Last updated on April 24, 2014 at 21:24 EDT

Aeterna Zentaris Reports Second Quarter 2013 Financial and Operating Results

August 8, 2013

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

QUEBEC CITY, Aug. 8, 2013 /PRNewswire/ – Aeterna Zentaris Inc.
(NASDAQ: AEZS) (TSX: AEZ) (the “Company”), a specialty
biopharmaceutical company engaged in developing novel treatments in
oncology and endocrinology, today reported financial and operating
results as at and for the second quarter ended June 30, 2013.

Key Highlights

Appointment of New President and CEO

        --  David Dodd was appointed President and Chief Executive Officer
            of the Company, as well as to its Board of Directors.
            Mr. Dodd's executive management experience in the
            pharmaceutical and biotechnology industries spans more than 35
            years. Before joining the Company, he was President, CEO and
            Chairman of BioReliance Corporation, a leading provider of
            biological safety and related testing services. During his
            six-year tenure as President, CEO and Director of Serologicals
            Corporation, the market value of that company increased from
            $85 million to an all-cash sale to Millipore Corporation for
            $1.5 billion. That successful transformation followed his
            five-year term as President and CEO of Solvay Pharmaceuticals,
            Inc. and as Chairman of its subsidiary Unimed Pharmaceuticals,
            Inc. Mr. Dodd also held various senior management positions at
            Wyeth-Ayerst Laboratories, the Mead Johnson Laboratories
            Division at Bristol-Myers Squibb, and Abbott Laboratories. Mr.
            Dodd holds a Master's degree from Georgia State University, and
            completed the Harvard Business School of Advanced Management

Zoptarelin Doxorubicin (AEZS-108)

        --  Co-development and revenue sharing agreement signed with
            Ergomed Clinical Research Ltd. ("Ergomed") as the contract
            clinical development organization for the ongoing Phase 3
            "ZoptEC" (Zoptarelin doxorubicin in Endometrial Cancer) trial
            in women with endometrial cancer resistant to
            platinum/taxane-based chemotherapy. Ergomed will assume 30% (up
            to $10 million) of the clinical and regulatory costs for this
            trial, which are estimated at approximately $30 million over
            the course of the study. Ergomed will be entitled to receive an
            agreed upon single-digit percentage of any net income received
            by the Company for zoptarelin doxorubicin (AEZS-108) in this
            indication, up to a specified maximum amount. This is an
            open-label, randomized, multicenter trial to be conducted in
            North America, Europe, and other territories under a Special
            Protocol Assessment ("SPA"). The trial will compare zoptarelin
            doxorubicin (AEZS-108) with doxorubicin as second line therapy
            for locally-advanced, recurrent or metastatic endometrial
            cancer. The trial will involve approximately 500 patients and
            the primary efficacy endpoint is improvement in median Overall

        --  Subsequent to quarter-end, the Company announced the initiation
            of patient-dosing in the ZoptEC trial.

        --  Encouraging final data for the Phase 1 portion of the ongoing
            Phase 1/2 trial in men with castration- and
            taxane   resistant prostate cancer with zoptarelin
            doxorubicin (AEZS-108) were presented at the American Society
            of Clinical Oncology Annual Meeting in Chicago. In general,
            zoptarelin doxorubicin (AEZS-108) was well tolerated and
            demonstrated promising evidence of its anti-tumor activity in
            this heavily pretreated population. Among the 15 evaluable
            patients with measurable disease, 10 achieved stable disease
            and a drop in PSA was noted in 3 patients. The maximum
            tolerated dose ("MTD") of zoptarelin doxorubicin (AEZS-108) in
            this indication was established at 210 mg/m2, which is below
            the MTD reported in women with refractory endometrial and
            ovarian cancer. The Phase 2 portion of this trial in prostate
            cancer is ongoing.

Macimorelin Acetate (AEZS-130)

        --  Ongoing preparation of a New Drug Application ("NDA")
            submission to the United States Food and Drug Administration
            for macimorelin acetate (AEZS-130) as an oral diagnostic test
            for Adult Growth Hormone Deficiency ("AGHD"). Phase 3 data have
            demonstrated that the compound has the potential to become the
            first orally-approved diagnostic test for AGHD, with accuracy
            comparable to available testing procedures.

Cetrotide((R)) Manufacturing Rights

        --  Binding agreements signed with various partners and licensees
            with respect to the manufacturing rights for Cetrotide(R),
            currently marketed for in vitro fertilization. The principal
            effect of such agreements is to transfer the manufacturing
            rights and to grant a manufacturing license for Cetrotide(R) to a
            subsidiary of Merck KGaA of Darmstadt, Germany ("Merck
            Serono"), in all jurisdictions (the "Cetrotide(R) Transactions").
            The Cetrotide(R)Transactions are expected to be completed on or
            about October 1, 2013, at which time Zentaris IVF GmbH, a
            direct wholly-owned subsidiary of AEZS GmbH ("AEZS Germany"),
            would receive a one-time payment of EUR2.5 million, or
            approximately $3.3 million, as well as certain other payments
            related to current assets and equipment to be transferred. In
            addition, AEZS Germany and Zentaris IVF GmbH also entered into
            a transitional services agreement with Merck Serono under which
            the Company will, during a 36-month period, provide various
            transition services to assist Merck Serono in assuming
            responsibility for the manufacturing of Cetrotide(R) in
            consideration for the payment of a monthly fee to Zentaris IVF
            GmbH throughout such period. The Company had previously
            monetized the royalty stream related to Cetrotide(R) in November
            2008 in a transaction with HealthCare Royalty Partners L.P.
            (formerly Cowen Healthcare Royalty Partners L.P.).

“At-the-Market” Issuance Program

        --  On May 21, 2013, the Company entered into an "At-the-Market"
            ("ATM") Sales Agreement, under which it may, at its discretion,
            from time to time during the term of the sales agreement, sell
            up to a maximum of 2.5 million of its common shares through ATM
            issuances on the NASDAQ for aggregate gross proceeds not to
            exceed $4.6 million.

        --  Between May 22, 2013 and June 30, 2013, the Company issued a
            total of 708,959 common shares under the May 2013 ATM Program
            for aggregate gross proceeds of $1.5 million.

Class Action Lawsuit

        --  The class action lawsuit filed against the Company and certain
            of its officers (the "Defendants") in the United States
            District Court for the Southern District of New York was
            entirely dismissed with prejudice and without leave to amend.
            No payment was made by any of the Defendants to the plaintiff
            or his counsel in connection with the lawsuit. The plaintiff
            did not appeal the judgment dismissing the lawsuit.

Registered Direct Offering

        --  On July 30, 2013, subsequent to quarter-end, the Company
            completed a registered direct offering of 5.2 million units, at
            a purchase price of $1.50 per unit, (the "Offering"),
            generating net proceeds of approximately $7 million. Each unit
            consisted of one common share and 0.5 of a warrant to purchase
            one common share. Each warrant is exercisable at any time after
            January 30, 2014 for a period of five years from the date of
            issuance at an exercise price of $1.85 per share. The Company
            intends to use the net proceeds of the Offering for the
            continued funding of its ongoing drug development activities,
            primarily for the advancement of its zoptarelin doxorubicin
            (AEZS-108) program, secondly for its macimorelin acetate
            (AEZS-130) program, as well as for general corporate purposes
            and working capital.

Cash and cash equivalents totalled $25.3 million as at June 30, 2013, compared to $39.5 million as
at December 31, 2012.

David Dodd, Aeterna Zentaris President and Chief Executive Officer,
commented, “Over the past few months, we have successfully met four out
of the five critical objectives that were previously outlined: (1)
transfer of Cetrotide((R)) manufacturing rights to Merck Serono; (2) initiation of patient
recruitment and dosing of the first patient, as well the signed
agreement with Ergomed as CRO for our very important Phase 3 ZoptEC
trial in endometrial cancer; (3) successful raising of important
financing in support of our ongoing operations and development
programs; and (4) significant efforts related to obtaining
on-the-market products that will accelerate our strategy aimed at
transitioning to a revenue and cash generating company. As for the
fifth objective, we are finalizing our preparation for submitting the
NDA for macimorelin acetate (AEZS 130) as the only approved oral
diagnostic test for adult growth hormone deficiency. Having now
completed my initial three months with the Company, I am even more
confident in our ability to successfully develop Aeterna Zentaris to a
position of commercial and competitive presence within our target

Dennis Turpin, CPA, CA, Senior Vice President and Chief Financial
Officer at Aeterna Zentaris stated, “As of June 30, 2013, including net
proceeds from the recent Offering, we had a pro forma cash and cash
equivalents position of $32.3 million which enables us to continue to
move our key product candidates through the pipeline.”


Revenues were $30.1 million for the three-month period ended June 30, 2013,
compared to $7.5 million for the same period in 2012. The increase is
largely attributable to the acceleration of the recognition of
previously deferred revenues received in connection with the 2008 sale
of the Cetrotide((R)) royalty stream to HealthCare Royalty Partners L.P.

R&D costs, net of refundable tax credits and grants were $5.3 million for the three-month period ended June 30, 2013,
compared to $5.2 million for the same period in 2012.

Selling, general and administrative (“SG&A”) expenses were $5.8 million for the three-month period ended June 30, 2013,
compared to $3.6 million for the same period in 2012. The increase is
mainly related to the termination benefits granted to the Company’s
former CEO and to the related non-cash share-based compensation costs.

Net income for the three-month period ended June 30, 2013 was $9.3 million or
$0.37 per basic and diluted share, compared to $4.5 million or $0.25
per basic and diluted share for the same period in 2012. The
significant increase is due largely to the significant increase in
royalties revenues (non-cash), partly offset by lower net finance
income (non-cash), as well as by higher SG&A.


Management will be hosting a conference call for the investment
community beginning at 8:30 a.m. (Eastern Time) tomorrow, Friday,
August 9, 2013, to discuss the 2013 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 (“MD&A”) for the
second quarter 2013 with the associated Unaudited Interim Condensed
Consolidated Financial Statements can be found at www.aezsinc.com in the Investors section.

About Aeterna Zentaris

Aeterna Zentaris is a specialty biopharmaceutical company engaged in
developing novel treatments in oncology and endocrinology. The
Company’s pipeline encompasses compounds from drug discovery to
regulatory approval. 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 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.

Interim Consolidated Statements of Comprehensive Income Information

                     Three months ended June     Six months ended June 30,

    (in thousands,       2013         2012           2013           2012
    except share
    and per share

                           $            $              $              $


    Sales and            29,751        7,239         39,960         15,547

    License fees            336          232          6,726          1,434
    and other

                         30,087        7,471         46,686         16,981


    Cost of sales         9,438        6,262         18,122         13,775

    Research and          5,316        5,167          9,717         10,739
    costs, net of
    refundable tax
    credits and

    Selling,              5,848        3,642          9,642          6,855
    general and

                         20,602       15,071         37,481         31,369

    Income (loss)         9,485      (7,600)          9,205       (14,388)

    Finance income          379       12,140          2,183          7,477

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

    Net finance           (155)       12,140          2,011          7,477
    (costs) income

    Net income            9,330        4,540         11,216        (6,911)

    income (loss):

    Items that may
    to profit or

      Foreign             (141)           52             99          (203)

    Comprehensive         9,189        4,592         11,315        (7,114)
    income (loss)

    Net income
    (loss) per

    Basic                  0.37         0.25           0.44         (0.38)

    Diluted                0.37         0.25           0.44         (0.38)

    average number
    of shares

    Basic            25,542,263   18,509,690     25,436,364     18,089,582

    Diluted          25,542,263   18,509,969     25,436,385     18,089,582

Interim Consolidated Statement of Financial Position Information

                                        As at June 30,   As at December 31,

    (in thousands)                             2013                2012

                                                 $                   $

    Cash and cash equivalents                   25,339               39,521

    Trade and other receivables and             14,111               13,780
    other current assets

    Restricted cash                                816                  826

    Property, plant and equipment                1,611                2,147

    Other non-current assets                    11,034               11,391

    Total assets                                52,911               67,665

    Payables and accrued liabilities            11,532               10,440

    Current portion of deferred                 11,842                5,235

    Current portion of long-term               --                   30

    Warrant liability                            4,078                6,176

    Non-financial non-current                   17,669               52,479

    Total liabilities                           45,121               74,360

    Shareholders' equity (deficiency)            7,790              (6,695)

    Total liabilities and                       52,911               67,665
    shareholders' equity (deficiency)


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

SOURCE Aeterna Zentaris Inc.

Source: PR Newswire