Aeterna Zentaris Reports Third Quarter 2016 Financial and Operating Results
Capital expected to be sufficient to complete two clinical trials, to report top-line results and to file a New
Drug Application for Macrilen™ in first half of 2017
All $ amounts are in US Dollars
Key developments
-
Product development programs remain on track towards FDA submissions in 2017
- Zoptrex™ (zoptarelin doxorubicin) pivotal Phase 3 clinical program remains on track for release
of top-line results in Q1 2017 and submission of New Drug Application to the U.S. FDA in 2017
- Macrilen™ (macimorelin) patient recruitment completed for confirmatory Phase 3 Trial after
quarter-end; on track for release of top-line results in early 2017 and submission of New Drug Application to the U.S. FDA in
H1 2017
-
Zoptrex™ out-licensing activity successfully continues
- License and Supply Agreements were concluded with Specialised Therapeutics Asia Pty Ltd for
Australia and New Zealand subsequent to quarter-end on October 12, 2016, following the out-licensing arrangements concluded
during July 2016
-
Financial condition and capital structure improved
- $21.1 million unrestricted cash and cash equivalents at quarter end; no third-party debt
- Approximately $9.8 million of combined gross proceeds raised from a successful registered direct
offering of Units concluded on November 1 and sales of Common Shares pursuant to our ATM program during and subsequent to the
third quarter
- Approximately 12.6 million Common Shares and Pre-Funded Warrants exercisable for Common Shares
outstanding as of November 8, 2016
- Remaining Series B Share Purchase Warrants expired without being exercised on September 12,
2016
Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the “Company”), a specialty biopharmaceutical company engaged in developing and
commercializing novel treatments in oncology and endocrinology, today reported financial and operating results for the third
quarter ended September 30, 2016.
Commenting on recent key developments, David A. Dodd, President and Chief Executive Officer of the Company, stated, “On
September 30, 2016, we had unrestricted cash and cash equivalents of approximately $21.1 million. After the end of Q3, we concluded
a financing transaction that secured our financial condition on the eve of our completion of two pivotal Phase 3 trials. We raised
$7.56 million of gross proceeds from the sale of Common Shares, Pre-funded Warrants and Warrants in a registered direct offering on
November 1, 2016. Also between September 14, 2016 and October 14, 2016, we raised approximately $2.3 million of gross proceeds from
the sale of 580,912 Common Shares pursuant to our ATM program. Since October 14, 2016, our ATM program has not been utilized.
Therefore, we believe we have the funds necessary to complete our two pivotal clinical trials, to report top-line results on both
and to file a New Drug Application for Macrilen™ in the first half of 2017, if the results of the trial warrant doing so. While we
will need to raise additional funds before we are able to bring a product to market, we expect that reporting favorable top-line
results from one or both of our clinical trials will permit us to do so on favorable terms.”
Regarding developments with respect to Zoptrex™ (zoptarelin doxorubicin), the Company’s lead oncology compound, Mr. Dodd stated,
“After quarter-end, we concluded the fourth out-license of Zoptrex™, our investigational compound that links a synthetic peptide
carrier to doxorubicin as a New Chemical Entity (NCE). Specialised Therapeutics Asia Pty Ltd, a leading specialty pharmaceutical
company based in Australia, licensed the product for commercialization in Australia and New Zealand. We received an up-front
payment for the rights to Zoptrex™ and we will receive additional milestone payments and royalties if commercialization of the
potential product proceeds. Furthermore, we obtained further validation of the market’s interest in Zoptrex™. We expect to release
top-line results for our pivotal Phase 3 trial of Zoptrex™ in Q1 of 2017 and if the results of the trial warrant doing so, to file
a new drug application for Zoptrex™ in 2017.”
Mr. Dodd continued his commentary with an update on the development of Macrilen™ (macimorelin), “We are pleased to announce that
we recently completed recruitment in our confirmatory Phase 3 study of Macrilen™ for the evaluation of adult growth hormone
deficiency. As a result, we are very confident that the study of Macrilen™ will be concluded and that we will report top-line
results in early 2017. If our expectations for completion of the confirmatory Phase 3 study are realized and if the top-line
results indicate that the product attained the primary endpoint of the Phase 3 study, we expect to file an NDA for Macrilen™ in the
first half of 2017. Since the regulatory review period for the Macrilen™ confirmatory study is six months, we could begin
commercializing the product late in 2017.”
Third Quarter 2016 Financial Highlights
R&D costs were $4.5 million and $11.9 million for the three and nine months ended September 30, 2016, respectively,
compared to $4.1 million and $13.0 million for the same periods in 2015. The increase in R&D costs for the three months ended
September 30, 2016, as compared to the same periods in 2015, is mainly attributable to higher comparative third-party costs. During
2015, we initiated the new confirmatory Phase 3 clinical trial of Macrilen™. The first patient recruitment was achieved in the
fourth quarter of 2015 and we completed the patient recruitment in the fourth quarter of 2016. The decrease in R&D costs for
the nine months ended September 30, 2016, as compared to the same periods in 2015, is mainly attributable to lower comparative
third-party costs. Third-party costs attributable to Zoptrex™ decreased considerably during the nine months ended September 30,
2016, as compared to the same period in 2015, mainly due to the fact that dosing of patients in the ZoptEC trial was completed in
February 2016. This is consistent with our expectations as we are approaching the end of the clinical trials. The overall decrease
for the nine-month period is also explained by lower employee compensation and benefits 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.
General and administrative (“G&A”) expenses were $1.6 million and $5.4 million for the three and nine months ended
September 30, 2016, respectively, as compared to $1.9 million and $7.4 million for the same periods in 2015. The decrease in our
G&A costs for the three months ended September 30, 2016, as compared to the same period in 2015, is mainly due to the
realization of cost savings in connection with our corporate restructuring, which was announced in the fourth quarter of 2015. The
comparative decrease for the nine-month period is also partially explained by the realization of costs saving in connection with
our corporate restructuring although mainly attributable to the recording, in the prior year period, of certain transaction costs
allocated to warrants in connection with the completion of an offering in March 2015.
Selling expenses were $1.8 million and $5.2 million for the three and nine months ended September 30, 2016, respectively,
as compared to $1.7 million and $5.1 million for the same periods in 2015. The selling expenses for the three and nine months ended
September 30, 2016, and 2015 represent mainly the costs of our contracted sales force related to the co-promotion activities as
well as our internal sales management team.
Net loss for the three and nine months ended September 30, 2016, was $6.1 million and $16.7 million, or $0.61 and $1.68
per basic and diluted share, as compared to a net loss of $15.3 million and $40.1 million, or $6.66 and $29.12 per basic and
diluted share, for the same periods in 2015. The decrease in net loss for the three months ended September 30, 2016, as compared to
the same period in 2015, is due largely to higher comparative net finance income. The decrease in net loss for the nine months
ended September 30, 2016, as compared to the same period in 2015, is due largely to lower operating expenses and higher comparative
net finance income. The movements in net finance income (costs) primarily relate to the change in fair value of warrant
liability.
Cash and cash equivalents were approximately $21.1 million as at September 30, 2016, compared to approximately $26.2 million as
at June 30, 2016.
Conference Call & Webcast
The Company will host a conference call and live webcast to discuss these results on Wednesday, November 9, 2016, at 8:30 a.m.,
Eastern Time. Participants may access the live webcast via the Company's website at www.aezsinc.com, or by telephone using the following number: 201-689-8029, Confirmation #13646681. A replay
of the webcast will also be available on the Company’s website for a period of 30 days.
About Aeterna Zentaris Inc.
Aeterna Zentaris is a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in
oncology, endocrinology and women's health. We are engaged in drug development activities and in the promotion of products for
others. We are now conducting Phase 3 studies of two internally developed compounds. The focus of our business development efforts
is the acquisition or in-license of 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 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 provisions of the US Securities
Litigation Reform Act of 1995, 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,”
“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 in the Company's MD&A, while others 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 US Securities and Exchange Commission ("SEC"). Such
statements include, but are not limited to, statements about the progress of our research, development and clinical trials and the
timing of, and prospects for, regulatory approval and commercialization of our product candidates, the timing of expected results
of our studies, anticipated results of these studies, 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 the forward-looking statements. Such risks and uncertainties include,
among others, the availability of funds and resources to pursue our research and development projects and clinical trials, 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 rejection or non-acceptance of
any new drug application by one or more regulatory authorities and, more generally, uncertainties related to the regulatory
process, the ability of the Company to efficiently commercialize one or more of its products or product candidates, the degree of
market acceptance once our products are approved for commercialization, 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
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 by applicable law.
|
Condensed Interim Consolidated Statements of Comprehensive Loss Information
(in thousands, except share and per share data)
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
(Unaudited) |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
$ |
|
$ |
|
$ |
|
$ |
Revenues |
|
|
|
|
|
|
|
|
Sales commission and other |
|
105 |
|
|
111 |
|
|
319 |
|
|
256 |
|
License fees |
|
164 |
|
|
62 |
|
|
288 |
|
|
187 |
|
|
|
269 |
|
|
173 |
|
|
607 |
|
|
443 |
|
Operating expenses |
|
|
|
|
|
|
|
|
Research and development costs |
|
4,512 |
|
|
4,050 |
|
|
11,876 |
|
|
12,991 |
|
General and administrative expenses |
|
1,631 |
|
|
1,910 |
|
|
5,390 |
|
|
7,355 |
|
Selling expenses |
|
1,829 |
|
|
1,714 |
|
|
5,219 |
|
|
5,123 |
|
|
|
7,972 |
|
|
7,674 |
|
|
22,485 |
|
|
25,469 |
|
Loss from operations |
|
(7,703 |
) |
|
(7,501 |
) |
|
(21,878 |
) |
|
(25,026 |
) |
(Loss) gain due to changes in foreign currency exchange rates |
|
(64 |
) |
|
(367 |
) |
|
326 |
|
|
(1,452 |
) |
Change in fair value of warrant liability |
|
1,687 |
|
|
(7,573 |
) |
|
4,682 |
|
|
(13,986 |
) |
Other finance income |
|
25 |
|
|
40 |
|
|
131 |
|
|
279 |
|
Net finance income (costs) |
|
1,648 |
|
|
(7,900 |
) |
|
5,139 |
|
|
(15,159 |
) |
Net loss from continuing operations |
|
(6,055 |
) |
|
(15,401 |
) |
|
(16,739 |
) |
|
(40,185 |
) |
Net income from discontinued operations |
|
— |
|
|
111 |
|
|
— |
|
|
60 |
|
Net loss |
|
(6,055 |
) |
|
(15,290 |
) |
|
(16,739 |
) |
|
(40,125 |
) |
Other comprehensive loss: |
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
(62 |
) |
|
(21 |
) |
|
(301 |
) |
|
1,260 |
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
|
Actuarial (loss) gain on defined benefit plans |
|
(400 |
) |
|
— |
|
|
(2,622 |
) |
|
960 |
|
Comprehensive loss |
|
(6,517 |
) |
|
(15,311 |
) |
|
(19,662 |
) |
|
(37,905 |
) |
Net loss per share (basic and diluted) from continuing operations |
|
(0.61 |
) |
|
(6.71 |
) |
|
(1.68 |
) |
|
(29.16 |
) |
Net income per share (basic and diluted) from discontinued operations |
|
— |
|
|
0.05 |
|
|
— |
|
|
0.04 |
|
Net loss per share (basic and diluted) |
|
(0.61 |
) |
|
(6.66 |
) |
|
(1.68 |
) |
|
(29.12 |
) |
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
9,951,573 |
|
|
2,294,504 |
|
|
9,938,980 |
|
|
1,378,260 |
|
Diluted |
|
9,951,573 |
|
|
2,294,504 |
|
|
9,938,980 |
|
|
1,378,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Interim Consolidated Statement of Financial Position Information
(in thousands)
|
|
|
|
As at September 30, |
|
As at December 31, |
(Unaudited) |
|
2016 |
|
2015 |
|
|
$ |
|
$ |
Cash and cash equivalents1 |
|
21,052 |
|
41,450 |
Trade and other receivables and other current assets |
|
904 |
|
944 |
Restricted cash equivalents |
|
512 |
|
255 |
Property, plant and equipment |
|
224 |
|
256 |
Other non-current assets |
|
9,047 |
|
8,593 |
Total assets |
|
31,739 |
|
51,498 |
Payables and other current liabilities2 |
|
5,066 |
|
4,770 |
Current portion of deferred revenues |
|
453 |
|
244 |
Warrant liability (current and non-current portions) |
|
6,209 |
|
10,891 |
Non-financial non-current liabilities3 |
|
16,729 |
|
13,978 |
Total liabilities |
|
28,457 |
|
29,883 |
Shareholders' equity |
|
3,282 |
|
21,615 |
Total liabilities and shareholders' equity |
|
31,739 |
|
51,498 |
|
|
|
|
|
_________________________
1 Approximately $1.0 and $1.5 million were denominated in EUR as of September 30, 2016 and December 31, 2015,
respectively and approximately$4.5 and $4.4 million were denominated in Canadian dollars as of September 30, 2016 and December 31,
2015, respectively.
2 Approximately $0.1 and $0.6 million related to our provision for restructuring as at September 30, 2016 and
December 31, 2015, respectively.
3 Comprised mainly of employee future benefits, provisions for onerous contracts and non-current portion of deferred
revenues.
Aeterna Zentaris Inc.
Philip A. Theodore, 843-900-3211
Senior Vice President
IR@aezsinc.com
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