Full Press Release Details
Interim Consolidated Financial Statements
at SEPTEMBER 30, 2020 and for the three-month AND NINE-MONTH periodS ended September 30, 2020 and 2019
thousands of US dollars)
Interim Consolidated Financial Statements
at SEPTEMBER 30, 2020 and for the three-month AND Nine-MONTH periodS ended September 30, 2020 and 2019
| Condensed Interim Consolidated Statements of Financial Position | 3 |
| Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency) | 5 |
| Condensed Interim Consolidated Statements of Comprehensive Income (Loss) | 7 |
| Condensed Interim Consolidated Statements of Cash Flows | 8 |
| Notes to Condensed Interim Consolidated Financial Statements | 9 |
Interim Consolidated Statements of Financial Position
thousands of US dollars)
| September 30, 2020 | December 31, 2019 | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | 21,746 | 7,838 | ||||||
| Trade and other receivables (note 5) | 841 | 658 | ||||||
| Inventory | 371 | 1,203 | ||||||
| Prepaid expenses and other current assets | 358 | 1,211 | ||||||
| Total current assets | 23,316 | 10,910 | ||||||
| Restricted cash equivalents | 325 | 364 | ||||||
| Right of use assets (note 6) | 171 | 582 | ||||||
| Property, plant and equipment | 25 | 35 | ||||||
| Identifiable intangible assets | 28 | 40 | ||||||
| Goodwill (note 7) | 8,406 | 8,050 | ||||||
| Total assets | 32,271 | 19,981 | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Payables and accrued liabilities (note 8) | 936 | 2,148 | ||||||
| Current provision for restructuring and other costs (note 9) | 117 | 418 | ||||||
| Income taxes payable | - | 1,448 | ||||||
| Current portion of deferred revenues | 619 | 991 | ||||||
| Current portion of lease liabilities (note 10) | 125 | 648 | ||||||
| Current portion of warrant liability (note 11) | - | 6 | ||||||
| Total current liabilities | 1,797 | 5,659 | ||||||
| Deferred revenues | 128 | 185 | ||||||
| Lease liabilities (note 10) | 76 | 255 | ||||||
| Warrant liability (note 11) | - | 2,249 | ||||||
| Employee future benefits (note 12) | 14,851 | 13,788 | ||||||
| Provision for restructuring and other costs (note 9) | 271 | 308 | ||||||
| Total liabilities | 17,123 | 22,444 | ||||||
| SHAREHOLDERS' EQUITY (DEFICIENCY) | ||||||||
| Share capital | 235,008 | 224,528 | ||||||
| Warrants (notes 11 and 13) | 12,402 | - | ||||||
| Other capital | 89,489 | 89,806 | ||||||
| Deficit | (321,363 | ) | (316,891 | ) | ||||
| Accumulated other comprehensive income (loss) ("AOCI") | (388 | ) | 94 | |||||
| Total shareholders' equity (deficiency) | 15,148 | (2,463 | ) | |||||
| Total liabilities and shareholders' equity (deficiency) | 32,271 | 19,981 |
and contingencies (note 20)
accompanying notes are an integral part of these condensed interim consolidated financial statements.
by the Board of Directors
| /s/ Carolyn Egbert | /s/ Pierre-Yves Desbiens | |
| Carolyn Egbert Chair of the Board | Pierre-Yves Desbiens Director |
Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency)
the three MONTHS ended September 30, 2020 and 2019
thousands of US dollars, unaudited)
| Common shares (number of) | Share capital | Warrants | Other capital | Deficit | AOCI | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance - July 1, 2020 | 23,584,071 | 226,724 | 4,237 | 89,467 | (319,592 | ) | 95 | 931 | ||||||||||||||||||||
| Net (loss) | - | - | - | - | (1,136 | ) | - | (1,136 | ) | |||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | (483 | ) | (483 | ) | |||||||||||||||||||
| Actuarial (loss) on defined benefit plan (note 12) | - | - | - | - | (635 | ) | - | (635 | ) | |||||||||||||||||||
| Comprehensive (loss) | - | - | - | - | (1,771 | ) | (483 | ) | (2,254 | ) | ||||||||||||||||||
| Reclassification of warrant liability to equity (note 11(b)) | - | 3,140 | - | - | - | 3,140 | ||||||||||||||||||||||
| Issuance of common shares and warrants, net of transaction costs (note 13) | 39,094,542 | 8,284 | 5,025 | - | - | - | 13,309 | |||||||||||||||||||||
| Share-based compensation costs (note 14) | - | - | - | 22 | - | - | 22 | |||||||||||||||||||||
| Balance - September 30, 2020 | 62,678,613 | 235,008 | 12,402 | 89,489 | (321,363 | ) | (388 | ) | 15,148 |
| Common shares (number of) | Share capital | Warrants | Other capital | Deficit | AOCI | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance - July 1, 2019 | 16,632,410 | 223,140 | - | 89,824 | (315,977 | ) | (15 | ) | (3,028 | ) | ||||||||||||||||||
| Net income | - | - | - | - | (331 | ) | - | (331 | ) | |||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | 377 | 377 | |||||||||||||||||||||
| Actuarial (loss) on defined benefit plan (note 12) | - | - | - | - | (536 | ) | - | (536 | ) | |||||||||||||||||||
| Comprehensive (loss) | - | - | - | - | (867 | ) | 377 | (490 | ) | |||||||||||||||||||
| Issuance of common shares, net of transaction costs (note 13) | 3,325,000 | 1,290 | - | - | - | - | 1,290 | |||||||||||||||||||||
| Exercise of deferred share units (note 13) | 37,100 | 101 | - | (121 | ) | (20 | ) | |||||||||||||||||||||
| Share-based compensation costs | - | - | - | 55 | - | - | 55 | |||||||||||||||||||||
| Balance - September 30, 2019 | 19,994,510 | 224,531 | - | 89,758 | (316,844 | ) | 362 | (2,193 | ) |
Interim Consolidated Statements of Changes in Shareholders' Equity (Deficiency)
the NiNE months ended september 30, 2020 and 2019
thousands of US dollars, unaudited)
| Common shares (number of) | Share capital | Warrants | Other capital | Deficit | AOCI | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance - January 1, 2020 | 19,994,510 | 224,528 | - | 89,806 | (316,891 | ) | 94 | (2,463 | ) | |||||||||||||||||||
| Net (loss) | - | - | - | - | (3,807 | ) | - | (3,807 | ) | |||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | (482 | ) | (482 | ) | ||||||||||||||||||||||
| Actuarial (loss) on defined benefit plan (note 12) | - | - | - | (665 | ) | - | (665 | ) | ||||||||||||||||||||
| Comprehensive (loss) | - | (4,472 | ) | (482 | ) | (4,954 | ) | |||||||||||||||||||||
| Reclassification of warrants to equity (note 11(b)) | - | - | 7,377 | - | - | - | 7,377 | |||||||||||||||||||||
| Issuance of common shares and warrants, net of transaction costs (note 13) | 42,684,103 | 10,480 | 5,025 | (362 | ) | - | - | 15,143 | ||||||||||||||||||||
| Share-based compensation costs (note 14) | - | - | - | 45 | - | - | 45 | |||||||||||||||||||||
| Balance - September 30, 2020 | 62,678,613 | 235,008 | 12,402 | 89,489 | (321,363 | ) | (388 | ) | 15,148 |
| Common shares (number of) | Share capital | Warrants | Other capital | Deficit | AOCI | Total | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance - January 1, 2019 | 16,440,760 | 222,335 | - | 89,342 | (309,781 | ) | 11 | 1,907 | ||||||||||||||||||||
| Net (loss) | - | - | - | - | (5,036 | ) | - | (5,036 | ) | |||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | 351 | 351 | |||||||||||||||||||||
| Actuarial (loss) on defined benefit plan (note 12) | - | - | - | - | (2,027 | ) | - | (2,027 | ) | |||||||||||||||||||
| Comprehensive (loss) | - | - | - | - | (7,063 | ) | 351 | (6,712 | ) | |||||||||||||||||||
| Exercise of warrants, stock options and deferred share units | 228,750 | 906 | - | (329 | ) | - | - | 577 | ||||||||||||||||||||
| Issuance of common shares and warrants, net of transaction costs | 3,325,000 | 1,290 | - | - | - | - | 1,290 | |||||||||||||||||||||
| Share-based compensation costs | - | - | - | 745 | - | - | 745 | |||||||||||||||||||||
| Balance - September 30, 2019 | 19,994,510 | 224,531 | - | 89,758 | (316,844 | ) | 362 | (2,193 | ) |
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Interim Consolidated Statements of Comprehensive Loss
the three AND nine months ended september 30, 2020 and 2019
thousands of US dollars, except share and per share data)
| Three months ended | Nine months ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Revenues (note 4) | ||||||||||||||||
| Royalty income | 23 | 8 | 47 | 29 | ||||||||||||
| Product sales | - | - | 1,016 | 129 | ||||||||||||
| Supply chain | 87 | 256 | 168 | 301 | ||||||||||||
| Licensing revenue | 18 | 19 | 55 | 55 | ||||||||||||
| Total revenues | 128 | 283 | 1,286 | 514 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Cost of sales | 33 | - | 907 | 101 | ||||||||||||
| Research and development costs | 372 | 475 | 880 | 1,574 | ||||||||||||
| General and administrative expenses | 1,180 | 1,364 | 3,445 | 4,924 | ||||||||||||
| Selling expenses | 283 | 377 | 730 | 1,176 | ||||||||||||
| Restructuring costs (note 9) | - | - | - | 773 | ||||||||||||
| Impairment (reversal) of right of use asset | - | (125 | ) | - | 276 | |||||||||||
| Gain on modification of building lease (notes 6 and 10) | - | - | (219 | ) | - | |||||||||||
| Impairment of prepaid asset | - | - | - | 169 | ||||||||||||
| Total operating expenses (note 14) | 1,868 | 2,091 | 5,743 | 8,993 | ||||||||||||
| Loss from operations | (1,740 | ) | (1,808 | ) | (4,457 | ) | (8,479 | ) | ||||||||
| Gain due to changes in foreign currency exchange rates | 211 | 3 | 237 | 61 | ||||||||||||
| Gain on change in fair value of warrant liability (note 11) | 816 | 2,120 | 1,147 | 3,985 | ||||||||||||
| Other finance (costs) | (423 | ) | (646 | ) | (734 | ) | (603 | ) | ||||||||
| Net finance income | 604 | 1,477 | 650 | 3,443 | ||||||||||||
| Net (loss) | (1,136 | ) | (331 | ) | (3,807 | ) | (5,036 | ) | ||||||||
| Other comprehensive (loss): | ||||||||||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||||||||
| Foreign currency translation adjustments | (483 | ) | 377 | (482 | ) | 351 | ||||||||||
| Items that will not be reclassified to profit or loss: | ||||||||||||||||
| Actuarial (loss) on defined benefit plans (note 12) | (635 | ) | (536 | ) | (665 | ) | (2,027 | ) | ||||||||
| Comprehensive (loss) | (2,254 | ) | (490 | ) | (4,954 | ) | (6,712 | ) | ||||||||
| Net (loss) per share [basic and diluted] | (0.02 | ) | (0.02 | ) | (0.11 | ) | (0.31 | ) | ||||||||
| Weighted average number of shares outstanding (note 19): | ||||||||||||||||
| Basic | 56,211,486 | 16,887,819 | 33,832,136 | 16,651,969 | ||||||||||||
| Diluted | 56,211,486 | 16,887,819 | 33,832,136 | 16,651,969 |
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Interim Consolidated Statements of Cash Flows
the three AND nine months ended September 30, 2020 and 2019
thousands of US dollars, except share and per share data)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net (loss) for the period | (1,136 | ) | (331 | ) | (3,807 | ) | (5,036 | ) | ||||||||
| Items not affecting cash and cash equivalents: | ||||||||||||||||
| (Gain) on change in fair value of warrant liability (note 11) | (816 | ) | (2,120 | ) | (1,147 | ) | (3,985 | ) | ||||||||
| Transaction costs of warrants issued and expensed as finance cost (note 13) | 422 | 545 | 732 | 545 | ||||||||||||
| Provision for restructuring costs utilized (note 9) | (11 | ) | - | (359 | ) | 773 | ||||||||||
| Depreciation and amortization | 42 | 119 | 188 | 255 | ||||||||||||
| Impairment (reversal) of right of use asset | - | (125 | ) | - | 276 | |||||||||||
| Impairment of prepaid asset | - | - | - | 169 | ||||||||||||
| Gain on modification of building lease (notes 6 and 10) | - | - | (219 | ) | - | |||||||||||
| Share-based compensation costs | 68 | 55 | 45 | 745 | ||||||||||||
| Employee future benefits (note 12) | 58 | 60 | 157 | 196 | ||||||||||||
| Amortization of deferred revenues | (27 | ) | (19 | ) | (64 | ) | (55 | ) | ||||||||
| Foreign exchange (loss) on items denominated in foreign currencies | (263 | ) | (12 | ) | (295 | ) | (61 | ) | ||||||||
| Gain on disposal of property, plant and equipment | - | (3 | ) | (2 | ) | (6 | ) | |||||||||
| Other non-cash items | 2 | - | 9 | - | ||||||||||||
| Interest accretion on lease liabilities (note 10) | (2 | ) | (15 | ) | (17 | ) | (53 | ) | ||||||||
| Payment of income taxes | - | - | (1,448 | ) | - | |||||||||||
| Changes in operating assets and liabilities (note 15) | (130 | ) | (749 | ) | (420 | ) | (1,534 | ) | ||||||||
| Net cash used in operating activities | (1,793 | ) | (2,595 | ) | (6,647 | ) | (7,771 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||||||
| Issuance of common shares and warrants (notes 13 and 11, respectively) | 19,000 | 4,988 | 23,500 | 4,988 | ||||||||||||
| Transaction costs (note 13) | (2,158 | ) | (786 | ) | (2,767 | ) | (786 | ) | ||||||||
| Proceeds from exercise of warrants, options and deferred share units | - | - | - | 314 | ||||||||||||
| Payments on lease liabilities (note 10) | (49 | ) | (152 | ) | (248 | ) | (462 | ) | ||||||||
| Net cash provided by financing activities | 16,793 | 4,050 | 20,485 | 4,054 | ||||||||||||
| Cash flows from investing activities | ||||||||||||||||
| Proceeds from disposal of property, plant and equipment | - | - | 6 | - | ||||||||||||
| Change in restricted cash equivalents | - | - | 50 | 50 | ||||||||||||
| Net cash provided by investing activities | - | - | 56 | 50 | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 3 | (276 | ) | 14 | 17 | |||||||||||
| Net change in cash and cash equivalents | 15,003 | 1,179 | 13,908 | (3,650 | ) | |||||||||||
| Cash and cash equivalents - Beginning of period | 6,743 | 9,683 | 7,838 | 14,512 | ||||||||||||
| Cash and cash equivalents - End of period | 21,746 | 10,862 | 21,746 | 10,862 |
accompanying notes are an integral part of these condensed interim consolidated financial statements.
Notes to Condensed Interim Consolidated Financial Statements
As at SEPTEMBER 30, 2020 and for the three AND nine months ended September 30, 2020 and 2019
(amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted) (Unaudited)
of business and liquidity
Zentaris Inc. ("Aeterna Zentaris" or the "Company") is a specialty biopharmaceutical company commercializing
and developing therapeutics and diagnostic tests. The Company's lead product, Macrilen (macimorelin), is the first
and only United States Food and Drug Administration ("FDA") and European Commission approved oral test indicated for
the diagnosis of patients with adult growth hormone deficiency ("AGHD"). Macrilen (macimorelin) is currently
marketed in the U.S. through a license and assignment agreement (the "License Agreement") with Novo Nordisk A/S ("Novo").
Aeterna Zentaris is also pursuing the development of macimorelin for the diagnosis of child-onset growth hormone deficiency ("CGHD"),
an area of significant unmet need. In addition, we are actively pursuing business development opportunities for the commercialization
of macimorelin in Europe and the rest of the world in addition to other non-strategic assets to monetize their value.
Company's principal focus is on the commercialization of Macrilen (macimorelin) and it currently does not have any
other approved products. Under the terms of License Agreement, Novo is funding 70% of the pediatric clinical trial submitted to
the European Medicines Agency ("EMA") and FDA, the Company's sole development activity. In November 2019, Novo
contracted the Company's wholly owned German subsidiary ("AEZS Germany") to provide supply chain services for
the manufacture of Macrilen (macimorelin). In April 2020, we announced the results from AEZS-130-P01 ("Study P01")
to establish a dose that can both be safely administered to pediatric patients and cause a clear rise in growth hormone concentration
in subjects ultimately diagnosed as not having growth hormone deficiency. The Company plans to proceed with the pivotal second
study, AEZS-130-P02 ("Study P02"), with an expected start date in the first quarter of 2021 and an expected completion
date in July 2022, according to the pediatric investigation plan ("PIP") agreement with the EMA. Study P02 is designed
to investigate the diagnostic efficacy and safety of macimorelin acetate in pediatric patients from 2 years of age to 18 years
of age with suspected growth hormone deficiency.
at September 30, 2020, a limited portion of the Company's cash is held in AEZS Germany, the Company's principal operating
subsidiary. AEZS Germany is the counter-party to the License Agreement described above with Novo, and as such, for generating
future revenue earned under the License Agreement. Management considers the cash resources available to AEZS Germany in executing
its obligations under the License Agreement. In September 2019 and February, July and August of 2020 the company completed financings
resulting in total funding (net of transaction costs) of $24,933 (note 13). All of this cash was deposited in AEZS Canada accounts.
As AEZS Germany has a limited portion of the Company's cash, The parent company can support cash needs of the German subsidiary
from the funds provided through the financing transactions.
2020, the COVID-19 pandemic began causing significant financial market declines and social dislocation. The situation is dynamic
with various cities and countries around the world responding in different ways to address the outbreak. The spread of COVID-19
may impact the Company's operations, including the potential interruption of our clinical trial activities and the Company's
supply chain, or that of the Company's licensee. For example, the COVID-19 outbreak may delay enrollment in the Company's
clinical trials due to prioritization of hospital resources toward the outbreak, and some patients may be unwilling to be enrolled
in the Company's trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt
healthcare services, which would delay the Company's ability to conduct clinical trials or release clinical trial results
and could delay the Company's ability to obtain regulatory approval and commercialize the Company's product candidates.
The pandemic may also impact the ability of the Company's suppliers to deliver components or raw materials on a timely basis
or at all. In addition, hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an
infectious disease. The Company's licensee may be impacted due to significant delays of diagnostic activities in the U.S.
To date, the Company has not experienced significant business disruption from COVID-19.
unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board ("IFRS") applicable to the preparation of interim
financial statements, including IAS 34, Interim Financial Reporting. These unaudited condensed interim consolidated financial
statements should be read in conjunction with the Company's annual consolidated financial statements as at and for the year
ended December 31, 2019.
unaudited condensed interim consolidated financial statements were approved by the Board of Directors (the "Board")
on November 5, 2020.
accounting policies in these condensed interim consolidated financial statements are consistent with those presented in the Company's
annual consolidated financial statements except as noted below:
Company accounts for share purchase warrants that meet the fixed-for-fixed criteria as equity-settled. Such share purchase warrants
are accounted for by using the relative fair value method whereby the total gross proceeds of the financing are allocated to each
of common shares and share purchase warrants based on their relative fair values.
share units ("DSUs") are classified as other capital. The Company grants DSUs to members of its Board of Directors
who are not employees or officers of the Company. DSUs cannot be redeemed until the holder is no longer a director of the Company
and are considered equity-settled instruments. Under the terms of the DSU agreement, the DSUs vest immediately upon grant. The
value attributable to the DSUs is based on the market value of the share price at the time of grant and share based compensation
expense is recognized in general and administrative expenses on the consolidated statements of loss and comprehensive (loss) income.
At the time of redemption, each DSU may be exchanged for one common share of the Company.
consideration received by the Company in connection with the exercise of DSUs is credited to share capital. Any other capital
component of the share-based compensation is transferred to share capital upon the issuance of shares.
preparation of condensed interim consolidated financial statements in accordance with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amounts of the Company's assets, liabilities, revenues, expenses and
related disclosures. Judgments, estimates and assumptions are based on historical experience, expectations, current trends and
other factors that management believes to be relevant at the time at which the Company's condensed interim consolidated