AEZS Aeterna Zentaris Inc

All amounts are in U.S. dollars QUEBEC CITY, Nov. 13 /PRNewswire-FirstCall/ -- AEterna Zentaris Inc. (NASDAQ:AEZSNASDAQ:TSX:NASDAQ:AEZ), a global biopharmaceutical company focused on endocrinology and oncology, today reported financial and operating results for the third quarter ended September 30, 2008. Third Quarter 2008 Highlights - Appointment on September 1, 2008, of Juergen Engel, Ph.D. as President and CEO of AEterna Zentaris, replacing Juergen Ernst who had been acting as Interim President and CEO since April 2008. Mr. Ernst, the former Chairman of the Company, was appointed Executive Chairman effective September 1, 2008; - Completion of patient recruitment for the second efficacy trial of the Phase 3 program in benign prostatic hyperplasia (BPH) with lead compound, cetrorelix; - Start of second stage of recruitment for the Phase 2 trial in ovarian cancer with AEZS-108. The trial is part of a Phase 2 program in gynaecological cancers which will include up to 82 women; - Signing of a license and cooperation agreement for the commercialization of cetrorelix in BPH, with Handok Pharmaceuticals Co., Ltd. (Handok) for the Korean market. Subsequent to quarter end, signing of another agreement with Handok for the commercialization of ozarelix in BPH for the Korean market; and - Recovery of worldwide rights from Ardana plc (LSE:ARA) for the Growth Hormone Secretagogue (GHS) compound, AEZS-130. Future development options are currently being evaluated for the use of this compound in growth hormone deficiencies. Subsequent to Quarter-End On November 11, 2008, AEterna Zentaris signed a definitive agreement to sell to Cowen Healthcare Royalty Partners, L.P. ("CHRP") its rights to royalties on future sales of Cetrotide(R) covered by its license agreement with Merck Serono. The license agreement between AEterna Zentaris and Merck Serono was signed in 2000 and granted Merck Serono exclusive rights to market, distribute and sell Cetrotide worldwide, with the exception of Japan, in the field of in vitro fertilization. On closing, AEterna Zentaris will receive $52.5 million from CHRP. In addition, contingent on 2010 net sales of Cetrotide(R) reaching a specified level, AEterna Zentaris would receive an additional payment of $2.5 million from CHRP. Under the terms of the agreement, if cetrorelix which is currently in Phase 3 clinical trials for the treatment of benign prostatic hyperplasia, is approved for sale by the European regulatory authorities in an indication other than in vitro fertilization, AEterna Zentaris has agreed to make a one-time cash payment to CHRP for an amount ranging from $5 million up to a maximum of $15 million. The amount which would be due to CHRP will be higher the earlier the product receives European regulatory approval. "We are very pleased with the Cowen Healthcare Royalty Partners transaction for Cetrotide(R) which is in line with our strategy of generating non-dilutive financing. With this transaction, we strengthened our financial position to focus on the development of cetrorelix in BPH, while pursuing partnership opportunities for its future commercialization," said Juergen Engel, Ph.D., President and Chief Executive Officer of AEterna Zentaris. "At the drug development level, both our Phase 3 program in BPH with cetrorelix, and our Phase 2 program with our lead oncology compound, AEZS-108 in ovarian and endometrial cancer, met their recruitment goals as scheduled and remain on track. First results for cetrorelix in BPH are still expected in the third quarter of 2009, while those for AEZS-108 should be disclosed in the next few months." CONSOLIDATED RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2008 Consolidated sales and royalties increased to $8.6 million for the three-month period ended September 30, 2008, compared to $7.4 million for the same period in 2007. The increase in sales and royalties for the three-month period ended September 30, 2008 compared to the same period last year is related primarily to additional sales of Cetrotide(R), partly offset by the exclusion of sales from Impavido(R) in the third quarter of 2008. License fees revenues decreased to $2.4 million for the three-month period ended September 30, 2008 compared to $3.7 million for the same period in 2007. The decrease for the three-month period ended September 30, 2008, compared to the same period in 2007, is mainly attributable to a milestone payment received in 2007 from Ardana plc. Consolidated R&D costs, net of tax credits and grants were $13.9 million for the three-month period ended September 30, 2008 compared to $9.8 million for the same period in 2007. Additional R&D expenses for the three-month period ended September 30, 2008, compared to the same period in 2007 are mainly related to the advancement of the Phase 3 program in BPH with the compound, cetrorelix. Consolidated selling, general and administrative (SG&A) expenses were $3.3 million for the three-month period ended September 30, 2008 compared to $5.8 million for the same period in 2007. The decrease in SG&A expenses for the three-month period ended September 30, 2008 compared to the same period in 2007 is primarily related to organizational changes and cost saving measures that were implemented in the second quarter of 2008. Consolidated net loss for the three-month period ended September 30, 2008 was $13.9 million or $0.26 per basic and diluted share compared to $8.7 million or $0.16 per basic and diluted share for the same period in 2007. The increase in net loss for the three-month period ended September 30, 2008 compared to the same period last year, is mainly related to the advancement of the cetrorelix Phase 3 program for BPH, lower manufacturing margins and foreign exchange loss. The cash and short-term investments were $11 million as at September 30, 2008. CONFERENCE CALL Management will be hosting a conference call for the investment community beginning at 10:00 a.m. Eastern Time, today, November 13, 2008, to discuss third quarter 2008 financial results. To participate in the live conference call by telephone, please dial 416-646-3095, 514-807-8791 or 800-814-4859. Individuals interested in listening to the conference call on the Internet may do so by visiting http://www.aezsinc.com/. A replay will be available on the Company's Web site for 30 days. About AEterna Zentaris Inc. AEterna Zentaris Inc. is a global biopharmaceutical company focused on endocrine therapy and oncology with proven expertise in drug discovery, development and commercialization. News releases and additional information are available at http://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. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the Company's 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 R&D projects, the successful and timely completion of clinical studies, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process 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 relating to the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The Company does not undertake to update these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments except if we are requested by a governmental authority or applicable law. Attachment: Financial summary (In thousands of US dollars, except share and per share data) Three months ended Nine months ended Sept. 30, Sept. 30, (Unaudited) 2008 2007 2008 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ $ $ Revenues Sales and royalties 8,630 7,372 24,822 22,392 License fees 2,399 3,671 6,412 9,436 ------------------------------------------------------------------------- 11,029 11,043 31,234 31,828 ------------------------------------------------------------------------- Operating expenses Cost of sales 4,986 3,290 14,348 9,675 Research and development costs, net of tax credits and grants* 13,880 9,835 44,914 25,557 Selling, general and administrative* 3,277 5,847 14,287 15,257 Depreciation and amortization: Property, plant and equipment 433 426 1,199 1,183 Intangible assets 839 1,024 2,555 3,014 ------------------------------------------------------------------------- 23,415 20,422 77,303 54,686 ------------------------------------------------------------------------- Loss from operations (12,386) (9,379) (46,069) (22,858) Other income (expenses) Interest income 149 494 737 1,369 Interest expense - (15) (68) (68) Foreign exchange (loss) gain (1,324) (170) 429 (766) Loss on disposal of long-lived assets held for sale (90) - (125) - ------------------------------------------------------------------------- (1,265) 309 973 535 ------------------------------------------------------------------------- Loss before income taxes (13,651) (9,070) (45,096) (22,323) Income tax (expense) recovery (228) 1,012 (228) 4,287 ------------------------------------------------------------------------- Net loss from continuing operations (13,879) (8,058) (45,324) (18,036) Net loss from discontinued operations - (646) - (624) ------------------------------------------------------------------------- Net loss for the period (13,879) (8,704) (45,324) (18,660) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per share from continuing operations Basic and diluted (0.26) (0.15) (0.85) (0.34) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net loss per share Basic and diluted (0.26) (0.16) (0.85) (0.35) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares Basic and diluted 53,187,470 53,184,803 53,187,470 53,181,248 ------------------------------------------------------------------------- ------------------------------------------------------------------------- * Stock-based compensation costs included in: Research and development 50 64 166 180 Selling, general and administra- tive 52 447 78 1,312 ------------------------------------------------------------------------- 102 511 244 1,492 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statement of Comprehensive Income Three months ended Nine months ended Sept. 30, Sept. 30, (Unaudited) 2008 2007 2008 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ $ $ Net loss for the period (13,879) (8,704) (45,324) (18,660) Other comprehensive income (loss): Foreign currency translation (3,169) 6,315 (2,650) 13,204 Variation in the fair value of short-term investments (15) 81 (3) (87) ------------------------------------------------------------------------- Comprehensive loss (17,063) (2,308) (47,977) (5,543) ------------------------------------------------------------------------- ------------------------------------------------------------------------- (In thousands of US dollars) CONSOLIDATED BALANCE SHEETS September 30, December 31, Unaudited 2008 2007 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Cash and short-term investments 10,957 41,387 Other current assets 15,374 18,193 ---------------------------- 26,331 59,580 Long-term assets 46,227 63,783 ---------------------------- Total assets 72,558 123,363 ---------------------------- ---------------------------- Current liabilities 17,611 22,255 Deferred revenues 4,508 3,333 Long-term payable 197 - Employee future benefits 9,384 9,184 ---------------------------- 31,700 34,772 Shareholders' equity 40,858 88,591 ---------------------------- Total liabilities and shareholders' equity 72,558 123,363 ---------------------------- ---------------------------- DATASOURCE: AETERNA ZENTARIS INC. CONTACT: Investor Relations: Ginette Vallieres, Investor Relations Coordinator, (418) 652-8525 ext. 265, ; Media Relations: Paul Burroughs, Director of Communications, Office: (418) 652-8525 ext. 406, Cell: (418) 575-8982,

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