Full Press Release Details
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Zoptarelin Doxorubicin (AEZS-108)
Macimorelin Acetate (AEZS-130)
Cetrotide Manufacturing Rights
In November 2008, we had monetized our Cetrotide royalty stream to HealthCare Royalty Partners L.P. (formerly Cowen Healthcare Royalty Partners L.P.) for $52.5 million.
Effective October 2013, we have ceased generating revenue both from the manufacturing rights and from the royalties on sales (excluding revenue from transfer of remaining inventory) of Cetrotide .
"At-the-Market" Issuance Program
This ATM allows the Company to sell up to a maximum of 2.5 million of our common shares through ATM issuances on the NASDAQ Capital Market (the "NASDAQ") for aggregate gross proceeds not to exceed $4.6 million.
Registered Direct Offering
Third Quarter MD&A - 2013
Listing Transfer to NASDAQ Capital Market
Appointment of Chief Commercial Officer and Reaffirmation of New Strategic Vision
Focus on the successful development and commercialization of our pipeline:
Focus on successful in-/out-licensing and acquisition opportunities:
Third Quarter MD&A - 2013
This Management's Discussion and Analysis ("MD&A") provides a review of the results of operations, financial condition and cash flows of Aeterna Zentaris Inc. for the three-month and nine-month periods ended September 30, 2013. In this MD&A, "Aeterna Zentaris", the "Company", "we", "us", "our" and the "Group" mean Aeterna Zentaris Inc. and its subsidiaries. This discussion should be read in conjunction with the information contained in the Company's unaudited interim condensed consolidated financial statements as at September 30, 2013 and for the three-month and nine-month periods ended September 30, 2013 and 2012 (the "interim consolidated financial statements").
All amounts in this MD&A are presented in U.S. dollars, except for share, option and warrant data, per share and per warrant data and as otherwise noted.
All shares, options and share purchase warrants as well as per share, option and share purchase warrant information for periods preceding October 2, 2012 have been adjusted, including proportionate adjustments being made to each stock option and share purchase warrant exercise price, to reflect and give effect to the Company's six-to-one share consolidation effected on such date.
About Forward-Looking Statements
This document contains forward-looking statements, which reflect our current expectations regarding future events. Forward-looking statements may include words such as "anticipate", "assuming", "believe", "could", "expect", "foresee", "goal", "guidance", "intend", "may", "objective", "outlook", "plan", "seek", "should", "strive", "target" and "will".
Forward-looking statements involve risks and uncertainties, many of which are discussed in this MD&A. Results or performance may differ significantly from expectations. For example, the results of current clinical trials cannot be foreseen, nor can changes in policy or actions taken by regulatory authorities such as the FDA, the European Medicines Agency, the Therapeutic Products Directorate of Health Canada or any other organization responsible for enforcing regulations in the pharmaceutical industry.
Given these uncertainties and risk factors, readers are cautioned not to place undue reliance on any forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, unless required to do so by a governmental authority or by applicable law.
About Material Information
This MD&A includes information that we believe to be material to investors after considering all circumstances, including potential market sensitivity. We consider information and disclosures to be material if they result in, or would reasonably be expected to result in, a significant change in the market price or value of our securities, or where it is likely that a reasonable investor would consider the information and disclosures to be important in making an investment decision.
The Company is a reporting issuer under the securities legislation of all of the provinces of Canada, and its securities are registered with the United States Securities and Exchange Commission. The Company is therefore required to file or furnish continuous disclosure information such as interim and annual financial statements, MD&A, proxy circulars, annual reports on Form 20-F, material change reports and press releases with the appropriate securities regulatory authorities. Copies of these documents may be obtained free of charge upon request from the Company's Investor Relations department or on the Internet at the following addresses: www.aezsinc.com, www.sedar.com and www.sec.gov.
Third Quarter MD&A - 2013
Aeterna Zentaris Inc. (NASDAQ: AEZS and TSX: AEZ) is a specialty biopharmaceutical company engaged in developing novel treatments in oncology and endocrinology. The Company's pipeline encompasses compounds from drug discovery to regulatory approval.
Over the years, the Company has incurred operating losses, having invested significantly in our research and development ("R&D") activities, as well as supporting our general and administrative expenses. We have financed our operations through different sources including the issuance of common shares and warrants, the conclusion of strategic alliances with licensee partners and other collaborators as well as through research and development ("R&D") grants awarded by governmental agencies. The Company expects to continue to incur operating expenses and may require significant capital to fulfill its future obligations in absence of sufficient corresponding revenues. See the capital disclosures and the liquidity risk sections below.
In oncology, we have an ongoing Phase 3 ZoptEC trial in endometrial cancer under an SPA with zoptarelin doxorubicin, a doxorubicin Luteinizing Hormone-Releasing Hormone ("LHRH")-targeted conjugate compound. We have successfully completed a Phase 2 trial in advanced endometrial and advanced ovarian cancer with this compound. Phase 2 investigator-driven trials are advancing with zoptarelin doxorubicin in triple-negative breast cancer and castration- and taxane-resistant prostate cancer.
Our oncology pipeline also encompasses other earlier-stage programs, including AEZS-112, an oral anticancer agent which involves three mechanisms of action (tubulin, topoisomerase II and angiogenesis inhibition), which has completed a Phase 1 trial in advanced solid tumors and lymphoma. Additionally, several novel targeted anticancer candidates such as AEZS-120, a live recombinant oral tumor vaccine candidate, as well as our PI3K/Erk inhibitors, including AEZS-129 and AEZS-136, are currently in preclinical development.
In endocrinology, we have submitted an NDA in the United States for the registration of macimorelin acetate, an oral ghrelin agonist, as an inducer of growth hormone release for the evaluation of AGHD. A Phase 3 trial under an SPA with the FDA has been completed in this indication. Furthermore, macimorelin acetate is in a Phase 2A investigator-driven trial for the treatment of cancer-induced cachexia.
Third Quarter MD&A - 2013
| Discovery | Preclinical | Phase 1 | Phase 2 | Phase 3 | NDA | |||||
| ~120,000 compound library | AEZS-120 Prostate cancer vaccine (oncology) AEZS-129 and 136 PI3K/Erk inhibitors(oncology) AEZS-137 (disorazol Z) (oncology) AEZS-138 (LHRH- disorazol Z) (oncology) | AEZS-112 (oncology) (completed) | Zoptarelin doxorubicin (AEZS-108) Triple-negative breast cancer Ovarian cancer (completed) Castration- and taxane-resistant prostate cancer Ozarelix (sponsored by Spectrum) Prostate cancer Macimorelin acetate (AEZS-130) Therapeutic in cancer cachexia Perifosine (sponsored by Yakult Honsha) (Phase 1/2) Neuroblastoma Glioma Pediatric solid tumors | Zoptarelin doxorubicin (AEZS-108) Endometrial cancer | Macimorelin acetate (AEZS-130) Evaluation of adult growth hormone deficiency (endocrinology) |
Licensee Partners and Territories by Product
Spectrum Pharmaceuticals, World (ex-Japan, Korea and other Asian countries) - Handok Pharmaceuticals, Korea and other Asian countries for benign prostatic hyperplasia indication - Nippon Kayaku, Japan for oncology indications
Yakult Honsha, Japan - Handok Pharmaceuticals, Korea - Hikma Pharmaceuticals, Middle East/North Africa
Third Quarter MD&A - 2013
Key Developments for the Three and Nine Months Ended September 30, 2013
Interim Consolidated Statements of Comprehensive Income (Loss) Information
| (Unaudited) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
| (in thousands, except share and per share data) | 2013 | 2012 | 2013 | 2012 | ||||||||
| $ | $ | $ | $ | |||||||||
| Revenues | ||||||||||||
| Sales and royalties | 20,834 | 6,826 | 60,794 | 22,373 | ||||||||
| License fees and other | 225 | 313 | 6,951 | 1,747 | ||||||||
| 21,059 | 7,139 | 67,745 | 24,120 | |||||||||
| Operating expenses | ||||||||||||
| Cost of sales | 8,860 | 5,556 | 26,982 | 19,331 | ||||||||
| Research and development costs, net of refundable tax credits and grants | 6,230 | 4,342 | 15,947 | 15,081 | ||||||||
| Selling, general and administrative expenses | 2,976 | 2,921 | 12,618 | 9,776 | ||||||||
| 18,066 | 12,819 | 55,547 | 44,188 | |||||||||
| Income (loss) from operations | 2,993 | (5,680 | ) | 12,198 | (20,068 | ) | ||||||
| Finance income | 1,384 | 34 | 3,567 | 6,603 | ||||||||
| Finance costs | (535 | ) | (908 | ) | (707 | ) | - | |||||
| Net finance income (costs) | 849 | (874 | ) | 2,860 | 6,603 | |||||||
| Net income (loss) | 3,842 | (6,554 | ) | 15,058 | (13,465 | ) | ||||||
| Other comprehensive income (loss): | ||||||||||||
| Items that may be reclassified subsequently to profit or loss | ||||||||||||
| Foreign currency translation adjustments | 550 | (97 | ) | 649 | (300 | ) | ||||||
| Comprehensive income (loss) | 4,392 | (6,651 | ) | 15,707 | (13,765 | ) | ||||||
| Net income (loss) per share | ||||||||||||
| Basic | 0.13 | (0.35 | ) | 0.56 | (0.74 | ) | ||||||
| Diluted | 0.13 | (0.35 | ) | 0.56 | (0.74 | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||
| Basic | 29,627,222 | 18,703,023 | 26,848,668 | 18,295,555 | ||||||||
| Diluted | 29,627,222 | 18,703,023 | 26,848,668 | 18,295,555 |
Third Quarter MD&A - 2013
Revenues were derived primarily from sales and royalties as well as from license fees. Sales were derived from Cetrotide (cetrorelix acetate solution for injection), marketed for reproductive health assistance for in vitro fertilization, as well as from active pharmaceutical ingredients. Royalties were derived indirectly from net sales of Cetrotide and represent the periodic amortization of the proceeds received in connection with the 2008 sale to HealthCare Royalty Partners L.P. (formerly Cowen Healthcare Royalty Partners L.P.) ("HC Royalty") of the underlying Cetrotide royalty stream.
License fees include periodic milestone payments, R&D contract fees and the amortization of upfront payments received from our licensing partners.
On April 3, 2013 (the "Effective Date"), we entered into a transfer and service agreement ("TSA") and concurrent agreements with various partners and licensees with respect to the manufacturing rights for Cetrotide . The principal effect of these agreements was to transfer, on October 1, 2013 (the "Closing Date"), the manufacturing rights and to grant a license to Merck Serono, for the manufacture, testing, assembling, packaging, storage and release of Cetrotide in all territories. The TSA also provides that the Company will provide certain transition services to Merck Serono over a period of 36 months from the Effective Date, in order to assist Merck Serono in assuming overall responsibility for the manufacturing of Cetrotide and related activities (collectively, the "Cetrotide Business"). Under the TSA, during the period commencing on the Effective Date and ending on the Closing Date (the "Interim Period"), we have continued to conduct the Cetrotide Business in the ordinary course in a manner consistent with past practices.
In accordance with the terms of the TSA, following the Closing Date of October 1, 2013, we received a one-time payment of 2.5 million (approximately $3.3 million) (the "Upfront Payment") in consideration for the transfer of the manufacturing rights referred to above. During the fourth quarter of 2013, we also expect to receive other payments in exchange for the transfer of certain assets and equipment used solely for the manufacture of Cetrotide . We will provide the transition services in exchange for a monthly fee, payable by Merck Serono.
The Company has applied the provisions of IAS 18, Revenue ("IAS 18") and has concluded that the Upfront Payment will be recognized in full on the Closing Date, given management's assessment that as of that date, substantially all of the risks and rewards associated with the Cetrotide Business will have been transferred to Merck Serono and given that the Company is not expected to retain continuing managerial involvement or control over the Cetrotide Business.
Transition services revenues will be recognized as other revenues by the Company as earned over the corresponding transition period.
With regard to the royalty revenues previously deferred following the aforementioned 2008 transaction with HC Royalty, given our conclusion that, as of the Closing Date, substantially all of the risks and rewards associated with the Cetrotide Business have been transferred to Merck Serono, that we are not expected to retain continuing managerial involvement or control over the Cetrotide Business and that our continuing involvement with regard to the Cetrotide Business has been inextricably linked to the ability to recognize the royalty revenues associated with the 2008 transaction entered into with HC Royalty, we have determined that the end of the earnings process vis- -vis the aforementioned deferred revenues necessarily coincides with the date at which the substantial risks and rewards of ownership, as well as control of the Cetrotide Business, were effectively transferred to Merck Serono, namely the Closing Date.
As such, we have adjusted the amortization of the remaining deferred revenues, which, as of the Effective Date, amounted to approximately $31.9 million, and it was fully amortized through September 30, 2013.
The acceleration of the recognition of previously deferred revenues is the primary explanation for the significant increase in sales and royalties, which, for the three-month and nine-month periods ended September 30, 2013, were $20.8 million and $60.8 million, respectively, as compared to $6.8 million and $22.4 million for the same periods in 2012.
Sales and royalties in the fourth quarter of 2013 are expected to decrease significantly as compared to the third quarter of 2013, as there will be no more remaining amortization of the royalty revenues attributable to HC Royalty and in light of the fact that all sales and royalties related to the Cetrotide Business ceased on the Closing Date. See also the section titled "Outlook for the remainder of 2013".
Third Quarter MD&A - 2013
License fees and other revenues were $0.2 million and $7.0 million for the three-month and nine-month periods ended September 30, 2013, respectively, as compared to $0.3 million and $1.7 million for the same periods in 2012. The significant increase for the nine-month period ended September 30, 2013 is predominantly due to the recognition, during the three-month period ended March 31, 2013, of unamortized deferred revenues related to upfront payments received from our licensee partners in connection with perifosine, following our decision to discontinue our Phase 3 trials of that compound.
License fees and other revenues are expected to increase in the fourth quarter of 2013, as compared to the third quarter of 2013, due to the recognition, on October 1, 2013, of the Upfront Payment, discussed above, as well as due to the revenues associated with the provision of the transition services to Merck Serono, as discussed above.
Cost of sales were $8.9 million and $27.0 million for the three-month and nine-month periods ended September 30, 2013, respectively, as compared to $5.6 million and $19.3 million for the same period in 2012. This increase is largely attributable to the increase in sales of Cetrotide . Additionally, cost of sales as a percentage of sales and royalties decreased to approximately 42.5% and 44.4% for the three-month and nine-month periods ended September 30, 2013, respectively, as compared to 81.4% and 86.4% for the same periods in 2012, predominantly due to the accelerated recognition of royalties as mentioned above.
As a result of the Cetrotide Transactions, cost of sales in the fourth quarter of 2013 is expected to decrease significantly. See also the section titled "Outlook for the remainder of 2013".
R&D costs, net of refundable tax credits and grants, were $6.2 million and $15.9 million for the three-month and nine-month periods ended September 30, 2013, respectively, compared to $4.3 million and $15.1 million for the same periods in 2012.
The increase for the three-month period ended September 30, 2013, as compared to the same period in 2012, is attributable to comparative higher third-party costs associated with the development of our products, as described below.
The following table summarizes our net R&D costs by nature of expense:
| Three months ended September 30, | Nine months ended September 30, | |||||||||||
| (in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||
| $ | $ | $ | $ | |||||||||
| Employee compensation and benefits | 1,932 | 1,948 | 6,235 | 6,445 | ||||||||
| Third-party costs | 3,503 | 1,581 | 7,221 | 6,334 | ||||||||
| Facilities rent and maintenance | 442 | 408 | 1,292 | 1,260 | ||||||||
| Other costs* | 520 | 551 | 1,598 | 1,798 | ||||||||
| R&D tax credits and grants | (167 | ) | (146 | ) | (399 | ) | (756 | ) | ||||
| 6,230 | 4,342 | 15,947 | 15,081 |
_________________________
* Includes depreciation and amortization charges.
Third Quarter MD&A - 2013
The following table summarizes primary third-party R&D costs, by product candidate, incurred by the Company during the three-month and nine-month periods ended September 30, 2013.
| (in thousands, except percentages) | Three months ended September 30, | Three months ended September 30, | ||||||||||||
| Product | Status | 2013 | 2012 | |||||||||||
| $ | % | $ | % | |||||||||||
| Perifosine | Discontinued | 169 | 4.8 | 1,052 | 66.5 | |||||||||
| Zoptarelin doxorubicin | Phases 2 and 3 | 1,878 | 53.6 | - | - | |||||||||
| Macimorelin acetate | Phases 2 and 3 | 563 | 16.1 | - | - | |||||||||
| PI3K/Erk inhibitors | Preclinical | 420 | 12.0 | 497 | 31.5 | |||||||||
| Other | Preclinical | 473 | 13.5 | 32 | 2.0 | |||||||||
| 3,503 | 100.0 | 1,581 | 100.0 |
| (in thousands, except percentages) | Nine months ended September 30, | Nine months ended September 30, | ||||||||||||
| Product | Status | 2013 | 2012 | |||||||||||
| $ | % | $ | % | |||||||||||
| Perifosine | Discontinued | 1,134 | 15.7 | 2,367 | 37.4 | |||||||||
| Zoptarelin doxorubicin | Phases 2 and 3 | 3,267 | 45.2 | 1,851 | 29.2 | |||||||||
| Macimorelin acetate | Phases 2 and 3 | 954 | 13.2 | 82 | 1.3 | |||||||||
| PI3K/Erk inhibitors | Preclinical | 816 | 11.3 | 1,528 | 24.1 | |||||||||
| Other | Preclinical | 1,050 | 14.6 | 506 | 8.0 | |||||||||
| 7,221 | 100.0 | 6,334 | 100.0 |
Excluding the impact of foreign exchange rate fluctuations and despite the discontinuance of the perifosine program, we expect net R&D costs to slightly increase in the fourth quarter of 2013, compared to the third quarter of 2013, due to the advancement of zoptarelin doxorubicin in various Phase 2 and 3 studies. Overall, excluding the impact of unforeseen foreign exchange rate fluctuations, we continue to expect that we will incur net R&D costs of between $21 million and $23 million for the full year 2013, particularly given our primary focus on developing zoptarelin doxorubicin and certain earlier-stage compounds.
Selling, general and administrative ("SG&A") expenses were $3.0 million and $12.6 million for the three-month and nine-month periods ended September 30, 2013, respectively, as compared to $2.9 million and $9.8 million for the same periods in 2012.
The increase for the nine-month period ended September 30, 2013, as compared to the same period in 2012, is mainly related to the recognition in the second quarter of 2013 of termination benefits granted to our former CEO and to the related non-cash share-based compensation costs.
We expect SG&A expenses to remain at the same level in the fourth quarter of 2013, as compared to the third quarter of 2013. See also the section titled "Outlook for the remainder of 2013".
Third Quarter MD&A - 2013
Net finance income (costs) are comprised predominantly of the change in fair value of warrant liability and the net gains (losses) due to changes in foreign currency exchange rates. For the three-month and nine-month periods ended September 30, 2013, net finance income (costs) totalled $0.8 million and $2.9 million, respectively, as compared to $(0.9) million and $6.6 million for the same periods in 2012, as presented below.
| (in thousands) | Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| $ | $ | $ | $ | |||||||||
| Finance income | ||||||||||||
| Change in fair value of warrant liability | 1,349 | - | 3,447 | 6,112 | ||||||||
| Net gains due to changes in foreign currency exchange rates | - | - | - | 318 | ||||||||
| Interest income | 35 | 34 | 120 | 173 | ||||||||
| 1,384 | 34 | 3,567 | 6,603 | |||||||||
| Finance costs | ||||||||||||
| Change in fair value of warrant liability | - | (624 | ) | - | - | |||||||
| Net losses due to changes in foreign currency exchange rates | (535 | ) | (284 | ) | (707 | ) | - | |||||
| (535 | ) | (908 | ) | (707 | ) | - | ||||||
| 849 | (874 | ) | 2,860 | 6,603 |
The significant fluctuation in net finance income (costs) during the three-month and nine-month periods ended September 30, 2013, as compared to the same periods in 2012, is mainly due to the change in fair value of our warrant liability. That change results from the periodic "mark-to-market" revaluation, via the application of the Black-Scholes option pricing model, of currently outstanding share purchase warrants. The Black-Scholes "mark-to-market" warrant valuation most notably has been impacted by the closing price of our common shares, which, on NASDAQ, has fluctuated from $2.29 to $12.90 for the nine-month period ended on September 30, 2012 and from $1.37 to $3.23 for the period ended September 30, 2013. The fluctuation in net finance income (costs) is also related to gains or (losses) due to changes in foreign currency exchange rates, which are mainly related to the period-over-period strength or (weakness) of the euro against the U.S. dollars, as presented below.
| Three months ended September 30, | Nine months ended September 30, | |||||||
| 2013 | 2012 | 2013 | 2012 | |||||
| Euro to US$ average conversion rate | 1.3253 | 1.2521 | 1.3175 | 1.2843 |
Net income (loss) for the three-month and nine-month periods ended September 30, 2013 was $3.8 million and $15.1 million, or $0.13 and $0.56 per per basic and diluted share, respectively, compared to $(6.6) million and $(13.5) million, or $(0.35) and $(0.74) per basic and diluted share for the same periods in 2012. The significant increase in net income for the three-month period ended September 30, 2013, as compared to the same period in 2012, is due largely to the significant increases in royalties revenues (non-cash) and in net finance income (non-cash), partly offset by higher net R&D costs. The significant increase in net income for the nine-month period ended September 30, 2013, as compared to the same period in 2012, is due largely to the significant increases in royalties and in license fees revenues arising from the accelerated amortization of deferred revenues (non-cash), partly offset by lower net finance income (non-cash) as well as by higher net R&D costs and SG&A.
Third Quarter MD&A - 2013
Quarterly Consolidated Results of Operations Information
| (in thousands, except for per share data) | Quarters ended | |||||||||||
| September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | |||||||||
| $ | $ | $ | $ | |||||||||
| Revenues | 21,059 | 30,087 | 16,599 | 9,545 | ||||||||
| Income (loss) from operations | 2,993 | 9,485 | (280 | ) | (6,936 | ) | ||||||
| Net income (loss) | 3,842 | 9,330 | 1,886 | (6,947 | ) | |||||||
| Net income (loss) per share | ||||||||||||
| Basic | 0.13 | 0.37 | 0.07 | (0.29 | ) | |||||||
| Diluted | 0.13 | 0.37 | 0.07 | (0.29 | ) |
| Quarters ended | ||||||||||||
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |||||||||
| $ | $ | $ | $ | |||||||||
| Revenues | 7,139 | 7,471 | 9,510 | 12,627 | ||||||||
| Loss from operations | (5,680 | ) | (7,600 | ) | (6,788 | ) | (8,688 | ) | ||||
| Net (loss) income | (6,554 | ) | 4,540 | (11,451 | ) | (7,519 | ) | |||||
| Net (loss) income per share | ||||||||||||
| Basic | (0.35 | ) | 0.25 | (0.65 | ) | (0.44 | ) | |||||
| Diluted | (0.35 | ) | 0.25 | (0.65 | ) | (0.44 | ) |
First, second and third quarter revenues of 2013 increased, as compared to each of the corresponding periods in 2012, in part due to higher deliveries of Cetrotide to Merck Serono and to the strengthening of the euro against the U.S. dollar. The increase is also predominantly due to the recognition in the first quarter of 2013 of approximately $6.1 million in deferred revenues related to licensing agreements after the development of perifosine was discontinued and to the recognition in the second and third quarters of 2013 of approximately $20.5 million and $12.1 million, respectively, in deferred revenues associated with the 2008 transaction entered into with HC Royalty, as discussed above.
Fourth quarter revenues of 2012 decreased as compared to the corresponding period in 2011. The decrease is largely attributable to a decrease in license fee revenues from a partner and to the relative weakening of the euro against the U.S. dollar.
In the last eight quarters, net income (loss) has been impacted by revenues, as mentioned above, and by the comparative level of net R&D costs in connection with the development and termination of perifosine Phase 3 programs, followed by the increased development of zoptarelin doxorubicin (AEZS-108), including the initiation in 2013 of a Phase 3 ZoptEC trial and the development of macimorelin acetate (AEZS-130) and certain earlier stage compounds.
The quarter-over-quarter periods net income (loss) were also impacted by the recognition of termination benefits granted to our former CEO and to the related non-cash share-based compensation costs in the second quarter of 2013, by the recognition of impairment losses in the fourth quarter of 2011 and 2012, by the initiation of prelaunch and marketing efforts related to the potential commercialization of perifosine in Europe in the fourth quarter of 2011, by foreign exchange gains or losses and changes in fair value of our warrant liability, as well as by an income tax expense in the fourth quarter of 2011.
Third Quarter MD&A - 2013
Interim Consolidated Statement of Financial Position Information
| As at September 30, | As at December 31, | |||||
| (in thousands) | 2013 | 2012 | ||||
| $ | $ | |||||
| Cash and cash equivalents | 24,829 | 39,521 | ||||
| Trade and other receivables and other current assets | 11,435 | 13,780 | ||||
| Restricted cash | 848 | 826 | ||||
| Property, plant and equipment | 1,537 | 2,147 | ||||
| Other non-current assets | 11,322 | 11,391 | ||||
| Total assets | 49,971 | 67,665 | ||||
| Payables and accrued liabilities | 8,599 | 10,470 | ||||
| Current portion of deferred revenues | - | 5,235 | ||||
| Warrant liability | 5,399 | 6,176 | ||||
| Non-financial non-current liabilities* | 18,375 | 52,479 | ||||
| Total liabilities | 32,373 | 74,360 | ||||
| Shareholders' equity (deficiency) | 17,598 | (6,695 | ) | |||
| Total liabilities and shareholders' equity (deficiency) | 49,971 | 67,665 |
_________________________
* Comprised mainly of non-current portion of deferred revenues, employee future benefits and provision.
The decrease in cash and cash equivalents as at September 30, 2013, as compared to December 31, 2012, is due to the recurring disbursements and other variations in components of our working capital, partially offset by the receipt of net proceeds of $7.0 million pursuant to a registered direct offering and $1.9 million in drawdowns made under our May 2013 ATM Program, as discussed above, and the relative strengthening, as at September 30, 2013, of the euro against the US dollar, as compared to December 31, 2012.
The decrease in trade and other receivables and other current assets as at September 30, 2013, as compared to December 31, 2012, is mainly due to lower trade accounts receivable, inventory and prepaid expenses related to the Cetrotide Business, partly offset by the relative strengthening, as at September 30, 2013, of the euro against the US dollar, as compared to December 31, 2012.
The decrease in payables and accrued liabilities as at September 30, 2013, as compared to December 31, 2012, is mainly due to lower trade accounts payable and lower accrued R&D costs, partly offset by the relative strengthening, as at September 30, 2013, of the euro against the US dollar, as compared to December 31, 2012.
The decrease in current portion of deferred revenues as at September 30, 2013, as compared to December 31, 2012, is predominantly due to the change in the timing in the amortization of deferred revenues, as mentioned above.
Our warrant liability decreased from December 31, 2012 to September 30, 2013 predominantly due to the change in fair value pursuant to the periodic "mark-to-market" revaluation of the underlying outstanding share purchase warrants, as discussed above. The decrease was partly offset by the issuance of 2.6 million additional share purchase warrants in connection with the registered direct offering mentioned above.
The decrease in non-financial non-current liabilities as at September 30, 2013, as compared to December 31, 2012, is mainly due to a decrease in deferred revenues predominantly as a result of the recognition of unamortized deferred revenues related to upfront payments received from our partners in connection with Cetrotide and perifosine, as mentioned above, partly offset by the relative strengthening, as at September 30, 2013, of the euro against the US dollar, as compared to December 31, 2012.
Third Quarter MD&A - 2013
The significant increase in shareholders' equity from December 31, 2012 to September 30, 2013 is mainly attributable to the decrease in our deficit due to the net income, to the increase in share capital representing the proceeds from the issuance of common shares pursuant to the aforementioned registered direct offering and drawdowns made under our May 2013 ATM Program, to the decrease in accumulated other comprehensive loss due to foreign currency translation gain, as well as the increase in other capital due to the recording of share-based compensation costs.
Financial Liabilities, Obligations and Commitments
We have certain contractual leasing obligations and purchase obligation commitments. Purchase obligation commitments mainly include R&D services and manufacturing agreements related to R&D programs. The following tables summarize future cash requirements with respect to these obligations.