Full Press Release Details
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Aeterna Zentaris Inc. is a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in oncology, endocrinology and women's health.
Our drug development efforts are focused currently on two lead, clinical-stage development compounds: zoptarelin doxorubicin, which has the potential to become the first United States ("US") Food and Drug Administration ("FDA")-approved medical therapy for advanced, recurrent endometrial cancer, and Macrilen , a novel orally-active ghrelin agonist for use in evaluating adult growth hormone deficiency ("AGHD"). Additionally, our Erk inhibitors and luteinizing hormone releasing hormone ("LHRH") - Disorazol Z compounds, which are potential oncology-indication product candidates, are in pre-clinical development.
We also continue to work concurrently to pursue strategic commercial initiatives in connection with our goal to become a commercially operating specialty biopharmaceutical organization. Our vision includes in-licensing, acquiring, promoting or co-promoting additional commercial products, as well as optimizing the ultimate launch of our potential product candidates (i.e. Macrilen and zoptarelin doxorubicin) in certain strategic territories, including the US, Canada and the European Union, where we already have business activities. We also intend to license out certain commercial rights to licensees in territories where such out-licensing would enable the Company to ensure final development, registration and launch of our product candidates.
The Company's common shares are listed on both the NASDAQ Capital Market ("NASDAQ"), under the symbol "AEZS", and on the Toronto Stock Exchange ("TSX"), under the symbol "AEZ".
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 period ended March 31, 2015. 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 condensed interim consolidated financial statements and the accompanying notes thereto as at March 31, 2015 and for the three-month periods ended March 31, 2015 and 2014 (the "condensed interim consolidated financial statements"). Our condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting.
All amounts in this MD&A are presented in US dollars, except for share, option and warrant data, per share and per warrant data and as otherwise noted.
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", "assume", "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 and others of which are discussed under the caption "Key Information - Risk Factors" in our most recent Annual Report on Form 20-F filed with the relevant Canadian securities regulatory authorities in lieu of an annual information form and with the US Securities and Exchange Commission ("SEC"). Such statements include, but are not limited to, statements about the progress of our research,
First Quarter MD&A - 2015
development and clinical trials and the timing of, and prospects for, regulatory approval and commercialization of our product candidates, the timing of expected results of our studies, anticipated results of these studies, statements about the status of our efforts to establish a commercial operation and to obtain the right to promote or sell products that we did not develop and estimates regarding our capital requirements and our needs for, and our ability to obtain, additional financing. Known and unknown risks and uncertainties could cause our actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue our research and development ("R&D") projects, the successful and timely completion of clinical studies, the degree of market acceptance once our products are approved for commercialization, our ability to take advantage of business opportunities in the pharmaceutical industry, our ability to protect our intellectual property, uncertainties related to the regulatory process and general changes in economic conditions. See also the section entitled "Risk Factors and Uncertainties" in this MD&A.
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 our securities are registered with the SEC. The Company is therefore required to file or furnish continuous disclosure information, such as interim and annual financial statements, MD&A, proxy or information 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.
Status of Our Drug Pipeline
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First Quarter MD&A - 2015
Zoptarelin Doxorubicin
Zoptarelin doxorubicin is a complex molecule that combines a synthetic peptide carrier with doxorubicin, a well-known chemotherapy agent. The synthetic peptide carrier is an LHRH agonist, a modified natural hormone with affinity for the LHRH receptor. The design of the compound allows for the specific binding and selective uptake of the cytotoxic conjugate by LHRH receptor-positive tumors. Potential benefits of this targeted approach include a better efficacy and a more favorable safety profile with lower incidence and severity of side effects as compared to doxorubicin alone.
We believe that zoptarelin doxorubicin has the potential to become the first FDA-approved medical therapy for advanced, recurrent endometrial cancer, potentially resulting in the compound's rapid adoption as a novel core therapy for patient treatment and management, representing a significant potential market opportunity for the Company. Moving forward, we will continue to develop our commercialization plans regarding zoptarelin doxorubicin in this indication. In addition, contingent on the success of the ZoptEC (Zoptarelin Doxorubicin in Endometrial Cancer) Phase 3 clinical trial, we have additional areas of interest for further therapeutic development, including ovarian, prostate and triple negative breast cancer.
On April 27, 2015, we announced that an independent Data and Safety Monitoring Board ("DSMB") for the pivotal Phase 3 ZoptEC clinical trial with zoptarelin doxorubicin in women with advanced, recurrent or metastatic endometrial cancer had completed a pre-specified first interim futility analysis. The DSMB has recommended that the Phase 3 clinical trial continue as planned. At this time, site initiation has been completed with over 120 sites in operation in North America, Europe and Israel. More than 465 patients, out of an expected total of 500, have been recruited.
Also subsequent to quarter-end, we announced that we had filed an application for a European patent on a novel method of manufacturing zoptarelin doxorubicin. Because this compound is a complex molecule, it is expensive to synthesize, and the requested patent, if granted, may make it difficult for generic manufacturers to produce zoptarelin doxorubicin on a financially feasible basis once our composition of matter patent on the compound expires. Further, the claimed manufacturing process is expected to result in a significant reduction in cost of goods sold, providing a stronger competitive position for the Company.
Macrilen (macimorelin)
On April 13, 2015, we announced plans to conduct a new confirmatory Phase 3 clinical trial to demonstrate the efficacy of Macrilen , as well as a dedicated thorough QT study to evaluate the effect of Macrilen on myocardial repolarization. During an end-of-review meeting with the FDA on March 6, 2015, we and the FDA agreed on the general design of the confirmatory Phase 3 clinical trial of Macrilen , as well as on evaluation criteria. The clinical trial will be conducted as a two-way crossover with the insulin tolerance test as the benchmark comparator. The clinical trial population will consist of patients with a medical history documenting risk factors for AGHD and will include a spectrum of patients from those with a low risk of having AGHD to those with a high risk of having the condition. We expect to submit a proposed final protocol of the confirmatory Phase 3 clinical trial to the FDA for approval in the near-term and to initiate it by the end of this year. Our goal is to initiate the QT study at the beginning of 2016. We currently estimate that it will take approximately 18 months to complete the trials, with a combined expenditure of between $5 million and $6 million over the same period.
Pre-clinical developments
As for our compounds in earlier stages of development, as part of our resource optimization program announced and implemented during 2014, we have decided to streamline our drug discovery activities and focus on specific projects related to our Erk inhibitors and our LHRH-disorazol Z product candidates. Regarding our Erk inhibitors program, we expect to select an optimized molecule for development during the second quarter of 2015.
On March 31, 2015, we announced the transfer of our discovery library of roughly 100,000 unique compounds to the South Carolina Center for Therapeutic Discovery and Development (the "Center") pursuant to a material transfer agreement, which represents the beginning of a long-term relationship between the Company and the Center, which in turn is part of The Medical University of South Carolina ("MUSC"). Our agreement with the Center will result in the continued use of the library for the discovery of drug development candidates for the Company in the areas of oncology, neurology, endocrinology and women's health. The Center may make the library available to all investigators in the University of South Carolina system without restriction on its use and will own any therapeutic compounds discovered outside our areas of therapeutic interest.
The Center has agreed to conduct screening and pre-clinical activities with respect to the library with a view toward submitting to us at least one development candidate per year in our areas of therapeutic interest over a ten-year period beginning in 2018.
First Quarter MD&A - 2015
We also have a right of first refusal to license any submitted development candidates. Should we decide to further develop a development candidate submitted by the Center, MUSC will license the compound candidate to us and be entitled to a royalty on the net sales of all commercialized products developed from the development candidate. However, should we decide not to further develop the development candidate submitted by the Center, MUSC is required to pay us a royalty on net sales of all commercialized products developed from the development candidate.
Commercial Developments
During the quarter, we ramped up selling efforts related to our co-promotion agreement with ASCEND Therapeutics US LLC ("ASCEND"), which we entered into in August 2014. Pursuant to that agreement, we are co-promoting ASCEND'S product, EstroGel , a leading non-patch transdermal hormone replacement therapy product, in specific agreed-upon US territories in exchange for a sales commission that is based upon incremental sales volumes of the product that are generated over pre-established baselines.
Detailing efforts associated with EstroGel commenced in earnest early in the first quarter of 2015, following the completion of sales force training and other knowledge-transfer activities that had been underway since late 2014. During the quarter, our contract sales representatives initiated calling on prescribing physicians in their respective territories, and overall feedback from the field has been positive. Subsequent to quarter-end, we began exceeding pre-established unit sales baseline thresholds on a total nation basis, as discussed further below.
Our commercial operations consist of a full-time sales force and a sales-management staff. We currently have 19 sales representatives in the US who provide services pursuant to our agreement with a contract sales organization.
On May 7, 2015, we announced that we had entered into a promotional services agreement with EMD Serono, Inc., the US and Canadian biopharmaceutical businesses of Merck KGaA of Darmstadt, Germany ("EMD Serono"),that will allow us to promote Saizen [somatropin (rDNA origin) for injection] to designated medical professionals in specified US territories. Saizen is a recombinant human growth hormone registered in the US for the treatment of growth hormone deficiency in children and adults. Under this agreement, we will detail Saizen to designated medical professionals, representing an important incremental field promotion activity in support of the EMD Serono's product. Payment to Aeterna Zentaris will be based on new, eligible patient starts on Saizen above an agreed-upon baseline. We have subcontracted with ASCEND, pursuant to our co-promotion agreement, to detail Saizen in territories not covered by our contracted sales force.
Corporate Developments
On March 11, 2015, we completed a public offering of 59.7 million units (the "Units"), generating net proceeds of approximately $34.4 million, with each Unit consisting of either one common share or one warrant to purchase one common share ("Series C Warrant"), 0.75 of a warrant to purchase one common share ("Series A Warrant") and 0.50 of a warrant to purchase one common share ("Series B Warrant"), at a purchase price of $0.62 per Unit (the "March 2015 Offering"). The Series A Warrants are exercisable for a period of five years at an exercise price of $0.81 per share, and the Series B Warrants are exercisable for a period of 18 months at an exercise price of $0.81 per share. Both the Series A and Series B warrants are subject to certain anti-dilution provisions. The Series C Warrants are exercisable for a period of five years at an exercise price of $0.62 per share. Total gross proceeds payable to us in connection with the exercise of the Series C Warrants have been pre-paid by investors and therefore are included in the aforementioned proceeds.
The complete exercise of the Series A and Series B Warrants would result in the issuance of an aggregate of approximately 74.6 million common shares that would generate additional proceeds for an amount that would be determined based on the then adjusted exercise price. Both the Series A and Series B Warrants may at any time be exercised on a "net" or "cashless" basis. In addition to standard cashless exercise provisions, the Series B Warrants may be exercised on an alternate cashless basis. The number of common shares that would be issued pursuant to an alternative cashless exercise is not currently determinable; however, such alternative cashless exercise could result in the issuance of a substantially larger number of the Company's common shares than otherwise would be issued following a standard cash or cashless exercise of the Series B Warrants.
In connection with the March 2015 Offering, the holders of 21.1 million of the 21.9 million outstanding warrants issued in connection with previous public offerings completed in November 2013 and January 2014 each entered into an amendment
First Quarter MD&A - 2015
agreement that caused such previously issued warrants to expire and terminate in consideration for a cash payment made by us in the aggregate amount of approximately $5.7 million.
Condensed Interim Consolidated Statements of Comprehensive Loss Information
| Three months ended March 31, | ||||||
| (in thousands, except share and per share data) | 2015 | 2014 | ||||
| $ | $ | |||||
| Revenues | ||||||
| License fees | 73 | - | ||||
| Operating expenses | ||||||
| Research and development costs | 4,466 | 5,830 | ||||
| Selling, general and administrative expenses | 5,143 | 2,365 | ||||
| 9,609 | 8,195 | |||||
| Loss from operations | (9,536 | ) | (8,195 | ) | ||
| Finance income | 1,374 | 4,919 | ||||
| Finance costs | (1,474 | ) | (1,028 | ) | ||
| Net finance (costs) income | (100 | ) | 3,891 | |||
| Net loss from continuing operations | (9,636 | ) | (4,304 | ) | ||
| Net loss from discontinued operations | (100 | ) | (52 | ) | ||
| Net loss | (9,736 | ) | (4,356 | ) | ||
| Other comprehensive income (loss): | ||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||
| Foreign currency translation adjustments | 1,775 | 23 | ||||
| Items that will not be reclassified to profit or loss: | ||||||
| Actuarial loss on defined benefit plans | (1,301 | ) | (959 | ) | ||
| Comprehensive loss | (9,262 | ) | (5,292 | ) | ||
| Net loss per share (basic and diluted) from continuing operations | (0.13 | ) | (0.08 | ) | ||
| Net loss per share (basic and diluted) from discontinued operations | - | - | ||||
| Net loss (basic and diluted) per share | (0.13 | ) | (0.08 | ) | ||
| Weighted average number of shares outstanding: | ||||||
| Basic | 71,653,626 | 54,921,459 | ||||
| Diluted | 71,653,626 | 54,921,459 |
First Quarter MD&A - 2015
Revenues recorded during the three months ended March 31, 2015 resulted predominantly from the amortization of a one-time, non-refundable payment made to us in 2014 in connection with a master collaboration agreement, a technology transfer and technical assistance agreement and a license agreement we entered into with Sinopharm A-Think Pharmaceuticals Co., Ltd. ("Sinopharm"), which is related to zoptarelin doxorubicin.
We expect revenues during the second quarter of 2015 to be higher than those recorded during the first quarter of 2015 due to sales commission revenue that we expect to begin generating in connection with our sales efforts related to EstroGel , pursuant to the co-promotion services agreement entered into with ASCEND.
As discussed above, following the completion of sales force training and other knowledge-transfer activities, detailing efforts commenced in earnest early in the first quarter of 2015. During that period, our contract sales representatives initiated calling on prescribing physicians in their respective territories, and overall feedback from the field has been positive. Subsequent to quarter-end, we began exceeding pre-established unit sales baseline thresholds on a total nation basis. As such, we expect to commence recognizing sales commissions revenue in the second and subsequent quarters of 2015.
R&D costs were $4.5 million for the three-month period ended March 31, 2015, compared to $5.8 million for the same period in 2014.
The decrease for the three-month period ended March 31, 2015, as compared to the same period in 2014, is attributable to lower comparative employee compensation and benefits costs, facilities rent and maintenance as well as other costs. A substantial portion of this decrease is due to the realization of cost savings in connection with our aforementioned global resource optimization program as well as the lower comparative exchange rate of the EUR against the US dollar. This decrease was partly compensated by higher third-party costs, as described below.
The following table summarizes our R&D costs by nature of expense:
| Three months ended March 31, | ||||||
| (in thousands) | 2015 | 2014 | ||||
| $ | $ | |||||
| Third-party costs | 3,173 | 2,543 | ||||
| Employee compensation and benefits | 1,041 | 2,450 | ||||
| Facilities rent and maintenance | 335 | 448 | ||||
| Other costs* | 191 | 389 | ||||
| Gain on disposal of equipment | (274 | ) | - | |||
| 4,466 | 5,830 |
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* Includes depreciation, amortization, reversal of impairment charges and of unused provision as well as operating foreign exchange losses.
First Quarter MD&A - 2015
The following table summarizes primary third-party R&D costs, by product candidate, incurred by the Company during the three-month periods ended March 31, 2015 and 2014.
| (in thousands, except percentages) | Three months ended March 31, | Three months ended March 31, | ||||||||||
| Product Candidate | 2015 | 2014 | ||||||||||
| $ | % | $ | % | |||||||||
| Zoptarelin doxorubicin | 2,803 | 88.3 | 1,879 | 73.9 | ||||||||
| Erk inhibitors | 216 | 6.8 | 202 | 7.9 | ||||||||
| Macrilen , macimorelin | 82 | 2.6 | 42 | 1.7 | ||||||||
| LHRH-Disorazol Z | 47 | 1.5 | 143 | 5.6 | ||||||||
| Other | 25 | 0.8 | 277 | 10.9 | ||||||||
| 3,173 | 100.0 | 2,543 | 100.0 |
As shown above, a substantial portion of the quarter-to-date third-party R&D costs relates to development initiatives associated with zoptarelin doxorubicin, and in particular with our Phase 3 ZoptEC clinical trial initiated in 2013 with Ergomed Clinical Research Ltd. ("Ergomed"), the contract clinical development organization with which, in April 2013, we entered into a co-development and profit sharing agreement. Third-party costs attributable to zoptarelin doxorubicin increased by $0.9 million during the three-month period ended March 31, 2015, as compared to the same period in 2014, mainly due to a higher comparative number of patients enrolled in the clinical trial.
During the three-month period ended March 31, 2015, ongoing services provided by Ergomed included the conducting of monitoring visits at various clinical sites, screening and enrolment initiatives, investigation-related management and analysis and regulatory support. ZoptEC-related efforts are progressing in accordance with pre-established timelines. As we continue to closely monitor all initiatives supported by Ergomed, we may decide to revise some of the trial's parameters or expand the scope of work performed by Ergomed and, consequently, total estimated costs in connection with the co-development and revenue sharing agreement may be adjusted. To date, our arrangement with Ergomed has been revised following our decision to open additional clinical sites and to perform additional sub-studies, resulting in overall, cumulative cost increases of approximately $1.8 million, as compared to our original expectations.
Excluding the impact of foreign exchange rate fluctuations, we expect R&D costs to increase in the second quarter of 2015, as compared to the first quarter of 2015, mainly due to slightly higher third-party R&D costs in connection with our Phase 3 ZoptEC clinical trial and to the recording in the first quarter of 2015 of a non-recurring gain on disposal of certain R&D equipment, reversal of impairment charges and unused provision. Based on currently available information and forecasts, excluding the impact of foreign exchange rate fluctuations, we continue to expect that we will incur R&D costs of between $21 million and $23 million for the year ended December 31, 2015, including the expected initiation of our confirmatory Phase 3 clinical trial for Macrilen .
Selling, general and administrative ("SG&A") expenses were $5.1 million for the three-month period ended March 31, 2015, as compared to $2.4 million for the same period in 2014.
The quarter-over-quarter increase is attributable to our increased selling activities, associated with the co-promotion efforts related to EstroGel , with $1.1 million of first quarter 2015 expenses being related to higher costs associated with our contracted sales force and our own sales and marketing staff. Additionally, approximately $0.8 million of the quarter-over-quarter increase is attributable to transaction costs incurred in connection with the completion of the March 2015 Offering. Other increases are attributable in large part to lower comparative foreign exchange gains.
Excluding the impact of foreign exchange rate fluctuations, we expect SG&A expenses to decrease in the second quarter of 2015, as compared to the first quarter of 2015, due to the recording in the first quarter of non-recurring transaction costs related to the March 2015 Offering. Based on currently available information and forecasts, excluding the impact of foreign exchange rate fluctuations, we now expect that our SG&A expenses will increase for the year ended December 31, 2015, as compared to the year ended December 31, 2014, mainly due to the aforementioned recording of transaction costs in connection with the completion of the March 2015 Offering.
First Quarter MD&A - 2015
Net finance income decreased by $4.0 million for the three-month period ended March 31, 2015, as compared to the same period in 2014.
While finance costs, which increased by $0.4 million for the three-month period ended March 31, 2015 as compared to the same period in 2014, are attributable entirely to losses associated with foreign currency fluctuations, finance income for the three-month period ended March 31, 2015 was $1.3 million, as compared to $4.9 million for the same period in 2014. This decrease is almost entirely 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 the Black-Scholes option pricing model, of currently outstanding share purchase warrants. The "mark-to-market" warrant valuation most notably has been impacted by the fair value calculated at the issuance of 74.6 million additional share purchase warrants and by the closing price of our common shares, which, on the NASDAQ, fluctuated from $0.51 to $0.84 during the three-month period ended March 31, 2015.
Net loss for the three-month period ended March 31, 2015 was $9.7 million, or $0.13 per basic and diluted share, compared to $4.4 million, or $0.08 per basic and diluted share, for the same period in 2014.
The increase in net loss for the three-month period ended March 31, 2015, as compared to the same period in 2014, is due largely to higher comparative SG&A expenses and to higher comparative net finance costs, partially offset by lower comparative R&D costs, as presented above.
Quarterly Consolidated Results of Operations Information
| (in thousands, except for per share data) | Three months ended | |||||||||||
| March 31, 2015 | December 31, 2014 | September 30, 2014 | June 30, 2014 | |||||||||
| $ | $ | $ | $ | |||||||||
| Revenues | 73 | 11 | - | - | ||||||||
| Loss from operations | (9,536 | ) | (10,947 | ) | (9,843 | ) | (8,410 | ) | ||||
| Net (loss) income from continuing operations | (9,636 | ) | 3,995 | (11,629 | ) | (5,249 | ) | |||||
| Net (loss) income | (9,736 | ) | 4,153 | (11,337 | ) | (5,024 | ) | |||||
| Net (loss) income per share from continuing operations (basic and diluted)* | (0.13 | ) | 0.06 | (0.20 | ) | (0.09 | ) | |||||
| Net (loss) income per share (basic and diluted)* | (0.13 | ) | 0.06 | (0.20 | ) | (0.09 | ) |
| (in thousands, except for per share data) | Three months ended | |||||||||||
| March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | |||||||||
| $ | $ | $ | $ | |||||||||
| Revenues | - | - | 17 | 96 | ||||||||
| Loss from operations | (8,195 | ) | (7,972 | ) | (8,648 | ) | (9,693 | ) | ||||
| Net loss from continuing operations | (4,304 | ) | (10,596 | ) | (7,799 | ) | (9,848 | ) | ||||
| Net (loss) income | (4,356 | ) | (8,243 | ) | 3,842 | 9,330 | ||||||
| Net loss per share from continuing operations (basic and diluted)* | (0.08 | ) | (0.28 | ) | (0.26 | ) | (0.39 | ) | ||||
| Net (loss) income per share (basic and diluted)* | (0.08 | ) | (0.22 | ) | 0.13 | 0.37 |
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First Quarter MD&A - 2015
Historical quarterly results of operations and net income (loss) from continuing operations cannot be taken as reflective of recurring revenue or expenditure patterns or of predictable trends, largely given the unpredictable quarterly variations attributable to our net finance income (costs), which in turn are comprised of the impact of the periodic "mark-to-market" revaluation of our warrant liability and of foreign exchange gains and losses. Additionally, our R&D costs historically have varied on a quarter-over-quarter basis due to the ramping up or winding down of potential product candidate activities, which in turn are dependent upon a number of factors that often do not occur on a linear or predictable basis.
More recently, our SG&A expenses have increased on a quarter-over-quarter basis due to the ramping up of pre-commercialization activities associated with Macrilen (prior to the receipt of a Complete Response Letter from the FDA in November 2014) and to the deployment of our contracted sales force related to our co-promotion activities associated with EstroGel .
In addition to the items referred to above, our net income (loss) also has been impacted by net variations attributable to our discontinued operations related to the manufacturing of Cetrotide and related activities.
Condensed Interim Consolidated Statement of Financial Position Information
| As at March 31, | As at December 31, | |||||
| 2015 | 2014 | |||||
| $ | $ | |||||
| Cash and cash equivalents 1 | 53,259 | 34,931 | ||||
| Trade and other receivables and other current assets | 2,292 | 1,286 | ||||
| Restricted cash equivalents | 674 | 760 | ||||
| Property, plant and equipment | 529 | 797 | ||||
| Other non-current assets | 8,520 | 9,661 | ||||
| Total assets | 65,274 | 47,435 | ||||
| Payables and other current liabilities 2 | 6,078 | 7,304 | ||||
| Current portion of deferred revenues | 239 | 270 | ||||
| Warrant liability | 22,151 | 8,225 | ||||
| Non-financial non-current liabilities 3 | 16,425 | 17,152 | ||||
| Total liabilities | 44,893 | 32,951 | ||||
| Shareholders' equity | 20,381 | 14,484 | ||||
| Total liabilities and shareholders' equity | 65,274 | 47,435 |
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1 Of which approximately $2.4 million was denominated in EUR as at March 31, 2015 ($3.6 million as at December 31, 2014)
3 Comprised mainly of employee future benefits and provisions for onerous contracts.
The increase in cash and cash equivalents as at March 31, 2015, as compared to December 31, 2014, is due to the receipt of net proceeds of $34.4 million in connection with the March 2015 Offering, by variations in components of our working capital and by recurring disbursements, as well as by the effect of exchange rate fluctuations.
The increase in trade and other receivables and other current assets as at March 31, 2015, as compared to December 31, 2014, is mainly due to higher trade accounts receivable, due in connection with the disposal of certain R&D equipment.
The decrease in other non-current assets as at March 31, 2015, as compared to December 31, 2014, is primarily due to the lower comparative exchange rate of the EUR against the US dollar, which weakened by 11.4% from December 31, 2014 to March 31, 2015.
First Quarter MD&A - 2015
The decrease in payables and other current liabilities as at March 31, 2015, as compared to December 31, 2014, is mainly explained by the decrease of our provision for restructuring costs, following severance payments made during the first quarter of 2015, as well as by the lower comparative exchange rate of the EUR against the US dollar.
Our warrant liability increased from December 31, 2014 to March 31, 2015 predominantly due to the issuance of 74.6 million additional share purchase warrants in connection with the March 2015 Offering, as discussed above. This increase was partly offset by a $5.9 million reduction resulting from the early expiry and derecognition of 21.1 million warrants previously issued in connection with offerings completed in November 2013 and January 2014 and by net fair value gains of $1.2 million, which were recorded pursuant to our periodic "mark-to-market" revaluation of the underlying outstanding share purchase warrants.
The increase in shareholders' equity as at March 31, 2015, as compared to December 31, 2014, is mainly attributable to the increase in our share capital and pre-funded warrants following the issuance of units discussed above and to the increase in our accumulated other comprehensive income due to foreign currency translation adjustments, partly offset by the increase in our deficit due to the recording of our net loss and an actuarial loss on our pension-related employee benefit obligation.
Financial Liabilities, Obligations and Commitments
We have certain contractual lease obligation commitments. The following table summarizes future cash requirements with respect to these obligations.
Expected future minimum lease payments and future minimum sublease receipts under non-cancellable operating leases (subleases) are as follows:
| As at March 31, 2015 | ||||||
| (in thousands) | Minimum lease payments | Sublease income | ||||
| $ | $ | |||||
| Less than 1 year | 1,543 | (375 | ) | |||
| 1 - 3 years | 1,024 | (432 | ) | |||
| 4 - 5 years | 242 | - | ||||
| Total | 2,809 | (807 | ) |
With regard to our lease arrangement in Germany for laboratory, office and storage space, we expect not to renew our existing agreement beyond the end of its original term (expiry of March 2016). As such, the minimum lease payments presented above exclude any lease payments for our German subsidiary beyond March 2016. However, in the near-term, we expect to enter into a new lease agreement, which will reflect reduced space requirements as compared to our current arrangement.
Outstanding Share Data
As at May 7, 2015, we had 95,894,654 common shares issued and outstanding 29,629,355 pre-funded warrants, as well as 3,856,986 stock options outstanding. Non-pre-funded warrants outstanding as at May 7, 2015 represented a total of 81,815,298 equivalent common shares.
Our objective in managing capital, consisting of shareholders' equity, with cash and cash equivalents and restricted cash equivalents being its primary components, is to ensure sufficient liquidity to fund R&D activities, selling, general and administrative expenses and working capital.
Over the past several years, we have increasingly raised capital via public equity offerings and drawdowns under various ATM sales programs as our primary source of liquidity.
Our capital management objective remains the same as that in previous periods. The policy on dividends is to retain cash to keep funds available to finance the activities required to advance our product development portfolio and to pursue appropriate commercial opportunities as they may arise.