Dr. Klaus Paulini reports

AETERNA ZENTARIS REPORTS FIRST QUARTER 2022 FINANCIAL RESULTS AND PROVIDES BUSINESS OUTLOOK

Aeterna Zentaris Inc. has released its financial and operating results for the first quarter ended March 31, 2022. The company also provided an update on its preclinical and clinical development programs.

"We are beginning to see tangible progress related to the development programs we in-licensed throughout 2021. In particular, we are very pleased to report data with our preclinical program for AIM biologicals, which have recently been accepted for presentation at two scientific conferences. We remain focused advancing our pipeline, executing on our strategic priorities and unlocking the full potential of our pipeline and value for all stakeholders," commented Dr. Klaus Paulini, chief executive officer of Aeterna.

Recent highlights:

• Presented results from preclinical studies of Aeterna's AIM Biologicals (Autoimmunity Modifying Biologicals) for the potential treatment of Parkinson's disease (PD) at IMMUNOLOGY2022, the annual event of the American Association of Immunologists, held May 6 to May 10, 2022;
• Secured new European patent providing intellectual property protection of macimorelin in 27 countries within the European Union (EU) as well as additional European non-EU countries, such as the United Kingdom and Turkey, for macimorelin (Ghryvelin; Macrilen) for use to diagnose growth hormone deficiency (GHD) in adults;
• Announced that results from preclinical studies of Aeterna's AIM Biologicals for the potential treatment of neuromyelitis optica spectrum disorder (NMOSD) were accepted for presentation at the 13th International Congress on Autoimmunity to be held June 10 to June 13, 2022, in Athens, Greece.

Preclinical and clinical programs update

Therapeutics development pipeline

AIM Biologicals: Targeted, highly specific autoimmunity modifying therapeutics for the potential treatment of neuromyelitis optica spectrum disorder and Parkinson's disease

AIM Biologicals utilize a novel mechanism which is believed to demonstrate that peptide antigens presented on immunosuppressive MHC Class I molecules can selectively and efficiently induce antigen-specific tolerance. Based on this mechanism, the targeted immunomodulating therapeutics are being designed as optimized soluble molecules with the goal that they may be adapted to selectively induce tolerance to various autoantigens. With AIM Biologicals, the company aims to restore the tolerance against such proteins to treat autoimmune diseases.

Preclinical studies conducted by the University of Wuerzburg, Germany, thus far indicate that tolerance induction appears to be achieved via selective elimination of antigen-specific immune effector cells and via induction of antigen-specific regulatory T cells from naive T cells. AIM Biologicals thus have the potential to become highly specific and effective yet not personalized treatments of NMOSD. Data from the preclinical studies will be presented at the 13th International Congress on Autoimmunity to be held June 10 to June 13, 2022, in Athens, Greece.

For the treatment of NMOSD, it is believed that the AIM Biologicals will present a specific antigen derived from the water channel protein aquaporin-4 (AQP4) loaded to soluble immunoregulatory HLA-G protein to selectively induce immunological tolerance in the central nervous system.

For the development of AIM Biologicals as potential PD therapeutic, 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. Additionally, the company recently presented preclinical data demonstrating that corresponding AIM Biologicals prevented mobility impairments and postmortem histopathological assessment confirmed the induction of favourable in situ immune cell composition and the rescue of substantia nigra neurons. The preclinical data confirmed that the translation potential of the approach deserves further exploration.

The University of Wuerzburg continues to bolster its intellectual property (IP) protection and has filed new IP on AIM-Biologicals related to both NMOSD and PD.

Next steps -- NMOSD:

• Conduct in vitro and in vivo assessments to select an AIM Biologicals-based development candidate;
• Manufacturing process development for a 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 for primary hypoparathyroidism in adults.

The company has selected a contract manufacturing organization for the development of its manufacturing for AEZS-150.

Next steps

Work with the University of Sheffield to conduct in-depth characterization of development candidate (in vitro and in vivo).

Continuing development of manufacturing process.

Formalize preclinical development of AEZS-150 in preparation for a potential IND 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 (Lou Gehrig's disease). 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 via 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:

• Continue investigating macimorelin efficacy in an ALS specific SOD1 mouse model;
• 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 (the 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. 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 United States FDA (Food and Drug Administration) investigational new drug application associated with this clinical trial became active.

The first clinical sites in the U.S. 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, Professor 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 first quarter 2022 financial results

All amounts in this press release are in U.S. dollars unless otherwise noted.

Results of operations for the three-month period ended March 31, 20 22

For the three-month period ended March 31, 2022, the company reported a consolidated net loss of ($2.6-million), or (two cents) net loss per common share (basic), as compared with a consolidated net loss of ($1.5)-million, or (two cents) net income per common share (basic) for the three-month period ended March 31, 2021. The $1.1-million increase in net loss is primarily due to an increase of $1.3-million in total operating costs, $200,000 decline in total revenues and offset by favourable foreign currency exchange rates of $400,000

Revenues

• The company's total revenue for the three-month period ended March 31, 2022, was $1.5-million as compared with $1.7-million for the same period in 2021, representing a decline of $200,000. The 2022 revenue was comprised $430,000 in licensing revenue (2021 -- $520,000), $1.0-million in development revenue (2021 -- $1.1-million), $40,000 in supply chain revenue (2021 -- $40,000), $20,000 in royalty income (2021 -- $10,000). and six cents in product sales (2021 -- nil).

Operating expenses

• The company's total operating expense for the three-month period ended March 31, 2022 was $4.3-million as compared with $3.0-million for the same period in 2021, representing an increase of $1.3-million. This increase arose primarily from a $900,000 increase research and development, $300,000 increase in general and administrative expenses and an increase of $100,000 in selling expenses.

Net finance (costs) income

• The company's net finance (costs) for the three-month period ended March 31, 2022, was $200,000 as compared with net finance cost of negative $300,000 for the same period in 2021, representing an increase in net finance income of $500,000.

The company had $63.6-million cash and cash equivalents at March 31, 2022 (Dec. 31, 2021 -- $65.3-million).

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.

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; Lou Gehrig's disease). Additionally, the company is developing an oral prophylactic bacterial vaccine against SARS-CoV-2 (COVID-19) and Chlamydia trachomatis.

We seek Safe Harbor.