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Nymox Pharmaceutical Corp. (NYMX) is the longest running failure that we have ever seen. The company started in 1989, and as of today, 31 years later, has never created any marketable drug or product. The stock has rallied over 100% over the past six months, and there doesn't appear to be any news that caused it. Its market cap is currently above $250M. We believe this NYMX rally is a good opportunity to take a short position.
NYMX has one drug in the clinic called Fexapotide Triflutate ("FT" or NX-1207). In 2014, NX-1207 failed to hit the primary endpoint in both of its Phase III trials in benign prostatic hyperplasia (BPH). Since then, NYMX hasn't done any clinical work that would likely be of value to a regulatory body to get NX-1207 approved (i.e. another phase II or III trial). It has instead engaged in data mining, post hoc analyses, and long-term extension studies. The data generated from the extension studies likely won't be sufficient for approval for several reasons. Adam Feuerstein debunked Nymox's claims of FT's efficacy and potential in a 2016 Street.com article. Even though Nymox has since released some of the data from the trials, Feuersteins' main points still stand:
- The primary endpoint of the dual Phase III trials was a patient reported symptom score at 12 months. FT failed to show a difference vs placebo at 12 months but apparently showed a benefit after a mean follow-up of 3.6 years. This is a nonsensical result that defies logic.
- Data quality is likely poor and the FDA will question the study design: doubtful that a company like Nymox was able to conduct adequate and well-controlled long-term extension studies
- In any case, men wouldn't wait over 3 years for symptom relief since there are effective BPH treatments, many of them low-cost generic pills.
Some bulls disagree with Feuerstein, saying that the placebo had an exceptionally strong effect at 12 months, but then wore off afterwards while FT maintained its strength. We don't believe that makes much sense. But whether one agrees with Feuerstein's points or not, what's important is what the FDA thinks. And these points all are negative in regards to the FDA's eventual decision on whether to approve or reject FT.
NYMX has told investors that they would file for FDA approval, every year from 2016-2019, but haven't followed through. We expect the same will happen this year. NYMX only reported having $7.1M in cash on 9/29/19 and at the company's quarterly cash burn of $2-$3M, its cash likely won't last through 2Q20. This means that the company will likely have to do an equity raise before 2Q20 ends, which in itself could cause a selloff.
Note: we refer to many of NYMX's press releases (PRS) throughout this report. NYMX has removed most links to its PRs and just has one page that lists its historical PRs, which can be read by downloading a PDF of the PRs.
A Competitor Met The Same Primary Endpoint That Nymox Failed To Meet
Sophiris Bio (OTC:SPHS) is a good comparable for NYMX as it's also developing an injectable drug for the treatment of BPH and prostate cancer. While its Phase 2b study in prostate cancer produced mixed results, Sophiris has completed a successful Phase 3 trial in BPH, meeting the same 12-month endpoint that NX-1207 missed. The PR states:
PRX302 demonstrated a statistically significant improvement in International Prostate Symptom Score (IPSS) total score from baseline over 12 months compared to the vehicle-only control group (7.60 vs. 6.58 point overall improvement; p = 0.043), the primary endpoint of the study.
Source: Nymox clinicaltrials.gov
SPHS became public via an IPO and has raised money through public offerings. The company is domiciled in the US and has six full-time and three part-time employees. Its current market capitalization is approximately $25M. Compared to NYMX at $250M.
Nymox Regulatory "Progress" Has Been Years Of Failure And Delay
Since 2015, NYMX has made so many broken promises to investors. We believe this will continue until NYMX stops receiving investor support. The following is our list of NYMX's regulatory progress guidance and the results (or lack thereof):
Source: Table by author, using Nymox PRs
Later in this report, we go into more detail and analysis of the more important PRs listed above.
Nymox Oddly Submitted Then Withdrew Its EU Marketing Application
We have written on NYMX twice before in 2018. On 2/1/18, we published an article titled:
"The Clock Is Ticking For Nymox Pharma's European Drug Application - Bet On A Rejection"
On 5/10/17, NYMX announced it had filed for marketing approval of NX-1207, in five countries in Europe. As we state in our report, it usually takes 11-12 months after the initial application for the EMA (European Medicines Agency) to approve or reject the marketing authorization for a drug. Were we right or wrong in our prediction? Neither. NYMX effectively "took its ball and went home" before the EMA could issue a response.
NYMX published an announcement on 7/2/18 titled:
"NYMOX Announces Expanded Marketing Plans"
The announcement states:
The Company has initiated the process and is taking the necessary steps to submit an expanded application for Fexapotide Triflutate (FT) to the European Medicines Agency for approval. The prior application in the EU will be replaced by the new expanded application.
It has now been 1.5 years since this announcement of the marketing application removal. It makes no sense for the company to first apply to only five EU countries, wait a year, and then remove the marketing application because it wants NX-1207 to be approved for the entire EU. We have asked the company why, and they haven't responded. It could have let it get approved first in those five EU countries, and then expand from there. That would've allowed the drug to get out to at least some patients who need it, and create some needed revenue for NYMX at the same time.
That is, if the drug is effective and approvable, which we don't believe it is. Notice there has been no follow-up announcement since then and NYMX has not re-applied for marketing approval in the EU. We believe this action by the company alone should have killed any trust it had with investors and shareholders.
Furthermore, the PR states:
The Company held a pre-NDA meeting with FDA earlier in 2018 and expects to file for approval in the US later in 2018.
Both 2018 and 2019 have come and gone, and NYMX has not filed for approval in the U.S. In the meantime, NYMX executives will continue to pay themselves high salaries.
Nymox' Excessive Executive Salaries
The following are the NYMX executive salaries for 2018:
Source: 2018 Annual Report
Nymox CEO Dr. Averback doesn't receive cash based compensation. Per the 2018 20-F, he receives 250K restricted stock units every month for the duration of a seven-year contract that is effective from 7/17/15 until 7/17/22. That comes to 3M shares every year. At the current share price of around $3, that equals an obscene salary of $9M per year.
The CFO, Erik Danielsen, is being paid $442.5K per year. That's a lot of money to pay a CFO of a company that doesn't do very much with finances, given that they don't have any marketable products.
Randall Lanham is an attorney who provides General Counsel for the company and gets paid over half a million annually for the effort. We believe that's an excessive salary for a company that apparently doesn't have many legal issues.
NYMX has six directors including Averback and Lanham, who are executives as well as directors.
A Closer Look At Some Employees And A Related Party Payment Reveal Some Interesting Facts
A Mysterious Related Party Received 1 Million NYMX Shares In 2019
In the Q319 report, it states:
"On June 12, 2019, the corporation issued one million shares with a total value of $1,330,000 to a related party for their significant contributions and development of the company from year 2014 to 2019."
What were these shares for exactly? NYMX provides no further explanation on who this related party is and what contributions they made to deserve so many shares. Because it is domiciled in the Bahamas, it doesn't need to disclose this info
What's also interesting, is the stock closed at $1.33 on 6/12/19, but that was the lowest close the stock had at any day in 2019. One million shares today are worth quite a bit more at $3 per share, which would be a value of $3M.
Mark Staples, PHD - VP of Chemistry, Manufacturing and Controls (CMC)
On 3/19/19, NYMX announced they hired Mark Staples, PHD as VP of Chemistry, Manufacturing, and Controls (CMC). The PR states regarding Dr. Staples:
"Marquis Who's Who, presented Dr. Staples with the Albert Nelson Marquis Lifetime Achievement Award in 2018."
In our opinion, the Marquis Who's Who Award is not a real award. It is given to anyone who will pay a subscription fee. As stated on Researchgate.net in regards to this award, many don't believe it's legitimate.
In our opinion, the fact that NYMX would say in a PR that the Marquis Who's Who Award is a real achievement is revealing to what kind of a company NYMX is.
Randall Lanham - Nymox General Counsel
As shown in his biography on Bloomberg, Randall Lanham has been the Secretary/General Counsel for NYMX since 2015. He has been a board member for NYMX since 2006. Below is Lanham's license status shown on his State Bar of California profile:
Source: State Bar of California
It shows above that Lanham had his license suspended for failing to pay Bar fees in 2015. Lanham had several disciplinary charges against him from 2017-2019. His license status is presently active.
In 2012, Lanham represented a public company called Caribbean Pacific and sent two letters to the SEC to allow the company to sell shares. Caribbean Pacific was allegedly a penny stock fraud. Allegedly, the article states the SEC allowed the company to sell shares at the time even though it knew it was a fraud. Two months later, the SEC took action against the company.
After Nymox Moved To The Bahamas, Its Equity Compensation Spiked
In the spring of 2015, NYMX announced plans to change its domicile from Canada to the Bahamas. The exact reasons why NYMX wanted to move were initially unknown. However, in an amendment filed to the 2017 annual report, you can see where the benefits lay. Note that this disclosure about the substantial differences in Bahamas corporate governance wasn't filed until May 2018, nearly three years after the announcement of the move. The amendment states:
"There is no requirement under Bahamas law that equity compensation plan, or any material amendment thereto, be subject to shareholder approval.
There is no requirement under Bahamas law that stock issuances pursuant to private placements be subject to shareholder approval."
- Bahamas corporate governance practices do not require shareholders to approve equity compensation decisions - only board approval is required.
- Bahamas' regulations are much less restrictive with respect to private placements.
Right after being domiciled in the Bahamas, Averback had his compensation changed to 250K shares per month or 3M shares per year. Averback's annual salary in the year prior (2014) was only $290k with a bonus of 500k options and was similar or less in the prior two years. A roughly 500% increase in compensation is hard to justify after the company had just fired 67% of its workforce after its phase III trial failed.
An Analysis Of Nymox' Latest Press Release On 1/28/20
On 1/28/20, NYMX published a PR titled: "Nymox Provides Update on Current Corporate Activities and Milestones". Investors reacted positively to the update with the stock closing at $3.61 on 1/31/20, for a 26% gain over three days. Was such a rally justified based on the info in the press release? We don't think so, given the company's history of empty promises.
The PR states:
The Company recently received the necessary information regarding formatting and content of its upcoming regulatory filings… The filings seeking approvals in the US and in Europe are now targeted for the first half of 2020 in both jurisdictions.
What "necessary information" is NYMX referring to? Is NYMX really insisting that it didn't have clarity on the necessary "formatting and content" for both an NDA and MAA (for Europe)? Recall that NYMX claimed it had a pre-NDA meeting in early 2018 and a CMC meeting in early 2019. Are we expected to believe that proper formatting wouldn't have been discussed at either of these meetings? NYMX has been supposedly preparing for an NDA/MAA since 2015, so it's surprising to us that it was still unclear on "formatting and content".
In addition, how is it possible that they received "necessary information" for both an NDA and MAA, during the same period. And NYMX previously filed for approval in Europe - shouldn't it have already been aware of the required formatting?
The PR continues:
…At this point, the Company does not have any barriers to report and does not expect any delays.
The direct and pointed language, discussion of "barriers" and "delays" is unusual in biotechnology press releases. It's also unusual that NYMX is committing to a specific time period for a supposed filing, and in the middle of the year. In the past, the company has vaguely guided "later in the year". After over 4 years of selling shareholders on a near-term filing and approval, we believe the larger Nymox investors are tiring of the delays and excuses and this PR was an attempt to placate them - at least for a few more months.
NYMX hasn't reported on the exact words of the FDA. Did the FDA give NYMX the go-ahead to file an NDA even though both of their phase III trials failed in 2014?
Nymox Will Have To Raise Money Soon, Which May Prove Difficult
If we are correct and the private placement investors are growing impatient, NYMX will find it difficult to raise more capital. They have only ever done private placements, having never done a public offering of any kind. This is another red flag as small-cap biotechs ordinarily seek to raise funds using conventional means for the pricing efficiency and to help establish credibility with the transparency inherent in public offerings. As stated in the annual report, NYMX raised about $15M in private placements in 2018. From the Q119 quarterly report, it states:
On January 15, 2019, the Corporation completed one private placement to an accredited investor for an amount of $5,000,000 and 2,500,000 shares were issued at $2.0 per share and 2,500,000 warrants were issued connect with it.
That was the last private placement the company did, and at $2 per share with 100% warrant coverage. Now, over a year has passed, and the company hasn't accomplished anything significant in 2019 since then. Would any private investor really want to make a significant purchase and buy shares above $2 at this point, especially considering the long history of delays? We find it unlikely. We believe the private placement buyers have lost patience and will wait until NYMX actually files for approval before buying another offering.
Nymox Has Accomplished Very Little In The Past Few Years
As shown in the chart below, Nymox Pharmaceutical Corp. stock has recently more than doubled without significant news.
Source: Yahoo Finance NYMX chart
From reaching a low of $1.33 on 6/12/19, it has closed at over $3 on 1/6/20 for the first time since 7/14/18. There doesn't appear to be any news to justify this 100%+ rally.
However, on 1/6/20, the Company announced that it has published a peer-review article on experimental studies of its Fexapotide Triflutate treatment for prostate enlargement (BPH) and low grade prostate cancer. The article is titled:
Fexapotide triflutate induces selective prostate glandularpharmaco-ablation in the rat.
If "rat studies" are all that NYMX has to show now, then we think the stock is bound to fade back down. Rat studies are very unreliable pre-clinical studies, and certainly don't support a $250M valuation. If NYMX will revert to being a pre-clinical company, which we believe is inevitable, then it should be trading well below $50M. We see no other significant news for the company since it traded at its lows last year. Note that NYMX had already rallied before presenting its rat study.
On 1/15/19, NYMX announced a peer review article entitled:
Efficacy and safety of fexapotide triflutate in outpatient medical treatment of male lower urinary tract symptoms associated with benign prostatic hyperplasia.
It was published in the journal Therapeutic Advances in Urology. This article simply reported the alleged long term benefits of fexapotide in men suffering from BPH. This is an extension study that followed up on patients in the company's two phase III studies which failed. The date range of the information is between 2009 and 2017. The company has not shown any follow-up studies past 2017, yet they still haven't filed for FDA approval with this data.
NYMX claimed in April 2019 that they'd file an NDA to the FDA in 2019. This PR from 4/16/19 states:
Nymox Pharmaceutical Corporation (NYMX) today announced that it has held its pre-New Drug Application (NDA) Chemistry Manufacturing and Controls (CMC) meeting with the US Food and Drug Administration (FDA) regarding its lead product candidate Fexapotide Triflutate, a novel prostate injectable developed for the treatment of enlarged prostate (Benign Prostatic Hyperplasia, BPH).
We recognize the fundamental importance of the CMC contribution to an NDA filing and, therefore, consider this meeting an important milestone in our efforts towards successful filing of the NDA for Fexapotide for BPH in the U.S. later this year."
This announcement is another letdown as we showed earlier in this report, the Company said they had a pre-NDA meeting with the FDA on 7/2/18. Here they had another one in 2019. However, NYMX still didn't file an NDA for Fexapotide in 2019 even though they said they would. No surprise there, as they also didn't follow through after saying they would file an NDA in 2018.
On 10/21/19, NYMX reported on newly issued patents and corporate developments. It states that the company was issued patents for Fexapotide use. It also says:
Nymox is further pleased to report that two new peer review manuscripts concerning the Fexapotide investigations have recently been prepared and which are in the process of being submitted for publication. The Company looks forward to reporting further on these and other exciting developments in the near future at the appropriate time.
It might have been the anticipation of these new manuscripts that have caused the current rally. However, we expect this rally to fade, as the stock faded in mid-2019.
Nymox Said It Would File An NDA, Every Year From 2016-2019, But Never Did
In addition to NYMX claiming that it would file an NDA in each of years 2018 and 2019, it also said that it would file even further back - in 2016 and 2017. We've already quoted the company's PRs in 2018 and 2019 earlier in this report.
Additionally, on 8/11/16, NYMX issued a PR stating:
"Fexapotide will be filed for approval in the next 1-2 quarters and the company envisages no significant new cash needs for the pre-marketing development of fexapotide."
And NYMX had less than $327K in cash and receivables at the time. Only a week later, NYMX conducted a private placement for $2.24M despite saying it didn't have new cash needs.
On 3/29/17, NYMX issued a PR stating:
"The Company is very pleased with the progress it has made, which is in line with its previous timeline announcements. The Company now expects to submit its initial filing seeking approval for Fexapotide Trifluate in the next few weeks."
Of course, the NDA filing never happened in 2016 or 2017.
We Suspect Nymox Will Never File An NDA
Filing an NDA and/or MAA is a large, resource-intensive process. We suspect that the company won't file either application. However, if one is eventually filed, we believe it would be withdrawn similar to NYMX's earlier EU application, or the filings will be rejected due to inadequate efficacy or poor data quality. The longer NYMX can avoid a definitive negative decision by a regulatory body, the longer its CEO can collect 250K shares/month (or $9M/year), and award stock to whoever they choose. But the Company will be forced to confront reality by the end of 2Q20 when it will run out of cash.
Risks To Shorting Nymox Right Now
We believe NYMX has reached a very high level that's ripe for a reversal. But there could be some future catalysts that could make it go even higher. For example, if NYMX files an NDA, that could cause a headline rally on the news. Then if the NDA is accepted by the FDA, that would be good news and could cause the stock to go higher. However, we believe it's likely that the FDA will issue a RTF (Refuse to File) in response to an NDA filing. This is because we believe that NYMX's follow-up studies are inadequate for an FDA response.
As stated in this FDA paper on when an RTF is issued:
"...the need for more than one trial to demonstrate effectiveness and if the submitted justification for reliance on a single trial is inadequate."
Then, of course, if the FDA approves FT, then that would likely cause the stock to go up. But that would be a longways away.
Valuation: An Eventual Zero
For the last five years, NYMX has engaged in data mining in its follow-up studies on FT. Meanwhile, the CEO, CFO, and General Counsel continue to receive high salaries, with CEO Averback actually increasing his own stock-based compensation with the help of relaxed Bahamas corporate governance standards. As the pattern of missing company guided regulatory timelines continues, NYMX will eventually be unable to find investors to fund its existence. Until then, investors should avoid NYMX shares or establish a short position simply based on valuation. We believe NYMX should trade no higher than its current net cash of approximately $5M or $0.10/share. Ultimately, we believe the stock will go to zero.