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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of: November, 2006
Commission File Number: 000-50393
NEUROCHEM INC.
275 Armand-Frappier Boulevard
Laval, Quebec
H7V 4A7
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40 F. Form 20-F [ ] Form 40-F [x]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
Yes [ ] No [X]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Yes [ ] No [X]
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 12g-3 under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
================================================================================
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.
NEUROCHEM INC.
November 8, 2006
By: /s/ David Skinner
---------------------------------------
David Skinner, Vice President,
General Counsel and Corporate Secretary
NEUROCHEM INC.
275 Armand-Frappier Blvd.
[NEUROCHEM LOGO] Laval, Quebec, Canada H7V 4A7
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FOR FURTHER INFORMATION, PLEASE CONTACT:
Lise Hebert, Ph.D. Tel: (450) 680-4570
Vice President, Corporate Communications lhebert@neurochem.com
NEUROCHEM REPORTS RESULTS
FOR THIRD QUARTER OF FISCAL 2006
Neurochem will host a conference call on Thursday, November 9, 2006,
at 8:30 A.M. ET.
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LAVAL, Quebec, November 8, 2006 -- Neurochem Inc. (NASDAQ: NRMX; TSX: NRM)
reported results for the third quarter ended September 30, 2006. The Company
reported a net loss of $18,520,000 ($0.48 per share), compared to $21,074,000
($0.58 per share) for the corresponding period last year. The decrease is mainly
due to a reduction in general & administrative expenses. For the nine-month
period ended September 30, 2006, the net loss amounted to $56,028,000 ($1.45 per
share), compared to $56,738,000 ($1.65 per share) for the same period last year.
Research and development (R&D) expenses amounted to $14,461,000 this quarter
compared to $13,945,000 for the same period last year. For the nine-month
period, R&D expenses were $42,529,000 compared to $38,807,000 for the
corresponding period of the previous year. The increase in R&D expenses in the
nine-month period is primarily due to expenses incurred in relation to the
development of tramiprosate (ALZHEMED(TM)) for the ongoing Phase III clinical
trials in North America and Europe. Tramiprosate (ALZHEMED(TM)) is the Company's
investigational product candidate for the treatment of Alzheimer's disease (AD).
As at September 30, 2006, the Company had available cash, cash equivalents and
marketable securities of $26,769,000, compared to $71,091,000 at December 31,
2005. The decrease is primarily due to funds used in operations and is partially
offset by proceeds received from the exercise of a warrant in February of 2006
by a subsidiary of Picchio Pharma Inc. (Picchio Pharma).
"Neurochem is going through a very important stage in its development as it
approaches the potential commercialization of its first product candidate," said
Dr. Francesco Bellini, Neurochem's Chairman, President and CEO. "The company has
filed a complete response to the FDA for the approvable letter for KIACTA(TM)
and now awaits a response from the FDA. At the same time, coinciding with the
last patient's visit, we expect to complete our North American Phase III
clinical trial in January 2007 for ALZHEMED(TM), a potential breakthrough
treatment that could stop or slow the
1
progression of Alzheimer's disease. The important progress we have made on these
two core product candidates, as well as our sound financial base including the
senior convertible notes along with the equity line of credit, positions
Neurochem well as we move forward," Dr. Bellini concluded.
CONFERENCE CALL
Neurochem will host a conference call on November 9, 2006, at 8:30 A.M ET. The
telephone numbers to access the conference call are 1-416-644-3426 or
1-866-249-2157. A replay of the call will be available until Thursday, November
16, 2006. The telephone numbers to access the replay of the call are
1-416-640-1917 or 1-877-289-8525. The access code for the replay is 21208556#
CONSOLIDATED FINANCIAL RESULTS HIGHLIGHTS
The following discussion and analysis should be read in conjunction with the
Company's unaudited consolidated financial statements for the nine-month period
ended September 30, 2006, as well as the Company's audited consolidated
financial statements for the year ended December 31, 2005, which have been
prepared in accordance with Canadian generally accepted accounting principles.
For discussion regarding related-party transactions, contractual obligations,
disclosure controls and procedures, critical accounting policies, recent
accounting pronouncements, and risks and uncertainties, refer to the Annual
Report and the Annual Information Form for the year ended December 31, 2005. All
dollar figures are Canadian dollars, unless specified otherwise.
RESULTS OF OPERATIONS
For the three-month period ended September 30, 2006, the net loss amounted to
$18,520,000 ($0.48 per share), compared to $21,074,000 ($0.58 per share) for the
corresponding period last year. For the nine-month period ended September 30,
2006, the net loss amounted to $56,028,000 ($1.45 per share), compared to
$56,738,000 ($1.65 per share) for the same period last year.
Revenue from collaboration agreement amounted to $607,000 for the current
quarter ($1,822,000 for the nine-month period), compared to $750,000 for the
same period last year ($2,777,000 for the nine-month period). This revenue is
earned under the agreement with Centocor, Inc. (Centocor) in respect of
eprodisate (KIACTA(TM) - formerly FIBRILLEX(TM)), an oral investigational
product candidate for the treatment of Amyloid A (AA) amyloidosis. Revenue
recognized is in respect of the non-refundable upfront payment received from
Centocor, which is being amortized over the estimated period through to the
anticipated regulatory approval date of the investigational product candidate.
The estimated period is subject to change based on additional information that
the Company may receive periodically. The other portion of the upfront payment
received from Centocor (U.S. $6,000,000) has been classified as deferred revenue
and is not being amortized as earned revenue given that it is potentially
refundable. In the event that the Company receives an approval letter issued by
the U.S. Food and Drug Administration (FDA), the amount would no longer be
refundable and would be amortized as earned revenue. In August 2006, the Company
received an approvable letter from the FDA for eprodisate (KIACTA(TM)),
following the Company's New Drug Application submitted in February 2006. In this
letter, the FDA requested additional efficacy information, as well as a safety
update. The FDA stated that this efficacy information would probably need to be
addressed by one or more additional clinical trials. As an alternative, the FDA
also stated that significant findings obtained from a
2
complete follow-up of patients in the existing study could be persuasive. The
FDA asked for further manufacturing and pharmacokinetic information, and
acknowledged that a QT clinical study should be submitted as part of a Phase 4
(post approval) commitment. The Company submitted a complete response to the FDA
on October 16, 2006. Neurochem is also seeking marketing approval for eprodisate
(KIACTA(TM)) for the treatment of AA amyloidosis in the European Union. The
Company's Marketing Authorization Application has been validated by the European
Medicines Agency (EMEA) in September 2006, which confirmed that the regulatory
review has started.
Reimbursable costs revenue amounted to $170,000 for the current quarter
($605,000 for the nine-month period), compared to $170,000 for the same period
last year ($827,000 for the nine-month period) and consists of costs
reimbursable by Centocor in respect of eprodisate (KIACTA(TM))-related
activities. The Company earns no margin on these reimbursable costs.
Research and development expenses, before research tax credits and grants,
amounted to $14,461,000 for the current quarter ($42,529,000 for the nine-month
period), compared to $13,945,000 for the same period last year ($38,807,000 for
the nine-month period). The increase in the nine-month period is primarily due
to expenses incurred in relation to the development of tramiprosate
(ALZHEMED(TM)) for the ongoing Phase III clinical trials in North America and
Europe. Tramiprosate (ALZHEMED(TM)) is the Company's investigational product
candidate for the treatment of Alzheimer's disease (AD). The 18-month North
American Phase III clinical trial is expected to be completed in January 2007.
This trial is being conducted in close to 70 clinical centers in the U.S. and in
Canada, with 1,052 mild-to-moderate AD patients enrolled. In September 2005, the
Company launched its Phase III clinical trial in Europe, with 930
mild-to-moderate AD patients expected to participate. The study duration is also
18 months and the trial is conducted in approximately 70 centers in ten European
countries. As of September 30, 2006, 641 patients had been successfully screened
in the European clinical trial, of which 564 were randomized; the remaining 77
patients are expected to be randomized and included in the clinical trial.
Enrollment for the European clinical trial is expected to be completed in the
fall of 2006. The Phase III clinical trials for tramiprosate (ALZHEMED(TM)) are
designed to demonstrate the safety, efficacy and disease-modifying potential of
the product candidate in the treatment of AD. In May 2006, the Company started
an 18-month open-label extension study for patients who have completed the
ongoing North American Phase III clinical trial for tramiprosate (ALZHEMED(TM)).
For the quarter and nine-month period ended September 30, 2006, research and
development expenses also included costs incurred to support the ongoing
eprodisate (KIACTA(TM)) Phase II/III open-label extension study, as well as
ongoing drug discovery programs. The Company expects research and development
expenses to increase in the future as product candidates progress through the
stages of clinical development and as the Company continues to invest in product
research and development.
Research tax credits and grants amounted to $434,000 this quarter ($1,463,000
for the nine-month period), compared to $1,704,000 for the corresponding period
last year ($2,664,000 for the nine-month period). Research tax credits represent
refundable tax credits earned under the Quebec Scientific Research and
Experimental Development
3
Program for expenditures incurred in Quebec. The decrease is mainly due to
additional tax credits recorded during the third quarter of 2005, claimed in
respect to eligible research and development taxable benefits on stock options
for 2005 and prior years.
Other research and development charges amounted to $1,277,000 for the current
quarter. In 2006, the Quebec taxation authorities proposed retroactive changes
in the application of the tax credit program that would deny tax credits on
eligible research and development taxable benefits relating to stock options for
2005 and prior years. Accordingly, management determined that the criteria for
recognition of these credits was no longer met and recorded a provision for
these research tax credits.
General and administrative expenses totaled $3,042,000 for the current quarter
($9,850,000 for the nine-month period), compared to $6,737,000 for the same
quarter last year ($17,819,000 for the nine-month period). The decrease is
primarily attributable to a reduction in legal fees incurred by the Company with
regards to the dispute with Immtech International, Inc. (now known as Immtech
Pharmaceuticals, Inc. and referred to herein as Immtech). See Arbitral award
below.
Arbitral award amounted to $2,089,000 (approximately U.S. $1.9 million) for the
nine-month period and relates to the dispute with Immtech. In June 2006, the
International Chamber of Commerce (the ICC) issued its Final Award (Final Award)
in the arbitration dispute involving Neurochem and Immtech. The dispute concerns
an agreement entered into between Immtech and Neurochem in 2002 (the Agreement)
under which Neurochem had the right to apply its proprietary anti-amyloid
technology to test certain compounds to be provided by Immtech. The ICC denied
the majority of Immtech's claims. On August 12, 2003, Immtech brought claims
against Neurochem in legal proceedings filed with the Federal District Court for
the Southern District of New York, U.S.A. The dispute was presented to an
arbitral tribunal (the Tribunal) convened in accordance with the rules of the
ICC. An evidentiary hearing before the Tribunal was held in September 2005. In
the Final Award, the Tribunal held that Neurochem did not misappropriate any of
Immtech's compounds, information or trade secrets and that Immtech was not
entitled to any interest in, or ownership or assignment of, Neurochem's patent
applications. While the Tribunal found that Neurochem had breached certain
sections of the Agreement, Immtech was awarded U.S. $35,000 in damages, plus
interest thereon. All of Immtech's tort claims were rejected, as were its claims
for injunctive relief and equitable relief; the Tribunal also denied Neurochem's
counterclaims. Immtech was awarded only a portion of the ICC's administrative
charges and arbitral fees and costs incurred by the Tribunal which had been
previously advanced by Immtech, as well as a portion of Immtech's
arbitration-related legal fees. Those charges, fees and costs amounted to
approximately U.S. $1.83 million. On July 10, 2006, Immtech submitted an
application in the form of a letter to the Tribunal and the ICC seeking a
determination by the Tribunal of an issue Immtech asserted the Tribunal did not
decide; specifically, Immtech claimed that certain Neurochem "inventions", and
pending patent applications relating thereto, should be assigned to, and
therefore be owned by Immtech and that the Final Award failed to distinguish
between the issue of ownership -- as distinct from the issue of inventorship. On
July 28, 2006, Neurochem filed a response opposing Immtech's request for a
further determination with respect to ownership of the Neurochem inventions and
pending patent applications. The Tribunal issued an Addendum to the Final Award
dated September 21,
4
2006, in which it denied Immtech's request to make a further determination A
status conference before the Federal District Court for the Southern District of
New York on the matter of the stayed litigation between Immtech and two
universities, on the one hand, and Neurochem, on the other hand, (the
Litigation) is scheduled for mid-November. Despite the outcome of the arbitral
proceedings, the outcome of the Litigation and the amount of loss, if any,
cannot reasonably be estimated. Accordingly, no provision for loss has been
recorded by the Company in connection with the Litigation.
Reimbursable costs amounted to $170,000 for the current quarter ($605,000 for
the nine-month period), compared to $170,000 for the same period last year
($827,000 for the nine-month period), and consist of costs incurred on behalf of
Centocor in respect of eprodisate (KIACTA(TM)) related activities and
reimbursable by Centocor.
Stock-based compensation amounted to $1,064,000 for the current quarter
($2,996,000 for the nine-month period), compared to $868,000 for the
corresponding quarter last year ($3,930,000 for the nine-month period). This
expense relates to employee and director stock options, and stock-based
incentives, whereby compensation cost is measured at fair value at the date of
grant and is expensed over the award's vesting period. The decrease in the
nine-month period is attributable to expenses of $1,441,000 recorded in the
second quarter of 2005 in relation to 140,000 common shares to be issued to the
Chairman, President and Chief Executive Officer, pursuant to an agreement signed
in December 2004.
Depreciation, amortization and write-off of patents amounted to $424,000 for the
current quarter ($1,326,000 for the nine-month period), compared to $631,000 for
the same quarter last year ($1,776,000 for the nine-month period). The decrease
results mainly from the sale-leaseback transaction entered into by the Company
in November 2005 in respect of its facilities and campus located in Laval,
Quebec.
Interest and bank charges amounted to $24,000 for the current quarter ($74,000
for the nine-month period), compared to $126,000 for the same quarter last year
($380,000 for the nine-month period). The decrease is attributable to the
reimbursement in November 2005, in connection with the sale-leaseback
transaction, of the long-term debt previously contracted to finance the
acquisition of facilities in 2004.
Interest income amounted to $479,000 for the current quarter ($1,702,000 for the
nine-month period), compared to $591,000 for the same quarter last year
($1,475,000 for the nine-month period). The decrease in the quarter is mainly
due to lower average cash balances and is partially offset by higher interest
rates during the current quarter, compared to the same period last year. The
increase in the nine-month period is mainly attributable to higher interest
rates and is partially offset by lower average cash balances during the current
period, compared to the same period last year.
Foreign exchange loss amounted to $25,000 for the current quarter ($595,000 for
the nine-month period), compared to $1,700,000 for the same quarter last year
($68,000 for the nine-month period). Foreign exchange gains or losses arise on
the movement in foreign exchange rates related to the Company's net monetary
assets held in foreign currencies, primarily U.S. dollars. Foreign exchange
losses recognized during 2006 are
5
mainly attributable to the strengthening of the Canadian dollar compared to the
U.S. dollar during the periods.
Other income amounted to $614,000 for the current quarter ($1,207,000 for the
nine-month period), compared to $291,000 for the same quarter last year
($638,000 for the nine-month period). Other income consists of non-operating
revenue, primarily sub-lease revenue. The increase in the current quarter
includes an amount of $332,000 in respect of the recovery of prior years'
property taxes.
Share of loss in a company subject to significant influence amounted to $503,000
for the current quarter ($2,210,000 for the nine-month period), compared to
$574,000 for the corresponding quarter last year ($2,153,000 for the nine-month
period). Non-controlling interest amounted to $166,000 for the current quarter
($724,000 for the nine-month period), compared to $171,000 for the corresponding
quarter last year ($641,000 for the nine-month period). These items result from
the consolidation of the Company's interest in a holding company that owns
shares of Innodia Inc., for which Neurochem is the primary beneficiary. In March
2006, the Company invested an additional amount of $1,660,000 in that holding
company in connection with a financing by Innodia Inc. As a result of the
transaction, the Company's indirect equity investment in Innodia Inc. is
approximately 23% of the issued and outstanding shares. Innodia Inc. is a
private development stage company engaged in developing novel drugs for the
treatment of type 2 diabetes and underlying diseases.
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2006, the Company had available cash, cash equivalents and
marketable securities of $26,769,000, compared to $71,091,000 at December 31,
2005. The decrease is primarily due to funds used in operations and is partially
offset by proceeds received from the exercise of a warrant in February of 2006
by a subsidiary of Picchio Pharma Inc. (Picchio Pharma).
In addition, on August 9, 2006, the Company entered into a securities purchase
agreement in respect of an equity line of credit facility, with a 24-month term,
that provides the Company up to U.S.$60,000,000 of funds in return for the
issuance of common shares at a discount of 3.0% to market price at the time of
draw downs over term. The agreement provides for an obligation for Neurochem to
drawdown at least U.S.$25,000,000 over the two-year term of the facility. The
agreement is conditional on the registration of the underlying securities and
the required regulatory approvals. As at September 30, 2006, the Company had not
drawn any funds under the equity line of credit.
On February 16, 2006, Picchio Pharma, the Company's largest shareholder,
exercised the warrant previously issued pursuant to a February 2003 private
placement which was otherwise scheduled to expire on February 18, 2006,
generating total proceeds to the Company of $9,372,000 and resulting in the
issuance of 1,200,000 common shares from treasury.
6
As at October 31, 2006, the Company had 38,701,732 common shares outstanding,
220,000 common shares issuable to the Chief Executive Officer upon the
achievement of specified performance targets and 2,608,670 options granted under
the stock option plan.
The Company believes that its available cash and short-term investments,
expected interest income, potential funding under the equity line of credit,
from potential partnerships, research and licensing agreements, research tax
credits, grants, and access to capital markets should be sufficient to finance
the Company's operations and capital needs for the coming year. However, in
light of the uncertainties associated with the regulatory approval process and
the Company's ability to secure additional licensing, partnership and/or other
agreements, further financing may be required to support the Company's
operations in the future.
SUBSEQUENT EVENT
On November 3, 2006, the Company entered into a private placement of
U.S.$40,000,000 aggregate principal amount of 6% senior convertible notes due in
2026, with a conversion premium of 20%. The Company has granted the U.S.
registered broker-dealer a 30-day option to purchase up to an additional
U.S.$2,085,000 aggregate principal amount of the notes. The Company will pay
interest on the notes until maturity on November 15, 2026, subject to earlier
repurchase, redemption or conversion. The sale of the notes is expected to close
on November 9, 2006.
7
NEUROCHEM INC.
CONSOLIDATED FINANCIAL INFORMATION 1
(IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
THREE-MONTH PERIOD ENDED NINE-MONTH PERIOD ENDED
SEPTEMBER 30 SEPTEMBER 30
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CONSOLIDATED STATEMENTS OF OPERATIONS 2006 2005 2006 2005
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(unaudited) (unaudited) (unaudited) (unaudited)
REVENUES:
Collaboration agreement $ 607 $ 750 $ 1,822 $ 2,777
Reimbursable costs 170 170 605 827
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777 920 2,427 3,604
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EXPENSES (INCOME):
Research and development 14,461 13,945 42,529 38,807
Research tax credits and grants (434) (1,704) (1,463) (2,664)
Other research and development charges 1,277 - 1,277 -
General and administrative 3,042 6,737 9,850 17,819
Arbitral award - - 2,089 -
Reimbursable costs 170 170 605 827
Stock-based compensation 1,064 868 2,996 3,930
Depreciation, amortization and
write-off of patents 424 631 1,326 1,776
Interest and bank charges 24 126 74 380
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20,028 20,773 59,283 60,875
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Net loss before undernoted items: (19,251) (19,853) (56,856) (57,271)
Interest income 479 591 1,702 1,475
Foreign exchange loss (25) (1,700) (595) (68)
Other income 614 291 1,207 638
Share of loss in a company subject to
significant influence (503) (574) (2,210) (2,153)
Non-controlling interest 166 171 724 641
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NET LOSS $(18,520) $(21,074) $(56,028) $(56,738)
===========================================================================================================
Net loss per share:
Basic $ (0.48) $ (0.58) $ (1.45) $(1.65)
Diluted $ (0.48) $ (0.58) $ (1.45) $(1.65)
===========================================================================================================
Weighted average number of common
shares outstanding:
Basic 38,814,360 36,618,807 38,589,402 34,288,153
Diluted 38,814,360 36,758,624 38,589,402 35,957,177
===========================================================================================================
AT AT
SEPTEMBER 30 DECEMBER 31
CONSOLIDATED BALANCE SHEETS 2006 2005
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(unaudited) (audited)
Cash, cash equivalents and marketable securities $26,769 $71,091
Other current assets 13,888 13,298
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Total current assets 40,657 84,389
Capital assets 10,447 10,327
Other long-term assets 2,404 2,230
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TOTAL ASSETS $53,508 $96,946
===========================================================================================================
Current liabilities $26,241 $17,420
Long-term liabilities 19,300 28,745
Non-controlling interest 1,030 509
Shareholders' equity 6,937 50,272
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $53,508 $96,946
===========================================================================================================
</Table>
1 Condensed from the Company's unaudited consolidated financial statements.
8
ABOUT NEUROCHEM
Neurochem Inc. is focused on the development and commercialization of innovative
therapeutics to address critical unmet medical needs. Eprodisate (KIACTA(TM);
formerly FIBRILLEX(TM)) is currently being developed for the treatment of AA
amyloidosis, and is under regulatory review for marketing approval by the U.S.
Food and Drug Administration and European Medicines Agency. Tramiprosate
(ALZHEMED(TM)), for the treatment of Alzheimer's disease, is currently in Phase
III clinical trials in both North America and Europe and tramiprosate
(CEREBRIL(TM)), for the prevention of Hemorrhagic Stroke caused by Cerebral
Amyloid Angiopathy, has completed a Phase IIa clinical trial.
TO CONTACT NEUROCHEM
For additional information on Neurochem and its drug development programs,
please call the North American toll-free number 1 877 680-4500 or visit our Web
Site at: www.neurochem.com.
Certain statements contained in this news release, other than statements of fact
that are independently verifiable at the date hereof, may constitute
forward-looking statements. Such statements, based as they are on the current
expectations of management, inherently involve numerous risks and uncertainties,
known and unknown, many of which are beyond Neurochem's control. Such risks
include but are not limited to: the impact of general economic conditions,
general conditions in the pharmaceutical industry, changes in the regulatory
environment in the jurisdictions in which Neurochem does business, stock market
volatility, fluctuations in costs, and changes to the competitive environment
due to consolidation, as well as other risks disclosed in public filings of
Neurochem. Consequently, actual future results may differ materially from the
anticipated results expressed in the forward-looking statements. The reader
should not place undue reliance, if any, on the forward-looking statements
included in this news release. These statements speak only as of the date made
and Neurochem is under no obligation and disavows any intention to update or
revise such statements as a result of any event, circumstances or otherwise.
Please see the Annual Information Form for further risk factors that might
affect the Company and its business.
9