AEterna Zentaris Reports Second Quarter 2004 Financial and Operating Results All amounts are in Canadian dollars QUEBEC CITY, Canada, Aug. 11 /PRNewswire-FirstCall/ -- AEterna Zentaris Inc. (TSX: AEZ; Nasdaq: AEZS) today reported financial and operating results for the second quarter ended June 30, 2004. Total revenue for the second quarter 2004 was $65.8 million, an increase of 69% compared with total revenue of $38.9 million for the same period in 2003. R&D expenses net of tax credits and grants decreased from $10.6 million in the second quarter of 2003 to $8.7 million in the second quarter of 2004, reflecting the streamlining of the clinical development program. Operating income for the second quarter 2004 was $9.2 million, compared to an operating loss of $1.1 million for the second quarter 2003, primarily reflecting the strong revenue growth of 90% from the majority-owned subsidiary Atrium, and a non-recurrent $6.5 million milestone gained from Solvay Pharmaceuticals, the Company's worldwide (ex-Japan) exclusive development and marketing partner for cetrorelix. This milestone was triggered by Solvay's decision to proceed with further clinical development of cetrorelix. The Company's net earnings were $1.3 million for the second quarter of 2004, or $0.03 per share, compared with a net loss of $4.7 million, or $0.11 per share, for the comparable period in 2003. The profitability for this quarter is primarily a result of the non- recurrent milestone gained from Solvay. "During the second quarter of 2004, we delivered a solid financial performance while also achieving our strategic objectives," said Gilles Gagnon, AEterna Zentaris President and Chief Executive Officer. "In addition to across-the-board strong financial performance from all our sectors of activity, we continued to advance our product pipeline and reported positive results on perifosine and cetrorelix, which support the ongoing and planned clinical development of these drug candidates in their respective indications. To that end, we are planning the initiation of Phase II trials on perifosine in combination with radiotherapy, while further clinical development of cetrorelix in endocrine therapy is being planned with our partner Solvay Pharmaceuticals. We believe that our accomplishments in the recent months have established a sound foundation for us to continue to grow our business and to achieve our objectives for the remainder of 2004." Dennis Turpin, AEterna Zentaris' Vice President and CFO, added, "With over $64 million in cash and short-term investments, as well as our continued strong financial performance, we are in an excellent financial position to continue to carry out our business plan." Atrium Biotechnologies' Second Quarter Results Second quarter 2004 operating results for Atrium, AEterna Zentaris' 62% owned subsidiary, included, for the first time, full three months of operations from US-based Pure Encapsulations which was acquired in March 2004. During the second quarter of 2004, sales for Atrium were $47 million, an increase of 90% compared with $24.7 million in sales for the comparable period in 2003. Operating income was $7.4 million during the quarter, compared with $3.2 million for the same period in 2003, representing a 131.8% increase. Net earnings increased 154.3% to $4.1 million, compared with $1.6 million for the same period in 2003. The increase reflects the combination of internal growth, as well as growth driven by the acquisition in March 2004 of Pure Encapsulations Inc., as well as of Chimiray/ Interchemical and Siricie in the second half of 2003. "The recent acquisition of Pure Encapsulations Inc. and its successful integration brought us an important strategic presence in USA in the field of nutritional supplements dedicated to healthcare professionals and largely contributed to deliver this growth," said Luc Dupont, President of the Executive Committee and CEO of Atrium Biotechnologies Inc. "We intend to continue to aggressively pursue our acquisition strategy." Second Quarter 2004 Highlights - Positive Phase II results for cetrorelix in endometriosis, uterine myoma and benign prostate hyperplasia - Favorable data continues to support the ongoing and planned clinical development of cetrorelix - Positive Phase I results for perifosine in combination with radiotherapy in cancer - Results support the planned initiation of Phase II trials on perifosine in combination with radiotherapy - New agreement with Ardana Bioscience for LHRH antagonist teverelix in prostate cancer - Name change to AEterna Zentaris and addition to the NASDAQ Biotech Index - Atrium revenues of $47 million, an increase of 90% and net earnings of $4.1 million, an increase of 154.3% AEterna Zentaris Six-Month Consolidated Financial Results Total revenue for the first half of 2004 increased 56% to $124.3 million, compared with $79.7 million for the first half of 2003. The Company reported a year-to-date 2004 operating income of $10.8 million, compared with an operating loss of $2.4 million for the comparable prior-year period. The operating income in 2004 increased 100.5% to $13.5 million compared with $6.7 million for the same period in 2003. Net loss for the first six months of 2004 was $1.2 million, or $0.03 per share, compared with a net loss of $9.6 million, or $0.23 per share, for the first six months of 2003. Atrium Six-Month Financial Results For the six-month period ended June 30, 2004, Atrium sales were $92.8 million compared to $53 million in 2003, representing a 75.3% increase. The operating income increased 100.5% to $13.5 million, compared to $6.7 million for the same period in 2003. Net income increased 136.8% to $7.7 million, compared to $3.2 million for the same period in 2003. Outlook 2004 The Company's specific goals for the remainder of 2004 include: - Initiate Phase II trials on perifosine in combination with radiotherapy - Report preliminary monotherapy Phase II data on perifosine from multiple North American trials - Develop new perifosine analogs - Advance one or more preclinical compounds into Phase I clinical trials - Report Phase II data on cetrorelix in BPH - Advance clinical development of cetrorelix with Solvay - Pending marketing approval for Cetrotide(R) in Japan for in vitro fertilization Conference Call Information Management will be hosting a conference call for the investment community beginning at 10:00 a.m. Eastern Time today, Wednesday, August 11, to discuss second quarter financial and operating results and to answer questions. To participate in the live conference call by telephone, please dial 514-807-8791, 416-640-4127 from Canada or 800-814-4941 from outside Canada. Individuals interested in listening to the conference call via the Internet may do so by visiting http://www.aeternazentaris.com/ . A replay will be available on the Company's Web site for 30 days. About AEterna Zentaris Inc. AEterna Zentaris Inc. is a biopharmaceutical company focused in oncology and endocrine therapy. Its extensive portfolio, from drug discovery to marketed products, includes perifosine, an orally-active AKT inhibitor in several Phase II trials for multiple cancers, and cetrorelix, an LHRH antagonist already marketed for in vitro fertilization under the brand name Cetrotide(R), and also in advanced clinical development for the treatment of uterine myoma, endometriosis and benign prostatic hyperplasia (BPH). AEterna Zentaris also owns 62% of Atrium Biotechnologies Inc., which develops, distributes and markets active ingredients, specialty fine chemicals, cosmetic and nutritional products for the cosmetics, chemical, pharmaceutical and nutritional industries. News releases and additional information about AEterna Zentaris are available on its new Web site http://www.aeternazentaris.com/ . Forward-Looking Statements This press release contains forward-looking statements made pursuant to the safe harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. Investors should consult the Company's quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The Company does not undertake to update these forward- looking statements. > DATASOURCE: AETERNA ZENTARIS INC. (FORMERLY/ANCIENNEMENT - LES LABORATOIRES AETERNA CONTACT: Media Relations: Paul Burroughs, (418) 652-8525 ext. 406, ; Investor Relations: Jacques Raymond, (418) 652-8525 ext. 360, ; U.S. Investor Relations: Lippert/Heilshorn & Associates, Kim Golodetz, (212) 838-3777, ; Europe: Matthias Seeber, +49 69 42602 3425, ; To request a free copy of this organization's annual report, please go to http://www.newswire.ca/ and click on reports@cnw

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