Aeterna Zentaris Reports Fourth Quarter and Full-Year 2007 Financial and Operating Results



    
    Year marked by strengthened leadership team and the initiation of
    Phase 3 program for cetrorelix in BPH

    All amounts are in U.S. dollars

    QUEBEC CITY, March 5 /CNW Telbec/ - Aeterna Zentaris Inc. (NASDAQ:   AEZS,
TSX: AEZ), a global biopharmaceutical company focused on endocrinology and
oncology, today reported financial and operating results for the fourth
quarter and full year ended December 31, 2007.
    David J. Mazzo, Ph.D., Aeterna Zentaris' President and Chief Executive
Officer commented, "2007 was a challenging year; a year marked by important
changes to both our corporate structure and business plan. The result has
given our stakeholders a sharper image of our objectives and ongoing
priorities. 2007 also involved a great deal of groundbreaking, marking for
example, the first time our team launched an international Phase 3 program as
is the case for cetrorelix in BPH. Another first was the opening of our
offices in New Jersey as part of our strategy to gain more exposure with the
pharmaceutical and financial communities in the United States. Furthermore,
following the appointment of three new key executives during the year, we now
have a team of the highest level in clinical research, regulatory affairs,
business development, pharmaceutical discovery, development and
commercialization - vital assets for the successful pre-launch activities for
cetrorelix, as well as for the thrust of our entire pipeline.
    Moving forward, we will continue to strive to expose the depth, breadth
and potential of our robust pipeline and will diligently execute our business
plan with the primary objective of creating value for our shareholders."

    CONSOLIDATED RESULTS FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2007

    Consolidated revenues were $10.2 million for the fourth quarter ended
December 31, 2007 compared to $11.9 million for the same quarter in 2006. The
decrease in revenues is attributable to lower sales of Impavido(R), as well as
active pharmaceutical ingredients to the Company's partners, combined with
lower license fees from the Company's partners.
    Selling, General and Administrative (SG&A) expenses were $5.1 million for
the fourth quarter ended December 31, 2007 compared to $4.2 million for the
same quarter in 2006. The increase in SG&A is mainly related to the support of
the continuation of a Phase 3 program with cetrorelix in benign prostatic
hyperplasia (BPH) and the opening of a new operational headquarters in
New Jersey.
    Consolidated Research & Development (R&D) expenses were $13.6 million for
the fourth quarter ended December 31, 2007 compared to $7.9 million for the
same quarter in 2006. The increase in R&D expenses relates to the continuation
of the Company's Phase 3 program with cetrorelix in BPH.
    Consolidated net loss was $13.6 million or $0.26 per basic and diluted
share for the fourth quarter ended December 31, 2007 compared to consolidated
net earnings of $39.1 million or $0.74 per basic and diluted share for the
same quarter in 2006. The increased net loss in the fourth quarter 2007 is
related to higher loss from operations of nearly $5.2 million mainly related
to increased R&D expenses, as well as to lower income tax recovery of nearly
$28.4 million attributable to the recognition of future income tax assets
mainly related to the sale of Atrium shares in 2006 and the special
distribution of the Company's remaining interest in January 2007, combined
with the decrease in net earnings from Atrium's discontinued operations of
approximately $16.3 million.
    The consolidated cash and short-term investments were $41.4 million as of
December 31, 2007.

    CONSOLIDATED RESULTS FOR THE FULL YEAR ENDED DECEMBER 31, 2007

    Consolidated revenues for the year ended December 31, 2007 were
$42.1 million compared to $38.8 million for the same period in 2006. The
increase in revenues for 2007 is mainly related to increased sales of
Cetrotide(R) and Impavido(R), partly compensated by lower license fees
revenues from the Company's partners.
    Consolidated R&D costs were $39.2 million for the year ended December 31,
2007 compared to $27.4 million for the same period in 2006. The increase in
R&D expenses of $11.8 million in 2007 is mainly related to the advancement of
the Company's lead product cetrorelix in Phase 3 for BPH; as well as to
further advancement of targeted, earlier-stage development programs including
AEZS-108, a cytotoxic conjugate and AEZS-112, a tubulin inhibitor.
    Consolidated loss from operations increased to $34.8 million for the year
ended December 31, 2007 compared to $23.8 million for the same period in 2006.
The increase in loss from operations in 2007 is attributable to a combination
of lower license revenues, increase in non-recurring G&A corporate expenses
and additional R&D expenses mainly related to the advancement of the Company's
Phase 3 program with cetrorelix in BPH. This increase in loss from operations
in 2007 was partly offset by increased sales and royalties, as well as lower
D&A expenses.
    Consolidated net loss was $32.3 million or $0.61 per basic and diluted
share for the year ended December 31, 2007 compared to consolidated net
earnings of $33.4 million or $0.64 per basic share and $0.62 per diluted share
for the same period in 2006. The increased net loss in 2007 is related to a
higher loss from operations of nearly $10 million, lower income tax recovery
of nearly $27 million related to the recognition of future income tax assets,
mainly attributable to the sale of Atrium shares in 2006, and the special
distribution of AEterna Zentaris' remaining interest in January 2007, as well
as lower net earnings from discontinued operations of Atrium of nearly
$26 million.

    CONFERENCE CALL

    Management will be hosting a conference call for the investment community
beginning at 10:00 a.m. Eastern Time today, Wednesday, March 5, to discuss
fourth quarter and full-year 2007 results.
    To participate in the live conference call by telephone, please dial
416-644-3425, 514-807-8791 or 800-595-8550. Individuals interested in
listening to the conference call on the Internet may do so by visiting
www.aezsinc.com. A replay will be available on the Company's Web site for 30
days.

    About Aeterna Zentaris Inc.

    Aeterna Zentaris Inc. is a global biopharmaceutical company focused on
endocrine therapy and oncology with proven expertise in drug discovery,
development and commercialization.
    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 harbor 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 requested by a
governmental authority or applicable law.

    Attachment: Financial summary


    (In thousands of
     US dollars,
     except share
     and per share data)
                                  Three months ended          Year ended
    CONSOLIDATED RESULTS              December 31,            December 31,
    Unaudited                       2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $
    Revenues
    Sales and royalties            6,435       6,800      28,825      25,123
    License fees                   3,705       5,137      12,843      13,652
    Other                            100           -         400          24
    -------------------------------------------------------------------------
                                  10,240      11,937      42,068      38,799
    -------------------------------------------------------------------------
    Operating expenses
    Cost of sales, excluding
     depreciation and
     amortization                  3,255       3,556      12,930      11,270
    Selling, general and
     administrative                5,146       4,159      20,403      16,478
    R&D costs                     13,574       7,926      39,248      27,422
    R&D tax credits and grants    (1,941)     (1,442)     (2,060)     (1,564)
    Depreciation and
     amortization                  1,135       4,195       5,566       8,964
    Impairment of long-lived
     asset held for sale             735           -         735           -
    -------------------------------------------------------------------------
                                  21,904      18,394      76,822      62,570
    -------------------------------------------------------------------------
    Loss from operations         (11,664)     (6,457)    (34,754)    (23,771)
    -------------------------------------------------------------------------

    Other revenues (expenses)
    Interest income                  535         703       1,904       1,441
    Interest expense                 (23)         14         (85)     (1,433)
    Foreign exchange gain
     (loss)                         (269)        384      (1,035)        319
    Loss on disposal of
     equipment                       (28)          -         (28)          -
    Gain on disposal of
     long-term investment              -         409           -         409
    Other                              -        (163)          -           -
    -------------------------------------------------------------------------
                                     215       1,347         756         736
    -------------------------------------------------------------------------
    Share in the results
     of an affiliated
     company                           -       1,575           -       1,575
    -------------------------------------------------------------------------
    Loss before Income taxes     (11,449)     (3,535)    (33,998)    (21,460)
    Income tax recovery
     (expense)                    (2,405)     26,061       1,961      29,037
    -------------------------------------------------------------------------
    Net earnings (loss) from
     continuing operations       (13,854)     22,526     (32,037)      7,577
    Net earnings (loss) from
     discontinued operations         218      16,575        (259)     25,813
    -------------------------------------------------------------------------
    Net earnings (loss) for
     the year                    (13,636)     39,101     (32,296)     33,390
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss) per
     share from continuing
     operations
      Basic and diluted            (0.26)       0.42       (0.61)       0.14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss)
     per share
      Basic                        (0.26)       0.74       (0.61)       0.64
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                      (0.26)       0.74       (0.61)       0.62
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Weighted average number
     of shares
      Basic                   53,182,803  52,694,868  53,182,803  52,099,290
      Diluted                 53,182,803  53,035,786  53,182,803  52,549,260
    Issued and outstanding
     shares                                           53,187,470  53,169,470


    (In thousands of US dollars, except share
    and per share data)


    CONSOLIDATED BALANCE SHEET                          December    December
                                                              31,         31,
    Unaudited                                               2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    Cash and short-term investments                       41,387      60,489
    Other current assets                                  18,193      41,234
                                                       ----------------------
                                                          59,580     101,723
    Long-term assets                                      63,783     121,768
                                                       ----------------------
    Total assets                                         123,363     223,491
                                                       ----------------------
                                                       ----------------------

    Current liabilities                                   22,255      16,310
    Long-term debt                                             -         687
    Other long-term liabilities                           12,517      27,615
                                                       ----------------------
                                                          34,772      44,612
    Shareholders' equity                                  88,591     178,879
                                                       ----------------------
    Total liabilities and shareholders' equity           123,363     223,491
                                                       ----------------------
                                                       ----------------------
    




For further information:

For further information: Jenene Thomas, Senior Director, Investor
Relations & Corporate Communications, (908) 626-5509, jthomas@aezsinc.com;
Paul Burroughs, Media Relations, (418) 652-8525 ext. 406,
pburroughs@aezsinc.com

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