Aeterna Zentaris Reports First Quarter 2010 Financial and Operating Results

All amounts are in U.S. dollars

QUEBEC CITY, May 13 /CNW Telbec/ - Aeterna Zentaris Inc. (NASDAQ: AEZS, TSX: AEZ) ("the Company"), a late-stage drug development company specialized in oncology and endocrinology, today reported financial and operating results as at and for the three months ended March 31, 2010.

First Quarter 2010 Highlights

    
    - January 25, 2010: Updated results of a Phase 2 study related to the use
      of perifosine in the treatment of advanced metastatic colon cancer
      showing a statistically significant benefit in survival, including
      5 FU-refractory patients.

    - January 29, 2010: Publication in the February 2010 issue of the Journal
      of Clinical Cancer Research of positive Phase 2 results for perifosine
      as a single agent for the treatment of advanced Waldenstrom's
      macroglobulinemia.

    - February 3, 2010: Special Protocol Assessment ("SPA") granted by the
      United States Food and Drug Administration ("FDA") for the Phase 3
      trial of perifosine in combination with capecitabine (Xeloda(R)) in
      refractory advanced colorectal cancer. The trial is to be conducted by
      Keryx Biopharmaceuticals, Inc. ("Keryx") (NASDAQ:   KERX), Aeterna
      Zentaris' partner and licensee for perifosine in North America.

    - March 1, 2010: Disclosure that the Committee for Orphan Medicinal
      Products of the European Medicines Agency ("EMA") had issued a positive
      opinion for orphan medicinal product designation for perifosine for the
      treatment of multiple myeloma.
    

Subsequent to Quarter-End

    
    - April 5, 2010: Perifosine receives FDA Fast Track Designation for the
      Phase 3 X-PECT (Xeloda(R) + Perifosine Evaluation in Colorectal cancer
      Treatment) registration trial.

    - April 8, 2010: Initiation of a Phase 3 registration trial with
      perifosine in refractory advanced colorectal cancer by Keryx.

    - April 15, 2010: Positive Scientific Advice from the EMA for the Phase 3
      program with perifosine in multiple myeloma. Data from ongoing Phase 3
      study, sponsored by Keryx, can be used to register perifosine in
      multiple myeloma in Europe.

    - April 20, 2010: Presentations of preclinical data on Erk inhibitor,
      AEZS-131, and Erk/PI3K dual inhibitor, AEZS-132, as well as preclinical
      data from a study sponsored by the National Institutes of Health with
      perifosine in oncology at the American Association for Cancer Research
      Annual Meeting in Washington, D.C.

    - April 20, 2010: Completion of a $15.0 million registered direct
      offering with certain institutional investors.

    - April, 23, 2010: Company regained compliance with Nasdaq's minimum bid
      price listing requirement.

    - May 6, 2010: Company receives orphan-drug designation from the FDA for
      AEZS-108 in ovarian cancer.

    - May 12, 2010: FDA approves the Company's Investigational New Drug (IND)
      application for AEZS-108 in LHRH-receptor positive urothelial (bladder)
      cancer.
    

Juergen Engel, Ph.D., Aeterna Zentaris' President and Chief Executive Officer commented, "This has been a very exciting quarter as we made great strides in the development of our lead oncology compound, perifosine, now in Phase 3 registration trials for multiple myeloma and refractory advanced colorectal cancer. Furthermore, the different designations recently granted by the FDA in both indications and the EMA's positive Scientific Advice for multiple myeloma, will accelerate as well as facilitate the future review and marketing authorization processes in North America and Europe."

Dennis Turpin, Senior Vice President and Chief Financial Officer of Aeterna Zentaris added, "With more than $40 million in cash, including proceeds from our recent $15 million registered direct offering and no debt, combined with our expected significantly reduced burn rate, we are in a solid financial position to execute our focused drug development and business strategy."

CONSOLIDATED RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2010

Revenues were $6.4 million for the three-month period ended March 31, 2010, compared to $6.1 million for the same period in 2009. The increase is mainly due to a comparative increase in sales of Cetrotide(R) to certain customers in the first quarter of 2010. This increase was partly offset by lower amortization of upfront license fee payments in 2010 related to our agreement with sanofi-aventis U.S. LLC ("sanofi-aventis"), which was entered into in March 2009, in connection with our now discontinued development program involving cetrorelix for the treatment of Benign Prostatic Hyperplasia ("BPH"), and subsequently terminated.

Research and development ("R&D") costs, net of tax credits and grants, were $5.7 million for the three-month period ended March 31, 2010, compared to $11.4 million for the same period in 2009. The comparative decrease in net R&D costs is almost entirely attributable to the winding down and termination of development activities related to cetrorelix in BPH, despite the presence in the first quarter of 2010 of residual expenditures associated with certain remaining contractual obligations.

Selling, general and administrative ("SG&A") expenses were $2.8 million for the three-month period ended March 31, 2010, compared to $3.6 million for the same period in 2009. This decrease is primarily related to lower comparative salary and benefit costs, lower legal expenses and other cost-saving measures.

Net loss was $5.9 million, or $0.09 per basic and diluted share, for the three-month period ended March 31, 2010, compared to $12.4 million, or $0.23 per basic and diluted share, for the same period in 2009. This decrease is mainly related to lower comparative net R&D costs, lower SG&A expenses and higher foreign exchange gains, partly offset by lower comparative license fee revenues and lower sales and royalty margins.

Cash and cash equivalents were $26.9 million as at March 31, 2010. This amount excludes an estimated $13.7 million of net proceeds received in connection with the registered direct offering completed on April 20, 2010.

CONFERENCE CALL

Management will be hosting a conference call for the investment community beginning at 2:30 p.m. Eastern Time today, Thursday, May 13, 2010, to discuss first quarter 2010 results. Individuals interested in participating in the live conference call by telephone may dial in Canada, 514-807-9895 or 647-427-7450, outside Canada, 888-231-8191, or may listen through the Internet at www.aezsinc.com. A replay will be available on the Company's website for 30 days following the live event.

About Aeterna Zentaris Inc.

Aeterna Zentaris Inc. is a late-stage drug development company specialized in oncology and endocrine therapy. News releases and additional information are available at www.aezsinc.com.

Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbour provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. Investors should consult the Company's quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The Company does not undertake to update these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments except if we are required by a governmental authority or applicable law.

Attachment: Financial summary

    
    Interim Consolidated Statements of Operations
    (in thousands, except share and per share data)
    (unaudited)
    -------------------------------------------------------------------------
                                                             Three months
                                                            ended March 31,
                                                          2010          2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                             $             $
    Revenues
    Sales and royalties                                  5,716         4,971
    License fees and other                                 706         1,140
    -------------------------------------------------------------------------
                                                         6,422         6,111
    -------------------------------------------------------------------------
    Operating expenses
    Cost of sales, excluding depreciation and
     amortization                                        4,617         3,694
    Research and development costs, net of tax
     credits and grants                                  5,701        11,437
    Selling, general and administrative expenses         2,792         3,554
    Depreciation and amortization
      Property, plant and equipment                        263           311
      Intangible assets                                    389           557
    -------------------------------------------------------------------------
                                                        13,762        19,553
    -------------------------------------------------------------------------
    Loss from operations                                (7,340)      (13,442)
    -------------------------------------------------------------------------
    Other income
    Interest income                                         58           154
    Foreign exchange gain                                1,402           900
    -------------------------------------------------------------------------
                                                         1,460         1,054
    -------------------------------------------------------------------------
    Net loss for the period                             (5,880)      (12,388)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net loss per share
    Basic and diluted                                    (0.09)        (0.23)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number of shares
    Basic and diluted                               63,089,954    53,187,470
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Interim Consolidated Balance Sheet Information
    (in thousands)
    (unaudited)
    -------------------------------------------------------------------------
                                                         As at         As at
                                                      March 31,  December 31,
                                                          2010          2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                             $             $

    Cash and cash equivalents                           26,947        38,100
    Accounts receivable and other current assets        10,383        10,913
    Restricted cash                                        833           878
    Property, plant and equipment                        3,885         4,358
    Other long-term assets                              29,924        32,013
    -------------------------------------------------------------------------
    Total assets                                        71,972        86,262
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accounts payable and other current liabilities      14,777        19,211
    Current portion of long-term payable                    59            57
    Long-term payable                                      118           143
    Non-financial long-term liabilities*              53,848        57,625
    -------------------------------------------------------------------------
    Total liabilities                                   68,802        77,036
    Shareholders' equity                                 3,170         9,226
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity          71,972        86,262
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    * Comprised mainly of deferred revenues and employee future benefits.
    

SOURCE Aeterna Zentaris Inc.

For further information: For further information: Investor Relations: Ginette Vallières, Investor Relations Coordinator, (418) 652-8525 ext. 265, gvallieres@aezsinc.com; Media Relations: Paul Burroughs, Director of Communications, (418) 652-8525 ext. 406, pburroughs@aezsinc.com

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