Mr. Philip Theodore reports
AETERNA ZENTARIS REPORTS THIRD QUARTER 2016 FINANCIAL AND OPERATING RESULTS
Aeterna Zentaris Inc. has released financial and operating results for the third quarter ended
Sept. 30, 2016.
Key developments
- Product development programs remain on track toward U.S. Food and Drug Administration (FDA) submissions in 2017:
- Zoptrex (zoptarelin doxorubicin) pivotal phase 3 clinical program remains on track for release of top-line results in the first quarter of 2017 and submission of new drug application to the FDA in 2017;
- Macrilen (macimorelin) patient recruitment completed for confirmatory phase 3 trial after quarter-end; on track for release of top-line results in early 2017 and submission of new drug application to the FDA in the first half of 2017;
- Zoptrex out-licensing activity successfully continues:
- Licence and supply agreements were concluded with Specialised Therapeutics Asia Pty. Ltd. for Australia and New Zealand subsequent to quarter-end on Oct. 12, 2016, following the out-licensing arrangements concluded during July, 2016;
- Financial condition and capital structure improved:
- $21.1-million unrestricted cash and cash equivalents at quarter-end; no third party debt;
-
Approximately $9.8-million of combined gross proceeds raised from a successful registered direct offering of units concluded on Nov. 1 and sales of common shares pursuant to the company's ATM (at-the-market) program during and subsequent to the third quarter;
-
Approximately 12.6 million common shares and prefinanced warrants exercisable for common shares outstanding as of Nov. 8, 2016;
-
Remaining Series B share purchase warrants expired without being exercised on Sept. 12, 2016.
Commenting on recent key developments, David A. Dodd, president and
chief executive officer of the company, stated: "On Sept. 30, 2016,
we had unrestricted cash and cash equivalents of approximately $21.1-million. After the end of the third quarter, we concluded a financing transaction that
secured our financial condition on the eve of our completion of two
pivotal phase 3 trials. We raised $7.56-million of gross proceeds from
the sale of common shares, prefunded warrants and warrants in a
registered direct offering on Nov. 1, 2016. Also, between Sept. 14, 2016, and Oct. 14, 2016, we raised approximately $2.3-million of
gross proceeds from the sale of 580,912 common shares pursuant to our
ATM program. Since Oct. 14, 2016, our ATM program has not been
utilized. Therefore, we believe we have the funds necessary to complete
our two pivotal clinical trials, to report top-line results on both and
to file a new drug application for Macrilen in the first half of 2017,
if the results of the trial warrant doing so. While we will need to
raise additional funds before we are able to bring a product to market,
we expect that reporting favourable top-line results from one or both of
our clinical trials will permit us to do so on favourable terms."
Regarding developments with respect to Zoptrex (zoptarelin
doxorubicin), the company's lead oncology compound, Mr. Dodd stated:
"After quarter-end, we concluded the fourth out-licence of Zoptrex, our
investigational compound that links a synthetic peptide carrier to
doxorubicin as a new chemical entity (NCE). Specialised Therapeutics
Asia Pty. Ltd., a leading specialty pharmaceutical company based in
Australia, licensed the product for commercialization in Australia and
New Zealand. We received an upfront payment for the rights to Zoptrex,
and we will receive additional milestone payments and royalties if
commercialization of the potential product proceeds. Furthermore, we
obtained further validation of the market's interest in Zoptrex. We
expect to release top-line results for our pivotal phase 3 trial of
Zoptrex in the first quarter of 2017 and, if the results of the trial warrant doing so,
to file a new drug application for Zoptrex in 2017."
Mr. Dodd continued his commentary with an update on the development of
Macrilen (macimorelin): "We are pleased to announce that we recently
completed recruitment in our confirmatory phase 3 study of Macrilen for
the evaluation of adult growth hormone deficiency. As a result, we are
very confident that the study of Macrilen will be concluded and that we
will report top-line results in early 2017. If our expectations for
completion of the confirmatory phase 3 study are realized and if the
top-line results indicate that the product attained the primary end point
of the phase 3 study, we expect to file an NDA for Macrilen in the
first half of 2017. Since the regulatory review period for the Macrilen
confirmatory study is six months, we could begin commercializing the
product late in 2017."
Third quarter 2016 financial highlights
Research and development (R&D) costs were $4.5-million and $11.9-million for the three
and nine months ended Sept. 30, 2016, respectively, compared with $4.1-million and $13-million for the same periods in 2015. The increase in
R&D costs for the three months ended Sept. 30, 2016, as compared with the same periods in 2015, is mainly attributable to higher comparative
third party costs. During 2015, the company initiated the new confirmatory phase
3 clinical trial of Macrilen. The first patient recruitment was
achieved in the fourth quarter of 2015 and the company completed the patient
recruitment in the fourth quarter of 2016. The decrease in R&D costs for
the nine months ended Sept. 30, 2016, as compared with the same
periods in 2015, is mainly attributable to lower comparative third party
costs. Third party costs attributable to Zoptrex decreased considerably
during the nine months ended Sept. 30, 2016, as compared with the same
period in 2015, mainly due to the fact that dosing of patients in the
ZoptEC trial was completed in February, 2016. This is consistent with the company's expectations as it is approaching the end of the clinical trials. The
overall decrease for the nine-month period is also explained by lower
employee compensation and benefits costs, as well as lower other costs. A
substantial portion of this decrease is due to the realization of cost
savings in connection with the company's continuing efforts to streamline its R&D
activities and to increase its commercial operations and flexibility by
reducing the company's R&D staff, which was started in 2014.
General and administrative (G&A) expenses were $1.6-million
and $5.4-million for the three and nine months ended Sept. 30, 2016,
respectively, as compared with $1.9-million and $7.4-million for the same
periods in 2015. The decrease in the company's G&A costs for the three months
ended Sept. 30, 2016, as compared with the same period in 2015, is
mainly due to the realization of cost savings in connection with the company's corporate restructuring, which was announced in the fourth quarter of
2015. The comparative decrease for the nine-month period is also
partially explained by the realization of cost savings in connection
with the company's corporate restructuring, although, mainly attributable to the
recording, in the prior-year period, of certain transaction costs
allocated to warrants in connection with the completion of an offering
in March, 2015.
Selling expenses were $1.8-million and $5.2-million for the three
and nine months ended Sept. 30, 2016, respectively, as compared with $1.7-million and $5.1-million for the same periods in 2015. The selling
expenses for the three and nine months ended Sept. 30, 2016, and
2015 represent mainly the costs of the company's contracted sales force related to
the co-promotion activities, as well as the company's internal sales management
team.
Net loss for the three and nine months ended Sept. 30, 2016,
was $6.1-million and $16.7-million, or 61 cents and $1.68 per basic and
diluted share, as compared with a net loss of $15.3-million and $40.1-million, or $6.66 and $29.12 per basic and diluted share, for the same
periods in 2015. The decrease in net loss for the three months ended
Sept. 30, 2016, as compared with the same period in 2015, is due
largely to higher comparative net finance income. The decrease in net
loss for the nine months ended Sept. 30, 2016, as compared with the
same period in 2015, is due largely to lower operating expenses and
higher comparative net finance income. The movements in net finance
income (costs) primarily relate to the change in fair value of warrant
liability.
Cash and cash equivalents were approximately $21.1-million as at
Sept. 30, 2016, compared with approximately $26.2-million as at June
30, 2016.
Conference call and webcast
The company will host a conference call and live webcast to discuss
these results on Wednesday, Nov. 9, 2016, at 8:30 a.m. Eastern
Time. Participants may access the live webcast via the company's website
or by telephone using the dial-in number 201-689-8029 (confirmation
No. 13646681). A replay of the webcast will also be available on the
company's website for a period of 30 days.
CONDENSED INTERIM CONSOLIDATED STATEMENTS
OF COMPREHENSIVE (LOSS) INFORMATION
(in thousands of dollars, except per-share data)
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2016 2015 2016 2015
Revenues
Sales commission and other $ 105 $ 111 $ 319 $ 256
Licence fees 164 62 288 187
-------- -------- -------- --------
269 173 607 443
-------- -------- -------- --------
Operating expenses
Research and development costs 4,512 4,050 11,876 12,991
General and administrative expenses 1,631 1,910 5,390 7,355
Selling expenses 1,829 1,714 5,219 5,123
-------- -------- -------- --------
7,972 7,674 22,485 25,469
-------- -------- -------- --------
(Loss) from operations (7,703) (7,501) (21,878) (25,026)
-------- -------- -------- --------
(Loss) gain due to changes in
foreign currency exchange rates (64) (367) 326 (1,452)
Change in fair value of warrant liability 1,687 (7,573) 4,682 (13,986)
Other finance income 25 40 131 279
-------- -------- -------- --------
Net finance income (costs) 1,648 (7,900) 5,139 (15,159)
-------- -------- -------- --------
Net (loss) from continuing operations (6,055) (15,401) (16,739) (40,185)
Net income from discontinued operations - 111 - 60
-------- -------- -------- --------
Net (loss) (6,055) (15,290) (16,739) (40,125)
-------- -------- -------- --------
Other comprehensive (loss)
Items that may be reclassified
subsequently to profit or (loss)
Foreign currency translation adjustments (62) (21) (301) 1,260
Items that will not be
reclassified to profit or (loss)
Actuarial (loss) gain on
defined benefit plans (400) - (2,622) 960
-------- -------- -------- --------
Comprehensive (loss) (6,517) (15,311) (19,662) (37,905)
-------- -------- -------- --------
Net (loss) per share (basic and diluted)
from continuing operations (0.61) (6.71) (1.68) (29.16)
Net income per share (basic and diluted)
from discontinued operations - 0.05 - 0.04
Net (loss) per share (basic and diluted) (0.61) (6.66) (1.68) (29.12)We seek Safe Harbor.
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