Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS)
today reported its financial and operating results for the fourth
quarter and year ended December 31, 2018.
All Amounts are in U.S. Dollars
Highlights
- Total revenue for fiscal 2018 was $26.9 million, compared to
$0.9 million for fiscal 2017
- Income from operations for fiscal 2018 was $9.8 million,
compared to a loss from operations of $23.1 million for fiscal
2017
- Net income for fiscal 2018 was $4.2 million, compared to a net
loss of $16.8 million for fiscal 2017
- Total revenue for Q4 2018 was $1.4 million, compared to $0.2
million for Q4 2017
- After our year-end, in January 2019, European Medicines Agency
(EMA) granted marketing authorization for macimorelin for diagnosis
of adult growth hormone deficiency
- As of December 31, 2018, we had $14.5 million of unrestricted
cash and cash equivalents
Summary of Full-Year
Results
For the year ended December 31, 2018, we
reported a consolidated net income of $4.2 million, or $0.25 per
common share, as compared with a consolidated net loss of $16.8
million, or $1.12 loss per common share, for the year ended
December 31, 2017. The $21 million improvement in results
arose primarily from a $23.9 million increase in gross profit
(which resulted primarily from the $24 million royalty payment
received from Strongbridge Biopharma) and a $9.1 million reduction
in operating expenses. These improvements were offset in part
by the $5.55 million in tax expense in 2018 (compared to a tax
recovery in 2017 of $3.5 million) and $1.6 million decrease in net
finance income.
Revenues
Our total revenue for the year ended December
31, 2018 was $26.9 million as compared with $0.9 million for the
same period in 2017, representing an increase of $26.0 million. The
2018 revenue comprised $24.3 million in license revenue, $2.2
million in product sales, $0.2 million in royalty income and $0.2
million in sales commissions as compared with $0.4 million in
license fee and $0.5 million in license fees in 2017. The increase
in total revenue in 2018 relates to license fees, royalty income
and product sales associated with executing the License and
Assignment Agreement for Macrilen™ (macimorelin) in January
2018.
Cost of sales
Our total cost of goods sold for the year ended
December 31, 2018 was $2.1 million as compared with nil for the
same period in 2017, reflecting the costs of our sales of Macrilen™
(macimorelin) inventory pursuant to an interim supply agreement
under the License and Assignment Agreement.
Operating Expenses
Our total operating expenses for the year ended
December 31, 2018 was $14.9 million as compared with $24.0 million
for the same period in 2017, representing a decline of $9.1
million. This was primarily due to a $7.8 million decline in
research and development costs, while the $2.0 million decrease in
selling expenses was offset by $0.1 million increase in general and
administrative expenses.
In 2018, our focus was on our PIP study for
Macrilen™ (macimorelin), for which we received $0.4 million from
our licensee for its share of such costs.
Our general and administrative expenses were
higher in 2018 than expected as we incurred significant legal costs
in the course of reaching settlement agreements for $1.4
million.
Our selling expenses are in-line with
expectations and lower in 2018 than in 2017 due to the Q1 2018
termination of our North American sales team and our co-promotion
activities as we shifted our focus to licensing Macrilen™
(macimorelin).
Net Finance Income
Our net finance income for the year ended
December 31, 2018 was $1.2 million, as compared to $2.8 million for
the same period in 2017, representing a decrease of $1.6 million.
The decline in net finance income is primarily due to the change in
fair value of our warrant liability. Such change in fair value
results from the periodic "mark-to-market" revaluation via the
application of pricing models to our outstanding share purchase
warrants.
Summary of Fourth Quarter
Results
For the three-month period ended December 31,
2018, we reported a consolidated net loss of $5.1 million, or $0.31
loss per common share, as compared with a consolidated net loss of
$0.5 million, or $0.03 loss per common share, for the three-month
period ended December 31, 2017. The $4.6 million increase in net
loss in 2018, as compared with 2017, results primarily from $2.8
million in tax expense movement, $1.4 million increase in cost of
goods, $0.9 million increase in finance costs and $0.8 million
increase in settlements, offset by $1.2 million increase in total
revenues. In the fourth quarter of 2018, unlike in 2017, we earned
$0.2 million in royalty income from our licensee and expensed $0.8
million in one-time settlement costs to settle a lawsuit against
the Company from two of our former executives. In the fourth
quarter of 2018 we also actively began the EMA and FDA pediatric
study for Macrilen™ (macimorelin).
Consolidated Financial Statements and
Management’s Discussion and Analysis
For reference, the Management’s Discussion and
Analysis of Financial Condition and Results of Operations for the
fourth quarter and fiscal 2018, as well as the Company’s audited
consolidated financial statements as at December 31, 2018, 2017 and
for the years ended December 31, 2018, 2017 and 2016 will be
available at www.zentaris.com in the "Investors" section or at
the Company’s profile at www.sedar.com and www.sec.gov.
Annual and Special Meeting of
Shareholders
The Company has scheduled its annual
shareholders meeting for 10:00 am (Eastern time) on May 8, 2019 at
1155 René-Lévesque Blvd. West, 41st Floor, Montreal, Quebec. At
that meeting, in addition to the presentation of the Company’s
annual financial statements, the election of directors and the
appointment of the Company’s auditors, shareholders will also
consider resolutions to move the Company’s registered address from
Quebec to Ontario, and to renew and amend the Company’s existing
shareholders rights plan. These matters are described in
detail in the Company’s 2019 Management Proxy Circular. This
proxy circular and a copy of the proposed amended and restated
shareholders rights plan will be available at www.sedar.com and
www.sec.gov.
At the Company’s 2019 annual and special
meeting, the Company will be proposing that the size of its board
of directors be reduced from seven to five, with Mr. Mike Cardiff
having resigned from the board of directors for personal reasons in
March 2019 and Mr. Juergen Ernst having indicated to the Company
his desire not to be nominated for re-election. The Company
thanks both of them for their service to the Company.
About Aeterna Zentaris Inc.
Aeterna Zentaris Inc. is a specialty
biopharmaceutical company focused on commercializing novel
pharmaceutical therapies, principally through out-licensing
arrangements. Aeterna Zentaris is a party to a license and
assignment agreement with a subsidiary of Novo Nordisk A/S to carry
out development, manufacturing, registration and commercialization
of Macrilen™ (macimorelin) in the United States and Canada.
Forward-Looking Statements
This press release contains forward-looking
statements (as defined by applicable securities legislation) made
pursuant to the safe-harbor provision of the U.S. 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 "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 and unknown risks
and uncertainties, including those discussed in this press release
and in our Annual Report on Form 20-F, under the caption "Key
Information -Risk Factors" filed with the relevant Canadian
securities regulatory authorities in lieu of an annual information
form and with the U.S. Securities and Exchange Commission. 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™ (macimorelin) and related
out-licensing arrangements and the continued availability of funds
and resources to successfully launch the product, our strategic
review process, the ability of the Special Committee to carry out
its mandate, 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, our ability 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 or other
litigation on our cash flow, results of operations and financial
position, 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 our 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 applicable law.
Contact:
Leslie Auld
Chief Financial Officer
Aeterna Zentaris Inc.
IR@aezsinc.com
(843) 900-3211
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