Newsroom 2005

- At the annual and special meeting of shareholders, Neurochem Inc. (NASDAQ: NRMX; TSX: NRM) highlighted the recent advances of its investigational product candidates Fibrillex™ and Alzhemed™ and emphasized their further development as the Company's main priority. Neurochem indicated that the plans to implement the management team necessary to bring the Company to the next level of product development and commercialization are essentially complete. During the quarter, the Company's financial position was significantly strengthened, with $89.7 million of cash available at the end of the quarter.

"Over the past year, we have worked very hard not only to advance the development of our investigational product candidates, but also to build a strong foundation for our Company with an exceptional management team and a solid financial base," stated Francesco Bellini, Chairman, President and CEO. "I am very proud to be able to lead a Company of this calibre and, as CEO and a significant shareholder, I will continue to support Neurochem and work towards bringing our product candidates to market."

Fibrillex™ - Results to be Presented to FDA

Neurochem completed the Fibrillex™ Phase II/III clinical trial in December 2004. Fibrillex™ is being developed for the treatment of Amyloid A (AA) Amyloidosis, a serious consequence of chronic inflammatory and infectious diseases, such as Rheumatoid Arthritis. It is estimated that there are approximately 40,000 people in Europe and the U.S. diagnosed with the disease.

The objective of the Phase II/III trial was to determine the ability of Fibrillex™ to delay or stop the progression of AA Amyloidosis and to assess the safety of Fibrillex™ compared to a placebo. The trial was initiated in 2000 to demonstrate statistical significance through the composite primary endpoint reaching an absolute difference of 20% in the number of patients stabilized or improved between the Fibrillex™ and placebo groups (p value= 0.01).

"The clinical trial for Fibrillex™ was the first Phase II/III clinical trial and the largest randomized, placebo-controlled study ever undertaken to test for the efficacy of a drug to treat AA Amyloidosis," said Denis Garceau, PhD, Neurochem's Senior Vice President, Drug Development. "We have broken new ground in designing the study and defining endpoints that have never been assessed in a study of that magnitude for this disease."

An assessment of preliminary findings made public on April 18, 2005, indicated that Fibrillex™ is well tolerated. The results also indicated that there were 13.4 percent more patients whose condition remained stable or improved while on Fibrillex™ therapy, compared to placebo (p value=0.06). While the level of 13.4% is a positive sign, it did not reach the pre-specified objective of the study of 20%. Preliminary findings on the secondary endpoints also indicate that Fibrillex™ does have a consistent and clinically meaningful effect on kidney function. These preliminary results suggest that Fibrillex™ delays progression of renal disease in AA amyloidosis patients.

Recognizing the lack of existing specific treatments for the disease, Fibrillex™ received "orphan drug" status in both the United States and Europe. Fibrillex™ also has been accorded "Fast Track Product" designation by the U.S. Food and Drug Administration (FDA) and was selected for the FDA's Pilot 2 program for accelerated review. In December 2004 and in advance of completion of the trial, Neurochem (International) Limited, a wholly owned subsidiary of the Company, concluded a collaboration and distribution agreement for Fibrillex™ with Centocor, Inc., a wholly-owned subsidiary of Johnson & Johnson.

Data on the Fibrillex™ Phase II/III trial is expected to be presented at selected international medical conferences in the coming months. Presentations at international conferences are scheduled during the European Renal Association-European Dialysis and Transplant Association (ERA-EDTA) conference to be held in Istanbul, Turkey, from June 4-7, 2005 and the European League Against Rheumatism (EULAR) conference to be held in Vienna, Austria, from June 8-12, 2005. The plan is also to publish the data in a peer-reviewed journal. Meanwhile, Neurochem is continuing to honour its commitment to supply Fibrillex™ to any patient receiving the drug, through the on-going open-label extension study.

Neurochem, therefore, intends to continue with plans to seek regulatory approval of Fibrillex™. As part of this process, the Company confirmed a meeting date with the FDA to pursue discussions about its data and to investigate the various regulatory options to possibly make Fibrillex™ available to the AA amyloidosis patients.

Alzhemed™ - North American Phase III Clinical Trial on Track

Progress throughout 2004 and into the first quarter of 2005 on the development of the investigational product candidate, Alzhemed™, for the treatment of Alzheimer's Disease (AD) is on-track and encouraging. This first-in-class product candidate has a unique mechanism of action, which may be capable of stopping the disease in its early stages by interfering with the formation of the toxic beta-amyloid complex and has been shown by many scientists to be neurotoxic. Data from a Phase II clinical trial and interim results from a follow-on open-label extension study over a 28-month period indicate that this orally administered investigational product candidate is safe and appears to stop the progression of the disease, particularly in milder AD patients.

During 2004, Alzhemed™ was highlighted at the 8th International Montreal/Springfield Symposium on Advances in Alzheimer Therapy and at the U.S. Alzheimer's Association at its annual international conference as a promising new treatment in development for AD.

Neurochem initiated a large-scale Phase III clinical trial in North America in June 2004. This double-blind, placebo-controlled study will include some 950 mild-to-moderate AD patients at 68 clinical centers across North America, who will be receiving medication over the trial period of 18 months. Approximately 1,100 patients have been screened and close to 800 are already on study medication. Recruitment in North America is therefore proceeding on schedule and the study is on track for completion as planned.

The Company plans to initiate patient recruitment for a similar Phase III clinical trial in Europe this fall.

Neurochem announced in April 2005 that its Independent Safety Review Board (ISRB) has issued a recommendation to continue the Company's North American Phase III clinical trial for Alzhemed™. The recommendation by the members of the ISRB was based on their recent review of the safety data from 562 patients who had been monitored in the trial for an average of 12 weeks to that point.

Cerebril™ - A Phase IIb Clinical Trial Under Preparation

Cerebril™, Neurochem's lead product candidate for the treatment of Hemorrhagic Stroke due to Cerebral Amyloid Angiopathy (HS-CAA), has successfully completed a Phase IIa clinical trial to assess safety conducted at five centers in the U.S.. There were no concerns regarding safety, and the pharmacokinetic profile of the product candidate was well characterized.

A Phase IIb trial is currently being designed to test the efficacy and safety of Cerebril™ in preventing recurring strokes caused by amyloid. Currently, no treatment exists for this disease.

Senior Management Team - Additions and Reassignment of Responsibilities

Neurochem also announced senior management appointments and reassignment of responsibilities: Francesco Bellini, Chairman, President and CEO, committed to remain with the Company in an executive capacity for at least three more years. Andreas Orfanos, M.B.B.Ch, MBA, was named Executive Vice President - Strategic Planning and Scientific Affairs, Shona McDiarmid, PhD, LLB, was appointed Vice President - Intellectual Property, Daniel Delorme, PhD, was named Vice President - Research, Mariano Rodriguez was appointed Vice President, Finance and Chief Financial Officer, Christine Lennon was named Vice President, Business Development and Judith Paquin was appointed Vice President, Human Resources. Philippe Calais, Pharm. D., became President - Global Business and Denis Garceau, PhD, was appointed Senior Vice President - Drug Development.

Recent Developments

Neurochem announced in March 2005 that it had completed a public offering of 4 million common shares. The common shares issued from treasury were sold in the United States and Canada and resulted in total gross proceeds to the Company of approximately US$61.2 million. Neurochem Inc. and its subsidiaries intend to use the net proceeds from the offering to fund the clinical trials of their investigational product candidates, primarily Alzhemed™, to advance Fibrillex™, to further complete pre-clinical and research and development programs and for working capital and general corporate purposes.

First Quarter Results - Consolidated Financial Results Highlights

The following information should be read in conjunction with the unaudited consolidated financial statements for the three-month period ended March 31, 2005, as well as the audited consolidated financial statements for the year ended December 31, 2004. For discussion regarding related-party transactions, contractual obligations and commercial commitments, critical accounting policies, recent accounting pronouncements, and risks and uncertainties, refer to the Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations for the year ended December 31, 2004. All dollar figures are Canadian dollars, unless specified otherwise.

For the three month-period ended March 31, 2005, the net loss amounted to $16,970,000 ($0.54 per share), compared to $9,164,000 ($0.31 per share) for the comparative period last year.

Revenues from collaboration agreement amounted to $1,205,000 for the current quarter and consist of the revenue earned under the agreement with Centocor, Inc. (Centocor) in respect of Fibrillex™. Revenue recognized during the quarter is in respect of the non-refundable upfront payment received from Centocor, which is being amortized over the remaining estimated period to obtaining the regulatory approvals of the investigational drug product. The period to obtain the regulatory approvals is estimated and is subject to change based on additional information that the Company may receive from time to time.

Reimbursable costs revenue amounted to $444,000 for the current quarter and consists of costs reimbursable by Centocor in respect of Fibrillex™-related activities. The Company earns no margin on these reimbursable costs.

Research and development expenses, before research tax credits and grants, amounted to $11,965,000 for the current quarter, compared to $5,577,000 for the same period last year. The increase is mainly due to expenses incurred in relation to the development of Alzhemed™; more specifically for the Phase III North American clinical trial and preparation for the Phase III European clinical trial. In the quarter ended March 31, 2005, research and development expenses also included costs incurred to support the on-going Fibrillex™ open-label extension study, as well as on-going drug discovery programs.

Research tax credits amounted to $409,000 this quarter, compared to $312,000 for the comparable quarter last year. Research tax credits represent refundable tax credits earned under the Quebec Scientific Research and Experimental Development Program. The increase is due to higher eligible expenses during the current period.

General and administrative expenses for the quarter totalled $5,165,000, compared to $3,965,000 for the same quarter last year. The increase is attributable to the expansion of the corporate infrastructure to support growth and the overall activity levels at the Company. More specifically, the increase is due to operating costs related to the facilities acquired during the second quarter of 2004 and higher legal fees incurred in relation to the Immtech litigation, and to other corporate agreements and matters.

Reimbursable costs amounted to $444,000 for the current quarter and consist of costs incurred on behalf of Centocor in respect of Fibrillex™ related activities and reimbursable by Centocor.

Stock-based compensation amounted to $770,000 for the current quarter, compared to $424,000 for the comparable quarter last year. This expense relates to employee stock options, whereby compensation cost is measured at fair value at the date of grant and is expensed over the award's vesting period. The increase is due to new stock options granted during the past year.

Depreciation and amortization for the current quarter increased to $570,000 from $368,000 for the comparable quarter last year. The increase reflects the depreciation and amortization associated with the acquisition during the past year of additional property and equipment, including the facilities acquired in the second quarter of 2004, and the increase in patent costs.

Interest and bank charges amounted to $121,000 for the current quarter, compared to $24,000 for the comparable quarter last year. The increase is due to interest expense on the $10,500,000 revolving decreasing term credit facility entered into by the Company to finance the acquisition of the facilities last year.

Interest income amounted to $251,000, compared to $322,000 for the comparable quarter last year. The decrease results from lower average cash balances in the current period, compared to the same period last year.

Foreign exchange gains amounted to $226,000 for the current quarter, compared to $441,000 for the same quarter last year. The decrease is attributable to lower monetary assets denominated in US dollars during the period, compared to the comparable period in 2004. Gains were recorded as a result of an increase in the value of the US dollar versus the Canadian dollar during the respective periods.

Variable interest entities
As previously reported, on January 1, 2005, the Company adopted the recommendations of the CICA Accounting Guideline 15 - Consolidation of Variable Interest Entities (AcG-15), which provide guidance for determining when an enterprise consolidates the assets, liabilities and results of activities of entities that are subject to control on a basis other than ownership of voting interests (a "variable interest entity" (VIE)). This guideline requires the Company to identify VIEs in which it has an interest, to determine whether it is the primary beneficiary of such entities and, if so, to consolidate the VIEs. A primary beneficiary is an enterprise that will absorb a majority of the VIE's expected losses, receive a majority of its expected residual return, or both. It was determined that the Company's investment in a holding company that owns Innodia's shares (Innodia Holding) meets the criteria for being a VIE and that the Company is the primary beneficiary of Innodia Holding. The implementation of AcG-15 resulted in the consolidation of the Company's interest in Innodia Holding starting January 1, 2005. The effect of the implementation of this accounting guideline was to adjust the net carrying value of the long-term investment and the opening deficit by $2,501,000 at January 1, 2005. The revised carrying amounts of the long-term investment and non-controlling interest at January 1, 2005, were $3,359,000 and $1,439,000, respectively. The implementation of this accounting guideline in the first quarter of 2005 resulted in the consolidation of a share of loss in a company subject to significant influence of $755,000 and non-controlling interest of $225,000, in the Consolidated Statement of Operations.

Litigation
Regarding the ongoing dispute with Immtech International, Inc. (Immtech) concerning a 2002 agreement, the Company continues to vigorously defend against the claims brought by Immtech in its legal proceedings filed on August 12, 2003, with the Federal District Court for the Southern District of New York, U.S.A. The dispute is now before an arbitral tribunal convened in accordance with the rules of the International Court of Arbitration.

A hearing has been scheduled by the arbitral tribunal for mid-September 2005. Immtech has claimed monetary damages which, to date, it has estimated at between a total of US$18 million and US$42 million, which includes an estimated valuation for equitable relief. The Company has counterclaimed damages which, to date, it has estimated at no less than US$3.5 million, which includes an estimated valuation for equitable relief. The outcome of this matter, or the likelihood and the amount of loss, if any, is not determinable. No provision for possible loss has been recorded by the Company in connection with this matter.

Liquidity and capital resources

As at March 31, 2005, the Company had cash, cash equivalents and marketable securities of $89,703,000, compared to $29,173,000 at December 31, 2004. The increase is primarily due to proceeds received from the issue of additional share capital during the quarter (as described below), net of funds used in operations and in investing activities.

On March 9, 2005, the Company completed a public offering of its common shares in the United States and in Canada. The Company issued four million common shares at a price of US$15.30 per share. Total proceeds from the offering were $74,495,000 (US$61,200,000) and the issue costs totaled $4,955,000. Certain funds raised from the share issuance were denominated in U.S. dollars. The Company maintains a significant U.S. dollars position to serve as a natural hedge of exchange rate fluctuations with respect to planned U.S. dollar denominated R&D expenditures primarily relating to its phase III clinical programs. Net proceeds will be used to fund the clinical trials of the Company's product candidates (primarily Alzhemed™), other research and development programs, advancing Fibrillex™, working capital and general corporate purposes.

As at April 30, 2005, the Company had 34,569,581 common shares outstanding, 2,287,614 options granted under the employee stock option plan and 4,000,000 warrants issued and outstanding.