AEterna Zentaris Reports 2005 Third Quarter Financial And Operating Results

QUEBEC CITY, Nov. 14 /PRNewswire-FirstCall/ - AEterna Zentaris Inc. today reported financial and operating results for the third quarter ended September 30, 2005. Consolidated revenues for the third quarter 2005 were $63.4 million compared to $55.4 million for the same period in 2004, an increase of 14.4%. Consolidated R&D expenses net of tax credits amounted to $7.4 million in the third quarter of 2005 compared to $6.6 million in the third quarter of 2004. Consolidated earnings from operations for the third quarter 2005 were $1.1 million, compared to $5.5 million for the third quarter 2004. The Company's consolidated net loss was $4.8 million, or $0.10 per basic and diluted share for the third quarter of 2005 compared to a consolidated net loss of $2 million, or $0.04 per basic and diluted share for the comparable period in 2004.

The $8 million increase in consolidated revenues during the third quarter 2005 as compared to the same period in 2004 is attributable to additional revenues from the acquisitions, in January 2005, of Echelon Biosciences in our biopharmaceutical segment and of MultiChem by the Company's subsidiary, Atrium Biotechnologies Inc. This increase is partly offset by the adverse effect of the strengthening Canadian dollar on the Company's sales denominated in foreign currencies and by $9.4 million non-periodic payments received in 2004 in the biopharmaceutical segment.

As of September 30, 2005, the Company had consolidated cash and short- term investments of $55.7 million, including $40.9 million dedicated to the biopharmaceutical segment. The Company generated consolidated positive cash flow from operating activities of $0.7 million in the third quarter 2005. The burn rate for the biopharmaceutical segment in the third quarter 2005 was $4.8 million as expected.

Nine-Month Consolidated Financial Results

Consolidated revenues for the first nine months of 2005 increased 19.1% to $214.1 million, compared to $179.7 million for the same period in 2004. The Company reported year-to-date 2005 consolidated earnings from operations of $13.4 million, compared to $16.3 million for the same period a year earlier. Consolidated net earnings for the first nine months of 2005 were $11.8 million, or $0.26 per basic share and $0.25 per diluted share compared to a consolidated net loss of $3.2 million, or $0.07 per basic and diluted share for the first nine months of 2004.

Dennis Turpin, Vice President and Chief Financial Officer of AEterna Zentaris, said, "With our strong cash and short-term position in the biopharmaceutical segment of nearly $41 million, as well as our controlled burn rate of nearly $1.5 million per month, we believe we are well-positioned to continue to aggressively advance the development of our core innovative and high potential pharmaceutical products."

During the third quarter 2005, AEterna Zentaris continued to advance its product pipeline. The Company initiated its own European multi-center Phase II trial of perifosine, a novel, first-in-class, oral signal transduction inhibitor, in combination with radiotherapy, in non-small cell lung cancer (NSCLC). This randomized, double-blind, placebo-controlled trial will assess the efficacy and safety of a 150 mg daily dose of perifosine when combined with radiotherapy in 160 patients with inoperable Stage III NSCLC. The trial is being conducted in collaboration with the Netherlands Cancer Institute. The primary endpoint will be the extent and duration of local control, i.e., the absence of tumor recurrence or progression in the area that has been irradiated during a 12-month follow-up period.

The Company also announced that it had completed enrollment for a Phase II trial with ozarelix (D-63153) in hormone-dependent prostate cancer, ahead of the projected schedule. This multi-center trial is designed to evaluate the effects of ozarelix on hormonal levels, in particular testosterone, as well as objective anti-tumor effects. This open-label trial involving 48 patients is being conducted in Europe in collaboration with its partner Spectrum Pharmaceuticals Inc. .

"During the last quarter, we made significant progress in advancing our exciting products through our pipeline," said Gilles Gagnon, AEterna Zentaris President and Chief Executive Officer. "The recent initiation of our Phase II trial in non-small cell lung cancer with our lead oncology compound, perifosine, was our seventh clinical development project initiated so far this year. Additionally, we were very pleased with having completed patient enrollment for our Phase II trial in prostate cancer with ozarelix, ahead of schedule. These significant achievements mark critical steps as we continue to execute our strategy aimed at establishing perifosine as a potential breakthrough cancer drug and reflects our strong commitment in building a world-class oncology franchise. We believe we will continue to deliver results and look forward to reporting on our progress next year," concluded Mr. Gagnon.

Conference Call Information

Management will be hosting a conference call for the investment community beginning at 10:30 a.m. Eastern Time today to discuss 2005 third quarter financial and operating results and 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 on the Internet may do so by visiting 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 growing global biopharmaceutical company engaged in the discovery, development and marketing of therapies for cancer and endocrine disorders.

AEterna Zentaris also owns 50.03% of Atrium Biotechnologies Inc. , a developer, manufacturer and marketer of science-based products for the cosmetics, pharmaceutical, chemical and nutritional industries.

News releases and additional information are available at 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.

Attachment: Financial summary << (in thousands of Canadian dollars, except share and per share data) Quarters ended Nine months ended CONSOLIDATED RESULTS September 30, September 30, Unaudited 2005 2004 2005 2004 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ $ $ Revenues 63,356 55,418 214,098 179,707 ------------------------------------------------------------------------- Operating expenses Cost of sales 40,856 30,806 134,417 102,856 Selling, general and administrative 11,816 10,166 36,463 30,499 R&D costs, net of tax credits and grants 7,384 6,595 22,883 23,279 Depreciation and amortization 2,206 2,306 6,936 6,767 ------------------------------------------------------------------------- 62,262 49,873 200,699 163,401 ------------------------------------------------------------------------- Earnings from operations 1,094 5,545 13,399 16,306 Interest income 406 218 1,311 1,000 Interest expense (2,688) (2,289) (8,651) (6,021) Foreign exchange loss (496) (1,008) (430) (364) ------------------------------------------------------------------------- Earnings (loss) before the following items (1,684) 2,466 5,629 10,921 Current income taxes (260) (2,835) (5,513) (13,743) Future income taxes (908) 145 (2,344) 5,089 Gain (loss) on dilution of investments (51) (535) 20,202 (535) Non-controlling interest (1,850) (1,237) (6,178) (4,948) ------------------------------------------------------------------------- Net earnings (loss) for the period (4,753) (1,996) 11,796 (3,216) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings (loss) per share Basic (0.10) (0.04) 0.26 (0.07) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Diluted (0.10) (0.04) 0.25 (0.07) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares Basic 46,139,814 45,628,742 46,139,814 45,564,092 Diluted 46,397,156 46,019,777 46,459,000 46,119,755 Issued and outstanding shares 46,139,814 45,630,439 CONSOLIDATED BALANCE SHEET As at As at Unaudited September 30,December 31, 2005 2004 ------------------------------------------------------------------------ ------------------------------------------------------------------------ $ $ Cash and short-terms investments 55,680 58,090 Other current assets 88,423 86,644 -------------------------- 144,103 144,734 Long term assets 203,453 204,494 -------------------------- Total assets 347,556 349,228 -------------------------- -------------------------- Current liabilities 87,850 72,265 Deferred revenues 16,359 25,557 Long-term debt 22,018 64,255 Other long-term liabilities 28,942 32,092 Non-controlling interest 65,671 34,767 -------------------------- 220,840 228,936 Shareholders' equity 126,716 120,292 -------------------------- Total liabilities and shareholders' equity 347,556 349,228 -------------------------- -------------------------- >>

AETERNA ZENTARIS INC. (FORMERLY/ANCIENNEMENT - LES LABORATOIRES AETERNA

CONTACT: Media Relations : Paul Burroughs, (418) 652-8525 ext. 406,paul.burroughs@aeternazentaris.com; Investor Relations : Ginette Vallieres,(418) 652-8525 ext. 265, ginette.vallieres@aeternazentaris.com; Europe :Matthias Seeber, +49 69 42602 3425, Matthias.seeber@zentaris.com; Torequest a free copy of this organization's annual report, please go tohttp://www.newswire.ca and click on reports@cnw.