Full Press Release Details
Financial Statements
of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020
| Report of Independent Registered Public Accounting Firm (PCAOB ID:1263) | 2 |
| Report of Predecessor Independent Registered Public Accounting Firm (PCAOB ID:271) | 4 |
| Consolidated Statements of Financial Position | 5 |
| Consolidated Statements of Changes in Shareholders' Equity | 6 |
| Consolidated Statements of Loss and Comprehensive Loss | 7 |
| Consolidated Statements of Cash Flows | 8 |
| Notes to Consolidated Financial Statements | 9 |
of Independent Registered Public Accounting Firm
the Shareholders and the Board of Directors of
on the Financial Statements
have audited the accompanying consolidated statements of financial position of Aeterna Zentaris Inc. (the Company) as of December
31, 2022 and 2021, the related consolidated statements of changes in shareholders' equity, loss and comprehensive loss, and cash
flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated
financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for each of the two years
in the period ended December 31, 2022, in conformity with International Financial Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board.
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that
our audits provide a reasonable basis for our opinion.
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
| Goodwill impairment | ||
| Description of the matter | As disclosed in notes 2, 3 and 11 of the consolidated financial statements, the Company tests goodwill for impairment at least annually, or if there is an indication that the group of CGUs to which goodwill has been allocated may be impaired. Impairment is determined by assessing whether the carrying value of the group of CGUs, including the allocated goodwill, exceeds its recoverable amount, which is determined based on the higher of fair value less costs of disposal ("FVLCD") and value in use ("VIU"). For the year ended December 31, 2022, the Company recorded an impairment charge on its goodwill for an amount of $7.6 million. Management determined the recoverable amount of the group of CGUs based on a FVLCD model which was determined to be higher than VIU. FVLCD was determined based on a market approach and derived from market data, including information from market participants regarding the price that the Company could receive in a sale of the group of CGUs. VIU was determined using cash flow projections covering a five-year period and discounted to their present value using an estimated pre-tax discount rate. | |
| We identified the impairment of goodwill for the group of CGUs as a critical audit matter because of the significant judgments made by management to determine the appropriate methodology and assumptions made to estimate the recoverable amount of the group of CGUs. | ||
| How we addressed the matter in our audit | To test the estimated recoverable amount for the goodwill impairment test, our audit procedures included, among others, obtaining the analysis prepared by management and, with the assistance of our valuation specialists, assessing the methodology used by management for developing the recoverable amount estimate. We compared the estimated FVLCD to supporting documentation and available market data, including, information from market participants regarding the price that the Company could receive in a sale of the group of CGUs. We also obtained management's VIU model and assessed the reasonableness of management's estimates and assumptions related to cash flow projections by comparing to historical data, current agreements and market information. With the assistance of our valuation specialists, we tested the discount rate by developing a range of independent estimates and compared those to the discount rate selected by management. |
have served as the Company's auditor since 2021.
of Independent Registered Public Accounting Firm
the Board of Directors and Shareholders of Aeterna Zentaris Inc.
on the Financial Statements
have audited the accompanying consolidated statements of changes in shareholders' equity, loss and comprehensive loss and cash
flows for the year ended December 31, 2020, including the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company's operations
and its cash flows for the year ended December 31, 2020 in conformity International Financial Reporting Standards as issued by the International
Accounting Standards Board.
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion.
audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Professional Accountants, Licensed Public Accountants
for adjustments to reflect the reverse stock split as described in note 16, for which the date is March 22, 2023.
have served as the Company's auditor from 1993 to 2021.
PricewaterhouseCoopers
Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
+1 416 863 1133, F: +1 416 365 8215
refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Statements of Financial Position
of December 31, 2022 and 2021
thousands of US dollars)
| 2022 | 2021 | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents (note 6) | 50,611 | 65,300 | ||||||
| Trade and other receivables (note 7) | 732 | 1,314 | ||||||
| Inventory | 229 | 73 | ||||||
| Income taxes receivable | 1,428 | 2,361 | ||||||
| Prepaid expenses and other current assets (note 8) | 2,488 | 1,772 | ||||||
| Total current assets | 55,488 | 70,820 | ||||||
| Non-current assets | ||||||||
| Restricted cash equivalents (note 6) | 322 | 335 | ||||||
| Property and equipment (note 9) | 216 | 192 | ||||||
| Identifiable intangible assets (note 10) | - | 625 | ||||||
| Goodwill (note 11) | - | 8,130 | ||||||
| Total non-current assets | 538 | 9,282 | ||||||
| Total assets | 56,026 | 80,102 | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Payables and accrued liabilities (note 12) | 3,828 | 2,672 | ||||||
| Provisions (note 13) | 45 | 34 | ||||||
| Income taxes payable (note 22) | 108 | 115 | ||||||
| Deferred revenues (note 5) | 2,949 | 4,815 | ||||||
| Lease liabilities (note 14) | 114 | 130 | ||||||
| Total current liabilities | 7,044 | 7,766 | ||||||
| Non-current liabilities | ||||||||
| Deferred revenues (note 5) | 1,684 | 1,493 | ||||||
| Deferred gain (note 10) | 110 | 98 | ||||||
| Lease liabilities (note 14) | 65 | 31 | ||||||
| Employee future benefits (note 15) | 11,159 | 17,485 | ||||||
| Provisions (note 13) | 188 | 243 | ||||||
| Total non-current liabilities | 13,206 | 19,350 | ||||||
| Total liabilities | 20,250 | 27,116 | ||||||
| Shareholders' equity | ||||||||
| Share capital (note 16) | 293,410 | 293,410 | ||||||
| Warrants (note 17) | 5,085 | 5,085 | ||||||
| Other capital (note 18) | 90,332 | 89,788 | ||||||
| Deficit | (352,084 | ) | (334,619 | ) | ||||
| Accumulated other comprehensive loss | (967 | ) | (678 | ) | ||||
| Total Shareholders' equity | 35,776 | 52,986 | ||||||
| Total liabilities and shareholders' equity | 56,026 | 80,102 |
accompanying notes are an integral part of these consolidated financial statements.
by the Board of Directors
| /s/ Carolyn Egbert | /s/ Dennis Turpin | |
| Carolyn Egbert Chair of the Board | Dennis Turpin Director |
Statements of Changes in Shareholders' Equity
the years ended December 31, 2022, 2021 and 2020
thousands of US dollars)
| Share capital | Warrants | Other capital | Deficit | Accumulated other comprehensive income (loss) | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance - January 1, 2020 | 224,528 | - | 89,806 | (316,891 | ) | 94 | (2,463 | ) | ||||||||||||||||
| Net loss | - | - | - | (5,118 | ) | - | (5,118 | ) | ||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | (1,139 | ) | (1,139 | ) | ||||||||||||||||
| Actuarial loss on defined benefit plans and remeasurement of the net defined benefit liability (note 15) | - | - | - | (650 | ) | - | (650 | ) | ||||||||||||||||
| Comprehensive loss | - | - | - | (5,768 | ) | (1,139 | ) | (6,907 | ) | |||||||||||||||
| Reclassification of warrants to equity (note 17) | - | 7,377 | - | - | - | 7,377 | ||||||||||||||||||
| Issuance of common shares and warrants, net of transaction costs (note 16) | 10,480 | 5,025 | (362 | ) | - | - | 15,143 | |||||||||||||||||
| Share-based compensation costs | - | - | 61 | - | - | 61 | ||||||||||||||||||
| Balance - December 31, 2020 | 235,008 | 12,402 | 89,505 | (322,659 | ) | (1,045 | ) | 13,211 | ||||||||||||||||
| Net loss | - | - | - | (8,368 | ) | - | (8,368 | ) | ||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | 367 | 367 | ||||||||||||||||||
| Actuarial loss on defined benefit plans and remeasurement of the net defined benefit liability (note 15) | - | - | - | (3,592 | ) | - | (3,592 | ) | ||||||||||||||||
| Comprehensive loss | - | - | - | (11,960 | ) | 367 | (11,593 | ) | ||||||||||||||||
| Issuance of common shares and warrants, net of transaction costs (note 16) | 29,082 | 1,897 | - | - | - | 30,979 | ||||||||||||||||||
| Exercise of warrants (note 17) | 29,833 | (9,746 | ) | - | - | - | 20,087 | |||||||||||||||||
| Transfer of warrant issuance costs upon exercise of warrants (note 17) | (532 | ) | 532 | - | - | - | - | |||||||||||||||||
| Exercise of deferred share units | 19 | - | (28 | ) | - | - | (9 | ) | ||||||||||||||||
| Share-based compensation costs | - | - | 311 | - | - | 311 | ||||||||||||||||||
| Balance - December 31, 2021 | 293,410 | 5,085 | 89,788 | (334,619 | ) | (678 | ) | 52,986 | ||||||||||||||||
| Net loss | - | - | - | (22,727 | ) | - | (22,727 | ) | ||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | (289 | ) | (289 | ) | ||||||||||||||||
| Actuarial gain on defined benefit plans and remeasurement of the net defined benefit liability (note 15) | - | - | - | 5,262 | - | 5,262 | ||||||||||||||||||
| Comprehensive loss | - | - | - | (17,465 | ) | (289 | ) | (17,754 | ) | |||||||||||||||
| Share-based compensation costs | - | - | 544 | - | - | 544 | ||||||||||||||||||
| Balance - December 31, 2022 | 293,410 | 5,085 | 90,332 | (352,084 | ) | (967 | ) | 35,776 |
accompanying notes are an integral part of these consolidated financial statements.
Statements of Loss and Comprehensive Loss
the years ended December 31, 2022, 2021 and 2020
thousands of US dollars, except share and per share data)
| Years ended December 31, | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| $ | $ | $ | ||||||||||
| Revenues (notes 5 and 25) | 5,640 | 5,260 | 3,652 | |||||||||
| Expenses (note 19) | ||||||||||||
| Cost of sales | 157 | 90 | 2,317 | |||||||||
| Research and development | 12,506 | 6,574 | 1,506 | |||||||||
| Selling, general and administrative | 8,230 | 7,267 | 5,893 | |||||||||
| Gain on modification of building lease | - | - | (219 | ) | ||||||||
| Impairment of intangible assets (note 10) | 584 | - | - | |||||||||
| Impairment of goodwill (note 11) | 7,642 | - | - | |||||||||
| (Reversal of) impairment of other assets (note 7) | 124 | - | (139 | ) | ||||||||
| Total operating expenses | 29,243 | 13,931 | 9,358 | |||||||||
| Loss from operations | (23,603 | ) | (8,671 | ) | (5,706 | ) | ||||||
| Gains due to changes in foreign currency exchange rates | 879 | 215 | 572 | |||||||||
| Change in fair value of warrant liability (note 17) | - | - | 1,147 | |||||||||
| Other finance costs | (3 | ) | (21 | ) | (736 | ) | ||||||
| Net finance income | 876 | 194 | 983 | |||||||||
| Loss before income taxes | (22,727 | ) | (8,477 | ) | (4,723 | ) | ||||||
| Income tax recovery (expense) (note 22) | - | 109 | (395 | ) | ||||||||
| Net loss | (22,727 | ) | (8,368 | ) | (5,118 | ) | ||||||
| Other comprehensive loss: | ||||||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||||
| Foreign currency translation adjustments | (289 | ) | 367 | (1,139 | ) | |||||||
| Items that will not be reclassified to profit or loss: | ||||||||||||
| Actuarial gain (loss) on defined benefit plans and remeasurement of the net defined benefit liability | 5,262 | (3,592 | ) | (650 | ) | |||||||
| Comprehensive loss | (17,754 | ) | (11,593 | ) | (6,907 | ) | ||||||
| Basic and diluted loss per share (note 26) | (4.68 | ) | (1.82 | ) | (3.11 | ) | ||||||
| Weighted average number of shares outstanding (basic and diluted) | 4,855,876 | 4,596,980 | 1,643,327 |
accompanying notes are an integral part of these consolidated financial statements.
Statements of Cash Flows
the years ended December 31, 2022, 2021 and 2020
thousands of US dollars)
| Years ended December 31, | ||||||||||||
| 2022 | 2021 | 2020 | ||||||||||
| $ | $ | $ | ||||||||||
| Cash flows from operating activities | ||||||||||||
| Net loss | (22,727 | ) | (8,368 | ) | (5,118 | ) | ||||||
| Items not affecting cash and cash equivalents: | ||||||||||||
| Amortization of deferred revenues | (1,704 | ) | (1,670 | ) | 1,257 | |||||||
| Share-based compensation costs | 544 | 311 | 61 | |||||||||
| Provision for restructuring and other costs | (28 | ) | 23 | (383 | ) | |||||||
| Impairment of intangible assets (note 10) | 584 | - | - | |||||||||
| Impairment of goodwill (note 11) | 7,642 | - | - | |||||||||
| (Reversal of) impairment of other assets | 124 | - | (139 | ) | ||||||||
| Depreciation and amortization | 135 | 145 | 232 | |||||||||
| Employee future benefits | 295 | 161 | 217 | |||||||||
| Gain on modification of building lease | - | - | (219 | ) | ||||||||
| Change in fair value of warrant liability | - | - | (1,147 | ) | ||||||||
| Transaction costs of warrants issued, expensed as finance cost | - | - | 732 | |||||||||
| Gain on disposal of property and equipment | - | (1 | ) | (2 | ) | |||||||
| Interest accretion on lease liabilities | 4 | 7 | (19 | ) | ||||||||
| Net foreign exchange differences | 16 | (179 | ) | (688 | ) | |||||||
| Other non-cash items | - | 95 | 133 | |||||||||
| Refund (Payment) of income taxes | 831 | (1,605 | ) | (1,448 | ) | |||||||
| Changes in operating assets and liabilities (note 21) | 604 | 2,500 | 2,402 | |||||||||
| Net cash used in operating activities | (13,680 | ) | (8,581 | ) | (4,129 | ) | ||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from issuances of common shares and warrants (note 16) | - | 34,200 | 23,500 | |||||||||
| Transaction costs | - | (3,221 | ) | (2,767 | ) | |||||||
| Proceeds from exercise of warrants and deferred share units | - | 20,087 | - | |||||||||
| Proceeds on deferred gain | 16 | 98 | - | |||||||||
| Payments on lease liabilities | (134 | ) | (127 | ) | (265 | ) | ||||||
| Net cash (used in) provided by financing activities | (118 | ) | 51,037 | 20,468 | ||||||||
| Cash flows from investing activities | ||||||||||||
| Purchase of intangible assets | - | (609 | ) | - | ||||||||
| Purchase of property and equipment | (11 | ) | (30 | ) | - | |||||||
| Proceeds for disposals of property and equipment | - | 1 | 6 | |||||||||
| (Decrease) increase in restricted cash equivalents | (1 | ) | (20 | ) | 50 | |||||||
| Net cash (used in) provided by investing activities | (12 | ) | (658 | ) | 56 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (879 | ) | (769 | ) | 38 | |||||||
| Net change in cash and cash equivalents | (14,689 | ) | 41,029 | 16,433 | ||||||||
| Cash and cash equivalents - beginning of year | 65,300 | 24,271 | 7,838 | |||||||||
| Cash and cash equivalents - end of year | 50,611 | 65,300 | 24,271 |
accompanying notes are an integral part of these consolidated financial statements.
to Consolidated Financial Statements
of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020
thousands of US dollars, except share and per share data and where otherwise noted)
Zentaris (the "Company" or "Aeterna") is a specialty biopharmaceutical company commercializing and developing
therapeutics and diagnostic tests. The Company's lead product, Macrilen (macimorelin), is the first and only U.S. Food and
Drug Administration ("FDA") and European Medicines Agency-approved oral test indicated for the diagnosis of patients with
adult growth hormone deficiency ("AGHD"). Macrilen is currently marketed in the US through a license agreement (the
"Novo Amendment") between the Company and Novo Nordisk Health Care AG ("Novo") until May 2023 and in the United
Kingdom and Europe through a license agreement with Consilient Healthcare Inc ("Consilient" or "CH") under the
trade name of Ghryvelin . The Company is also dedicated to the development of therapeutic assets and has recently taken steps to
establish a pre-clinical pipeline to potentially address unmet medical needs across several indications with a focus on rare or orphan
indications with the potential for pediatric use.
of COVID-19 and the Russian invasion of Ukraine