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Aeterna Zentaris Reports First Quarter 2012 Financial and Operating Results

May 9, 2012

All amounts are in U.S. dollars (unless otherwise noted)

QUEBEC CITY, May 9, 2012 /PRNewswire/ – Aeterna Zentaris Inc.
(NASDAQ: AEZS) (TSX: AEZ) (the ”Company”), today reported financial and
operating results as at and for the first quarter ended March 31, 2012.

Highlights

AEZS-108 (LHRH-Targeted Cytotoxic Conjugate)

        --  Agreement signed with Ventana Medical Systems, Inc., a member
            of the Roche Group, to develop a companion diagnostic for the
            immunohistochemical determination of luteinizing
            hormone-releasing hormone ("LHRH") receptor expression, for
            AEZS-108.

        --  Updated results for the Phase 1 portion of the ongoing Phase 2
            study in castration- and taxane-resistant prostate cancer
            ("CRPC") with AEZS-108 presented during a poster session at the
            American Society of Clinical Oncology Genitourinary Cancers
            Symposium. Data showed that AEZS-108 was well tolerated and
            demonstrated early evidence of antitumor activity in men with
            CRPC.

AEZS-130 (Oral Ghrelin Agonist)

        --  Michael E. DeBakey of Veterans Affairs Medical Center, in
            Houston, Texas initiated a Phase 2A trial with AEZS-130 in
            patients with cancer cachexia.

Perifosine (Oral Akt Inhibitor)

        --  Japanese partner, Yakult Honsha, initiated a Phase 1/2 trial in
            Japan with perifosine + capecitabine in refractory advanced
            colorectal cancer.

        --  Subsequent to quarter-end, topline results for the Phase 3
            "X-PECT" (Xeloda® + Perifosine Evaluation in Colorectal cancer
            Treatment") clinical trial evaluating perifosine + capecitabine
            (Xeloda®) in 468 patients with refractory advanced colorectal
            cancer, showed that the trial did not meet the primary endpoint
            of improving overall survival versus capecitabine + placebo.

        --  Subsequent to quarter-end, the Company and Keryx
            Biopharmaceuticals agreed to terminate their North American
            licensing agreement for perifosine; thus the Company regained
            full rights to the compound in this territory and will continue
            the ongoing Phase 3 trial in multiple myeloma.

Corporate Developments

At-The-Market Issuance Program

        --  On January 23, 2012, the Company, pursuant to its existing
            At-The-Market ("ATM") sales agreement dated June 29, 2011 with
            MLV, initiated a new ATM issuance program ("January 2012 ATM
            Program") under which it may, at its discretion, from time to
            time during the term of the sales agreement, sell up to a
            maximum of 10.4 million of its common shares through ATM
            issuances on the NASDAQ Global Market.

        --  Between January 23, 2012 and March 15, 2012, the Company issued
            a total of 3.6 million common shares under the January 2012 ATM
            Program for aggregate gross proceeds of $6.4 million.

        --  Subsequent to quarter-end through May 8, 2012, the Company
            issued a total of 2.5 million common shares under the January
            2012 ATM Sales Agreement for aggregate gross proceeds of $1.8
            million.

Cash and cash equivalents totalled $45.6 million as at March 31, 2012, compared to $46.9 million
as at December 31, 2011.

Juergen Engel, Ph.D, Aeterna Zentaris President and Chief Executive
Officer, commented, “The last weeks were quite challenging with the
disappointing results for the perifosine Phase 3 trial in colorectal
cancer. Nevertheless, after regaining North American rights to
perifosine, conducting a thorough analysis of the situation and
consulting with key opinion leaders, we have decided to continue the
Phase 3 trial in multiple myeloma up until the predefined interim
analysis, as we believe this compound still has the potential to become
a novel oral anticancer treatment.

Also during the quarter, other development programs moved forward as
Yakult initiated a trial in colorectal cancer with perifosine and the
Michael E. DeBakey of VA Medical Center initiated a trial with AEZS-130
in cancer cachexia. Furthermore, we signed an agreement with Ventana to
develop a companion diagnostic for AEZS-108.

Over the years, we have shown resilience by overcoming important
obstacles. I am proud to say that still today, our team of seasoned
professionals remains committed in providing cancer patients with novel
treatments, while striving to make Aeterna Zentaris an important
company in this field.”

Dennis Turpin, CA, Senior Vice President and Chief Financial Officer at
Aeterna Zentaris stated, “As of March 31, 2012, we had a cash position
of over $45 million which allows us to be well poised to continue to
move our key product candidates through the pipeline.”

CONSOLIDATED RESULTS AS AT AND FOR THE FIRST QUARTER ENDED MARCH 31,
2012

Revenues were $9.5 million for the quarter ended March 31, 2012, compared to
$7.4 million for the same quarter in 2011. This increase is largely
attributable to comparative higher deliveries of Cetrotide(®) to certain customers and to higher research and development services
provided, partly offset by the relative weakening of the euro against
the US dollar.

R&D costs, net of refundable tax credits and grants were relatively stable at $5.6 million for the quarter ended March 31,
2012, compared to $5.5 million for the same quarter in 2011.

Net loss amounted to $11.5 million, or $0.11 per basic and diluted share, for
the quarter ended March 31, 2012, compared to $10.1 million, or $0.12
per basic and diluted share, for the same quarter in 2011. This
increase is mainly due to higher net finance costs attributable to the
change in fair value of our warrant liability, partly offset by lower
income tax expense.

CONFERENCE CALL

Management will be hosting a conference call for the investment
community beginning at 8:30 a.m. (Eastern Time) today, Wednesday, May
9, 2012, to discuss the 2012 first 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 (“MD&A”) for the
first quarter 2012 with the associated Unaudited Interim Consolidated
Financial Statements can be found at www.aezsinc.com.

About Aeterna Zentaris Inc.

Aeterna Zentaris is an oncology and endocrinology drug development
company currently investigating treatments for various unmet medical
needs. The Company’s pipeline encompasses compounds at all stages of
development, from drug discovery through to marketed products. For more
information please visit www.aezsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to
the safe harbour provisions of the U.S. 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 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 U.S. 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


    Interim Consolidated Statements of Comprehensive Loss Information

                                                       Three monthsended
                                                           March 31,

    (in thousands, except for share and per
    share data)                                       2012           2011

                                                        $              $

    Revenues                                                               

    Sales and royalties                                8,308          7,092

    License fees and other                             1,202            297

                                                       9,510          7,389

    Operating expenses                                                     

    Cost of sales                                      7,513          6,023

    Research and development costs, net of
    refundable tax credits and grants                  5,572          5,498

    Selling, general and administrative expenses       3,213          3,159

                                                      16,298         14,680

    Loss from operations                             (6,788)        (7,291)

    Finance income                                        77            824

    Finance costs                                    (4,740)        (2,749)

    Net finance costs                                (4,663)        (1,925)

    Loss before income taxes                        (11,451)        (9,216)

    Income tax expense                                     -          (841)

    Net loss                                        (11,451)       (10,057)

    Other comprehensive loss                                               

    Foreign currency translation adjustments           (255)        (1,339)

    Comprehensive loss                              (11,706)       (11,396)

    Net loss per share                                                     

    Basic and diluted                                 (0.11)         (0,12)

    Weighted average number of shares
    outstanding                                                            

    Basic and diluted                            106,016,843     83,842,054

    Interim Consolidated Statement of Financial Position Information

                                                    Asat          As at
                                                  March 31,    December 31,
    (in thousands)                                  2012           2011

                                                        $              $

    Cash and cash equivalents                         45,583         46,881

    Trade and other receivables and other
    current assets                                    12,995         13,258

    Restricted cash                                      834            806

    Property, plant and equipment, net                 2,452          2,512

    Other non-current assets                          12,189         11,912

    Total assets                                      74,053         75,369

    Payables and other current liabilities            16,684         17,784

    Long-term payable (current and non-current
    portions)                                             60             88

    Warrant liability (current and non-current
    portions)                                         12,860          9,204

    Non-financial non-current liabilities*            53,126         52,839

    Total liabilities                                 82,730         79,915

    Shareholders' deficiency                         (8,677)        (4,546)

    Total liabilities and shareholders'
    deficiency                                        74,053         75,369

____________________
* Comprised mainly of non-current portion of deferred revenues, employee
future benefits and provision. 

 

SOURCE AETERNA ZENTARIS INC.


Source: PR Newswire