SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the quarter ended June 30, 2002
Nymox Pharmaceutical Corporation
9900 Cavendish Blvd., St. Laurent, QC, Canada, H4M 2V2
(Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20F or Form 40F)
Form 20 F [X] Form 40 F [ ]
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934)
Yes [ ] No [X]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NYMOX PHARMACEUTICAL CORPORATION
(Registrant)
Date: August 15, 2002
By: /s/ Paul Averback
--------------------------------
Paul Averback MD
President
NYMOX
CORPORATE PROFILE
Nymox Pharmaceutical Corporation is a biotechnology company with three unique
proprietary products on the market, and a significant R&D pipeline of products
in development. Nymox is a leader in the research and development of products
for the diagnosis and treatment of Alzheimer's disease, an affliction of more
than 15 million people around the world. Nymox developed and is currently
offering its AlzheimAlert(TM) test, a urinary test that is the world's only
accurate, non-invasive aid in the diagnosis of Alzheimer's disease. Nymox also
developed and markets NicAlert(TM) and NicoMeter(TM), tests that use urine or
saliva to detect use of tobacco products. Nymox also is developing treatments
aimed at the causes of Alzheimer's disease. One program targets spherons, which
Nymox researchers believe are a source of the senile plaques found in the brains
of patients with Alzheimer's disease. Another distinct program targets the brain
protein (neural thread protein) detected by its AlzheimAlert(TM) test and
implicated in widespread brain cell death seen in Alzheimer's disease. Nymox is
developing new antibacterial agents for the treatment of urinary tract and other
bacterial infections in humans and for the treatment of E. coli 0157:H7
contamination in meat and other food and drink products. Nymox is developing a
novel treatment (NX-1207) for benign prostatic hyperplasia. Nymox also has
several other drug candidates and diagnostic technologies in development.
Message to Shareholders
-----------------------
Nymox is pleased to present its results for the second quarter of 2002.
Nymox offers a proprietary product called AlzheimAlert(TM), which is a state of
the art urine test designed to aid physicians in the diagnosis of Alzheimer's
disease. AlzheimAlert(TM) is Nymox's unique patented urinary test for neural
thread protein, a key protein involved in the Alzheimer's disease process. We
are in the early stages of making the tests available to doctors throughout the
U.S. through a medical field force of over 60 medical representatives. The test
costs $295 and is performed by the company's clinical reference laboratory in
New Jersey.
On April 2, Nymox announced that the company anticipates a positive impact from
the recently reported change in Medicare policy to authorize coverage for the
treatment of Alzheimer's disease. The change was first reported in a front page
story in the Sunday (March 31) New York Times. Diseases which are covered under
Medicare need to be optimally diagnosed. The same holds true for Alzheimer's
disease, but poses considerable problems, which may be alleviated by the use of
AlzheimAlert(TM).
On April 16, Nymox announced the publication of a large new national clinical
study in Alzheimer's Reports, a peer-reviewed medical journal, providing further
confirmation of the accuracy and efficacy of the company's AlzheimAlert(TM)
urinary test. The article contains the results of a successful double-blind
study involving Alzheimer's disease patients and controls totaling 139
participants from across the U.S. Each patient received an AlzheimAlert(TM)
test,
1
and their clinical evolution was subsequently followed by their physician. The
AlzheimAlert(TM) test results were independently documented and compared with
the diagnosis after up to a year's follow-up. The results demonstrated again the
high accuracy and usefulness for the AlzheimAlert(TM) test as an aid to
physicians. The findings also confirmed that later stage Alzheimer cases had
higher levels on their AlzheimAlert(TM) tests than earlier stage cases. The
study was co-authored by Dr. Suzanna Levy of Mount Sinai School of Medicine, New
York; Dr. Robert Rush of Bendiner Schlesinger, New York; and Nymox scientists.
On May 7, scientists from Nymox presented new positive results from clinical
studies of the Company's AlzheimAlert(TM) test at the 2002 Annual Scientific
Meeting of the American Geriatrics Society in Washington DC. The studies
demonstrated the accuracy of the AlzheimAlert(TM) test in real clinical
situations. The studies showed that AlzheimAlert(TM) levels correlate with the
stage of the patient's Alzheimer's disease: patients who had shown clinical
signs of Alzheimer's disease for more than a year had significantly higher
AlzheimAlert(TM) readings than patients with clinical signs of AD of less than a
year, and significantly higher readings than age-matched normal controls. The
AlzheimAlert(TM) test was performed on 144 cases of Alzheimer's Disease and
non-Alzheimer control cases. All samples were tested in triplicate without
knowledge of the clinical diagnosis. Patients with clinical Alzheimer's Disease
and symptoms for over one year had average AlzheimAlert(TM) values of 34 units,
significantly greater than patients with symptoms of under one year, who had an
average value of 25.2 units, and controls (average 14.3 units).
Nymox also markets two other proprietary products; NicAlert(TM) and
NicoMeter(TM), which are inexpensive, simple-to-use test strips used to
determine whether a person is using tobacco products. NicAlert(TM) and
NicoMeter(TM) can be applied to many situations such as athletic and school
testing, insurance testing, workplace environment testing, research studies and
smoking cessation. NicoMeter(TM) is used with urine and the new NicAlert(TM) is
used for urine and saliva detection. Nymox provides NicAlert(TM) at $8 per test.
The Company is currently negotiating a number of new marketing initiatives for
NicAlert(TM). NicAlert(TM) and NicoMeter(TM) are currently being used in
research programs into tobacco use and exposure across the U.S., and in Japan.
The tests are a new improvement of a product, which has been used for many years
by experts in the field at institutions such as the University of Texas, Brown
University, and MD Anderson and by reference laboratories such as Smith Kline
Beecham.
On April 4, Nymox announced that NicAlert(TM), the Company's one-step test for
smoking and tobacco product exposure, can play a role in child custody cases
where exposure to second-hand smoke or environmental tobacco smoke (ETS) can
affect access, visitation and custody rights for smoking parents. In a recent,
widely reported decision, New York Supreme Court Justice Robert F. Julian
prohibited a mother from smoking in the presence of her 13 year old son because
of the detrimental effect of second-hand smoke on the health of children in
general. The decision was thought to be a first because, unlike earlier such
decisions, the child did not have any pre-existing health condition such as
asthma that could be exacerbated by exposure to second-hand smoke.
On April 18, Nymox announced that recently released statistics from the Centers
for Disease Control and Prevention (CDC) on the premature deaths caused by
smoking in the United States provide smokers with a powerful incentive to quit
smoking. Nymox's NicAlert(TM) and NicoMeter(TM) tests for smoking and tobacco
product exposure can be of value to smokers
2
willing to quit. The CDC report entitled "Annual Smoking-Attributable Mortality,
Years of Potential Life Lost, and Economic Costs -- United States, 1995-1999"
(Morbidity and Mortality Weekly Report (MMWR), 51(14): 300-303, April 12, 2002)
estimated that smoking caused over 440,000 premature deaths annually from 1995
through 1999 in the United States. The report put the annual health-related
economic loss caused by smoking at approximately $157 billion a year. The report
reiterated the CDC's long-standing recommendation of the implementation of
comprehensive tobacco-control programs in order to reduce smoking and its grim
consequences.
According to a University of Massachusetts Medical School study in the April
2002 issue of the Archives of Pediatric & Adolescent Medicine (156: 397-403)
even casual experimentation with cigarette smoking can quickly lead to addiction
to cigarettes in teens. The 30 month study used a simple checklist about
cigarette needs and cravings and about problems with quitting in order to
measure tobacco dependency in 679 grade seven students (mean age 13). Almost
half of the students in the study had tried smoking and about 14% were daily
smokers. The study found that students giving even one affirmative answer on the
ten point Hooked-On-Nicotine Checklist were at a very substantially greater risk
to become daily smokers, showing how easily tobacco dependence can lead to
addiction for teens.
The U.S. Surgeon General, the Centers for Disease Control and Prevention (CDC),
the World Health Organization and many other public health organizations have
targeted teenage tobacco use as a major preventable health risk. The large
majority of long-term smokers become addicted to tobacco in their teens, only to
face the health consequences later in life.
On May 22, Nymox announced that it had filed a 510(k) submission for its
proprietary NicAlert(TM) test to the U.S. Food and Drug Administration (FDA).
During the year, we continued to make progress in our several major drug
development programs. Nymox's R&D activities have been increasingly productive
in the past year in generating patentable products and company patent
applications. In the past eighteen months, the company and its affiliates have
drafted, filed and prosecuted over fourteen U.S. patent applications, as well as
a substantially larger number of foreign patent applications.
On April 5, Nymox announced that it had entered into a new sponsored research
and licensing agreement with the Rhode Island Hospital Corporation at Brown
University. The agreement concerns research in the laboratories of Jack R. Wands
M.D. into novel cancer markers that have potential application both for the
diagnosis and treatment of specific cancers. Dr. Wands is an internationally
prominent medical researcher, particularly in the fields of gastroenterology and
hepatology. He is the Jeffrey and Kimberly Greenberg - Artemis and Martha
Joukowsky Professor in Gastroenterology and Professor of Medical Science at the
Brown University School of Medicine and is the Director of the Liver Research
Center and Director of the Division of Gastroenterology at Lifespan and Rhode
Island Hospital. Dr. Wands is the author of more than 350 publications, the
recipient of numerous national and international awards and an inventor of more
than 30 patents.
On June 26, Nymox announced that it had filed an Investigational New Drug (IND)
application with the FDA for the Company's prostate drug candidate NX-1207.
NX-1207 is a prospective drug for the treatment of benign prostatic hyperplasia
(BPH), the common form of prostate
3
enlargement in the aging male population. NX1207 has shown excellent progress in
the required pre-clinical studies. The Company is presently testing NX1207 for
other possible indications, in addition to preparations for human testing of
NX1207 for BPH.
On June 12, Nymox announced progress with one of its leading new Alzheimer drug
candidates in pre-clinical laboratory studies. The Company's NXD-9062 works in
animals by inhibiting cell damage similar to that found in Alzheimer's disease
(AD) brain. The drug candidate NXD-9062 has been extensively tested by Nymox
scientists in laboratory and animal models where it has been safely tolerated
and has been shown to have promise in limiting the damage. Nymox plans to
finalize the steps to target NXD-9062 for regulatory review this year and
initial human trials.
We wish to thank our over 4,000 shareholders for their valuable continued
support. The Company welcomes the challenges ahead and Nymox is confident that
it will continue to meet or surpass its important milestones.
Paul Averback MD - CEO & President
August 15, 2002
4
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in US dollars)
The following discussion should be read in conjunction with the consolidated
financial statements of the Company.
Overview
The business activities of the Company since inception have been devoted
principally to research and development. Accordingly, the Company has had
limited revenues from sales and has not been profitable to date. We refer to the
Corporate Overview for a discussion of the Company's research and development
projects and its product pipeline.
Critical Accounting Policies
In December 2001, the Securities and Exchange Commission ("SEC") released
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies".
According to the SEC release, accounting policies are among the "most critical"
if they are, in management's view, most important to the portrayal of the
company's financial condition and most demanding on their calls for judgement.
Our accounting policies are described in the notes to our consolidated financial
statements. We consider the following policies to be the most critical in
understanding the judgements that are involved in preparing our financial
statements and the matters that could impact our results of operations,
financial condition and cash flows.
Revenue Recognition
The Corporation applies guidance from SAB 101 (Staff Accounting Bulletin 101)
issued by the Securities and Exchange Commission in the recognition of revenue.
The Company derives its revenue from product sales, research contracts, license
fees and interest. Revenue from product sales is recognized when the product or
service has been delivered or obligations as defined in the agreement are
performed. Revenue from research contracts is recognized at the time research
activities are performed under the agreement. Revenue from license fees,
royalties and milestone payments is recognized upon the fulfillment of all
obligations under the terms of the related agreement. These agreements may
include upfront payments to be received by the Corporation. Upfront payments are
recognized as revenue on a systematic basis over the period that the related
services or obligations as defined in the agreement are performed. Interest is
recognized on an accrual basis.
The Company currently markets AlzheimAlert(TM) as a service provided by our CLIA
certified reference laboratory in New Jersey. Physicians send urine samples
taken from their patients to our laboratory where the AlzheimAlert(TM) test is
performed. The results are then reported back to the physicians. We recognize
the revenues when the test has been performed. The Company sometimes enters into
bulk sales of its diagnostic products to customers under which it has a
continuing obligation to perform related testing services at its laboratory.
Although the Company receives non-refundable upfront payments under these
agreements, revenue is recognized in the period that the Company fulfils its
obligation or over the term of the arrangement. For research contracts and
licensing revenues, the Company usually enters
5
into an agreement specifying the terms and obligations of the parties. Revenues
from these sources are only recognized when there are no longer any obligations
to be performed by the Company under the terms of the agreement.
Valuation of Capital Assets
---------------------------
The Company reviews the unamortized balance of intellectual property rights and
patents on an annual basis and recognizes any impairment in carrying value when
it is identified. Factors we consider important, which could trigger an
impairment review include:
o Significant changes in the manner of our use of the acquired assets or
the strategy for our overall business; and
o Significant negative industry or economic trends.
No impairment losses were recognized for the years ended December 31, 2001, 2000
and 1999.
Valuation of Future Income Tax Assets
-------------------------------------
Management judgement is required in determining the valuation allowance recorded
against net future tax assets. We have recorded a valuation allowance of $6.4
million as of December 31, 2001, due to uncertainties related to our ability to
utilize some of our future tax assets, primarily consisting of net operating
losses carried forward, before they expire. In assessing the realizability of
future tax assets, management considers whether it is more likely than not that
some portion or all of the future tax assets will not be realized. The ultimate
realization of future tax assets is dependent upon the generation of future
taxable income and tax planning strategies. Since the Company is a development
stage enterprise, the generation of future taxable income is dependent on the
successful commercialization of its products and technologies.
Results of Operations
Revenues
--------
Revenues from sales amounted to $235,263 for the six months ended June 30, 2002,
compared with $187,765 for the same period in 2001. In addition, there is
$15,886 of deferred revenue, which will be recognized, in the next two quarters.
The increase is principally attributable to higher sales volumes for both
AlzheimAlert (increase 24%) and NicAlert/NicoMeter (increase 28%). Revenue from
sales for the quarter amounted to $172,958 compared to $126,468 for the second
quarter of 2001. Interest revenue was $3,772 for the six months ended June 30,
2002 compared to $11,559 for the same period in 2001, due to lower average cash
balances.
Research and Development
------------------------
Research and development expenditures were $914,935 for the six months ended
June 30, 2002, compared with $678,646 for the same period in 2001. The increase
is attributable to higher spending in the development of products in the
Company's pipeline. During the first six months of 2002, related research tax
credits amounted to $9,789 compared to $3,551 for the same period in 2001.
6
Marketing Expenses
------------------
Marketing expenditures decreased to $141,002 for the six months ended June 30,
2002, in comparison to expenditures of $160,081 for the same period in 2001. The
decrease is attributable to reduced costs relating to marketing agreements.
Administrative Expenses
-----------------------
General and administrative expenses amounted to $610,231 for the six months
ended June 30, 2002, compared with $491,540 for the same period in 2001,
principally due to write-offs of deferred share issuance costs ($70,796), as
explained in note 2(b) of the interim consolidated financial statements, and
increased professional fees (net increase $30,793)
Foreign Exchange
----------------
The Company incurs expenses in the local currency of the countries in which it
operates, which include the United States and Canada. Approximately 75% of 2002
expenses (75% in 2001) were in U.S. dollars. Foreign exchange fluctuations had
no meaningful impact on the Company's results in 2002 or 2001.
Inflation
---------
The Company does not believe that inflation has had a significant impact on its
results of operations.
Long-Term Commitments
---------------------
Nymox has no financial obligations of significance other than long-term lease
commitments for its premises in the United States and Canada of $14,414 per
month and ongoing research funding payments to a U.S. medical facility totaling
$770,750 over the next three years.
Results of Operations
---------------------
Net losses for the six month period ended June 30, 2002 were $1,726,595, or
$0.08 per share, compared to $1,358,123, or $0.06 per share, for the same period
in 2001. Net losses for the quarter ended June 30, 2002 were $843,578, or $0.04
per share, compared to $753,857, or $0.03 per share, for the same period in
2001. The weighted, fully diluted, average number of common shares outstanding
for the period ending June 30, 2002 were 22,481,717 compared to 21,642,846 for
the same period in 2001.
Financial Position
Liquidity and Capital Resources
-------------------------------
As of June 30, 2002, cash totaled $515,083 and receivables totaled $214,127. In
November 1999, the Corporation signed a common stock purchase agreement whereby
the investor is committed to purchase up to $12 million of the Corporation's
common shares over a thirty-month period commencing July 2000, when the initial
draw-down was effected. As at December 31, 2001, four drawings have been made
under this Share Purchase Agreement, for total proceeds of $1,436,364.
Specifically, on August 16, 2000, 152,616 common shares were issued at a volume
weighted average price of $3.2924 per share; on October 12, 2000, 137,889 common
shares were issued at a volume weighted average price of $3.6261 per share, on
February 7, 2001, 161,696 common shares were issued at a volume weighted
7
average
price of $2.0240 and on May 31, 2001, 56,108 common shares were issued at a
volume weighted average price of $1.9466. The Company intends to access
financing under this agreement when appropriate to fund its research and
development. At July 31, 2002, the Company has $3 million of financing available
under this facility. The agreement expires in January, 2003.
The Company intends to raise additional capital in 2002 in order to pursue its
development. To July 31, 2002, the Company completed four private placements and
issued 445,074 common shares for total proceeds of $1,882,000. On January 24,
74,074 shares were issued at a price of $4.05 in a private placement for total
proceeds of $300,000. On March 18, 195,000 shares were issued at a price of
$4.20 in a private placement for total proceeds of $819,000. On June 18, 90,000
shares were issued at a price of $4.00 in a private placement for total proceeds
of $360,000. On July 17, 86,000 shares were issued at a price of $4.68 in a
private placement for total proceeds of $403,000. The Company believes that
funds from operations as well as from existing equity facilities will be
sufficient to meet the Company's cash requirements for the next twelve months.
This message contains certain "forward-looking statements" as defined in
the United States Private Securities Litigation Reform Act of 1995 that
involve a number of risks and uncertainties. There can be no assurance
that such statements will prove to be accurate and the actual results and
future events could differ materially from management's current
expectations. Such factors are detailed from time to time in Nymox's
filings with the Securities and Exchange Commission and other regulatory
authorities.
8
kpmg
Consolidated Financial Statements of
(Unaudited)
NYMOX PHARMACEUTICAL
CORPORATION
Periods ended June 30, 2002, 2001 and 2000
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Financial Statements
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
Financial Statements
Consolidated Balance Sheets.......................................... 1
Consolidated Statements of Operations................................ 2
Consolidated Statements of Deficit................................... 3
Consolidated Statements of Cash Flows................................ 4
Notes to Consolidated Financial Statements........................... 5
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
June 30, 2002, with comparative figures as at December 31, 2001
(in US dollars)
-----------------------------------------------------------------------------------------
June 30, December 31,
2002 2001
-----------------------------------------------------------------------------------------
(Unaudited) (Audited)
Assets
Current assets:
Cash $ 515,083 $ 488,987
Accounts and other receivables 173,829 122,459
Research tax credits receivable 40,298 30,509
Inventory 88,430 17,567
Prepaid expenses and deposits 30,000 55,000
-----------------------------------------------------------------------------------------
847,640 714,522
Capital assets:
Property and equipment 207,650 217,083
Patents and intellectual property 3,128,302 3,154,441
-----------------------------------------------------------------------------------------
3,335,952 3,371,524
Deferred share issuance costs 35,399 106,195
-----------------------------------------------------------------------------------------
$ 4,218,991 $ 4,192,241
=========================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 668,021 $ 295,393
Notes payable 364,517 396,775
Deferred revenue 15,886 55,325
-----------------------------------------------------------------------------------------
1,048,424 747,493
Non-controlling interest 800,000 800,000
Shareholders' equity:
Share capital and other:
Share capital (note 2) 26,891,075 25,376,557
Warrants and options 421,638 421,638
Deficit (24,942,146) (23,153,447)
-----------------------------------------------------------------------------------------
2,370,567 2,644,748
Contingencies (note 5)
Subsequent event (note 6)
-----------------------------------------------------------------------------------------
$ 4,218,991 $ 4,192,241
=========================================================================================
See accompanying notes to unaudited consolidated financial statements.
1
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
----------------------------------------------------------------------------------------------------------------
Three months ended June 30, Six months ended June 30,
------------------------------------------------------------------ -------------------------------------------
2002 2001 2000 2002 2001 2000
----------------------------------------------------------------------------------------------------------------
Revenue:
Sales $ 172,958 $ 126,468 $ 35,227 $ 235,263 $ 187,765 $ 73,488
Interest 1,140 4,816 32,159 3,772 11,559 34,232
Research contract - 30,000 - - 30,000 -
----------------------------------------------------------------------------------------------------------------
174,098 161,284 67,386 239,035 229,324 107,720
Expenses:
Research and
development 380,045 354,862 674,747 914,935 678,646 1,108,808
Less investment tax
credits (3,908) (2,191) (4,115) (9,789) (3,551) (7,653)
----------------------------------------------------------------------------------------------------------------
376,137 352,671 670,632 905,146 675,095 1,101,155
General and
administrative 413,983 339,406 509,356 610,231 491,540 817,743
Marketing 56,520 82,103 75,399 141,002 160,081 139,715
Cost of sales 99,405 41,975 21,863 119,006 65,328 43,725
Depreciation and
amortization 95,994 97,660 44,694 190,408 192,542 93,128
Interest and bank
charges 8,537 1,326 1,018 32,737 2,861 2,850
----------------------------------------------------------------------------------------------------------------
1,050,576 915,141 1,322,962 1,998,530 1,587,447 2,198,316
Gain on disposal of
capital assets 32,900 - - 32,900 - -
----------------------------------------------------------------------------------------------------------------
Net loss $ (843,578) $ (753,857) $ (1,255,576) $ (1,726,595) $ (1,358,123) $ (2,090,596)
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Loss per share (basic
and diluted) $ (0.04) $ (0.03) $ (0.06) $ (0.08) $ (0.06) $ (0.10)
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Weighted average
number of common
shares outstanding 22,581,750 21,758,020 20,858,422 22,481,717 21,642,846 20,582,761
================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
2
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Deficit
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
----------------------------------------------------------------------------------------------------------------------
Three months ended June 30, Six months ended June 30,
---------------------------------------------------------------------- ----------------------------------------------
2002 2001 2000 2002 2001 2000
----------------------------------------------------------------------------------------------------------------------
Deficit, beginning of
period $ (24,051,464) $(20,639,359) $(16,743,820) $ (23,153,447) $(19,982,999) $(15,605,816)
Net loss (843,578) (753,857) (1,255,576) (1,726,595) (1,358,123) (2,090,596)
Share issue costs (47,104) (7,319) - (62,104) (59,413) (302,984)
----------------------------------------------------------------------------------------------------------------------
Deficit, end of
period $ (24,942,146) $(21,400,535) $(17,999,396) $ (24,942,146) $(21,400,535) $(17,999,396)
======================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
3
NYMOX PHARMACEUTICAL CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
-----------------------------------------------------------------------------------------------------------------
Three months ended June 30, Six months ended June 30,
-------------------------------------------------------------------- ------------------------------------------
2002 2001 2000 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------
Cash flows from operating
activities:
Net loss $ (843,578) $ (753,857) $ (1,255,576) $ (1,726,595) $ (1,358,123) $ (2,090,596)
Adjustments for:
Depreciation and
amortization 95,994 97,660 44,694 190,408 192,542 93,128
Write-down of
deferred share
issue costs 35,398 - - 70,796 - -
Services paid with
common
shares 32,420 - - 32,420 - -
Gain on disposal
of capital assets (32,900) - - (32,900) - -
Net change in operating
assets and liabilities 24,363 108,201 69,451 226,167 (40,220) (38,716)
-----------------------------------------------------------------------------------------------------------------
(688,303) (547,996) (1,141,431) (1,239,704) (1,205,801) (2,036,184)
Cash flows from financing
activities:
Proceeds from issuance
of share capital 360,000 109,091 - 1,479,000 848,364 4,000,000
Share issue costs (47,104) (3,274) (10,338) (62,104) (46,265) (350,365)
Repayment of notes
payable (396,775) - - (396,775) - (346,428)
Issuance of notes
payable 364,517 396,775 - 364,517 396,775 -
-----------------------------------------------------------------------------------------------------------------
280,638 502,592 (10,338) 1,384,638 1,198,874 3,303,207
Cash flows from investing
activities:
Additions to capital
assets (53,702) (94,389) (108,198) (151,738) (149,081) (165,312)
Proceeds on disposal
of capital assets 32,900 - - 32,900 250 -
-----------------------------------------------------------------------------------------------------------------
(20,802) (94,389) (108,198) (118,838) (148,831) (165,312)
-----------------------------------------------------------------------------------------------------------------
Net (decrease) increase
in cash (428,467) (139,793) (1,259,967) 26,096 (155,758) 1,101,711
Cash, beginning of period 943,550 549,746 2,811,041 488,987 565,711 449,363
-----------------------------------------------------------------------------------------------------------------
Cash, end of period $ 515,083 $ 409,953 $ 1,551,074 $ 515,083 $ 409,953 $ 1,551,074
=================================================================================================================
Supplemental disclosure to
statements of cash flows:
(a) Interest paid $ 23,459 $ 1,326 $ 1,018 $ 25,737 $ 2,861 $ 2,850
(b) Non-cash
transactions:
Acquisition of
Serex, Inc. by
issuance of
common shares - - - 3,098 - 1,319,997
Shares issued for
services 32,420 - - 32,420 - -
================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
4
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
Nymox Pharmaceutical Corporation (the "Corporation"), incorporated under
the Canada Business Corporations Act, including its subsidiaries, Nymox
Corporation, a Delaware Corporation, and Serex Inc. of New Jersey, is a
biopharmaceutical corporation which specializes in the research and
development of products for the diagnosis and treatment of Alzheimer's
disease. The Corporation is currently marketing AlzheimAlertTM, a urinary
test that aids physicians in the diagnosis of Alzheimer's disease. The
Corporation also markets NicAlertTM and NicoMeterTM, tests that use urine
or saliva to detect use of tobacco products. The Corporation is also
developing therapeutics for the treatment of Alzheimer's disease, new
treatments for benign prostate hyperplasia, and new anti-bacterial agents
for the treatment of urinary tract and other bacterial infections in
humans, including a treatment for E-coli 0157:H7 bacterial contamination in
meat and other food and drink products.
Since 1989, the Corporation's activities and resources have been primarily
focused on developing certain pharmaceutical technologies. The Corporation
is subject to a number of risks, including the successful development and
marketing of its technologies. In order to achieve its business plan and
the realization of its assets and liabilities in the normal course of
operations, the Corporation anticipates the need to raise additional
capital and/or achieve sales and other revenue generating activities.
Management believes that funds from operations as well as existing
financing facilities will be sufficient to meet the Corporation's
requirements for the next year.
The Corporation is listed on the NASDAQ Stock Market.
1. Basis of presentation:
(a) Interim financial statements:
The consolidated financial statements of the Corporation have been
prepared under Canadian generally accepted accounting principles. The
unaudited consolidated balance sheet as at June 30, 2002 and the
unaudited consolidated statements of operations, deficit and cash flows
for the three- and six-month periods ended June 30, 2002, 2001 and 2000
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results of the interim periods
presented. The Corporation's revenues and expenses are subject to
seasonal variations. Consequently, the results for any quarter are not
traditionally indicative of the results for the full year. The interim
consolidated financial statements follow the same accounting policies
and methods of their application as described in note 2 of the annual
consolidated financial statements for the year ended December 31, 2001.
The interim consolidated financial statements do not include all
disclosures required for annual financial statements and should be read
in conjunction with the most recent annual consolidated financial
statements of the Corporation as at and for the year ended December 31,
2001.
5
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
1. Basis of presentation (continued):
(b) New accounting standards:
(i) Stock-based compensation:
Effective January 1, 2002, the Corporation adopted the new
recommendations of the Canadian Institute of Chartered Accountants
("CICA"), Handbook Section 3870, with respect to the accounting
for stock-based compensation and other stock-based payments. The
new recommendations require that all stock-based payments to
non-employees, and employee awards that are direct awards of
stock, call for settlement in cash or other assets, or are stock
appreciation rights that call for settlement by the issuance of
equity instruments, granted on or after January 1, 2002, be
accounted for using the fair value method. For all other
stock-based employee compensation awards, the CICA has not
prescribed specific methods, and therefore the Corporation has
chosen to continue to follow its existing policy of using the
settlement method of accounting as permitted under the new
standard. Under this method, no compensation expense is recognized
when stock options are issued to employees. Any consideration
received from the plan participants upon exercise of stock options
is credited to share capital.
The new standard requires that the Corporation disclose the pro
forma effect of accounting for all stock-based awards granted
during the three- and six-month periods ended June 30, 2002 under
the fair value-based method. As no options were granted during
these periods, no such disclosure was required.
There is no impact on the Corporation's consolidated financial
position, results of operations and cash flows as a result of
adopting these recommendations.
(ii) Goodwill and other intangible assets:
Effective January 1, 2002, the Corporation adopted the new
recommendations of the CICA, Handbook Section 3062, with respect
to the accounting for goodwill and other intangible assets. The
standard changes the accounting for goodwill from an amortization
method to an impairment-only approach. In addition, the standard
requires acquired intangible assets to be separately recognized if
the benefit of the intangible assets is obtained through
contractual or other legal right, or if the intangible assets can
be sold, transferred, licensed, rented or exchanged.
6
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
1. Basis of presentation (continued):
(b) New accounting standards (continued):
(ii) Goodwill and other intangible assets (continued):
There was no impact on the Corporation's consolidated financial
position, results of operations and cash flows as a result of
adopting these recommendations. In addition, there has been no
change in the estimated useful life of the other intangible assets
which continue to be amortized using the straight-line method at
the following annual rates:
--------------------------------------------------------------------------------
Intellectual property rights 10%
Patents 17 years
--------------------------------------------------------------------------------
2. Share capital:
(a) Share capital transactions during the period were as follows:
---------------------------------------------------------------------------------------------------------------
Number Dollars
---------------------------------------------------------------------------------------------------------------
Balance, December 31, 2001 22,297,525 $ 25,376,557
Issued for cash pursuant to private placements 359,074 1,479,000
Issued to acquire additional shares of Serex, Inc. (i) 932 3,098
Issued in exchange for pre-clinical services (ii) 7,923 32,420
---------------------------------------------------------------------------------------------------------------
Balance, June 30, 2002 22,665,454 $ 26,891,075
===============================================================================================================
(i) During the period, the Corporation issued 932 common shares and
574 Series J warrants to purchase an additional 5,000 shares of
Serex, Inc. that it did not previously own. The Corporation owns
approximately 98% of Serex, Inc. The warrants are exercisable at
$3.70 per share and expire on July 31, 2005.
(ii) During the period, the Corporation issued 7,923 common shares as
payment for certain services totalling $32,420.
7
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
2. Share capital (continued):
(b) The costs incurred in connection with the common stock purchase
agreement described in note 6 (c) of the Corporation's annual
consolidated financial statements, were accounted for as deferred share
issuance costs to be amortized to the deficit over the thirty-month
draw-down period. Amortization is calculated for each draw-down based
on the percentage of the actual draw-down over the total facility.
During the period, the Corporation wrote off against earnings deferred
share issuance costs in the amount of $70,796 for the portion of the
facility that can no longer be utilized by the Corporation. The
facility expires in January 2003.
3. Canadian/US Reporting Differences:
(a) Consolidated statements of operations:
The reconciliation of earnings reported in accordance with Canadian
GAAP with U.S. GAAP is as follows:
----------------------------------------------------------------------------------------------------------------
Three months ended June 30, Six months ended June 30,
----------------------------------------------------------------- ---------------------------------------------
2002 2001 2000 2002 2001 2000
----------------------------------------------------------------------------------------------------------------
Net loss, Canadian GAAP $ (843,578) $ (753,857) $ (1,255,576) $ (1,726,595) $ (1,358,123) $ (2,090,596)
Adjustments:
Amortization of
patents (i) 2,354 2,352 2,343 4,707 4,705 4,392
Stock-based
compensation
options granted to
non-employees (ii) (10,285) (285) - (20,570) (15,595) -
----------------------------------------------------------------------------------------------------------------
(7,931) 2,067 2,343 (15,863) (10,890) 4,392
----------------------------------------------------------------------------------------------------------------
Net loss, U.S. GAAP $ (851,509) $ (751,790) $ (1,253,233) $ (1,742,458) $ (1,369,013) $ (2,086,204)
================================================================================================================
----------------------------------------------------------------------------------------------------------------
Loss per share, U.S. GAAP $ (0.04) $ (0.03) $ (0.06) $ (0.08) $ (0.06) $ (0.10)
================================================================================================================
8
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
3. Canadian/US Reporting Differences (continued):
(b) Consolidated shareholders' equity:
The reconciliation of shareholders' equity reported in accordance with
Canadian GAAP with U.S. GAAP is as follows:
--------------------------------------------------------------------------------------------------------
June 30, December 31,
2002 2001
--------------------------------------------------------------------------------------------------------
Shareholders' equity, Canadian GAAP $ 2,370,567 $ 2,644,748
Adjustments:
Amortization of patents (i) (133,828) (138,535)
Stock-based compensation - options granted to
non-employees (ii):
Cumulative compensation expense (1,281,153) (1,260,583)
Additional paid-in capital 1,333,716 1,313,146
Change in reporting currency (iii) (62,672) (62,672)
--------------------------------------------------------------------------------------------------------
(143,937) (148,644)
--------------------------------------------------------------------------------------------------------
Shareholders' equity, U.S. GAAP $ 2,226,630 $ 2,496,104
========================================================================================================
(i) In accordance with APB Opinion 17, Intangible Assets, the patents are
amortized using the straight-line method over the legal life of the
patents from the date the patent was secured. For Canadian GAAP purposes,
the patents are amortized over the remaining patent life commencing in
the year of commercial production of the developed products.
(ii) In accordance with APB Opinion 25, Accounting for Stock Issued to
Employees, compensation related to the stock options granted to
non-employees prior to January 1, 2002 has been recorded in the accounts
based on the fair value of the stock options at the grant date.
(iii) The Company adopted the US dollar as its reporting currency effective
January 1, 2000. For Canadian GAAP purposes, the financial information
for prior periods has been translated into US dollars at the December 31,
1999 exchange rate. For United States GAAP reporting purposes, assets and
liabilities for all periods presented have been translated into US
dollars at the ending exchange rate for the respective period and the
statement of operations at the average exchange rate for the respective
period.
9
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
4. Segment disclosures:
Geographic segment information is as follows:
--------------------------------------------------------------------------------
United
Canada States
--------------------------------------------------------------------------------
Revenues:
2002 $ 3,772 $ 235,263
2001 41,739 187,585
2000 34,232 73,488
Net loss:
2002 (1,417,277) (309,318)
2001 (1,063,458) (294,665)
2000 (1,247,918) (842,678)
Capital assets:
June 30, 2002 3,053,849 282,103
December 31, 2001 (audited) 3,086,869 284,655
Total assets:
June 30, 2002 3,542,399 676,592
December 31, 2001 (audited) 3,629,455 562,786
--------------------------------------------------------------------------------
5. Contingencies:
(a) Litigation:
A shareholder has served the Corporation with a Statement of Claim
filed with the Ontario Superior Court of Justice claiming to be
entitled to the issuance of 388,797 additional shares in accordance
with repricing provisions contained in a 2000 private placement
agreement and to damages of $4,000,000 for lost opportunity to sell
these shares. The Corporation believes that the shareholder's
interpretation of the repricing provisions in the March 2000 agreement
is incorrect and intends to defend the action vigorously. Accordingly,
no provision related to this matter has been recorded in these
financial statements.
(b) Demand for arbitration:
In March 2002, a former employee filed a demand for arbitration with
the American Arbitration Association concerning the termination of her
employment with the Corporation. The employee is claiming damages of up
to $498,000 plus attorney's fees and costs, based upon alleged
violations of New Jersey law and breach of an employment agreement. The
Corporation believes these claims are without merit and intends to
defend the matter vigorously. Accordingly, no provision related to this
matter has been recorded in these financial statements.
10
NYMOX PHARMACEUTICAL CORPORATION
Notes to Consolidated Financial Statements, Continued
(Unaudited)
Periods ended June 30, 2002, 2001 and 2000
(in US dollars)
--------------------------------------------------------------------------------
6. Subsequent event:
In July 2002, the Corporation completed a private placement and issued
86,000 common shares for gross proceeds of $403,000.
11