AEterna Zentaris Reports Second Quarter 2008 Financial and Operating Results



    All amounts are in U.S. dollars

    QUEBEC CITY, Aug. 12 /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 second
quarter ended June 30, 2008.

    Second Quarter 2008 Highlights

    
    - Advancement of cetrorelix Phase 3 program in BPH;
        - First efficacy trial: patient enrollment completed;
        - Second efficacy trial: patient enrollment ongoing / completion
          planned for third quarter of 2008 remains on target;
        - Safety trial: first patient dosing initiated.

    - Completion of sale of Quebec City building for $7.1 million.
    

    Juergen Ernst, Chairman, Interim President and CEO at AEterna Zentaris
commented, "During the quarter, we achieved our key objectives as our Phase 3
program in BPH with our lead compound cetrorelix met all recruitment goals and
remains on track, with first results expected in the third quarter of 2009.
Furthermore, we monetized our Quebec City building which provided additional
non-dilutive funding. Over the next few months, we will focus on advancing our
Phase 3 program in BPH with cetrorelix, while we endeavour to conclude
additional non-dilutive transactions and strategic partnerships."

    CONSOLIDATED RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2008

    Consolidated sales and royalties increased to $8.2 million for the
three-month period ended June 30, 2008, compared to $7.7 million for the same
period in 2007. The increase in sales and royalties for the three-month period
ended June 30, 2008 is related primarily to additional sales of Cetrotide(R),
partly offset by the exclusion of sales from Impavido(R) in the second quarter
of 2008.

    License fees revenues decreased to $2.2 million for the three-month
period ended June 30, 2008, compared to $3.9 million for the same period in
2007. The decrease for the three-month period ended June 30, 2008, is mainly
attributable to the termination of the Company's licensing agreement with
Solvay in 2007, which triggered additional amortization of upfront payments in
the second quarter of 2007.

    Consolidated R&D costs, net of tax credits and grants were $17.3 million
for the three-month period ended June 30, 2008 compared to $7.8 million for
the same period in 2007. Additional R&D expenses for the three-month period
ended June 30, 2008, are mainly related to the advancement of our Phase 3
program in BPH with our lead product, cetrorelix.

    Consolidated selling, general and administrative (SG&A) expenses were
$6.6 million for the three-month period ended June 30, 2008 compared to
$4.5 million for the same period in 2007. The increase in SG&A expenses for
the three-month period ended June 30, 2008 is primarily due to non-recurring
corporate expenses related to organizational changes, including severance paid
to the former President and CEO as well as to the Senior Vice President and
CBO that were implemented in the second quarter of 2008.

    Consolidated net loss for the three-month period ended June 30, 2008 was
$20.6 million or $0.39 per basic and diluted share, compared to $4.8 million
or $0.09 per basic and diluted share for the same period in 2007. The increase
in net loss for the three-month period ended June 30, 2008, compared to the
same period in 2007, is primarily attributable to the increased R&D costs
related to the advancement of cetrorelix into our Phase 3 program for the
treatment of BPH and non-recurring SG&A corporate costs.

    The consolidated cash and short-term investments were $24.8 million as at
June 30, 2008.

    CONFERENCE CALL

    Management will be hosting a conference call for the investment community
beginning at 4:30 p.m. Eastern Time today, Tuesday, August 12, to discuss
second quarter 2008 results. To participate in the live conference call by
telephone, please dial 416-644-3430, 514-807-8791 or 800-814-4862. 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         Six months ended
    CONSOLIDATED RESULTS              June 30,                 June 30,
    Unaudited                    2008         2007         2008        2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                    $            $            $            $
    Revenues
    Sales and royalties         8,250        7,698       16,192       15,020
    License fees                2,207        3,853        4,013        5,765
    -------------------------------------------------------------------------
                               10,457       11,551       20,205       20,785
    -------------------------------------------------------------------------

    Operating expenses
    Cost of sales               4,758        3,075        9,362        6,385
    R&D costs, net of tax
     credits and grants        17,345        7,815       31,034       15,722
    Selling, general and
     administrative             6,606        4,517       11,010        9,410
    Depreciation and
     amortization
      Property, plant and
       equipment                  397          392          766          757
      Intangible assets           876          928        1,716        1,990
    -------------------------------------------------------------------------
                               29,982       16,727       53,888       34,264
    -------------------------------------------------------------------------
    Loss from operations      (19,525)      (5,176)     (33,683)     (13,479)

    Other revenues
     (expenses)
    Interest income               311          300          588          875
    Interest expense              (53)         (53)         (68)         (53)
    Foreign exchange (loss)
     gain                        (502)        (637)       1,753         (596)
    Loss on disposal of
     long-lived assets held
     for sale                    (810)           -          (35)           -
    -------------------------------------------------------------------------
                               (1,054)        (390)       2,238          226
    -------------------------------------------------------------------------
    Loss before income
     taxes                    (20,579)      (5,566)     (31,445)     (13,253)
    Income tax recovery             -          731            -        3,275
    -------------------------------------------------------------------------
    Net loss from
     continuing operations    (20,579)      (4,835)     (31,445)      (9,978)
    Net (loss) earnings
     from discontinued
     operations                     -          (11)           -           22
    -------------------------------------------------------------------------
    Net loss for the period   (20,579)      (4,846)     (31,445)      (9,956)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net loss per share
     from continuing
     operations
      Basic and diluted         (0.39)       (0.09)       (0.59)       (0.19)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share
      Basic and diluted         (0.39)       (0.09)       (0.59)       (0.19)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average
     number of shares
    Basic and diluted      53,187,470   53,179,470   53,187,470   53,179,470



    (In thousands of US dollars)
    CONSOLIDATED BALANCE SHEETS                         June 30, December 31,
    Unaudited                                              2008         2007
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                              $            $

    Cash and short-term investments                      24,827       41,387
    Other current assets                                 18,018       18,193
                                                       ----------------------
                                                         42,845       59,580
    Long-term assets                                     52,704       63,783
                                                       ----------------------
    Total assets                                         95,549      123,363
                                                       ----------------------
                                                       ----------------------

    Current liabilities                                  24,046       22,255
    Deferred revenues                                     3,112        3,333
    Long-term payable                                       235            -
    Employee future benefits                             10,337        9,184
                                                       ----------------------
                                                         37,730       34,772
    Shareholders' equity                                 57,819       88,591
                                                       ----------------------
    Total liabilities and shareholders' equity           95,549      123,363
                                                       ----------------------
                                                       ----------------------
    




For further information:

For further information: Investor Relations: Dennis Turpin, CA, Senior
Vice President and Chief Financial Officer, (908) 626-5503,
dturpin@aezsinc.com; Media Relations: Paul Burroughs, Director of
Communications, (418) 652-8525 ext. 406, pburroughs@aezsinc.com

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