Ceapro Inc V.CZO

RE:Voting

[prophetoffactz]

fossi, "The history of Aeterna with numerous mergers and necessary capital increases will repeat itself. And I would like to document how quickly this can happen with just one figure."

The explicit goal of the merger is to create a long-term sustainable business:

"The combination is attractive for shareholders of both companies, as it is expected to create a long-term sustainable business..." news release

The newly merged company will not be a pre-revenue company. 

Combining the companies means the TSX-V listing and associated costs can be dropped. There will only be one CEO and CFO. The number of collective members of the Board of Directors will be significantly reduced. There will only need to be one IR function as opposed to two with two seperate companies. Other human resources can be streamlined.

Having incurred the costs of the the pediatric growth hormone deficiency test clinical trial those costs are eliminated. The test has been launched in Europe, etc., and revenue is now coming in. The licensing of the diagnostic test for North America can mean a significant upfront payment and soon royalties. CZO has a history of profitability with its main client and the main client is expected to return. CZO and Symrise are to launch new powder formulations of avenanthramide and beta glucan. The merger news release also explicitly targets with capital near-term revenue generating opportunities in CZO's pipeline on the path to long-term sustainability.  AEZS's development pipeline can be licensed for upfront payments and milestones at the appropriate time. CZO has a number of partnership opportunities from the avenathramide pill, to wound healing approaching potential licenising. A program could be sold for upfront cash. The new comapny is asset rich. 

The upfront payment from Strongbridge adjusted for inflation is ~C$40 million. Even half that given the test could soon be approved for the childhood market could be significant. There are further potential milestone payments and royalties from the diagnostic. The diagnostic test could be fully sold for an upfront payment.

AEZS received US$24 million upfront from Strongbridge, and was to receive US$5 million for pediatric approval. Pediatric approval could happen this year. Adding an assumed ~US$10 million for the pediatric clinical trial costs that have now been incurred and US$14 million in potentially achievable near term milestones linked to annual net sales achieving US$50 million as below that is a total of potentially US$53 million in upfront and near-term payments. That's about C$71 million.

In addition AEZS was to receive 15%-18% royalties and 5% upon patent expiration. This could be monitized for a significant upfront payment for CZO's growth plan.

With approval for the pediatric market the clinical trial and regulatory risk as well as time to market have also been absorbed. AEZS can charge money for this. The deal with Strongbridge was six years ago. Significant growth in the growth hormone deficiency market also appears to have occurred and is forecast into the future. Lumos Pharma is developing "LUM-201 has the potential to increase treatment rates and treatment adherence among PEM-positive pediatric patients due to the more favorable oral administration route." https://www.globaldata.com/store/report/growth-hormone-secretagogue-receptor-type-1-drugs-in-development-analysis/

AEZS also has C$113 million in tax loss carryforwards and other pipeline assets that could be licensed as they reach human testing.

• US$4,000,000 on achieving US$25,000,000 annual net sales,
• US$10,000,000 on achieving US$50,000,000 annual net sales,
• US$20,000,000 on achieving US$100,000,000 annual net sales,
• US$40,000,000 on achieving US$200,000,000 annual net sales, and
• US$100,000,000 on achieving US$500,000,000 annual net sales.

 

• A wholly-owned subsidiary of Strongbridge Biopharma plc has snapped up the North American rights to Aeterna Zentaris Inc.‘s lead product, Macrilen. 
• Aeterna Zentaris will get a much needed $24 million upfront, and royalties for the patent life of the drug, at a rate of 15% for sales up to $75 million and 18% above $75 million. After patent expiry, royalties will drop to 5%.
• Strongbridge will also pay milestone payments of up to $179 million on sales targets and on a pediatric U.S. approval, and will fund 70% of pediatric development costs.
• Post-review, Aeterna Zentaris strikes commercialization deal | BioPharma Dive