Prepares for Q4 2017 FDA Approval and Q1 2018
Commercial Launch
Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS) (the
“Company”), a specialty biopharmaceutical company engaged in
developing and commercializing novel pharmaceutical therapies,
today reported financial and operating results for the third
quarter ended September 30, 2017.
Third Quarter 2017 Highlights:
- Macimorelin development progressing
toward completion with Prescription Drug User Fee Act date of
December 30, 2017;
- Company prepares for the U.S. Food and
Drug Administration (“FDA”) approval and Q1 2018 target commercial
launch date;
- Jeffrey A. Whitnell joins as Interim
Chief Financial Officer;
- Stifel, Nicolaus & Company,
Incorporated retained as strategic advisors;
- Cash on hand of $12.2 million of
unrestricted cash and cash equivalents at quarter-end sufficient to
take Macrilen™ through approval and no third-party debt;
- Company adopts disciplined business
model focused on cost containment through zero-based budgeting and
preserving cash reserves for Macrilen™ product launch.
“We are continuing our laser focus on preparation for the FDA
approval of Macrilen™ by December 30, 2017, which will be the only
FDA-approved drug for assessing adult growth hormone deficiency in
the United States,” said Michael V. Ward, Aeterna Zentaris, Chief
Executive Officer. “Our goal is to launch the product in the first
quarter of 2018. The Company has reached an important point in its
evolution with Jeff Whitnell joining us as the Interim Chief
Financial Officer and retention of Stifel Nicolaus during the
quarter. We are making progress building out a stronger management
team and adopting a disciplined process for strategic review of
plans, resources and opportunities. Going forward, we will continue
to demonstrate our commitment to ensure that we optimize the use of
resources and capital and best position the Company to maximize
shareholder value.”
“I am pleased at this time to report that we are almost $2
million dollars ahead in cash reserves of where we thought we would
be at this time due to our disciplined new business model that
focuses on cost containment realized through zero-based budgeting,
said Jeff Whitnell, Interim Chief Financial Officer, Aeterna
Zentaris. “These cash reserves position us to take Macrilen™
through approval.”
Third Quarter Financials
All Amounts are in U.S. Dollars
Revenues
Revenues were $241,000 and $745,000 for the three and nine
months ended September 30, 2017, as compared to $269,000 and
$607,000 for the same periods in 2016. The year-to-date increase is
mainly explained by the expanded contract with Armune BioScience,
Inc. (APIFINY®), which was effective June 1, 2016 and the
amortization of the up-front payment received in connection with
one of the out-licensing agreements that we entered into in the
third quarter of 2016 for ZoptrexTM.
Research and Development (“R&D”) costs
R&D costs were $4.1 million and $10.2 million for the three
and nine months ended September 30, 2017, compared to $4.5 million
and $11.9 million for the same periods in 2016. R&D costs
decreased for the three-month and nine-month periods ended
September 30, 2017. The decrease in our R&D costs is mainly
attributable to lower comparative third-party costs partially
offset by the recording, in the third quarter of 2017, of a
provision in connection with the Restructuring Program.
Third-party costs attributable to Zoptrex™ decreased during the
three and nine months ended September 30, 2017, as compared to the
same period in 2016, mainly due to the fact that we closed out the
study and related activities in the second quarter following the
negative ZoptrexTM top-line results on May 1, 2017. The negative
costs for the three-month period ended September 30, 2017 are
mainly explained by lower close out costs as compared to the
accrual made in the second quarter.
Third-party costs attributable to Macrilen™ decreased during the
three and nine months ended September 30, 2017, as compared to the
same period in 2016. This is mainly due to the fact that we
completed the Phase 3 clinical trial at the end of 2016. The costs
incurred in 2017 related to the detailed analysis of the top-line
results as well as the preparation of the New Drug Application
(“NDA”) filing which was submitted on June 30, 2017. The cost
incurred in the third quarter of 2017 are explained mainly by the
close out costs as well as additional analysis required by the
FDA.
General and Administrative (“G&A”) Expenses
G&A expenses were $1.7 million and $5.4 million for both the
three and nine-month periods ended September 30, 2017, as compared
to $1.6 million and $5.4 million for the same periods in 2016. The
G&A expenses were in-line with our expectations.
Selling Expenses
Selling expenses were $1.7 million and $4.6 million for the
three and nine months ended September 30, 2017, as compared to $1.8
million and $5.2 million for the same periods in 2016. Selling
expenses for the three and nine months ended September 30, 2017 and
2016 represent mainly the costs of our sales force related to
co-promotion activities as well as our sales management team. The
decrease in selling expenses is explained by the reduction in the
number of sales representatives from 20 to 13 since February 2017.
In July 2017, we further reduced the number of sales representative
to 10 and we reduced our headcount by one sales manager. Following
the creation of the Strategic Review Committee, the board of
directors of the Company is currently evaluating options to be
ready to promote Macrilen™ quickly following the expected
approval.
Net Finance (Costs) Income
Net finance (costs) income was $(2.4) million and $3.2 million
for the three and nine months ended September 30, 2017, as compared
to $1.6 million and $5.1 million, for the same periods in 2016. The
decrease in finance income is mainly attributable to the change in
fair value recorded in connection with our warrant liability. Such
change in fair value results from the periodic "mark-to-market"
revaluation, via the application of option pricing models, of
outstanding share purchase warrants. The closing price of our
common shares, which, on the NASDAQ, fluctuated from $0.84 to $3.65
during the nine-month period ended September 30, 2017, compared to
$2.67 to $4.40 during the same period in 2016, also had a direct
impact on the change in fair value of warrant liability.
Net Loss
Net loss for the three and nine months ended September 30, 2017
was $9.6 million and $16.3 million (or $0.61 and $1.13 per share),
as compared to a net loss of $6.1 million and $16.7 million (or
$0.61 and $1.68 per share) for the same periods in 2016. The
increase in net loss for the three-month period ended September 30,
2017 is mainly explained by the change in fair value of the warrant
liability due to the increase in the share price since June 30,
2017. However, the loss per share during the same period remained
stable due to the increase in the weighted average number of shares
due to a share issuance done in November 2016 and “at-the-market”
issuances done in 2017. The increase in the weighted average number
of shares also explains the decrease in the loss per share for the
nine-month period.
Liquidity
Cash and cash equivalents were $12.2 million as at September 30,
2017, as compared to $22.0 million as at December 31, 2016. The
decrease in cash and cash equivalents as at September 30, 2017, as
compared to December 31, 2016, is due to the net cash used in
operating activities including variations in components of our
working capital. The decrease was partially offset by the net
proceeds generated by the issuance of common shares under our
various “at-the-market” programs.
Conference Call
The Company will host a conference call to discuss these results
on Thursday, November 9, 2017 at 8:30 a.m., Eastern Time.
Participants may access the conference call using the following
dial-in numbers:
- Toll-Free: 877-407-8029,
Confirmation #13672701
- Toll: 201-689-8029, Confirmation
#13672701
A replay of the conference call will also be available on the
Company’s website for a period of 30 days.
For reference, management’s discussion and analysis of financial
condition and results of operations for the third quarter ended
September 30, 2017, as well as the Company’s interim condensed
consolidated financial statements as at September 30, 2017, 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 pharmaceutical
therapies. We are engaged in drug development activities and in the
promotion of products for others. We recently resubmitted an NDA to
the FDA seeking approval of Macrilen™, an internally developed
compound. The focus of our business development efforts is the
acquisition of licenses to products that are relevant to our
therapeutic areas of focus. We also intend to license out certain
commercial rights of internally developed products to licensees in
non-U.S. territories where such out-licensing would enable us to
ensure development, registration and launch of our product
candidates. Our goal is to become a growth-oriented specialty
biopharmaceutical company by pursuing successful development and
commercialization of our product portfolio, achieving successful
commercial presence and growth, while consistently delivering value
to our shareholders, employees and the medical providers and
patients who will benefit from our products. For more information,
visit www.aezsinc.com.
Forward-Looking Statements
This press release contains forward-looking statements made
pursuant to the safe-harbor provision of the U.S. Securities
Litigation Reform Act of 1995 and applicable Canadian securities
laws, which reflect our current expectations regarding future
events. Forward-looking statements may include, but are not limited
to statements preceded by, followed by, or that include the words
“expects,” “believes,” “intends,”, “would”, “could”, “may”
“anticipates,” and similar terms that relate to future events,
performance, or our results. Forward-looking statements involve
known risks and uncertainties, many of which are discussed under
the caption “Key Information - Risk Factors” in our most recent
Annual Report on Form 20-F filed with the relevant Canadian
securities regulatory authorities in lieu of an annual information
form and with the U.S. Securities and Exchange Commission (“SEC”).
Such statements include, but are not limited to, statements about
the timing of, and prospects for, regulatory approval and
commercialization of our product candidates, statements about the
status of our efforts to establish a commercial operation and to
obtain the right to promote or sell products that we did not
develop and estimates regarding our capital requirements and our
needs for, and our ability to obtain, additional financing. Known
and unknown risks and uncertainties could cause our actual results
to differ materially from those in forward-looking statements. Such
risks and uncertainties include, among others, our now heavy
dependence on the success of Macrilen™ and the continued
availability of funds and resources to successfully launch the
product in the event the FDA approves Macrilen™, the rejection or
non-acceptance of the NDA by one or more regulatory authorities
and, more generally, uncertainties related to the regulatory
process, the ability of the Company to efficiently commercialize
Macrilen™, the degree of market acceptance of Macrilen™ in the
event it is approved for commercialization by the FDA, our ability
to obtain necessary approvals from the relevant regulatory
authorities to enable us to use the desired brand names for our
products, the impact of securities class action litigation, the
litigation involving two former officers of the Company, or other
litigation on our cash flow, results of operations and financial
position; any evaluation of potential strategic alternatives to
maximize potential future growth and stakeholder value may not
result in any such alternative being pursued, and even if pursued,
may not result in the anticipated benefits, our ability to take
advantage of business opportunities in the pharmaceutical industry,
our ability to protect our intellectual property, the potential of
liability arising from shareholder lawsuits and general changes in
economic conditions. Investors should consult the Company’s
quarterly and annual filings with the applicable Canadian and U.S.
securities commissions for additional information on risks and
uncertainties. Given these 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.
Condensed Interim Consolidated Statement of Financial
Position Information
(In thousands)
As at September 30, As
at December 31, (unaudited)
2017 2016 $ $
Cash and cash equivalents 1
12,173 21,999 Trade and other
receivables and other current assets
802 744 Restricted cash
equivalents
377 496 Property, plant and equipment
154
204 Other non-current assets
9,032 8,216
Total
assets 22,538 31,659 Payables and other
current liabilities
2,665 3,745 Provision for restructuring
costs
2,452 33 Current portion of deferred revenues
479 426 Warrant liability
3,419 6,854 Non-financial
non-current liabilities 2
15,478 14,389
Total
liabilities 24,493 25,447 Shareholders'
(deficiency) equity (1,955 ) 6,212
Total
liabilities and shareholders' (deficiency) equity 22,538
31,659
_________________________
- Approximately $1.0 million and $1.5
million were denominated in EUR as at September 30, 2017 and
December 31, 2016, respectively, and approximately $1.7 million and
$3.7 million were denominated in Canadian dollars as at September
30, 2017 and December 31, 2016, respectively.
- Comprised mainly of employee future
benefits, provisions for onerous contracts and non-current portion
of deferred revenues.
Condensed Interim Consolidated Statements of
Comprehensive Loss Information
(In thousands, except share and per share
data)
Three months ended
Nine months ended September 30, 2017 September 30,
2017 (unaudited)
2017 2016 2017
2016 $ $ $ $
Revenues Sales commission and other
122 105
406 319 License fees
119 164
339
288
241 269
745
607
Operating expenses Research and development costs
4,124 4,512
10,178 11,876 General and administrative
expenses
1,665 1,631
5,420 5,390 Selling expenses
1,652 1,829
4,643 5,219
7,441 7,972
20,241
22,485
Loss from operations (7,200 )
(7,703 )
(19,496 ) (21,878 ) Gain (loss) due to
changes in foreign currency exchange rates
169 (64 )
430 326 Change in fair value of warrant liability
(2,617 ) 1,687
2,700 4,682 Other finance
income
17 25
54 131
Net finance (costs) income (2,431 ) 1,648
3,184 5,139
Net loss
(9,631 ) (6,055 )
(16,312 ) (16,739 )
Other comprehensive (loss) income: Items that may be
reclassified subsequently to profit or loss: Foreign currency
translation adjustments
(400 ) (62 )
(1,192
) (301 ) Items that will not be reclassified to profit or
loss: Actuarial gain (loss) on defined benefit plans
—
(400 )
635 (2,622 )
Comprehensive loss
(10,031 ) (6,517 )
(16,869 ) (19,662 )
Net loss per share (basic and diluted) (0.61 )
(0.61 )
(1.13 ) (1.68 )
Weighted average number of
shares outstanding: Basic and Diluted
15,803,080
9,951,573
14,457,421 9,938,980
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Aeterna Zentaris Inc.Michael V. WardChief Executive
OfficerIR@aezsinc.com843-900-3223
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