Aeterna Zentaris Inc. (NASDAQ:AEZS)
(TSX:AEZS) today reported financial and operating results for
the first quarter ended March 31, 2018.
All Amounts are in U.S. Dollars
Recent Key Developments
- Continue to exceed terms of licensing and assignment agreement
with Strongbridge Ireland Limited in support of its Macrilen™
(macimorelin) commercial launch in the U.S. targeted for summer of
2018
- Diligently prepare European Medicines Agency (EMA) D120
regulatory response to Marketing Authorization Application (MAA) of
macimorelin for anticipated submission in July 2018
- Actively seeking out-licensing partners for macimorelin in
Europe
- Expanding resources to actively assist in identifying potential
marketed products in the U.S. market
- Financial condition and capital structure significantly
improved -- Upfront payment of $24 million received from
Strongbridge in January 2018;-- As of March 31, 2018, $24.5
million of unrestricted cash and cash
equivalents;-- Approximately 16.4 million Common Shares
outstanding as of March 31, 2018
Financial Highlights
- Revenues $24.7 million
- Research and Development (“R&D") Costs $0.8
million
- General and Administrative (“G&A") Expenses $2.8
million
- Selling Expenses $1.6 million
- Net Finance Income $1.9 million
- Income Taxes $6.9 million
- Net Income $14.4 million
- Working Capital $19.6 million
Commenting on recent key developments, Michael
V. Ward, President and Chief Executive Officer for Aeterna
Zentaris, stated, "We ended first quarter 2018 in the strongest
financial position in the past decade. Our licensing agreement of
Macrilen™ (macimorelin) in the U.S. and Canada with Strongbridge
demonstrates the success of our development initiatives and better
positions us to monetize our rights by licensing in territories
outside of the United States and Canada.”
First Quarter Highlights
Revenues
Licensing revenue was $24.6
million for the three months ended March 31, 2018, as compared to
$0.1 million for the same period in 2017. The increase is primarily
due to the recognition in January 2018, of the $24.0 million
upfront payment received from Strongbridge for the license of
Macrilen™(macimorelin) as earned revenue in accordance with
International Financial Reporting Standards (IFRS) 15, Revenue from
Contracts with Customers as it is a "right to use" license. In
addition, due to events that occurred in 2018, we consider our
performance obligations under the Zoptrex™ licensing agreements to
be fulfilled, therefore we recognized deferred revenues of $0.5
million relating to non-refundable upfront payments it previously
received for licensing and technology transfer arrangements that it
entered into with respect to the development of Zoptrex™ in various
territories.
Sales commission and other were
$90,000 for the three months ended March 31, 2018, compared to
$153,000 for the same period in 2017. During 2018, we received a
$90,000 termination agreement payment from our customer. In 2017,
those revenues mainly resulted from our sales team exceeding
pre-established unit sales baseline thresholds under our
co-promotion agreement to sell Saizen®. We also generated sales
commission in connection with our promotion of APIFINY®.
Operating Expenses
R&D costs were $0.8 million
for the three months ended March 31, 2018, as compared to $2.5
million for the same period in 2017. The decrease in R&D
costs is mainly attributable to lower comparative third-party
costs.
Additionally, the decrease in our R&D costs
for the three months ended March 31, 2018, as compared to the same
period in 2017, is attributable to lower employee compensation and
benefits costs, as well as lower facilities rent and maintenance
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.
Third-party costs attributable to Zoptrex™
and Macrilen™ (macimorelin) decreased considerably during the three
months ended March 31, 2018 as compared to March 31, 2017, mainly
since we completed the clinical portion of the ZoptEC trial and the
Macrilen™ (macimorelin) trial in 2017 and 2016, respectively.
Third-party costs attributable to Macrilen™ (macimorelin) incurred
in 2017 are related to the detailed analysis of the results as well
as the preparation of the New Drug Application filing, which was
submitted on June 30, 2017.
Excluding the impact of foreign exchange rate
fluctuations, we expect that we will incur overall R&D costs of
between $1.0 million and $2.0 million for the year ended December
31, 2018.
G&A expenses were $2.8
million for the three months ended March 31, 2018, as compared to
$1.9 million for the same period in 2017. The increase is primarily
related to fees associated with the Strongbridge License
Agreement.
Excluding the impact of foreign exchange rate
fluctuations and the recording of transaction costs related to
potential financing activities (not currently known or estimable),
we expect that G&A expenses will range between $8.0 million and
$10.0 million in 2018.
Selling expenses were $1.6
million for the three months ended March 31, 2018, as compared to
$1.5 million for the same period in 2017. Most of the selling
expenses for the three months ended March 31, 2018 were for the
payment of fees for the execution of the Strongbridge License
Agreement. For the three months ended March 31, 2017, the costs
were for our sales force co-promotion activities as well as our
sales management team. Based on currently available information, we
expect selling expenses to range between $1.8 million and $2.1
million in 2018.
Net finance income was $1.9
million for the three months ended March 31, 2018, as compared to
$1.5 million, for the same period in 2017. The increase in finance
income is mainly attributable to the change in fair value of
warrant liability. Such change in fair value results from the
periodic "mark-to-market" revaluation, via the application of
pricing models, of outstanding share purchase warrants. The closing
price of our common shares, which, on the NASDAQ, fluctuated from
$1.46 to $2.41 during the three months ended March 31, 2018,
compared to $2.45 to $3.65 during the same period in 2017, also had
a direct impact on the change in fair value of warrant
liability.
Net income for the three months
ended March 31, 2018 was $14.4 million (or $0.88 per share), as
compared to a net loss of $4.1 million (or $0.31 per share) for the
same period in 2017. The increase in net income for the three
months ended March 31, 2018 is a result of the revenue recognition
of the $24.0 million upfront payment received for the Strongbridge
License Agreement.
Liquidity, Cash Flows and Capital
Resources
At March 31, 2018, we had $24.5 million of cash
and cash equivalents. We expect existing cash balances and
operating cash flows will provide us with adequate funds to support
our current operating plan for at least the next twelve months and
for the foreseeable future.
Condensed Interim Consolidated
Statements of Financial Position
(Unaudited) |
|
March 31, 2018 |
|
December 31, 2017 |
|
|
$ |
|
$ |
ASSETS |
|
|
|
|
Current
Assets |
|
|
|
|
Cash and cash
equivalents |
|
24,548 |
|
|
7,780 |
|
Trade and other
receivables |
|
304 |
|
|
221 |
|
Inventory |
|
1,096 |
|
|
643 |
|
Prepaid expenses and
other current assets |
|
912 |
|
|
737 |
|
Total current
assets |
|
26,860 |
|
|
9,381 |
|
Restricted cash
equivalents |
|
388 |
|
|
381 |
|
Property, plant
and equipment |
|
94 |
|
|
101 |
|
Identifiable
intangible assets |
|
104 |
|
|
90 |
|
Other
non-current assets |
|
151 |
|
|
150 |
|
Deferred tax
asset |
|
— |
|
|
3,479 |
|
Goodwill |
|
8,844 |
|
|
8,613 |
|
Total
assets |
|
36,441 |
|
|
22,195 |
|
LIABILITIES |
|
|
|
|
Current
liabilities |
|
|
|
|
Payables and accrued
liabilities |
|
3,144 |
|
|
2,987 |
|
Provision for
restructuring costs |
|
864 |
|
|
2,296 |
|
Income taxes
payable |
|
3,300 |
|
|
— |
|
Current portion of
deferred revenues |
|
— |
|
|
486 |
|
Total Current
liabilities |
|
7,308 |
|
|
5,769 |
|
Deferred
revenues |
|
— |
|
|
55 |
|
Warrant
liability |
|
2,069 |
|
|
3,897 |
|
Employee future
benefits |
|
14,569 |
|
|
14,229 |
|
Provisions and
other non-current liabilities |
|
953 |
|
|
1,028 |
|
Total
Liabilities |
|
24,899 |
|
|
24,978 |
|
SHAREHOLDERS'
EQUITY (DEFICIT) |
|
|
|
|
Share
capital |
|
222,335 |
|
|
222,335 |
|
Other
capital |
|
88,895 |
|
|
88,772 |
|
Deficit |
|
(299,737 |
) |
|
(314,161 |
) |
Accumulated
other comprehensive income |
|
49 |
|
|
271 |
|
Total
Shareholders' Equity (Deficiency) |
|
11,542 |
|
|
(2,783 |
) |
Total
Liabilities and Shareholders' Equity (Deficiency) |
|
36,441 |
|
|
22,195 |
|
Commitments and contingencies |
|
|
|
|
|
|
Condensed Interim Consolidated
Statements of Comprehensive Income (Loss)
Information
(Unaudited) |
|
Three months ended March 31, |
(in
thousands, except share and per share data) |
|
2018 |
|
2017 |
|
|
$ |
|
$ |
Revenues |
|
|
|
|
Sales
commission and other |
|
90 |
|
|
153 |
|
Licensing revenue |
|
24,568 |
|
|
108 |
|
Total
revenues |
|
24,658 |
|
|
261 |
|
Operating expenses |
|
|
|
|
Research and development costs |
|
833 |
|
|
2,455 |
|
General and administrative expenses |
|
2,786 |
|
|
1,881 |
|
Selling expenses |
|
1,641 |
|
|
1,542 |
|
Total
operating expenses |
|
5,260 |
|
|
5,878 |
|
Income (loss) from operations |
|
19,398 |
|
|
(5,617 |
) |
Gain
due to changes in foreign currency exchange rates |
|
48 |
|
|
65 |
|
Change in fair value of warrant liability |
|
1,828 |
|
|
1,403 |
|
Other
finance income |
|
18 |
|
|
18 |
|
Net finance income |
|
1,894 |
|
|
1,486 |
|
Income (loss) before income taxes |
|
21,292 |
|
|
(4,131 |
) |
Income taxes |
|
(6,868 |
) |
|
— |
|
Net income (loss) |
|
14,424 |
|
|
(4,131 |
) |
Other comprehensive Income (loss): |
|
|
|
|
|
|
Items
that may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
Foreign currency translation adjustments |
|
(222 |
) |
|
(133 |
) |
Items
that will not be reclassified to profit or loss: |
|
|
|
|
Actuarial gain on defined benefit plans |
|
— |
|
|
441 |
|
Comprehensive income (loss) |
|
14,202 |
|
|
(3,823 |
) |
Net income (loss) per share (basic) |
|
0.88 |
|
|
(0.31 |
) |
Net income (loss) per share (diluted) |
|
0.87 |
|
|
(0.31 |
) |
Weighted average number of shares
outstanding: |
|
|
|
|
Basic |
|
16,440,760 |
|
|
13,175,866 |
|
Diluted |
|
16,493,363 |
|
|
13,175,866 |
|
|
|
|
|
|
|
|
Conference Call
The Company will host a conference call to
discuss these results on Tuesday, May 8, 2018, at 8:30 a.m.,
Eastern Time. Participants may access the conference call by
telephone using the following dial-in numbers:
- Toll-Free: 877-407-8029, Confirmation #13679691
- Toll: 201-689-8029, Confirmation #13679691
A replay of the conference call will also be
available on the Company’s website for a period of 30 days. For
reference, the Management’s Discussion and Analysis of Financial
Condition and Results of Operations for the first quarter 2018, as
well as the Company’s audited consolidated financial statements as
at March 31, 2018, 2017, 2016 and 2015, can be found
at www.zentaris.com in the "Investors" section.
About Aeterna Zentaris Inc.
Aeterna Zentaris Inc. (the “Company”) is a
specialty biopharmaceutical company focused on developing and
commercializing, principally through out-licensing arrangements,
Macrilen™ (macimorelin), an orally available ghrelin agonist, to be
used in the diagnosis of patients with adult growth hormone
deficiency (AGHD). On January 17, 2018, Aeterna Zentaris announced
that that it had, through a wholly-owned subsidiary, entered into a
license and assignment agreement with a wholly-owned subsidiary of
Strongbridge Biopharma plc to carry out development, manufacturing,
registration and commercialization of Macrilen™ (macimorelin) in
the United States and Canada. On December 20, 2017 the Company
announced that the U.S. Food and Drug Administration (FDA) granted
marketing approval for Macrilen™ (macimorelin). On November 27,
2017 Aeterna Zentaris announced that the Marketing Authorization
Application (MAA) for the use of Macrilen™ (macimorelin) for the
evaluation of AGHD was accepted by the European Medicines Agency
(EMA) for regulatory review. For more information, visit
www.zentaris.com.
Forward-Looking StatementsThis
press release contains forward-looking statements made pursuant to
the safe-harbor provisions 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 "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 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 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, 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, the
ability of Aeterna Zentaris 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, the litigation
involving two former officers of Aeterna Zentaris, 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 quarterly and
annual filings of Aeterna Zentaris with the applicable Canadian
securities regulators and the SEC 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.
Contacts:
Aeterna Zentaris Inc. James Clavijo Chief Financial Officer
IR@aezsinc.com 843-900-3201
Reilly Connect Susan Reilly President
susan.reilly@reillyconnect.com 312-600-6783
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