AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) reported financial and operating results for the first quarter ended March 31, 2017.
Commenting on recent key developments, David A. Dodd, President and Chief Executive Officer of the Company, stated, “On May 1, we reported that the ZoptEC (zoptarelin doxorubicin in endometrial cancer) Phase 3 study of Zoptrex™ in women with locally advanced, recurrent or metastatic endometrial cancer did not achieve its primary endpoint of demonstrating a statistically significant increase in the median period of overall survival of patients treated with Zoptrex™ as compared to patients treated with doxorubicin. Therefore, the results of the study do not support regulatory approval of Zoptrex™. Based on this outcome, we do not anticipate conducting clinical trials of Zoptrex™ with respect to any other indications.” Regarding the Company’s plans, Mr. Dodd continued, “Our focus has now shifted entirely to filing our new drug application (“NDA”) for Macrilen™ and, if the product is approved, to its commercial launch as soon as possible. We will also optimize our resources to be consistent with our focus on Macrilen™-related efforts. Consequently, we now expect that our monthly average use of cash in operations during the remainder of 2017 will be between $1.7 million and $1.9 million, a decrease of approximately 22%, compared to the first quarter. We continue to believe in the potential that Macrilen™ provides for us to become a successful specialty pharmaceutical company. Our intention is to submit the Macrilen™ NDA in the third quarter of 2017 and, if the product receives approval from the U.S. Food and Drug Administration (the “FDA”), to commercially launching the product in the first quarter of 2018.”
First Quarter Financial Highlights
Revenues were $261,000 for the three months ended March 31, 2017, as compared to $242,000 for the same period in 2016. The increase is mainly explained by the amortization of the up-front payment received in connection with one of the out-licensing agreements that we entered into in 2016 for ZoptrexTM with respect to a territory outside our core areas of interest.
Research and Development (“R&D”) costs
R&D costs were $2.5 million for the three months ended March 31, 2017, compared to $3.7 million for the same period in 2016. The decrease in our R&D costs for the three months ended March 31, 2017, as compared to the same period in 2016, is mainly attributable to lower third-party costs attributable to Zoptrex™, which is mainly due to the fact that we completed the clinical portion of the ZoptEC clinical trial during the first quarter of 2017. Third-party costs attributable to Macrilen™ remained stable during the three months ended March 31, 2017, as compared to the same period in 2016.
General and Administrative (“G&A”) Expenses
G&A expenses were $1.9 million for both three-month periods ended March 31, 2017 and 2016. The G&A expenses remained stable and were in line with our expectations for the first quarter.
Selling expenses were $1.5 million for the three months ended March 31, 2017, as compared to $1.7 million for the same period in 2016. Selling expenses for the three months ended March 31, 2017 and 2016 represent mainly the costs of our sales force related to the co-promotion activities as well as our sales management team. The decrease in selling expenses is explained by the reduction in the number of sales representatives from 20 to 13 in February 2017.
Net Finance Income
Net finance income was $1.5 million for the three months ended March 31, 2017, as compared to $3.3 million, for the same period in 2016. The decrease in finance income is mainly attributable to the change in fair value recorded in connection with our warrant liability. Such change in fair value results from the periodic “mark-to-market” revaluation, via the application of option pricing models, of outstanding share purchase warrants. The closing price of our common shares, which, on the NASDAQ, fluctuated from $2.45 to $3.65 during the three-month period ended March 31, 2017, compared to $2.67 to $4.40 during the same period in 2016, also had a direct impact on the change in fair value of warrant liability.
Net loss for the three months ended March 31, 2017 was $(4.1) million, or $(0.31) per basic and diluted share, as compared to a net loss of $(3.7) million, or $(0.37) per basic and diluted share, for the same period in 2016. The increase in net loss for the three months ended March 31, 2017, as compared to the same period in 2016, is largely attributable to lower operating expenses offset by lower net finance income, as described above. The basic and diluted loss per share decreased because the number of shares outstanding increased following an offering completed in November 2016 as well as issuances under our various ATM programs.
Cash and cash equivalents were $17.8 million as at March 31, 2017, as compared to $22.0 million as at December 31, 2016. The decrease in cash and cash equivalents as at March 31, 2017, as compared to December 31, 2016, is due to the net cash used in operating activities and variations in components of our working capital. The decrease was partially offset by the net proceeds generated by the issuance of common shares under our various ATM programs.
Shares of Aeterna Zentaris are up nearly 4% to $0.95 in after-hours trading. AEZS has a 1-year high of $5.59 and a 1-year low of $0.83. The stock’s 50-day moving average is $2.68 and its 200-day moving average is $3.17.
Æterna Zentaris, Inc. operates as a specialty biopharmaceutical company that is engaged in developing and commercializing novel treatments in oncology, endocrinology and women’s health. The company’s pipeline encompasses compounds at all stages of development, from drug discovery through to marketed products. It focuses on the development of Perifosine, Cetrotide, Ozarelix, AEZS-108 and AEZS-130.