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AEterna Zentaris Reports Second Quarter 2009 Financial and Operating Results

All amounts are in U.S. dollars

QUEBEC CITY, Aug. 11 /PRNewswire-FirstCall/ - AEterna Zentaris Inc. (NASDAQ: AEZS, TSX: AEZ) ("the Company"), a global biopharmaceutical company focused on endocrinology and oncology, today reported financial and operating results as at and for the three-month and six-month periods ended June 30, 2009.

    Second Quarter 2009 Highlights


    - Two poster presentations at the American Association of Cancer
      Research ("AACR") Annual Meeting on in vitro and in vivo results for
      AEZS-126 in human tumors, and one poster presentation on Phase 1
      results with AEZS-112 in solid tumors or lymphoma.

    - Notification from Nasdaq that the Company had regained compliance
      with Nasdaq's minimum bid price rules.


    - Presentation at the American Society of Clinical Oncology ("ASCO")
      Annual Meeting of results supporting evaluation of AEZS-108 in
      prostate cancer.


    - Presentation at the ASCO Annual Meeting of positive Phase 2 data on
      perifosine in advanced metastatic colon cancer and advanced renal cell
      carcinoma by the Company's partner, Keryx Biopharmaceuticals, Inc.

    - Acquisition from Ardana Bioscience Ltd. of all assets relating to

    - Disclosure of neutral results for the Company's Phase 2 trial in
      non-small cell lung cancer with perifosine as radioenhancer.

    - Announcement of the initiation of the extension of the Company's North
      American Phase 3 efficacy study with cetrorelix in benign prostatic
      hyperplasia ("BPH"). This extension of the study is sponsored by
      sanofi-aventis, the Company's partner for the US market.

    - Poster presentation at the Endocrine Society ("ENDO") Annual Meeting
      on AEZS-130 as a simple diagnostic test for adult growth hormone

    - Announcement that data from the Company's safety study of the Phase 3
      program in BPH with cetrorelix are expected to be disclosed ahead of
      schedule, from the fourth quarter 2009 to the third quarter of 2009.

    - Completion of a registered direct offering of US$10 million of units
      comprised of common shares and common share purchase warrants to
      certain institutional investors.

    Subsequent to Quarter-End


    - Publication in Proceedings of the National Academy of Sciences of new
      data supporting the use of the Company's ghrelin receptor antagonist
      compound, AEZS-123, for the treatment of alcohol dependence.


    - Keryx, the Company's partner and licensee for perifosine in the North
      American market, reached an agreement with the FDA regarding a Special
      Protocol Assessment on the design of a Phase 3 trial with perifosine
      in multiple myeloma.

Juergen Engel, Ph.D., AEterna Zentaris President and Chief Executive Officer, commented, "The quarter was marked by continued progress of our current Phase 3 program in BPH with cetrorelix. As part of this same program and with a sponsorship from sanofi-aventis, our partner for cetrorelix in the US market, we initiated the extension of our North American efficacy study. We also moved up disclosure of the safety trial results of this program ahead of schedule, from Q4 to Q3 2009. Furthermore, we presented data on some of our anticancer compounds at both the AACR and ASCO annual meetings, which underlined the breadth and potential of our product pipeline. Also, we were very pleased with Keryx's announcement that they expect to begin a Phase 3 trial with perifosine in multiple myeloma, following their recent SPA agreement with the FDA. We now look forward to disclosing first results of our Phase 3 program in BPH during the third quarter, as we continue to deploy all the necessary efforts to bring cetrorelix to market."

Dennis Turpin, the Company's Senior Vice President and Chief Financial Officer, added, "We were pleased to complete a $10 million registered direct offering during the quarter. This vote of confidence from institutional investors provides us with additional funds that will be used mainly to further strengthen our promising oncology pipeline."

    JUNE 30, 2009

Consolidated revenues were $8.4 million for the three-month period ended June 30, 2009, compared to $10.5 million for the same period in 2008. This decrease is related to lower royalty revenues having been recognized in the second quarter of 2009 in connection with the Company's agreement with Merck Serono, where amortization of the proceeds received from Cowen for the three-month period ended June 30, 2009 was lower than the royalty revenues generated and payable directly by Merck Serono during the second quarter of 2008. The comparative decrease in sales and royalties is also attributable to euro to US dollar exchange rate fluctuations, given the comparative strengthening of the US dollar in the second quarter of 2009 vis-a-vis the euro, and despite the increase in licence fee and other comparative revenues.

Consolidated R D costs, net of tax credits and grants, were $12.1 for the three-month period ended June 30, 2009 compared to $17.3 million for the same period in 2008. The comparative decrease in net R D costs is largely attributable to a lower volume of expenses incurred in connection with the continued advancement of the Company's Phase 3 program for its lead compound, cetrorelix, in BPH, as well as to euro to US dollar exchange rate fluctuations, as discussed above.

Consolidated selling, general and administrative ("SG A") expenses were $3.1 million for the three-month period ended June 30, 2009, compared to $6.6 million for the same period in 2008. This decrease is related to comparative euro to US dollar exchange rate fluctuations, the absence in 2009 of certain non-recurring corporate expenses related to organizational changes, including severance costs, which had been incurred in the second quarter of 2008, and to continuing cost-saving measures that were implemented beginning in the second quarter of 2008.

Consolidated net loss for the three-month period ended June 30, 2009 was $13.1 million, or $0.24 per basic and diluted share, compared to $20.6 million, or $0.39 per basic and diluted share, for the same period in 2008. This decrease is mainly related to lower comparative R D and SG A expenses, partially offset by lower comparative revenues, as discussed above.

Consolidated cash, cash equivalents and short-term investments were $57.3 million as at June 30, 2009.


Management will be hosting a conference call for the investment community beginning at 10:00 a.m. Eastern Time today, Tuesday, August 11, 2009, to discuss second quarter 2009 results. Individuals interested in participating in the live conference call by telephone may dial 800-588-4942, 416-644-3426, or 514-807-8791, or may listen through the Internet at A replay will be available on the Company's website for 30 days following the live event.

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

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 required by a governmental authority or applicable law.

Attachment: Financial summary

    Quarterly Interim Consolidated Statements of Loss (unaudited)

                                  Three months ended        Six months ended
                                        June 30,                June 30,
    (in thousands)                  2009        2008        2009        2008
                                       $           $           $           $
    Sales and royalties            5,427       8,250      10,398      16,192
    License fees and other         2,952       2,207       4,092       4,013
                                   8,379      10,457      14,490      20,205
    Operating expenses
    Cost of sales                  4,545       4,758       8,239       9,362
    Research and development
     costs, net of tax credits
     and grants                   12,076      17,345      23,513      31,034
    Selling, general and
     administrative                3,102       6,606       6,656      11,010
    Depreciation and
      Property, plant and
       equipment                     331         397         642         766
      Intangible assets              563         876       1,120       1,716
                                  20,617      29,982      40,170      53,888
    Loss from operations         (12,238)    (19,525)    (25,680)    (33,683)
    Other income (expenses)
    Interest income                  118         311         274         588
    Interest expense                   -         (53)         (2)        (68)
    Foreign exchange
     (loss) gain                    (960)       (502)        (60)      1,753
    Loss on disposal of
     long-lived assets
     held for sale                     -        (810)          -         (35)
                                    (842)     (1,054)        212       2,238
    Net loss for the period      (13,080)    (20,579)    (25,468)    (31,445)

    Net loss per share
    Basic and diluted              (0.24)      (0.39)      (0.48)      (0.59)
    Weighted average
     number of shares
    Basic and diluted         53,655,087  53,187,470  53,422,571  53,187,470

    Interim Consolidated Balance Sheet Information (unaudited)
                                                         As at         As at
                                                       June 30,  December 31,
    (in thousands)                                        2009          2008
                                                             $             $

    Cash and cash equivalents                           56,817        49,226
    Short-term investments                                 518           493
    Accounts receivable and other current assets        13,420        12,005
    Property, plant and equipment                        6,387         6,682
    Other long-term assets                              40,298        39,936
    Total assets                                       117,440       108,342

    Accounts payable and other current liabilities      27,006        22,121
    Current portion of long-term payable                    52            49
    Long-term payable                                      155           172
    Non-financial long-term liabilities                 86,858        64,525
    Total liabilities                                  114,071        86,867
    Shareholders' equity                                 3,369        21,475
    Total liabilities and shareholders' equity         117,440       108,342

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