AEterna Zentaris Reports Third Quarter 2007 Financial and Operating Results



    All amounts are in U.S. dollars

    QUEBEC, Nov. 7 /CNW Telbec/ - AEterna Zentaris Inc. (TSX: AEZ;
NASDAQ:   AEZS), a global biopharmaceutical company focused on endocrine therapy
and oncology, today reported financial and operating results for the third
quarter ended September 30, 2007.
    "Over the past five months, the executive management team completed a
thorough review of our extensive pipeline and business operations with the
goal of identifying our critical success factors and placing the appropriate
clarity and prioritization surrounding our key value drivers," said David
J. Mazzo, Ph.D., AEterna Zentaris' President and Chief Executive Officer. "By
preparing this strategic roadmap, we have clearly established a solid
foundation for the basis of our strategy and have identified the strategic
levers we believe will ensure long-term, sustained growth. Our experienced
team is highly focused on execution and committed to realizing the true value
of our Company."

    KEY DEVELOPMENTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2007

    Change at the Board Level - The Board of Directors nominated Jurgen Ernst
    as Chairman of the Board of Directors and David J. Mazzo, Ph.D., the
    Company's President and Chief Executive Officer (CEO), to its Board of
    Directors. Jurgen Ernst succeeds Eric Dupont, Ph.D., who founded the
    Company in 1991 and retired from the Board.

    Appointment of Chief Medical Officer - The Company completed its
    executive management team with the appointment of Paul Blake, M.D., as
    Senior Vice President and Chief Medical Officer.

    Management's Strategic Review - Management completed a thorough review of
    its extensive pipeline and business operations.

    RESULTS FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2007

    At September 30, 2007, the Company had consolidated cash and short-term
investments of $47.6 million compared to $61 million as of December 31, 2006.
    Consolidated revenues for the three-month period ended September 30, 2007
were $11.6 million, an increase of 9.4% compared to $10.6 million for the same
period in 2006. The increase in consolidated revenues is mainly attributed to
higher license fees revenues, partly reduced by lower sales of Cetrotide(R).
The increase in license fees revenues is related to a milestone payment of
$1.4 million received from our partner, Ardana Biosciences, Ltd., for the
initiation of a Phase 3 study for the diagnosis of growth hormone disorders
with our Growth Hormone Secretagogue, AEZS-130. The sales of Cetrotide(R) were
lower for the three-month period ended September 30, 2007 compared to the same
period in 2006, due to a significant first order of the product related to the
launch in Japan in September 2006.
    Consolidated R&D costs, net of tax credits and grants (R&D), were
$10.1 million for the three-month period ended September 30, 2007 compared to
$6.2 million for the same period in 2006. The increase in consolidated R&D
expense is related to the additional expenses incurred for the ongoing Phase 3
program with cetrorelix in BPH, as well as further advancement of targeted,
earlier clinical-stage development programs including AEZS-108.
    Consolidated selling, general and administrative (SG&A) expenses were
$6.1 million for the three-month period ended September 30, 2007 compared to
$4.5 million for the same period in 2006. The increase in consolidated SG&A is
related to the restructuring of the management team and the Board as well as
the opening of a new office in Warren, New Jersey.
    Consolidated loss from operations increased to $9.6 million for the
three-month period ended September 30, 2007 compared to $5.8 million for the
same period in 2006. The increase in consolidated loss from operations is
attributable to increased R&D and SG&A expenses, partly offset by increased
revenues.
    Consolidated net loss from continuing operations for the three-month
period ended September 30, 2007 was $8.7 million compared to $4.7 million for
the same period in 2006. This increase in consolidated net loss from
continuing operations is attributable to a combination of higher R&D, SG&A
expenses and other expenses recorded during the three-month period ended
September 30, 2007.
    Consolidated net earnings from discontinued operations for the
three-month period ended September 30, 2006 were $3.1 million and were
completely attributable to the Company's former subsidiary Atrium Innovations
which operations were excluded from consolidation effective on October 18,
2006.
    Consolidated net loss for the three-month period ended September 30, 2007
was $8.7 million or $0.16 per basic and diluted share, compared to
$1.6 million or $0.03 per basic and diluted share for the same period in 2006.
The consolidated net loss increase for the three-month period ended September
30, 2007 is attributable to an increased net loss from continuing operations
combined with the completion of the distribution of Atrium to AEterna Zentaris
shareholders on January 2, 2007.

    RESULTS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2007

    Consolidated revenues for the nine-month period ended September 30, 2007
were $33.8 million compared to $28.8 million for the same period in 2006. The
increase in consolidated revenues is mainly attributed to increased sales of
Cetrotide(R), due to the launch in Japan in September 2006, growth of 
Impavido (R), as well as additional license fees revenues.
    Consolidated R&D costs, net of tax credits and grants, for the nine-month
period ended September 30, 2007 were $26.3 million, compared to $20.2 million
for the same period in 2006. The increase in consolidated R&D expense is
related to the additional expenses incurred for the initiation in 2007 of our
ongoing Phase 3 program with cetrorelix in BPH, as well as further advancement
of targeted, earlier clinical-stage development programs including AEZS-108.
    Consolidated SG&A expenses for the nine-month period ended September 30,
2007, were $15.8 million compared to $12.9 million for the same period in
2006. The increase in consolidated SG&A expenses is due to additional expenses
related to the restructuring of the management team and the Board, as well as
the opening of a new office in Warren, New Jersey.
    Consolidated loss from operations for the nine-month period ended
September 30, 2007 was $23 million compared to $17.3 million for the same
period in 2006. The increase in consolidated loss from operations is
attributable to increased R&D and SG&A expenses, partly offset by increased
revenues.
    Consolidated net loss from continuing operations for the nine-month
period ended September 30, 2007 was $18.7 million compared to $15 million for
the same period in 2006. This is attributable to higher R&D and SG&A expenses,
partly offset by increased revenues from Cetrotide(R) and Impavido(R), lower
other expenses and higher income tax recovery.
    Consolidated net earnings from discontinued operations for the nine-month
period ended September 30, 2006 were $9.3 million and were completely
attributable to the Company's former subsidiary, Atrium Innovations, which
operations were excluded from consolidation effective on October 18, 2006.
    Consolidated net loss for the nine-month period ended September 30, 2007,
was $18.7 million or $0.35 per basic and diluted share, compared to
$5.7 million or $0.11 per basic and diluted share for the same period in 2006.
This increase in consolidated net loss is attributable to an increased net
loss from continuing operations combined with the completion of the
distribution of Atrium to AEterna Zentaris shareholders on January 2, 2007.

    CONFERENCE CALL

    Management will be hosting a conference call for the investment community
beginning at 10:00 a.m. Eastern Time today, Wednesday, November 7, 2007, to
discuss results for the three-month period ended September 30, 2007.
    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.aeternazentaris.com. A replay will be available on the Company's Web site
for 30 days.

    About AEterna Zentaris Inc.

    AEterna Zentaris Inc. is 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.aeternazentaris.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        Nine months ended
    CONSOLIDATED RESULTS             September 30,             September 30,
    Unaudited                       2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $
    Revenues
    Sales and royalties            7,919       8,419      24,333      20,222
    License fees                   3,674       2,211       9,438       8,539
    -------------------------------------------------------------------------
                                  11,593      10,630      33,771      28,761
    -------------------------------------------------------------------------

    Operating expenses
    Cost of sales                  3,433       3,992      10,092       8,038
    Research and development
     (R&D) costs, net of tax
     credits and grants           10,096       6,181      26,295      20,247
    Selling, general and
     administrative (SG&A)         6,055       4,540      15,823      12,900
    Depreciation and
     amortization (D&A)            1,596       1,673       4,551       4,889
    -------------------------------------------------------------------------
                                  21,180      16,386      56,761      46,074
    -------------------------------------------------------------------------
    Loss from operations          (9,587)     (5,756)    (22,990)    (17,313)

    Other revenues (expenses)       (187)        184         (16)       (653)
    Income tax recovery            1,070         903       4,346       2,966
    -------------------------------------------------------------------------
    Net loss from continuing
     operations                   (8,704)     (4,669)    (18,660)    (15,000)
    Net earnings from
     discontinued operations           -       3,100           -       9,289
    -------------------------------------------------------------------------
    Net loss for the period       (8,704)     (1,569)    (18,660)     (5,711)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share from
     continuing operations
      Basic and diluted            (0.16)      (0.09)      (0.35)      (0.29)

    Net loss per share
      Basic and diluted            (0.16)      (0.03)      (0.35)      (0.11)
    Weighted average number
     of shares
      Basic and diluted       53,184,803  52,692,065  53,181,248  51,900,754


    (In thousands of US dollars)
                                                       September    December
    CONSOLIDATED BALANCE SHEETS                               30,         31,
    Unaudited                                               2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                               $           $
    Cash and short-term investments                       47,646      61,019
    Other current assets                                  19,366      40,704
                                                       ----------------------
                                                          67,012     101,723
    Long-term assets                                      66,611     121,768
                                                       ----------------------
    Total assets                                         133,623     223,491
                                                       ----------------------
                                                       ----------------------

    Current liabilities                                   18,640      16,310
    Deferred revenues                                      4,476       8,468
    Long-term debt                                             -         704
    Other long-term liabilities                            9,825      19,130
                                                       ----------------------
                                                          32,941      44,612
    Shareholders' equity                                 100,682     178,879
                                                       ----------------------
    Total liabilities and shareholders' equity           133,623     223,491
                                                       ----------------------
                                                       ----------------------
    




For further information:

For further information: Jenene Thomas, Senior Director, Investor
Relations & Corporate Communications, (908) 938-1475,
jenene.thomas@aeternazentaris.com; Paul Burroughs, Media Relations, (418)
652-8525 ext. 406, Cell.: (418) 575-8982, paul.burroughs@aeternazentaris.com

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