On November 7, 2019 Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS) reported its financial and operating results for the third quarter ended September 30, 2019 (Press release, AEterna Zentaris, NOV 7, 2019, View Source [SID1234553274]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
All Amounts are in U.S. Dollars
Highlights
Net loss for the third quarter of 2019 was $0.3 million as compared to net loss of $2.5 million for the same period in 2018. Net loss for the nine-months ended September 30, 2019 was $5.0 million as compared to net income of $9.3 million for the same period in 2018.
As of September 30, 2019, we had $10.9 million of unrestricted cash and cash equivalents.
On September 20, 2019, the Company entered into a securities purchase agreement with U.S. institutional investors to purchase $5.0 million (before transaction costs of $0.8 million) of its common shares in a registered direct offering and warrants to purchase common shares in a concurrent private placement. The combined purchase price for one common share and one warrant was $1.50. Under the terms of the securities purchase agreement, the Company sold 3,325,000 common shares. In a concurrent private placement, the Company issued warrants to purchase up to an aggregate of 3,325,000 common shares. The warrants are exercisable commencing six months from the date of issuance, have an exercise price of $1.65 per share and expire 5 years following the date of issuance.
The Company earned royalty income for the nine-month period ending September 30, 2019 of $0.03 million from the license of Macrilen (macimorelin) and we invoiced Novo Nordisk (Novo) $0.8 million for its share of our pediatric clinical study (the "PIP study") costs and $1.1 million for supply chain costs.
During the third quarter of 2019, Novo confirmed that it had initiated a thorough review on support, reimbursement, distribution and marketing arrangements regarding Macrilen (macimorelin) in order to identify improvements to the Macrilen commercialization plans. We continue to work with Novo on addressing the slower than expected U.S. sales to date.
The initial phase of the Macrilen macimorelin PIP study (the "P01 Dose Ranging Study") continued to progress with the first two-thirds of subjects having completed the protocol. We currently expect to complete the P01 Dose Ranging Study in the first quarter of 2020.
Summary of Third Quarter Results and Year-to-date Third Quarter Results
For the three-month period ended September 30, 2019, we reported a consolidated net loss of $0.3 million, or $0.02 loss per common share (basic), as compared with a consolidated net loss of $2.5 million, or $0.15 loss per common share, for the three-month period ended September 30, 2018. The $2.2 million improvement in net results is primarily from a gain in fair value of warrant liability of $2.1 million and a decline in operating expenses of $1.1 million and an increase in gross income of $0.1 million and $0.1 million increase in foreign currency exchange rates, offset by $0.5 million movement in tax recovery and an increase in net finance costs of $0.7 million.
For the nine-month period ended September 30, 2019, we reported a consolidated net loss of $5.0 million, or $0.31 loss per common share, as compared with a consolidated net income of $9.3 million, or $0.57 income per common share (basic), for the nine-month period ended September 30, 2018. The $14.3 million decline in net results is primarily from a reduction of $24.3 million in gross income offset by $6.1 million in tax expense, $3.0 million decline in operating expenses and $0.9 million increase in net finance income.
On June 6, 2019, the Company announced that it was reducing the size of its German workforce and operations to more closely reflect the Company’s ongoing commercial activities in Frankfurt. This restructuring affects 8 employees in Frankfurt, Germany and resulted in $0.8 million of severance costs that are expected to be paid by January 31, 2020.
In July 2019, Michael Ward resigned as managing director of AEZS Germany and Dr. Klaus Paulini assumed this role. In August 2019, Jonathan Pollack resigned as a director of Aeterna Zentaris Inc. and, in September 2019, Brian Garrison, resigned as a Senior Vice President, Global Commercial Operations of Aeterna Zentaris Inc. Subsequent to quarter-end, on October 4, 2019, Dr. Klaus Paulini was announced as President and Chief Executive Officer of the Company, replacing Michael Ward who is entitled to severance of approximately $0.5 million. Dr. Paulini was also appointed as a Director of Aeterna Zentaris Inc. at that time.
Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis
For reference, the condensed interim consolidated financial statements as at September 30, 2019 and for the three-month and nine-month periods ending September 30, 2019 and 2018 and management’s discussion and analysis of financial condition and results of operations three-month and nine-month periods ending September 30, 2019, will be found at www.zentaris.com in the "Investors" section and at the Company’s profile at www.sedar.com and www.sec.gov.
The following tables set out summary consolidated financial information for the periods indicated. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year or any future period. The information presented herein does not contain disclosures required by IFRS for consolidated financial statements and should be read in conjunction with the Company’s audited annual consolidated financial statements for the year ended December 31, 2018.