Exhibit 99.1

Condensed Interim Consolidated Financial Statements

As at SEPTEMBER 30, 2022 and for the THREE- AND NINE-MONTH periodS ended SEPTEMBER 30, 2022 and 2021

(In thousands of US dollars)

(Unaudited)

Condensed Interim Consolidated Statements of Financial Position	2
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity	3
Condensed Interim Consolidated Statements of Comprehensive Loss	4
Condensed Interim Consolidated Statements of Cash Flows	5
Notes to Condensed Interim Consolidated Financial Statements	6

1

Condensed Interim Consolidated Statements of Financial Position

(In thousands of US dollars)

(Unaudited)

	September 30, 2022			December 31, 2021
	$			$
ASSETS
Current assets
Cash and cash equivalents		53,816			65,300
Trade and other receivables (note 4)		777			1,314
Inventory		238			73
Income taxes receivable		1,305			2,361
Prepaid expenses and other current assets (note 5)		2,474			1,772
Total current assets		58,610			70,820
Restricted cash equivalents		300			335
Right of use assets		85			150
Property, plant and equipment		40			42
Identifiable intangible assets		537			625
Goodwill		7,034			8,130
Total Assets		66,606			80,102
LIABILITIES
Current liabilities
Payables and accrued liabilities (note 6)		2,287			2,672
Current portion of provisions		25			34
Income taxes payable		99			115
Current portion of deferred revenues (note 3)		3,484			4,815
Current portion of lease liabilities		73			130
Total current liabilities		5,968			7,766
Deferred revenues (note 3)		1,462			1,493
Deferred gain		85			98
Lease liabilities		16			31
Employee future benefits (note 7)		9,458			17,485
Provisions		199			243
Total liabilities		17,188			27,116
SHAREHOLDERS’ EQUITY
Share capital (note 8)		293,410			293,410
Warrants (note 8)		5,085			5,085
Other capital (note 8)		90,291			89,788
Deficit		(338,664	)		(334,619	)
Accumulated other comprehensive loss (“AOCI”)		(704	)		(678	)
Total shareholders’ equity		49,418			52,986
Total liabilities and shareholders’ equity		66,606			80,102

Commitments (note 12)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Approved by the Board of Directors

/s/ Carolyn Egbert	/s/ Dennis Turpin
Carolyn Egbert Chair of the Board	Dennis Turpin Director

2

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity

For the NINE months ended SEPTEMBER 30, 2022 and 2021

(In thousands of US dollars, except share data, unaudited)

	Common shares (number of)		Share capital		Warrants		Other capital		Deficit			Accumulated other comprehensive income (loss)			Total
Balance - January 1, 2022		4,855,876		293,410		5,085		89,788		(334,619	)		(678	)		52,986
Net loss		—		—		—		—		(10,276	)		—			(10,276	)
Other comprehensive loss:
Foreign currency translation adjustments		—		—		—		—		—			(26	)		(26	)
Actuarial gain on defined benefit plans and Remeasurement of the net defined benefit liability (note 7)		—		—		—		—		6,231			—			6,231
Comprehensive loss		—		—		—		—		(4,045	)		(26	)		(4,071	)
Share-based compensation costs		—		—		—		503		—			—			503
Balance – September 30, 2022		4,855,876		293,410		5,085		90,291		(338,664	)		(704	)		49,418

	Common shares (number of)		Share capital			Warrants			Other capital			Deficit			Accumulated other comprehensive income (loss)			Total
			$			$			$			$			$			$
Balance - January 1, 2021		2,507,145		235,008			12,402			89,505			(322,659	)		(1,045	)		13,211
Net loss (as restated note 1)		—		—			—			—			(5,474	)		—			(5,474	)
Other comprehensive loss:
Foreign currency translation adjustments		—		—			—			—			—			460			460
Actuarial gain on defined benefit plans		—		—			—			—			133			—			133
Comprehensive loss		—		—			—			—			(5,341	)		460			(4,881	)
Issuance of common shares, net of transaction costs		943,448		29,081			1,897			—			—			—			30,978
Exercise of warrants		1,400,447		29,770			(9,728	)		—			—			—			20,042
Transfer of warrant issuance costs upon 2021 exercise of warrants (note 8)		—		(532	)		532			—			—			—			—
Exercise of deferred share units (note 8)		840		20			—			(28	)		—			—			(8	)
Share-based compensation costs		—		—			—			292			—			—			292
Balance – September 30, 2021		4,851,880		293,347			5,103			89,769			(328,000	)		(585	)		59,634

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

3

Condensed Interim Consolidated Statements of Comprehensive Loss

For the three AND NINE months ended SEPTEMBER 30, 2022 and 2021

(In thousands of US dollars, except share and per share data)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
				(As restated- Note 1)						(As restated- Note 1)
	$			$			$			$
Revenues (note 3)
License fees		605			293			831			1,309
Development Services		1,202			684			2,091			2,809
Product sales		—			—			57			—
Royalties		14			20			57			47
Supply chain		39			55			119			139
Total revenues		1,860			1,052			3,155			4,304
Operating expenses
Cost of sales		14			31			106			72
Research and development expenses		3,293			1,485			8,081			4,711
General and administrative expenses		2,057			1,228			5,396			4,137
Selling expenses		217			360			822			924
Total operating expenses		5,581			3,104			14,405			9,844
Loss from operations		(3,721	)		(2,052	)		(11,250	)		(5,540	)
Gain (loss) due to changes in foreign currency exchange rates		301			124			977			(42	)
Other finance costs		—			(4	)		(3	)		(21	)
Net finance income (costs)		301			120			974			(63	)
Loss before income taxes		(3,420	)		(1,932	)		(10,276	)		(5,603	)
Income tax recovery		—			—			—			129
Net loss		(3,420	)		(1,932	)		(10,276	)		(5,474	)
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustments		(105	)		39			(26	)		460
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 (note 7)		(1,794	)		219			6,231			133
Comprehensive loss		(5,319	)		(1,674	)		(4,071	)		(4,881	)
Net loss per share [basic and diluted]		(0.70	)		(0.40	)		(2.12	)		(1.21	)
Weighted average number of shares outstanding (note 11):
Basic		4,855,876			4,851,880			4,855,876			4,509,731
Diluted		4,855,876			4,851,880			4,855,876			4,509,731

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

4

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands of US dollars)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
				(As restated-						(As restated-
				Note 1)						Note 1)
		$			$			$			$
Cash flows from operating activities
Net loss for the period		(3,420	)		(1,932	)		(10,276	)		(5,474	)
Items not affecting cash and cash equivalents:
Provision		7			19			12			39
Depreciation and amortization		33			33			104			105
Share-based compensation costs		443			19			503			292
Employee future benefits (note 7)		69			50			266			149
Amortization of deferred revenues		(1,248	)		(527	)		(1,952	)		(1,601	)
Foreign exchange on items denominated in foreign currencies		—			(45	)		—			82
Gain on disposal of property, plant and equipment		—			—			—			(1	)
Interest accretion on lease liabilities		3			2			3			5
Refund (payment) of income taxes		—			(426	)		830			(2,067	)
Other asset		—			(25	)		—			(107	)
Changes in operating assets and liabilities (note 9)		168			1,344			254			2,410
Net cash used in operating activities		(3,945	)		(1,488	)		(10,256	)		(6,168	)
Cash flows from financing activities
Issuance of common shares (note 8)		—			—			—			34,200
Transaction costs (note 8)		—			—			—			(3,221	)
Proceeds from exercise of warrants (note 8)		—			—			—			20,042
Payments on lease liabilities		(33	)		(31	)		(101	)		(95	)
Net cash provided by (used in) financing activities		(33	)		(31	)		(101	)		50,926
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment		—			—			—			1
Purchase of intangible assets		—			—			—			(490	)
Purchase of property and equipment		(9	)		(5	)		(57	)		(25	)
Change in restricted cash equivalents		4			(20	)		4			(20	)
Net cash used in investing activities		(5	)		(25	)		(53	)		(534	)
Effect of exchange rate changes on cash and cash equivalents		(358	)		(322	)		(1,074	)		(493	)
Net change in cash and cash equivalents		(4,341	)		(1,866	)		(11,484	)		43,731
Cash and cash equivalents – Beginning of period		58,157			69,868			65,300			24,271
Cash and cash equivalents – End of period		53,816			68,002			53,816			68,002

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

5

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

1. Business overview

Summary of business

Aeterna 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”) 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 and with the potential for pediatric use.

These unaudited condensed interim consolidated financial statements were approved by the Board of Directors (the “Board”) on November 2, 2022.

Basis of presentation

These 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, 2021. The accounting policies used in these condensed interim consolidated financial statements are consistent with those presented in the Company’s annual consolidated financial statements, with the addition of the Company’s policy with respect to the government assistance which is as follows:

Government assistance

Amounts received or receivable resulting from government assistance programs, including grants and refundable investment tax credits for research and development, are accounted for in accordance with IAS 20 - Accounting for government grants and disclosure of government assistance and are recognized where there is reasonable assurance that the amount of government assistance will be received, and all attached conditions will be complied with. When the amount relates to an expense item such as research and development costs, it is recognized as income on a systematic basis as a reduction to the costs that it is intended to compensate. When the grant relates to an asset, it reduces the carrying amount of the asset and is then recognized as income over the useful life of the depreciable asset by way of a reduced depreciation charge.

COVID-19 & Russia and Ukraine conflict

The rise in COVID-19 variants has caused delays in site initiation and patient enrollment in our DETECT-trial and may be impacting sales activities for Macrilen™ in the US. Further, the continuation of the COVID-19 pandemic and the Russia/Ukraine conflict may also cause some patients to be unwilling to enroll in our trials or be unable to comply with clinical trial protocols if such events impede patient movement or interrupt healthcare services, both of which would delay our ability to conduct clinical trials or release clinical trial results on a timely basis and could delay our ability to obtain regulatory approval and commercialize our product candidates. For the period ended September 30, 2022, the Company assessed the impact of the uncertainties around the COVID-19 pandemic and the Russia/Ukraine conflict on its judgments, estimates, accounting policies and amounts recognized in these unaudited condensed interim consolidated financial statements and determined that no adjustments were required to the carrying value of assets and liabilities. During the quarter ended June 30, 2022, management determined that the recruitment for the DETECT-trial and the remaining development services under the Novo Amendment may now continue until later into 2023 compared to the end of the 2022 year as anticipated at the end of the previous fiscal year. It is expected that the delays associated with COVID-19 and the Russia/Ukraine conflict will result in additional costs to the program. As such, this change in estimate resulted in reversal of revenue in both the license fees and development services for the quarter ended June 30, 2022. During the quarter ended September 30, 2022, Novo provided the Company with a notice of termination of the Novo Amendment. Refer to note 3 for further details on the Novo Amendment. The Company will continue to monitor the impact of the development of the COVID-19 pandemic and Russia/Ukraine conflict in further reporting periods. Actual results could differ from these estimates, and such differences may be material.

6

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

Restatement of comparative period figures

At the end of the prior fiscal year 2021, the Company restated its previously reported condensed consolidated interim financial statements for the three-month period ended March 31, 2021 and the three-month and six-month periods ended June 30, 2021 and three-month and nine-month periods ended September 30, 2021 with respect to the recognition of revenue for the Novo Amendment, signed in November 2020. During the fourth quarter of 2021, management reassessed the classification of the development activities associated with the DETECT-trial and concluded that subsequent to the Novo Amendment, the parties no longer shared joint control of these activities and, as such, these development activities no longer met the definition of a joint operation, as defined in IFRS 11 - Joint Arrangements. Therefore, pursuant to the guidance in IFRS 15 - Revenue from Contracts with Customers, the Company reclassified the charges to Novo, from research and development expenses to development services revenue, in the related periods. In addition, the license fees related to the pediatric indication were adjusted to reflect the revised pattern of recognition as the performance obligation for the development services has now been combined with the pediatric license. In addition, the accounting for prepaid expenses and other assets and deferred revenues related the DETECT-trial expenses incurred was restated. The condensed interim consolidated financial statements were not adjusted and refiled at the time of discovery of the error, rather the comparatives are being corrected now with the filing of the interim financials for the period ended September 30, 2022. The impacts of the September 30, 2021 restatements are as follows (amounts in thousands, except for basic and diluted loss per share):

	Previously			Effect of
	reported			restatement			Amended
	$			$			$
Consolidated interim statement of loss and comprehensive loss for the three-month period ended September 30, 2021
License fees		527			(234	)		293
Development service revenues		—			684			684
Research and development expenses		801			684			1,485
Net loss		(1,698	)		(234	)		(1,932	)
Total comprehensive loss		(1,440	)		(234	)		(1,674	)
Basic and diluted loss per share		(0.35	)		(0.05	)		(0.40	)
Consolidated interim statement of loss and comprehensive loss for the nine-month period ended September 30, 2021
License fees		1,601			(292	)		1,309
Development service revenues		—			2,809			2,809
Research and development expenses		1,902			2,809			4,711
Net loss		(5,182	)		(292	)		(5,474	)
Total comprehensive loss		(4,589	)		(292	)		(4,881	)
Basic and diluted loss per share		(1.07	)		(0.06	)		(1.21	)
Consolidated interim statement of financial position as of September 30, 2021
Prepaid expenses and other current assets		3,431			600			4,031
Current portion of deferred revenues		2,075			943			3,018
Deficit		(327,708	)		(292	)		(328,000	)

2. Critical accounting estimates and judgements

The 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 financial statements are prepared.

Management reviews, on a regular basis, the Company’s accounting policies, assumptions, estimates and judgments in order to ensure that the condensed interim consolidated financial statements are presented fairly and in accordance with IFRS applicable to interim financial statements. Critical accounting estimates and assumptions, as well as critical judgments used in applying accounting policies in the preparation of the Company’s condensed interim consolidated financial statements, were the same as those applied to the Company’s annual consolidated financial statements as at and for the years ended December 31, 2021 and December 31, 2020.

7

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

3. License and supply arrangements

Novo Nordisk Health Care AG

On November 16, 2020, the Company, through AEZS Germany, entered into the Novo Amendment of its existing License Agreement with Novo related to the development and commercialization of macimorelin. The Company earns product sales, royalties and supply chain revenue, in addition to license fees and development service revenue from conducting the DETECT-trial, from Novo.

On August 26, 2022, Novo provided the Company with a notice of termination of the Novo Amendment. Under the terms of the Novo Amendment, the termination is effective May 23, 2023 upon the completion of a 270 day notice period (“notice period”). Upon termination, the rights and licenses granted by the Company to Novo under the Novo Amendment are returned to the Company, and the Company has full rights to continue the clinical development and future commercialization of Macrilen™. Following the notice of termination and throughout the 270 day notice period, Novo will continue to fund all DETECT-trial costs up to $8.6 million (€9 million), and any additional DETECT-trial costs incurred over $8.6 million (€9 million) up to $9.2 million (€9.8 million) will be shared equally between Novo and Aeterna.

The Company concluded that the notice of termination represents a contract modification for accounting purposes. The Company further concluded that upon receipt of the notice of termination, the remaining goods and services to be performed during the notice period are considered distinct goods and services and therefore, the contract modification is to be accounted for prospectively. As of the date of receipt of the notice of termination from Novo, the Company had recognized total license fees associated with the Pediatric Indication of $1,615 (€1,880) and total development services revenue of $3,865 (€4,448). Subsequent to the receipt of the notice of termination, management estimated the combined transaction price of the remaining services to be performed as $7,937 (€7,776), comprised of Pediatric Indication license fees of $2,872 (€2,814) and development services revenue of $5,065 (€4,962). Revenue associated with this combined performance obligation will be recognized as pediatric development services are incurred during the notice period, until the date of termination on May 23, 2023, using the cost-to-cost method. As such, all amounts in deferred revenue are classified as current as at September 30, 2022 to reflect the revised timing. Management will continue to reevaluate the transaction price at the end of each reporting period.

MegaPharm Ltd

In June 2020, the Company entered into an exclusive distribution and quality agreement with MegaPharm Ltd. (“MegaPharm”) for the commercialization in Israel and in the Palestinian Authority of macimorelin to be used in the diagnosis of patients with adult growth hormone deficiency and in clinical development for the diagnosis of pediatric growth hormone deficiency (the “MegaPharm Agreement”). As of September 30, 2022, there have been no products supplied under this agreement.

Consilient Healthcare

On December 7, 2020, the Company entered into an exclusive licensing agreement with “CH” for the commercialization of macimorelin in the European Economic Area and the United Kingdom (the “CH License Agreement”). The Company earns licenses fees and product sale revenue from CH.

NK Meditech Limited

The Company and NK Meditech Limited (“NK”) entered into a licensing agreement, effective November 30, 2021 and pursuant to which the Company granted to NK the exclusive right to commercialize (including marketing, selling and offering to sell) macimorelin in the Republic of Korea (the “ROK”) and as applicable, in the Democratic People’s Republic of Korea (“DPRK”) to the extent NK is allowed to use the aforementioned licensed rights in the latter (“NK License Agreement”). As of September 30, 2022, there have been no products supplied under this agreement.

The following table provides a summary of deferred revenue balances:

	September 30, 2022
	Current		Non-Current		Total
	$		$		$
Novo Amendment		3,466		—		3,466
CH License Agreement		18		1,345		1,363
NK License Agreement		—		117		117
Total		3,484		1,462		4,946

8

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

	December 31, 2021
	Current		Non-Current		Total
	$		$		$
Novo Amendment		4,791		23		4,814
CH License Agreement		24		1,334		1,358
NK License Agreement		—		136		136
Total		4,815		1,493		6,308

4. Trade and other receivables

	September 30, 2022		December 31, 2021
	$		$
Trade accounts receivable (net of expected credit losses of $55 (December 31, 2021 – $55)		383		877
Value-added tax		162		372
Grant receivable		201		—
Other		31		65
		777		1,314

In March 2022, the Company was awarded a monetary subsidy with respect to two pre-clinical programs—namely, the Company’s development of an oral vaccine against infections with SARS-CoV-2 and the development of a product candidate for the treatment of neuromyelitis optica. The subsidy was awarded pursuant to the provisions of the German Act on Tax Incentives for Research and Development, which provides direct reimbursement of certain qualifying R&D expenditures to eligible entities. The CoV-2 grant is related to R&D expenditures incurred in 2021 and during 2022. The Neuromyelitis Optica grant is related to expenditures incurred in 2021 and during 2022.

5. Prepaid expenses and other current assets

	September 30, 2022		December 31, 2021
	$		$
Prepaid insurance		839		421
Prepaid research and development		1,561		1,329
Other		74		22
		2,474		1,772

9

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

6. Payables and accrued liabilities

	September 30, 2022		December 31, 2021
	$		$
Trade accounts payable		720		934
Salaries, employment taxes and benefits		89		531
Accrued research and development costs		855		596
Other accrued liabilities		623		611
		2,287		2,672

7. Employee future benefits

The change in the Company’s accrued benefit obligations is summarized as follows:

	Nine months ended September 30, 2022									Year ended December 31, 2021
	Pension			Other
	benefit plans			benefit plans			Total			Total
	$			$			$			$
Change in plan liabilities
Balances – Beginning of the period		29,313			99			29,412			15,435
Current service cost		48			8			56			65
Interest cost		209			1			210			88
Employee contributions		10			—			10			—
Actuarial gain arising from changes in financial assumptions		(8,528	)		—			(8,528	)		(1,130	)
Past service cost associated with multi-employer plan		—			—			—			16,137
Actuarial loss arising from change in current assumptions on funding of future pension increases		—			—			—			556
Benefits paid		(513	)		(1	)		(514	)		(511	)
Impact of foreign exchange rate changes		(3,032	)		(14	)		(3,046	)		(1,228	)
Balances – End of the period		17,507			93			17,600			29,412
Change in plan assets
Balances – Beginning of the period		11,927			—			11,927			—
Presentation of plan assets as of December 31, 2021		—			—			—			11,963
Remeasurement of plan assets		(2,297	)		—			(2,297	)		—
Employer contributions		40			—			40			—
Employee contributions		10			—			10			—
Benefits paid		(182	)		—			(182	)		—
Impact of foreign exchange rate changes		(1,356	)		—			(1,356	)		(36	)
Balances – End of the period		8,142			—			8,142			11,927
Net liability of the unfunded plans		8,170			93			8,263			12,749
Net liability of the funded plans		1,195			—			1,195			4,736
Net amount recognized as Employee future benefits		9,365			93			9,458			17,485
Amounts recognized:
In net loss		257			9			266			(153	)
In other comprehensive (gain) loss		(7,907	)		(14	)		(7,921	)		(2,408	)

The calculation of the pension benefit obligation is sensitive to the discount rate assumption and other assumptions such as the rate of the pension benefit increase. Discount rates were 1.1% at December 31, 2021, 3.25% at June 30, 2022 and 3.70% at September 30, 2022 and the pension benefits increase rates were 0.50% at December 31, 2021 and June 30, 2022 and 1.0% at September 30, 2022 causing the variances in the actuarial (gain) loss on defined benefit plan during the quarter and the nine-months ended September 30, 2022.

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

8. Share capital, warrants and other capital

The Company has an unlimited number of authorized common shares (being voting and participating shares) with no par value, as well as an unlimited number of preferred, first and second ranking shares, issuable in series, with rights and privileges specific to each class, with no par value.

On July 15, 2022, the Company’s shareholders and board of directors approved an amendment to the Company’s articles of amendment to effect a 1-for-25 reverse stock split of the Company’s common shares, DSU and Warrants. The Company’s outstanding stock options were also adjusted to reflect the 1-for-25 reverse stock split of the Company’s common shares. Accordingly, all common shares, DSU and Warrants, stock options and per share amounts in these condensed interim consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split. Outstanding stock options were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased. The reverse stock split was effected in the markets on July 21, 2022.

2021

On February 19, 2021, the Company completed an underwritten public offering of 820,390 common shares at $36.25 per common share, resulting in aggregate gross proceeds of $29,739, before deducting underwriting discounts, commissions and offering expenses of $2,837 (the “February 2021 Financing). The Company also granted the underwriter and placement agent (the “Underwriter”), a 30-day over-allotment option to purchase up to 123,058 additional common shares at a price of $36.25 per common share (the “Underwriter Option”). Additionally, the Company issued warrants underlying 57,427 common shares to the Underwriter, with each warrant bearing an exercise price of $45.31 (the “February 2021 Placement Agent Warrants”). The February 2021 Placement Agent Warrants expire on February 17, 2026.

On February 22, 2021, the underwriter exercised the Underwriter Option in full and received 123,058 common shares in exchange for gross proceeds to the Company of $4,461. Upon exercise of the Underwriter Option, the Underwriter also an additional 8,614 February 2021 Placement Agent Warrants.

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

Aggregate gross proceeds received in connection with the February 2021 Financing totaled $34,200, less cash transaction costs of $3,221 and non-cash transaction costs, which represent the issue-date fair value of the February 2021 Placement Agent Warrants, of $1,897.

The table presented below shows the inputs and assumptions applied to the Black-Scholes option pricing model in order to determine the fair value of these Placement agent warrants:

	Number of equivalent shares		Market value per share price		Weighted average exercise price		Risk-free annual interest rate			Expected volatility			Expected life (years)		Expected dividend yield
			($)		($)		(i)			(ii)			(iii)		(iv)
February 2021 Placement agent warrants – public offering		57,427		37		45.31		0.59	%		119.18	%		4.99		0	%
February 2021 Placement agent warrants – Underwriter Option		8,614		37		45.31		0.59	%		119.57	%		4.98		0	%

(i)	During the nine-month period ended September 30, 2021, warrants were exercised as follows:
(ii)	Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the warrants.
(iii)	Based on the historical volatility of the Company’s stock price over the most recent period consistent with the expected life of the warrants.
(iv)	Based upon time to expiry from the issuance date.

During the nine-month period ended September 30, 2021, warrants were exercised as follows:

	Warrants exercised (number of underlying common shares)		Exercise Price		Aggregate proceeds to the Company
September 2019 Investor warrants		80,000	$	41.25	$	3,300
February 2020 Investor warrants		69,565		30.00		2,087
July 2020 Investor warrants		841,822		11.25		9,471
July 2020 Placement Agent warrants		74,667		14.06		1,050
August 2020 Investor warrants		303,595		11.75		3,567
August 2020 Placement Agent warrants		34,798		17.60		612
		1,404,447			$	20,087

Other capital

	Nine months ended September 30, 2022
	Stock options		Weighted average exercise price		DSUs
	(Number)		($)		(Number)
Balance – January 1, 2022		43,455		22.00		16,920
Granted		2,000		8.88		80,000
Expired		—		—		—
Exercised		—		—		—
Balance – September 30, 2022		45,455		21.42		96,920

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

	Year ended December 31, 2021
	Stock options			Weighted average exercise price		DSUs
	(Number)			($)		(Number)
Balance – January 1, 2021		20,256			36		6,920
Granted		23,200			10.5		11,200
Expired		(1	)		14,756.25		—
Exercised		—			—		(1,200	)
Balance – December 31, 2021		43,455			22		16,920

The DSU compensation expense for the three months ended September 30, 2022 was $402 (2021 - $nil) and the nine months ended September 30, 2022 was $402 (2021 – $244) recognized over the vesting period. Vested DSUs cannot be redeemed until the holder is no longer a member of the Board.

Fair value input assumptions for US dollar stock option grants

The table below shows the assumptions, or weighted average parameters, applied to the Black-Scholes option pricing model in order to determine share-based compensation costs over the life of the awards.

		Nine Months Ended			Year Ended
		September 30,			December 31,
		2022			2021
Expected dividend yield	(a)		0.00	%		0.00	%
Expected volatility	(b)		115.75	%		115.80	%
Risk-free annual interest rate	(c)		1.59	%		1.23	%
Expected life (years)	(d)		5.72			5.71
Weighted average share price		$	8.88		$	10.50
Weighted average exercise price		$	8.88		$	10.50
Weighted average grant date fair value		$	7.47		$	8.82

(a)	The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future.
(b)	Based on the historical volatility of the Company’s stock price over the most recent period consistent with the expected life of the stock options, as well as on future expectations.
(c)	Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the stock options.
(d)	Based upon historical data related to the exercise of stock options, on post-vesting employment terminations and on future expectations related to exercise behavior.

9. Supplemental disclosure of cash flow information

	Three months ended						Nine months ended
	September 30, 2022						September 30, 2022
	2022			2021			2022			2021
	$			$			$			$
Changes in operating assets and liabilities:
Trade and other receivables		205			563			425			666
Inventory		41			—			(165	)		(39	)
Prepaid expenses and other current assets		(481	)		233			(1,240	)		548
Payables and accrued liabilities		(133	)		298			(14	)		(17	)
Taxes payable		210			—			210			(129	)
Deferred revenues		595			318			1,425			1,606
Employee future benefits		(269	)		(68	)		(387	)		(225	)
		168			1,344			254			2,410

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NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2022 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(amounts in thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)

10. Segment information

The Company operates in a single operating segment, being the biopharmaceutical segment.

11. Net loss per share

The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common shareholders.

	Three months ended						Nine months ended
	September 30,						September 20,
	2022			2021			2022			2021
	$			$			$			$
Net loss		(3,420	)		(1,932	)		(10,276	)		(5,474	)
Basic weighted average number of shares outstanding		4,855,876			4,851,880			4,855,876			4,509,731
Net loss income per share (basic)		(0.70	)		(0.40	)		(2.12	)		(1.21	)
Dilutive effect of stock options and DSUs		—			—			—			—
Dilutive effect of warrants		—			—			—			—
Diluted weighted average number of shares outstanding		4,855,876			4,851,880			4,855,876			4,509,731
Net loss per share (diluted)		(0.70	)		0.40			(2.12	)		(1.21	)
Items excluded from the calculation of diluted net loss per share because the exercise price was greater than the average market price of the common shares or due to their anti-dilutive effect
Stock options and DSUs		142,375			37,176			142,375			37,176
Warrants		457,649			461,649			457,649			461,649

Net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding during the relevant period. Diluted weighted average number of shares reflects the dilutive effect of equity instruments, such as any “in the money” stock options, DSUs and warrants. In periods with reported net losses, all stock options and warrants are deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal, and thus “in the money” stock options and warrants have not been included in the computation of net loss per share because to do so would be anti-dilutive.

12. Commitments

	Service and manufacturing		R&D contracts		TOTAL
	$		$		$
Less than 1 year		7,006		1,870		8,876
1 - 3 years		2,089		629		2,718
4 - 5 years		46		—		46
More than 5 years		—		—		—
Total		9,141		2,499		11,640

The Company executed various agreements including in-licensing and similar arrangements with development partners. Such agreements may require the Company to make payments on achievement of stages of development, launch or revenue milestones, although the Company generally has the right to terminate these agreements at no penalty.

Based on the closing exchange rates at September 30, 2022, the Company expects to pay $8,527 including $6,394 (€6.5 million), and $1,283 (£1.2 million) and $850 USD, in R&D milestone payments and up to $37,438, including $27,043 (€27.6 million); $1,395 (£1.3 million) and $9,000 USD, in revenue related milestone payments. The table below contains all potential R&D and revenue-related milestone payments that the Company may be required to make under such agreements:

	Future potential R&D milestone payments		Future potential revenue milestone payments		TOTAL
	$		$		$
Less than 1 year		24		—		24
1 - 3 years		198		—		198
4 - 5 years		1,243		—		1,243
More than 5 years		7,062		37,438		44,500
Total		8,527		37,438		45,965

The future payments that are disclosed represent contract payments and are not discounted and are not risk-adjusted. The development of any pharmaceutical product candidates is a complex and risky process that may fail at any stage in the development process due to a number of factors. The timing of the payments is based on the Company’s current best estimate of achievement of the relevant milestone.

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