On May 5, 2021 Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZS) ("Aeterna" or the "Company"), a specialty biopharmaceutical company developing and commercializing a diversified portfolio of pharmaceutical and diagnostic products, reported its financial and operating results for the first quarter ended March 31, 2021 (Press release, AEterna Zentaris, MAY 5, 2021, View Source [SID1234579223]). The Company also provided an update on its preclinical and clinical development programs.
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"Over the course of the first quarter, we continued to execute on our key strategic priorities by significantly strengthening our balance sheet and expanding our development pipeline. This solid execution provides us with optionality to advance and accelerate our pipeline programs," commented Dr. Klaus Paulini, Chief Executive Officer of Aeterna.
Recent Highlights:
Regained compliance with minimum bid price requirement for continued listing on Nasdaq;
Closed bought deal offering of common shares for gross proceeds of $34.2 million;
Received $20.0 million in proceeds from exercise of warrants in 2021;
Entered into a material transfer agreement (the "MTA") with The University of Queensland ("Queensland University"), for the advancement of macimorelin as a potential therapeutic for the treatment of an undisclosed neurodegenerative disease; and
Executed on building preclinical projects pipeline to expand assets in development for potential high-value indications through multiple licensing agreements with universities in Europe.
"I firmly believe we have positioned Aeterna Zentaris for a transformational year. We have secured intellectual property and assets in high-value indications that we believe hold significant promise, the necessary capital to advance our pipeline as rapidly as possible, and the team and expertise to execute and deliver results, all of which we believe will build shareholder value in the near- and long-term," added Dr. Paulini.
Preclinical and Clinical Programs Update:
Diagnostics Development Pipeline
Macimorelin Diagnostic: Ghrelin agonist in development for diagnostic use in childhood-onset growth hormone deficiency ("CGHD")
With the investigational new drug application, "Multicenter, open-label trial to investigate the efficacy and safety of a single oral dose of 1.0 mg/kg macimorelin acetate as growth hormone stimulation test ("GHST") in pediatric patients with suspected growth hormone deficiency ("GHD")," now active, preparations remain ongoing to initiate the pivotal Phase 3 study (the "DETECT-trial"). Children and adolescents from two to less than 18 years of age with suspected growth hormone deficiency are expected to be included. The study is expected to include approximately 100 subjects worldwide, with at least 40 subjects in pre-pubertal and 40 subjects in pubertal status. A macimorelin GHST will be performed twice to ensure the repeatability of the data. Two standard GHSTs will be used as controls: arginine (i.v.) and clonidine (p.o.).
Next Steps
Initiate DETECT-trial study sites and patient enrollment, which is expected in the second quarter of 2021.
Therapeutics and Vaccine Development Pipeline
AIM Biologicals: Targeted, highly specific immunosuppressive therapeutics for the potential treatment of neuromyelitis optica spectrum disorder ("NMOSD")
In January 2021, the Company entered into an exclusive patent license agreement and research agreement with Julius-Maximilians-University of Wuerzburg, Germany for worldwide rights to develop, manufacture and commercialize targeted, highly specific immunosuppressive therapeutic proteins ("AIM Biologicals") for the potential treatment of NMOSD.
AIM Biologicals utilize a novel mechanism which is believed to demonstrate that peptide antigens presented on immunosuppressive major histocompatibility complex class I molecules can selectively and efficiently induce antigen-specific tolerance. Based on this mechanism, the targeted immunosuppressive therapeutics are being designed as optimized soluble molecules with the goal that they may be adapted to selectively induce tolerance to various autoantigens.
Next Steps
Conduct further preclinical research to identify and characterize an AIMBiologicals-based development candidate for the treatment of NMOSD and develop manufacturing process for selected candidate.
Delayed Clearance Parathyroid Hormone ("DC-PTH") Fusion Polypeptides: Potential treatment for primary hypoparathyroidism
In March 2021, Aeterna entered into an exclusive patent and know-how license agreement and research agreement with The University of Sheffield, United Kingdom, for the intellectual property relating to DC-PTH fusion polypeptides with delayed clearance covering the field of all human use.
DC-PTH is a modified growth hormone binding protein (GHBP) linked to PTH1-34 with the goal of providing parathyroid hormone activity with a delayed clearance of one or two weeks. PTH is a key regulating hormone and may help patients with primary hypoparathyroidism maintain normal serum calcium and phosphate levels during chronic use.
Next Steps
Work with The University of Sheffield to conduct in depth characterization of development candidate (in vitro and in vivo).
Macimorelin Therapeutic: Ghrelin agonist in development for the treatment of an undisclosed neurodegenerative disease
In January 2021, the Company entered into the MTA with Queensland University, Australia, to provide macimorelin for the conduct of preclinical and subsequent clinical studies evaluating macimorelin as a potential therapeutic for the treatment of an undisclosed neurodegenerative disease. Queensland University researchers have filed for supportive grants and aim to conduct preclinical studies in multiple models to demonstrate the therapeutic reach of macimorelin on disease progression and disease-specific pathology as well as to conduct a subsequent investigator initiated clinical trial.
Macimorelin, a ghrelin agonist, is an orally active small molecule that stimulates the secretion of growth hormone from the pituitary gland. Acting via this mechanism, it is believed that macimorelin may slow the progression of certain neurodegenerative diseases.
Next Steps
Work with Queensland University to conduct proof-of-concept studies with macimorelin in disease-specific animal models, assess alternative formulations and formalize a preclinical development plan.
COVID-19 Vaccine: Potential orally active COVID-19 (SARS-CoV-2) live-attenuated bacterial vaccine
In February 2021, Aeterna entered into an exclusive option agreement with Julius-Maximilians-University to evaluate a preclinical, potential COVID-19 vaccine developed at Julius-Maximilians-University. In March 2021, the Company exercised its option and entered into a license agreement where the Company was granted an exclusive, world-wide, license to certain patent applications and know-how owned by Julius-Maximilians-University to research and develop, manufacture, and sell a potential COVID-19 vaccine.
Julius-Maximilians-University also granted Aeterna an option for the exclusive use of certain patent applications and know-how in an additional undisclosed field. The Company has six months from the date of the license agreement to exercise that option. Additionally, Aeterna entered into a Research Agreement under which the Company has engaged Julius-Maximilians-University on a fee-for-service basis to conduct supplementary research activities and preclinical development studies on the potential vaccine, the results of which will be included within the scope of the license agreement.
Next Steps
Conduct in vivo immunology experiments with antigen variant candidates, initiate challenge experiments in immunized transgenic animals as proof of concept, select a development candidate for initiation of the formal preclinical toxicology and safety studies and start manufacturing process assessment and development.
Financing and Warrant Exercises
Between January 1, 2021 and March 24, 2021, the Company has raised net proceeds of approximately $31.0 million from a registered public offering and $20.0 million from warrant exercises. On February 19, 2021, the Company closed a public offering of 20,509,746 common shares at a price to the public of $1.45 per common share, for gross proceeds of $29.7 million, before deducting underwriting discounts, commissions and offering expenses payable by the Company, in the amount of $2.8 million. Aeterna also granted the underwriter, which was also the Placement agent, a 30-day overallotment option (the "Underwriter Option") to purchase up to 3,076,461 additional common shares at the public offering price, less underwriting discounts and commissions, and 1,435,682 Placement agent warrants with an exercise price of $1.8125 and expiring on February 17, 2026. The net cash proceeds to the Company from the offering totaled $26.9 million. On February 22, 2021, the underwriter exercised the Underwriter Option in full and received 3,076,461 common shares for gross proceeds to the Company of $4.5 million. In connection with the public offering and the exercise of the Underwriter Option, the Company paid commissions and other expenses of $0.4 million and issued 215,352 Placement agent warrants priced at $1.8125 and expiring on February 17, 2026. Collectively, this financing is referred to as the "February 2021 Financing."
Summary of First Quarter 2021 Financial Results
All amounts in this press release are in U.S. dollars unless otherwise noted.
Results of operations for the three-month period ended March 31, 2021
For the three-month period ended March 31, 2021, we reported a consolidated net loss of ($1.4 million), or ($0.02) net loss per common share (basic), as compared with a consolidated net income of $0.8 million, or $0.04 net income per common share (basic) for the three-month period ended March 31, 2020. The $2.2 million increase in net loss is primarily from a decrease in net finance income of $2.3 million and a decrease of $0.5 million in total revenues, partially offset by a decrease of $0.5 million in total operating expenses and $0.1 million increase in tax recovery.
Revenues
Our total revenue for the three-month period ended March 31, 2021 was $0.6 million as compared with $1.1 million for the same period in 2020, representing a decrease of $0.5 million. The 2021 revenue was comprised of $0.5 million in licensing revenue (2020 – $0.02 million), $0.04 million in supply chain revenue (2020 – $0.04 million) and $0.01 million in royalty income (2020 – $0.01 million). In the first quarter of 2020, the Company sold $1.0 million in Macrilen (macimorelin) to Novo Nordisk Biopharm Limited ("Novo Nordisk") while no such sale of product occurred in the first quarter of 2021.
Operating expenses
Our total operating expense for the three-month period ended March 31, 2021 was $1.9 million as compared with $2.4 million for the same period in 2020, representing a decrease of $0.5 million. This decrease arose primarily from a $0.8 million decrease in cost of sales, offset by an increase of $0.1 million in general and administrative expenses and a $0.2 million one-time gain on modification of a lease that was incurred in 2020 only. There was a significant decrease in cost of sales as the Company did not sell any product in the first quarter of 2021.
Net finance (costs) income
Our net finance (costs) for the three-month period ended March 31, 2021 was ($0.3 million) as compared with net finance income $2.1 million for the same period in 2020, representing a decrease in net finance income of $2.4 million.
The Company had $73.4 million cash and cash equivalents at March 31, 2021 (December 31, 2020 – 24.3 million).
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 2021, as well as the Company’s unaudited consolidated interim financial statements as of March 31, 2021, 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.