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Aeterna Zentaris Reports Second Quarter 2014 Financial and Operating Results

Companies mentioned in this article: AETERNA ZENTARIS INC.

All amounts are in US dollars

QUEBEC CITY, Aug. 7, 2014 /PRNewswire/ - Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the "Company"), a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in oncology and endocrinology, today reported financial and operating results as at and for the second quarter ended June 30, 2014.

Research and development ("R&D") costs, net of refundable tax credits and grants, for the three-month period ended June 30, 2014 were $5.5 million compared to $5.3 million for the same period in 2013.

Selling, general and administrative ("SG&A") expenses were $2.9 million for the three-month period ended June 30, 2014, compared to $4.4 million for the same period in 2013. The decrease in SG&A expenses is mainly related to the recognition in the second quarter of 2013 of non-recurring termination benefits (approximately $1.4 million) and to the recording of related non-cash share-based compensation costs, amounting to approximately $0.7 million.

Net loss for the three-month period ended June 30, 2014 was $5.0 million compared to a net income of $9.3 million for the same period in 2013. The decrease in net income is due largely to lower net income from discontinued operations related to the Company's former Cetrotide(®) business, partially offset by lower comparative operating expenses and by higher comparative net finance income.

Cash and cash equivalents totaled $39.6 million as at June 30, 2014, compared to $43.2 million as at December 31, 2013.

David Dodd, Chairman and CEO of Aeterna Zentaris, commented, "During the quarter, our main focus was on refining our launch and commercialization plan for Macrilen(TM) in the U.S., and on patient recruitment for our ongoing ZoptEC Phase 3 trial in endometrial cancer with zoptarelin doxorubicin. For Macrilen(TM), we continued our focus on issues such as cost of goods, manufacturing, packaging, distribution and reimbursement, while building our core business team based in Charleston, South Carolina. The NDA for Macrilen(TM) continues to be under review, with a PDUFA date of November 5 of this year, and we have been in continued discussions with the FDA; if approved, Macrilen(TM) would become the first FDA approved oral drug for use in evaluating AGHD. Regarding the ZoptEC Phase 3 trial, we are very pleased with the pace at which we have been opening sites and recruiting patients with over 115 sites now in operation and over 230 patients recruited. At this rate, we are on track to reach the number of patients required to secure our first interim analysis in the first half of 2015. Also during the quarter, we announced the implementation of a global resources optimization program to streamline R&D activities, increase commercial operations and flexibility, ultimately reduce our operating cash burn and more appropriately, align our financial resources with our strategic goal of transitioning into a commercially operating specialty biopharmaceutical company. Finally, we have intensified our business development efforts, which have already resulted in the signing of a co-promotion agreement with Ascend Therapeutics to co-promote EstroGel(®) and to jump start our commercial activities. Further, we intend to pursue other opportunities, including in-licensing transactions, product acquisitions or other co-promotional arrangements, throughout the remainder of the year."

Dennis Turpin, CFO of Aeterna Zentaris commented, "With our cash position, combined with the streamlining of our R&D activities, we are able to continue to advance our strategic programs and reach our near-term milestones related to Macrilen(TM) and zoptarelin doxorubicin."



Macrilen(TM) (macimorelin)

        --  Continued discussions with the FDA and provided the agency with
            further information regarding the New Drug Application ("NDA")
            review for Macrilen(TM), which seeks approval as the first
            orally-administered drug for the evaluation of Adult Growth
            Hormone Deficiency ("AGHD"). Prescription Drug User Fee Act
            ("PDUFA") date set for November 5, 2014.

        --  Continued pre-commercialization activities for Macrilen(TM)
            with the hiring of new employees and a specialized third-party
            firm dedicated to this process.

Zoptarelin Doxorubicin

        --  Additional sites opened and patients recruited for the current
            ZoptEC(Zoptarelin doxorubicin in Endometrial Cancer) Phase 3
            trial in endometrial cancer. Currently, over 115 sites are in
            operation and over 230 patients have been entered into this

        --  Poster presented on the design of the ZoptEC Phase 3 trial in
            endometrial cancer at the annual meeting of the American
            Society of Clinical Oncology in Chicago.


        --  Poster on AEZS-134, a highly potent and selective ATP
            competitive Erk inhibitor, entitled, "Erk Inhibition as a
            Therapeutic Option for the Treatment of Raf- and Mek-Inhibitor
            Resistant Tumors", was presented at the American Association
            for Cancer Research annual meeting, providing rationale for a
            potential treatment option for patients suffering from tumors
            which are resistant to currently established therapies such as
            B-Raf and Mek inhibitors.

Corporate Developments

        --  Relocation of U.S. operations to Charleston, South Carolina.

        --  In May, the Company entered into an At-the-Market ("ATM") Sales
            Agreement (the "May 2014 ATM Program"), with MLV & Co. LLC,
            under which the Company may, at its discretion, from time to
            time during the term of the sales agreement, sell up to a
            maximum of 14,018,692 million of its common shares through ATM
            issuances on the NASDAQ, up to an aggregate amount of $15

        --  Subsequent to quarter-end, between July 1, 2014 and August 7,
            2014, the Company issued a total of approximately 1.4 million
            common shares under the May 2014 ATM Program for aggregate
            gross proceeds of $1.7 million, less cash transaction costs of
            $44,000 and previously deferred transaction costs of $8,000.

        --  Subsequent to quarter-end, signing of a co-promotion services
            agreement with Ascend Therapeutics. Under the terms of the
            agreement, Aeterna Zentaris will market Ascend's hormone
            replacement therapy product, EstroGel®, in specific agreed-upon
            U.S. territories in exchange for a sales commission. Ascend
            will render similar services regarding Aeterna Zentaris'
            Macrilen(TM), an oral product used in the evaluation of
            AGHD, following its regulatory approval.

        --  Subsequent to quarter-end, approval of a global resources
            optimization program (the "Program") as part of  the Company's
            objective to transition into a commercially operating specialty
            biopharmaceutical company, by streamlining R&D activities and
            increasing commercial operations and flexibility. Termination
            of 30 employees, representing approximately one-third of
            current staffing is expected to be completed over a period of
            approximately 12 months. Upon completion of the Program,
            overall annualized savings are expected to amount to
            approximately $2.2 million.


Management will be hosting a conference call for the investment community beginning at 8:30 a.m. (Eastern Time) tomorrow, Friday, August 8, 2014, to discuss the 2014 second quarter results. Individuals interested in participating in the live conference call by telephone may dial, in Canada, 514-807-9895 or 647-427-7450, outside Canada, 888-231-8191. They may also listen through the Internet at www.aezsinc.com in the "Newsroom" section. A replay will be available on the Company's website for 30 days following the live event.

For reference, the Management's Discussion and Analysis of Financial Condition and Results of Operations for the second quarter of 2014, as well as the Company's consolidated financial statements, can be found at www.aezsinc.com in the "Investors" section.

About Aeterna Zentaris Inc.

Aeterna Zentaris is a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in oncology and endocrinology. The Company's pipeline encompasses compounds at various stages of development. For more information, visit www.aezsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbour provisions of the US Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that could cause the Company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the risk that safety and efficacy data from any of our Phase 3 trials may not coincide with the data analyses from previously reported Phase 1 and/or Phase 2 clinical trials, the ability of the Company to efficiently commercialize one or more of its products or product candidates, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. Investors should consult the Company's quarterly and annual filings with the Canadian and US securities commissions for additional information on risks and uncertainties relating to forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The Company does not undertake to update these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, unless required to do so by a governmental authority or by applicable law.

Attachment: Financial summary

Condensed Interim Consolidated Statements of Comprehensive (Loss) Income Information

                     Three months ended June 30,     Six months ended June

    (in thousands,       2014         2013             2014         2013
    except share
    and per share

                           $            $                $            $


    Sales and           --           96          --           96

    License fees        --      --          --        6,062
    and other

                        --           96          --        6,158


    Cost of sales       --           51          --           51

    Research and          5,462        5,308           11,292        9,709
    costs, net of
    refundable tax
    credits and

    Selling,              2,948        4,430            5,313        7,254
    general and

                          8,410        9,789           16,605       17,014

    Loss from           (8,410)      (9,693)         (16,605)     (10,856)

    Finance income        3,161          379            7,150        2,183

    Finance costs       --        (534)             (98)        (172)

    Net finance           3,161        (155)            7,052        2,011
    income (costs)

    Net loss from       (5,249)      (9,848)          (9,553)      (8,845)

    Net income              225       19,178              173       20,061

    Net (loss)          (5,024)        9,330          (9,380)       11,216

    (loss) income:

    Items that may                                                        
    to profit or

      Foreign             (117)        (141)             (94)           99

    Items that                                                            
    will not be
    to profit or

      Actuarial         (1,111)      --          (2,070)      --
      loss on

    Comprehensive       (6,252)        9,189         (11,544)       11,315
    (loss) income

    Net loss per         (0.09)       (0.39)           (0.17)       (0.35)
    share (basic
    and diluted)

    Net income per      --         0.75          --         0.79
    share (basic
    and diluted)

    Net (loss)           (0.09)         0.36           (0.17)         0.44
    income per
    share (basic
    and diluted)

    average number
    of shares
    outstanding :

    Basic            56,513,969   25,542,263       55,722,113   25,436,364

    Diluted          56,513,969   25,542,263       55,722,113   25,436,385

Condensed Interim Consolidated Statement of Financial Position Information

                                      As at June 30,   As at December 31,

    (in thousands)                           2014                2013

                                               $                   $

    Cash and cash equivalents                 39,553               43,202

    Trade and other receivables and            1,971                2,453
    other current assets

    Restricted cash                              860                  865

    Property, plant and equipment                829                1,351

    Other non-current assets                  10,927               11,325

    Total assets                              54,140               59,196


    Payables and other current                 5,668                7,242

    Warrant liability                         19,427               18,010

    Non-financial non-current                 18,796               16,880

    Total liabilities                         43,891               42,132

    Shareholders' equity                      10,249               17,064

    Total liabilities and                     54,140               59,196
    shareholders' equity


(1) Comprised mainly of employee future benefits and provisions.

SOURCE Aeterna Zentaris Inc.