The
information in this preliminary prospectus supplement is not complete and may be changed. This preliminary prospectus supplement
and the accompanying prospectus are part of an effective registration statement filed with the Securities and Exchange Commission.
This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED FEBRUARY 16, 2021
PRELIMINARY
PROSPECTUS SUPPLEMENT
(To
Prospectus dated August 15, 2019)
Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-232935
AETERNA
ZENTARIS INC.
Common Shares
Aeterna
Zentaris Inc. (“we,” “us,” “our” or the “Company”) are offering common
shares, no par value, (“Common Shares”), in this offering. Each Common Share offered under this prospectus supplement
and the accompanying prospectus has associated with it one right to purchase a Common Share under our Rights Plan (as defined
herein). Please see the section entitled “Description of Securities Offered Under This Prospectus Supplement — Shareholder
Rights Plan” in this prospectus supplement and the accompanying prospectus for a more detailed discussion.
Our
Common Shares are listed on the Nasdaq Capital Market and on the Toronto Stock Exchange (“TSX”) under the symbol “AEZS”.
On February 12, 2021, the last reported sale price of our Common Shares on the Nasdaq Capital Market was $1.90 per
share.
Investing
in our securities involves a high degree of risk. Before making any decision to invest in our securities, you should carefully
consider the information disclosed in this this prospectus supplement and the accompanying base prospectus, including the information
under “Risk Factors” beginning on page S-6 of this prospectus supplement, as well as the information, including
the risk factors contained or incorporated by reference to this prospectus supplement and the accompanying prospectus as described
under the heading “Where You Can Find More Information.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE
SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT HAVE NOT BEEN QUALIFIED FOR SALE IN CANADA AND MAY NOT BE OFFERED OR SOLD IN
CANADA EXCEPT PURSUANT TO AN EXEMPTION FROM THE PROSPECTUS REQUIREMENTS UNDER APPLICABLE CANADIAN SECURITIES LAWS. THE COMPANY
HAS NOT FILED AND DOES NOT INTEND TO FILE A CANADIAN PROSPECTUS IN CONNECTION WITH THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT.
There
is no arrangement for funds to be received in escrow, trust or similar arrangement. The Company has applied to the TSX for conditional
approval for listing of the Common Shares offered for sale pursuant to this prospectus supplement. Listing on the TSX is subject
to us fulfilling all of the requirements of the TSX.
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Per Common
Share
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Total
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Offering Price
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$
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$
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Underwriting Discounts and Commissions(1)
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$
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$
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Proceeds, before expenses, to us
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$
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$
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(1)
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See
“Underwriting” beginning on page S-12 of this prospectus supplement for additional information regarding
underwriting compensation.
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We
have granted the underwriter an option for a period of 30 days from the date of this prospectus to purchase up to additional
Common Shares at the public offering price per share set forth above, less underwriting discounts and commissions. If the underwriter
exercises the option in full, the total underwriting discounts and commissions payable by us will be $ , and the total
proceeds to us, before expenses, will be approximately $ .
We
expect that delivery of the shares being offered pursuant to this prospectus supplement and the accompanying base prospectus will
be made on or about February , 2021, subject to satisfaction of customary closing conditions.
H.C.
WAINWRIGHT & CO.
The
date of this prospectus supplement is February , 2021.
TABLE
OF CONTENTS
You
should rely only on the information contained in or incorporated by reference in this prospectus supplement and the accompanying
prospectus. We have not, and the underwriter has not, authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriter is
not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this prospectus supplement, the accompanying prospectus or in any documents incorporated by
reference herein or therein is accurate only as of the date of the applicable document. Our business, financial condition, results
of operations and prospects may have changed since that date.
This
prospectus supplement is not an offer to sell or a solicitation of an offer to buy securities in any jurisdiction in which such
offer or solicitation is illegal.
ABOUT
THIS PROSPECTUS SUPPLEMENT
All
references to the terms “Aeterna Zentaris,” the “Company,” “we,” “us” or “our”
in this prospectus supplement refer to Aeterna Zentaris Inc., a Canadian corporation, and its consolidated subsidiaries, unless
the context requires otherwise.
This
prospectus supplement and the accompanying base prospectus are part of a registration statement on Form F-3 (File No. 333-232935)
that we filed with the Securities and Exchange Commission (the “SEC”) utilizing a “shelf” registration
process. Each time we conduct an offering to sell securities under the accompanying base prospectus we will provide a prospectus
supplement that will contain specific information about the terms of that offering, including the price, the amount of securities
being offered and the plan of distribution. The shelf registration statement was initially filed with the SEC on August 1, 2019,
and was declared effective on August 15, 2019. This prospectus supplement describes the specific details regarding this offering
and may add, update or change information contained in the accompanying base prospectus. The accompanying base prospectus provides
general information about us and our securities, some of which, such as the section entitled “Plan of Distribution,”
may not apply to this offering. This prospectus supplement and the accompanying base prospectus are an offer to sell only the
securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making offers
to sell or solicitations to buy our securities in any jurisdiction in which an offer or solicitation is not authorized or in which
the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer or
solicitation.
If
information in this prospectus supplement is inconsistent with the accompanying base prospectus or the information incorporated
by reference with an earlier date, you should rely on this prospectus supplement. This prospectus supplement, together with the
accompanying base prospectus and the documents incorporated by reference into this prospectus supplement and the accompanying
base prospectus, include all material information relating to this offering. You should assume that the information appearing
in this prospectus supplement, the accompanying base prospectus and the documents incorporated by reference in this prospectus
supplement and the accompanying base prospectus is accurate only as of the respective dates of those documents. Our business,
financial condition, results of operations and prospects may have changed since those dates. You should carefully read this
prospectus supplement, the accompanying base prospectus and the information and documents incorporated by reference herein and
therein before making an investment decision. See “Where You Can Find More Information” in this prospectus supplement
and in the accompanying base prospectus.
We
have not, and the underwriter has not, authorized anyone to provide you with information that is different from that contained
in this prospectus supplement, the accompanying base prospectus or in any free writing prospectus we may authorize to be delivered
or made available to you. When you make a decision about whether to invest in our securities, you should not rely upon any information
other than the information contained in or incorporated by reference into this prospectus supplement, the accompanying base prospectus
or in any free writing prospectus that we may authorize to be delivered or made available to you. Neither the delivery of this
prospectus supplement and the accompanying base prospectus nor the sale of our securities means that the information contained
in this prospectus supplement, the accompanying base prospectus or any free writing prospectus is correct after the date of the
respective dates of such documents.
For
investors outside the United States: We have not, and the underwriter has not, taken any action that would permit this offering
or possession or distribution of this prospectus supplement or the accompanying base prospectus in any jurisdiction where action
for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this
prospectus supplement or the accompanying base prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the securities covered hereby and the distribution of this prospectus supplement and the accompanying base
prospectus outside the United States. This offering is not available to a resident of Canada or a person or company in Canada.
See the section entitled “Underwriting” in this prospectus supplement.
This
prospectus supplement and the accompanying base prospectus contain summaries of certain provisions contained in some of the documents
described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in
their entirety by the full text of the actual documents, some of which have been filed or will be filed with the SEC and incorporated
by reference herein. See “Where You Can Find More Information” in this prospectus supplement. We further note that
the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is
incorporated by reference into this prospectus supplement or the accompanying base prospectus were made solely for the benefit
of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements,
and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants
were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied
on as accurately representing the current state of our affairs.
This
prospectus supplement and the accompanying base prospectus contain and incorporate by reference certain market data and industry
statistics and forecasts that are based on studies sponsored by us, independent industry publications and other publicly available
information. Although we believe these sources are reliable, estimates as they relate to projections involve numerous assumptions,
are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under “Risk
Factors” in this prospectus supplement and the accompanying base prospectus and under similar headings in the documents
incorporated by reference herein and therein. Accordingly, investors should not place undue reliance on this information.
Unless
otherwise noted herein, all references to “CDN$,” “CAD$,” or “Canadian dollars” are to the
currency of Canada and “$,” “dollars,” “US$,” “United States dollars,” or “U.S.
dollars” are to the currency of the United States. This prospectus supplement, the accompanying base prospectus and the
information incorporated by reference herein and therein contain references to trademarks, service marks and trade names owned
by us or other companies. Solely for convenience, trademarks, service marks and trade names referred to in this prospectus supplement,
the accompanying base prospectus and the information incorporated by reference herein and therein, including logos, artwork, and
other visual displays, may appear without the ® or ® symbols, but such references are not intended to indicate,
in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor
to these trademarks, service marks and trade names. We do not intend our use or display of other companies’ trade names,
service marks or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Other trademarks,
trade names and service marks appearing in this prospectus supplement, the accompanying base prospectus and the documents incorporated
by reference herein and therein are the property of their respective owners.
The
financial statements included in or incorporated by reference into this prospectus supplement and the accompanying prospectus
have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board. This may not be comparable to financial statements of United States (“U.S.”) companies. Our consolidated financial
statements are subject to the standards of the Public Company Accounting Oversight Board (United States) and the SEC independence
standards.
Our
principal executive offices are located at 315 Sigma Drive, Summerville, South Carolina 29486; our telephone number is (843) 900-3223.
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying prospectus and the documents incorporated herein by reference contain “forward-looking
statements” made pursuant to the safe-harbor provision of the U.S. Private Securities Litigation Reform Act of 1995, which
reflect our current expectations regarding future events. All statements other than statements of historical facts included in
or incorporated by reference into this prospectus supplement that address activities, events or developments that we expect, believe
or anticipate will or may occur in the future are forward-looking statements. Our forward-looking statements generally include
statements about our plans, objectives, strategies and prospects regarding, among other things, our businesses, results of operations,
liquidity and financial condition. In some cases, we have identified these forward-looking statements with words like “believe,”
“may,” “could,” “might,” “possible,” “potential,” “project,”
“will,” “should,” “expect,” “intend,” “plan,” “predict,”
“anticipate,” “estimate,” “approximate,” “contemplate” or “continue,”
or the negative of these words or other words and terms of similar meaning. Known and unknown risks and uncertainties could cause
our actual results to differ materially from those in forward-looking statements. Such risks include, but are not limited to,
the following:
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ability to raise capital and obtain financing to continue our currently planned operations;
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our
ability to regain compliance with the continued listing requirements of the Nasdaq and to maintain listing of our Common Shares
on the Nasdaq;
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our
ability to continue as a going concern, which is dependent, in part, on our ability to secure additional financing;
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our
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, including our heavy reliance on the success of the license
and assignment agreement with Novo Nordisk A/S (“Novo”) for the commercialization of Macrilen™ for the diagnosis
of adult growth hormone deficiency in the United States;
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our
ability to enter into out-licensing, development, manufacturing, marketing and distribution agreements with other pharmaceutical
companies and keep such agreements in effect;
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our
reliance on third parties for the manufacturing and commercialization of Macrilen™ (macimorelin);
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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;
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uncertainties
related to the regulatory process;
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unforeseen
global instability, including the instability due to the global pandemic of the novel coronavirus;
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our
ability to efficiently commercialize or out-license Macrilen™ (macimorelin) in other territories and for other indications
not covered by our license and assignment agreement with Novo;
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our
reliance on the success of the pediatric clinical trial in the European Union (“E.U.”) and U.S. for Macrilen™
(macimorelin);
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the
degree of market acceptance of Macrilen™ (macimorelin);
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our
and our partners’ ability to obtain necessary approvals from the relevant regulatory authorities to enable us to use
the desired brand names for our product;
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our
and our partners’ ability to successfully negotiate pricing and reimbursement in key markets in the E.U. for Macrilen™
(macimorelin);
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any
evaluation of potential strategic alternatives to maximize potential future growth and shareholder value may not result in
any such alternative being pursued, and even if pursued, may not result in the anticipated benefits;
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ability to protect our intellectual property;
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the
timing and progress of the preclinical and clinical development of our product candidates; and
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the
potential of liability arising from shareholder lawsuits and general changes in economic conditions.
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More
detailed information about these and other factors is included under “Risk Factors” in this prospectus supplement,
the accompanying prospectus and in other documents incorporated herein by reference. Many of these factors are beyond our control.
Future events may vary substantially from what we currently foresee. You should not place undue reliance on such forward-looking
statements. We are under no obligation to update or alter such forward-looking statements whether as a result of new information,
future results, events, developments or otherwise, unless required to do so by a governmental authority or applicable law. We
advise you, however, to review any further disclosures we make on related subjects in our Form 20-F and reports on Form 6-K filed
or furnished to the SEC.
SUMMARY
The
following summary highlights selected information contained elsewhere in or incorporated by reference into this prospectus supplement
and the accompanying prospectus. The summary may not contain all of the information that you should consider before investing
in our Common Shares. You should read this entire prospectus supplement and the accompanying prospectus carefully, including “Risk
Factors” contained in this prospectus supplement and the documents incorporated by reference into this prospectus supplement
and the accompanying prospectus, before making an investment decision. This prospectus supplement may add to, update or change
information in the accompanying prospectus. See the “Risk Factors” section of this prospectus supplement beginning
on page S-6 for a discussion of the risks involved in investing in our securities.
Our
Company
Aeterna
Zentaris is a specialty biopharmaceutical company commercializing and developing therapeutics and diagnostic tests. The Company’s
lead product, Macrilen™ (macimorelin), is the first and only United States Food and Drug Administration (“FDA”)
and European Commission approved oral test indicated for the diagnosis of patients with adult growth hormone deficiency (“AGHD”).
Macrilen™ (macimorelin) is currently marketed in the United States through a license and assignment agreement, as amended
(the “License Agreement”) with Novo Nordisk Biopharm Limited (“Novo”). Aeterna Zentaris is also pursuing
the development of macimorelin for the diagnosis of child-onset growth hormone deficiency (“CGHD”), an area of significant
unmet need. In addition, we are actively pursuing business development opportunities for the commercialization of macimorelin
in the rest of the world in addition to other non-strategic assets to monetize their value.
Recent
Developments
Evaluation
and potential development of an oral prophylactic bacterial vaccine against COVID-19
On
February 2, 2021, we announced that we entered into an exclusive option agreement to evaluate a preclinical potential COVID-19
vaccine developed at the Julius-Maximilians-University Wuerzburg (the “University”), and made a payment of €110,000
to the University. The vaccine technology developed at the University uses a typhoid fever vaccine as a carrier strain and has
the potential to be an orally active COVID-19 (SARS-CoV-2) live-attenuated bacterial vaccine. Under the option agreement entered
into with the University, we have the right to negotiate an exclusive worldwide license to develop this technology for the prevention
of coronavirus diseases, including COVID-19. A scientific advice meeting with the German authorities at Paul-Ehrlich Institute
has been scheduled by the University to discuss a roadmap towards initiating a first-in-human clinical trial. We believe that,
if it is determined that there is sufficient data to advance into human clinical trials, the development program for this particular
COVID-19 vaccine is expected to be abbreviated because extensive clinical safety data is already available for the underlying
vaccine strain, Salmonella Typhi Ty21a. We expect to make a decision whether to exercise our option to negotiate a license for
that technology by mid-2021.
Expansion
of orphan drug development pipeline with targeted immunosuppressive therapeutics
On
January 28, 2021, we announced that we licensed the exclusive worldwide rights to develop, manufacture and commercialize targeted,
highly specific, autoimmunity modifying proteins, currently in early preclinical development, for the potential treatment of neuromyelitis
optica spectrum disorder from the University, and made a payment of €100,000 to the University.
Evaluation
of macimorelin as treatment for neurodegenerative disease
On
January 13, 2021, we entered into a material transfer agreement with The University
of Queensland to conduct preclinical and clinical studies evaluating macimorelin as a therapeutic for the treatment of an undisclosed
neurodegenerative disease. The University researchers aim to conduct preclinical studies in multiple models to demonstrate the
therapeutic reach of macimorelin on disease progression and disease-specific pathology.
European
licensing agreement with Consilient Health Ltd. for commercialization of macimorelin
On
December 7, 2020, we announced that we entered into an exclusive licensing agreement with Consilient Health, Ltd. (“CH”
or “Consilient Health”) for the commercialization in the European Union and the United Kingdom of macimorelin in any
diagnostic application, including the diagnosis of patients with AGHD and, subject to receipt of regulatory approval, CGHD. Consilient
Health is expected to negotiate reimbursement of macimorelin.
Amendment
to Novo Nordisk License Agreement
On
November 16, 2020, we entered into an amendment to the license Agreement with Novo pursuant to which Novo made an upfront payment
to us of €5 million, which accelerated and replaced a U.S.$5 million regulatory approval milestone. In addition, we agreed
that we will be solely responsible for the pivotal Study P02 in partnership with a contract research organization, agreed to adjust
the percentage of Study P02 clinical trial costs that Novo is required to reimburse us from 70% to 100% of costs
up to €9 million, and to reduce the royalty payment we receive on sales of macimorelin in the U.S. and Canada from 15% to
8.5% for annual net sales up to U.S.$40 million, and returns to 15% or more for annual net sales of macimorelin over U.S.$40 million.
In addition, upon regulatory approval of macimorelin in the U.S. for the diagnosis of CGHD, if Novo determines not to commercialize
macimorelin in Canada, we have the option to exclusively license rights to macimorelin in Canada to a third party.
Megapharm
Distribution Agreement
On
June 25, 2020, we announced that we entered into an exclusive distribution and related quality agreement with Megapharm Ltd. (“Megapharm”),
a leading Israel-based biopharmaceutical company, for the commercialization in Israel and in the Palestinian Authority of macimorelin,
to be used in the diagnosis of patients with AGHD and in clinical development for the diagnosis of CGHD.
Under
the terms of the agreement, Megapharm will be responsible for obtaining registration to market macimorelin in Israel and the Palestinian
Authority, while we will be responsible for manufacturing, product supply, quality assurance and control, regulatory support,
and maintenance of the relevant intellectual property. The regulatory process for macimorelin in Israel is expected to commence
in the first quarter of 2021.
Pediatric
clinical trial for Macrilen™ (macimorelin)
On
January 28, 2020, we announced the successful completion of patient recruitment for the first pediatric study of macimorelin as
a growth hormone stimulation test for the evaluation of growth hormone deficiency (“GHD”) in children. This
study, AEZS-130-P01 (“Study P01”), was the first of two studies as agreed with the European Medicines Agency (“EMA”)
in our PIP for macimorelin as a GHD diagnostic. Macimorelin, a ghrelin agonist, is an orally active small molecule that stimulates
the secretion of growth hormone from the pituitary gland into the circulatory system. The goal of Study P01 was to establish a
dose that can both be safely administered to pediatric patients and cause a clear rise in growth hormone concentration in subjects
ultimately diagnosed as not having GHD. The recommended dose derived from Study P01 will be evaluated in the pivotal second study
AEZS-130-P02 (“Study P02”) on diagnostic efficacy and safety. Study P01 was an international, multicenter study which
was conducted in Hungary, Poland, Ukraine, Serbia, Belarus and Russia. Study P01 was an open label, group comparison, dose escalation
trial designed to investigate the safety, tolerability, and pharmacokinetic/pharmacodynamic (“PK/PD”) of macimorelin
acetate after ascending single oral doses of macimorelin at 0.25, 0.5, and 1.0 mg per kg body weight in pediatric patients from
2 to less than 18 years of age with suspected GHD. We enrolled a total of 24 pediatric patients across the three cohorts of the
study. Per study protocol, all enrolled patients completed four study visits after successful completion of the screening period.
At Visit 1 and Visit 3, a provocative GH stimulation test was conducted according to the study sites’ local practices. At
Visit 2, the macimorelin test was performed: following the oral administration of the macimorelin solution, blood samples were
taken at predefined times for PK/PD assessment. Visit 4 was a safety follow-up visit at study end.
The
final study results from Study P01 were published in the second quarter of 2020 indicating positive safety and tolerability data
for use of macimorelin in child-onset growth hormone as well as PK/PD data observed in the range as expected from the adult
studies. Thereafter, we plan to proceed with the pivotal Study P02 with an expected start date in the first quarter of 2021 and
an expected completion date in July 2022, according to the PIP agreement with EMA. Study P02 is designed to investigate the diagnostic
efficacy and safety of macimorelin acetate in a dose of 1.0 mg/kg body weight in pediatric patients from 2 years of age to 18
years of age with suspected growth hormone deficiency.
On
April 7, 2020, we announced the decision of the EMA to accept our modification request of our PIP as originally approved in March
2017, which covered the conduct of two pediatric studies and defined relevant key elements in the outline of these studies. We
believe this EMA decision supports the development of one globally harmonized study protocol for test validation, specifically
Study P02, which we expect to be accepted both in Europe and the U.S.
Financing
Activities
During
the period beginning on January 1, 2021 and ending on February 10, 2021, investors have exercised certain of our
outstanding warrants to purchase 33,069,253 of our common shares for gross proceeds of approximately $19.0 million
(such exercises, the “Warrant Exercises”).
On
August 5, 2020, we closed a registered direct offering with several institutional investors in the United States for 12,427,876
Common Shares, at a purchase price of $0.56325 per Common Share, priced at-the-market under Nasdaq rules. Additionally, we issued
to the investors unregistered warrants to purchase up to an aggregate of 9,320,907 Common Shares in a concurrent private placement.
The warrants have an exercise price of $0.47 per Common Share, are exercisable immediately and will expire five and one-half years
following the date of issuance. The gross proceeds from the offering totaled approximately $7.0 million, before deducting placement
agent fees and offering expenses.
On
July 7, 2020, we closed a public offering of 26,666,666 units at a price to the public of $0.45 per unit, for gross proceeds of
$12 million, before deducting placement agent fees and other offering expenses payable by us, estimated at $1.4 million.
Each unit contained one Common Share (or Common Share equivalent in lieu thereof) and one investor share purchase warrant to purchase
one Common Share. In total, 26,666,666 Common Shares, 26,666,666 investor share purchase warrants with an exercise price of $0.45
per share expiring July 7, 2025 and 1,866,667 placement agent warrants with an exercise price of $0.5625 per share expiring July
1, 2025 were issued.
Nasdaq
Letters
On
July 27, 2020, we received a letter from the Listing Qualifications Staff of the Nasdaq (the “Staff”), notifying us
that for the last 30 consecutive business days prior to the date of the letter, the closing bid price of our Common Shares was
below $1.00 per share and, therefore, we did not meet the requirement for continued listing on Nasdaq as required by Nasdaq Listing
Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were granted a grace
period of 180 calendar days, through January 25, 2021, and on January 26, 2021, we were granted a subsequent 180 calendar day
extension, through July 26, 2021, to evidence compliance with the Bid Price Rule. As of February 12, 2021, the closing
bid price of our Common Shares was over $1.00 for 7 consecutive days. However, there is no guarantee that we will maintain
a closing bid price of over $1.00 for the period required to regain compliance with the Bid Price Rule. To evidence compliance,
we must evidence a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days on or before July
26, 2021. In the event we do not timely evidence compliance with the Bid Price Rule, we will face delisting. In that case, we
would be entitled to request a hearing before the Nasdaq Hearings Panel, which request would stay any delisting action by the
Staff pending completion of the hearing process. Nasdaq’s notice has no immediate effect on the listing of our Common Shares
on Nasdaq and does not otherwise impact our listing on the Toronto Stock Exchange. We are considering the options available to
us to evidence compliance with the Bid Price Rule prior to the expiration of the grace period.
In
addition to the minimum bid price requirement, the continued listing rules of Nasdaq require us to meet at least one of the following
listing standards: (i) stockholders’ equity of at least $2.5 million, (ii) market value of listed securities (calculated
by multiplying the daily closing bid price of our securities by our total outstanding securities) of at least $35 million or (iii)
net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years) of at least $500,000.
On
April 8, 2020, we received a letter from the Staff notifying us that, based upon the net loss for the fiscal year ended December
31, 2019, we no longer satisfied the minimum net income requirement for continued listing on The Nasdaq Capital Market under Nasdaq
Listing Rule 5550(b)(3) and did not otherwise satisfy the alternative requirements of market value of listed securities or stockholders’
equity. We timely submitted a plan to regain compliance with Nasdaq Listing Rule 5550(b)(3), and on June 3, 2020 the Staff granted
us an extension of 180 days, through October 5, 2020, to evidence compliance with this requirement. On July 1, 2020, we priced
an approximate $12 million public offering of our common shares and warrants, pursuant to which we ultimately raised approximately
$10.5 million in net proceeds. As a result of the offering, on July 30, 2020, we received a letter from the Staff notifying us
that the Staff determined that we comply with the stockholders’ equity component of the rules, subject to being delisted
if in a future periodic report we fail to evidence compliance. There is no assurance that we will maintain compliance, and therefore
there can be no assurance that our Common Shares will remain listed on Nasdaq.
Corporate
Information
We
were incorporated on September 12, 1990 under the Canada Business Corporations Act (the “CBCA”) and continue to be
governed by the CBCA. Our registered address is located at 222 Bay St., Suite 3000, Toronto, Ontario, Canada M5K 1E7 c/o Norton
Rose Fulbright Canada LLP. Our principal executive offices are located at 315 Sigma Drive, Summerville, South Carolina 29486;
our telephone number is (843) 900-3223 and our website is www.zentaris.com. None of the documents or information found on our
website shall be deemed to be included in or incorporated by reference into this prospectus supplement and the accompanying prospectus,
unless such document is specifically incorporated herein by reference. The SEC also maintains a website at www.sec.gov that contains
reports, proxy statements and other information regarding registrants that file electronically with the SEC.
We
currently have three wholly owned direct and indirect subsidiaries, Aeterna Zentaris GmbH (“AEZS Germany”), based
in Frankfurt am Main, Germany, Zentaris IVF GmbH, a direct wholly owned subsidiary of AEZS Germany, based in Frankfurt am Main,
Germany, and Aeterna Zentaris, Inc., an entity incorporated in the State of Delaware with an office based in Summerville, South
Carolina in the U.S.
THE
OFFERING
Issuer
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Aeterna
Zentaris Inc.
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Securities
offered by us pursuant to this prospectus supplement:
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Common Shares, no par value, and associated Common Share purchase rights.
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Offering
Price:
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$
per share
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Common
Shares outstanding before this offering:
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95,747,866
Common Shares(1)
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Common
Shares outstanding after this offering
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Common Shares, if all the Common Shares are purchased in the offering(1)
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Use
of proceeds:
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We
intend to use the net proceeds from the sale of our Common Shares under this prospectus supplement for general corporate purposes,
which includes, among other purposes, the investigation of further therapeutic uses of Macrilen™ (macimorelin), the
expansion of pipeline development activities, the further expansion of commercialization of macimorelin in available territories,
the potential funding of a pediatric clinical trial in the E.U. and U.S. for macimorelin, if such trials exceed €9 million,
and the investigation of further therapeutic uses of macimorelin. Please see the section entitled “Use of Proceeds”
on page S-10 of this prospectus supplement for a more detailed discussion.
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Risk
factors:
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An
investment in our Common Shares involves a high degree of risk. Please see the section entitled “Risk Factors”
beginning on page S-6 of this prospectus supplement as well as the other information included in or incorporated by
reference into this prospectus supplement and the accompanying prospectus for a discussion of factors that you should consider
carefully before making an investment decision.
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Dividend
policy:
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We
have never declared or paid any cash dividends on our Common Shares. We do not anticipate paying any cash dividends in the
foreseeable future.
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Nasdaq
Capital Market and TSX symbol:
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AEZS
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(1)
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The
number of Common Shares outstanding is based on 95,747,866 shares outstanding
as February 10, 2021, which excludes:
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11,832,113
Common Shares issuable upon the exercise of outstanding
warrants at a weighted average exercise price of $0.6787 per share;
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679,400
Common Shares issuable upon the exercise of outstanding
stock options and deferred share units at a weighted average exercise price of $1.07 per share;
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9,989,238
Common Shares reserved for future issuance under our 2018
Long-Term Incentive Plan; and
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246,619
Common Shares reserved for future issuance under our Second
Amended and Restated Stock Option Plan.
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RISK
FACTORS
Before
making an investment decision, you should carefully consider the risks described in this prospectus supplement, together with
all of the other information incorporated by reference into this prospectus supplement and the accompanying prospectus, including
the risks described in our most recent Annual Report on Form 20-F and subsequent reports on Form 6-K furnished to the SEC, including
our audited consolidated financial statements and corresponding management’s discussion and analysis. The risks mentioned
below are presented as of the date of this prospectus supplement and we expect that these will be updated from time to time in
our periodic and current reports filed with or furnished to the SEC, as applicable, which are incorporated herein by reference.
Please refer to these subsequent reports for additional information relating to the risks associated with investing in our Common
Shares.
Our
business, financial condition or results of operations could be materially adversely affected by any of these risks. Additional
risks not presently known to us or that we currently deem immaterial may also impair our business operations. The trading price
of our Common Shares could decline due to any of these risks, and you may lose all or part of your investment. This prospectus
supplement, the accompanying prospectus and the incorporated documents also contain forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a
result of certain factors, including the risks mentioned below. Forward-looking statements included in this prospectus supplement
are based on information available to us on the date hereof, and all forward-looking statements in documents incorporated by reference
are based on information available to us as of the date of each such document. We disavow and are under no obligation to update
or alter such forward-looking statements whether as a result of new information, future events or otherwise, other than as required
by applicable securities legislation.
Risks
Relating to Us and Our Business
Our
Common Shares may be delisted from the Nasdaq or the TSX, which could affect their market price and liquidity. If our Common Shares
were to be delisted, investors may have difficulty in disposing their Common Shares.
Our
Common Shares are currently listed on both the Nasdaq and the TSX under the symbol “AEZS”. We must meet continuing
listing requirements to maintain the listing of our Common Shares on the Nasdaq and the TSX. For continued listing, the Nasdaq
requires, among other things, that listed securities maintain a minimum closing bid price of not less than $1.00 per share. On
July 27, 2020, we received a letter from the Listing Qualifications Staff of the Nasdaq (the “Staff”), notifying us
that for the last 30 consecutive business days prior to the date of the letter, the closing bid price of our Common Shares was
below $1.00 per share and, therefore, we did not meet the requirement for continued listing on the Nasdaq as required by Nasdaq
Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were granted
a grace period of 180 calendar days, through January 25, 2021, and on January 26, 2021, we were granted a subsequent 180 calendar
extension, through July 26, 2021, to evidence compliance with the Bid Price Rule. To evidence compliance, we must evidence a closing
bid price of at least $1.00 per share for a minimum of 10 consecutive business days on or before July 26, 2021. As of February
12, 2020, the closing bid price of our Common Shares was over $1.00 for 7 consecutive days. However, there is no
guarantee that we will maintain a closing bid price of over $1.00 for the period required to regain compliance with the Bid Price
Rule. In the event we do not timely evidence compliance with the Bid Price Rule, we will face delisting. In that case, we would
be entitled to request a hearing before the Nasdaq Hearings Panel, which request would stay any delisting action by the Staff
pending completion of the hearing process. Nasdaq’s notice has no immediate effect on the listing of our Common Shares on
Nasdaq and does not otherwise impact our listing on the Toronto Stock Exchange. We are considering the options available to us
to evidence compliance with the Bid Price Rule prior to the expiration of the grace period.
In
addition to the minimum bid price requirement, the continued listing rules of the Nasdaq require us to meet at least one of the
following listing standards: (i) stockholders’ equity of at least $2.5 million, (ii) market value of listed securities (calculated
by multiplying the daily closing bid price of our securities by our total outstanding securities) of at least $35 million or (iii)
net income from continuing operations (in the latest fiscal year or in two of the last three fiscal years) of at least $500,000.
On
April 8, 2020, we received a letter from the Staff notifying us that, based upon the net loss for the fiscal year ended December
31, 2019, we no longer satisfied the minimum net income requirement for continued listing on The Nasdaq Capital Market under Nasdaq
Listing Rule 5550(b)(3) and did not otherwise satisfy the alternative requirements of market value of listed securities or stockholders’
equity. We timely submitted a plan to regain compliance with Nasdaq Listing Rule 5550(b)(3), and on June 3, 2020 the Staff granted
us an extension of 180 days, through October 5, 2020, to evidence compliance with this requirement. On July 1, 2020, we priced
an approximate $12 million public offering of our common shares and warrants, pursuant to which we ultimately raised approximately
$10.5 million in net proceeds. As a result of the offering, on July 30, 2020, we received a letter from the Staff notifying us
that the Staff determined that we comply with the stockholders’ equity component of the rules, subject to being delisted
if in a future periodic report we fail to evidence compliance. There is no assurance that we will maintain compliance, and therefore
there can be no assurance that our Common Shares will remain listed on the Nasdaq. If we fail to meet any of the Nasdaq’s
or the TSX’s continued listing requirements, our Common Shares may be delisted. Any delisting of our Common Shares may adversely
affect our ability to raise additional financing through the public or private sale of equity securities, would significantly
adversely affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our Common
Shares. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of
institutional investor interest and fewer business opportunities. If our Common Shares are delisted by the Nasdaq or the TSX,
the price of our Common Shares may decline, and a shareholder may find it more difficult to dispose, or obtain quotations as to
the market value, of such shares. Moreover, if we are delisted, we could incur additional costs under state blue sky laws in connection
with any sales of our securities. These requirements could severely limit the market liquidity of our Common Shares and the ability
of our shareholders to sell our Common Shares in the secondary market.
It
is possible that we may be a passive foreign investment company, which could result in adverse tax consequences to U.S. investors.
Adverse
U.S. federal income tax rules apply to “U.S. Holders” (as defined in “Income Tax Considerations - Material U.S.
Federal Income Tax Considerations” in this prospectus supplement and the accompanying prospectus) who directly or indirectly
hold stock of a passive foreign investment company (“PFIC”). We will be classified as a PFIC for U.S. federal income
tax purposes for a taxable year if (i) at least 75% of our gross income is “passive income” or (ii) at least 50% of
the average value of our assets, including goodwill (based on annual quarterly average), is attributable to assets which produce
passive income or are held for the production of passive income.
The
determination of whether we are, or will be, a PFIC for a taxable year depends, in part, on the application of complex U.S. federal
income tax rules, which are subject to various interpretations. Although the matter is not free from doubt, we believe that we
were not a PFIC during our 2020 taxable year and will not likely be a PFIC during our 2021 taxable year. Because
PFIC status is based on our income, assets and activities for the entire taxable year, and our market capitalization, it is not
possible to determine whether we will be characterized as a PFIC for the 2021 taxable year until after the close of the
taxable year. The tests for determining PFIC status are subject to a number of uncertainties. These tests are applied annually,
and it is difficult to accurately predict future income, assets and activities relevant to this determination. In addition, because
the market price of our Common Shares is likely to fluctuate, the market price may affect the determination of whether we will
be considered a PFIC. There can be no assurance that we will not be considered a PFIC for any taxable year (including our 2021
taxable year).
If
we are a PFIC for any taxable year during which a U.S. Holder holds Common Shares, we generally would continue to be treated as
a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds such Common Shares, even if
we ceased to meet the threshold requirements for PFIC status. Accordingly, no assurance can be given that we will not constitute
a PFIC in the current (or any future) tax year or that the Internal Revenue Service (the “IRS”) will not challenge
any determination made by us concerning our PFIC status. PFIC characterization could result in adverse U.S. federal income tax
consequences to U.S. Holders. In particular, absent certain elections, a U.S. Holder would generally be subject to U.S. federal
income tax at ordinary income tax rates, plus a possible interest charge, in respect of a gain derived from a disposition of our
Common Shares, as well as certain distributions by us. If we are treated as a PFIC for any taxable year, a U.S. Holder may be
able to make an election to “mark-to-market” Common Shares each taxable year and recognize ordinary income pursuant
to such election based upon increases in the value of the Common Shares.
In
addition, U.S. Holders may mitigate the adverse tax consequences of the PFIC rules by making a “qualified electing fund”
(“QEF”) election; however, there can be no assurance that we will satisfy the record keeping requirements applicable
to a QEF or that we will provide the information regarding our income that would be necessary for a U.S. Holder to make a QEF
election.
If
the Company is a PFIC, U.S. Holders will generally be required to file an annual information return with the IRS (on IRS Form
8621 Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, which
PFIC shareholders will be required to file with their U.S. federal income tax or information returns) relating to their ownership
of Common Shares. This filing requirement is in addition to any pre-existing reporting requirements that apply to a U.S. Holder’s
interest in a PFIC (which this requirement does not affect).
For
a more detailed discussion of the potential tax impact of us being a PFIC, please see “Income Tax Considerations - Material
U.S. Federal Income Tax Considerations” in this prospectus supplement and the accompanying prospectus. The PFIC rules are
complex. U.S. Holders should consult their tax advisors regarding the potential application of the PFIC regime and any reporting
obligations to which they may be subject under that regime.
Our
net operating losses may be limited for U.S. federal income tax purposes under Section 382 of the Internal Revenue Code.
If
a corporation with net operating losses (“NOLs”) undergoes an “ownership change” within the meaning of
Section 382 of the United States Internal Revenue Code of 1986, as amended (the “Code”), then such corporation’s
use of such “pre-change” NOLs to offset income incurred following such ownership change may be limited. Such limitation
also may apply to certain losses or deductions that are “built-in” (i.e., attributable to periods prior to the ownership
change, but not yet taken into account for tax purposes) as of the date of the ownership change that are subsequently recognized.
An ownership change generally occurs when there is either (i) a shift in ownership involving one or more “5% shareholders,”
or (ii) an “equity structure shift” and, as a result, the percentage of stock of the corporation owned by one or more
5% shareholders (based on value) has increased by more than 50 percentage points over the lowest percentage of stock of the corporation
owned by such shareholders during the “testing period” (generally the 3 years preceding the testing date). In general,
if such change occurs, the corporation’s ability to utilize its net operating loss carry-forwards and certain other tax
attributes would be subject to an annual limitation, as described below. The unused portion of any such net operating loss carry-forwards
or tax attributes each year is carried forward, subject to the same limitation in future years. The impact of an ownership change
on state NOL carryforwards may vary from state to state. Due to previous ownership changes, or if we undergo an ownership change
in connection with or after this offering, our ability to use our NOLs could be limited by Section 382 of the Code. Future changes
to our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the
Code. Recent legislation added several limitations to the ability to claim deductions for NOLs in future years, particularly for
tax years beginning after December 31, 2020, including a deduction limit equal to 80% of taxable income and a restriction on NOL
carryback deductions. For these reasons, we may not be able to use a material portion of the NOLs, even if we attain profitability.
Prevention
of Transactions Involving a Change of Control of the Company
Effective
May 8, 2019, the shareholders re-approved our Rights Plan (as defined herein) that provides the Board of Directors and the Company’s
shareholders with additional time to assess any unsolicited take-over bid for the Company and, where appropriate, to pursue other
alternatives for maximizing shareholder value. Under the Rights Plan, one right has been issued for each currently issued Common
Share, and one right will be issued with each additional Common Share that may be issued from time to time. The Rights Plan may
have a significant anti-takeover effect. The Rights Plan has the potential to significantly dilute the ownership interests of
an acquiror of our shares, and therefore may have the effect of delaying, deterring or preventing a change in control of the Company.
Risks
Relating to This Offering
The
trading price of our Common Shares has recently increased significantly to a level that we do not believe is consistent with any
recent change in our financial condition or results of operations. If the trading price of our Common Shares decreases rapidly,
investors purchasing our Common Shares in this offering could lose a significant portion of their investment.
The
trading price of our Common Shares has recently spiked significantly. On February 2, 2021, the last reported sale price of our
Common Shares on the Nasdaq was $1.00 per share; on February 8, 2021, the last reported sale price of our Common Shares on the
Nasdaq was $3.34 per share; and on February 12, 2021, the last reported sale price of our Common Shares on the Nasdaq
was $1.90 per share. We do not know why the trading price of our Common Shares has spiked significantly, we believe, however,
that the sharp spike in the trading price of our Common Shares is the result of a number of factors outside our control. There has been no recent change in our financial condition or results
of operations that is consistent with the increase in the trading price of our Common Shares. The recent spike in the trading
price of our Common Shares may not be sustained. In the event of a rapid decrease in the trading price of our Common Shares, investors
purchasing our Common Shares in this offering could lose a significant portion of their investment.
Sales
of our Common Shares by shareholders may have an adverse effect on the then prevailing market price of our Common Shares.
Sales
of a substantial number of our Common Shares in the public market following this offering could cause the market price of our
Common Shares to decline and could impair our ability to raise capital through the sale of additional equity securities. We cannot
predict the effect that future sales of our Common Shares or other equity or equity-related securities would have on the market
price of our Common Shares.
Management
will have broad discretion as to the use of the net proceeds from this offering, and we may not use the proceeds effectively.
We
intend to use the net proceeds from the sale of Common Shares by us in this offering for general corporate purposes, which may
include, among other purposes, the investigation of further therapeutic uses of macimorelin, the expansion of pipeline development
activities, the further expansion of commercialization of macimorelin in available territories, and the potential funding of a
pediatric clinical trial in the E.U. and U.S. for macimorelin, if such trials exceed €9 million. Our management will have
broad discretion as to the application of the net proceeds from this offering and could use them for purposes other than those
contemplated at the time of this offering, as described below in the section entitled “Use of Proceeds,” or in ways
that do not necessarily improve our operating results or enhance the value of our Common Shares. Our shareholders may not agree
with the manner in which our management chooses to allocate and spend the net proceeds. Our failure to use these funds effectively
could have a material adverse effect on our business and could cause the price of our securities to decline.
Investors
in this offering will suffer immediate and substantial dilution in the net tangible book value per Common Share.
Because
the offering price for the Common Shares offered pursuant to this prospectus supplement is substantially higher than the net tangible
book value of each outstanding Common Share, purchasers of Common Shares in this offering will experience immediate and substantial
dilution on the book value basis. Based on the offering price of $ per share and
our pro forma as adjusted net tangible book value as of September 30, 2020, of $0.27 per share, if you purchase Common
Shares in this offering you will suffer immediate and substantial dilution of approximately $ per share. If the holders
of outstanding options, warrants, or other securities convertible into our Common Shares exercise those options, warrants, or
other such securities at prices below the offering price, you will incur further dilution. Please see the section entitled “Dilution”
for a more detailed discussion of the dilution you will incur in this offering.
We
may require additional funding through further issuances of our Common Shares or other securities, which may negatively affect
the market price of our Common Shares.
To
operate our business, we may need to raise additional capital through sales of our Common Shares, securities exercisable for or
convertible into our Common Shares or debt securities pursuant to which interest and/or principal payments may be satisfied through
the issuance of our Common Shares. Future sales of such securities or our Common Shares could adversely affect the prevailing
market price of our Common Shares and our ability to raise capital in the future, and may cause you to incur additional dilution.
We
do not intend to pay dividends on our Common Shares so any returns will depend on appreciation in the price of our Common Shares.
We
have never declared or paid any cash dividends on our Common Shares. We currently anticipate that we will retain future earnings,
if any, for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends
for the foreseeable future. Any return to stockholders will, therefore, be limited to the appreciation of their respective shares.
There is no guarantee that our Common Shares will appreciate in value or maintain the price at which you purchased them.
USE
OF PROCEEDS
We
estimate that the net proceeds from our sale of Common Shares in this offering, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us, will be approximately $ million (or approximately $ million if
the underwriter exercises its option to purchase additional Common Shares in full).
Except
as otherwise provided in any free writing prospectus that we may authorize to be provided to you, we will retain broad discretion
over the use of the net proceeds from the sale of the Common Shares offered by this prospectus supplement, and we may not use
these proceeds in a manner desired by our shareholders. Unless otherwise specified in this prospectus supplement, the accompanying
prospectus or any related free writing prospectus, we currently expect to use the net proceeds of our sale of Common Shares for
general corporate purposes, which includes, among other purposes, the investigation of further therapeutic uses of macimorelin,
the expansion of pipeline development activities, the further expansion of commercialization of macimorelin in available territories,
and the potential funding of a pediatric clinical trial in the E.U. and U.S. for macimorelin, if such trials exceed €9 million.
We
may temporarily invest funds that we do not immediately need for these purposes in investment securities or use them to make payments
on our borrowings. All expenses relating to an offering of Common Shares and any compensation paid to the Placement Agent, dealers
or agents, as the case may be, will be paid out of our general funds or from the proceeds of any offering under this prospectus
supplement or the accompanying prospectus. The use of proceeds will be specified in this prospectus supplement relating to a particular
offering of Common Shares, as required by applicable securities legislation.
DIVIDEND
POLICY
We
have never declared nor paid dividends on our securities. We currently expect to retain future earnings, if any, for use in the
operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future
determination to pay dividends on our securities is subject to the discretion of our Board of Directors and will depend upon various
factors, including, without limitation, our results of operations and financial condition.
DILUTION
If
you invest in our Common Shares, your interest will be diluted immediately to the extent of the difference between the offering
price per share and the as-adjusted net tangible book value per Common Share after this offering.
The
net tangible book value of our Common Shares as of September 30, 2020 was approximately $6.7 million, or approximately
$0.11 per Common Share. Net tangible book value per share represents the amount of our total tangible assets less total
liabilities divided by the total number of our Common Shares outstanding as of September 30, 2020.
After giving effect
to the Warrant Exercises, our pro forma net tangible book value as of September 30, 2020 would have been approximately $25.7
million, or approximately $0.27 per Common Share, an increase of approximately $0.16 per Common Share.
After
giving effect to the sale by us in this offering of Common Shares at a price per share of $ , after deducting
estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net
tangible book value as of September 30, 2020 would have been approximately $ million, or approximately $ per
Common Share. This represents an immediate increase in as adjusted net tangible book value of approximately $ per Common
Share to our existing security holders and an immediate dilution in pro forma as adjusted net tangible book value of approximately
$ per Common Share to purchasers of Common Shares in this offering, as illustrated by the following table:
Offering price per Common Share
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$
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Consolidated net tangible book value per Common Share as of September 30, 2020
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$
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0.11
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Pro forma increase in net tangible book value per share attributable to the Warrant Exercises
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$
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0.16
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|
As adjusted consolidated net tangible book value per Common Share as of September 30, 2020
|
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$
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0.27
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|
|
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|
Increase in as adjusted consolidated net tangible book value per Common Share attributable to the offering
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|
$
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|
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Dilution per Common Share to new investors participating in this offering
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|
|
|
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|
$
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|
If
the underwriter exercises in full its option to purchase additional
Common Shares, the pro forma as adjusted net tangible book value per share after this offering would be $
per share, and the dilution in pro forma net tangible book value per share to new investors purchasing common shares in this offering
would be $ per share.
The
figures above are based on 62,678,613 shares outstanding as of September 30, 2020 (95,747,866 shares outstanding
on a pro forma basis after giving effect to the Warrant Exercises), and excludes as of such date:
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499,410 Common Shares issuable upon
the exercise of outstanding options and deferred share units at a weighted average exercise price of $1.34 per share;
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|
|
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|
●
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6,399,333 Common Shares reserved for
future issuance under our 2018 Long-Term Incentive Plan; and
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|
|
|
|
●
|
246,619 Common Shares reserved for
future issuance under our Second Amended and Restated Stock Option Plan.
|
To
the extent that outstanding exercisable options or warrants are exercised, you may experience further dilution. In addition, we
may need to raise additional capital and to the extent that we raise additional capital by issuing equity or convertible debt
securities your ownership will be further diluted.
UNDERWRITING
Pursuant
to the underwriting agreement with H.C. Wainwright & Co., LLC (“Wainwright” or the “underwriter”),
we have agreed to issue and sell, and the underwriter has agreed to purchase, the number of Common Shares listed opposite its
name below, less the underwriting discount, on the closing date, subject to the terms and conditions contained in the underwriting
agreement. The underwriting agreement provides that the obligations of the underwriter are subject to certain customary conditions
precedent, representations and warranties contained therein.
Underwriter
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|
Number of
Shares
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|
H.C. Wainwright & Co., LLC
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|
|
|
|
Pursuant
to the underwriting agreement, the underwriter has agreed to purchase all of the Common Shares sold under the underwriting agreement
if any of these Common Shares are purchased, other than those shares covered by the underwriter’s option to purchase additional
Common Shares described below. The underwriter has advised us that it does not intend to confirm sales to any account over which
it exercises discretionary authority.
Discounts,
Commissions and Expenses
The
underwriter may offer the Common Shares from time to time to purchasers directly or through agents, or through brokers in brokerage
transactions on the Nasdaq Capital Market, or to dealers in negotiated transactions or in a combination of such methods of sale,
or otherwise, at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, subject to receipt and acceptance by it and subject to its right
to reject any order in whole or in part. The difference between the price at which the underwriter purchases shares from us and
the price at which the underwriter resells such shares may be deemed underwriting compensation. If the underwriter effects such
transactions by selling Common Shares to or through dealers, such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriter and/or purchasers of Common Shares for whom they may act as agents or to whom they may sell
as principal.
The
underwriter is offering the shares, subject to prior sale, when, as and if issued to and accepted by it, subject to approval of
legal matters and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw, cancel
or modify offers to the public and to reject orders in whole or in part.
We
have granted to the underwriter an option to purchase up to an additional Common
Shares (up to 15% of the Common Shares in this offering) at the public offering price, less the underwriting discounts
and commissions. The option is exercisable for 30 days from the closing date of this offering.
Any
shares sold by the underwriter to securities dealers will be sold at the public offering price less a selling concession not in
excess of $ per share.
For
the 12-month period following the consummation of this offering, the underwriter (or any affiliate designated by the underwriter)
shall have a right of first refusal to act as sole book-running manager, sole underwriter or sole placement agent for any future
public offering (including any at-the-market facility), private placement or any other capital-raising financing of equity, or
equity-linked securities of the Company, in each case for capital raising purposes, using an underwriter or placement agent during
such 12-month period.
The
following table shows the public offering price, underwriting discounts and commissions and proceeds, before expenses, to us.
These amounts are shown assuming both no exercise and full exercise of the underwriter’s option to purchase additional shares.
Per Share
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Total
Without
Option
|
|
|
Total
with
Option
|
|
Public offering price
|
|
$
|
|
|
|
$
|
|
|
Underwriting discounts and commissions payable by us
|
|
$
|
|
|
|
$
|
|
|
Proceeds, before expenses, to us
|
|
$
|
|
|
|
$
|
|
|
We
have also agreed to pay the underwriter a management fee equal to 1% of the aggregate gross proceeds in this offering.
We
have agreed to reimburse the expenses of the underwriter in the non-accountable sum of $50,000 in connection with this offering,
reimburse the expenses of the underwriter, including its legal fees, up to $100,000 in connection with this offering, and up to
$15,950 for the clearing expenses of the underwriter in connection with this offering. We estimate that the total expenses of
the offering payable by us, excluding underwriting discounts and commissions, will be approximately $ .
Underwriter
Warrants
We
have also agreed to issue to the underwriter or its designees, at the closing of this offering, warrants to purchase a number
of our Common Shares equal to an aggregate of 7.0% of the Common Shares sold in this offering (or warrants to purchase up to of our Common Shares). The underwriter warrants will have an exercise price equal to $ per share, which is 125% of the public
offering price of the Common Shares sold in this offering. The underwriter warrants will be exercisable for a term of five years
commencing on the first closing date of this offering and will otherwise be in customary form.
Tail
Financing Payments
In
the event that any investors that participate in this offering or were introduced to this offering by the underwriter provides
any capital to us in a public or private offering or capital-raising transaction within the 12 months following the expiration
of termination of the engagement of the underwriter to the extent that an offering pursuant to which the underwriter received
the compensation described above was not previously consummated, we shall pay the underwriter the cash compensation and warrants
provided above, calculated in the same manner provided above.
Other
Relationships
From
time to time, Wainwright may provide in the future various advisory, investment and commercial banking and other services to us
in the ordinary course of business, for which they have received and may continue to receive customary fees and commissions. However,
except as disclosed in this prospectus supplement, we have no present arrangements with Wainwright for any further services. Wainwright
acted as our exclusive placement agent for our August 2020 registered direct offering and received cash compensation of approximately
$577,500, warrants to purchase up to 9,320,907 Common Shares at an exercise price of $0.7040625 per share, and a 12-month
right of first refusal in connection therewith. Wainwright served as our exclusive placement agent for the registered direct offering
of 3,478,261 common shares, at a purchase price of $1.29 per share, and the concurrent private placement of warrants to purchase
up to an aggregate of 2,608,696 common shares, which closed on February 21, 2020, for which it received an aggregate of $371,250
in fees and reimbursement of certain expenses. As part of Wainwright’s compensation in connection with such registered direct
offering and the concurrent private placement of warrants, we also issued on February 21, 2020, 243,478 warrants to Wainwright’s
designees with an exercise price of $1.61719 per Common Share. Wainwright also served as our exclusive placement agent for a July
2020 public offering, for which it received $1,077,900 in fees and reimbursement of certain expenses and its designees received
warrants to purchase an aggregate of 1,866,667 Common Shares with an exercise price of $0.5625 per Common Share. Wainwright also
served as our sales agent for an at-the-market offering pursuant to a sales agreement dated April 27, 2017.
Lock-up
Agreement
We
have agreed with Wainwright to be subject to a lock-up period of 30 days following the date of closing of the offering pursuant
to this prospectus supplement and the accompanying base prospectus. This means that, during the applicable lock-up period, we
may not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any common shares or their equivalents,
subject to certain exceptions. We have also agreed for a period of one year following the closing date of the offering not to
effect or enter into an agreement to effect any issuance by the Company of Common Shares or common share equivalents (or a combination
of units thereof) involving a variable rate transaction, subject to an exception other than an at-the market offering program
with the underwriter following the expiration of the 30-day period set forth above. The underwriter may waive the terms of this
lock-up agreement and prohibition in its sole discretion and without notice.
Transfer
Agent
The
transfer agent and registrar for our Common Shares is Computershare Trust Company of Canada, 1500 University Street, 7th
Floor, Montreal, Quebec, H3A 358.
Listing
Our
common shares are listed on Nasdaq Capital Market and on the TSX under the symbol “AEZS”.
Indemnification
We
have agreed to indemnify Wainwright and specified other persons against certain liabilities, including civil liabilities under
the Securities Act of 1933, as amended, or to contribute to payments that Wainwright may be required to make in respect of such
liabilities.
Price
Stabilization, Short Positions and Penalty Bids
In
connection with this offering, the underwriter may engage in stabilizing transactions, overallotment transactions, syndicate covering
transactions and penalty bids in connection with our common shares.
Stabilizing
transactions permit bids to purchase common shares so long as the stabilizing bids do not exceed a specified maximum.
Overallotment
transactions involve sales by the underwriter of common shares in excess of the number of shares the underwriter is obligated
to purchase. This creates a syndicate short position which may be either a covered short position or a naked short position. In
a covered short position, the number of shares over-allotted by the underwriter is not greater than the number of shares that
it may purchase in the overallotment option. In a naked short position, the number of shares involved is greater than the number
of shares in the overallotment option. The underwriter may close out any short position by exercising its overallotment option
and/or purchasing shares in the open market.
Syndicate
covering transactions involve purchases of common shares in the open market after the distribution has been completed in order
to cover syndicate short positions. Such a naked short position would be closed out by buying securities in the open market. A
naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the
price of the securities in the open market after pricing that could adversely affect investors who purchase in the offering.
Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when the securities originally sold by the
syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
These
stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market
price of our Common Shares or preventing or retarding a decline in the market price of our Common Shares. As a result, the price
of our Common Shares in the open market may be higher than it would otherwise be in the absence of these transactions. Neither
we nor the underwriter make any representation or prediction as to the effect that the transactions described above may have on
the price of our Common Shares. These transactions may be effected on the Nasdaq Capital Market, in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
Electronic
Distribution
A
prospectus in electronic format may be made available on the websites maintained by the underwriter, if any, participating in
this offering and the underwriter may distribute prospectuses electronically. Other than the prospectus in electronic format,
the information on these websites is not part of this prospectus or the registration statement of which this prospectus forms
a part, has not been approved or endorsed by us or the underwriter, and should not be relied upon by investors.
Canadian
Securities Matters
The
common shares are being distributed pursuant to a prospectus exemption under applicable Canadian securities laws on the basis
that the common shares are being distributed outside Canada. The underwriter has agreed not to engage in any solicitation or sale
of common shares to a person or company who is a resident of Canada or a person or company in Canada.
INCOME
TAX CONSIDERATIONS
THE
FOLLOWING SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE
TO ANY PARTICULAR INVESTOR. CONSEQUENTLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS FOR ADVICE AS TO THE
TAX CONSEQUENCES OF AN INVESTMENT IN THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS HAVING
REGARD TO THEIR PARTICULAR CIRCUMSTANCES.
Material
U.S., Federal Income Tax Considerations for U.S. Holders
The
following discussion is a summary of the material U.S. federal income tax consequences applicable to the purchase, ownership and
disposition of Common Shares being offered by this prospectus supplement and the accompanying prospectus by a U.S. Holder (as
defined below), but does not purport to be a complete analysis of all potential U.S. federal income tax effects.
This
summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), final temporary and proposed
U.S. Treasury regulations promulgated thereunder (the “Regulations”), IRS rulings and judicial decisions
in effect on the date of this prospectus supplement. All of these are subject to change, possibly with retroactive effect, or
different interpretations. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed
legislation that, if enacted, could be applied on a retroactive basis. This summary is not binding on the IRS, and the IRS is
not precluded from taking a position that is different from, and contrary to, the positions taken in this summary.
This
summary does not address all aspects of U.S. federal income taxation that may be relevant to particular U.S. Holders in light
of their specific circumstances (for example, U.S. Holders subject to the alternative minimum tax or the Medicare contribution
tax on net investment income under the Code) or to holders that may be subject to special rules under U.S. federal income tax
law, including, without limitation:
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dealers
in stocks, securities or currencies;
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securities
traders that use a mark-to-market accounting method;
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banks,
underwriters and financial institutions;
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insurance
companies;
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regulated
investment companies;
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passive foreign investment companies;
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real
estate investment trusts;
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tax-exempt
organizations;
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retirement
plans, individual plans, individual retirement accounts and tax-deferred accounts;
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partnerships
or other pass-through entities for U.S. federal income tax purposes and their partners or members;
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persons
holding Common Shares as part of a hedging or conversion transaction straddle or other integrated or risk reduction transaction;
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persons
who or that are, or may become, subject to the expatriation provisions of the Code;
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persons
whose functional currency is not the U.S. dollar; and
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direct,
indirect or constructive owners of 10% or more of the total combined voting power of all classes of our voting stock or 10%
or more of the total value of shares of all classes of our stock.
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This
summary also does not discuss any aspect of state, local or foreign law, or estate or gift tax law as applicable to U.S. Holders.
In addition, this discussion is limited to U.S. Holders purchasing Common Shares pursuant to this prospectus supplement and that
will hold such Common Shares as capital assets. For purposes of this summary, “U.S. Holder” means a beneficial holder
of Common Shares who or that for U.S. federal income tax purposes is:
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an
individual citizen or resident alien of the U.S.;
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a
corporation or other entity classified as a corporation for U.S. federal income tax purposes created or organized in or under
the laws of the U.S., any state thereof or the District of Columbia;
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an
estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
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a
trust, if (a) a court within the U.S. is able to exercise primary supervision over the administration of such trust and one
or more “U.S. persons” (within the meaning of the Code) have the authority to control all substantial decisions
of the trust, or (b) a valid election is in effect to be treated as a U.S. person for U.S. federal income tax purposes.
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If
a partnership or other entity or arrangement classified as a partnership for U.S. federal income tax purposes holds Common Shares,
the U.S. federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the
partnership. This summary does not address the tax consequences to any such partner. Such a partner should consult its own tax
advisor as to the tax consequences of the partnership purchasing, owning and disposing of Common Shares.
PROSPECTIVE
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE TAX CONSEQUENCES DESCRIBED BELOW TO THEIR
PARTICULAR SITUATIONS AS WELL AS THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, INCLUDING GIFT AND ESTATE TAX
LAWS.
Tax
Consequences if we are a Passive Foreign Investment Company
A foreign corporation
will be classified as a PFIC for any taxable year in which, after taking into account the income and assets of the corporation
and certain subsidiaries pursuant to applicable “look-through rules,” either (i) at least 75% of its gross income
is “passive income” (the “income test”) or (ii) at least 50% of the average quarterly value of
its assets is attributable to assets which produce passive income or are held for the production of passive income (the “asset
test”). Passive income generally includes dividends, interest, rents and royalties (other than certain rents and royalties
derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. For purposes
of the asset test, the value of the Company’s assets is expected to be based, in part, on the quarterly average of the fair
market value of such assets. If a non-U.S. corporation owns at least 25% by value of the stock of another corporation, the
non-U.S. corporation is treated for purposes of the income and asset tests as (i) owning its proportionate share
of the assets of the other corporation and as (ii) receiving directly its proportionate share of the other corporation’s
income.
The
determination of whether we are, or will be, a PFIC for a taxable year depends, in part, on the application of complex U.S. federal
income tax rules, which are subject to various interpretations. Although the matter is not free from doubt, we believe that we
were not a PFIC during our 2020 taxable year and will not likely be a PFIC during our 2021 taxable year. Because
PFIC status is based on our income, assets and activities for the entire taxable year, and our market capitalization, it is not
possible to determine whether we will be characterized as a PFIC for the 2021 taxable year until after the close of the
taxable year. The tests for determining PFIC status are subject to a number of uncertainties. These tests are applied annually,
and it is difficult to accurately predict future income, assets and activities relevant to this determination. In addition, because
the market price of our Common Shares is likely to fluctuate, the market price may affect the determination of whether we will
be considered a PFIC. There can be no assurance that we will not be considered a PFIC for any taxable year (including our 2021
taxable year). Prospective investors should consult their tax advisors regarding the Company’s PFIC status.
If
the Company is classified as a PFIC for any taxable year during which a U.S. Holder owns Common Shares, the U.S. Holder, absent
certain elections (including the mark-to-market and QEF elections described below), will generally be subject to adverse rules
(regardless of whether the Company continues to be classified as a PFIC) with respect to (i) any “excess distributions”
(generally, any distributions received by the U.S. Holder on the Common Shares in a taxable year that are greater than 125% of
the average annual distributions received by the U.S. Holder in the three preceding taxable years or, if shorter, the U.S. Holder’s
holding period for the Common Shares) and (ii) any gain realized on the sale or other disposition of the Common Shares.
Under
these adverse rules (a) the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period,
(b) the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which the Company
is classified as a PFIC will be taxed as ordinary income and (c) the amount allocated to each of the other taxable years during
which the Company was classified as a PFIC will be subject to tax at the highest rate of tax in effect for the applicable category
of taxpayer for that year and an interest charge will be imposed with respect to the resulting tax attributable to each such other
taxable year. A U.S. Holder that is not a corporation will be required to treat any such interest paid as “personal interest,”
which is not deductible.
U.S.
Holders can avoid the adverse rules described above in part by making a mark-to-market election with respect to the Common Shares,
provided that the Common Shares are “marketable.” The Common Shares will be marketable if they are “regularly
traded” on a “qualified exchange” or other market within the meaning of applicable U.S. Treasury regulations.
For this purpose, the Common Shares generally will be considered to be regularly traded during any calendar year during which
they are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. The Common Shares
are currently listed on the Nasdaq, which constitutes a qualified exchange; however, there can be no assurance that the Common
Shares will be treated as regularly traded for purposes of the mark-to-market election on a qualified exchange. If the Common
Shares were not regularly traded on the Nasdaq or were delisted from the Nasdaq and were not traded on another qualified exchange
for the requisite time period described above, the mark-to-market election would not be available.
A
U.S. Holder that makes a mark-to-market election must include in gross income, as ordinary income, for each taxable year an amount
equal to the excess, if any, of the fair market value of the U.S. Holder’s Common Shares at the close of the taxable year
over the U.S. Holder’s adjusted tax basis in the Common Shares. An electing U.S. Holder may also claim an ordinary loss
deduction for the excess, if any, of the U.S. Holder’s adjusted tax basis in the Common Shares over the fair market value
of the Common Shares at the close of the taxable year, but this deduction is allowable only to the extent of any net mark-to-market
gains previously included in income. A U.S. Holder that makes a mark-to-market election generally will adjust such U.S. Holder’s
tax basis in the Common Shares to reflect the amount included in gross income or allowed as a deduction because of such mark-to-market
election. Gains from an actual sale or other disposition of the Common Shares will be treated as ordinary income, and any losses
incurred on a sale or other disposition of the Common Shares will be treated as ordinary losses to the extent of any net mark-to-market
gains previously included in income.
If
we are classified as a PFIC for any taxable year in which a U.S. Holder owns Common Shares, but before a mark-to-market election
is made, the adverse PFIC rules described above will apply to any mark-to-market gain recognized in the year the election is made.
Otherwise, a mark-to-market election will be effective for the taxable year for which the election is made and all subsequent
taxable years. The election cannot be revoked without the consent of the IRS unless the Common Shares cease to be marketable,
in which case the election is automatically terminated.
If
the Company is classified as a PFIC, a U.S. Holder of Common Shares will generally be treated as owning stock owned by the Company
in any direct or indirect subsidiaries that are also PFICs and will be subject to similar adverse rules with respect to distributions
to the Company by, and dispositions by the Company of, the stock of such subsidiaries. A mark-to-market election is not permitted
for the shares of any subsidiary of the Company that is also classified as a PFIC. Prospective investors should consult their
tax advisors regarding the availability of, and procedure for making, a mark-to-market election.
In
some cases, a shareholder of a PFIC can avoid the interest charge and the other adverse PFIC consequences described above by making
a QEF election to be taxed currently on its share of the PFIC’s undistributed income. We will endeavor to satisfy the record
keeping requirements that apply to a QEF and to supply requesting U.S. Holders with the information that such U.S. Holders are
required to report under the QEF rules. There can be no assurance, however, that we will satisfy the record keeping requirements
or provide the information required to be reported by U.S. Holders.
A
U.S. Holder that makes a timely and effective QEF election for the first tax year in which its holding period of its Common Shares
begins generally will not be subject to the adverse PFIC consequences described above with respect to its Common Shares. Rather,
a U.S. Holder that makes a timely and effective QEF election will be subject to U.S. federal income tax on such U.S. Holder’s
pro rata share of (a) the Company’s net capital gain, which will be taxed as long-term capital gain to such U.S. Holder,
and (b) the Company’s ordinary earnings, which will be taxed as ordinary income to such U.S. Holder, in each case regardless
of which such amounts are actually distributed to the U.S. Holder by the Company. Generally, “net capital gain” is
the excess of (i) net long-term capital gain over (ii) net short-term capital loss, and “ordinary earnings” are the
excess of (A) “earnings and profits” over (B) net capital gain.
A
U.S. Holder that makes a timely and effective QEF election with respect to the Company generally (a) may receive a tax-free distribution
from us to the extent that such distribution represents “earnings and profits” that were previously included in income
by the U.S. Holder because of such QEF election and (b) will adjust such U.S. Holder’s tax basis in the Common Shares to
reflect the amount included in income or allowed as a tax-free distribution because of such QEF election. In addition, a U.S.
Holder that makes a QEF election generally will recognize capital gain or loss on the sale or other taxable disposition of Common
Shares.
The
QEF election is made on a shareholder-by-shareholder basis. Once made, a QEF election will apply to the tax year for which the
QEF election is made and to all subsequent tax years, unless the QEF election is invalidated or terminated or the IRS consents
to revocation of the QEF election. In addition, if a U.S. Holder makes a QEF election, the QEF election will remain in effect
(although it will not be applicable) during those tax years in which we are not a PFIC.
If
the Company is classified as a PFIC and then ceases to be so classified, a U.S. Holder may make an election (a “deemed sale
election”) to be treated for U.S. federal income tax purposes as having sold such U.S. Holder’s Common Shares on the
last day of the taxable year of the Company during which it was a PFIC. A U.S. Holder that made a deemed sale election would then
cease to be treated as owning stock in a PFIC by reason of ownership of Common Shares in the Company. Any gain recognized, however,
as a result of making the deemed sale election would be subject to the adverse rules described above and loss would not be recognized.
If the Company is
a PFIC in any year with respect to a U.S. Holder, the U.S. Holder will be required to file an annual information return on IRS
Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund,
regarding distributions received on Common Shares and any gain realized on the disposition of Common Shares.
In addition, if the
Company is a PFIC, U.S. Holders will generally be required to file an annual information return with the IRS (also on IRS Form
8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund,,
which PFIC shareholders are required to file with their U.S. federal income tax or information returns) relating to their
ownership of Common Shares.
Prospective
investors should consult their tax advisors regarding the potential application of the PFIC regime and any reporting obligations
to which they may be subject under that regime.
Taxation
of Distributions
Subject
to the PFIC rules discussed above, any distributions paid by us out of current or accumulated earnings and profits (as determined
for U.S. federal income tax purposes), before reduction for any Canadian withholding tax paid with respect thereto, will generally
be taxable to a U.S. Holder as foreign source dividend income, and generally will not be eligible for the dividends received deduction
generally allowed to corporations.
Distributions
in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of
the U.S. Holder’s adjusted tax basis in the Common Shares and, thereafter, as capital gain. We do not, however, intend to
calculate our earnings and profits under U.S. federal income tax principles. Therefore, U.S. Holders should expect that any distribution
from us generally will be treated for U.S. federal income tax purposes as a dividend. Prospective investors should consult their
own tax advisors with respect to the appropriate U.S. federal income tax treatment of any distribution received from us.
Dividends
paid to non-corporate U.S. Holders by us in a taxable year in which we are treated as a PFIC, or in the immediately following
taxable year, will not be eligible for the special reduced rates normally applicable to long-term capital gains. In all other
taxable years, dividends paid by us should be taxable to a non-corporate U.S. Holder at the special reduced rates normally applicable
to long-term capital gains, provided that certain conditions are satisfied (including a minimum holding period requirement). We
believe we were not a PFIC for the 2020 taxable year. However, no assurance can be provided that we will not be classified
as a PFIC for 2021 and, therefore, no assurance can be provided that a U.S. Holder will be able to claim a reduced rate
for dividends paid in 2021 or 2022 (if any). Please see the subsection above entitled “Material U.S. Federal Income
Tax Considerations — “Tax Consequences if we are a Passive Foreign Investment Company” for a more detailed discussion.
Under
current law, payments of dividends by us to non-Canadian investors are generally subject to a 25% Canadian withholding tax. The
rate of withholding tax applicable to U.S. Holders that are eligible for benefits under the Canada-United States Tax Convention
(the “Convention”) is reduced to a maximum of 15%. This reduced rate of withholding will not apply if the dividends
received by a U.S. Holder are effectively connected with a permanent establishment of the U.S. Holder in Canada. For U.S. federal
income tax purposes, U.S. Holders will be treated as having received the amount of Canadian taxes withheld by the Company, and
as then having paid over the withheld taxes to the Canadian taxing authorities. As a result of this rule, the amount of dividend
income included in gross income for U.S. federal income tax purposes by a U.S. Holder with respect to a payment of dividends may
be greater than the amount of cash actually received (or receivable) by the U.S. Holder from the Company with respect to the payment.
Subject
to certain limitations, a U.S. Holder will generally be entitled, at the election of the U.S. Holder, to a credit against its
U.S. federal income tax liability, or a deduction in computing its U.S. federal taxable income, for Canadian income taxes withheld
by us. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding)
by a U.S. Holder during a year. For purposes of the foreign tax credit limitation, dividends paid by us generally will constitute
foreign source income in the “passive category income” basket rather than the “general
category income” basket).
A U.S. Holder will be denied a foreign tax credit with respect to a Canadian income tax withheld from dividends received with
respect to our Common Shares to the extent the U.S. Holders has not held the Common Shares for at least 16 days of the 30-day
period beginning on the date which is 15 days before the ex-dividend date or to the extent the U.S. Holder is under an obligation
to make related payments with respect to substantially similar or related property. Any days during which a U.S. Holder has substantially
diminished its risk of loss on our Common Shares are not counted toward meeting the 16-day holding period required by the statute
The foreign tax credit rules are complex and prospective investors
should consult their tax advisors concerning the availability of the foreign tax credit in their particular circumstances.
Dividends
paid in Canadian dollars will be included in the gross income of a U.S. Holder in a U.S. dollar amount calculated by reference
to the exchange rate in effect on the date the U.S. Holder (actually or constructively) receives the dividend, regardless of whether
such Canadian dollars are actually converted into U.S. dollars at that time. If the Canadian dollars received are not converted
into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the Canadian dollars equal to their U.S. dollar
value on the date of receipt. Gain or loss, if any, realized on a sale or other disposition of the Canadian dollars will generally
be U.S. source ordinary income or loss to a U.S. Holder.
We
generally do not pay any dividends and do not anticipate paying any dividends in the foreseeable future.
Sale,
Exchange or Other Taxable Disposition of Common Shares
Subject
to the PFIC rules discussed above, upon a sale, exchange or other taxable disposition of Common Shares, a U.S. Holder generally
will recognize capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount realized
on the sale, exchange or other taxable disposition and the U.S. Holder’s adjusted tax basis in the Common Shares.
This
capital gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period in the Common Shares exceeds
one year. The deductibility of capital losses is subject to limitations. Any gain or loss will generally be U.S. source for U.S.
foreign tax credit purposes.
Information
Reporting and Backup Withholding
In
general, information reporting for U.S. federal income tax purposes should apply to distributions made on our securities within
the United States to a U.S. Holder (other than an exempt recipient) and to the proceeds from sales and other dispositions of our
securities by a U.S. Holder (other than an exempt recipient) to or through a U.S. office of a broker. Payments made (and sales
and other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.
In addition, certain information concerning a U.S. Holder’s adjusted tax basis in securities it owns and adjustments to
that tax basis and whether any gain or loss with respect to such securities is long term or short term also may be required to
be reported to the IRS.
In addition, Section
6038D of the Code generally requires certain individuals who are U.S. Holders (and possibly certain entities that
have U.S. Holder owners) to file IRS Form 8938, Statement of Specified Foreign Financial Assets, to report the
ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (subject
to certain exceptions). For these purposes, a specified foreign financial asset includes not only a financial account (as defined
for these purposes) maintained by a foreign financial institution, but also any stock or security issued by a non-U.S. person,
any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest
in a foreign entity, provided that the asset is not held in an account maintained by a financial institution. The minimum applicable
threshold amount is generally U.S. $50,000 in the aggregate, but this threshold amount varies depending on whether the individual
lives in the U.S., is married, files a joint income tax return with his or her spouse, and on certain other factors. Certain domestic
entities that are U.S. Holders may also be required to file IRS Form 8938, Statement of Specified Foreign Financial Assets,
if both (i) such entities are owned at least 80% by an individual who is a U.S. citizen or U.S. tax resident (or in some
cases, by a nonresident alien who meets certain criteria) or are trusts with beneficiaries that are such individuals and (ii)
more than 50% of their income consists of certain passive income or more than 50% of their assets is held for the production of
such income. U.S. Holders are urged to consult with their tax advisors regarding their reporting obligations, including the requirement
to file IRS Form 8938, Statement of Specified Foreign Financial Assets.
U.S.
Holders who transfer more than $100,000 to us in a 12-month period (and/or who become owners of 10% or more of our securities)
will be required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, and U.S. Holders who become
holder of more than 10% of our securities may also have to file IRS Form 5471, Information Return of U.S. Persons With Respect
to Certain Foreign Corporations, in each case reporting transfers of cash or other property to us and information relating to
the U.S. Holder and us. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with these filing requirements.
U.S. Holders should consult their own tax advisors about the need to file either of these forms. See also the discussion, above,
regarding IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund.
Backup
withholding of U.S. federal income tax, currently at a rate of 24%, generally will apply to dividends paid on our securities to
a U.S. Holder (other than an exempt recipient) and the proceeds from sales and other dispositions of our securities by a U.S.
Holder (other than an exempt recipient), in each case who:
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fails
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is
notified by the IRS that backup withholding is required; or
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in
certain circumstances, fails to comply with applicable certification requirements.
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non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification
of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an
exemption.
Backup
withholding is not an additional tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S.
Holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information
is timely furnished to the IRS.
Holders
are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedures
for obtaining an exemption from backup withholding in their particular circumstances.
Canadian
Federal Income Tax Considerations for U.S. Shareholders
The
following is a general summary, as of the date hereof, of the principal Canadian federal income tax considerations generally applicable
to the holding and disposition of Common Shares acquired pursuant to this prospectus supplement by a holder who, at all relevant
times, (a) for the purposes of the Income Tax Act (Canada) (the “Tax Act”), (i) is not resident, or deemed
to be resident, in Canada, (ii) deals at arm’s length with, and is not affiliated with, the Company, (iii) beneficially
owns securities as capital property, (iv) does not use or hold the securities in the course of carrying on, or otherwise in connection
with, a business or a part of a business carried on or deemed to be carried on in Canada and (v) is not an insurer that carries
on an insurance business in Canada and elsewhere or “authorized foreign bank” within the meaning of the Tax Act (a
“Non-resident Holder”). Securities will generally be considered to be capital property to a holder unless such securities
are held in the course of carrying on a business of buying or selling securities, or an adventure or concern in the nature of
trade.
This
summary is based upon the current provisions of the Tax Act and the regulations thereunder (the “Regulations”) and
the Company’s understanding of the current administrative policies and assessing practices of the Canada Revenue Agency
(“CRA”) made publicly available prior to the date hereof. It also takes into account all proposed amendments to the
Tax Act and the Regulations publicly released by the Minister of Finance (Canada) (“Tax Proposals”) prior to the date
hereof, and assumes that all such Tax Proposals will be enacted as currently proposed. No assurance can be given that the Tax
Proposals will be enacted in the form proposed or at all. This summary does not otherwise take into account or anticipate any
changes in law, whether by way of legislative, judicial or administrative action or interpretation, nor does it take into account
tax laws of any province or territory of Canada or of any other jurisdiction outside Canada.
This
summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular
Non-resident Holder and no representation with respect to the federal income tax consequences to any particular Non-resident Holder
or prospective Non-resident Holder is made. The tax consequences to a Non-resident Holder will depend on the holder’s particular
circumstances. Accordingly, Non-resident Holders should consult with their own tax advisors for advice with respect to their own
particular circumstances.
For
purposes of the Tax Act, all amounts, including dividends, adjusted cost base and proceeds of disposition, must generally be determined
in Canadian dollars using the applicable exchange rate quoted by the Bank of Canada for the relevant day or such other rate of
exchange that is acceptable to the Minister of National Revenue (Canada).
Dividends
Amounts
paid or credited or deemed to be paid or credited as, on account or in lieu of payment, or in satisfaction of, dividends on our
Common Shares to a Non-resident Holder will be subject to Canadian withholding tax at the rate of 25% on the gross amount of such
dividends unless the rate is reduced under the provisions of an applicable income tax treaty or convention between Canada and
the country of residence of the Non-resident Holder. For example, under the Convention, the rate of Canadian withholding tax on
dividends paid or credited by us to a Non-resident Holder who is a resident of the United States for purposes of the Convention,
is fully entitled to the benefits of the Convention, and beneficially owns such dividends is generally 15% unless the beneficial
owner is a company that owns at least 10% of our voting stock at that time, in which case the rate of Canadian withholding tax
is reduced to 5%.
Dispositions
A
Non-resident Holder will generally not be subject to tax under the Tax Act on any capital gain realized on a disposition or deemed
disposition of Common Shares, unless the Common Shares constitute “taxable Canadian property” to the Non-resident
Holder at the time of disposition. Generally, Common Shares will not constitute taxable Canadian property to a Non-resident Holder
provided Common Shares are listed on a designated stock exchange (which currently includes the Nasdaq and the TSX) at the time
of the disposition, unless (1) at any time during the 60-month period immediately preceding the disposition, (a) one or any combination
of (A) the Non-resident Holder, (B) persons with whom the Non-resident Holder did not deal at arm’s length and (C) partnerships
in which the Non-resident Holder or a person described in (B) holds a membership interest directly or indirectly through one or
more partnerships, owned 25% or more of the issued shares of any series or class of our capital stock and (b) more than 50% of
the fair market value of Common Shares was derived directly or indirectly from one or any combination of (i) real or immovable
property situated in Canada, (ii) “Canadian resource properties” (as defined in the Tax Act), (iii) “timber
resource properties” (as defined in the Tax Act) and (iv) options in respect of, or interests in, or for civil law rights
in property described in (i) to (iii), whether or not the property exists, or (2) Common Shares are otherwise deemed to be taxable
Canadian property to the Non-resident Holder.
In
certain circumstances, a Non-resident Holder may be exempt from tax under the Tax Act on such capital gains if they are entitled
to relief under an applicable income tax treaty or convention between Canada and the country of residence of the Non-resident
Holder. For example, if the Common Shares constitute taxable Canadian property to a particular Non-resident Holder who is a resident
of the United States for purposes of the Convention and is fully entitled to all of the benefits of the Convention, any capital
gain arising on the disposition of Common Shares by such Non-Resident Holder may be exempt from Canadian tax under the Convention
if, at the time of disposition, the Common Shares do not derive their value principally from real property situated in Canada
as defined in the Convention.
Provided
that the Common Shares are listed at the time of their disposition on the Nasdaq, the TSX or another “recognized stock exchange”
(as defined in the Tax Act), a Non-resident Holder who disposes of the Common Shares that are taxable Canadian property will not
be required to apply for and obtain a certificate of compliance under section 116 of the Tax Act. An exemption from such obligations
may also be available in respect of such a disposition if the Common Shares are “treaty-protected property” (as defined
in the Tax Act) of the disposing Non-resident Holder.
LEGAL
MATTERS
Certain
legal matters relating to the offering of Common Shares under this prospectus supplement will be passed upon for us by Norton
Rose Fulbright Canada LLP with respect to matters of Canadian law and by Lowenstein Sandler LLP with respect to matters of U.S.
law. Certain legal matters in connection with this offering will be passed upon for the underwriter by Haynes and Boone, LLP with
respect to U.S. law.
EXPERTS
The
consolidated financial statements incorporated into this prospectus supplement and the accompanying prospectus by reference to
our Annual Report on Form 20-F for the financial year ended December 31, 2019 (which contains an explanatory paragraph relating
to the Company’s ability to continue as a going concern as described in Note 1 to the consolidated financial statements
included therewith), have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent auditors,
given on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual reports on Form 20-F with the SEC, and we furnish other documents, such as quarterly and current reports, proxy statements
and other information and documents that we file with the Canadian securities regulatory authorities, to the SEC, as required.
The materials we file with or furnish to the SEC are available to the public on the SEC’s Internet website at www.sec.gov.
Those filings are also available to the public on our corporate website at www.zentaris.com. Information contained
on our website is not a part of this prospectus supplement and the inclusion of our website address in this prospectus supplement
is an inactive textual reference only. As we are a Canadian issuer, we also file continuous disclosure documents with the Canadian
securities regulatory authorities, which documents are available on the System for Electronic Document Analysis and Retrieval
(“SEDAR”) website maintained by the Canadian Securities Administrators at www.sedar.com.
This
prospectus supplement and the accompany prospectus forms part of a registration statement that we filed with the SEC. The registration
statement contains more information than this prospectus supplement and the accompanying prospectus regarding us and our securities,
including certain exhibits and schedules. You can obtain a copy of the registration statement from the SEC at www.sec.gov.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
This
prospectus supplement and the accompanying prospectus are part of a registration statement on Form F-3 filed by us with the SEC.
This prospectus supplement and the accompanying prospectus do not contain all of the information set forth in the registration
statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. Statements contained in
this prospectus supplement, the accompanying prospectus or the documents incorporated by reference into this prospectus supplement
or the accompanying prospectus as to the contents of any contract or other document referred to are not necessarily complete and
in each instance reference is made to the copy of that contract or other document filed with or furnished to the SEC. For further
information about us and the securities offered by this prospectus supplement, we refer you to the registration statement and
its exhibits and schedules which may be obtained as described herein.
The
SEC allows us to “incorporate by reference” the information contained in documents that we file with or furnish to
it, which means that we can disclose important information to you by referring you to those documents. The information incorporated
by reference is considered to be part of this prospectus supplement and the accompanying prospectus, and information in documents
that we subsequently file with or furnish to the SEC and the Canadian securities regulatory authorities will automatically update
and supersede information in this prospectus supplement and the accompanying prospectus. We incorporate by reference the documents
listed below into this prospectus supplement, and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until the offering of all the securities by this prospectus supplement is
completed, including all filings made after the date of this prospectus supplement. We hereby incorporate by reference the documents
listed below:
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our Annual Report on Form 20-F for the fiscal year ended December 31, 2019, filed with the SEC on March 31, 2020, as amended by
Form 20-F/A filed on June 18, 2020;
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a Form 8-A12B/A filed with the SEC on May 5, 2019 to amend our previously filed Form 8-A12B filed on April 14, 2017;
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the
Reports on Form 6-K furnished to the SEC on January 8, 2020, January 27, 2020, January 28, 2020, February 21, 2020 (two such
Reports on such date), March 31, 2020 (excluding exhibit 99.3 thereto), April 6, 2020, April 7, 2020, May 6, 2020, as amended
by Report on Form 6-K/A furnished to the SEC on May 11, 2020 (excluding exhibits 99.3 and 99.4 thereto), June 25, 2020, July 6, 2020, July 29, 2020, July 30, 2020, July 31, 2020, August 4, 2020, August 5, 2020, August 6, 2020, October 7, 2020, November 5, 2020, November 16, 2020, December 7, 2020, January 26, 2021, January 28, 2021 and February 2, 2021.
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All
subsequent annual reports on Form 20-F filed by us and all subsequent reports on Form 6-K filed by us that are identified by us
as being incorporated by reference shall be deemed to be incorporated by reference into this prospectus supplement and deemed
to be a part hereof after the date of this prospectus supplement, but before the termination of the offering by this prospectus
supplement.
We
will provide each person to whom this prospectus supplement is delivered a copy of all of the information that has been incorporated
by reference into this prospectus supplement or the accompanying prospectus, but not delivered with this prospectus supplement
and the accompanying prospectus. You may obtain copies of these filings, at no cost, by writing or telephoning us at:
Aeterna
Zentaris Inc.
Attention: Investor Relations
315 Sigma Drive,
Summerville, South Carolina
USA, 29486
Tel. (843) 900-3223
You
should rely only on the information contained in this prospectus supplement, including information incorporated by reference as
described above. We have not authorized anyone else to provide you with different information. You should not assume the information
in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front of those
documents or that any document incorporated by reference is accurate as of any date other than its filing date. You should not
consider this prospectus to be an offer or solicitation relating to the securities in any jurisdiction in which such an offer
or solicitation relating to the securities is not authorized. Furthermore, you should not consider this prospectus supplement
to be an offer or solicitation relating to the securities if the person making the offer or solicitation is not qualified to do
so, or if it is unlawful for you to receive such an offer or solicitation.
PROSPECTUS
US$45,000,000
Common
Shares
Common Share Purchase Rights
Preferred Shares
Warrants
Units
Aeterna
Zentaris Inc. (“Aeterna Zentaris”, “we”, “us” or the “Company”) may from time
to time during the period that this prospectus (the “Prospectus”), including any amendments hereto, remains valid,
offer, sell, and issue under this Prospectus, together or separately, in one or more offerings, any combination of the securities
listed above (the “Securities”). The maximum aggregate initial public offering price of the Securities offered through
this Prospectus is US$45,000,000.
This
Prospectus describes the general terms that may apply to the Securities offered. The specific terms of any offering of Securities
will be set out in the applicable supplement to this Prospectus (each, a “Prospectus Supplement”), including, where
applicable, the type and number of Securities offered, the manner of determination of the public offering price, the currency
in which the Securities will be issued and any other specific terms applicable thereto.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Investing
in the Securities involves a high degree of risk. Before making any decision to invest in our Securities, you should carefully
consider the information disclosed under “Risk Factors” beginning on page 2 of this Prospectus, as well as those risk
factors contained or incorporated by reference into this Prospectus and in the applicable prospectus supplements.
Our
common shares (“Common Shares”) are listed on both the Nasdaq Capital Market (“Nasdaq”) and on the Toronto
Stock Exchange (“TSX”) under the symbol “AEZS”. On July 30, 2019, the last reported sales price of our
Common Shares on Nasdaq was $2.51 per share and on TSX was C$3.31 per share. None of the other Securities that we may offer through
this Prospectus are currently traded on any securities exchange.
We
may offer and sell the Securities on a continuous or delayed basis, through agents, dealers, or underwriters, or directly to purchasers
in the U.S. without the involvement of agents, underwriters or dealers. We may also sell the securities directly to institutional
investors or others in the U.S. who may be deemed to be underwriters within the meaning of the Securities Act with respect to
any sale of those securities. The applicable Prospectus Supplement will set out the names of any agents, dealers, or underwriters,
or any such direct institutional investors in or purchasers of our Securities involved in the sale or re-sale of our Securities
and the plan of distribution for such Securities, including the manner of determination of the public offering price and the compensation
of any such agents and/or such other amounts payable to any direct institutional investors in and purchasers of our Securities.
Net proceeds from the sale of securities will be set forth in the applicable prospectus supplement. See “Plan of Distribution”.
The Securities offered by this Prospectus have not been qualified in Canada and may not be offered or sold in Canada except pursuant
to a Canadian prospectus or prospectus exemption.
The
aggregate market value of our Common Shares held by non-affiliates pursuant to General Instruction I.B.5 of Form F-3 is $42,072,103
which was calculated based on 16,629,290 of our Common Shares outstanding and held by non-affiliates as of the date of this Prospectus
and a price of $2.53 per share, the closing price of our Common Shares on Nasdaq on July 22, 2019. We have not sold any Securities
of the types listed above pursuant to General Instruction I.B.5 of Form F-3 during the prior 12 calendar month period that ends
on, and includes the date of this Prospectus.
The
date of this Prospectus is August 15, 2019
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
Prospectus is a part of a registration statement on Form F-3 that we have filed with the Securities and Exchange Commission (“SEC”)
utilizing a shelf registration process. Under this shelf registration process, we may sell any combination of the Securities described
in this prospectus as being offered, from time to time in one or more offerings, up to a total dollar amount of $45,000,000.
This
Prospectus provides you with a general description of the Securities that we may offer. Each time we sell Securities, we will
provide a Prospectus Supplement that will contain specific information about the terms of that offering. We may also authorize
one or more free writing prospectuses to be provided to you that may contain material information relating to that offering. The
applicable Prospectus Supplement (and any related free writing prospectus that we may authorize to be provided to you) may also
add, update or change information contained in this Prospectus or in the documents that we have incorporated by reference. This
Prospectus does not contain all of the information set forth in the registration statement and the exhibits to the registration
statement. If there is any inconsistency between the information in this Prospectus and the applicable Prospectus Supplement,
you should rely on the information in the Prospectus Supplement. Before investing in our Securities, you should read both this
Prospectus and any applicable Prospectus Supplement together with the additional information described under the heading “Where
You Can Find More Information.”
The
financial statements included in or incorporated by reference into this Prospectus have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board. Our consolidated financial statements
are subject to the standards of the Public Company Accounting Oversight Board (United States) and the SEC independence standards,
and thus may not be comparable to financial statements of United States (“U.S.”) companies.
You
should rely only on the information provided or incorporated by reference in this Prospectus, any free writing prospectus and
any Prospectus Supplement, if applicable. We have not authorized anyone to provide you with different information. The information
contained in this Prospectus is accurate only as of the date of this Prospectus, regardless of the time of delivery of this Prospectus
or of any sale of our Securities.
Unless
otherwise stated, currency amounts in this Prospectus are stated in United States dollars, or “$” or “US$”.
In
this Prospectus and in any Prospectus Supplement, unless otherwise indicated, references to “we”, “us”,
“our”, “Aeterna Zentaris” or the “Company” are to Aeterna Zentaris Inc., a Canadian corporation,
and its consolidated subsidiaries, unless it is clear that such terms refer only to Aeterna Zentaris Inc. excluding its subsidiaries.
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This
Prospectus, the accompanying Prospectus Supplement and the documents incorporated herein by reference contain forward-looking
statements 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 risks and uncertainties, including those discussed
in the 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 SEC. Known and unknown risks and uncertainties
could cause our actual results to differ materially from those in forward-looking statements. Such risks include but are not limited
to:
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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;
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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;
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reliance
on third parties for the manufacturing and commercialization of our product candidates;
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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;
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the
ability of the Company to efficiently commercialize or out-license Macrilen™ (macimorelin);
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the
degree of market acceptance of Macrilen™ (macimorelin);
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our
ability to obtain necessary approvals from the relevant regulatory authorities to enable us to use the desired brand names
for our products;
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the
effect on the Company’s operations, cash flow and financial position because of the impact of the securities class action
litigation;
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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;
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our
ability to take advantage of business opportunities in the pharmaceutical industry;
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our
ability to protect our intellectual property;
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the
potential of liability arising from shareholder lawsuits and general changes in economic conditions.
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More
detailed information about these and other factors is included under “Risk Factors” in this Prospectus, the accompanying
Prospectus Supplement and in other documents incorporated herein by reference. 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. Many
of these factors are beyond our control. Future events may vary substantially from what we currently foresee. You should not place
undue reliance on such forward-looking statements. The Company disavows and is under no obligation to update or alter such forward-looking
statements whether as a result of new information, future results, events, developments or otherwise, unless required to do so
by a governmental authority or applicable law.
RISK
FACTORS
Investing
in our Securities involves a high degree of risk. Before making an investment decision, you should carefully consider the risks
described in the applicable Prospectus Supplement and any related free writing prospectus and under the captions “Risk Factors”
in any of our filings with the SEC, including the item captioned “Risk Factors” in our most recent Annual Report on
Form 20-F and subsequent consolidated financial statements and corresponding management’s discussion and analysis filed
with the Canadian securities regulatory authorities and our Reports on Form 6-K furnished to the SEC including our unaudited interim
consolidated financial statements and corresponding management’s discussion and analysis. For additional information, please
see the sources described in “Where You Can Find More Information.”
These
risks are not the only risks we face. Additional risks not presently known to us, or that we currently view as immaterial, may
also impair our business, if any of the risks described in our SEC filings or any Prospectus Supplement or any additional risks
actually occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
In that case, the value of our securities could decline substantially and you could lose all or part of your investment.
OUR
BUSINESS
Overview.
We are a specialty biopharmaceutical company engaged in commercializing novel pharmaceutical therapies, principally through
out-licensing arrangements. We are a party to a license and assignment agreement with Novo Nordisk A/S (“Novo”) 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 (“AGHD”), in the United States
and Canada (the “License and Assignment Agreement”). 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.
Our
Strategy. Our primary business strategy is to finalize the development, manufacturing, registration and commercialization
of Macrilen™ (macimorelin) through the License and Assignment Agreement in the United States and Canada. We continue to
explore various alternatives to monetize our rights to Macrilen™ (macimorelin) in other countries around the globe, including
whether to find other license partners in these jurisdictions. Our vision is to become a growth-oriented specialty biopharmaceutical
company.
Drug
Development.
Macrilen™
(macimorelin)
Macrilen™
(macimorelin) is a novel orally available peptidomimetic ghrelin receptor agonist that stimulates the secretion of growth hormone
by binding to the ghrelin receptor (GHSR-1a) and that has potential uses in both endocrinology and oncology indications. Macrilen™
(macimorelin) was granted orphan-drug designation by the U.S. Food and Drug Administration (the “FDA”) for use in
evaluating growth hormone deficiency (“GHD”).
Competitors
for Macrilen™ (macimorelin) as a product for the evaluation of AGHD are principally the diagnostic tests currently performed
by endocrinologists, although none of these tests are approved by the FDA for this purpose. The most commonly used diagnostic
tests for GHD are:
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Measurement
of blood levels of Insulin Growth Factor (“IGF”)-1, which is typically used as the first test when GHD is suspected.
However, this test is not used to definitively diagnose GHD because many growth hormone deficient patients show normal IGF-1
levels.
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The
Insulin Tolerance Test (“ITT”), which has historically been considered the gold standard for the evaluation of
AGHD because of its high sensitivity and specificity. However, the ITT is inconvenient to both patients and physicians, administered
intravenously (IV), and contra-indicated in certain patients, such as patients with coronary heart disease or seizure disorder,
because it requires the patient to experience hypoglycemia to obtain an accurate result. Some physicians will not induce full
hypoglycemia, intentionally compromising accuracy to increase safety and comfort for the patient. Furthermore, administration
of the ITT includes additional costs associated with the patient being closely monitored by a physician for the two- to four-hour
duration of the test and the test must be administered in a setting where emergency equipment is available and where the patient
may be quickly hospitalized. The ITT is not used for patients with co-morbidities, such as cardiovascular disease, seizure
disorder or a history of brain cancer or for patients who are elderly and frail, due to safety concerns.
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The
Glucagon Stimulation Test (“GST”) is considered relatively safe by endocrinologists. The mechanism of action for
this test is unclear. Also, this test takes up to three to four hours. It produces side effects in up to one-third of the
patients with the most common being nausea during and after the test. This test is administered intramuscularly (IM).
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The
GHRH + ARG test (growth hormone releasing hormone-arginine stimulation) which is an easier
test to perform in an office setting and has a good safety profile but is considered
to be costly to administer compared to the ITT and the GST. GHRH + ARG is approved in
the EU and has been proposed to be the best alternative to ITT, but GHRH is no longer
available in the United States. This test is administered intravenously (IV).
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Oral
administration of Macrilen™ (macimorelin) offers convenience and simplicity over the current GHD tests used, all of which
require either intravenous or intramuscular administration. Additionally, Macrilen™ (macimorelin) may demonstrate a more
favorable safety profile than existing diagnostic tests, some of which may be inappropriate for certain patient populations, e.g.
diabetes mellitus or coronary heart disease, and have demonstrated a variety of side effects, which Macrilen™ (macimorelin)
has not thus far. These factors may be limiting the use of GHD testing and may potentially enable Macrilen™ (macimorelin)
to become the product of choice in evaluating AGHD. We believe that Macrilen™ (macimorelin) is likely to displace the ITT
as the preferred means by endocrinologists of evaluating AGHD for the following reasons:
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it
is safer and more convenient than the ITT because it does not require the patient to become hypoglycemic;
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Macrilen™
(macimorelin) is administered orally, while the ITT requires an intravenous injection of insulin;
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Macrilen™
(macimorelin) is a more robust test than the ITT leading to evaluable test results;
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Macrilen™
(macimorelin) results are highly reproducible;
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the
evaluation of AGHD using Macrilen™ (macimorelin) is less time-consuming and labor-intensive than the ITT; and
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the
evaluation can be conducted in the physician’s office rather than in a hospital-like setting.
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We
believe that approximately 15,000 AGHD tests will be conducted annually, in the U.S., after full market introduction of Macrilen™
(macimorelin). In addition, based on published information from the U.S. Centers for Disease Control and Prevention, different
scientific publications and Huron and Navigant Research, we estimate that the total potential U.S. market for AGHD evaluation
is approximately 65,000 tests per year, including the evaluation of patients who have suffered traumatic brain injury (“TBI”).
In patients with TBI, GHD is frequent and may contribute to cognitive sequelae and reduction in quality of life. GHD may develop
in approximately 28% of TBI victims according to a recent 5 year prospective study.
Development
History
The
following is a summary of the history of our development of Macrilen™ (macimorelin):
2004
- 2014
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We
out-licensed the development compound macimorelin acetate to Ardana Bioscience in 2004. Ardana Bioscience subsequently initiated
the clinical development program of macimorelin acetate as an orally active compound intended to be used in the diagnosis
of AGHD, however in 2008 Ardana Bioscience filed for bankruptcy so we terminated the license and regained rights to the compound.
On October 19th, 2009, we announced that we would continue the macimorelin clinical development program for use in evaluating
the AGHD and assumed the sponsorship of the Investigational New Drug Application (IND). On December 20, 2010, we announced
we had reached agreement with the FDA on a Special Protocol Assessment (“SPA”) for Macrilen™ (macimorelin),
enabling us to complete the ongoing registration study required to gain approval for use in evaluating AGHD. On July 26, 2011,
we announced the completion of the Phase 3 study of Macrilen™ (macimorelin) as a first oral product for use in evaluating
AGHD and the decision to meet with the FDA for the future filing of an NDA for the registration of Macrilen™ (macimorelin)
in the United States. On June 26, 2012, we announced that the final results from a Phase 3 trial for Macrilen™ (macimorelin)
showed that the drug is safe and effective in evaluating AGHD. In November 2013, we filed an NDA for Macrilen™ (macimorelin)
for the evaluation of AGHD by evaluating the pituitary gland secretion of growth hormone in response to an oral dose of the
product. The FDA accepted the NDA for substantive review in January 2014. On November 6, 2014, the FDA informed us, by issuing
a Complete Response Letter (“CRL”), that it had determined that our NDA could not be approved in its then present
form. The CRL stated that the planned analysis of our pivotal trial did not meet its stated primary efficacy objective as
agreed to in the SPA. The CRL further mentioned issues related to the lack of complete and verifiable source data for determining
whether patients were accurately diagnosed with AGHD. The FDA concluded that, “in light of the failed primary analysis
and data deficiencies noted, the clinical trial does not by itself support the indication.” To address the deficiencies
identified above, the CRL stated that we needed to demonstrate the efficacy of Macrilen™ (macimorelin) as a diagnostic
test for GHD in a new, confirmatory clinical study. The CRL also stated that a serious event of electrocardiogram QT interval
prolongation occurred for which attribution to drug could not be excluded. Therefore, a dedicated thorough QT study to evaluate
the effect of macimorelin on the QT interval would be necessary for FDA clearance and approval.
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2015
– present
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Following
receipt of the CRL, we assembled a panel of experts in the field of growth-hormone deficiency, including experts in the field
from both the United States and the EU. The panel met on January 8, 2015, during which we discussed our conclusions from the
CRL, as well as the potential design of a new pivotal study. The panel advised us to continue to seek approval for Macrilen™
(macimorelin) because of their confidence in its efficacy and because there currently is no FDA-approved diagnostic test for
AGHD. In parallel, we collected information on timelines and costs for such a study.
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During
an end-of-review meeting with the FDA on March 6, 2015, we agreed with the FDA on the general design of the confirmatory Phase
3 study of Macrilen™ (macimorelin) for the evaluation of AGHD, as well as evaluation criteria. We agreed with the FDA
that the confirmatory study will be conducted as a two-way crossover with the ITT as the benchmark comparator.
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On
April 13, 2015, we announced plans to conduct a new, confirmatory Phase 3 clinical study to demonstrate the efficacy of Macrilen™
(macimorelin) for the evaluation of AGHD, as well as a dedicated thorough QT study to evaluate the effect of Macrilen™
(macimorelin) on myocardial repolarization. The confirmatory Phase 3 clinical study of Macrilen™ (macimorelin), entitled
“Confirmatory validation of oral macimorelin as a growth hormone (GH) stimulation test (ST) for the diagnosis of AGHD
in comparison with the insulin tolerance test (ITT),” was designed as a two-way crossover study with the ITT as the
benchmark comparator and involved 31 sites in the United States and Europe. The study population was planned to include at
least 110 subjects (at least 55 ITT-positive and 55 ITT-negative) with a medical history documenting risk factors for AGHD,
and was planned to include a spectrum of subjects from those with a low risk of having AGHD to those with a high risk of having
the condition.
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On
May 26, 2015, we announced that we had received written scientific advice from the EMA regarding the further development plan,
including the study design, for the new confirmatory Phase 3 clinical study of Macrilen™ (macimorelin) for use in evaluating
AGHD. As a result of the advice, we believe that the confirmatory Phase 3 study that was agreed with the FDA meets the EMA’s
study-design expectations as well, allowing for U.S. and European approval, if the study is successful.
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On
November 19, 2015, we announced the enrollment of the first patient in the confirmatory Phase 3 clinical study of Macrilen™
(macimorelin).
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On
October 26, 2016, we announced completion of patient recruitment for the confirmatory Phase 3 clinical trial of Macrilen™
(macimorelin) as a growth hormone stimulation test for the evaluation of AGHD. In addition, we completed the dedicated QT
study as requested by the FDA in the CRL to evaluate the effect of Macrilen™ (macimorelin) on the QT interval.
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On
January 4, 2017, we announced that, based on an analysis of top-line data, the confirmatory Phase 3 clinical trial of Macrilen™
(macimorelin) failed to achieve one of its co-primary endpoints. Under the study protocol, the evaluation of AGHD with Macrilen™
(macimorelin) would be considered successful, if the lower bound of the two-sided 95% confidence interval for the primary
efficacy variables was 75% or higher for “percent negative agreement” with the ITT, and 70% or higher for the
“percent positive agreement” with the ITT. While the estimated percent negative agreement met the success criteria,
the estimated percent positive agreement did not reach the criteria for a successful outcome. Therefore, the results did not
meet the pre-defined equivalence criteria which required success for both the percent negative agreement and the percent positive
agreement.
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On
February 13, 2017, we announced that, after reviewing the raw data on which the top-line data were based, we had concluded
that Macrilen™ (macimorelin) had demonstrated performance supportive of achieving FDA registration and that we intended
to pursue registration. The announcement set forth the facts on which our conclusion was based. The Company met with the FDA
at the end of March 2017 to discuss this position.
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On
March 7, 2017, we announced that the Pediatric Committee (“PDCO”) EMA agreed to the Company’s Pediatric
Investigation Plan (“PIP”) for Macrilen™ (macimorelin) and agreed that the Company may defer conducting
the PIP until after it files a Marketing Authorization Application (“MAA”) seeking marketing authorization for
the use of Macrilen™ (macimorelin) for the evaluation of AGHD.
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On
July 18, 2017, we were provided a PDUFA date of December 30, 2017 by the FDA.
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On
November 27, 2017, the EMA accepted our MMA submission for Macrilen™ (macimorelin).
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On
December 20, 2017, the FDA approved the market authorization for Macrilen™ (macimorelin), to be used in the diagnosis
of patients with adult growth hormone deficiency (AGHD).
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On
January 16, 2018, the Company, through AEZS Germany, entered into a License and Assignment Agreement to carry out development,
manufacturing, registration, regulatory and supply chain services for the commercialization of Macrilen™ (macimorelin)
in the U.S. and Canada as further described below.
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In
the August 2018, Volume 103, Issue 8 edition of The Journal of Clinical Endocrinology and Metabolism, the pivotal Phase 3
data from the macimorelin confirmatory trial was published by Jose M. Garcia, MD, PhD, et al., titled ‘Macimorelin as
a Diagnostic Test for Adult GH Deficiency’.
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On
November 19, 2018, we announced the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency
(EMA) adopted a positive opinion recommending a marketing authorization for macimorelin.
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On
January 16, 2019, the Company announced that the EMA granted marketing authorization for macimorelin.
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Macrilen™
(macimorelin) License and Assignment Agreement
On
January 16, 2018, the Company, through AEZS Germany, entered into a License and Assignment Agreement with Strongbridge Ireland
Limited (“Strongbridge”) to carry out development, manufacturing, registration, regulatory and supply chain services
for the commercialization of Macrilen™ (macimorelin) in the U.S. and Canada. This agreement provides (i) for the “right
to use” license relating to the Adult Indication; (ii) for the right to acquire a license for the Pediatric Indication if
and when the FDA approves a pediatric indication; (iii) that the licensee is to fund 70% of the costs of a pediatric clinical
trial submitted for approval to the EMA and FDA (the “PIP”) to be run by the Company with customary oversight from
a joint steering committee (the “JSC”); and (iv) the Interim Supply Arrangement.
Effective
December 19, 2018, Strongbridge sold the United States and Canadian rights to Macrilen™ (macimorelin) under the License
and Assignment Agreement to Novo for a payment plus tiered royalties on net sales and Novo will fund Strongbridge’s Macrilen™
(macimorelin) field organization as a contract field force to promote the product in the United States for up to three years.
Under
the terms of the License and Assignment Agreement, and for as long as Macrilen™ (macimorelin) is patent-protected, the Company
will be entitled to a 15% royalty on annual net sales up to $75.0 million and an 18% royalty on annual net sales above $75.0 million.
Following the end of patent protection in the United States or Canada for Macrilen™ (macimorelin), the Company will be entitled
to a 5% royalty on net sales in that country. In addition, the Company will receive one-time payments ranging from $4.0 million
to $100.0 million upon the achievement of commercial milestones going from $25.0 million annual net sales up to $500.0 million
annual net sales.
In
January 2018, the Company received a cash payment of $24.0 million from Strongbridge and on July 23, 2018, Strongbridge launched
product sales of Macrilen™ (macimorelin) in the United States. In 2018, the Company received royalty fees of $183,878 and
in the first quarter of 2019 received royalty fees of $12,872 under the License and Assignment Agreement.
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(ii)
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Pediatric
Indication
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Upon
approval by the FDA of a pediatric indication for Macrilen™ (macimorelin), the Company will receive a one-time milestone
payment from Novo of $5.0 million.
We
have initiated an open label, single dose trial to investigate the pharmacokinetics, pharmacodynamics, safety and tolerability
of macimorelin in pediatric patients from two to less than 18 years of age with suspected growth hormone deficiency (“GHD”).
Under the terms of the License and Assignment Agreement, the licensee will pay 70% and the Company will pay the remaining 30%
of the research and development costs associated with the PIP. The Company invoiced $358,000 in 2018 and $307,705 in the first
quarter of 2019 as licensee’s share of the costs incurred by the Company under the PIP.
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(iv)
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Interim
supply arrangement
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The
Company has agreed to supply ingredients for the manufacture of Macrilen™ (macimorelin) during an interim period at a price
that is set ‘at cost’, without any profit margin. The Company invoiced $2,108,000 in 2018 and no amounts in the first
quarter of 2019 under an interim supply agreement.
Rest
of world commercialization of macimorelin
On
January 16, 2019, we announced that the EMA had granted marketing authorization for macimorelin for the diagnosis of AGHD. AGHD
may occur in an adult patient who has a history of childhood onset GHD or may occur during adulthood as an acquired condition.
Considering a population of 512 million for the European Union and the UK, research based on prevalence suggests that at least
35,000 adults could be afflicted with GHD. This milestone marks a key development in our European commercialization strategy and
we are in discussions with a variety of companies regarding licensing and/or distribution opportunities in the rest of the world.
Special
Committee
On
March 12, 2019, we announced that our board of directors (the “Board of Directors”) formed a special committee of
independent directors (the “Special Committee”) to review strategic options available to the Company. The Special
Committee has approved the engagement by the Company of a financial advisor that is working with management to assist the Special
Committee and the Board of Directors in considering a wide range of transactions (including opportunities for the license of Macrilen™
(macimorelin) outside of the United States and Canada), or other monetization transactions relating to Macrilen™ (macimorelin).
As of the date hereof, the Special Committee continues to evaluate strategic options, but has not recommended that we enter into
any particular transaction at this time.
Restructuring
in Germany
On
June 7, 2019, we announced that the Company is reducing the size of its German workforce and operations to more closely reflect
the Company’s ongoing commercial activities in Frankfurt. This restructuring will affect eight employees in Frankfurt, Germany
and is expected to result in US$773,000 of severance costs that is expected to be paid by January 31, 2020.
Securities
Class-action lawsuit
The
Company and certain of its current and former officers are defendants in a class-action lawsuit pending the U.S. District Court
for the District of New Jersey, brought on behalf of the shareholders of the Company. The lawsuit alleges violations of the Securities
Exchange Act of 1934 in connection with allegedly false and misleading statements made by the defendants between August 30, 2011
and November 6, 2014 (the “Class Period”), regarding the safety and efficacy of Macrilen™ (macimorelin) and
the prospects for the approval of the Company’s New Drug Application for the product by the FDA. The Plaintiffs represent
a class comprised of purchasers of the Company’s New Drug Application for the product by the FDA. The Plaintiffs represent
a class comprised of purchasers of the Company’s common shares during the Class Period and seek damages, costs and expenses
and such other relief as determined by the Court. We consider the claims that have been asserted in the lawsuit to be without
merit and are vigorously defending against them. We cannot, however, predict at this time the outcome or potential losses, if
any, with respect to this lawsuit.
Corporate
Information
We
were incorporated on September 12, 1990 under the Canada Business Corporations Act (the “CBCA”) and continue to be
governed by the CBCA. Our registered address is located at 5300 Commerce Court West, 199 Bay Street, Toronto, Ontario, Canada
M5L 1B9 c/o Stikeman Elliott, LLP. Our principal executive offices are located at 315 Sigma Drive, Summerville, South Carolina
29486; our telephone number is (843) 900-3223 and our website is www.zentaris.com. None of the documents or information found
on our website shall be deemed to be included in or incorporated by reference into this Annual Report on Form 20-F, unless such
document is specifically incorporated herein by reference. The SEC also maintains a website at www.sec.gov that contains reports,
proxy statements and other information regarding registrants that file electronically with the SEC.
We
currently have three wholly owned direct and indirect subsidiaries, Aeterna Zentaris GmbH (“AEZS Germany”), based
in Frankfurt, Germany, Zentaris IVF GmbH, a direct wholly owned subsidiary of AEZS Germany, based in Frankfurt, Germany, and Aeterna
Zentaris, Inc., an entity incorporated in the State of Delaware with an office based in Summerville, South Carolina in the U.S.
SECURITIES
WE MAY OFFER
The
Securities that may be offered from time to time through this Prospectus are:
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Common
Shares;
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Preferred
Shares, which we may issue in one or more series;
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Rights
to purchase Common Shares;
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Warrants
entitling the holders to purchase Common or Preferred Shares; and
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Units.
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We
will describe the terms of particular Securities that we may offer in the accompanying Prospectus Supplement we will deliver with
this Prospectus. This Prospectus may not be used to offer or sell any securities unless accompanied by a Prospectus Supplement.
In each Prospectus Supplement we will include, if relevant and material, the following information:
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Type
and amount of Securities which we propose to sell;
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Initial
public offering price of the Securities;
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Rates
and times of payment of interest, dividends, or other payments, if any;
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Redemption,
conversion, exercise, exchange, settlement, or sinking fund terms, if any;
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Ranking;
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Voting
or other rights, if any;
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Conversion,
exchange, or settlement prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion,
exchange, or settlement prices or rates in the Securities or other property receivable upon conversion, exchange, or settlement;
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Names
of the underwriters, agents, or dealers, if any, through or to which we or any selling securityholder will sell the Securities;
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Compensation,
if any, of those underwriters, agents, or dealers;
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Details
regarding over-allotment options, if any;
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Net
proceeds to us;
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Information
about any securities exchange or automated quotation system on which the Securities will be listed or traded;
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Material
Canadian and United States federal income tax considerations applicable to the Securities;
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Any
material risk factors associated with the Securities; and
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Any
other material information about the offer and sale of the Securities.
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In
addition, the applicable Prospectus Supplement and any related free writing prospectus may add, update or change the information
contained in this Prospectus or in the documents we have incorporated by reference.
DESCRIPTION
OF SHARE CAPITAL
Our
authorized share capital structure consists of an unlimited number of shares of the following classes (all classes are without
nominal or par value): Common Shares; and first preferred shares (the “First Preferred Shares”) and second preferred
shares (the “Second Preferred Shares” and, together with the First Preferred Shares, the “Preferred Shares”),
each issuable in series. As of the date of this Prospectus, there are 16,440,760 Common Shares issued and outstanding. No Preferred
Shares have been issued to date.
Common
Shares
The
holders of the Common Shares are entitled to one vote for each Common Share held by them at all meetings of shareholders, except
meetings at which only shareholders of a specified class of shares are entitled to vote. In addition, the holders are entitled
to receive dividends if, as and when declared by the Board of Directors on the Common Shares. Finally, the holders of the Common
Shares are entitled to receive the remaining property of the Company upon any liquidation, dissolution or winding-up of the affairs
of the Company, whether voluntary or involuntary. Shareholders have no liability to further capital calls as all issued and outstanding
shares are fully paid and non-assessable.
Shareholder
Rights Plan
The
Board of Directors approved a shareholder rights plan of the Company on March 29, 2016, which was approved, ratified and confirmed
by the shareholders at the annual and special meeting of shareholders of the Company on May 10, 2016 (the “Existing Rights
Plan”). The Existing Rights Plan was implemented to ensure, to the extent possible, that all shareholders of the Company
are treated fairly in connection with any take-over bid or other acquisition of control of the Company.
The
Board of Directors reviewed the terms of the Existing Rights Plan for conformity with current Canadian securities laws, as well
as the evolving practices of public corporations in Canada, with respect to shareholder rights plan design and made some minor
amendments thereto as a result.
The
Board of Directors determined it appropriate and in the best interests of the shareholders to continue the Existing Rights Plan
and approved the amended and restated shareholder rights plan (the “Rights Plan”) on March 26, 2019. The Rights Plan
took effect immediately upon receipt of approval of the shareholders of the Company at the annual and special meeting of shareholders
held on May 8, 2019.
The
fundamental objectives of the Rights Plan are to provide adequate time for our Board of Directors and shareholders to assess an
unsolicited take-over bid for us, to provide the Board of Directors with sufficient time to explore and develop alternatives for
maximizing shareholder value if a take-over bid is made, and to provide shareholders with an equal opportunity to participate
in a take-over bid. The Rights Plan encourages a potential acquirer who makes a take-over bid to proceed either by way of a “Permitted
Bid,” which requires a take-over bid to satisfy certain minimum standards designed to promote fairness, or with the concurrence
of our Board of Directors. If a takeover bid fails to meet these minimum standards and the Rights Plan is not waived by the Board
of Directors, the Rights Plan provides that holders of Common Shares, other than the acquirer, will be able to purchase additional
Common Shares at a significant discount to market, thus exposing the person acquiring Common Shares to substantial dilution of
its holdings.
Pursuant
to the terms of the Rights Plan, one right was issued in respect of each common share outstanding at 5:01 p.m. on March 29, 2016
(the “Record Time”). In addition, we will issue one right for each additional Common Share issued after the Record
Time and prior to the earlier of the Separation Time (as defined in the Rights Plan) and the Expiration Time (as defined in the
Rights Plan). The rights have an initial exercise price equal to the Market Price (as defined in the Rights Plan) of the Common
Shares as determined at the Separation Time, multiplied by five, subject to certain anti-dilution adjustments (the “Exercise
Price”), and they are not exercisable until the Separation Time. Upon the occurrence of a Flip-in Event (as defined in the
Rights Plan), each right will entitle the holder thereof, other than an Acquiring Person (as defined in the Rights Plan) or any
other person whose rights are or become void pursuant to the provisions of the Rights Plan, to purchase from us, effective at
the close of business on the eighth trading day after the Stock Acquisition Date (as defined in the Rights Plan), upon payment
to us of the Exercise Price, Common Shares having an aggregate Market Price equal to twice the Exercise Price on the date of consummation
or occurrence of such Flip-in Event, subject to certain anti-dilution adjustments.
The
Rights Plan is described in detail in Item 10.B. of our most recent Annual Report on Form 20-F.
Preferred
Shares
The
Preferred Shares are issuable in series with rights and privileges specific to each class. The holders of Preferred Shares are
not entitled to receive notice of or to attend or vote at meetings of shareholders. The holders of First Preferred Shares are
entitled to preference and priority to any participation of holders of Second Preferred Shares, Common Shares or shares of any
other class of shares of the share capital of the Company ranking junior to the First Preferred Shares with respect to dividends
and, in the event of the liquidation of the Company, the distribution of its property upon its dissolution or winding-up, or the
distribution of all or part of its assets among the shareholders, to an amount equal to the value of the consideration paid in
respect of such shares outstanding, as credited to the issued and paid-up share capital of the Company, on an equal basis, in
proportion to the amount of their respective claims in regard to such shares held by them. The holders of Second Preferred Shares
are entitled to preference and priority to any participation of holders of Common Shares or shares of any other class of shares
of the share capital of the Company ranking junior to the Second Preferred Shares with respect to dividends and, in the event
of the liquidation of the Company, the distribution of its property upon its dissolution or winding-up, or the distribution of
all or part of its assets among the shareholders, to an amount equal to the value of the consideration paid in respect of such
shares outstanding, as credited to the issued and paid-up share capital of the Company, on an equal basis, in proportion to the
amount of their respective claims in regard to such shares held by them.
Our
Board of Directors may, from time to time, provide for additional series of Preferred Shares to be created and issued, but the
issuance of any Preferred Shares is subject to the general duties of the directors under the CBCA to act honestly and in good
faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
DESCRIPTION
OF WARRANTS
The
complete terms of the warrants will be contained in the applicable warrant agreement and warrant. These documents have been or
will be included or incorporated by reference as exhibits to the registration statement of which this Prospectus is a part. You
should read the warrant and warrant agreement. You should also read the Prospectus Supplement, which will contain additional information
and which may update or change some of the information below.
Warrants
We May Offer
We
may issue warrants for the purchase of Common Shares or Preferred Shares in one or more series. If we offer warrants, we will
describe the terms in a Prospectus Supplement (and any free writing prospectus). Warrants may be offered independently, together
with other Securities offered by any Prospectus Supplement, or through a dividend or other distribution to shareholders and may
be attached to or separate from other Securities. Warrants may be issued under a written warrant agreement to be entered into
between us and the holder or beneficial owner, or under a written warrant agreement with a warrant agent specified in a Prospectus
Supplement. A warrant agent would act solely as our agent in connection with the warrants of a particular series and would not
assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of those warrants.
The
following are some of the terms relating to a series of warrants that could be described in a Prospectus Supplement:
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Title
of the warrants;
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number of warrants;
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Price
or prices at which the warrants will be offered;
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Designation,
number, aggregate principal amount, denominations, and terms of the Securities that may be purchased on exercise of the warrants;
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Date,
if any, on and after which the warrants and the related Securities will be separately transferable;
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Purchase
price for each security purchasable on exercise of the warrants;
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Dates
on which the right to purchase certain Securities upon exercise of the warrants will begin and expire;
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Minimum
or maximum number of Securities that may be purchased at any one time upon exercise of the warrants;
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Anti-dilution
provisions or other adjustments to the exercise price of the warrants;
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Terms
of any rights that we may have to redeem or call the warrants;
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Effect
of any merger, consolidation, sale, or other transfer of our business on the warrants and the applicable warrant agreement;
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Name
and address of the warrant agent, if any;
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Information
with respect to book-entry procedures;
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A
discussion of material Canadian and/or U.S. federal income tax considerations; and
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Other
material terms, including terms relating to transferability, exchange, exercise, or amendments of the warrants.
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Until
any warrants to purchase our Securities are exercised, holders of the warrants will not have any rights of holders of the underlying
Securities.
DESCRIPTION
OF UNITS
The
complete terms of the units will be contained in the unit agreement and any related documents applicable to any units. These documents
have been or will be included or incorporated by reference as exhibits to the registration statement of which this Prospectus
is a part. You should read the unit agreement and any related documents. You also should read the Prospectus Supplement, which
will contain additional information and which may update or change some of the information below.
We
may issue units, in one or more series, consisting of any combination of one or more of the other Securities described in this
prospectus. If we offer units, we will describe the terms in a Prospectus Supplement (and any free writing prospectus). Units
may be issued under a written unit agreement to be entered into between us and the holder or beneficial owner, or we could issue
units under a written unit agreement with a unit agent specified in a Prospectus Supplement. A unit agent would act solely as
our agent in connection with the units of a particular series and would not assume any obligation or relationship of agency or
trust for or with any holders or beneficial owners of those units.
Each
unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder
of a unit will have the rights and obligations of a holder of each included security.
The
following are some of the unit terms that could be described in a Prospectus Supplement:
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Title
of the units;
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Aggregate
number of units;
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Price
or prices at which the units will be offered;
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Currency
or currency unit in which the units are denominated;
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Designation
and terms of the units and of the Securities comprising the units, including whether and under what circumstances those Securities
may be held or transferred separately;
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Effect
of any merger, consolidation, sale, or other transfer of our business on the units and the applicable unit agreement;
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Name
and address of the unit agent, if any;
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Information
with respect to book-entry procedures;
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A
discussion of material Canadian and/or U.S. federal income tax considerations; and
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Other
material terms, including terms relating to transferability, exchange, exercise, or amendments of the units.
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The
provisions described in this section, as well as those described under “Description of Share Capital” and “Description
of Warrants” will apply to each unit and to any Common Shares, Preferred Shares, or warrant included in each unit, respectively.
The
unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date. We will file as an exhibit to a filing with the SEC that is incorporated
by reference into this Prospectus the forms of the unit agreements containing the terms of the units being offered. The description
of units in any Prospectus Supplement will not necessarily describe all of the terms of the units in detail. You should read the
applicable unit agreements for a complete description of all of the terms.
USE
OF PROCEEDS
We
will retain broad discretion over the use of the net proceeds from the sale of the Securities offered by this Prospectus. Unless
otherwise specified in the applicable Prospectus Supplement or any related free writing prospectus, we currently expect to use
the net proceeds of our sale of Securities for general corporate purposes.
General
corporate purposes may include, among other purposes, the funding of a pediatric clinical trial in the E.U. and U.S. for Marcelin™
(macimorelin). We may temporarily invest funds that we do not immediately need for these purposes in investment securities or
use them to make payments on our borrowings. All expenses relating to an offering of Securities and any compensation paid to underwriters,
dealers or agents, as the case may be, will be paid out of our general funds or from the proceeds of any offering under this Prospectus
or a Prospectus Supplement. The use of proceeds will be specified in the Prospectus Supplement relating to a particular offering
of Securities, as required by applicable securities legislation.
PLAN
OF DISTRIBUTION
We
may sell the Securities from time to time pursuant to public offerings, negotiated transactions, block trades, sales “at-the-market”
to or through a market maker or into an existing trading market, on an exchange or otherwise, or a combination of these methods.
We may sell the Securities to or through an underwriter or group of underwriters managed or co-managed by one or more underwriters,
or to or through dealers, through agents, directly to one or more investors or through a combination of such methods of sale.
We
may distribute Securities from time to time in one or more transactions:
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at
a fixed price or prices which may be changed;
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at
market prices prevailing at the time of sale;
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at
prices related to such prevailing market prices; or
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at
negotiated prices.
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Each
time we sell Securities a Prospectus Supplement will describe the method of distribution of the Securities and any applicable
restrictions.
The
Prospectus Supplement or supplements will describe the terms of the offering of the Securities, including:
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the
name or names of the underwriters, placement agents or dealers, if any;
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the
purchase price of the Securities and the proceeds we will receive from the sale;
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any
over-allotment options under which underwriters may purchase additional Securities from us;
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any
agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation;
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any
discounts or concessions allowed or reallowed to be paid to dealers (which may be changed at anytime); and
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any
securities exchange or market on which the Securities may be listed or quoted.
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In
addition, we may enter into derivative transactions with third parties, or sell securities not covered by this Prospectus to third
parties in privately negotiated transactions. In connection with such a transaction, the third parties may sell securities covered
by and pursuant to this Prospectus and an applicable Prospectus Supplement. If so, the third party may use securities borrowed
from us or others to settle such sales and may use securities received from us to close out any related short positions.
We
may determine the price or other terms of the Securities offered under this Prospectus by use of an electronic auction. We will
describe in the applicable Prospectus Supplement how any auction will be conducted to determine the price or any other terms of
the Securities, how potential investors may participate in the auction and, where applicable, the nature of the underwriters’
obligations with respect to the auction.
Unless
stated otherwise in the applicable Prospectus Supplement, the obligations of any underwriters to purchase Securities will be subject
to certain conditions set forth in the applicable underwriting agreement, and generally the underwriters will be obligated to
purchase all of the Securities if they purchase any of the securities. If underwriters are used in the sale of any Securities,
the Securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions
described above. The Securities may be either offered to the public through underwriting syndicates represented by managing underwriters,
or directly by underwriters. Generally, the underwriters’ obligations to purchase the Securities will be subject to certain
conditions precedent. If a dealer is used in a sale, we may sell the Securities to the dealer as principal. The dealer may then
resell the Securities to the public at varying prices to be determined by the dealer at the time of resale.
We
or our agents may solicit offers to purchase Securities from time to time. Unless stated otherwise in the applicable Prospectus
Supplement, any agent will be acting on a best efforts basis for the period of its appointment.
In
connection with the sale of Securities, underwriters or agents may receive compensation (in the form of fees, discounts, concessions
or commissions) from us or from purchasers of Securities for whom they may act as agents. Underwriters may sell Securities to
or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be “underwriters, “ as that term is defined in the Securities
Act, and any discounts or commissions received by them from us and any profits on the resale of the Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act. We will identify any such underwriter or agent,
and we will describe any compensation paid to them, in the related Prospectus Supplement.
Underwriters,
dealers and agents may be entitled under agreements with us to indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, or contribution with respect to payments that the underwriters, dealers or agents
may make with respect to these liabilities.
If
stated in the applicable Prospectus Supplement, we may authorize underwriters, dealers or agents to solicit offers by certain
investors to purchase Securities from us at the public offering price set forth in the Prospectus Supplement under delayed delivery
contracts providing for payment and delivery on a specified date in the future. These contracts will be subject only to those
conditions set forth in the applicable Prospectus Supplement, and the applicable Prospectus Supplement will set forth the commission
payable for solicitation of these contracts.
The
Securities we may offer, other than Common Shares, may be new issues of securities with no established trading market. No assurance
can be given as to the liquidity of the trading market for any of our Securities. Any underwriter may make a market in these Securities.
However, no underwriter will be obligated to do so, and any underwriter may discontinue any market making at any time, without
prior notice. Therefore, we cannot give any assurances to you concerning the liquidity of any Security offered by this Prospectus.
In
connection with an offering of Securities, underwriters may purchase and sell these Securities in the open market. Any underwriter
may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act. Over-allotment involves sales in excess of the offering size, which creates a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum
price. Syndicate-covering or other short-covering transactions involve purchases of the securities, either through the exercise
of the over-allotment option or in the open market after the distribution is completed, to cover short positions. Penalty bids
permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased
in a stabilizing or covering transaction to cover short positions. Those activities may cause the price of the securities to be
higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time.
Any
underwriters who are qualified market makers on the Nasdaq Stock Market LLC may engage in passive market making transactions in
our Common Shares, Preferred Shares, and warrants, as applicable, on the Nasdaq Stock Market LLC in accordance with Rule 103 of
Regulation M, during the business day prior to the pricing of the offering, before the commencement of offers or sales of the
securities. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market
makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such
security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s
bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the
securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any
time.
Underwriters,
dealers and agents and their affiliates may be customers of, engage in transactions with, or perform services for us or our subsidiaries
in the ordinary course of their businesses. In connection with the distribution of the Securities offered under this Prospectus,
we may enter into swaps or other hedging transactions with, or arranged by, underwriters or agents or their affiliates. These
underwriters or agents or their affiliates may receive compensation, trading gain or other benefits from these transactions.
In
compliance with guidelines of the Financial Industry Regulatory Authority, Inc., or FINRA, the maximum consideration or discount
to be received by any FINRA member or independent broker dealer must be fair and reasonable, considering all relevant risks, factors
and circumstances.
CERTAIN
INCOME TAX CONSIDERATIONS
The
applicable Prospectus Supplement will describe certain Canadian federal income tax consequences to an investor acquiring any Securities
offered thereunder, including, for investors who are non-residents of Canada, whether the payments of dividends (or any other
amounts) on the Securities, if any, will be subject to Canadian non-resident withholding tax.
The
applicable Prospectus Supplement may also describe certain U.S. federal income tax consequences of the acquisition, ownership
and disposition of any Securities offered thereunder by an initial investor who is a U. S. person (within the meaning of the U.S.
Internal Revenue Code of 1986, as amended).
LEGAL
MATTERS
Unless
otherwise specified in the Prospectus Supplement relating to any offering of Securities, certain legal matters relating to the
offering of the Securities under this Prospectus will be passed upon for us by Stikeman Elliott LLP with respect to matters of
Canadian law and by Barnes & Thornburg LLP with respect to matters of U.S. law. In addition, certain legal matters in connection
with any offering of Securities under this Prospectus will be passed upon for any underwriters, dealers or agents by counsel to
be designated at the time of the offering by such underwriters, dealers or agents with respect to matters of applicable law.
EXPERTS
The
consolidated financial statements incorporated into this Prospectus by reference to the Annual Report on Form 20-F for the year
ended December 31, 2018 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered
public accounting firm, given on the authority of said firm as experts in auditing and accounting.
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are a corporation incorporated under and governed by the CBCA. Many of our officers and directors, and some of the experts named
in this Prospectus, are residents of Canada or elsewhere outside of the U.S., and a substantial portion of our assets and the
assets of such persons are located outside the U.S. As a result, it may be difficult for investors in the U.S. to effect service
of process within the U.S. upon such directors, officers and representatives of experts who are not residents of the U.S. or to
enforce against them judgments of a U.S. court predicated solely upon civil liability under U.S. federal securities laws or the
securities laws of any state within the U.S. We have been advised by our legal counsel, Stikeman Elliott LLP, that a judgment
of a U.S. court predicated solely upon civil liability under U.S. federal securities laws would probably be enforceable in Canada
if the U.S. court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a
Canadian court for the same purposes. We have also been advised by Stikeman Elliott LLP, however, that there is substantial doubt
as to whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon U.S.
federal securities laws.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual reports on Form 20-F with the SEC, and we furnish other documents, such as quarterly and current reports, proxy statements
and other information and documents that we file with the Canadian securities regulatory authorities, to the SEC, as required.
The materials we file with or furnish to the SEC are available to the public on the SEC’s Internet website at www.sec.gov.
Those filings are also available to the public on our corporate website at www.zentaris.com. Information contained on our
website is not a part of this Prospectus and the inclusion of our website address in this Prospectus is an inactive textual reference
only. As we are a Canadian issuer, we also file continuous disclosure documents with the Canadian securities regulatory authorities,
which documents are available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website maintained
by the Canadian Securities Administrators at www.sedar.com.
This
Prospectus Forms part of a registration statement that we filed with the SEC. The registration statement contains more information
than this Prospectus regarding us and our Securities, including certain exhibits and schedules. You can obtain a copy of the registration
statement from the SEC at the address listed above or electronically at www.sec.gov.
The
following documents have been filed with the various securities commissions or similar securities regulatory authorities in Canada
and are specifically incorporated by reference into, and form an integral part of, this Prospectus:
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our
2018 Annual Report on Form 20-F for the year ended December 31, 2018, which includes, among other items, (i) our consolidated
statements of financial position as at December 31, 2018 and December 31, 2017 and our consolidated statements of changes
in shareholders’ (deficiency) equity, comprehensive income (loss) and cash flows for the years ended December 31, 2018,
2017 and 2016 and the report of independent registered public accounting firm dated March 29, 2019 thereon included in Item
18; (ii) management’s annual report on internal control over financial reporting included in Item 15, and (iii) Management’s
Discussion and Analysis included in “Item 5.—Operating and Financial Review and Prospects”;
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a
management information circular dated March 26, 2019 in connection with an annual and special meeting of shareholders held
on May 8, 2019, included as Exhibit 99.3 to a Report on Form 6-K furnished to the SEC on April 1, 2019;
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unaudited
condensed interim consolidated financial statements as at March 31, 2019 and for the three-month periods ended March 31, 2019
and March 2018, included as Exhibit 99.1 to a Report on 6-K furnished to the SEC on May 7, 2019;
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a
Form8-A12B/A filed with the SEC on May 5, 2019 to amend our previously filed Form 8-A12B filed on April 14, 2017;
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management’s
discussion and analysis for the first quarter of 2019, included as Exhibit 99.2 to a Report on 6-K furnished to the SEC on
May 7, 2019;
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the
results of the annual and special shareholders’ meeting held on May 8, 2019, included as Exhibit 99.1 to a Report on
6-K furnished to the SEC on May 9, 2019;
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the
Amended and Restated Shareholder Rights Plan Agreement (amending and restating the Shareholder Rights Plan dated March 29,
2016) between the Company and Computershare Trust Company of Canada dated as of May 8, 2019, included as Exhibit 99.2 to a
Report on 6-K furnished to the SEC on May 9, 2019;
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a
material change report dated June 7, 2019 in connection with the reduction of our German workforces and operations, included
as Exhibit 99.1 to a Report on Form 6-K furnished to the SEC on June 10, 2019;
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Annual
Report on Form 20-F/A filed with the SEC on July 26, 2019, to amend our previously filed Annual Report on Form 20-F filed
on April 1, 2019;
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Unaudited
condensed interim consolidated statements as at June 30, 2019 and for the three-month periods ended June 30, 2019 and June
2018, included as Exhibit 99.1, 101.IV, 101.SCH, 101.CAL, 101.DEF, 101.LAB and 101.PRE to a Report on 6-K furnished to the
SEC on August 13, 2019;
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A
management’s discussion and analysis for the second quarter of 2019, included as Exhibit 99.2 to a Report on 6-K furnished
to the SEC on August 13, 2019; and
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to
the extent permitted by applicable securities law, any other documents which we elect to incorporate by reference into this
Prospectus.
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All
subsequent annual reports on Form 20-F filed by us and all subsequent reports on Form 6-K furnished by us that are identified
by us as being incorporated by reference shall be deemed to be incorporated by reference into this Prospectus and deemed to be
a part hereof after the date of this Prospectus but before the termination of the offering by this Prospectus.
We
will provide each person to whom this Prospectus is delivered a copy of the information that has been incorporated into this Prospectus
by reference but not delivered with the Prospectus (except exhibits, unless they are specifically incorporated into this Prospectus
by reference). You may obtain copies of these documents, at no cost, by writing or telephoning us at:
Aeterna
Zentaris Inc.
Attention: Investor Relations
315 Sigma Drive
Summerville, South Carolina
USA, 29486
Tel. (843) 900-3223
Any
statement contained in this Prospectus or in a document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded, for the purposes of this Prospectus, to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be incorporated herein by reference modifies or supersedes
such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or
include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding
statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted
a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified
or superseded shall not constitute a part of this Prospectus, except as so modified or superseded.
Upon
a new annual information form or annual report on Form 20-F and the related audited annual consolidated financial statements together
with the auditors’ report thereon and management’s discussion and analysis related thereto being filed by us with
the applicable securities regulatory authorities during the currency of this Prospectus, the previous annual information form
or annual report on Form 20-F, the previous audited annual consolidated financial statements and all interim financial statements,
annual and quarterly management’s discussion and analyses, material change reports and business acquisition reports filed
by us prior to the commencement of our financial year in which the new annual information form or annual report on Form 20-F was
filed, no longer shall be deemed to be incorporated by reference into this Prospectus for the purpose of future offers and sales
of Securities hereunder.
One
or more Prospectus Supplements containing the terms of an offering of Securities and other information in relation to such Securities
will be delivered to purchasers of such Securities together with this Prospectus and shall be deemed to be incorporated by reference
into this Prospectus as of the date of such Prospectus Supplement solely for the purposes of the offering of the Securities covered
by any such Prospectus Supplement. A Prospectus Supplement containing any additional or updated information that we elect to include
therein will be delivered with this Prospectus to purchasers of Securities who purchase such Securities after the filing of this
Prospectus and shall be deemed to be incorporated into this Prospectus as of the date of such Prospectus Supplement.
Common Shares
PROSPECTUS
SUPPLEMENT
H.C.
WAINWRIGHT & CO.
February
, 2021
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