Ms. Carolyn Egbert of Aeterna reports

AETERNA ZENTARIS AND CEAPRO ANNOUNCE MERGER OF EQUALS TO CREATE A DIVERSIFIED BIOPHARMACEUTICAL COMPANY

Aeterna Zentaris Inc. and Ceapro Inc. have entered into a definitive agreement to combine operations in an all-stock merger of equals transaction. The combined company is expected to be listed on the Nasdaq Capital Market and the Toronto Stock Exchange (the TSX), subject to the receipt of all necessary approvals. A new name for the combined company will be announced in the coming weeks and the transaction is expected to close in the first quarter of 2024.

The combination is attractive for shareholders of both companies, as it is expected to create a long-term sustainable business, which is optimally positioned to deliver value as the biopharma sector recovers from its current levels.

Key attributes of the combined company include:

• Recurring revenue to support business expansion. The combined company will benefit from continuing revenue from existing Ceapro products -- which provide near-term revenue owing to the streamlined development and commercialization opportunities in the cosmeceutical and nutraceutical space -- along with licence revenue from the partnering of Aeterna's pharmaceutical products, including Macrilen/Ghryvelin, which have the potential to create long-term value for investors. These revenue streams will be used to support the development of high-potential-return products and represent a more diversified value proposition for investors.
• Diversified commercial and development product pipeline. The combined company will have a stronghold in the active ingredients market and value-driving cosmeceutical products (that is, oat beta glucan and avenanthramides, which are found in leading skin care product brands, including Aveeno, Jergens, Neutrogena, Lubriderm and other leading brand names) and nutraceuticals. It will also benefit from a robust pipeline of innovative products in development.
• Dual-listing expected to improve trading volume and capital market profile. Shareholders of each company will share in future value creation, with existing securityholders of Aeterna and Ceapro to each own 50 per cent of the combined company, respectively (assuming the exercise of all transaction warrants (as defined below)). The anticipated dual Nasdaq and TSX listing is expected to provide additional volume and an improved capital market profile for the combined company.
• Strengthened combined balance sheet. The combined company will be well capitalized to support continuing commercial operations while strategically investing in product research and development to advance differentiated, innovative products.
• Operational synergies and leadership. The combined company will benefit from established pharmaceutical research and development capabilities and infrastructure to support development activities and draw on existing executives to form the new management team.

"Aeterna's board of directors conducted a fulsome review of strategic alternatives to maximize value for shareholders and, following extensive discussions, believes the transaction announced today presents a compelling upside opportunity for investors in both companies," said Carolyn Egbert, chair of Aeterna. "Ceapro has well-established and growing commercial operations, with potential value-creating pipeline opportunities in large and growing cosmetic and consumer health markets. We believe that the new company will have the capital resources to support this ongoing growth, in addition to continuing to maximize the value of Aeterna's existing assets, including Macimorelin."

"We are thrilled with this exciting transaction to merge with Aeterna and combine two complementary companies and teams, in support of our plan to drive significant growth," said Ronnie Miller, chairman of Ceapro. "After careful consideration, we believe this transaction is the best way forward for Ceapro and our valued shareholders."

Gilles Gagnon, chief executive officer of Ceapro, added: "The transaction provides us with the additional capital and internal capabilities to fully support near-term revenue-generating cosmeceutical and nutraceutical product development programs, while achieving Ceapro's previously stated objective of expanding further into the pharmaceutical space, which we will be able to do via the exciting projects Aeterna has been developing, even as we seek to extract additional value from Ceapro's core technologies. This is an exciting day for stakeholders of both companies who share a bright future together."

Board of directors' recommendations

Aeterna's board of directors appointed a strategic committee of independent directors to, among other matters, consider strategic alternatives for Aeterna, including reviewing and considering the transaction, and to provide the Aeterna board with advice and recommendations with respect to the transaction. Based on the unanimous recommendation of the Aeterna strategic committee and after consultation with its outside financial and legal advisers, the Aeterna board, with Mr. Gagnon declaring his conflict of interest as a director and the chief executive officer of Ceapro and therefore abstaining from voting, unanimously approved the transaction. The Aeterna board recommends that Aeterna shareholders vote in favour of the transaction.

Raymond James Ltd. has provided an opinion to the Aeterna board to the effect that, as of the date thereof, and based upon and subject to the assumptions, limitations and qualifications stated therein, the transaction is fair, from a financial point of view, to Aeterna's shareholders.

Ceapro's board of directors appointed a special committee of independent directors to, among other matters, consider strategic alternatives for Ceapro, including reviewing and considering the transaction, and to provide the Ceapro board with advice and recommendations with respect to the transaction. Based on the unanimous recommendation of the Ceapro special committee and after consultation with its outside financial and legal advisers, the Ceapro board, with Mr. Gagnon declaring his conflict of interest as a director of Aeterna and therefore abstaining from voting, unanimously approved the transaction. The Ceapro board recommends that Ceapro shareholders and optionholders vote in favour of the transaction.

Bloom Burton Securities Inc. has provided a fairness opinion to the Ceapro board to the effect that, as of the date thereof, and based upon and subject to the assumptions, limitations and qualifications stated therein, the exchange ratio (as defined below) is fair, from a financial point of view, to the Ceapro shareholders and optionholders.

Transaction details

The transaction is structured as a merger of equals business combination. The terms of the transaction are set out in a definitive arrangement agreement between Aeterna and Ceapro. The transaction will be effected by way of a plan of arrangement in respect of Ceapro under the Canada Business Corporations Act pursuant to which, at closing, each outstanding Ceapro common share will be exchanged for 0.09439 of an Aeterna common share with the result that Ceapro will become a wholly owned subsidiary of Aeterna.

Additionally, as part of the transaction, Aeterna will issue to its shareholders immediately prior to the closing of the transaction 0.47698 of a share purchase warrant for each Aeterna common share held as of such date. Each transaction warrant will have a term of three years and each whole transaction warrant will be exercisable to purchase one common share of Aeterna at a nominal exercise price of one U.S. cent. Holders of Aeterna's currently outstanding warrants will also be issued transaction warrants in accordance with the anti-dilution provisions of such warrants.

The transaction warrants will be issued to current Aeterna shareholders in order to reflect the difference between the market capitalizations of Ceapro and Aeterna as of the date of the arrangement agreement and to compensate Aeterna shareholders for the value of Aeterna's cash position which is not fully reflected in Aeterna's current market capitalization.

The transaction also provides the outstanding options to acquire Ceapro common shares to be replaced by options allowing their holders to acquire common shares of Aeterna on similar terms, as adjusted by the exchange ratio.

Following the closing of the transaction, the former shareholders of Ceapro will own 50 per cent of Aeterna and the pretransaction securityholders of Aeterna will own the remaining 50 per cent, assuming the exercise of all transaction warrants.

The transaction will require the approval of at least 66-2/3 per cent of the votes cast by Ceapro shareholders and 66-2/3 per cent of the votes cast by Ceapro shareholders and Ceapro optionholders, voting together as a single class, at a special meeting of Ceapro's securityholders. The issuance of common shares, transaction warrants and replacement options by Aeterna under the transaction is subject to the approval of a simple majority of the votes cast by Aeterna shareholders at a special meeting of Aeterna shareholders. Moreover, Aeterna shareholders will also be required to approve, by simple majority, the proposed changes to the Aeterna board described below, as well as, by a majority of at least 66-2/3 per cent of the votes cast by Aeterna shareholders, the proposed change of the name of Aeterna and the proposed consolidation of the Aeterna common shares described below.

The transaction is also subject to closing conditions customary for transactions of this nature, including Alberta court approval and applicable stock exchange approvals. The arrangement agreement includes reciprocal non-solicitation provisions and a reciprocal termination fee of $500,000 payable in certain circumstances.

Certain officers and directors of Ceapro have entered into lock-up agreements with Aeterna, agreeing to vote their Ceapro common shares and options in favour of the transaction. Similarly, certain officers and directors of Aeterna have entered into lock-up agreements with Ceapro, agreeing to vote their Aeterna common shares in favour of the transaction.

It is anticipated that both shareholder meetings and the closing of the transaction will take place in the first quarter of 2024, subject to the satisfaction of the conditions of the arrangement agreement.

Following closing of the transaction, it is expected that the shares of the combined company will continue to trade on the TSX and the Nasdaq, subject to approval or acceptance of each such exchange. As a wholly owned subsidiary of Ceapro upon closing of the transaction, Ceapro's common shares will be delisted from the TSX Venture Exchange following closing.

Leadership and governance

Following the closing of the transaction, the board of directors of the combined company will consist of eight directors, comprising four independent directors from Ceapro, three independent directors from Aeterna and Mr. Gagnon, who currently serves on both boards.

Management of the combined operations will include executives from both Ceapro and Aeterna, with Ceapro's current chief executive officer, Mr. Gagnon, and Aeterna's current chief financial officer, Giuliano La Fratta, continuing to carry out their respective responsibilities following the closing of the transaction.

Potential share consolidation

Aeterna's listing on Nasdaq is a critical asset to Aeterna and its shareholders, as it provides access to a broad universe of potential investors, enhanced access to equity capital and trading liquidity. As such, Ceapro and Aeterna wish to ensure that their combined operations can continue to benefit from the Aeterna listing on Nasdaq after the closing of the transaction.

To allow Aeterna to comply with Nasdaq's standards regarding minimum share prices following the closing of the transaction, Aeterna may be required to complete a consolidation (or reverse split) of its common shares as part of the transaction. As a result, at the Aeterna special meeting of shareholders, Aeterna shareholders will be asked to approve a special resolution authorizing the Aeterna board, at its discretion, to consolidate the Aeterna common shares at a ratio within the range of between three and four preconsolidation common shares for every one postconsolidation common share. The consolidation ratio may be adjusted by the parties in order to meet Nasdaq's standards.

The consolidation may also provide the potential benefits of enhancing the marketability of the common shares given that an increase in the price per common share could increase the interest of institutional and other investors with policies that prohibit them from purchasing shares below a minimum price, and reducing volatility as a result of small changes in the share price of the common shares.

Further information

Aeterna and Ceapro will each file a material change report in respect of the transaction in compliance with securities laws, as well as copies of the arrangement agreement and lock-up agreements, which will be available under Aeterna's profile on SEDAR+ and on EDGAR and under Ceapro's profile on SEDAR+.

Full details of the transaction will be included in management information circulars of Aeterna and Ceapro that are expected to be mailed to shareholders of each company on or around Jan. 31, 2024.

Advisers and counsel

Aeterna has engaged Raymond James as its financial adviser, Norton Rose Fulbright as its Canadian and U.S. legal adviser, FGS Longview as its communications adviser, and Kingsdale Advisors as its proxy solicitor. Ceapro has engaged Bloom Burton Securities Inc. as its financial adviser, Blake, Cassels & Graydon LLP as its Canadian legal adviser, Troutman Pepper Hamilton Sanders LLP as its U.S. legal adviser, JTC Team as its communications adviser, and Morrow Sodali as its proxy solicitor.

About Aeterna Zentaris Inc.

Aeterna is a specialty biopharmaceutical company developing and commercializing a diversified portfolio of pharmaceutical and diagnostic products focused on areas of significant unmet medical need. Aeterna's lead product, macimorelin (Macrilen; Ghryvelin), is the first and only U.S. Food and Drug Administration- and European Commission-approved oral test indicated for the diagnosis of adult growth hormone deficiency (AGHD). Aeterna is leveraging the clinical success and compelling safety profile of macimorelin to develop it for the diagnosis of childhood-onset growth hormone deficiency (CGHD), an area of significant unmet need.

Aeterna is also dedicated to the development of its therapeutic assets and has established a preclinical development pipeline to potentially address unmet medical needs across a number of indications, including neuromyelitis optica spectrum disorder (NMOSD), Parkinson's disease (PD), hypoparathyroidism and amyotrophic lateral sclerosis (ALS; Lou Gehrig's disease).

About Ceapro Inc.

Ceapro is a Canadian biotechnology company involved in the development of proprietary extraction technology and the application of this technology to the production of extracts and active ingredients from oats and other renewable plant resources.

Ceapro adds further value to its extracts by supporting their use in cosmeceutical, nutraceutical and therapeutics products for humans and animals. Ceapro has a broad range of expertise in natural product chemistry, microbiology, biochemistry, immunology and process engineering. These skills merge in the fields of active ingredients, biopharmaceuticals and drug-delivery solutions.

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