Aeterna Zentaris Reports Second Quarter 2010 Financial and Operating Results

All amounts are in U.S. dollars

QUEBEC CITY, Aug. 12 /PRNewswire-FirstCall/ - Aeterna Zentaris Inc. (NASDAQ: AEZS, TSX: AEZ) ("the Company"), a late-stage drug development company specialized in oncology and endocrinology, today reported financial and operating results for the second quarter ended June 30, 2010.

Second Quarter 2010 Highlights

Pipeline development


    - April 5, 2010: Perifosine receives U.S. Food and Drug Administration
      ("FDA") Fast Track Designation for the Phase 3 X-PECT (Xeloda(R) +
      Perifosine Evaluation in Colorectal cancer Treatment) registration

    - April 8, 2010: Initiation of the registration Phase 3 X-PECT study with

    - April 15, 2010: Positive Scientific Advice from the European Medicines
      Agency ("EMA") for the Phase 3 program with perifosine in multiple
      myeloma. Therefore, the ongoing trial is expected to be sufficient for
      registration in Europe.

    - April 20, 2010: Presentations at the annual meeting of the American
      Association for Cancer Research ("AACR") in Washington, D.C. of
      preclinical data from a study sponsored by the National Institutes of
      Health with perifosine in oncology.

    - May 17, 2010: Publication of an article in the May 12, 2010 issue of
      the Journal of the National Cancer Institute, entitled "In Vitro and In
      Vivo Inhibition of Neuroblastoma Tumor Cell Growth by Akt Inhibitor
      Perifosine," demonstrating the single agent activity of perifosine in
      neuroblastoma tumor preclinical models.

    - June 7, 2010: Presentation at the American Society of Clinical Oncology
      ("ASCO") annual meeting of Phase 1 data on single agent perifosine in
      the treatment of recurrent pediatric solid tumors, including patients
      with advanced brain tumors and neuroblastoma.

    - June 8, 2010: Report at the ASCO annual meeting of Phase 2 results
      confirming a statistically significant improvement in both time to
      tumor progression and overall survival with perifosine, in combination
      with capecitabine (Xeloda(R)), in the treatment of advanced metastatic
      colorectal cancer.

    - June 29, 2010: EMA issues positive Scientific Advice for Phase 3 trial
      with perifosine in colorectal cancer. Therefore, the ongoing trial is
      expected to be sufficient for registration in Europe.


    - May 6, 2010: Received orphan drug designation from the FDA for AEZS-
      108, the Company's doxorubicin targeted conjugate compound, for the
      treatment of ovarian cancer.

    - May 12, 2010: Received approval from the FDA for the Company's
      Investigational New Drug ("IND") application for AEZS-108 in
      luteinizing hormone-releasing hormone ("LHRH") receptor-positive
      urothelial (bladder) cancer.

    - May 17, 2010: Received positive opinion for orphan medicinal product
      designation from the Committee for Orphan Medicinal Products of the
      EMA, for AEZS-108 for the treatment of ovarian cancer.

    - June 7, 2010: Presentation at ASCO's annual meeting of positive
      efficacy and safety data for AEZS-108 in ovarian cancer.

    - June 28, 2010: Announcement of a collaboration with Almac Group Ltd.'s
      ("Almac") Diagnostic division to develop a companion diagnostic for
      AEZS-108 in cancer.

    AEZS-130 (Solorel(TM))

    - June 21, 2010: Presentation at the 92nd Annual Endocrine Society
      Meeting and Expo of positive data on AEZS-130, a ghrelin mimetic for
      diagnostic and therapeutic use.

    AEZS-131 and 132

    - April 20, 2010: Presentations at AACR's annual meeting in Washington,
      D.C., of preclinical data on Erk inhibitor, AEZS-131, and on Erk/PI3K
      dual inhibitor, AEZS-132.

    Corporate developments

    - April 20, 2010: Completion of a $15.0 million registered direct
      offering with certain institutional investors.

    - April 23, 2010: Regained compliance with Nasdaq's minimum bid price
      listing requirement.

    - June 21, 2010: Completion of a $12.1 million registered direct offering
      with certain institutional investors.

    Subsequent to Quarter-End

    - July 8, 2010: Presentation at the 7th International Congress of
      Neuroendocrinology in Rouen, France, of a scientific poster entitled,
      "Use of the Orally Active Ghrelin Mimetic AEZS-130 as a Simple Test for
      the Diagnosis of Growth Hormone (GH) Deficiency (GHD) in adults

    - July 14, 2010: Perifosine receives orphan drug designation by the FDA
      for the treatment of neuroblastoma, a cancer of the nervous system
      affecting mostly children and infants for which there are no FDA
      approved therapies.

Juergen Engel, Ph.D., Aeterna Zentaris' President and Chief Executive Officer commented, "During the second quarter, we made great strides in advancing our key compounds in oncology: perifosine, our PI3K/Akt inhibitor and AEZS-108, our LHRH targeted doxorubicin conjugate. In particular, we now have agreement from the FDA and the EMA as to a clear pathway toward the registration of perifosine in both multiple myeloma and refractory colorectal cancer. Both indications are expected to gain approval following only one Phase 3 trial per indication, which are currently progressing as planned. Regarding AEZS-108, we disclosed positive Phase 2 survival data in advanced ovarian cancer, and we now look forward to disclosing detailed Phase 2 results in endometrial cancer in the second half of the year. We are also evaluating various opportunities regarding the further development of AEZS-108, and our recent collaboration with Almac will contribute to the success of that compound's development." Dr. Engel added, "Our focus is now on advancing our pipeline, while expanding our network of partners to ensure the successful commercialization of perifosine in non-US markets."

Dennis Turpin, Senior Vice President and Chief Financial Officer of Aeterna Zentaris, added, "With more than $45 million in cash and equivalents at quarter-end and a burn rate reduced to approximately $2 million per month, the Company is now in a solid financial position to pursue activities leading to the creation of value for our shareholders. Our strategy now calls for additional partnerships to contribute to advancing our pipeline and to improving our cash position such that Aeterna Zentaris becomes a successful long-term player in our industry."


Revenues were $5.6 million for the three-month period ended June 30, 2010, compared to $8.4 million for the same period in 2009. The decrease is due mainly to the absence, in 2010, of amortization of an upfront license fee payment related to our agreement with sanofi-aventis U.S. LLC, which was entered into in March 2009 and subsequently terminated, in connection with our now discontinued development program involving cetrorelix for the treatment of benign prostatic hyperplasia ("BPH").

Research and development ("R&D") costs, net of tax credits and grants, were $5.0 million for the three-month period ended June 30, 2010, compared to $12.1 million for the same period in 2009. The comparative decrease in net R&D costs is primarily attributable to the winding down and termination of development activities related to cetrorelix in BPH.

Net loss was $4.5 million, or $0.06 per basic and diluted share, for the three-month period ended June 30, 2010, compared to $13.1 million, or $0.24 per basic and diluted share, for the same period in 2009. This decrease is mainly related to lower comparative net R&D costs and higher foreign exchange gains, which resulted largely from the comparative weakening in 2010 of the euro vis-à-vis the Canadian and U.S. dollar, partly offset by the comparative decrease in revenues, as discussed above.

Cash and cash equivalents were $45.3 million as at June 30, 2010.


Management will be hosting a conference call for the investment community beginning at 1:30 p.m. Eastern Time today, Thursday, August 12, 2010, to discuss second quarter 2010 results. Individuals interested in participating in the live conference call by telephone may dial in Canada, 514-807-9895 or 647-427-7451, outside Canada, 888-231-8191, or may listen through the Internet at A replay will be available on the Company's website for 30 days following the live event.

About Aeterna Zentaris Inc.

Aeterna Zentaris Inc. is a late-stage drug development company specialized in oncology and endocrine therapy. News releases and additional information are available at

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbour 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. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments except if we are required by a governmental authority or applicable law.

Attachment: Financial summary

    Interim Consolidated Statements of Operations
    (in thousands, except for share and per share data)
                                  Three months ended        Six months ended
                                        June 30,                June 30,
                                    2010        2009        2010        2009
                                       $           $           $           $
    Sales and royalties            5,165       5,427      10,881      10,398
    License fees and other           419       2,952       1,125       4,092
                                   5,584       8,379      12,006      14,490
    Operating expenses
    Cost of sales, excluding
     depreciation and
     amortization                  4,415       4,545       9,032       8,239
    Research and development
     costs, net of tax credits
     and grants                    5,029      12,076      10,730      23,513
    Selling, general and
     administrative expenses       3,129       3,102       5,921       6,656
    Depreciation and amortization
      Property, plant and
       equipment                     242         331         505         642
      Intangible assets              358         563         747       1,120
                                  13,173      20,617      26,935      40,170
    Loss from operations          (7,589)    (12,238)    (14,929)    (25,680)
    Other income (expenses)
    Interest income                   31         118          89         272
    Foreign exchange gain
     (loss)                        3,108        (960)      4,510         (60)
                                   3,139        (842)      4,599         212
    Net loss for the period       (4,450)    (13,080)    (10,330)    (25,468)

    Net loss per share
    Basic and diluted              (0.06)      (0.24)      (0.15)      (0.48)
    Weighted average number
     of shares
    Basic and diluted         72,918,880  53,655,087  68,031,569  53,422,571

    Interim Consolidated Balance Sheet Information
    (in thousands)
                                                         As at         As at
                                                       June 30,  December 31,
                                                          2010          2009
                                                             $             $

    Cash and cash equivalents                           45,311        38,100
    Accounts receivable and other current assets         9,325        10,913
    Restricted cash                                        755           878
    Property, plant and equipment                        3,301         4,358
    Other long-term assets                              26,824        32,013
    Total assets                                        85,516        86,262

    Accounts payable and other current liabilities      14,784        19,211
    Current portion of long-term payable                    56            57
    Long-term payable                                      113           143
    Non-financial long-term liabilities*              48,054        57,625
    Total liabilities                                   63,007        77,036
    Shareholders' equity                                22,509         9,226
    Total liabilities and shareholders' equity          85,516        86,262

    * Comprised mainly of deferred revenues and employee future benefits.