AEterna Zentaris Reports Second Quarter 2007 Financial and Operating Results



    All amounts are in U.S. dollars

    QUEBEC CITY, Aug. 14 /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 second
quarter ended June 30, 2007.
    "I am pleased with our progress during the second quarter. Most
importantly, we commenced patient dosing for the first trial of the Phase 3
program for cetrorelix in BPH. With recruitment underway, our other clinical
programs progressing very well and the addition of key executives to our team,
we are able to focus on a rigorous strategic review of our product portfolio
and business opportunities, and I am confident we will have a coherent plan,
optimized for success to communicate to you in September," said David J.
Mazzo, Ph.D., AEterna Zentaris' President and Chief Executive Officer.

    
    KEY DEVELOPMENTS FOR THE SECOND QUARTER ENDED JUNE 30, 2007

    CORPORATE:

    - The Company bolstered its executive management team with the
      appointments of Ellen McDonald, MBA, Senior Vice President, Business
      Operations and Chief Business Officer, as well as Nicholas J.
      Pelliccione, Ph.D., Senior Vice President, Regulatory Affairs and
      Quality Assurance.

    ADVANCING THE PIPELINE:

    Cetrorelix

    - Patient dosing commenced with cetrorelix, the Company's lead
      luteinizing hormone-releasing hormone (LHRH) antagonist compound, in
      the first study of its extensive Phase 3 program in benign prostatic
      hyperplasia (BPH).
    - AEterna Zentaris regained exclusive worldwide (ex-Japan) rights for
      cetrorelix from Solvay Pharmaceuticals (Euronext: SOLB) in all
      indications, including endometriosis, without any financial
      compensation payable to Solvay.

    Ozarelix

    - Positive, detailed Phase 2 BPH results for ozarelix, a fourth-
      generation LHRH/GnRH antagonist, were presented at the American
      Urological Association (AUA) Annual Meeting.
    - Enrollment was completed for the Phase 2b trial in BPH being conducted
      in the U.S. and Canada by Spectrum Pharmaceuticals (NASDAQ:   SPPI).

    Perifosine

    - Positive Phase 1 and Phase 2 results for perifosine, an oral anti-
      cancer signal transduction inhibitor compound for the treatment of
      patients with advanced sarcoma were presented at the American Society
      of Clinical Oncology's (ASCO) Annual Meeting.

    AEZS-108

    - Positive, detailed Phase 1 results for AEZS-108, a targeted cytotoxic
      LHRH analog, were reported in female patients with cancers expressing
      LHRH receptors at the ASCO Annual Meeting.

    RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2007

    Consolidated cash and short-term investments were $51.5 million as of
June 30, 2007 compared to $61 million as of December 31, 2006.
    Consolidated revenues for the second quarter ended June 30, 2007 were
$12.2 million, an increase of 29.8% compared to revenues of $9.4 million for
the same period in 2006. The increase in consolidated revenues is mainly
attributed to increased sales of both Cetrotide(R) and Impavido(R).
    Consolidated R&D costs, net of tax credits and grants (R&D), were
$8 million for the quarter ended June 30, 2007 compared to $7.3 million for
the same period in 2006. The increase in R&D expense was related to the
additional expenses incurred with respect to the Phase 3 program with
cetrorelix in BPH, as well as further advancement of targeted, earlier
clinical-stage development programs.
    Consolidated selling, general and administrative (SG&A) expenses were $4.7
million for the quarter ended June 30, 2007 compared to $4.5 million for the
same period in 2006.
    Consolidated loss from operations decreased to $5.1 million for the
quarter ended June 30, 2007 compared to $5.5 million for the same period in
2006. The decrease in loss from operations is attributable to increased sales
of Cetrotide(R) and Impavido(R) partly offset by additional expenses in R&D.
    Net loss from continuing operations for the quarter ended June 30, 2007
was $4.8 million compared to $4.4 million for the same period in 2006. This
increase is attributable to a combination of higher R&D expenses and to the
foreign exchange loss recorded during the quarter ended June 30, 2007, partly
offset by increased revenues.
    Net earnings from discontinued operations for the second quarter ended
June 30, 2006 were nearly $2.9 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 quarter ended June 30, 2007 was $4.8 million
or $0.09 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 net loss increase for
the quarter is attributable to the completion of the distribution of AEterna
Zentaris remaining interest in Atrium to the Company's shareholders on January
2, 2007.

    CONFERENCE CALL

    Management will be hosting a conference call for the investment community
beginning at 10:30 a.m. Eastern Time today, Tuesday, August 14, to discuss
results for the quarter ended June 30, 2007.
    To participate in the live conference call by telephone, please dial
416-644-3420, 514-807-8791 or 800-731-5774. 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.

    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                       2007        2006        2007        2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $
    Revenues
    Sales and royalties            8,376       5,227      16,414      11,803
    License fees                   3,852       4,156       5,764       6,328
    -------------------------------------------------------------------------
                                  12,228       9,383      22,178      18,131
    -------------------------------------------------------------------------

    Operating expenses
    Cost of sales                  3,196       1,404       6,659       4,046
    R&D costs, net of tax
     credits and grants            8,015       7,262      16,199      14,066
    Selling, general and
     administrative                4,672       4,515       9,768       8,360
    Depreciation and
     amortization                  1,491       1,653       2,955       3,216
    -------------------------------------------------------------------------
                                  17,374      14,834      35,581      29,688
    -------------------------------------------------------------------------
    Loss from operations          (5,146)     (5,451)    (13,403)    (11,557)

    Interest income                  305         282         878         510
    Interest expense                 (53)        (19)        (54)     (1,262)
    Foreign exchange loss           (693)       (126)       (653)        (85)
    -------------------------------------------------------------------------
    Loss before income taxes      (5,587)     (5,314)    (13,232)    (12,394)
    Income tax recovery              741         884       3,276       2,063
    -------------------------------------------------------------------------
    Net loss from continuing
     operations                   (4,846)     (4,430)     (9,956)    (10,331)
    Net earnings from
     discontinued operations           -       2,868           -       6,189
    -------------------------------------------------------------------------
    Net loss for the period       (4,846)     (1,562)     (9,956)     (4,142)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share from
     continuing operations
      Basic and diluted            (0.09)      (0.08)      (0.19)      (0.20)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net loss per share
      Basic and diluted            (0.09)      (0.03)      (0.19)      (0.08)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Weighted average number
     of shares
      Basic and diluted       53,179,470  52,682,969  53,179,470  52,098,582
    Issued and outstanding
     shares                                           53,179,470  53,160,970


    (In thousands of US dollars)
    CONSOLIDATED BALANCE SHEETS                        June 30,  December 31,
    Unaudited                                             2007          2006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                             $             $
    Cash and short-term investments                     51,500        61,019
    Other current assets                                20,186        40,704
                                                 ----------------------------
                                                        71,686       101,723
    Long-term assets                                    63,809       121,768
                                                 ----------------------------
    Total assets                                       135,495       223,491
                                                 ----------------------------
                                                 ----------------------------

    Current liabilities                                 17,642        16,310
    Deferred revenues                                    4,781         8,468
    Long-term debt                                           -           704
    Other long-term liabilities                         10,608        19,130
                                                 ----------------------------
                                                        33,031        44,612
    Shareholders' equity                               102,464       178,879
                                                 ----------------------------
    Total liabilities and shareholders' equity         135,495       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, paul.burroughs@aeternazentaris.com

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