Aeterna Zentaris Reports Second Quarter 2019 Financial and Operating Results
August 13 2019 - 4:15PM
Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS)
today reported its financial and operating results for the second
quarter ended June 30, 2019.
All Amounts are in U.S. Dollars
Highlights
- On June 6, 2019, the Company
announced that it was reducing the size of its German workforce and
operations to more closely reflect the Company’s ongoing commercial
activities in Frankfurt. This restructuring affects 8
employees in Frankfurt, Germany and resulted in $773,000 of
severance costs that are expected to be paid by January 31,
2020.
- Net income for the second quarter
of 2019 was $0.2 million as compared to a net loss of $2.6 million
for the same period in 2018. Net loss for the six-months ended June
30, 2019 was $4.7 million as compared to net income of $11.8
million for the same period in 2018.
- In the first six months of 2019,
the Company earned $21,000 from the license of Macrilen™
(macimorelin) as gross sales in the U.S. continue to disappoint.
Novo Nordisk has advised that Macrilen™ (macimorelin) has been
successfully integrated into their patient and provider support hub
as they work to gain broader product coverage with payers and
specialty pharmacies. We continue to work with Novo Nordisk on
addressing the disappointing U.S. commercial execution and results
to date.
- The initial phase of the
macimorelin pediatric development program (the dose ranging study),
continued to progress with the first one-third of subjects having
completed the protocol, all in accordance with our expected
timeline.
Summary of Second Quarter Results and
Year-to-date Second Quarter Results
For the three-month period ended June 30, 2019,
we reported a consolidated net income of $0.2 million, or $0.01
income per common share (basic), as compared with a consolidated
net loss of $2.6 million, or $0.16 loss per common share, for the
three-month period ended June 30, 2018. The $2.8 million
improvement in net results is primarily from a gain in fair value
of warrant liability of $4.1 million, offset by a loss in exchange
rates of $0.7 million, an increase in operating expenses of $0.3
million and $0.2 million movement in tax recovery.
For the six-month period ended June 30, 2019, we
reported a consolidated net loss of $4.7 million, or $0.28 loss per
common share, as compared with a consolidated net income of $11.8
million, or $0.72 income per common share (basic), for the
six-month period ended June 30, 2018. The $16.5 million decline in
net results is primarily from a reduction of $24.5 million in gross
income and $0.6 million decrease in net finance income, offset by a
reduction of tax expense of $6.6 million and operating expenses of
$1.9 million.
Condensed Interim Consolidated Financial
Statements and Management’s Discussion and Analysis
For reference, the condensed interim
consolidated financial statements as at June 30, 2019 and for the
three-month and six-month periods ending June 30, 2019 and 2018 and
management’s discussion and analysis of financial condition and
results of operations for the three-month and six-month periods
ending June 30, 2019, will be found at www.zentaris.com in the
"Investors" section and at the Company’s profile at www.sedar.com
and www.sec.gov.
The tables below set out summary consolidated
financial information for the periods indicated. These tables
should be read together with the condensed interim consolidated
financial statements as at June 30, 2019 and for the three-month
and six-month periods ending June 30, 2019 and 2018 and
management’s discussion and analysis of financial condition and
results of operations for the three-month and six-month periods
ending June 30, 2019, which contain important information relating
to the Company. The results of operations for interim periods are
not necessarily indicative of the results to be expected for a full
year or any future period. The information presented herein does
not contain disclosures required by IFRS for consolidated financial
statements and should be read in conjunction with the Company’s
audited annual consolidated financial statements for the year ended
December 31, 2018.
About Aeterna Zentaris Inc.
Aeterna Zentaris Inc. is a specialty
biopharmaceutical company engaged in commercializing novel
pharmaceutical therapies, principally through out-licensing
arrangements. Aeterna Zentaris is the licensor and party to a
license and assignment agreement with Novo Nordisk A/S to carry out
development, manufacturing, registration, regulatory, and supply
chain for the commercialization of Macrilen™ (macimorelin), which
is to be used in the diagnosis of patients with adult growth
hormone deficiency in the United States and Canada. In addition, we
are actively pursuing business development opportunities for
macimorelin in the rest of the world and to monetize the value of
our non-strategic assets.
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 ability to
continue as a going concern dependent, in part, on the ability of
Aeterna Zentaris to transfer cash from Aeterna Zentaris GmbH to the
Canadian parent and U.S. subsidiary and secure additional
financing, 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
commercialize 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 Macrilen™ (macimorelin),
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
product, 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
Condensed Interim Consolidated Statements of
Comprehensive Income (Loss)
|
Three months
ended June 30, |
|
Six months
ended June 30, |
(in thousands, except share
and per share data) |
2019 |
|
2018 |
|
|
2019 |
|
2018 |
|
$ |
|
$ |
|
$ |
|
$ |
Revenues |
|
|
|
|
|
|
|
Royalty
income |
8 |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
Product sales |
129 |
|
|
|
— |
|
|
|
129 |
|
|
|
— |
|
|
Sales commission and other |
39 |
|
|
|
79 |
|
|
|
45 |
|
|
|
169 |
|
|
Licensing revenue |
18 |
|
|
|
89 |
|
|
|
36 |
|
|
|
24,657 |
|
|
Total revenues |
194 |
|
|
|
168 |
|
|
|
231 |
|
|
|
24,826 |
|
|
Cost of goods sold |
101 |
|
|
|
197 |
|
|
|
101 |
|
|
|
197 |
|
|
Gross income |
93 |
|
|
(29 |
) |
|
130 |
|
|
24,629 |
|
Research and development costs |
571 |
|
|
|
974 |
|
|
|
1,099 |
|
|
|
1,807 |
|
|
General and administrative expenses |
1,923 |
|
|
|
2,004 |
|
|
|
3,560 |
|
|
|
4,790 |
|
|
Selling expenses |
495 |
|
|
|
497 |
|
|
|
799 |
|
|
|
2,138 |
|
|
Restructuring costs |
773 |
|
|
|
— |
|
|
|
773 |
|
|
|
— |
|
|
Impairment of right of use
asset |
64 |
|
|
|
— |
|
|
|
401 |
|
|
|
— |
|
|
Write-off of other current
assets |
— |
|
|
|
— |
|
|
|
169 |
|
|
|
— |
|
|
Total operating expenses |
3,826 |
|
|
|
3,475 |
|
|
|
6,801 |
|
|
|
8,735 |
|
|
(Loss) income from operations |
(3,733 |
) |
|
|
(3,504 |
) |
|
|
(6,671 |
) |
|
|
15,894 |
|
|
(Loss) gain due to changes in foreign currency exchange
rates |
(6 |
) |
|
|
677 |
|
|
|
58 |
|
|
|
725 |
|
|
Change in fair value of warrant liability |
3,926 |
|
|
|
(134 |
) |
|
|
1,865 |
|
|
|
1,694 |
|
|
Other finance income |
19 |
|
|
|
126 |
|
|
|
43 |
|
|
|
144 |
|
|
Net finance income |
3,939 |
|
|
|
669 |
|
|
|
1,966 |
|
|
|
2,563 |
|
|
Income (loss) before income taxes |
206 |
|
|
|
(2,835 |
) |
|
|
(4,705 |
) |
|
|
18,457 |
|
|
Income tax recovery (expense) |
— |
|
|
|
233 |
|
|
|
— |
|
|
|
(6,635 |
) |
|
Net income (loss) |
206 |
|
|
|
(2,602 |
) |
|
|
(4,705 |
) |
|
|
11,822 |
|
|
Other comprehensive (loss) income: |
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or
loss: |
|
|
|
|
|
|
|
Foreign currency translation adjustments |
(110 |
) |
|
|
(28 |
) |
|
|
(26 |
) |
|
|
(250 |
) |
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
|
|
|
Actuarial loss (gain) on defined benefit plans |
(756 |
) |
|
|
205 |
|
|
|
(1,491 |
) |
|
|
205 |
|
|
Comprehensive (loss) income |
(660 |
) |
|
|
(2,425 |
) |
|
|
(6,222 |
) |
|
|
11,777 |
|
|
Net (loss) income per share [basic] |
0.01 |
|
|
|
(0.16 |
) |
|
|
(0.28 |
) |
|
|
0.72 |
|
|
Net (loss) income per share [diluted] |
0.01 |
|
|
|
(0.16 |
) |
|
|
(0.28 |
) |
|
|
0.70 |
|
|
Weighted average number of shares
outstanding: |
|
|
|
|
|
|
|
Basic |
16,622,415 |
|
|
|
16,440,760 |
|
|
|
16,532,090 |
|
|
|
16,440,760 |
|
|
Diluted |
17,260,0168 |
|
|
|
16,440,760 |
|
|
|
16,532,090 |
|
|
|
16,489,364 |
|
|
Condensed Interim Consolidated Statement of Financial
Position
(in
thousands) |
|
As at June 30, |
|
As at December 31, |
|
|
2019 |
|
2018 |
|
|
$ |
|
$ |
Cash and cash equivalents |
|
9,683 |
|
|
14,512 |
|
Trade and other receivables
and other current assets |
|
1,524 |
|
|
1,504 |
|
Inventory |
|
562 |
|
|
240 |
|
Restricted cash
equivalents |
|
367 |
|
|
418 |
|
Property, plant and
equipment |
|
48 |
|
|
65 |
|
Right of use asset |
|
340 |
|
|
— |
|
Other non-current assets |
|
8,227 |
|
|
8,272 |
|
Total
assets |
|
20,751 |
|
|
25,011 |
|
Payables and other current
liabilities |
|
3,200 |
|
|
2,966 |
|
Current portion of deferred
revenues |
|
74 |
|
|
74 |
|
Warrant liability |
|
1,451 |
|
|
3,634 |
|
Current provision for
restructuring costs and other costs |
|
1,004 |
|
|
887 |
|
Taxes payable |
|
1,662 |
|
|
1,669 |
|
Employee future benefits |
|
14,561 |
|
|
13,205 |
|
Lease liabilities |
|
1,205 |
|
|
— |
|
Non-current portion of
restructuring and other costs and deferred revenues |
|
622 |
|
|
669 |
|
Total
liabilities |
|
23,779 |
|
|
23,104 |
|
Shareholders'
(deficiency) equity |
|
(3,028 |
) |
|
1,907 |
|
Total liabilities and
shareholders' equity (deficiency) |
|
20,751 |
|
|
25,011 |
|
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