Dr. Klaus Paulini reports

AETERNA ZENTARIS REPORTS FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL RESULTS AND PROVIDES BUSINESS OUTLOOK

Aeterna Zentaris Inc. has released its financial and operating results for the year ended Dec. 31, 2021. The company also provided an update on progress in its preclinical and clinical development programs.

"With the in-licensing of six new preclinical development programs, 2021 was a transformational year for Aeterna Zentaris. As we work to make a positive impact across multiple therapeutic areas with unmet needs, our team is executing on all fronts to advance these preclinical assets toward in-human clinical studies," commented Dr. Klaus Paulini, chief executive officer of Aeterna. "Since the start of 2022, we have continued to build momentum and position ourselves to unlock the full potential of our pipeline and value for all stakeholders. Bolstered by our cash position, which provides us with the funding for operations through 2023, we are laser focused on our development and strategic priorities."

Recent highlights:

• Expanded research program with Julius-Maximilians-University Wuerzburg, aimed to accelerate development of vaccine programs on COVID-19 and chlamydia;
• Announced notice of allowance for U.S. patent covering AEZS-150 for the potential treatment of chronic hypoparathyroidism;
• Appointed Giuliano La Fratta as chief financial officer.

Preclinical and clinical programs update

Therapeutics development pipeline

AIM (autoimmunity modifying) biologicals -- targeted, highly specific autoimmunity modifying therapeutics for the potential treatment of neuromyelitis optica spectrum disorder (NMOSD) and Parkinson's disease (PD)

In January, 2021, Aeterna entered into an exclusive patent licence and research agreement with the University of Wuerzburg, Germany, for worldwide rights to develop, manufacture and commercialize AIM Biologicals for the potential treatment of NMOSD. Additionally, the company has engaged Prof. Dr. Joerg Wischhusen from the University Hospital in Wuerzburg as well as neuro-immunologist Dr. Michael Levy from the Massachusetts General Hospital in Boston as consultants for scientific support and advice in the field of inflammatory central nervous system disorders, autoimmune diseases of the nervous system and NMOSD. In September, 2021, the company entered into an additional exclusive licence with the University of Wuerzburg for early preclinical development toward the potential treatment of Parkinson's disease.

AIM biologicals is based on a natural process during pregnancy, which induces immunogenic tolerance of the maternal immune system to the partially foreign fetal antigens. Fetal proteins are processed and presented on certain immunosuppressive major histocompatibility complex Class I molecules to induce this tolerance. In an autoimmune disease, the immune system is misdirected and targets the body's own protein. With AIM biologicals, the company aims to restore the tolerance against such proteins to treat autoimmune diseases.

For the development of AIM biologicals as potential PD therapeutics, Aeterna plans to utilize, among others, an innovative animal model on neurodegeneration by alpha-synuclein-specific T cells in AAV-A53T-alpha-synuclein Parkinson's disease mice, which has recently been published by University of Wuerzburg researchers.

Next steps -- NMOSD:

• Conduct in vitro and in vivo assessments to select an AIM biologicals-based development candidate;
• Manufacturing process development for selected candidate.

Next steps -- Parkinson's disease:

• Design and produce antigen-specific AIM biologics molecules for the potential treatment of Parkinson's disease;
• Conduct in vitro and in vivo assessments in relevant Parkinson's disease models.

Delayed clearance parathyroid hormone (DC-PTH) fusion polypeptides -- potential treatment for primary hypoparathyroidism

In March, 2021, Aeterna entered into an exclusive patent and know-how licence agreement and research agreement with the University of Sheffield, United Kingdom, for the intellectual property relating to DC-PTH fusion polypeptides with delayed clearance for all human uses. In consultation with the University of Sheffield, Aeterna has selected AEZS-150 as the lead candidate in its DC-PTH program. AEZS-150 is being developed with the goal of providing a potential new treatment option of primary hypoparathyroidism in adults.

Next steps:

• Work with the University of Sheffield to conduct in depth characterization of development candidate (in vitro and in vivo);
• Develop manufacturing process;
• Formalize preclinical development of AEZS-150 in preparation for a potential investigational new drug filing for conducting the first in-human clinical study.

Macimorelin therapeutic -- ghrelin agonist in development for the treatment of ALS (Lou Gehrig's disease)

In January, 2021, the company entered into a material transfer agreement with the University of Queensland, Australia, to provide macimorelin for the conduct of preclinical and subsequent clinical studies evaluating macimorelin as a potential therapeutic for the treatment of ALS. The University of Queensland researchers have filed for supportive grants and aim to conduct preclinical studies in multiple preclinical models to demonstrate the therapeutic potential of macimorelin to slow disease progression and disease-specific pathology.

Macimorelin, a potent ghrelin agonist, is an orally active small molecule that stimulates the secretion of growth hormone from the pituitary gland. Acting through this mechanism, which was established during the development as a diagnostic test for growth hormone deficiency, it is believed that macimorelin may slow the progression of certain neurodegenerative diseases like ALS.

Apart from already available preclinical and clinical data on macimorelin for the development as a diagnostic, Aeterna may utilize the established supply chain to support this development. Alternative formulations are currently also under development, as a further option in addition to the existing oral solution already approved for the diagnostic use in adult growth hormone deficiency (AGHD).

Next steps:

• Work with the University of Queensland to conduct proof-of-concept studies with macimorelin in disease-specific animal models;
• Assess alternative formulations;
• Formalize preclinical development plan.

Diagnostics development pipeline

Macimorelin diagnostic -- ghrelin agonist in development for diagnostic use in childhood-onset growth hormone deficiency (CGHD)

Aeterna is currently conducting its pivotal phase 3 safety and efficacy study AEZS-130-P02 (Detect trial) evaluating macimorelin for the diagnosis of CGHD.

Children and adolescents from two to less than 18 years of age with suspected growth hormone deficiency are to be included. The study is expected to include approximately 100 subjects in Europe and North America, with at least 40 subjects in prepubertal and 40 subjects in pubertal status. A macimorelin growth hormone stimulation test (GHST) will be performed twice for repeatability data and two standard GHSTs will be used as controls: arginine (i.v.) and clonidine (p.o.).

On April 22, 2021, the U.S. Food and Drug Administration investigational new drug application associated with this clinical trial became active.

The first clinical sites in the United States and in Europe are open for patient recruitment. In Europe, national clinical trial approval procedures and site initiation activities are continuing. Site activation and patient enrolment continues to be impacted by the continuing COVID-19 pandemic. The company is actively monitoring delays to mitigate potential impact of COVID-19 on estimated trial completion dates. Additionally, clinical trial sites originally planned in the Ukraine and Russia are being halted due to the conflict in Ukraine intensifying following the Russian invasion. As a result, further delays with enrolment are expected as the Detect trial planned to recruit at least 25 per cent (25 subjects) within those countries. Due to these circumstances and the resulting feasibility data from the company's CRO on potential options, Aeterna believes recruitment for the Detect trial may now continue until later into 2023.

The company continues to advance its continuing business development discussions to secure commercialization partners for macimorelin in additional markets. In addition to its previously established agreements, Aeterna recently entered into a licence agreement with NK Meditech Ltd. for the development and commercialization of macimorelin in the Republic of Korea, and a distribution agreement with Er-Kim Pharmaceuticals Bulgaria EOOD for the commercialization of macimorelin in Turkey and some Balkan countries.

Vaccine development pipeline

Bacterial vaccine platform -- Orally active, live-attenuated bacterial vaccine platform with potential application against viruses and bacteria, such as coronavirus types, including COVID-19 (SARS-CoV-2) and chlamydia

In February, 2021, Aeterna entered into an exclusive option agreement with the University of Wuerzburg to evaluate a preclinical, potential COVID-19 vaccine developed at the University of Wuerzburg. In March, 2021, the company exercised its option and entered into a licence agreement where the company was granted an exclusive, worldwide licence to certain patent applications and know-how owned by the University of Wuerzburg to research and develop, manufacture, and sell a potential COVID-19 vaccine. The company's vaccine platform is currently undergoing preclinical studies for the prevention of coronavirus diseases, including COVID-19 (SARS-CoV-2), with the planned start of clinical development targeted for H1 2023.

In September, 2021, the company exercised its option under the agreement with the University of Wuerzburg on a then undisclosed field, now known to be chlamydia. Chlamydia trachomatis is a sexually transmitted bacterium infecting over 130 million subjects annually. Asymptomatic disease can spread to the reproductive tract, eventually inducing infertility, miscarriage or ectopic pregnancy, which is a life-threatening condition. Ocular infections can lead to inclusion conjunctivitis or trachoma, which is the primary source of visual impairment or infectious blindness. Additionally, Prof. Dr. Thomas Rudel of the University of Wuerzburg was engaged by the company in September, 2021, as a scientific consultant to support development of the salmonella-based vaccine platform for the coronavirus and chlamydia vaccines.

Recently, the company expanded its research agreement with the University of Wuerzburg to conduct supplementary research activities and preclinical development studies on the potential vaccines, the results of which are covered within the scope of the licence agreements. Under the expanded research program, the University of Wuerzburg will validate and utilize innovative human 3-D intestinal tissue models to study the infection biology of salmonella strains toward clinical development.

Next steps -- coronavirus vaccine:

• Evaluate administration route, dose and immunization scheme;
• Initiate in vivo immunology experiments with antigen variant candidates in relevant mice models;
• Conduct virus challenge experiments in immunized transgenic animals;
• Start manufacturing process assessment/development;
• Conduct preclinical safety and toxicology assessment.

Next steps -- chlamydia vaccine:

• Design and prepare candidate vaccine strains;
• Evaluate administration route, dose and immunization scheme;
• Conduct in vivo immunology experiments with candidate strains in relevant mouse models.

Summary of fourth quarter and full year 2021 financial results

All amounts are in U.S. dollars

Cash and cash equivalents

The company had $65.3-million in cash and cash equivalents at Dec. 31, 2021.

Results of operations for the three-month period ended Dec. 31, 2021

For the three-month period ended Dec. 31, 2021, the company reported a consolidated net loss of $2.9-million, or two cents loss per common share (basic and diluted), as compared with a consolidated net loss of $1.3-million, or two cents loss per common share (basic and diluted), for the three-month period ended Dec. 31, 2020. The $1.6-million increase in net loss is primarily from a $500,000 increase in total operating expenses and a $1.4-million decrease in revenues, offset by a $400,000 reduction in income tax expense.

Revenues:

• Aeterna's total revenue for the three-month period ended Dec. 31, 2021, was $1-million as compared with $2.4-million for the same period in 2020, representing a decrease of $1.4-million, primarily due to $1.4-million decline in product sales of macimorelin to its licensees, and a $500,000 decline in licence fees, offset by $500,000 increase in development services.

Operating expenses:

• Aeterna's total operating expenses for the three-month period ended Dec. 31, 2021, were $4.1-million as compared with $3.6-million for the same period in 2020, representing an increase of $500,000. This increase arises primarily from a $1.3-million increase in research and development expenses, a $500,000 increase in general and administrative expenses, and $100,000 in costs incurred in 2020 and not incurred in 2021 (comprising $100,000 in reversal of impairment of other asset), offset by a decline of $1.4-million in cost of sales.

Net finance income:

• For the three-month period ended Dec. 31, 2021, Aeterna's net finance income was $300,000 as compared with $300,000 for the three-month period ended Dec. 31, 2020.

Results of operations for the year ended Dec. 31, 2021

For the 12-month period ended Dec. 31, 2021, Aeterna reported a consolidated net loss of $8.4-million, or seven cents loss per common share (basic and diluted), as compared with a consolidated net loss of $5.1-million, or 12 cents loss per common share (basic and diluted), for the year ended Dec. 31, 2020. The $3.3-million increase in net loss is primarily from a $4.5-million increase in operating expenses and an $800,000 decline in net finance income, partially offset by an increase of $1.6-million in total revenues and a change in income tax recovery of $500,000.

Revenues:

• Aeterna's total revenue for the 12-month period ended Dec. 31, 2021, was $5.3-million as compared with $3.7-million for the same period in 2020, representing an increase of $1.6-million, primarily due to $3.3-million increase in development services with Novo and $800,000 increase in licence fees related to the partial recognition of the five-million-euro upfront payment received from Novo in 2020, offset by a decrease in product sales by $2.5-million.

Operating expenses:

• Aeterna's total operating expenses for the 12-month period ended Dec. 31, 2021, were $13.9-million as compared with $9.4-million for the same period in 2020, representing an increase of $4.5-million. This increase arises primarily from a $5.1-million increase in research and development expenses, $1.1-million increase in general and administration expenses, $300,000 in increase in selling expenses and $300,000 in costs incurred in 2020 and not incurred in 2021 (comprising $200,000 in gain on modification of building lease and $100,000 in reversal of impairment of other asset), offset by a $2.2-million decrease in cost of sales.

Net finance income:

• Aeterna's net finance income for the 12-month period ended Dec. 31, 2021, was $200,000 as compared with $1-million for the same period in 2020, representing a decrease of $800,000. This is primarily due to a $1.1-million change in fair value of warrant liability, and a $400,000 decline in gain due to change in foreign currency, offset by a $700,000 decline in other finance costs. During the prior year, the company registered the common shares underlying certain warrants, which allowed the company to reclassify such warrants from liability to shareholders equity in the condensed interim consolidated statements of financial position. As such the change in fair value of such warrants liabilities was classified as a finance cost in the consolidated statements of loss in 2020; there was no such change in fair value in 2021.

Consolidated financial statements and management's discussion and analysis

For reference, the management's discussion and analysis of financial condition and results of operations for the fourth quarter and full year 2021, as well as the company's unaudited consolidated interim financial statements as of Dec. 31, 2021, will be available on the company's website in the investors section or at the company's profile on SEDAR and EDGAR.

About Aeterna Zentaris Inc.

Aeterna Zentaris is a specialty biopharmaceutical company developing and commercializing a diversified portfolio of pharmaceutical and diagnostic products focused on areas of significant unmet medical need. The company's lead product, macimorelin (Macrilen), is the first and only U.S. FDA- and European Commission-approved oral test indicated for the diagnosis of adult growth hormone deficiency (AGHD). The company 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, in collaboration with Novo Nordisk.

Aeterna Zentaris is also dedicated to the development of therapeutic assets and has recently taken steps to establish a growing preclinical 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). Additionally, the company is developing an oral prophylactic bacterial vaccine against SARS-CoV-2 (COVID-19) and chlamydia trachomatis.

We seek Safe Harbor.