Nymox Pharmaceutical : MANAGEMENT'S DISCUSSION AND ANALYSIS - Form 6-K

MANAGEMENT'S DISCUSSION AND ANALYSIS

(in US dollars)

This is Management's discussion and analysis ("MD&A") comments on the Corporation's operations, performance and financial condition as of and for the three and six months ended June 30, 2023 and 2022. This MD&A should be read together with the unaudited condensed interim Consolidated Financial Statements and the related notes. This MD&A is dated August 14, 2023. All amounts in this report are in U.S. dollars unless otherwise noted.

Except as otherwise indicated, all financial information contained in this MD&A and in the unaudited condensed interim Consolidated Financial Statements has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The unaudited condensed interim Consolidated Financial Statements and this MD&A were reviewed by the Corporation's Audit Committee and were approved by our Board of Directors.

Additional information about the Corporation can be obtained on EDGAR at www.sec.gov or on SEDAR at www.sedar.com.

Overview

Corporate Profile

Nymox Pharmaceutical Corporation is a biopharmaceutical company focused on developing its drug candidate, NX-1207, for treating BPH and low-grade localized prostate cancer. Since 1989, the Corporation's activities and resources have been directed primarily at developing certain pharmaceutical technologies. Since 2002, Nymox has been developing its novel proprietary drug candidate, NX-1207, to treat benign prostatic hyperplasia ("BPH"). NX-1207 showed positive results for treating BPH in Phase 1 and 2 clinical trials in the U.S. and in follow-up studies of available subjects from the completed clinical trials. In 2009, Nymox started two pivotal double-blind placebo-controlled Phase 3 trials for NX-1207, NX02-0017, and NX02-0018, conducted at investigational sites across the U.S. with a total enrollment of approximately 1,000 patients. Nymox also initiated subsequent open-label U.S. re-injection Phase 3 safety studies, NX02-0020 and NX02-0022. The NX02-0017 study completed patient enrollment and participation in December 2013, and the NX02-0018 study in May 2014. Top-line results of the Phase 3 NX02-0017 and NX02-0018 U.S. clinical trials of NX-1207 for BPH at 12 months post-treatment were not statistically significant compared to placebo.

The Corporation is in the process of further data analysis and assessments of the two studies and expects to continue its efforts to work on the development program. Nymox is also developing NX-1207 for the treatment of low-grade localized prostate cancer. A Phase 2 study of NX-1207 for low-grade localized prostate cancer was started in 2012, with positive results reported in 2014. The Corporation is in the process of working towards definitive studies for this indication. The Corporation also has an extensive patent portfolio covering its marketed products, its investigational drug, and other therapeutic and diagnostic indications. Nymox developed the AlzheimAlert™ test, certified with a CE Mark in Europe. Nymox developed and markets NicAlert™ and TobacAlert™, which are tests that use urine or saliva to detect the use of and exposure to tobacco products. NicAlert™ has received clearance from the FDA and is certified with a CE Markin Europe. TobacAlert™ is the first test of its kind to measure second and third-hand smoke exposure in individuals accurately.

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 debt or capital in the near term and/or achieve sales and other revenue-generating activities. Management has taken steps to reduce expenditures from now on in the short term through staff reductions, deferral of management salaries, and operational changes.

The top-line failure of the two Phase 3 studies of NX-1207 for BPH materially affects the Corporation's current ability to fund its operations, meet its cash flow requirements, realize its assets, and discharge its obligations. Management believes that current cash balances as of June 30, 2023, and planned financing will be sufficient to meet the Company's cash needs for the next 12 months.

We have incurred operating losses throughout our history. Management believes that such operating losses will continue for at least the next few years due to expenditures relating to research and development of our potential therapeutic products.

On July 27, 2015, Nymox announced initial clinical results from its ongoing analysis and assessment of its Phase 3 development program in BPH. The Company announced that the U.S. long-term extension prospective, double-blind Phase 3 BPH studies NX02-0017 and NX02-0018 of fexapotide triflutate (NX-1207) for BPH had successfully met the pre-specified primary endpoint of long-term symptomatic statistically significant benefit superior to placebo. Fexapotide showed an excellent safety profile with no evidence of drug-related short-term or long-term toxicity nor any significant related molecular side effects in the two studies. As a result of the clinical benefits observed in the long-term extension trial, the Company announced that it intends to meet with regulatory authorities in various jurisdictions around the world and in due course, explore the possibility to proceed to file for approval where possible.

On August 2, 2018, the Corporation opened its new office in Irvine, California. The Corporation has maintained all Quality Assurance activities from this office.

Forward-Looking Statements

Certain statements included in this MD&A may constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation and regulations and are subject to significant risks, uncertainties, and assumptions. This forward-looking information includes, amongst others, information concerning our objectives and the strategies to achieve these objectives, as well as our beliefs, plans, expectations, anticipations, estimates, and intentions. Forward-looking statements generally can be identified using forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. We refer you to the Corporation's filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission, as well as the "Risk Factors" section of this MD&A, and of our Form 20-F, for a discussion of the various factors that may affect the Corporation's future results. The results or events predicted in such forward-looking information may differ materially from actual results or events.

Differences between Bahamas and NASDAQ Corporate Governance Practices

Nymox Pharmaceutical Corporation is subject to corporate governance requirements imposed by NASDAQ because Nymox Pharmaceutical's Shares are listed on the Nasdaq Capital Market.

Nymox Pharmaceutical Corporation is incorporated in the Bahamas. Under NASDAQ Marketplace Rule 5615(a)(3), NASDAQ-listed non-US companies may generally follow their home country corporate governance practices instead of specific NASDAQ corporate governance requirements. A NASDAQ listed non- U.S. company must provide a general summary of the significant differences between its home country's corporate governance practices and NASDAQ corporate governance requirements to its shareholders, either in the company's annual report filed on Form 20-F or on the company's website. Nymox is committed to a high standard of corporate governance. As such, Nymox must comply with most of the NASDAQ corporate governance practices, with the following exceptions. Under NASDAQ Marketplace Rule 5635(c), shareholders must be allowed to vote on any material amendment to the terms of a company's equity compensation plan (i.e., an amendment to the plan to include repricing provisions). There is no requirement under Bahamas law that an equity compensation plan, or any material amendment, be subject to shareholder approval. Nymox will continue to follow the Bahamas practice and require any material amendment to the terms of its plan to be subject only to approval by its board of directors.

Also under NASDAQ Marketplace Rule 5635(d), shareholders must be given the opportunity to vote prior to the issuance of securities in connection with a transaction other than a public offering involving: (1) the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of the book or market value which together with sales by officers, directors or substantial shareholders of the Company equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance; or (2) the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of the book or market value of the stock. There is no requirement under Bahamas law that stock issuances pursuant to private placements be subject to shareholder approval. Nymox will continue to follow the Bahamas practice and require private placement transactions to be subject only to approval by its board of directors.

Results of Operations

Results of Operations - the three and six months ended June 30, 2023, compared to the three and six months ended June 30, 2022

Net loss was $1,110,171, or $0.01 per share, for the quarter, and net loss was $2,496,954, or $0.03 per share, for the six months ended June 30, 2023, compared to net income of $1,340,567, or $0.01 per share, for the quarter, and net loss of $3,745,791, or $0.04 per share, for the six months ended June 30, 2022. The $1,248,837 decrease in net losses for the six months ended June 30, 2023, compared to the same period in 2022, is due to a decrease of $3,830,551 in R&D expense, a decrease of $532,981 in G&A expense offset with a decrease of $3,117,218 in other income related to NDA application fee refund. The $2,450,738 increase in net losses for the quarter that ended June 30, 2023, compared to the same period in 2022, is mainly due to a decrease of $216,205 in R&D expense, a decrease of $ 457,527 in G&A expense offset with a decrease of $3,117,218 in other income related to NDA application fee refund. The basic and diluted weighted average number of common shares outstanding for the three months ended June 30, 2023, were 91,265,140 and 91,245,140, respectively, compared to the basic and diluted weighted average number of common shares of 90,419,933 and 105,439,009, respectively for the three months ended June 30, 2022. The basic and diluted weighted average number of common shares outstanding for the six months ended June 30, 2023, were 91,265,140 and 91,245,140, respectively, compared to the basic and diluted weighted average number of common shares of 88,235,439 and 88,235,439 respectively, for the six months ended June 30, 2022.

Revenues

Revenues from sales of goods were nil for the quarter and nil for the six months ended June 30, 2023 and 2022, respectively.

Research and Development

Research and development expenditures were $593,730 for the quarter, and $1,313,473 for the six months ended June 30, 2023, compared with $809,935 for the quarter and $5,144,024 for the six months ended June 30, 2022. Research and development expenditures include costs incurred in advancing Nymox's BPH product candidate NX-1207 through clinical trials and costs related to its R&D pipeline. Research and development expenditures also include stock compensation charges of $32,369 for the quarter and $64,738 in the six months ended June 30, 2023, compared with $44,610 for the quarter and $108,113 for the six months ended June 30, 2022. The $3,830,551 decrease in R&D expense for the six months ended June 30, 2023, compared to the same period in 2022, is mainly due to a decrease of $3,117,218 in NDA application fee, a decrease of $371,003 in professional fees and a decrease of 43,375 in stock-based compensation. The $216,205 decrease in R&D expense for the quarter ended June 30, 2023, compared to the same period in 2022, is mainly due to a decrease of $246,837 in professional fees.

Marketing Expenses

Marketing expenditures were nil for the quarters and the six months ending June 30, 2023, and 2022, respectively. The Corporation expects that marketing expenditures will increase when new products are launched on the market.

General and Administrative Expenses

General and administrative expenses were $505,080 for the quarter, and $1,169,748 for the six months ended June 30, 2023, compared with $962,607 for the quarter and $1,702,729 for the six months ended June 30, 2022. General and administrative expenditures included stock compensation charges of $0 for the quarter and $37,096 for the six months ended June 30, 2023, compared with $337,018 for the quarter and $368,151 in the comparative period in 2022. The decrease of $532,981 in general and administrative expenses for the six months is primarily attributable to a decrease of $331,055 in stock compensation charges and $283,454 in professional fees. The decrease in general and administrative expenses of $457,527 for the quarter ended June 30, 2023, is mainly attributable to a decrease of $337,018 in stock compensation charges and a decrease of $188,277 in professional fees. The Corporation expects that general and administrative expenditures (exclusive of stock compensation costs) will increase as new product development leads to expanded operations.

Finance costs

Net finance expenses were $11,361 for the quarter, and net finance expenses were $13,732 for the six months ended June 30, 2023, compared with net finance expense of $4,110 for the quarter and net finance expense of $16,256 for the six months ended June 30, 2022. The finance expense decrease of $2,523 for the six months ended June 30, 2023, is mainly attributable to an increase of $4,427 in finance charges offset by a decrease of $7,100 in operation lease interest expense.

The Corporation incurs expenses in the local currency of the countries it operates, including the United States, Canada, and the Bahamas. Foreign exchange fluctuations had no meaningful impact on the Corporation's results in 2023 or 2022.

Inflation

The Corporation does not believe that inflation has had a significant impact on its results of operations.

Contractual Obligations Commitment

Nymox has no contractual obligations of significance other than its accounts payable, accrued liabilities and the following:

Off-Balance Sheet Arrangements

The Corporation has no binding commitments for purchasing property, equipment, or intellectual property. Effective for annual reporting periods beginning on January 1, 2019, IFRS 16 introduces a new approach to lessee accounting that requires a lessee to recognize assets and liabilities for the rights and obligations created by the lease. IFRS 16 requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months and for which the underlying asset value is not of low value. The Corporation adopted IFRS 16 on January 1, 2019. The corporation has no commitments that are not reflected in the statement of financial position except for insurance premium installments.

Transactions with Related Parties

The Corporation had no transactions with related parties in 2023 and 2022 other than those disclosed for key management personnel in note 7 of the unaudited condensed interim Consolidated Financial Statements.

Financial Position

Liquidity and Capital Resources

As of June 30, 2023, cash and receivables, including tax credits receivable, totalled $142,000 compared with $1,413,000 on December 31, 2022.

We used cash in our operating activities in the amounts of $1,897,154 and $2,650,358 for the six months ended June 30, 2023, and 2022, respectively.

Investing activities have been insignificant, and all cash flows have been substantially provided by financing activities, specifically proceeds from the issuance of common stock.

On April 17, 2023, we signed a short-term loan agreement with a related party for $1,000,000, of which $500,000 was received on April 25, 2023, and $250,000 was received on June 5, 2023.

As of June 30, 2023, the Corporation made the principal repayment of the operating lease at $120,868.

We have incurred substantial operating losses since our inception due largely to expenditures for our research and development activities and expense charges related to the issuance of stock and stock options to our key employees. As at June 30, 2023, we had an accumulated deficit of $201,635,190, and we have negative cash flows from operations. The Corporation had a negative working capital of $2,933,193 at June 30, 2023. Our current level of annual expenditures exceeds the anticipated revenues from sales of goods. However, we are working on securing investment funds from investors and already received a commitment of fund investment from an investor.

Management has implemented steps to reduce expenditures, including deferral of management salaries and other operational changes. There is no assurance that these actions will succeed; however, management believes using the going concern assumption is appropriate.

The unaudited interim consolidated financial statements for the three months ended June 30, 2023, do not include any adjustments or disclosures that may be necessary should the Corporation not be able to continue as a going concern. Should the going concern assumption not be appropriate, then adjustments may be necessary to the carrying value and classification of assets and liabilities and reported results of operations, and such adjustments could be material.

Capital disclosures

The Corporation's objective in managing capital is to ensure a sufficient liquidity position to finance its research and development activities, general and administrative expenses, working capital and overall capital expenditures, including those associated with patents. The Corporation makes every attempt to manage its liquidity to minimize shareholder dilution when possible.

The capital management objectives remain the same as for the previous fiscal year. The Corporation tries to optimize its liquidity needs by non-dilutive sources, including sales, collaboration agreements, and interest income. The Corporation's general dividend policy is to retain cash to keep funds available to finance its research, development, and operating expenses.

The Corporation is not subject to any capital requirements imposed by external parties other than the Nasdaq Capital Market requirements related to the Listing Rules.

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed is accumulated and communicated to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure. The Corporation's Chief Executive Officer is responsible for establishing and maintaining disclosure controls and procedures. He is assisted in this responsibility by the Corporation's audit committee. Based on an evaluation of the Corporation's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 and National Instrument 52-109), the Chief Executive Officer has concluded that the disclosure controls and procedures are effective as of August 11, 2023.

Changes in Internal Controls over Financial Reporting

We have made significant improvements in Internal Controls over Financial Reporting since year 2017.

Management believes that proper segregation of duties is critical to a properly designed and operating internal control environment for financial reporting. The Corporation developed a remediation plan, with oversight from the Audit Committee, to remediate the following material weaknesses in internal controls over financial reporting, first identified in 2015.

The Corporation did not employ a sufficient complement of finance and accounting personnel to ensure that there was proper segregation of duties related to certain processes, primarily impacting the expenditures/disbursements processes and information technology general controls ("ITGC") and sufficient compensating controls did not exist in these areas. To improve the weakness in these areas, the Corporation has implemented a remediation plan.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate this risk.

Financial Statements

Notes to Interim Consolidated Financial Statements(Unaudited)

See accompanying notes to the unaudited consolidated financial statements.

See accompanying notes to the unaudited consolidated financial statements.

See accompanying notes to the unaudited consolidated financial statement.

Six-month period ended June 30, 2023

(In Thousands of US dollars and Thousands of Shares)

Six-month period ended June 30, 2022

(In Thousands of US dollars and Thousands of Shares)

See accompanying notes to the condensed unaudited interim consolidated financial statements.

Management believes that current cash balances as of June 30, 2023 and planed fund raising will be sufficient to finance the Company's operations for at least the next 12 months. However, if necessary, the Company intends to seek additional equity or other financing, should the Company's liquidity need change.

Considering recent developments and the need for additional financing, there exists a material uncertainty that casts substantial doubt about the Corporation's ability to continue as a going concern. These financial statements do not reflect adjustments that would be necessary. If the going concern assumption is not appropriate, then adjustments may be necessary to the carrying value and classification of assets and liabilities and reported results of operations and such an adjustment could be material.

The stock and stock option-based compensation expense is disaggregated in the statements of operations and comprehensive loss as follows:

Weighted average number of common shares outstanding:

There is no difference in diluted as compared to basic earnings per share for the period when the company has a net loss as the impact would be antidilutive .

The following table provides the changes in the Corporation's operating lease right-of-use assets for the six months ended June 30, 2023 and year end of December 31, 2022 respectively:

The following table provides the changes in the Corporation's operating lease liability for the six months ended June 30, 2023 and year end of 2022 respectively:

We used an incremental borrowing rate as a discount rate for our operating leases. The discount rate ranges from 4.75% to 5.00% and the average remaining years for our lease are 0.21 years as of June 30, 2023.

The total future commitment payment amount for above lease is $55,042 comparing an outstanding lease liability of $54,631 as of June 30, 2023. The difference is due to interest expense.

The total future commitment payment amount for above lease is $175,910 comparing an outstanding lease liability of $172,942 as of December 31, 2022. The difference is due to interest expense.

On April 17, 2023, the company signed a short-term loan agreement with the company's director, James G, Robinson. The principal amount of the loan is $1,000,000. The loan amount shall be delivered in two or more payment. The loan bear interest, compound annually, at 10%. The principal amount of the loan and any accrued but unpaid interest shall be due and payable in full due on or before April 16, 2024.

The company received the first loan payment of $500,000 on April 25, 2023, and received $250,000 on June 5, 2023. As a result, the company has a outstanding short term loan balance of $750,000 as of June 30,2023. A total of $10,989 interest expense has been accrued for the loan by the end of June 30,2023

The Company is subject to periodic legal or administrative proceedings in the ordinary course of business. The Company does not have any pending legal or administrative proceeding to which the Company is a party that will have a material effect on its business or financial condition other than the matters discussed below.

Currently the Canadian Revenue Authorities ("CRA") is asserting that the Company owes additional taxes for the domicile move from Canada to the Bahamas. The Company disputes this allegation and is currently contesting the matter with the CRA. No resolution has been reached as of today's date; however the Company is confident that its position will prevail.

In addition, the corporation has a future insurance premium payment of $241,869 as of June 30, 2023.

The transactions we have with related parties include compensation arrangements for current compensation, share based compensation, compensation under options, share purchase as investor and short term loan from the company director.

Executive officers and directors participate in the Corporation's stock option plan. Certain Executive officers are covered under the Corporation's health plan.

Key management personnel compensation is comprised of:

Total honorariums to the independent directors of the Corporation for participating in Board and Committee meetings were nil for the period ended June 30, 2023 and 2022, respectively.

The former Chief Financial Officer received salary compensation as an individual in the amount of $62,500 for the period ended June 30, 2023. We also made payments based on contract for services rendered to a corporation controlled by him. Amounts paid under this arrangement were $46,066 for the period ended June 30, 2023

The former Corporate Legal Counsel receives no salary compensation as an individual and receives no deferred or incentive compensation. We made payments based on contract for services rendered to a corporation controlled by him. Amounts paid under this arrangement were $141,717 for the period ended June 30, 2023 and $242,500 for the period ended June 30, 2022, respectively.

On April 17, 2023, we signed a short-term loan agreement with the company's director, James G, Robinson. The principal amount of the loan is $1,000,000 of which $500,000 was received on April 25, 2023, $250,000 was received on June 5, 2023. The loan bear interest, compound annually, at 10%. Total of $10,989 interest expense has been accrued for the loan by the end of June 30,2023.

The Corporation has evaluated subsequent events through August 14, 2023, the date the financial statements were authorized for issuance by the Audit Committee of the Board of Directors. The Corporation has determined there are no subsequent events except the following.

On July 3, the company received $250,000 as the remaining portion of $1 million short-term loan from the company 's director, James G, Robinson.

On August 2,2023, the company announced a private placement of US $2.0 million for 2 million shares at the price of $1.00 per share with 500,000 warrants priced at $2.00. The investment comes from James Robinson, a long-term shareholder of Nymox and a distinguished member of the Board of Directors of the Company. The funds will be used for general corporate purposes. The investment will close in the upcoming days after the customary formalities are completed.