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AEterna Zentaris Inc (2)
Symbol C : AEZ
Shares Issued 25,329,288
Close 2013-03-20 C$ 1.92
Recent Sedar Documents

AEterna loses $20.41-million (U.S.) in 2012

2013-03-21 16:27 ET - News Release

Ms. Ginette Vallieres reports

AETERNA ZENTARIS REPORTS FOURTH QUARTER AND FULL-YEAR 2012 FINANCIAL AND OPERATING RESULTS

AEterna Zentaris Inc. has released its financial and operating results as at and for the fourth quarter and the year ended Dec. 31, 2012. All amounts are in United States dollars, unless otherwise indicated.

Key developments in 2012

AEZS-108 (doxorubicin peptide conjugate):

  • Special protocol assessment (SPA) granted by the U.S. Food and Drug Administration (FDA) for the initiation of a phase 3 study in advanced recurrent endometrial cancer. This is an open-label, randomized, multicentre trial that will be conducted in North America and Europe, comparing AEZS-108 with doxorubicin as second-line therapy for locally advanced, recurrent or metastatic endometrial cancer. The trial will involve approximately 500 patients and the primary efficacy end point is improvement in median overall survival.
  • Initiation of the phase 2 portion of the phase 1/2 trial in castration- and taxane-resistant prostate cancer (CRPC) supported by a three-year $1.6-million grant from the National Institutes of Health (NIH) to an investigator to support this study. Results for the phase 1 portion demonstrated that AEZS-108 was well tolerated and early evidence of antitumour activity was observed in men with CRPC.

AEZS-130 (oral ghrelin agonist):

  • Phase 3 trial results for AEZS-130 as a diagnostic test for adult growth hormone deficiency (AGHD) presented at the sixth international congress of the Growth Hormone Research and Insulin-like Growth Factor Society in Munich, Germany. The data expanded on the previously disclosed data in June, 2012, at the 94th ENDO annual meeting and Expo. Both sets of data confirm AEZS-130's potential of possibly becoming the first approved oral diagnostic test for AGHD.
  • Subsequent to year-end, new drug application (NDA) as a diagnostic test for AGHD remains in preparation.

Perifosine (oral AKT inhibitor):

  • Phase 3 trial results for perifosine and capecitabine (Xeloda) showed no benefit in overall survival and in progression-free survival in the refractory colorectal cancer (CRC) setting.
  • Subsequent to year-end, the company determined to discontinue the phase 3 trial with perifosine in multiple myeloma further to the Data Safety Monitoring Board's (DSMB) recommendation to do so, following its preplanned safety and efficacy first interim analyses. The DSMB reported that it was unlikely the study would achieve a significant difference in its primary end point, progression-free survival. No safety concerns were raised.

Corporate developments

At-the-market issuance program:

  • During 2012, the company issued a total of 1.2 million common shares (retroactively adjusted to reflect the share consolidation described below) under the January, 2012, at-the-market (ATM) program for total gross proceeds of $8.8-million.

Share consolidation and Nasdaq minimum bid price compliance:

  • The company consolidated its issued and outstanding common shares on a 6-to-1 basis, effective as of Oct. 2, 2012, in order to regain compliance with the Nasdaq minimum bid price requirement. AEterna's common shares began trading on a consolidated basis on Oct. 5, 2012, and the company regained Nasdaq compliance on Oct. 19, 2012.

Public offering:

  • On Oct. 17, 2012, the company completed a public offering of 6.6 million units at a purchase price of $2.50 per unit, generating net proceeds of $15.1-million.

Cash and cash equivalents:

  • Totalled $39.5-million as at Dec. 31, 2012, compared with $46.9-million as at Dec. 31, 2011.

Juergen Engel, PhD, AEterna president and chief executive officer, commented: "Twenty twelve was a challenging year. We had to face disappointing phase 3 results for perifosine in colorectal cancer, and more recently, in multiple myeloma. Despite these obstacles, we believe we demonstrated our ability to take on these challenges as we analyzed the situation, made the necessary strategic adjustments and implemented cost-cutting measures needed to move forward. We now look to 2013 with great anticipation, as we focus on reaching the next milestones for our major drug development programs: our phase 3 trial in endometrial cancer under an SPA, as well as phase 2 trials in triple-negative breast cancer, bladder and prostate cancer with AEZS-108, and the NDA filing for AEZS-130 as an oral diagnostic test for AGHD."

Dennis Turpin, CPA, CA, senior vice-president and chief financial officer at AEterna, stated, "Based on our current expectations, with $39.5-million in cash and cash equivalent as at Dec. 31, 2012, we believe we have sufficient capital resources to fund our planned operations into at least the first half of 2014."

Consolidated results as at and for the fourth quarter ended Dec. 31, 2012

Revenues were $9.5-million for the three-month period ended Dec. 31, 2012, compared with $12.6-million for the same period in 2011. The decrease is mainly due to the recording of a $2.6-million milestone payment from Yakult with respect to the initiation of a phase 1 trial with perifosine in CRC in Japan during the last quarter of 2011.

Research and development costs, net of refundable tax credits and grants, were $5.5-million for the three-month period ended Dec. 31, 2012, compared with $7.8-million for the same period in 2011. The decrease is attributable to lower employee compensation and benefit costs, as no annual cash bonuses were recorded during the fourth quarter of 2012, as well as to continued cost-saving measures resulting in a lower number of employees. The decrease is also related to comparative lower third party costs associated with the development of PI3K/ERK inhibitors and other products during the fourth quarter of 2012, and the weakening of the euro against the U.S. dollar.

Selling, general and administrative expenses were $3.5-million for the three-month period ended Dec. 31, 2012, compared with $5.4-million for the same period in 2011. The comparative decrease is mainly related to 2011 events. During the three-month period ended Dec. 31, 2011, the company recognized an impairment loss on property, plant and equipment ($300,000), an increase in onerous lease provision ($200,000) and marketing expenses incurred in Europe ($500,000). In addition, the quarter-to-quarter decrease is attributable to the employee-benefits-expense decrease ($400,000) and the related foreign-exchange-loss decrease ($500,000), partly offset by transaction costs related to share purchase warrants ($400,000).

Net loss for the three-month period ended Dec. 31, 2012, was $6.9-million or 29 cents per basic and diluted share, compared with $7.5-million or 44 cents per basic and diluted share for the same period in 2011. The decrease in net loss is largely due to lower net research and development costs, selling, general and administrative expenses, and income tax expense, as well as to higher margin contributions from Cetrotide, partly offset by the significant decrease in licence fee revenues and in net finance income.

Consolidated results for the year ended Dec. 31, 2012

Revenues were $33.7-million for the year ended Dec. 31, 2012, compared with $36.1-million for the same period in 2011. The decrease is mainly due to the recording of a $2.6-million milestone payment from Yakult with respect to the initiation of a phase 1 trial with perifosine in CRC in Japan during the last quarter of 2011.

Research and development costs, net of refundable tax credits and grants, were $20.6-million for the year ended Dec. 31, 2012, compared with $24.5-million for the same period in 2011. The decrease is attributable to lower employee compensation and benefit costs, as no annual cash bonuses were recorded during the fourth quarter of 2012, as well as to continued cost-saving measures resulting in a lower number of employees. The decrease is also related to comparative lower third party costs associated with the development of most of the company's products except for AEZS-108 and perifosine, and the weakening of the euro against the U.S. dollar.

Selling, general and administrative expenses were $13.2-million for the year ended Dec. 31, 2012, compared with $16.2-million for the same period in 2011. The comparative decrease is mainly related to 2011 events. During the year ended Dec. 31, 2011, the company recognized an impairment loss on its Cetrotide asset ($1.1-million), an impairment loss on property, plant and equipment ($300,000), an increase in onerous lease provision ($200,000) and marketing expenses incurred in Europe ($900,000). In addition, the year-over-year decrease in selling, general and administrative expenses is attributable to the decreases in employee-benefit expenses ($800,000) and royalty expenses ($200,000), as well as the weakening of the euro against the U.S. dollar, partly offset by transaction costs related to share purchase warrants ($400,000), share-based compensation costs related to collaborators ($300,000) and an increase in legal fees ($300,000).

Net loss for the year ended Dec. 31, 2012, was $20.4-million, or $1.03 per basic and diluted share, compared with $27.1 million, or $1.72 per basic and diluted share, for the same period in 2011. The decrease is largely due to lower net research and development costs, selling, general and administrative expenses, and income tax expense, as well as to higher margin contributions from sales and higher net finance income, partly offset by the significant decrease in licence fee revenues.

Adoption of advance notice bylaw

The company also announces that its board of directors has approved an amendment to its bylaws to add an advance notice requirement, which requires advance notice to be given to the company in circumstances where nominations of persons for election as a director of the company are made by shareholders other than pursuant to: (i) a requisition of a meeting made pursuant to the provisions of the Canada Business Corporations Act (CBCA); or (ii) a shareholder proposal made pursuant to the provisions of the CBCA. Among other things, the bylaw amendment fixes a deadline by which shareholders must submit a notice of director nominations to the company prior to any annual or special meeting of shareholders where directors are to be elected and sets forth the information that a shareholder must include in the notice for it to be valid. In the case of an annual meeting of shareholders, notice to the company must be given not less than 30 days and not more than 65 days prior to the date of the annual meeting, however, in the event the meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be given not later than the close of business on the 10th day following such public announcement. The bylaw amendment is effective immediately and will be submitted to shareholders for confirmation and ratification at the company's coming annual meeting of shareholders to be held on May 8, 2013.

Conference call

Management will be hosting a conference call for the investment community beginning at 8:30 a.m. (Eastern Time) tomorrow, Friday, March 22, 2013, to discuss the 2012 fourth quarter and full-year results. Individuals interested in participating in the live conference call by telephone may dial, in Canada, 514-807-9895 or 647-427-7450 or, outside Canada, 888-231-8191. They may also listen through the Internet at the company's website in the newsroom section. A replay will be available on the company's website for 30 days following the live event.

For reference, the management's discussion and analysis for the fiscal year 2012 with the associated audited consolidated financial statements can be found at the company's in the investors section.

                       CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INFORMATION
                                       (in thousands of dollars)

                                              Three-month periods ended Dec. 31,            Years ended Dec. 31,
                                                     2012                   2011      2012       2011       2010

Revenues
Sales and royalties                              $  9,165               $  9,317 $  31,538  $  31,306  $  24,857
Licence fees and other                                380                  3,310     2,127      4,747      2,846
                                                    9,545                 12,627    33,665     36,053     27,703
Operating expenses
Cost of sales                                       7,489                  8,114    26,820     27,560     18,700
Research and development costs,
net of refundable tax credits
and grants                                          5,523                  7,793    20,604     24,517     21,257

Selling, general and administrative
expenses                                            3,469                  5,408    13,245     16,170     12,552
                                                   16,481                 21,315    60,669     68,247     52,509
(Loss) from operations                            (6,936)                (8,688)  (27,004)   (32,194)   (24,806)
Finance income                                        689                  1,434     6,974      6,231      1,792
Finance costs                                       (700)                    (2)     (382)          -    (5,437)
Net finance (costs) income                           (11)                  1,432     6,592      6,231    (3,645)
(Loss) before income taxes                        (6,947)                (7,256)  (20,412)   (25,963)   (28,451)
Income tax expense                                      -                  (263)         -    (1,104)          -
Net (loss)                                        (6,947)                (7,519)  (20,412)   (27,067)   (28,451)
Other comprehensive (loss)
Items that may be reclassified subsequently
to profit or (loss)
Foreign currency translation adjustments            (204)                    169     (504)      (789)      1,001
Items that will not be reclassified to
profit or (loss)
Actuarial (loss) on defined benefit plans         (3,705)                (1,335)   (3,705)    (1,335)        191

We seek Safe Harbor.

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