AEZS Aeterna Zentaris Inc

Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS) (“Aeterna” or the “Company”), a specialty biopharmaceutical company developing and commercializing a diversified portfolio of pharmaceutical and diagnostic products, today reported its financial and operating results for the second quarter ended June 30, 2021. The Company also provided an update on its pre-clinical and clinical development programs.

“Our team continues its solid execution to drive forward the development across our clinical and preclinical programs. During the second quarter, we achieved key milestones across multiple fronts including bolstering our management team and scientific expertise, commencing our pivotal Phase 3 DETECT-trial of macimorelin, and advancing our earlier-stage preclinical development pipeline,” commented Dr. Klaus Paulini, Chief Executive Officer of Aeterna. “I believe we are well-positioned to propel the Company forward with the goal of creating meaningful shareholder value.”

Recent Highlights:

• Engaged neuro-immunologist, Michael Levy, MD, PhD, Research Director of the Division of Neuroimmunology & Neuroinfectious Disease at Massachusetts General Hospital as a scientific consultant to support the development of the Company's targeted, highly specific immunosuppressive therapeutic proteins (“AIM Biologicals”) for the potential treatment of neuromyelitis optica spectrum disorder (“NMOSD”).
• Advanced preclinical development planning for potential orally active COVID-19 (SARS-CoV-2) live-attenuated bacterial vaccine program.
• Initiated the preclinical program to qualify macimorelin for clinical development as a potential treatment option for amyotrophic lateral sclerosis (ALS; Lou Gehrig's disease).
• Commenced its pivotal Phase 3 safety and efficacy study AEZS-130-P02 (“the DETECT-trial") evaluating macimorelin for the diagnosis of childhood-onset growth hormone deficiency (“CGHD”) in collaboration with Novo Nordisk.
• In consultation with The University of Sheffield, UK, selected AEZS-150 as the lead candidate in the Company's delayed clearance parathyroid hormone fusion polypeptides (“DC-PTH”) program.
• Appointed Michael Teifel, Ph.D. as Senior Vice President, Non-Clinical Development and Chief Scientific Officer.
• Fully settled the previously disclosed class-action lawsuit against it in the U.S. District Court for the District of New Jersey, as approved by the U.S. District Court for the District of New Jersey.

All amounts in this press release are in U.S. dollars unless otherwise noted.

Preclinical and Clinical Programs Update:

Diagnostics Development Pipeline

Macimorelin Diagnostic: Ghrelin agonist in development for diagnostic use in childhood-onset growth hormone deficiency (“CGHD”)

Aeterna Zentaris is currently conducting its pivotal Phase 3 safety and efficacy study AEZS-130-P02 ("the DETECT-trial") evaluating macimorelin for the diagnosis of CGHD. Children and adolescents from two to less than 18 years of age with suspected GHD are to be included. The study is expected to include approximately 100 subjects worldwide, with at least 40 subjects in pre-pubertal and 40 subjects in pubertal status. Macimorelin growth hormone stimulation test (“GHST”) will be performed twice for repeatability data and two standard GHSTs will be used as controls: arginine (i.v.) and clonidine (p.o.). On April 22, 2021, the U.S. FDA Investigational New Drug Application associated with this clinical trial became active. The first clinical site in the U.S. is now open for patient recruitment.

Next Steps

• Conduct and completion of the DETECT-trial.

Therapeutics and Vaccine Development Pipeline

AIM Biologicals: Targeted, highly specific autoimmunity modifying therapeutics for the potential treatment of neuromyelitis optica spectrum disorder (“NMOSD”)

In January 2021, Aeterna Zentaris entered into an exclusive patent license and research agreement with Julius-Maximilians-University of Wuerzburg, Germany for worldwide rights to develop, manufacture and commercialize AIM Biologicals for the potential treatment of NMOSD. The Company is currently conducting in-vitro and in-vivo assessments to identify and characterize an AIM Biologicals-based development candidate for the treatment of NMOSD and to develop a manufacturing process for the selected candidate. Additionally, the Company recently engaged neuro-immunologist, Dr. Michael Levy, who will provide scientific support and advice in the field of inflammatory CNS disorders, autoimmune diseases of the nervous system, and NMOSD.

Next Steps

• Conduct further preclinical research to identify and characterize an AIM Biologicals-based development candidate for the treatment of NMOSD.
• Manufacturing process development for selected candidate.

Macimorelin Therapeutic: Ghrelin agonist in development for the treatment of ALS (Lou Gehrig’s disease)

In January 2021, the Company entered into a material transfer agreement (“MTA”) with Queensland University, Australia, to provide macimorelin for the conduct of preclinical and subsequent clinical studies evaluating macimorelin as a potential therapeutic for the treatment of ALS (Lou Gehrig’s disease). Queensland University researchers have filed for supportive grants and aim to conduct preclinical studies in multiple models to demonstrate the therapeutic reach of macimorelin on disease progression and disease-specific pathology. They also plan to conduct a subsequent investigator initiated clinical trial given positive pre-clinical results.

Macimorelin, a ghrelin agonist, is an orally active small molecule that stimulates the secretion of growth hormone from the pituitary gland. Acting via this mechanism, it is believed that macimorelin may slow the progression of certain neurodegenerative diseases like ALS.

Next Steps

• Work with Queensland University to conduct proof-of-concept studies with macimorelin in disease-specific animal models.
• Assess alternative formulations.
• Formalize preclinical development plan.

Delayed Clearance Parathyroid Hormone (“DC-PTH”) Fusion Polypeptides: Potential treatment for primary hypoparathyroidism

In March 2021, Aeterna entered into an exclusive patent and know-how license agreement and research agreement with The University of Sheffield, United Kingdom, for the intellectual property relating to DC-PTH fusion polypeptides with delayed clearance covering the field of all human uses. In consultation with the University, Aeterna has selected AEZS-150 as the lead candidate in its delayed clearance parathyroid hormone fusion polypeptides (“DC-PTH”) program. Aeterna will now start the formal preclinical development of AEZS-150 in preparation for a potential IND filing for conducting the first in-human clinical study of AEZS-150. AEZS-150 is being developed with the goal of providing a potential new treatment option of primary hypoparathyroidism in adults.

Next Steps

• Work with The University of Sheffield to conduct in depth characterization of development candidate (in-vitro and in-vivo).
• Develop manufacturing process.

Oral Coronavirus Vaccine Platform: Potential orally active COVID-19 (SARS-CoV-2) live-attenuated bacterial vaccine

In February 2021, Aeterna entered into an exclusive option agreement with Julius-Maximilians-University to evaluate a preclinical, potential COVID-19 vaccine developed at Julius-Maximilians-University. In March 2021, the Company exercised its option and entered into a license agreement where the Company was granted an exclusive, world-wide, license to certain patent applications and know-how owned by Julius-Maximilians-University to research and develop, manufacture, and sell a potential COVID-19 vaccine.

Julius-Maximilians-University also granted Aeterna an option for the exclusive use of certain patent applications and know-how in an additional, so-far undisclosed field. The Company has six months from the date of the license agreement to exercise that option. Additionally, Aeterna entered into a Research Agreement under which the Company has engaged Julius-Maximilians-University on a fee-for-service basis to conduct supplementary research work and preclinical development studies on the potential vaccine, the results of which will be included within the scope of the license agreement.

Next Steps

• Conclude in-vivo immunology experiments with antigen variant vaccine candidates.
• Perform challenge experiments in immunized transgenic animals as proof of concept.
• Select a development candidate for initiation of the formal preclinical toxicology and safety studies.
• Start manufacturing process assessment / development.

Financing and Warrant Exercises

During the period between January 1, 2021 and June 30, 2021, holders have exercised certain of the Company’s outstanding warrants to purchase 35,011,187 of the Company’s common shares for gross proceeds of approximately $20.0 million. The Company had $69.9 million cash and cash equivalents at June 30, 2021 (March 31, 2021 – 73.4 million).

Summary of Second Quarter 2021 Financial Results

Results of operations for the three-month period ended June 30, 2021

For the three-month period ended June 30, 2021, we reported a consolidated net loss of $2.0 million, or $0.02 loss per common share (basic), as compared with a consolidated net loss of $3.5 million, or $0.15 loss per common share (basic) for the three-month period ended June 30, 2020. The $1.5 million improvement in net loss is primarily from an increase in net finance income of $2.1 million and an increase of $0.5 million in total revenues, partially offset by an increase of $1.2 million in total operating expenses.

Revenues

• Our total revenue for the three-month period ended June 30, 2021 was $0.60 million as compared with $0.07 million for the same period in 2020, representing an increase of $0.53 million. The 2021 revenue was comprised of $0.5 million in licensing revenue (2020 - $0.02 million), $0.04 million in supply chain revenue (2020 - $0.04 million) and $0.02 million in royalty income (2020 - $0.01 million). The licensing revenue was earned from the recognition of a portion of the deferred €5 million payment from Novo Nordisk received with the amendment to the Novo License agreement in the fourth quarter of 2020.

Operating expenses

• Our total operating expenses for the three-month period ended June 30, 2021 was $2.7 million as compared with $1.5 million for the same period in 2020, representing an increase of $1.2 million. This increase arose primarily from a $0.5 million increase in research and development costs and $0.5 million increase in general and administrative expenses and an increase of $0.1 million in selling expenses. This increase in total operating expense is due to the initiation of research and development projects as announced in the first quarter of 2021, and higher public company costs incurred holding our annual shareholders meeting in May 2021, subsequent to our issuance of common shares in the February 2021 financing and the 2021 warrant exercises, in addition to higher auditor fees mostly related to F-3 warrant registration filings.

Net finance (costs) income

• Our net finance income for the three-month period ended June 30, 2021 was $0.1 million as compared with net finance costs of ($2.0 million) for the same period in 2020, representing an increase in net finance income of $2.1 million. This is primarily due to the $2.1 million decrease in change in fair value of warrants. Unlike as at June 30, 2020, the Company did not account for its warrants as liabilities as at June 30, 2021. As at June 30, 2020, the fair value of such liabilities was classified as a finance cost in the consolidated statements of loss and comprehensive loss.

Consolidated Financial Statements and Management’s Discussion and Analysis

For reference, the Management's Discussion and Analysis of Financial Condition and Results of Operations for the second quarter of 2021, as well as the Company's unaudited consolidated interim financial statements as of June 30, 2021, will be available at www.zentaris.com in the Investors section or at the Company’s profile at www.sedar.com and www.sec.gov.

About Aeterna Zentaris Inc.

Aeterna Zentaris is a specialty biopharmaceutical company developing and commercializing a diversified portfolio of pharmaceutical and diagnostic products focused on areas of significant unmet medical need. The Company’s lead product, macimorelin (Macrilen™), is the first and only U.S. FDA and European Commission approved oral test indicated for the diagnosis of adult growth hormone deficiency (AGHD). The Company is leveraging the clinical success and compelling safety profile of macimorelin to develop it for the diagnosis of childhood-onset growth hormone deficiency (CGHD) in collaboration with Novo Nordisk.

Aeterna Zentaris is dedicated to the development of therapeutic assets and has recently taken steps to establish a growing preclinical pipeline to potentially address unmet medical needs across a number of indications, including neuromyelitis optica spectrum disorder (NMOSD), hypoparathyroidism and amyotrophic lateral sclerosis (ALS; Lou Gehrig’s disease). Additionally, the Company is developing an oral prophylactic bacterial vaccine against SARS-CoV-2, the virus that causes COVID-19.

For more information, please visit www.zentaris.com and connect with the Company on Twitter, LinkedIn and Facebook.

Forward-Looking Statements

This press release contains statements that may constitute forward-looking statements within the meaning of U.S. and Canadian securities legislation and regulations and such statements are made pursuant to the safe-harbor provision of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “potential,” “possible,” and similar expressions. Such statements, based as they are on current expectations of management, inherently involve numerous risks, uncertainties and assumptions, known and unknown, many of which are beyond our control. Forward-looking statements in this press release include, but are not limited to, those relating to:

Aeterna’s expectation with respect to the DETECT-trial (including regarding the enrollment of subject in the DETECT-trial, the application of the Macimorelin growth hormone stimulation test and the completion of the DETECT-trial); Aeterna’s expectations regarding conducting preclinical research to identify and characterize an AIM Biologicals-based development candidate for the treatment of NMOSD and developing a manufacturing process for a selected candidate; Queensland University undertaking a subsequent investigator initiated clinical trial evaluating macimorelin as a potential therapeutic for the treatment of ALS and Aeterna formulating a pre-clinical development plan for same; the commencement of Aeterna’s formal preclinical development of AEZS-150 in preparation for a potential IND filing for conducting the first in-human clinical study of AEZS-150; Aeterna’s plans to perform challenge experiments, select a development candidate and establish a manufacturing process for the orally active COVID-19 (SARS-CoV-2) live-attenuated bacterial vaccine.

Forward-looking statements involve known and unknown risks and uncertainties, and other factors which may cause the actual results, performance or achievements stated herein to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such risks and uncertainties include, among others, our reliance on the success of the pediatric clinical trial in the European Union and U.S. for Macrilen™ (macimorelin); the commencement of the DETECT-trial may be delayed or we may not obtain regulatory approval to initiate that study, we may be unable to enroll the expected number of subjects in the DETECT-trial and the result of the DETECT-trial may not support receipt of regulatory approval in CGHD; the coronavirus vaccine platform technology (and any vaccine candidates using that technology) licensed from Julius-Maximilians-University has never been tested in humans and so further pre-clinical or clinical studies of that technology and any vaccine developed using that technology may not be effective as a vaccine against COVID-19 (SARS-CoV-2) or any other coronavirus disease; the timeline to develop a vaccine may be longer than expected; such technology or vaccines may not be capable of being used orally, may not have the same characteristics as vaccines previously approved using the Salmonella Typhi Ty21a carrier strain; results from ongoing or planned pre-clinical studies of macimorelin by Queensland University or for our other products under development may not be successful or may not support advancing the product to human clinical trials; our ability to raise capital and obtain financing to continue our currently planned operations; our now heavy dependence on the success of Macrilen™ (macimorelin) and related out-licensing arrangements and the continued availability of funds and resources to successfully commercialize the product, including our heavy reliance on the success of the License Agreement with Novo Nordisk; the global instability due to the global pandemic of COVID-19, and its unknown potential effect on our planned operations; our ability to enter into out-licensing, development, manufacturing, marketing and distribution agreements with other pharmaceutical companies and keep such agreements in effect. Investors should consult our quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties, including those risks discussed in our Annual Report on Form 40-F and annual information form, under the caption "Risk Factors". Given the uncertainties and risk factors, readers are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce 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 applicable law.

No securities regulatory authority has either approved or disapproved of the contents of this news release. The Toronto Stock Exchange accepts no responsibility for the adequacy or accuracy of this release.

Investor Contact:

Jenene ThomasJTC TeamT (US): +1 (833) 475-8247E: aezs@jtcir.com