Strong fundamentals; dilution from Series B Warrants substantially ended

All amounts are in US Dollars

Third quarter key developments

• Saizen^® promotional activities show early promise
• EstroGel^® year-over-year new-prescription growth continues ahead of the market in the Company’s territories
• Zoptrex (zoptarelin doxorubicin) receives DSMB recommendation to continue ZoptEC Phase 3 clinical program to completion following review of the final interim efficacy and safety data (after quarter end)
• Zoptrex meets Phase 2 Primary Endpoint in Men with Heavily Pretreated Castration- and Taxane-Resistant Prostate Cancer
• Optimized Erk-Inhibitor Compound Selected for Further Development
• Company announces restructuring of Financial Team and closing of Quebec City office (after quarter end)
• Series B Share Purchase Warrants substantially eliminated (after quarter end)

Quebec City, Nov. 5, 2015 /CNW Telbec/ - Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the “Company”), a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in oncology, endocrinology and women’s health, today reported financial and operating results as at and for the third quarter ended September 30, 2015.

Commenting on third quarter results and the Company’s prospects, David A. Dodd, Chairman, President and Chief Executive Officer of the Company, stated, “Despite our continued progress in transforming the Company, the price of our common shares remained under intense pressure during the third quarter as a result of the exercise of Series B Common Share Purchase Warrants (“Series B Warrants”). At the beginning of the quarter, 26,812,308 Series B Warrants were outstanding. We finished the quarter with 6,880,170. As a result of the agreements we reached with the major holders of the Series B Warrants on November 1, only approximately 0.8 million Series B Warrants will remain outstanding, representing approximately 2.7% of the number originally issued. While the dilution caused by the Series B Warrants is substantially ended, we find it necessary to ask our fellow shareholders to approve another share consolidation. We believe that a share consolidation will permit our common shares to remain listed on The Nasdaq Capital Market, which will permit us to raise capital again on reasonable terms, further supporting our focus on developing a profitable, growth-oriented pharmaceutical business.”

Commenting on the Company’s lead oncology compound, Mr. Dodd stated, “Our confidence in the commercial potential of Zoptrex, which is the brand name we selected for zoptarelin doxorubicin, was enhanced by the announcement during the third quarter of the results of an investigator sponsored Phase 2 clinical study of Zoptrex in men with in castration- and taxane-resistant prostate cancer. Zoptrex achieved its primary endpoint and demonstrated good tolerability during this early-stage study. The primary endpoint was Clinical Benefit, defined as remaining progression-free by RECIST and Prostate Specific Antigen after treatment for 12+ weeks. Shortly after quarter end, we received very encouraging news regarding Zoptrex when, following a comprehensive review of the final interim efficacy and safety data, the DSMB recommended that we continue the ZoptEC Phase 3 clinical study to its conclusion. We look forward to the successful completion of the clinical development of Zoptrex^TM for our initial indication over the next year.”

Continuing with his commentary, Mr. Dodd stated, “During the third quarter, we made progress promoting Saizen^®, a leading product in the $1.6 billion US market for the treatment of growth hormone deficiency in children and adults. Our recently commenced promotional efforts for Saizen^® show promise and support our belief that detailing this product will contribute to our commercial success. In addition, year-over-year new prescription growth for EstroGel^® in our territories increased significantly, compared to its market which is currently flat or declining. Our commercial operation, while not yet a meaningful contributor to our financial results, is an important investment we are making in the transformation of the Company. This demonstrated, effective commercial operation will position us to build our portfolio by in-licensing products. We intend to continue with this investment in parallel with our efforts to successfully in-license products.”

Concluding, Mr. Dodd addressed the Company’s earlier stage development efforts as follows: “We also made significant progress with respect to our pipeline of internally developed products, selecting an optimized Erk-inhibitor compound for further development. We are looking for other parties to assist us with the further development of the compound because we believe it could represent an important new category of cancer therapy.”

Third Quarter Financial Highlights

Research and development (“R&D”) costs were $4.1 million for the three-month period ended September 30, 2015, as compared to $6.1 million for the same period in 2014. A substantial portion of this decrease is mainly due to the realization of cost savings in connection with the Company’s global resource optimization program, as well as to the weakening, in 2015, of the euro against the US dollar. The decrease was partly offset by higher costs associated with the Company’s ZoptEC and Macrilen Phase 3 trials.

Selling expenses were $1.7 million for the three-month period ended September 30, 2015, as compared to $0.9 million for the same period in 2014. This increase is mainly attributable to the implementation of our promotional activities associated with EstroGel^®, which commenced in late 2014. We also expanded the size of our contracted sales force from 19 to 23 sales representatives during the quarter in order to support our promotional efforts associated with Saizen^®.

General and administrative expenses were $1.9 million for the three-month period ended September 30, 2015, as compared to $2.8 million for the same period in 2014. General and administrative expenses were lower in the current-year quarter mainly due to the realization of costs savings in connection with the Company’s global resource optimization program.

Net finance costs were $7.9 million for the three-month period ended September 30, 2015, as compared to net finance costs of $1.8 million for the same period in 2014. The increase in net finance costs of $6.1 million is mainly related to the change in the estimated fair value of the Company’s warrant liability.

Net loss for the three-month period ended September 30, 2015 was $15.3 million or $0.07 per basic and diluted share, as compared to $11.3 million or $0.20 per basic and diluted share for the same period in 2014. This increase is predominantly due to higher comparative net finance costs and to higher comparative selling expenses, partially offset by lower comparative R&D costs.

At the opening of the third quarter, the Company had 139.9 million issued and outstanding common shares. On September 30 and November 4, 2015, the Company had 492.5 million and 632.7 million issued and outstanding common shares, respectively.

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