having the right to disclose such information has
lawfully disclosed to the receiving Party; or
(d) the receiving Party developed independently of the Confidential
Information provided by the other Party as evidenced by the receiving Party's
written or other tangible records.
B. Test Results
Specialty may disclose the results of the performance of an AD7C(TM) Test and
its interpretation to anyone authorized by law to receive such results.
C. Consent to Disclose
A Party may disclose Confidential Information provided by the other Party with
the written consent of the disclosing Party.
D. Requirements of Law
Nothing in this Agreement shall be deemed to prohibit the receiving Party from
disclosing any Confidential Information that is required by law, as determined
by the reasonable judgment of the receiving Party's attorney; provided, however,
that in the event of such legal requirement, prior to disclosing any
Confidential Information, the receiving Party shall notify the other Party of
the scope and source of such legal requirement and shall give the other Party
the opportunity to challenge the need to disclose and/or limit the scope of the
disclosed Confidential Information.
3.04 DURATION OF THE OBLIGATION TO MAINTAIN CONFIDENTIALITY
Each Party's obligations under this Article shall be in force during the term of
this Agreement and shall survive five (5) years after the termination or
expiration of this Agreement.
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ARTICLE 4. THE LICENSE GRANT
4.01 SUBJECT MATTER OF THE LICENSE
Nymox hereby grants to Specialty a license to utilize all Nymox proprietary
technology, including its rights to the Patents and Know-How, necessary to
conduct the AD7C(TM) Test in a reference laboratory.
4.02 NATURE OF THE LICENSE GRANTED
A. AD7C(TM) Test
Specialty's license to market and perform the AD7C(TM) Test shall include the
following:
(a) Specialty's license is semi-exclusive for conducting the AD7C(TM) Test
for Diagnostic Purposes. Nymox retains the right to conduct the
AD7C(TM) Test for Diagnostic Purposes and the right to market, license
and sell kits to third parties for conducting the AD7C(TM) Test for
Diagnostic Purposes and to license its AD7C(TM) Test Patents, Know-How
and technology to third parties in order to develop a kit for
conducting the AD7C(TM) Test.
(b) Specialty's license is exclusive for conducting the AD7C(TM) Test for
Clinical Study Support. Notwithstanding the foregoing, Nymox retains
the right to conduct the AD7C(TM) Test in connection with Nymox's
research and development activities, including Nymox's own clinical
trials and third party clinical trials evaluating Nymox's therapeutics
for Alzheimer's disease, and in connection with the clinical trials of
a strategic partner of Nymox. (It is understood for the purposes of
this Paragraph that any agreement establishing such a strategic
relationship shall include other substantive activities (e.g. equity
investment, R&D funding etc.) beyond assay services for the clinical
trials.) Nymox shall inform Specialty of the name of any such
strategic partner in a timely manner and the number of strategic
partners shall not exceed three. However, Nymox shall not have the
right to market or sell any kits for conducting the AD7C(TM) Test in
connection with any clinical trials or to grant licenses for that
purpose.
Specialty shall have the right to conduct the AD7C(TM) Test on all specimen
types, including but not limited to, cerebrospinal fluid (CSF), urine and
blood.
B. Trademarks
Specialty's license includes the right to use the Nymox Trademarks, "AD7C(TM)"
and "Nymox," in connection with the promotion, education, marketing and
performance of the AD7C(TM) Test, subject to Nymox's right to approve marketing
materials as set out below in Article 7.
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4.03 TERRITORY
Specialty's license to conduct the AD7C(TM) Test and to use the Nymox and AD7C
Trademarks is for the United States and its territories and possessions.
4.04 TERM
The initial term of the license is for twenty-four (24) months from the date of
Launch by Specialty of the AD7C(TM) Test. The parties anticipate that Specialty
will launch the AD7C(TM) Test within two months of the Effective Date. The
Agreement shall automatically renew for two (2) additional one (1) year terms,
unless terminated earlier pursuant to Article 9.
4.05 NON-TRANSFERABLE; NO SUBLICENSING
Specialty's license is not transferable or assignable and Specialty is not
entitled to sublicense or to use this license as collateral or security in any
lending, financing or other agreement. Nymox shall not transfer or assign this
Agreement, or any Nymox obligations under this Agreement, to any third party.
4.06 LAUNCH REQUIREMENTS
In order to enable Specialty to achieve timely Launch, Nymox must fulfill its
obligations under Paragraphs 11.02 (1), (2) and (3) within ten (10) days of the
Effective Date of this Agreement.
ARTICLE 5. COMPENSATION TO NYMOX
5.01 COMPENSATION FOR TESTS CONDUCTED FOR DIAGNOSTIC PURPOSES
For AD7C(TM) Tests conducted by Specialty for Diagnostic Purposes, the
compensation owed to Nymox by Specialty for each Billing Month will be
calculated as follows:
(1) Where the Average Price for the AD7C(TM) Tests conducted for
Diagnostic Purposes for a Billing Month is more than $200:
Compensation = ($82 + 60% x (Average Price -$200)) x Number of Tests.
(2) Where the Average Price for the AD7C(TM) Tests conducted for
Diagnostic Purposes for that Billing Month is $200 or less:
Compensation = $82 x Number of Tests.
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5.02 COMPENSATION FOR TEST CONDUCTED FOR CLINICAL TRIALS
For AD7C(TM) Tests conducted by Specialty for Clinical Study Support, the
compensation owed to Nymox by Specialty will be calculated and reported
separately for each Clinical Support Study contract, on a quarterly basis. For
each Clinical Study Support contract executed by Specialty, the compensation to
Nymox will be calculated for each Billing Quarter as follows:
(1) Where the Average Price for the AD7C(TM) Tests conducted under that
contract is more than $200:
Compensation = ($51.25 + 25% x (Average Price - $200)) x number of
tests actually conducted during that Billing Quarter
(2) Where the Average Price for the AD7C(TM) Test conducted under that
contract is $200 or less:
Compensation = $51.25 x number of tests actually conducted during that
Billing Quarter.
5.03 INTRODUCTION OF A KIT
If Nymox or a Nymox licensee introduces a kit for sale or license to third
parties for conducting the AD7C(TM) Test for Diagnostic Purposes, Nymox and
Specialty agree to renegotiate the compensation package in keeping with the
spirit of this Agreement in order to enable Specialty to market and conduct the
AD7C(TM) Test on a competitive basis with Nymox and third parties offering such
kits.
5.04 PAYMENT OF COMPENSATION
Compensation payments will be made quarterly and will be due and payable within
30 days of the closing of each calendar quarter.
Each compensation payment shall be accompanied by an itemized statement
detailing how the compensation was calculated.
For AD7C(TM) Tests conducted for Diagnostic Purposes, the itemized statement for
each compensation payment shall include for each Billing Month in that payment
period:
(a) the Net Revenue, specifying the gross amount invoiced for the
performance of the AD7C(TM) Test by Specialty and the amount of each
deduction;
(b) the Number of Tests; and
(c) the Average Price.
For each Clinical Study Support contract, the itemized statement for each
Billing Quarter shall include, as applicable, :
(a) the Estimated Net Revenue, including the gross amount estimated to be
invoiced for the performance of the AD7C(TM) Test by Specialty and the
estimated amount of each deduction;
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(b) the Estimated Number of Tests;
(c) the Average Price; and
(d) the number of tests actually conducted during the Billing Quarter.
5.05 RIGHT TO EXAMINE RECORDS
During the term of this Agreement and for one year after its termination or
expiration, Nymox shall have the right to retain an independent certified public
accounting firm, to which Specialty has no reasonable objection, to examine the
relevant books and records of Specialty to verify the calculation and payment of
compensation owed to Nymox under this Agreement. Specialty may require the
accounting firm to sign a confidential disclosure agreement before the
examination is conducted. The accounting firm will only report the results of
its examination with respect to the accuracy of the calculation, payment and
reporting to Nymox (specifying any inaccuracies found) and shall not disclose to
Nymox any other information it obtained. Only one such examination may be
conducted a year and any examination shall be conducted during reasonable
business hours. Specialty agrees to cooperate with the examination and to
provide any financial, business or laboratory records requested by the
accounting firm or used by Specialty in calculating the compensation. The
accounting firm shall give reasonable notice of an examination date sufficient
to allow Specialty to organize its records. Nymox shall bear the costs of any
such examination unless the examination results in an adjustment in its favor,
which adjustment is at least the greater of $50,000 or more or 5% of the total
compensation paid by Specialty for the payment period under examination, in
which case Specialty will bear the cost of the examination.
Nymox and Specialty agree to be bound by the results of any such examination and
to pay to the other Party any sums found owing within 30 days of the examination
report.
ARTICLE 6. REIMBURSEMENT AND PRICE
6.01 PRICE
The Parties anticipate that Specialty will initially invoice the performance of
the AD7C(TM) Test at the current market price of $400 per test, but recognize
that Specialty may change the invoice price in the future because of cost
factors, reimbursement patterns or other market considerations.
6.02 CLINICAL STUDY SUPPORT
For AD7C(TM) Tests to be conducted by Specialty for Clinical Study Support,
Specialty may negotiate contracts and set prices, for example, based on volume
commitments.
Both parties agree to review clinical studies on a case by case basis.
Nymox has the right to review any proposed clinical study before Specialty
enters into a Clinical
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Study Support contract with respect to such study and the right to approve the
parties conducting them, such approval not to be unreasonably withheld. For any
proposed Clinical Study Support contract, Specialty shall disclose to Nymox the
names of the party(ies) who will be conducting the study and the nature of the
study. Nymox shall notify Specialty within 10 days of receiving the relevant
information from Specialty whether Nymox objects. Nymox must demonstrate a
reasonable basis for any objection to the party(ies) conducting the study.
Specialty agrees to make it a term of any Clinical Study Support contract that
the other party agree that any AD7C(TM) Tests performed pursuant to that
contract be only for the purposes of Clinical Study Support.
6.03 REIMBURSEMENT
The Parties agree to use reasonable efforts to share all information concerning
reimbursement for the AD7C(TM) Test and to cooperate fully with each other about
obtaining reimbursement for the AD7C(TM) Test from physicians, hospitals,
patients and third party payers.
ARTICLE 7. MARKETING
7.01 SHARING MARKETING EXPENSES
Nymox shall share all direct marketing and promotional costs incurred by
Specialty on the following basis:
(a) 50%/50% for the direct marketing and promotional costs for the conduct
of the AD7C(TM) Test for Diagnostic Purposes, provided that Specialty
be reimbursed a minimum of $10,000 per year for such activities, with
amounts above that being subject to Nymox's approval at its sole
discretion.
(b) 0%(Nymox)/100%(Specialty) for the direct marketing and promotional
costs for the conduct of the AD7C(TM) Test for Clinical Study Support
purposes during any period when Specialty's license for Clinical Study
Support is exclusive; and
(c) 50%/50% for the direct marketing and promotional costs for the
conducting of the AD7C(TM) Test for Clinical Study Support during any
period when Specialty's license for Clinical Study Support purposes is
nonexclusive, provided that Specialty be reimbursed a minimum of
$10,000 per year for such activities, with amounts above that being
subject to Nymox's approval at its sole discretion.
7.02 APPROVAL OF MARKETING STRATEGY
Nymox has the right to review and approve Specialty's marketing materials and
literature and marketing strategy which approval shall be given within 10 days
of receiving all the relevant information from Specialty; any such approval
shall not be unreasonably withheld.
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7.03 SPECIALTY TRADEMARKS
Nothing herein shall restrict the right of Specialty to use its own trademarks
and logos on any and all marketing materials, literature, invoices, reports and
the like in connection with its license under this Agreement.
ARTICLE 8. PERFORMANCE TARGETS/CONVERSION TO NONEXCLUSIVE
LICENSE
8.01 SPECIALTY EFFORTS
Specialty shall use commercially reasonable efforts to market and conduct the
AD7C(TM) Test.
8.02 TEST VOLUME ESTIMATE
Before the start of each Contract Year, Specialty shall make a reasonable
estimate in good faith of the number of AD7C(TM) Tests it anticipates performing
for Diagnostic Purposes and for Clinical Study Support purposes for a given
Contract Year and give Nymox written notice of such estimate at least 30 days
before the start of that Contract Year.
8.03 COMPENSATION FOR FAILURE TO MEET MINIMUM TEST
If Specialty's actual Number of Tests in a Contract Year do not meet the Minimum
Test Volume for that Contract Year, Specialty shall have the right to maintain
its semi-exclusive license rights for the following Contract Year by paying
Nymox its lost compensation caused by the deficiency. The lost compensation
would be calculated as follows:
(1) Determine the shortfall in the number of tests:
Annual Shortfall = Minimum Test Volume - Number of Tests in the
Contract Year
(2) Convert to monthly shortfall:
Monthly Shortfall in Number of Tests = Annual Shortfall/12.
(3) For each Billing Month in the Contract Year, use the Monthly Shortfall
in Number of Tests as the "Number of Tests" in the appropriate
Paragraph 5.01 formula in order to calculate the lost compensation for
that Billing Month.
(4) Total the calculated lost compensation revenues for the Billing Months
of the Contract Year to arrive at the lost compensation.
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The lost compensation would be due and payable within 30 days of the calendar
quarter immediately following the end of the Contract Year in order for
Specialty to maintain its semi-exclusive license for Diagnostic Purposes. If
Specialty's failure to meet the Minimum Test Volume is due to Nymox's failure to
fulfil its obligations under Paragraph 11.04, or Nymox's failure or refusal to
approve Specialty's marketing materials or strategy under Paragraph 7.02, then
Paragraph 8.03 shall not apply.
8.04 FAILURE TO PAY COMPENSATION
If Specialty fails to pay the lost compensation due pursuant to Paragraph 8.03,
then Nymox has the option of either converting to nonexclusive Specialty's
license for conducting the AD7C(TM) Test for Diagnostic Purposes or terminating
that portion of the Agreement. Nymox shall give Specialty 90 days written notice
of its intent to exercise either option. Notwithstanding the foregoing, if
Specialty's failure to meet the Minimum Test Volume is due to Nymox's failure to
fulfil its obligations under Paragraph 11.04 or Nymox's failure or refusal to
approve Specialty's marketing materials or strategy under Paragraph 7.02, then
Paragraph 8.04 shall not apply.
8.05 CONVERSION TO NONEXCLUSIVE LICENSE
If Nymox exercises its option under Paragraph 8.04 to convert Specialty's
license to nonexclusive and then licenses one or more third parties to conduct
the AD7C(TM) Test, the compensation to Nymox from Specialty would be the lesser
of:
(a) the compensation which would have been due under this Agreement had
the license remained semi-exclusive; or
(b) the compensation as calculated under any applicable portions(s) of the
third party license.
ARTICLE 9. TERMINATION
9.01 TERMINATION FOR MATERIAL BREACH
Either Party has the right to terminate the Agreement for material breach by the
other Party upon thirty (30) days written notice specifying the breach. The
other Party has thirty (30) days from the receipt of the notice to cure the
breach, failing which the Agreement shall immediately terminate upon the sending
of a second notice of termination to the other Party. A material breach includes
(but is not limited to) a failure or refusal to pay compensation which is
actually due and owing pursuant to Paragraphs 5.04 and 5.05.
9.02 TERMINATION FOR FAILURE TO LAUNCH TEST
Subject to Nymox having fulfilled its obligations under Paragraph 4.06, if
Specialty does not launch the AD7C(TM) Test within two months following the
Effective Date, Nymox can give Specialty 60 days notice of its intent to
terminate this Agreement. If during that 60 day period, Specialty launches the
AD7C(TM) Test, the Agreement shall not be terminated for this reason.
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9.03 TERMINATION FOR FAILURE TO PAY LOST COMPENSATION REVENUE
If Specialty fails to pay Nymox lost compensation due pursuant to Paragraph 8.03
and Nymox gives Specialty notice of its intent to terminate the Diagnostic
Purpose portion of Agreement pursuant to Paragraph 8.04, Nymox may so terminate
if Specialty has not paid the lost compensation within the 90 day notice period.
If during that 90 day period, Specialty pays the lost compensation, all license
rights under this Agreement shall continue in full force and effect.
9.04 TERMINATION ON BANKRUPTCY
A. Nymox may elect to terminate this Agreement upon Specialty becoming
bankrupt, making an assignment in bankruptcy or an assignment for the
benefit of its creditors, coming under receivership, whether as a
result of court order, the provisions of a contract or agreement or
government action or otherwise being unable to meet its financial
obligations as they become due.
B. In the event of Nymox becoming bankrupt, entering into bankruptcy
proceedings (voluntary or otherwise) or coming under receivership,
Specialty may elect to retain its license rights under this Agreement
if the trustee, receiver or other entity so authorized by a federal
bankruptcy court, seeks to reject Specialty's license. Upon such
election, the rights and remedies of the Parties shall continue to be
governed by the terms of this Agreement.
9.05 TERMINATION FOR FORCE MAJEURE
Should force majeure as described in Paragraph 15.01 make substantial
performance of this Agreement impossible for more than one hundred and eighty
(180) then the Party not affected by the force majeure may give a thirty (30)
day notice of termination of this Agreement pursuant to Paragraph 15.01 and if
the Party affected is unable to restore substantial performance of this
Agreement in that thirty (30) day notice period, the Agreement shall be
terminated.
9.06 TERMINATION FOR COMPETITOR ACQUIRING CONTROL
If a Competitor acquires control of Specialty during the term of this Agreement,
Nymox may terminate this Agreement on three (3) months written notice to
Specialty.
9.07 EFFECT OF TERMINATION OR EXPIRATION
Upon the termination or expiration of this Agreement, Specialty shall:
(a) return to Nymox any unused reagents, antibodies, proteins, specimens,
protocols, promotional material and other property provided by Nymox
for the conducting of the AD7C(TM) Test, provided that copies or
samples may be retained by Specialty for record purposes;
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(b) cease receiving specimens which are provided to Specialty solely for
conducting the AD7C(TM) Test and cease conducting the AD7C(TM) Test
with the exception of conducting AD7C(TM) Tests on specimens that
Specialty had already received prior to the termination or expiration
of this Agreement;
(c) cease using the "AD7C(TM)" and "Nymox" trademarks and marketing the
AD7CT(TM) Test.
It shall not be considered "use" or "marketing" to continue use of the
Trademarks in Specialty's then-current catalog or previously printed marketing
materials which include assays or services other than the AD7C(TM) Test,
provided that Specialty shall remove the Trademarks from all catalogs and
marketing materials at the next scheduled revision.
The termination or expiration of this Agreement shall not affect any rights or
obligations which may have accrued to either Party prior to the termination or
expiration date, including the obligation for compensation as outlined in
Article 5.
Upon the termination or expiration of this Agreement, all rights that Nymox
licensed to Specialty under this Agreement revert to Nymox in their entirety,
subject only to Specialty's retained rights pursuant to Paragraph 10.01 which
shall remain in effect following termination or expiration. It is understood
that this paragraph applies only to the termination of the Agreement in its
entirety, and not to termination of the Diagnostic Purposes portion of the
Agreement pursuant to Paragraph 9.03.
ARTICLE 10. IMPROVEMENTS
10.01 SPECIALTY'S IMPROVEMENTS
If Specialty makes any Improvements during the term of this Agreement, it shall
disclose such Improvements to Nymox in a timely manner, and such Specialty
Improvements shall become the property of Nymox. Specialty shall thereafter
have the right to use such Specialty Improvements according to the terms of
Specialty's license under this Agreement, without payment of any additional
compensation for the use of any such Specialty Improvement(s). Specialty shall
execute any documents necessary for Nymox to secure its property interests in
the Specialty Improvements.
In addition, Specialty shall retain an irrevocable, fully-paid, royalty-free,
nonexclusive worldwide license to practice the Specialty Improvements in all
areas and applications outside the subject matter of this license during the
term of this Agreement and following its termination or expiration, to the
fullest extent permitted by applicable law
Nothing in this Agreement shall be construed as granting to Specialty any
express or implied license or right under any of the Patents after the
expiration or termination of this Agreement.
10.02 NYMOX IMPROVEMENTS
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If Nymox makes any Improvements during the term of this Agreement, it shall
promptly disclose such Improvements to Specialty, and Specialty shall thereafter
have the right to use such Nymox Improvements according to the terms of its
license under this Agreement.
ARTICLE 11. RESPONSIBILITIES OF THE PARTIES
11.01 SPECIALTY'S RESPONSIBILITIES
Specialty's responsibilities under this Agreement include:
(1) at its expense, specimen collection and shipping, specimen storage,
reporting of results, billings and collections and any other
additional related tasks that the Parties may agree upon;
(2) at its expense, performance of the AD7C(TM) Test, including the
provision of the necessary personnel, supplies (other than the Nymox
reagents and materials referred to in Paragraph 11.02(3)) and
equipment;
(3) at its expense, inclusion of the AD7C(TM) Test in Specialty's
directory of services;
(4) at its share of the expenses as set out in Article 7, marketing and
promotional activities for the AD7C(TM) Test; and
(5) at its expense, the wages and benefits of Specialty personnel during
their training by Nymox in connection with performance of the AD7C(TM)
Test.
11.02 NYMOX'S RESPONSIBILITIES
Nymox's responsibilities under this Agreement include:
(1) at its expense, provision of AD7C(TM) Test protocols, sufficient
clinical specimens for assay validation, quality control procedures
and technology transfer as may be required for Specialty to perform
the AD7C(TM) Test to Nymox's specifications and to obtain AD7C(TM)
Test results consistent with those obtained by Nymox personnel
experienced in conducting the AD7C(TM) Test;
(2) at its expense, training of such Specialty personnel as may be
required for Specialty to perform the AD7C(TM) Test to specifications;
(3) at its expense, supply of the Nymox proprietary and non-proprietary
materials and reagents needed for Specialty to perform the AD7C(TM)
Test as further specified in Paragraph 11.04;
(4) at its expense, provision of technical support, including
interpretation support, technical service support, and confirmation
testing to be conducted by Nymox at the request of Specialty;
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(5) at its share of the expenses as set out in Article 7, assisting the
marketing and promotional activities for the AD7C(TM) Test carried out
by Specialty, including assisting with the preparation of Specialty
promotional materials for the AD7C(TM) Test, as requested by
Specialty, and approving all Specialty promotional materials for the
AD7C(TM) Test, such approval not to be unreasonably withheld pursuant
to Paragraph 7.02; and
(6) at its expense, sole responsibility for payment of any license fees,
royalties or other compensation which may be owed to a third party to
secure the right to market and perform the AD7C(TM) Test.
11.03 SHARED TRAVEL AND ACCOMMODATION EXPENSES
Specialty and Nymox agree to share any travel and accommodation expenses 50%/50%
incurred prior to the Effective Date as a result of either Party's personnel
having to travel to the other Party's facilities for training, technology
transfer, quality control or other reason relating to the performance of the
AD7C(TM) Test to specifications. Any future such travel expenses shall be
shared 50%/50% only if mutually agreed upon in advance.
11.04 SUPPLY OBLIGATIONS
Nymox shall supply to Specialty all materials and reagents necessary for the
conduct of the AD7C(TM) Test as the conduct of the test is specified by Nymox.
All such materials and reagents shall meet all specifications and quality
requirements then in effect for Nymox's own conduct of the AD7C(TM) Test and,
Nymox shall provide Specialty with its data and specifications concerning the
stability and shelf life of the materials and reagents, including any changes
or new information, on an ongoing basis.
During the period prior to the start of the Contract Year, Nymox shall supply
materials and reagents to Specialty every two (2) months, in an amount
sufficient to conduct at least 500 AD7C(TM) Tests. Such materials and reagents
shall have a shelf life of no less than two (2) months.
During each Contract Year, Nymox shall supply materials and reagents to
Specialty on a quarterly basis, in amounts sufficient for Specialty to conduct
one-fourth (1/4) of the test volume estimates in Paragraph 8.02. Such
materials and reagents shall have a shelf life of no less than three months.
In the event Specialty needs additional quantities of materials and reagents,
Specialty shall notify Nymox in writing of its additional needs, and Nymox shall
use reasonable efforts to supply the materials and reagents in a timely manner.
11.05 LIMITATIONS ON LIABILITY
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In no event shall either Party be liable to the other in contract, tort, product
liability or otherwise for special, indirect, incidental, consequential or
punitive damages.
Each Party is responsible for:
(1) the safety of its own employees and agents while engaged in work at
its own facility pursuant to this Agreement, and
(2) any liability for damages or personal injuries, including death,
resulting from work conducted by that Party's own employees and agents
pursuant to this Agreement, without any warranty, liability or
indemnification on the part of the other Party unless such damages or
personal injuries are due to the negligence or wilful misconduct of
such other Party or employees or agents of such other Party.
11.06 INFRINGEMENT
A. Notice of Suspected Patent Infringement
Specialty shall promptly inform Nymox in writing of any suspected infringement
of the Patents by a third party and Nymox shall make reasonable efforts with the
cooperation of Specialty to ascertain in a timely manner whether the third party
is infringing or has infringed the Patents. Nymox shall communicate in writing
the results of its investigation into the suspected infringement to Specialty.
B. Purported Patent Infringement
If the result of Nymox's investigation is that Nymox believes an infringement
has occurred, is occurring or on reasonable ground is believed likely to occur,
Nymox will have six months either to halt such infringement (including by
licensing such third party if Specialty's license has been converted to
nonexclusive pursuant to Paragraph 8.04 or by written agreement by such third
party to cease any infringement) or to initiate litigation against the
infringing third party (including authorizing Specialty, with Specialty's
consent, to initiate such litigation). Specialty agrees that it will, at
Nymox's request and expense, furnish reasonable cooperation and assistance.
C. Nymox's Failure or Refusal to Take Action Within Six Months
Nymox may initiate infringement litigation with respect to Patent(s) owned by
Nymox relating to the AD7C(TM) Test, in the sole discretion of Nymox. In the
event that Nymox, for any reason, does not halt the infringement or initiate
litigation within the six months as set out in Paragraph 11.06(B), Specialty's
compensation obligations shall be reduced by one-half until the infringement is
discontinued and Specialty may elect, in its discretion, to bring an action in
its own name, or, if required by law to bring such action in the name of the
holder of the patent, in the name of Nymox. If Specialty elects to bring an
action against an alleged infringer under this paragraph, Nymox will cooperate
with Specialty in the litigation and Specialty shall bear the cost and expenses
incurred in
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relation to the litigation subject to Specialty's right to withhold and be
forgiven compensation payments which otherwise would be payable to Nymox, not to
exceed Specialty's out-of-pocket expenses for bringing and maintaining such
action. From such time as the infringement ceases (whether voluntarily or by
court order), Specialty's full compensation obligations to Nymox would resume.
D. Infringement Proceedings
No settlement, consent judgement, or other voluntary disposition of the
litigation which may have an adverse effect on the rights of one party may be
entered into without the consent of that Party.
The Party initiating any infringement litigation, whether with or without the
consent of the other Party, shall bear the costs of litigation against
infringers (subject to Specialty's rights to withhold compensation under
Paragraph 11.06(C)) and shall receive all damages and recoveries awarded in such
instance; provided, however, that in the event of such an award to Specialty,
Nymox shall first be paid the amount of the withheld compensation (if any).
ARTICLE 12. QUALITY CONTROL
12.01 STANDARD OF QUALITY
Specialty shall conduct the AD7C(TM) Tests in compliance with Nymox's written
specifications and standard operating procedures (provided that such have been
conveyed to Specialty in writing) and to the standards of a fully-certified
reference laboratory.
12.02 QUALITY CONTROL Specialty acknowledges that Nymox has the right to
ensure that Specialty performs the AD7C(TM) Test to the standard of quality set
out in Paragraph 12.01 and agrees to cooperate fully with Nymox's exercise of
that right. Without limiting this general right, Nymox has the specific rights
to:
(1) have Specialty furnish Nymox with any pertinent information about its
procedures, records, notes and results for the AD7C(TM) Test,
including such information about specific test results (subject to any
legal requirements to maintain patient confidentiality) to enable
Nymox to verify Specialty's compliance with Paragraph 12.01 in the
event of any apparent discrepancies or, in the absence of
discrepancies, not more than once per Contract Year;
(2) have Specialty supply Nymox with samples of specimens, reagents or
other material or supplies for Nymox's own testing for the
verification of Paragraph 12.02(1), to the extent reasonably available
and not needed for other Specialty testing; and
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(3) upon ten (10) days written notice and at a mutually agreeable time,
not more than once per Contract Year, to inspect any facility
conducting or assisting in the conducting of AD7C(TM) Tests and any
laboratory records, documents, reports or other information relating
to the conducting of AD7C(TM) Tests, test any reagents, equipment or
other supplies and material used in the conducting of AD7C(TM) Tests
(to the extent reasonably available and not required for other
Specialty testing, and provided that Specialty approve the competence
and qualification of any person prior to allowing tests of Specialty
equipment) and interview any laboratory personnel directly involved in
the conducting of AD7C(TM) Tests.
ARTICLE 13. EFFECT OF LICENSING AGREEMENT
13.01 NO AGENCY RELATIONSHIP ESTABLISHED
Neither Party would be an agent, representative, contractor nor employee of the
other.
13.02 NO TRANSFER OF INTELLECTUAL PROPERTY RIGHTS
Nymox retains all of its patent rights, trademarks, copyrights, trade secrets
and other proprietary rights covering or relating to the AD7C(TM) Test and
nothing in this Agreement shall be construed as assigning, alienating or
transferring any of these rights to Specialty, except as specifically provided
in the license grants of this Agreement.
13.03 NO SALE OF PROPRIETARY REAGENTS
Nymox retains ownership to any proprietary reagents it supplies to Specialty
under the terms of this Agreement. Specialty agrees to use any reagents
supplied by Nymox for the conducting of the AD7C(TM) Test pursuant to this
Agreement and not to give, transfer or sell any of these reagents to any third
party without the written consent of Nymox.
ARTICLE 14. REPRESENTATIONS AND WARRANTIES
14.01 WARRANTY OF RIGHTS IN THE SUBJECT MATTER OF LICENSE
Nymox warrants that it owns the rights to the Patents listed in Exhibit A and
the Trademarks listed in Exhibit B to this Agreement and that it has the
authority to grant licenses to use these Patents and Trademarks and its Know-How
concerning the AD7C(TM) Test and its performance as provided herein.
14.02 WARRANTY OF SUPPLIES
Nymox warrants that the AD7C(TM) Test materials and reagents it supplies to
Specialty will meet the internal specifications and quality requirements used by
Nymox for those materials and reagents at the time they are shipped.
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14.03 DISCLAIMER OF WARRANTY
Other than the warranties set out in Paragraph 14.01 and 14.02, Nymox makes no
express or implied warranties about the AD7C(TM) Test materials supplied by
Nymox and used by Specialty pursuant to this Agreement or about the AD7C(TM)
Test, including but not limited to the implied warranties of merchantability and
fitness for a particular purpose.
14.04 REPRESENTATIONS
A. Nymox represents to Specialty that, to the best knowledge of Nymox, as
of the Effective Date:
(1) There are no claims, actions, suits or proceedings, pending or
threatened, which relate in any way to the marketing or performance of
the AD7C(TM) Test;
(2) There are no claims, actions, suits or proceedings, pending or
threatened, which allege that marketing or performance of the AD7C(TM)
Test infringes the patent, trademark or other rights of a third party;
and
(3) Nymox is not aware of any third party patent(s) which would be
infringed by Specialty's marketing an/or performance of the AD7C(TM)
Test.
B. Specialty represents to Nymox that:
(1) Prior to Launch, Specialty will have clinically validated the AD7C(TM)
Test; and
(2) Specialty shall treat the AD7C(TM) Test in the same manner as other
tests included in Specialty's directory of services and agrees to
comply with applicable regulatory requirements.
ARTICLE 15. MISCELLANEOUS PROVISIONS
15.0 FORCE MAJEURE
The performance by either Party of any covenants or obligations to be performed
under this Agreement shall be excused by reason of strikes or other labor
disturbances, riots, fires, floods, earthquakes, accidents, wars, embargoes,
delays of carriers, inability to obtain materials from sources of supply, or
acts, injunctions or restraints of governments or any cause beyond the control
of the Parties preventing such performance whether similar or dissimilar to the
foregoing, provided, however, that:
(1) the Party affected shall inform the other of the occurrence of the
force majeure condition as soon as practicable;
(2) the Party affected shall exert its reasonable diligent efforts to
eliminate or cure or overcome any such causes and to resume
performance of its covenants and obligations as soon as practicable;
and
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(3) should the force majeure condition make substantial performance of
this Agreement impossible for more than one hundred eighty (180) days
then the Party not affected may give a thirty (30) day notice of
termination of this Agreement and if the Party affected is unable to
restore substantial performance of this Agreement in that thirty (30)
day notice period, the Agreement shall be terminated.
15.0 PUBLIC STATEMENTS
Nymox and Specialty shall mutually develop and approve in writing any press
releases or announcements about this Agreement or about any activities by either
Party relating to this Agreement. Neither Party shall publicly disclose the
specific terms of this Agreement except as required by law or regulation or with
the consent of the other Party or unless there has been a prior public
disclosure of the information by the other Party.
15.03 NOTICES
Any notice or other communication required by this Agreement shall be in writing
and shall be effective if hand delivered or if sent by certified or registered
mail or by facsimile transmission to the following locations until notified
otherwise in writing.
Nymox Pharmaceutical Corporation
Attention: President
Nymox Pharmaceutical Corporation
9900 Boul. Cavendish, Suite 306
Saint Laurent Quebec
Canada H4M 2V2
FAX: (514) 332-2227
Specialty Laboratories, Inc.
Attention: President
Specialty Laboratories, Inc.
2211 Michigan Avenue
Santa Monica, CA 90409-3900
FAX: (310) 828-9413
A notice is effective on the date of delivery to the Party. Delivery is deemed
to have occurred on the day of delivery by courier, or upon facsimile
transmission with confirmation, or on the fifth day after the date of sending
the notice by registered mail.
15.04 GOVERNING LAW
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This Agreement shall be governed by, construed and enforced in accordance with
the laws of the State of California.
15.05 DISPUTE RESOLUTION
In the event of any controversy or claim arising out of or relating to any
provisions of this Agreement or the breach thereof, the Parties shall try to
settle those conflicts amicably between themselves. Should they fail to agree,
the matter in dispute shall be settled through arbitration conducted by and in
accordance with the rules of the American Arbitration Association ("A.A.A.").
Either Party may furnish the other party with a dated, written notice (the
"Arbitration Notice") indicating (I) intent to commence arbitration proceedings,
(ii) the nature, with reasonable detail, of the dispute, (iii) the amount
involved, if any, and (iv) the remedy sought. The arbitration shall be held at
a neutral place mutually agreeable to the parties. Within thirty (30) days of
the date of the Arbitration Notice, each party shall select one (1) Arbitrator,
who shall not be a current or former employee, agent, consultant or other
representative of either party; the two selected Arbitrators shall appoint a
third, neutral, Arbitrator.
The arbitration award shall be final and binding. Either party may enter any
such award in a court having jurisdiction or may make application to such court
for judicial acceptance of the award and an order of enforcement, as the case
may be.
15.06 CURRENCY
All references to money in the Agreement refer to U.S. dollars and all payments
made under this Agreement shall be in that currency.
15.07 PARTIAL INVALIDITY
If any provision of this Agreement be held invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and the Parties shall use reasonable efforts to
substitute a valid, legal and enforceable provision which, as far as
practicable, implements the purposes and intent of the provision held invalid,
illegal or unenforceable. If the Parties are unable to arrive at such a
substitute, this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained in it, provided that the
performance required under this Agreement with such a provision deleted remains
substantially consistent with the intent of the Parties.
15.08 WAIVER
Failure to require performance of any provision of this Agreement does not waive
a Party's right to demand compliance with that provision at a later time.
Waiver of any default shall not waive any other default.
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15.08 ENTIRE AGREEMENT
This Agreement contains the entire agreement between the Parties with respect to
the subject matter covered by this Agreement. No representations, whether oral
or written, made before this Agreement is executed shall amend this Agreement.
Any modification or amendment to this Agreement shall be in writing and signed
by an authorized officer of each Party.
IN WITNESS THEREOF, the undersigned have executed this Agreement as of the dates
set forth below:
ACCEPTED AND AGREED TO:
Nymox Corporation Specialty Laboratories, Inc.
- --------------------------------------------------------------------------------
Paul Averback Paul Beyer
President President
EXHIBIT A: PATENTS LICENSED TO SPECIALTY
U.S Patent Number Title
- ----------------- -----
5,830,670 Neural Thread Protein Gene Expression
and Detection of Alzheimer's Disease
U.S. Patent Application Number Title
- ------------------------------ -----
08/450,673 Neural Thread Protein Gene Expression
and Detection of Alzheimer's Disease
08/469,629 Neural Thread Protein Gene Expression
and Detection of Alzheimer's Disease
08/340,426 Method of Detecting Neurological Disease
or Dysfunction
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EXHIBIT B: TRADEMARKS LICENSED TO SPECIALTY
The Trademark AD7C(TM)
The trademarks on this page are reasonable facsimiles of the actual Trademarks.
Nymox will furnish Specialty with materials necessary for reproduction of the
actual Trademarks on Specialty promotional materials.
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