August 13, 2004

Neurochem reports results for second quarter of fiscal 2004 and closing of $10.5 million bank financing.
Neurochem will host a conference call Monday, Aug. 16, at 8:30 A.M. EDT.

- Neurochem Inc. (NASDAQ: NRMX; TSX: NRM) today announced results for the second quarter of fiscal 2004, ended June 30. The Company reported a net loss of $14,072,000 ($0.47 per share) for the quarter, compared to $3,470,000 ($0.15 per share) for the same period the previous year. Actual cash burn from on-going operations during this quarter was $8,293,000. The net loss during the second quarter includes a non-cash, non-recurring special charge of $2,085,000 resulting from the Company's move to new headquarters in Laval, Quebec, Canada, and a $2,239,000 non-cash stock based compensation expense resulting from the coming into effect in 2004 of a new CICA accounting policy. In the June 2003 quarter, net loss was low as a result of a one-time gain of $3,484,000 on the sale to Innodia, Inc. of Neurochem's diabetes program.

In July 2004, the Company increased its cash position by entering into a $10,500,000, five-year revolving decreasing term credit to finance the recent acquisition of the Laval premises.

The quarter was active for each of the Company's three clinical programs. Alzhemed™, Neurochem's investigational product candidate for the treatment of Alzheimer's Disease (AD), attracted particular attention with the presentation of positive interim results at two major scientific conferences and with the launch of the Phase III clinical trial and the beginning of patient recruitment in North America.

"We are very much on track with our entire clinical development program," said Francesco Bellini, Ph.D., Neurochem's Chairman and CEO. "Recent scientific advances¹ independently support the key role of amyloid in AD and emphasize the importance of early intervention to put a stop to the progression of the disease. We are very pleased that our therapeutic approach with Alzhemed™ has been targeting the amyloid cascade with the objective of stabilizing the condition of AD patients. We have shown that our interim data from the on-going open-label Phase II extension trial, even though not statistically significant, supports well the hypothesis set forth in the literature. By intervening early in the disease, we have obtained preliminary data that continue to show clinical benefits on cognitive function tests especially in the milder AD patients. These results, along with the decrease of amyloid levels in the cerebrospinal fluid of the AD patients at the two highest doses of Alzhemed™ during the double-blind, randomized stage of the Phase II clinical trial, appear to indicate that early intervention targeting amyloid, before brain destruction in AD patients is too advanced, could provide important benefit to the affected patient population," Dr. Bellini concluded.

Highlights of the Quarter

• Neurochem reports preliminary positive results with Alzhemed™ at the 16-month time point at 8th International Montreal/Springfield Symposium on Advances in Alzheimer Therapy.

• Company launches Phase III clinical trial/patient recruitment for Alzhemed™ in North America.

• Following the close of the quarter, Neurochem reports continuing positive interim results with Alzhemed™ at the 20-month time point at 9th International Conference on Alzheimer's Disease and Related Disorders in Philadelphia.

• Neurochem's Fibrillex™ selected by Cardio-Renal Drug Product Division of the U.S. Food and Drug Administration (FDA) to be part of the Continuous Marketing Applications Pilot 2 program aimed at further accelerating the development and eventual marketing of this product candidate.

Alzhemed™

Neurochem launched patient recruitment for its North American Phase III clinical trial of Alzhemed™ in June at an investigators' meeting attended by more than 200 clinicians and study coordinators, with each of the 50 U.S. sites and 20 Canadian sites represented. This launch followed a meeting of the Company with its clinical advisory board for this product candidate in July 2003 and a meeting between Neurochem and the FDA at the end of the Phase II trials in December 2003 for Alzhemed™.

Fibrillex™

Fibrillex™ is Neurochem's investigational product candidate for the treatment of AA Amyloidosis, a serious consequence of chronic inflammatory and infectious diseases, such as Rheumatoid Arthritis. Subsequent to the end of the quarter, the Cardio-Renal Drug Product Division of the FDA selected Fibrillex™ to be part of the Continuous Marketing Applications Pilot 2 program aimed at further accelerating the development and eventual marketing of this product candidate. As a result of the Pilot 2 program, in August, Neurochem will begin a series of frequent discussions with the FDA based on a pre-approved schedule to agree on the new drug approval package to be submitted. Fibrillex™ has already been designated as a Fast Track Product and received orphan drug status designation by the FDA, as well as being designated as an Orphan Medicinal Product in Europe. Neurochem anticipates completing the Phase II/III clinical trial of Fibrillex™ in January 2005, and, assuming positive clinical outcomes, would expect to receive regulatory approvals by the end of 2005.

Cerebril™

The Company continues to work towards a Phase IIb trial to determine whether Cerebril™ can prevent recurrence of stroke in patients suffering from Hemorrhagic Stroke due to Cerebral Amyloid Angiopathy, a form of stroke for which there is currently no effective therapy.

¹ Oddo et al., Neuron 43: 321-32. August 2004.

Conference Call

Neurochem will host a conference call Monday, Aug. 16, 2004 at 8:30 A.M. EDT. The telephone number to access the conference call is 514 985-7038 or 1 800 208-6587. A replay of the call will be available until Aug. 23, 2004. The telephone number to access the replay of the call is 416 626-4100 or 1 800 558-5253. The access code for the call and the replay is 21205603.

Financial Results Highlights

The following information should be read in conjunction with the selected financial information contained herein.

For the three-month period ended June 30, 2004, net loss amounted to $14,072,000 ($0.47 per share), compared to $3,470,000 ($0.15 per share) for the same period last year. For the six month-period ended June 30, 2004, net loss amounted to $23,236,000 ($0.77 per share) compared to $9,079,000 ($0.40 per share) for the same period last year.

Research and development expenses, before research tax credits and grants, amounted to $6,923,000 for the current quarter, compared to $4,676,000 for the same period last year. For the six-month period ended June 30, 2004, these expenses amounted to $12,500,000, compared to $9,332,000 for the same period last year. These increases are mainly due to expenses incurred in preparation of Alzhemed™ Phase III clinical trials and the hiring of additional employees mostly in clinical development. Overall, research and development expenses were incurred to support the on-going Fibrillex™ Phase II/III clinical trials and open-label extension study; the on-going Alzhemed™ Phase II extension study and advancement towards its Phase III clinical trials; the completion of the Cerebril™ Phase II clinical trial which ended in January 2004, as well as on-going drug discovery programs. As at June 30, 2004, Neurochem had 153 patients in clinical trials.

Research tax credits amounted to $309,000 this quarter ($621,000 for the six-month period), compared to $722,000 for the comparable quarter last year ($988,000 for the six-month period last year). Research tax credits represent tax credits earned under the Quebec Scientific Research and Experimental Development program.

Research grants and other amounted to $110,000 this quarter, compared to $121,000 for the same quarter last year. For the six month-period ended June 30, 2004, these grants amounted to $229,000, compared to $744,000 for the same period last year. Research grants represent mainly grants received from the US Food and Drug Administration for the development of Fibrillex™ and from the Natural Sciences and Engineering Research Council (NSERC). In the six-month period ended June 30, 2003, research grants also included contributions under the Technology Partnerships Canada (TPC) Program received by the Company for the development of Alzhemed™.

General and administrative expenses for the quarter totaled $4,624,000, compared to $2,997,000 for the same quarter last year. For the six-month period ended June 30, 2004, these expenses amounted to $8,589,000, compared to $4,715,000 for the same period last year. These increases are mainly due to the expansion of the corporate infrastructure necessary to support growth and the increase in overall activity levels at the Company, in particular, in the legal, administrative, marketing, and senior management functions of the Company. More specifically, the increase is due to higher legal fees incurred in relation to the Immtech litigation and other corporate matters, higher Directors' and Officers' insurance costs resulting from our US financing and NASDAQ listing and increased awareness, educational and medical conference activities related to AA Amyloidosis, Fibrillex™'s target indication.

Special charges in the amount of $2,085,000 were recorded during the quarter and are related to the relocation to newly acquired facilities. These charges include $896,000 of future lease payments due in connection with the former premises, net of estimated sublease rentals that could reasonably be obtained for those premises. It also includes the write-off of certain property and equipment, mainly leasehold improvements, in the amount of $1,189,000.

Depreciation and amortization for the current quarter increased to $499,000 ($867,000 for the six-month period) from $320,000 for the comparable quarter last year ($641,000 for the six-month period last year). The increase reflects the depreciation and amortization associated with the acquisition of additional property and equipment, including the facilities acquired during the quarter, as well as increases in patent costs.

Interest income amounted to $253,000 ($575,000 for the six-month period), compared to $157,000 for the comparable quarter last year ($318,000 for the six-month period last year). The increase results from higher average cash balances in the current period, compared to the same period last year, and is offset by a larger portion of the investment portfolio denominated in US dollars, which earned a lower yield.

Foreign exchange gains amounted to $1,650,000 for the current quarter ($2,091,000 for the six-month period), compared to $62,000 for the same quarter last year ($129,000 for the six-month period last year). The increase is mainly attributable to the realization of foreign exchange gains during the quarter following the conversion of US dollars into Canadian dollars.

Acquisition of property and equipment
During the quarter, the Company acquired facilities for $10,500,000 and incurred $421,000 of acquisition related expenses to relocate its operations. This acquisition was necessary to support the growth of the Company and to regroup corporate and scientific employees at the same location. Cash was used to finance the acquisition in May 2004. In July 2004, the Company entered into a revolving decreasing term credit agreement in the amount of $10,500,000 to finance this acquisition.

Stock-based compensation
As of January 1, 2004, the Company implemented the new CICA accounting policy requiring the use of the fair value-based method for recording stock options. One of the transitional alternatives available to the Company was to retroactively apply the fair value based method to all employee stock options granted on or after July 1, 2002, without restatement of prior periods. As a result of adopting this alternative, $2,162,000 was recorded as an adjustment to the opening deficit and additional paid-in capital at January 1, 2004. Furthermore, an expense in the amount of $2,239,000 was recorded during the quarter ($2,663,000 for the six-month period). See notes 2 and 5 of the interim Consolidated Financial Statements.

Litigation
The Company continues to vigorously defend against the claims brought by Immtech International, Inc. 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 proceedings are at the early stages and 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 June 30, 2004, the Company had cash, cash equivalents and marketable securities of $49,574,000, compared to $77,594,000 at December 31, 2003. The decrease is due to use of funds for operating and investing activities (including the acquisition of facilities as previously discussed), net of proceeds received from the issue of additional share capital during the period pursuant to the exercise of employee stock options. In July 2004, the Company increased its cash position by drawing an amount of $10,500,000 under the above-mentioned term credit.

As at July 31, 2004, the Company had 30,280,803 common shares outstanding, 2,384,850 options granted under the employee stock option plan and 4,000,000 warrants in issue.

Neurochem Inc.
Selected Financial Highlights¹
($'000 CDN, except per share data)

Three-month period ended June 30

Six-month period ended June 30

Consolidated Statements of Operations

2004

2003

2004

2003

Expenses (Income):

Research and
development

6,923

4,676

12,500

9,332

Research tax credits
& grants

(419)

(843)

(850)

(1,732)

General and
administrative

4,624

2,997

8,589

4,715

Stock based compensation

2,239

-

2,663

-

Special charges

2,085

-

2,085

-

Depreciation and amortization

499

320

867

641

Interest and bank charges

24

23

48

54

15,975

7,173

25,902

13,010

Interest income

253

157

575

318

Foreign exchange gain

1,650

62

2,091

129

Gain on disposal of intellectual property

-

3,484

-

3,484

Net loss

(14,072)

(3,470)

(23,236)

(9,079)

Loss per share:

Basic

$ (0.47)

$ (0.15)

$ (0.77)

$ (0.40)

Diluted

$ (0.47)

$ (0.15)

$ (0.77)

$ (0.40)

Weighted average number of common shares outstanding:

Basic

30,162,322

23,294,432

30,013,058

22,798,005

Diluted

34,907,357

27,086,468

34,736,983

26,321,577

Consolidated
Balance Sheets

At June 30 2004

At Dec. 31 2003

Cash, cash equivalents and marketable securities

49,574

77,594

Other current assets

5,025

4,503

Total current assets

54,599

82,097

Long-term investment

4,421

4,421

Capital assets

19,919

7,481

Other long term assets

475

226

Total assets

79,414

94,225

Current liabilities

10,358

6,244

Obligations under
capital leases

192

416

Long term
accrued liabilities

590

-

Shareholders' equity

68,274

87,565

Total liabilities and
shareholders' equity

79,414

94,225

¹ Condensed from the Company's unaudited consolidated financial statements.

About Neurochem

Neurochem is focused on the development and commercialization of innovative therapeutics for neurological disorders. The Company's pipeline of proprietary, disease-modifying oral products addresses critical unmet medical needs. Fibrillex™, designated as an orphan drug and as a Fast Track Product candidate, is also part of a Continuous Marketing Applications Pilot 2 program and is currently in a Phase II/III clinical trial for the treatment of AA Amyloidosis. Alzhemed™, for the treatment of Alzheimer's Disease, is in a Phase III clinical trial and Cerebril™, for the prevention of Hemorrhagic Stroke caused by Cerebral Amyloid Angiopathy, has completed a Phase II 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 s tatements, 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 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.

For further Information, please contact:
Dr. Lise Hébert
Vice President, Corporate Communications
lhebert@neurochem.com

275 Armand-Frappier
Laval (Quebec)
H7V 4A7
Tel: (450) 680-4500
Fax: (450) 680-4501

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