Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS)
today reported its financial and operating results for the third
quarter ended September 30, 2019.
All Amounts are in U.S. Dollars
Highlights
- Net loss for the third quarter of 2019 was $0.3 million as
compared to net loss of $2.5 million for the same period in 2018.
Net loss for the nine-months ended September 30, 2019 was $5.0
million as compared to net income of $9.3 million for the same
period in 2018.
- As of September 30, 2019, we had $10.9 million of unrestricted
cash and cash equivalents.
- On September 20, 2019, the Company entered into a securities
purchase agreement with U.S. institutional investors to purchase
$5.0 million (before transaction costs of $0.8 million) of its
common shares in a registered direct offering and warrants to
purchase common shares in a concurrent private placement. The
combined purchase price for one common share and one warrant was
$1.50. Under the terms of the securities purchase agreement, the
Company sold 3,325,000 common shares. In a concurrent private
placement, the Company issued warrants to purchase up to an
aggregate of 3,325,000 common shares. The warrants are exercisable
commencing six months from the date of issuance, have an exercise
price of $1.65 per share and expire 5 years following the date of
issuance.
- The Company earned royalty income for the nine-month period
ending September 30, 2019 of $0.03 million from the license of
Macrilen™ (macimorelin) and we invoiced Novo Nordisk (Novo) $0.8
million for its share of our pediatric clinical study (the “PIP
study”) costs and $1.1 million for supply chain costs.
- During the third quarter of 2019, Novo confirmed that it had
initiated a thorough review on support, reimbursement, distribution
and marketing arrangements regarding Macrilen™ (macimorelin) in
order to identify improvements to the Macrilen™ commercialization
plans. We continue to work with Novo on addressing the slower than
expected U.S. sales to date.
- The initial phase of the Macrilen™ macimorelin PIP study (the
“P01 Dose Ranging Study”) continued to progress with the first
two-thirds of subjects having completed the protocol. We currently
expect to complete the P01 Dose Ranging Study in the first quarter
of 2020.
Summary of Third Quarter Results and
Year-to-date Third Quarter Results
For the three-month period ended September 30,
2019, we reported a consolidated net loss of $0.3 million, or $0.02
loss per common share (basic), as compared with a consolidated net
loss of $2.5 million, or $0.15 loss per common share, for the
three-month period ended September 30, 2018. The $2.2 million
improvement in net results is primarily from a gain in fair value
of warrant liability of $2.1 million and a decline in operating
expenses of $1.1 million and an increase in gross income of $0.1
million and $0.1 million increase in foreign currency exchange
rates, offset by $0.5 million movement in tax recovery and an
increase in net finance costs of $0.7 million.
For the nine-month period ended September 30,
2019, we reported a consolidated net loss of $5.0 million, or $0.31
loss per common share, as compared with a consolidated net income
of $9.3 million, or $0.57 income per common share (basic), for the
nine-month period ended September 30, 2018. The $14.3 million
decline in net results is primarily from a reduction of $24.3
million in gross income offset by $6.1 million in tax expense, $3.0
million decline in operating expenses and $0.9 million increase in
net finance income.
On June 6, 2019, the Company announced that it
was reducing the size of its German workforce and operations to
more closely reflect the Company’s ongoing commercial activities in
Frankfurt. This restructuring affects 8 employees in Frankfurt,
Germany and resulted in $0.8 million of severance costs that are
expected to be paid by January 31, 2020.
In July 2019, Michael Ward resigned as managing
director of AEZS Germany and Dr. Klaus Paulini assumed this role.
In August 2019, Jonathan Pollack resigned as a director of Aeterna
Zentaris Inc. and, in September 2019, Brian Garrison, resigned as a
Senior Vice President, Global Commercial Operations of Aeterna
Zentaris Inc. Subsequent to quarter-end, on October 4, 2019, Dr.
Klaus Paulini was announced as President and Chief Executive
Officer of the Company, replacing Michael Ward who is entitled to
severance of approximately $0.5 million. Dr. Paulini was also
appointed as a Director of Aeterna Zentaris Inc. at that time.
Condensed Interim Consolidated Financial
Statements and Management’s Discussion and Analysis
For reference, the condensed interim
consolidated financial statements as at September 30, 2019 and for
the three-month and nine-month periods ending September 30, 2019
and 2018 and management’s discussion and analysis of financial
condition and results of operations three-month and nine-month
periods ending September 30, 2019, will be found
at www.zentaris.com in the "Investors" section and at the
Company’s profile at www.sedar.com and www.sec.gov.
The following tables set out summary
consolidated financial information for the periods indicated. The
results of operations for interim periods are not necessarily
indicative of the results to be expected for a full year or any
future period. The information presented herein does not contain
disclosures required by IFRS for consolidated financial statements
and should be read in conjunction with the Company’s audited annual
consolidated financial statements for the year ended December 31,
2018.
About Aeterna Zentaris Inc.
Aeterna Zentaris Inc. is a specialty
biopharmaceutical company engaged in commercializing novel
pharmaceutical therapies, principally through out-licensing
arrangements. Aeterna Zentaris is the licensor and party to a
license and assignment agreement with Novo Nordisk A/S to carry out
development, manufacturing, registration, regulatory, and supply
chain for the commercialization of Macrilen™ (macimorelin), which
is to be used in the diagnosis of patients with adult growth
hormone deficiency in the United States and Canada. In addition, we
are actively pursuing business development opportunities for
macimorelin in the rest of the world and to monetize the value of
our non-strategic assets.
Forward-Looking Statements
This press release contains forward-looking
statements (as defined by applicable securities legislation) made
pursuant to the safe-harbor provision of the U.S. Securities
Litigation Reform Act of 1995, which reflect our current
expectations regarding future events. Forward-looking statements
may include, but are not limited to statements preceded by,
followed by, or that include the words "will," "expects,"
"believes," "intends," "would," "could," "may," "anticipates," and
similar terms that relate to future events, performance, or our
results. Forward-looking statements involve known and unknown risks
and uncertainties, including those discussed in this press release
and in our Annual Report on Form 20-F, under the caption "Key
Information -Risk Factors" filed with the relevant Canadian
securities regulatory authorities in lieu of an annual information
form and with the U.S. Securities and Exchange Commission. Known
and unknown risks and uncertainties could cause our actual results
to differ materially from those in forward-looking statements. Such
risks and uncertainties include, among others, our ability to
continue as a going concern dependent, in part, on the ability of
Aeterna Zentaris to transfer cash from Aeterna Zentaris GmbH to the
Canadian parent and U.S. subsidiary and secure additional
financing, our now heavy dependence on the success of Macrilen™
(macimorelin) and related out-licensing arrangements and the
continued availability of funds and resources to successfully
commercialize the product, our strategic review process, the
ability of the Special Committee to carry out its mandate, the
ability of Aeterna Zentaris to enter into out-licensing,
development, manufacturing and marketing and distribution
agreements with other pharmaceutical companies and keep such
agreements in effect, reliance on third parties for the
manufacturing and commercialization of Macrilen™ (macimorelin),
potential delay or termination of our pediatric clinical trial
program, potential disputes with third parties, leading to delays
in or termination of the manufacturing, development, out-licensing
or commercialization of our product candidates, or resulting in
significant litigation or arbitration, and, more generally,
uncertainties related to the regulatory process, our ability to
efficiently commercialize or out-license Macrilen™ (macimorelin),
the degree of market acceptance of Macrilen™ (macimorelin), our
ability to obtain necessary approvals from the relevant regulatory
authorities to enable us to use the desired brand names for our
product, the impact of securities class action litigation or other
litigation on our cash flow, results of operations and financial
position, our ability to take advantage of business opportunities
in the pharmaceutical industry, our ability to protect our
intellectual property, the potential of liability arising from
shareholder lawsuits and general changes in economic conditions.
Investors should consult our quarterly and annual filings with the
Canadian and U.S. securities commissions for additional information
on risks and uncertainties. Given these uncertainties and risk
factors, readers are cautioned not to place undue reliance on these
forward-looking statements. We disclaim any obligation to update
any such factors or to publicly announce any revisions to any of
the forward-looking statements contained herein to reflect future
results, events or developments, unless required to do so by a
governmental authority or applicable law.
Contact:
Leslie AuldChief Financial OfficerAeterna
Zentaris Inc.IR@aezsinc.com(843) 900-3211
Condensed Interim Consolidated
Statements of Comprehensive (Loss) Income
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
(in thousands, except share and per share
data) |
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
2018 |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Royalty income |
8 |
|
|
|
— |
|
|
|
29 |
|
|
— |
|
Product sales |
— |
|
|
|
663 |
|
|
|
129 |
|
|
721 |
|
Sales commission and
other |
256 |
|
|
|
— |
|
|
|
301 |
|
|
721 |
|
Licensing revenue |
19 |
|
|
|
— |
|
|
|
55 |
|
|
24,657 |
|
Total
revenues |
283 |
|
|
|
663 |
|
|
|
514 |
|
|
24,489 |
|
Cost of goods sold |
— |
|
|
|
494 |
|
|
|
101 |
|
|
691 |
|
Gross
income |
283 |
|
|
|
169 |
|
|
|
413 |
|
|
24,798 |
|
Research and development
costs |
475 |
|
|
|
358 |
|
|
|
1,574 |
|
|
2,165 |
|
General and administrative
expenses |
1,364 |
|
|
|
2,439 |
|
|
|
4,924 |
|
|
7,229 |
|
Selling expenses |
377 |
|
|
|
383 |
|
|
|
1,176 |
|
|
2,521 |
|
Restructuring costs |
— |
|
|
|
— |
|
|
|
773 |
|
|
— |
|
Impairment (reversal) of right
of use asset |
(125 |
) |
|
|
— |
|
|
|
276 |
|
|
— |
|
Write-off of other current
assets |
— |
|
|
|
— |
|
|
|
169 |
|
|
— |
|
Total operating expenses |
2,091 |
|
|
|
3,180 |
|
|
|
8,892 |
|
|
11,915 |
|
(Loss) income from
operations |
(1,808 |
) |
|
|
(3,011 |
) |
|
|
(8,479 |
) |
|
12,883 |
|
Gain (loss) due to changes in
foreign currency exchange rates |
3 |
|
|
|
(133 |
) |
|
|
61 |
|
|
592 |
|
Change in fair value of
warrant liability |
2,120 |
|
|
|
58 |
|
|
|
3,985 |
|
|
1,752 |
|
Other finance (costs)
income |
(646 |
) |
|
|
30 |
|
|
|
(603 |
) |
|
174 |
|
Net finance (costs)
income |
1,477 |
|
|
|
(45 |
) |
|
|
3,443 |
|
|
2,518 |
|
Income (loss) before income
taxes |
(331 |
) |
|
|
(3,056 |
) |
|
|
(5,036 |
) |
|
15,401 |
|
Income tax recovery
(expense) |
— |
|
|
|
547 |
|
|
|
— |
|
|
(6,088 |
) |
Net (loss)
income |
(331 |
) |
|
|
(2,509 |
) |
|
|
(5,036 |
) |
|
9,313 |
|
Other comprehensive
(loss) income: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
377 |
|
|
|
3 |
|
|
|
351 |
|
|
(247 |
) |
Actuarial (gain) loss on defined benefit plans |
(536 |
) |
|
|
406 |
|
|
|
(2,027 |
) |
|
611 |
|
Comprehensive (loss)
income |
(490 |
) |
|
|
(2,100 |
) |
|
|
(6,712 |
) |
|
9,677 |
|
Net (loss) income per
share [basic] |
(0.02 |
) |
|
|
(0.15 |
) |
|
|
(0.31 |
) |
|
0.57 |
|
Net (loss) income per
share [diluted] |
(0.02 |
) |
|
|
(0.15 |
) |
|
|
(0.31 |
) |
|
0.56 |
|
Weighted average
number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
16,887,819 |
|
|
|
16,440,760 |
|
|
|
16,651,969 |
|
|
16,440,760 |
|
Diluted |
16,887,819 |
|
|
|
16,440,760 |
|
|
|
16,651,969 |
|
|
16,655,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Interim Consolidated Statement of Financial
Position
(in thousands) |
As at September 30, |
|
|
As at December 31, |
|
|
2019 |
|
|
2018 |
|
|
$ |
|
|
$ |
|
Cash and cash equivalents |
10,862 |
|
|
14,512 |
|
Trade and other receivables
and other current assets |
1,349 |
|
|
1,504 |
|
Inventory |
582 |
|
|
240 |
|
Restricted cash
equivalents |
356 |
|
|
418 |
|
Property, plant and
equipment |
42 |
|
|
65 |
|
Right of use asset |
418 |
|
|
— |
|
Other non-current assets |
7,893 |
|
|
8,272 |
|
Total
assets |
21,502 |
|
|
25,011 |
|
Payables and other current
liabilities |
2,908 |
|
|
2,966 |
|
Current portion of deferred
revenues |
74 |
|
|
74 |
|
Warrant liability |
2,788 |
|
|
3,634 |
|
Current provision for
restructuring costs and other costs |
877 |
|
|
887 |
|
Taxes payable |
1,595 |
|
|
1,669 |
|
Employee future benefits |
14,477 |
|
|
13,205 |
|
Lease liabilities |
408 |
|
|
— |
|
Non-current portion of
restructuring and other costs and deferred revenues |
568 |
|
|
669 |
|
Total
liabilities |
23,695 |
|
|
23,104 |
|
Shareholders’
(deficiency) equity |
(2,193 |
) |
|
1,907 |
|
Total liabilities and
shareholders’ (deficiency) equity |
21,622 |
|
|
25,011 |
|
|
|
|
|
|
|
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