U.S. Markets open in 4 hrs 15 mins

Aeterna Zentaris Reports Third Quarter 2017 Financial and Operating Results

CHARLESTON, S.C.--(BUSINESS WIRE)--

Aeterna Zentaris Inc. (AEZS) (AEZS.TO) (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

_________________________

  1. 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.
  2. 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  
 

View source version on businesswire.com: http://www.businesswire.com/news/home/20171108006480/en/

  • YouTube goes down for more than an hour
    Business
    Associated Press

    YouTube goes down for more than an hour

    YouTube's video streaming service went out for more than an hour on Tuesday, apparently affecting locations around the world. YouTube acknowledged the outage in a tweet at 9:41 p.m. EDT, noting that it affected YouTube, YouTube Music and YouTube TV. Reporters for the AP found that YouTube's main service was working again around 10:50 p.m. EDT.

  • 7 Stocks to Buy and Hold Through Any Market Selloff
    Business
    InvestorPlace

    7 Stocks to Buy and Hold Through Any Market Selloff

    Last week’s market collapse made headlines throughout the world. Since the sharp correction has negatively impacted virtually all investment sectors, you’re going to find discounted deals everywhere you look.

  • Brits Are All Making the Same Joke About the New Royal Baby
    News
    Time

    Brits Are All Making the Same Joke About the New Royal Baby

    Meghan Markle, the Duchess of Sussex, is expecting her first child with Prince Harry. The news, announced Monday morning by Kensington Palace, has already been greeted by hundreds of messages of congratulations for the royal couple on social media. The U.K. is set to leave the European Union on March 29, exactly two years after Prime Minister Theresa May started the formal process for doing so by invoking Article 50 of the Lisbon Treaty.

  • Boeing delivers first 737 Max 8 BBJ and unveils Max 7 luxury interior (Photos)
    Business
    American City Business Journals

    Boeing delivers first 737 Max 8 BBJ and unveils Max 7 luxury interior (Photos)

    Boeing has delivered its very first 737 Max 8 business jet to a paying customer. It's the first of 20 BBJ Max jets that buyers from around the world have ordered from the Chicago-based jetmaker since they went on sale. Boeing spokesman Dmitry Krol declined to identify the buyer of the jet, which is the second of its kind made at Boeing's Renton 737 factory.

  • Netflix user growth beats expectations, shares spike
    Finance
    Yahoo Finance

    Netflix user growth beats expectations, shares spike

    Netflix (NFLX) reported user growth that exceeded Wall Street expectations, underscoring a recovery for the online streamer following a rare miss in new user additions last quarter.The Los Gatos, California-based company brought on 6.96 million total new streamers, beating its own guidance of 5 million total member additions for the quarter. The company issued guidance that it would add 9.4 million new members in the fourth quarter of 2018. Netflix’s stock rose 13% in late trading Tuesday.

  • Jamal Khashoggi was accidentally killed during interrogation: report
    World
    Fox Business Videos

    Jamal Khashoggi was accidentally killed during interrogation: report

    Fox Business foreign policy analyst Walid Phares on the report that Saudi journalist Jamal Khashoggi was accidentally killed.

  • Here's the Average Social Security Benefit for 2019
    Business
    Motley Fool

    Here's the Average Social Security Benefit for 2019

    Millions of seniors collect Social Security, and without it, they'd be underwater on their bills. At present, the average retiree gets $1,422 a month in Social Security benefits. There's a world of misinformation surrounding Social Security, and perhaps one of the most detrimental myths out there is the notion that the program is enough to sustain seniors by itself.

  • Marijuana Stocks to Watch in October -- and Into 2019
    Business
    Motley Fool

    Marijuana Stocks to Watch in October -- and Into 2019

    Tomorrow, Wednesday, Oct. 17, Canada will become the first industrialized county in the world where marijuana is legal for adult recreational use -- and only the second country, along with Uruguay, where such use is legal.  Not only does this open up

  • General Electric (GE) Stock Sinks As Market Gains: What You Should Know
    Finance
    Zacks

    General Electric (GE) Stock Sinks As Market Gains: What You Should Know

    With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

  • Sears soars 36% — one day after filing for bankruptcy (SHLD)
    Finance
    Business Insider

    Sears soars 36% — one day after filing for bankruptcy (SHLD)

    The retailer received approval on Tuesday to access a $300 million loan to keep it afloat during bankruptcy. Sears Holdings soared as much as 124% — one day after filing for bankruptcy — as the embattled retailer received approval to access a $300 million loan to keep it afloat during bankruptcy.

  • Where Will NVIDIA Be in 5 Years?
    Business
    Motley Fool

    Where Will NVIDIA Be in 5 Years?

    At one time, NVIDIA (NASDAQ: NVDA) floated under the radar in the technology sector. Its graphics processing units (GPUs) were then niche tech products that appealed mainly to graphic artists and hardcore PC gamers, but that all changed over the last

  • Why MannKind Corp. Soared 16.4% Tuesday
    Business
    Motley Fool

    Why MannKind Corp. Soared 16.4% Tuesday

    After MannKind Corp. (NASDAQ: MNKD) announced that it closed on its planned collaboration agreement with United Therapeutics (NASDAQ: UTHR), its shares rallied 16.4% on Tuesday. MannKind only has one Food and Drug Administration (FDA)-approved drug to its name, Afrezza, an inhalable insulin. Afrezza was launched in 2015 and sales have been far shy of optimistic pre-launch forecasts.

  • Saudi Arabia using the 'oil weapon option' could cause prices to soar to $150
    World
    Business Insider

    Saudi Arabia using the 'oil weapon option' could cause prices to soar to $150

    Analysts see a 1973-style embargo as unlikely, but warn oil prices could hit triple-digits if tensions escalate. "We believe that Saudi leadership would be extremely reluctant to exercise the oil weapon option, as its reputation as the world’s stable, reliable oil central banker would be severely undercut," RBC analysts wrote in a research note.

  • 3 Stocks for Warren Buffett Fans
    Business
    Motley Fool

    3 Stocks for Warren Buffett Fans

    Warren Buffett has no shortage of acolytes, and it's easy to see why. The Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) chief and founder has made thousands of early investors in his conglomerate rich as the parent of businesses like GEICO car insurance and Burlington Northern Santa Fe railroad has posted average annual returns of 20% over the last 50 years, crushing the market. Buffett has never gotten too big for his britches, however.

  • The Largest Private Employer in the World May Soon Sell Marijuana Products
    Business
    Motley Fool

    The Largest Private Employer in the World May Soon Sell Marijuana Products

    With literally hours remaining, Canada is set to lift the curtain on nine decades of recreational marijuana prohibition tomorrow. This makes Canada the first industrialized country in the world to legalize adult-use weed. As you might rightly imagine, investors can't wait for this legalization to take place.

  • Walmart is aggressively shifting away from its most legendary shopping format
    Finance
    Yahoo Finance

    Walmart is aggressively shifting away from its most legendary shopping format

    Walmart (WMT) continues to kill off the American shopping creation it’s most known for, the massive supercenter that sells everything under one roof. With the U.S. market already having more than 3,500 Walmart supercenters and a focus by CEO Doug McMillon to increase spending on eCommerce and India, Walmart said Tuesday it will open a mere 10 supercenters in 2019. The company has reduced emphasis on the store format pioneered by founder Sam Walton – which could average a gargantuan 178,000 square feet – in recent years.

  • Call of the day: Tilray as Benchmark starts coverage with bullish rating
    Business
    Yahoo Finance Video

    Call of the day: Tilray as Benchmark starts coverage with bullish rating

    Benchmark initiated its coverage of Tilray with a 'buy' rating and a $200 price target. Analyst Mike Hickey said he's bullish on the cannabis company's early leadership in the medical cannabis market in Canada and its strategic alliance with Novartis.

  • Finance
    CNBC

    Morgan Stanley: The stock sell-off is going to get worse

    The stock market is in the middle of a rolling bear market, says Morgan Stanley's Mike Wilson. "It's being caused by a drain in liquidity and peaking growth," Wilson says. The stock market sell-off is only going to get worse, predicts Morgan Stanley's chief U.S. equity strategist, Mike Wilson.

  • A Look at AT&T’s Dividends
    Business
    Market Realist

    A Look at AT&T’s Dividends

    What Investors Should Know about AT&T’s Growth Prospects (Continued from Prior Part) Shareholder returns Increasing capital returns to shareholders is one of AT&T’s (T) main priorities. In the second quarter, the company returned $3.1 billion to shareholders

  • Price Target Update for Canopy Growth in October
    Business
    Market Realist

    Price Target Update for Canopy Growth in October

    How Analysts Rate These Cannabis Stocks in October (Continued from Prior Part) Canopy Growth Without a doubt, Canopy Growth (CGC)(WEED) has been one of the hottest cannabis stocks on the market (MJ). The company is one of the most valuable companies,

  • These are the bad things about early retirement that no one talks about
    News
    MarketWatch

    These are the bad things about early retirement that no one talks about

    For all the glamour of living an early retirement lifestyle, there are plenty of negatives I’ve come to discover since I permanently left my job in 2012. As a result, you’re repeatedly forced to will yourself into action.

  • Business
    InvestorPlace

    30 Marijuana Stocks to Buy as the Future Turns Green

    With the previous presidential administration’s frankness on the matter, marijuana has become more blasé. Naturally, marijuana stocks have also increased in popularity, where we have more choices today than was previously thought possible. For instance, some of the top marijuana stocks are levered toward medical cannabis.

  • Marijuana stocks to watch: Canopy Growth is the cannabis business’s $4 billion gorilla
    Business
    MarketWatch

    Marijuana stocks to watch: Canopy Growth is the cannabis business’s $4 billion gorilla

    The following article is part of a package of stories that MarketWatch is publishing to mark the start of full legalization of cannabis for adult use in Canada on Wednesday. Smith Falls, Ontario–based Canopy Growth Corp. made headlines and drove cannabis stocks to new heights over the summer when it announced that Corona brewer Constellation Brands Inc. was going to invest an additional $4 billion in the company. Billed by both companies as a strategic partnership, the additional $4 billion investment adds to the 9.9% stake that Constellation bought in October of last year and sets the company up to either be bought outright by Constellation — via warrants that could increase its stake to more than 50% — or continue to work with the beverage company to create a range of consumer-focused cannabis products that may one day appear in markets in dozens of countries.

  • Netflix is ditching freeloaders from subscriber forecasts after volatile stock moves
    Business
    MarketWatch

    Netflix is ditching freeloaders from subscriber forecasts after volatile stock moves

    After two consecutive quarters of missing the mark on its own forecasts for subscriber growth, Netflix Inc. hopes to put an end to the big swings in its stock with some changes in its accounting. In kicking off tech’s earnings season Tuesday, Netflix (NFLX) reported better-than-expected subscriber growth in the quarter, leading to an 11% jump in its shares in after-hours trading. Three months ago, Netflix reported weaker-than-expected subscriber growth, sending its stock tumbling around 12% in the next trading day.

  • 3 Top Large-Cap Stocks to Buy in October
    Business
    Motley Fool

    3 Top Large-Cap Stocks to Buy in October

    If you're looking for high-quality large-cap stocks to add to your portfolio this month, three of our Motley Fool contributors have some ideas. Here's why you should consider Berkshire Hathaway (NYSE: BRK.B), Cisco Systems (NASDAQ: CSCO), and AT&T (NYSE: T). Tyler Crowe (Berkshire Hathaway): Perhaps one of the most ridiculous investment takes out there right now is that Berkshire Hathaway's immense cash pile isn't a good thing.