AEterna Zentaris Reports 2006 First Quarter Financial And Operating Results

QUEBEC CITY, Canada, May 3 /PRNewswire-FirstCall/ - AEterna Zentaris Inc. today reported financial and operating results for the first quarter ended March 31, 2006. Consolidated revenues for the first quarter 2006 were $84.5 million, an increase of 36.5% compared to total revenues of $61.9 million for the same period in 2005. Consolidated R&D expenses net of tax credits amounted to $6.9 million for the first quarter of 2006 compared to $6.4 million for the same period in 2005. The Company's consolidated net loss was $2.6 million for the first quarter of 2006, or $0.05 per share, compared to net earnings of $0.1 million for the same period in 2005. This $2.7 million variation is mainly attributable to a decrease in license revenues in the Company's Biopharmaceutical segment, increased R&D investments and interest expense, partly offset by its 48.29%-owned subsidiary Atrium Biotechnologies' net earnings. The consolidated cash and short-term investments were $46.9 million on March 31, 2006.

The Company highlighted first quarter 2006 advancements with respect to its product development pipeline, Corporate Affairs and recent events:

Product Development Pipeline Advancements - Initiation of Phase 2, Multi-Center study of perifosine for the treatment of refractory multiple myeloma; - Initiation of Phase 2, Multi-Center study of perifosine for the treatment of refractory leukemia; - Disclosure of preclinical results on various drug candidates at the American Association for Cancer Research (AACR) Meeting in Washington, including tubulin inhibitors, signal transduction inhibitors and cytotoxic conjugates; and - Regained the exclusive worldwide (ex-Japan) rights for cetrorelix in benign prostate hyperplasia. Corporate Affairs - The Solidarity Fund QFL and SGF Sante Inc. converted their term loans into common shares; - Former Abbott Vice President, Gerald J. Martin appointed to AEterna Zentaris Board. Recent Events - Gained market approval for Cetrotide(R) (cetrorelix) in Japan for in vitro fertilization.

Gilles Gagnon, AEterna Zentaris' President and Chief Executive Officer said, "We progressed on multiple fronts throughout the quarter as we strengthened our financial position and continued to advance our development pipeline. The preclinical results on different anti-cancer agents presented at the American Association for Clinical Research (AACR) meeting in Washington, are indicative of the depth of our pipeline and its potential to yield novel products to treat cancer. Furthermore, we were very pleased to have regained the worldwide, ex-Japan rights for cetrorelix in BPH, and are presently in the process of designing a protocol to conduct a late-stage study with cetrorelix in BPH in the United States, upon discussions with the United States Food and Drug Administration. We believe we will initiate our late-stage development program this year, in line with our strategy. Finally, we continue to see progress with our lead signal transduction inhibitor, perifosine as two Phase 2 trials were initiated this quarter with our partner, Keryx, in leukemia and multiple myeloma. We are committed to driving our strategy forward as we aggressively move our promising product candidates through our pipeline."

Dennis Turpin, Vice President and Chief Financial Officer of AEterna Zentaris, commented: "We were very pleased with SGF and FTQ's decision to convert the entirety of their convertible term loans into AEterna Zentaris common shares. This conversion, along with Atrium's continued growth, further strengthened our balance sheet in the first quarter. Furthermore, we will continue to see an increase in our R&D investment in 2006, clearly reflecting our commitment to our focused strategy to advance and expand our clinical- stage pipeline, in particular, the oncology proprietary products while maintaining a solid financial position."

Appointment to Company Management

Mario Paradis, CA, has been promoted from Senior Director, Finance and Corporate Secretary to Vice President, Finance, Administration and Corporate Secretary. Former Senior Manager at PricewaterhouseCoopers, within the Audit and Assurance Group, Mr. Paradis joined AEterna Zentaris in 1999.

"Mario Paradis has been a great asset for our Company over the last seven years," said Gilles Gagnon, President and Chief Executive Officer at AEterna Zentaris. "In addition to his current financial and legal functions, he will be in charge of overall administrative affairs of the Company and its subsidiaries."

Conference Call Information

Management will be hosting a conference call for the investment community beginning at 3:30 p.m. Eastern Time today, Wednesday, May 3, to discuss 2006 first quarter financial and operating results, followed by a question and answer session.

To participate in the live conference call by telephone, please dial 514-807-8791, 416-644-3424 from Canada or 800-796-7558 from outside Canada. Individuals interested in listening to the conference call on the Internet may do so by visiting 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 focused on oncology and endocrine therapy with proven expertise in drug discovery, development and commercialization.

AEterna Zentaris also owns 48.29% of the equity of Atrium Biotechnologies Inc. and 64.7% of its voting rights. Atrium is 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

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 US dollars, except share and per share data) Three-month periods CONSOLIDATED RESULTS ended March 31, Unaudited 2006 2005 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Revenues 84,477 61,865 ------------------------------------------------------------------------- Operating expenses Cost of sales 57,196 37,163 Selling, general and administrative 13,567 9,935 R&D costs, net of tax credits and grants 6,901 6,446 Depreciation and amortization 2,381 1,818 ------------------------------------------------------------------------- 80,045 55,362 ------------------------------------------------------------------------- Earnings from operations 4,432 6,503 Interest income 420 306 Interest expense (3,223) (2,158) Foreign exchange gain 212 208 ------------------------------------------------------------------------- Earnings before the following items 1,841 4,859 Current income taxes (1,996) (2,121) Future income taxes 1,189 (1,097) Loss on dilution of investments (54) - Non-controlling interest (3,560) (1,523) ------------------------------------------------------------------------- Net earnings (loss) for the period (2,580) 118 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings (loss) per share Basic (0.05) - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Diluted (0.05) - ------------------------------------------------------------------------- ------------------------------------------------------------------------- Weighted average number of shares Basic 50,327,227 45,799,897 Diluted 50,864,878 46,238,901 Issued and outstanding shares 53,133,681 46,139,814 Biopharmaceutical Segment - Selected Financial Information (In thousands of US dollars) Unaudited Three-month periods ended March 31, 2006 2005 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Revenues Sales and royalties 6,575 6,898 License fees 2,173 6,849 ------------------------------------------------------------------------- 8,748 13,747 ------------------------------------------------------------------------- ------------------------------------------------------------------------- R&D expense, net of tax credits and grants 6,804 6,350 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings (loss) from operations (6,105) 135 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash flows generated (used) by operating activities (3,524) 1,322 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET As at As at March 31, December 31, Unaudited 2006 2005 ------------------------------------------------------------------------- ------------------------------------------------------------------------- $ $ Cash and short-term investments 46,917 52,705 Other current assets 112,177 108,998 --------------------------- 159,094 161,703 Long term assets 264,409 263,835 --------------------------- Total assets 423,503 425,538 --------------------------- --------------------------- Current liabilities 57,888 62,201 Long-term debt 105,954 135,743 Other long-term liabilities 52,773 53,532 Non-controlling interest 68,699 64,531 --------------------------- 285,314 316,007 Shareholders' equity 138,189 109,531 --------------------------- Total liabilities and shareholders' equity 423,503 425,538 --------------------------- --------------------------- >>


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