On May 6, 2020 Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS) ("Aeterna" or the "Company"), a specialty biopharmaceutical company commercializing and developing therapeutics and diagnostic tests, reported its financial and operating results for the three months ended March 31, 2020 (Press release, AEterna Zentaris, MAY 6, 2020, View Source [SID1234557117]).
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The Company also provided an update on its clinical program to develop macimorelin for the diagnosis of child-onset growth hormone deficiency ("CGHD"), an area of significant unmet need, and its plans to expand macimorelin for the diagnosis of adult growth hormone deficiency ("AGHD") in Europe.
Dr. Klaus Paulini, Chief Executive Officer of Aeterna commented, "Over the course of the first quarter, we made significant progress on clinical and corporate fronts. We successfully executed Study P01 in our clinical program to develop macimorelin for the diagnosis of CGHD, an area of significant unmet need. We are encouraged by the final results from the study, which demonstrated positive safety and tolerability data for use of macimorelin in CGHD. With these positive Study P01 results, we have the necessary data to lay the foundation for our test validation, Study P02, which we expect to commence later this year. Additionally, we were pleased to have received the decision from the EMA to accept a modification to our agreed pediatric investigation plan for macimorelin, ultimately supporting the development of one globally harmonized study protocol for Study P02, which will be accepted both in Europe and the United States of America."
Dr Paulini concluded, "In tandem, we have continued to work alongside our U.S. and Canadian commercialization partner, Novo Nordisk, to raise awareness and position Macrilen (macimorelin) for the diagnosis of AGHD. We remain focused on advancing our business development efforts to secure a marketing partner for macimorelin for the diagnosis of AGHD in Europe and other key markets. We are pleased with the progress we have made over the first quarter and believe that 2020 holds significant potential for the advancement of macimorelin."
Recent Highlights
Announced the decision of the European Medicines Agency ("EMA") to accept a modification request by Aeterna of the Company’s PIP for macimorelin as originally approved in March 2017 which covered the conduct of two pediatric studies and defined relevant key elements in the outline of these studies
Announced the positive results for the dose-finding pediatric study, Study P01, of macimorelin as a growth hormone stimulation test for the evaluation of CGHD; and
Closed a $4.5 million registered direct offering priced at-the-market (the "February 2020 Financing").
Macimorelin Clinical Program Update
The Company’s lead product, macimorelin, is the only United States Food and Drug Administration ("FDA") approved oral drug indicated for the diagnosis of AGHD and is currently marketed in the United States ("U.S.") under the tradename Macrilen, by Novo Nordisk. Aeterna is currently developing macimorelin for the diagnosis of CGHD, an area of significant unmet need, in collaboration with Novo Nordisk.
The Company recently announced positive results for the first pediatric study of macimorelin as a growth hormone stimulation test for the evaluation of CGHD. The dose-finding results from Study P01 provides the clinical framework to advance the Company’s pediatric investigation plan for macimorelin as a growth hormone deficiency diagnostic. The completed study included 24 subjects aged 4 to 15 years. In the subjects who completed the study in accordance with the protocol, macimorelin demonstrated an excellent safety and tolerability profile. There were 88 adverse events ("AE") reported in 23 subjects, none of which were assessed by the investigator as related to macimorelin. The majority of AEs (approximately 70%) were expected side effects related to the hypoglycemia introduced by the Insulin Tolerance Test. No significant changes in electrocardiogram parameters and safety laboratory values were noted in any of the three dosing cohorts.
The pharmacokinetic and pharmacodynamic profile of macimorelin proved to be in the expected range and in general comparable to data in adults.
For more information about Study P01, please visit EU Clinical Trials Register and reference EudraCT #2018-001988-23.
Upcoming Anticipated Program Milestones
Commence CGHD safety and efficacy study, Study P02 (multi-national, including U.S.); and
Advance business development efforts to secure a marketing partner for macimorelin for the diagnosis of AGHD in Europe and other key markets.
The Company is closely monitoring the evolving situation with coronavirus, or COVID-19, and is following guidance from health authorities. COVID-19 is affecting the global community and is adversely affecting our business operations, in a manner which at this time cannot be fully determined or quantified. The situation with COVID-19 is rapidly evolving and the impact of COVID-19, including travel and business restrictions, and other impediments to undertaking clinical studies, may significantly affect the Company’s business, operations, results, projected timelines and market price for Aeterna’s common shares. Aeterna has developed protocols and procedures should they be required to deal with any potential epidemics and pandemics and has implemented these protocols and procedures to address the current COVID-19 pandemic. Despite appropriate steps being taken to mitigate such risks, there can be no assurance that existing policies and procedures will ensure that the Company’s operations will not be further adversely affected. For more information, please see the Risk Factor entitled, "The economic effects of a pandemic, epidemic or outbreak of an infectious disease could adversely affect our operations or the market price of our Common Shares," in the Company’s Annual Report on Form 20-F for the year ended December 31, 2019.
Summary of First Quarter 2020 Financial Results
All amounts are in U.S. dollars
For the three-month period ended March 31, 2020, the Company reported a consolidated net income of $0.8 million, or $0.04 income per common share (basic), as compared with a consolidated net loss of $4.9 million, or $0.30 loss per common share (basic) for the three-month period ended March 31, 2019. The $5.7 million improvement in net results is primarily from a gain in fair value of warrant liability of $4.5 million and increase in revenues of $1.1 million.
Revenues
The Company reported total revenue for the three-month period ended March 31, 2020 of $1.1 million as compared with $0.04 million for the same period in 2019, representing an increase of $1.06 million. The 2020 revenue was comprised of $0.01 million in royalty revenue (2019 – $0.01 million), $1.0 million in product sales of Macrilen (macimorelin) to Novo Nordisk (2019 – $nil), $0.04 million in supply chain revenue (2019 – $0.01 million) and $0.02 million in licensing revenue (2019 – $0.02 million). The product sales in 2020 represented sales of Macrilen (macimorelin) to Novo Nordisk.
Operating Expenses
The Company reported total operating expenses for the three-month period ended March 31, 2020 of $2.4 million as compared with $3.0 million for the same period in 2019, representing a decrease of $0.6 million. This decrease arises primarily from a $0.5 million decline in general and administrative, a $0.2 million decline in research and development costs, a $0.2 million gain on modification of building lease, $0.3 million impact from impairment in right of use assets, $0.2 million impact in impairment of prepaid asset, and a $0.1 million decline in selling expenses, offset by a $0.9 million increase in cost of sales. The impact of the Company’s June 2019 restructuring in its German subsidiary, namely for payroll and share-based compensation costs, is a key influence in the declines in general and administrative expenses, selling and research and development expenses.
The further impact on the decline in research and development costs is attributed to the different phases of activity of Study P01. In the first quarter of 2019, study activities included study start with document development, medication manufacturing, study feasibility testing at different sites and clinical trial applications in Hungary, Poland, Belarus, Russia, Ukraine and Serbia, while in 2020, all sites had completed their enrollment and clinical activities.
Net Finance Income
The Company reported net finance income for the three-month period ended March 31, 2020 of $2.1 million as compared with net finance costs of $2.0 million for the same period in 2019, representing an increase of $4.1 million. This is primarily due to a $4.5 million change in fair value of warrant liability offset by increased finance costs of $0.3 million from the February 2020 Financing and $0.1 million from changes in currency exchange rates. Such a non-cash change in fair value of warrant liability results from the periodic "mark-to-market" revaluation, which occurs through the application of the Company’s pricing model, of Aeterna’s outstanding share purchase warrants.
Consolidated Financial Statements and Management’s Discussion and Analysis
For reference, the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the first quarter of 2020, as well as the Company’s audited consolidated financial statements as of March 31, 2020, will be available at www.zentaris.com in the Investors section or at the Company’s profile at www.sedar.com and www.sec.gov.