Aeterna Zentaris Inc. (NASDAQ:AEZS) (TSX:AEZS)
today reported financial and operating results for the fourth
quarter and year ended December 31, 2017.
All Amounts are in U.S. Dollars
Recent Key Developments
- U.S. Food and Drug Administration (FDA) granted marketing
approval for Macrilen™
- Marketing Authorization Application (MAA) for the use of
Macrilen™ (macimorelin) for the evaluation of AGHD was accepted by
the European Medicines Agency (EMA) for regulatory review
- Macrilen™(macimorelin) License and Assignment Agreement to
Strongbridge Biopharma completed
- Financial condition and capital structure improved
- As of December 31, 2017, we had $7.8 million
of unrestricted cash and cash equivalents at
year-end and no third-party debt;
- Upfront payment of $24 million received from Strongbridge in
January 2018
- Approximately 16,440,760 Common Shares outstanding as of March
27, 2018
- Appointment of James Clavijo as Chief Financial Officer
Commenting on recent key developments, Michael
V. Ward, President and Chief Executive Officer for Aeterna
Zentaris, stated, "We made a positive transformation in the fourth
quarter 2017 when we pursued out-licensing to maximize shareholder
value and now are focused on the flawless execution of the
contractual obligations with Strongbridge. We have been working
with the exceptional leadership team at Strongbridge to transition
Macrilen™ and are on target to support their efforts to
successfully launch Macrilen™ as early as possible."
Mr. Ward continued his commentary with an update
on the development of Macrilen™. "We are now in a better position
to maximize additional value of Macrilen™ by licensing in
territories outside of the United States and Canada. We have
continued adjustment of the operating plan in Germany and the
United States to reduce non-essential expenses. We further enhanced
our operations with the appointment of James Clavijo as Chief
Financial Officer on March 5, 2018. James is highly-skilled at
building effective financial systems, organization restructuring,
and developing solutions leading to financial and operational
improvements."
Financial Highlights
Revenues $0.9 million
Research and Development (“R&D") Costs $10.7
million
General and Administrative (“G&A") Expenses
$8.2 million
Selling Expenses $5.1 million
Net Finance Costs Income $2.8 million
Income Tax Recovery $3.5 million
Net Loss $16.8 million
Working Capital $3.6 million
Fourth Quarter and Full-Year
Highlights
Revenues
Sales commission and other were $0.1 million and
$0.5 million for the three and twelve months ended December 31,
2017 and $0.1 million and $0.4 million for the same periods in
2016, and thus increased in 2017 as compared to 2016. In 2017,
those revenues mainly resulted from our sales team exceeding
pre-established unit sales baseline thresholds under our
co-promotion agreement to sell Saizen®. We also generated sales
commission in connection with our promotion of APIFINY®. In the
corresponding periods in 2016, sales commission and other revenues
were mainly related to EstroGel®.
License fees were $0.1 million and $0.5 million
for the three and twelve months ended December 31, 2017, as
compared to $0.2 million and $0.5 million for the same periods in
2016.
The Company currently has deferred revenues at
December 31, 2017 of $541,000 relating to non-refundable upfront
payments it previously received for licensing and technology
transfer arrangements that it entered into with respect to the
development of Zoptrex™ in various territories. Due to events that
occurred in 2018, the Company does not anticipate development of
Zoptrex™ under the licensing agreements, therefore the Company's
remaining carrying amount of deferred revenues will be recognized
in the first quarter of 2018 as income.
Operating Expenses
R&D costs were $0.5 million and $10.7
million for the three and twelve months ended December 31, 2017,
compared to $4.6 million and $16.5 million for the same periods in
2016. R&D costs decreased for the three-month and twelve-month
periods ended December 31, 2017 as compared to the same period in
2016. The decrease in R&D costs is mainly attributable to lower
comparative third-party costs, as described below, partially offset
by the recording, in the third quarter of 2017, of a provision in
connection with the 2017 German Restructuring.
Additionally, the decrease in our R&D costs
for the twelve months ended December 31, 2017, as compared to the
same period in 2016, is attributable to lower employee compensation
and benefits costs, lower facilities rent and maintenance costs as
well as lower other costs. A substantial portion of this decrease
is due to the realization of cost savings in connection with our
ongoing efforts to streamline our R&D activities and to
increase our commercial operations and flexibility by reducing our
R&D staff, which was started in 2014 (the "Resource
Optimization Program"). The R&D costs for the year ended
December 31, 2017 were lower than anticipated mainly because we
were able to negotiate reductions to a change order received from
our principal R&D third-party service provider.
Third-party costs attributable to Zoptrex™
decreased during the three and twelve months ended December 31,
2017, as compared to the same period in 2016, mainly since we
closed out the study and related activities in the second quarter
following the negative Zoptrex™ top-line results on May 1, 2017.
The negative costs for the three-month period ended December 31,
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™
(macimorelin) decreased during the three and twelve months ended
December 31, 2017, as compared to the same period in 2016. This is
mainly since 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 NDA
filing which was submitted on June 30, 2017. The costs reversal in
the fourth quarter of 2017 are explained mainly by the reductions
to close out costs.
Excluding the impact of foreign exchange rate
fluctuations, we expect that we will incur overall R&D costs of
between $1.0 million and $2.0 million for the year ended December
31, 2018.
G&A expenses were $2.8 million and $8.2
million for both the three and twelve-month periods ended December
31, 2017, as compared to $1.8 million and $7.1 million for the same
periods in 2016. The increase in our G&A costs for the three
and twelve months ended December 31, 2017, as compared to the same
period in 2016, is mainly due to outside legal costs. The G&A
expenses are in line with expectations.
Excluding the impact of foreign exchange rate
fluctuations and the recording of transaction costs related to
potential financing activities (not currently known or estimable),
we expect that G&A expenses will range between $9.0 million and
$11.0 million in 2018.
Selling expenses were $0.5 million and $5.1
million for the three and twelve months ended December 31, 2017, as
compared to $1.5 million and $6.7 million for the same periods in
2016. Selling expenses for the three and twelve months ended
December 31, 2017 and 2016 represent mainly the costs of our sales
force related to the co-promotion activities as well as our sales
management team. The decrease in selling expenses is explained by
the elimination of sales representatives. In the fourth quarter, we
eliminated all sales representatives as part of the restructuring
efforts. Based on currently available information, we expect
selling expenses to range between $0.2 million and $0.5 million in
2018.
Other Income (Costs)
Net finance income (costs) was $(0.4) million
and $2.8 million for the three and twelve months ended December 31,
2017, as compared to $(0.6) million and $4.5 million, for the same
periods in 2016. The decrease in finance income is mainly
attributable to the change in fair value of warrant liability. Such
change in fair value results from the periodic "mark-to-market"
revaluation, via the application of 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
twelve-month period ended December 31, 2017, compared to $2.67 to
$4.94 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 twelve months ended
December 31, 2017 was $0.5 million and $16.8 million (or $0.03 and
$1.12 per share), as compared to a net loss of $8.2 million and
$25.0 million (or $0.71 and $2.41 per share) for the same periods
in 2016. The decrease in net loss for the three-month period ended
December 31, 2017 is a result of the reduction in third party
R&D costs. The reduction is attributed to closing out the
Zoptrex™ study and successful completion in the U.S. of the
Macrilen™ (macimorelin) filing.
Liquidity
Our operations and capital expenditures have
been financed through certain transactions impacting our cash flows
from operating activities, public equity offerings and issuances
under various ATM programs.
At December 31, 2017, we had $7.8 million of
cash and cash equivalents. We expect existing cash balances and
operating cash flows (including the upfront cash payment of $24
million from Strongbridge discussed below) will provide us with
adequate funds to support our current operating plan for at least
the next twelve months.
Conference Call
The Company will host a conference call to
discuss these results on Wednesday, March 28, 2017, at 8:30 a.m.,
Eastern Time. Participants may access the conference call by
telephone using the following dial-in numbers:
- Toll-Free: 877-407-8029, Confirmation #13677806
- Toll: 201-689-8029, Confirmation #13677806
A replay of the conference call will also be
available on the Company’s website for a period of 30 days.
For reference, the Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the
fourth quarter and full year 2017, as well as the Company’s audited
consolidated financial statements as at December 31, 2017, 2016 and
2015, can be found at www.aezsinc.com in the"Investors"
section.
About Aeterna Zentaris Inc.
Aeterna Zentaris Inc. is a specialty
biopharmaceutical company focused on developing and
commercializing, principally through out-licensing arrangements,
Macrilen™ (macimorelin), an orally available ghrelin agonist, to be
used in the diagnosis of patients with adult growth hormone
deficiency (AGHD). On January 17, 2018, Aeterna Zentaris announced
that that it had, through a wholly-owned subsidiary, entered into a
license and assignment agreement with a wholly-owned subsidiary of
Strongbridge Biopharma plc to carry out development, manufacturing,
registration and commercialization of Macrilen™ (macimorelin) in
the United States and Canada. On December 20, 2017 the Company
announced that the U.S. Food and Drug Administration (FDA) granted
marketing approval for Macrilen™ (macimorelin). On November 27,
2017 Aeterna Zentaris announced that the Marketing Authorization
Application (MAA) for the use of Macrilen™ (macimorelin) for the
evaluation of AGHD was accepted by the European Medicines Agency
(EMA) for regulatory review. For more information, visit
www.aezsinc.com.
Forward-Looking Statements
This press release contains forward-looking
statements made pursuant to the safe-harbor provisions 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 "will," "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 risks and uncertainties include, among others, 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 launch the product, the
ability of Aeterna Zentaris to enter into out-licensing,
development, manufacturing and marketing and distribution
agreements with other pharmaceutical companies and keep such
agreements in effect, reliance on third parties for the
manufacturing and commercialization of our product candidates,
potential disputes with third parties, leading to delays in or
termination of the manufacturing, development, out-licensing or
commercialization of our product candidates, or resulting in
significant litigation or arbitration, and, more generally,
uncertainties related to the regulatory process, the ability of
Aeterna Zentaris to efficiently commercialize or out-license
Macrilen™ (macimorelin), the degree of market acceptance of
Macrilen™ (macimorelin), 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 Aeterna Zentaris, 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 quarterly and annual
filings of Aeterna Zentaris with the applicable Canadian securities
regulators and the SEC 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.
Contacts:
Aeterna Zentaris Inc.James ClavijoChief
Financial OfficerIR@aezsinc.com843-900-3201
Reilly ConnectSusan
ReillyPresidentsusan.reilly@reillyconnect.com312-600-6783
Consolidated Statements of Comprehensive Loss
Information
|
|
Three months ended December 31, |
|
Years ended December 31, |
(in thousands, except
share and per share data) |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
2015 |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
Revenues |
|
|
|
|
|
|
|
|
|
|
Sales commission and
other |
|
59 |
|
|
94 |
|
|
465 |
|
|
414 |
|
|
297 |
|
License fees |
|
119 |
|
|
210 |
|
|
458 |
|
|
497 |
|
|
248 |
|
Total revenues |
|
178 |
|
|
304 |
|
|
923 |
|
|
911 |
|
|
545 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development costs |
|
526 |
|
|
4,619 |
|
|
10,704 |
|
|
16,495 |
|
|
17,234 |
|
General and
administrative expenses |
|
2,778 |
|
|
1,757 |
|
|
8,198 |
|
|
7,147 |
|
|
11,308 |
|
Selling expenses |
|
452 |
|
|
1,526 |
|
|
5,095 |
|
|
6,745 |
|
|
6,887 |
|
Total operating
expenses |
|
3,756 |
|
|
7,902 |
|
|
23,997 |
|
|
30,387 |
|
|
35,429 |
|
Loss from
operations |
|
(3,578 |
) |
|
(7,598 |
) |
|
(23,074 |
) |
|
(29,476 |
) |
|
(34,884 |
) |
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) due to
changes in foreign currency exchange rates |
|
72 |
|
|
(396 |
) |
|
502 |
|
|
(70 |
) |
|
(1,767 |
) |
Change in fair value of
warrant liability |
|
(478 |
) |
|
(245 |
) |
|
2,222 |
|
|
4,437 |
|
|
(10,956 |
) |
Warrant exercise
inducement fee |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,926 |
) |
Other finance
income |
|
21 |
|
|
19 |
|
|
75 |
|
|
150 |
|
|
305 |
|
Net finance
income (costs) |
|
(385 |
) |
|
(622 |
) |
|
2,799 |
|
|
4,517 |
|
|
(15,344 |
) |
Loss before income
taxes |
|
(3,963 |
) |
|
(8,220 |
) |
|
(20,275 |
) |
|
(24,959 |
) |
|
(50,228 |
) |
Income tax
recovery |
|
3,479 |
|
|
— |
|
|
3,479 |
|
|
— |
|
|
— |
|
Net loss from
continuing operations |
|
(484 |
) |
|
(8,220 |
) |
|
(16,796 |
) |
|
(24,959 |
) |
|
(50,228 |
) |
Net income from
discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
85 |
|
Net
loss |
|
(484 |
) |
|
(8,220 |
) |
|
(16,796 |
) |
|
(24,959 |
) |
|
(50,143 |
) |
Other
comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments |
|
(238 |
) |
|
870 |
|
|
(1,430 |
) |
|
569 |
|
|
1,509 |
|
Items that will not be
reclassified to profit or loss: |
|
|
|
|
|
|
|
|
|
|
Actuarial gain (loss)
on defined benefit plans |
|
59 |
|
|
1,143 |
|
|
694 |
|
|
(1,479 |
) |
|
844 |
|
Comprehensive
loss |
|
(663 |
) |
|
(6,207 |
) |
|
(17,532 |
) |
|
(25,869 |
) |
|
(47,790 |
) |
Net loss per
share (basic and diluted) from continuing operations |
|
(0.03 |
) |
|
(0.71 |
) |
|
(1.12 |
) |
|
(2.41 |
) |
|
(18.17 |
) |
Net income per
share (basic and diluted) from discontinued
operations |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.03 |
|
Net loss per
share (basic and diluted) |
|
(0.03 |
) |
|
(0.71 |
) |
|
(1.12 |
) |
|
(2.41 |
) |
|
(18.14 |
) |
Weighted
average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
16,440,760 |
|
|
11,565,210 |
|
|
14,958,704 |
|
|
10,348,879 |
|
|
2,763,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Statement of Financial Position
Information
|
|
December 31, |
(in thousands) |
|
2017 |
|
2016 |
|
|
$ |
|
$ |
Cash and cash
equivalents 1 |
|
7,780 |
|
|
21,999 |
|
Trade and other
receivables and other current assets |
|
958 |
|
|
744 |
|
Restricted cash
equivalents |
|
381 |
|
|
496 |
|
Inventory |
|
643 |
|
|
— |
|
Property, plant and
equipment |
|
101 |
|
|
204 |
|
Deferred tax
assets |
|
3,479 |
|
|
— |
|
Other non-current
assets |
|
8,853 |
|
|
8,216 |
|
Total
assets |
|
22,195 |
|
|
31,659 |
|
Payables and other
current liabilities |
|
2,987 |
|
|
3,745 |
|
Provision for
restructuring costs |
|
2,296 |
|
|
33 |
|
Current portion of
deferred revenues |
|
486 |
|
|
426 |
|
Warrant liability |
|
3,897 |
|
|
6,854 |
|
Non-financial
non-current liabilities 2 |
|
15,312 |
|
|
14,389 |
|
Total
liabilities |
|
24,978 |
|
|
25,447 |
|
Shareholders'
(deficiency) equity |
|
(2,783 |
) |
|
6,212 |
|
Total
liabilities and shareholders' (deficiency) equity |
|
22,195 |
|
|
31,659 |
|
- Approximately $0.6 million and $1.5 million were denominated in
EUR as at December 31, 2017 and December 31, 2016, respectively,
and approximately $1.0 million and $3.7 million were denominated in
Canadian dollars as at December 31, 2017 and December 31, 2016,
respectively.
- Comprised mainly of employee future benefits, provisions for
onerous contracts and non-current portion of deferred
revenues.
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