Exhibit 99.1
Aeterna Zentaris Inc.
Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars)
(Unaudited)
| 1 |
Aeterna Zentaris Inc.
Condensed Interim Consolidated Statements of Financial Position
(In thousands of US dollars)
(Unaudited)
| As of September 30, 2023 | As of December 31, 2022 | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ||||||||
| Trade and other receivables | ||||||||
| Inventory | ||||||||
| Income taxes receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Restricted cash equivalents | ||||||||
| Property and equipment | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Payables and accrued liabilities | ||||||||
| Provisions | ||||||||
| Income taxes payable | ||||||||
| Deferred revenues (note 3) | ||||||||
| Deferred gain (note 4) | ||||||||
| Lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Deferred revenues (note 3) | ||||||||
| Deferred gain (note 4) | ||||||||
| Lease liabilities | ||||||||
| Employee future benefits (note 5) | ||||||||
| Provisions | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity | ||||||||
| Share capital (note 6) | ||||||||
| Warrants | ||||||||
| Contributed surplus | ||||||||
| Deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
Commitments (note 10)
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 |
Aeterna Zentaris Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
For the nine months ended September 30, 2023, and 2022
(In thousands of US dollars)
(Unaudited)
| Share capital | Warrants | Contributed surplus | Deficit | Accumulated other comprehensive loss | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance – January 1, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||
| Foreign currency translation adjustments | ||||||||||||||||||||||||
| Actuarial gain on defined benefit plans (note 5) | ||||||||||||||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ||||||||||||||||||||
| Share-based compensation costs | ||||||||||||||||||||||||
| Balance – September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Share capital | Warrants | Contributed surplus | Deficit | Accumulated other comprehensive loss | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance – January 1, 2022 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Other comprehensive loss: | ||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||||||||||
| Actuarial gain on defined benefit plans | ||||||||||||||||||||||||
| Comprehensive income | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Share-based compensation costs | ||||||||||||||||||||||||
| Balance – September 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 3 |
Aeterna Zentaris Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Revenues (note 3) | ||||||||||||||||
| Expenses | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain (loss) due to changes in foreign currency exchange rates | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Other finance costs | ( | ) | ( | ) | ||||||||||||
| Net finance income | ||||||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax recovery | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss: | ||||||||||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Items that will not be reclassified to profit or loss: | ||||||||||||||||
| Actuarial gain (loss) on defined benefit plans (note 5) | ( | ) | ||||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Basic and diluted loss per share (note 8) | ) | ) | ) | ) | ||||||||||||
| Weighted average number of shares outstanding (basic and diluted) | ||||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 4 |
Aeterna Zentaris Inc.
Condensed Interim Consolidated Statements of Cash Flows
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Items not affecting cash and cash equivalents: | ||||||||||||||||
| Provisions | ( | ) | ( | ) | ||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Share-based compensation costs | ||||||||||||||||
| Employee future benefits | ||||||||||||||||
| Amortization of deferred revenues | ( | ) | ( | ) | ( | ) | ||||||||||
| Net foreign exchange differences | ( | ) | ( | ) | ||||||||||||
| Other non-cash items | ||||||||||||||||
| Refund of income taxes | ||||||||||||||||
| Changes in operating assets and liabilities (note 7) | ( | ) | ( | ) | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cash flows from financing activities | ||||||||||||||||
| Payments on lease liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cash flows from investing activities | ||||||||||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in restricted cash equivalents | ( | ) | ( | ) | ||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||||||
| Net change in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents – Beginning of period | ||||||||||||||||
| Cash and cash equivalents – End of period | ||||||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
| 5 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
1. Business overview
Summary of business
Aeterna Zentaris 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 (“EMA”) approved oral test indicated for the diagnosis of patients with adult growth hormone deficiency (“AGHD”). Macimorelin is currently marketed under the tradename Ghryvelin™ in the European Economic Area and the United Kingdom through an exclusive licensing agreement with Pharmanovia. The Company’s several other license and commercialization partners are also seeking approval for commercialization of macimorelin in Israel and the Palestinian Authority, the Republic of Korea, Turkey and several non-European Union Balkan countries. The Company is actively pursuing business development opportunities for the commercialization of macimorelin in North America, Asia and the rest of the world.
The Company is also dedicated to the development of therapeutic assets and has 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.
These unaudited condensed interim consolidated financial statements were approved by the Board of Directors (the “Board”) on November 8, 2023.
2. Basis of presentation
These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board.
The unaudited condensed interim consolidated financial statements do not include all the notes normally included in annual consolidated financial statements. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements as of and for the year ended December 31, 2022.
The accounting policies used in these condensed interim consolidated financial statements are consistent with those presented in the Company’s annual consolidated financial statements.
New standards and amendments
Effective January 1, 2023, the Company adopted the Disclosure of Accounting Policies (amendments to IAS 1 and IFRS Practice Statement 2). The amendments to IAS 1 require that the Company discloses its material accounting policies instead of its significant accounting policies. As a result of the adoption of these amendments, there were no adjustments to the presentation or amounts recognized in the interim financial statements.
Critical accounting estimates and judgements
The preparation of condensed interim consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of the Company’s assets, liabilities, revenues, expenses and related disclosures. Judgements, 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.
| 6 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
Management reviews, on a regular basis, the Company’s accounting policies, assumptions, estimates and judgements 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 judgements 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 of and for the year ended December 31, 2022.
3. Revenue
The Company derives revenue from the transfer of goods and services over time and at a point in time in the following categories:
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| License fees | ||||||||||||||||
| Development services | ||||||||||||||||
| Product sales | ||||||||||||||||
| Royalties | ||||||||||||||||
| Supply chain | ||||||||||||||||
The
Company recorded revenue for the transfer of services over time for the three months ended September 30, 2023, nil (2022 – $
Pharmanovia:
On
March 15, 2023, with the Company’s consent, Consilient Health (“CH”) entered into an assignment agreement with Pharmanovia
to transfer the current licensing agreement for the commercialization of macimorelin in the European Economic Area and the United Kingdom
to Pharmanovia, as well as the current supply agreement pursuant to which the Company agreed to provide the licensed product (together,
the “Assignment Agreement”). Also on March 15, 2023, the Company and Pharmanovia entered into an amendment agreement, pursuant
to which the Company provided its acknowledgement and consent to the Assignment Agreement and agreed to certain amended terms which do
not materially differ from the previous license and supply agreement with CH. Subsequent to the execution of the Assignment Agreement,
the aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligations was $
| 7 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
Novo Nordisk Health Care AG:
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 was 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 returned to the Company, and the Company regained full
rights to continue the clinical development and future commercialization of Macrilen™. Following the notice of termination and
throughout the 270-day notice period, as per the terms of the Novo Amendment, Novo continued to fund DETECT-trial costs up to $
Liabilities related to contracts with customers
The following table provides a summary of deferred revenue balances:
| September 30, 2023 | ||||||||||||
| Current | Non-current | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Novo Nordisk Health Care | ||||||||||||
| Pharmanovia | ||||||||||||
| NK Meditech | ||||||||||||
| December 31, 2022 | ||||||||||||
| Current | Non-current | Total | ||||||||||
| $ | $ | $ | ||||||||||
| Novo Nordisk Health Care | ||||||||||||
| Consilient Health | ||||||||||||
| NK Meditech | ||||||||||||
4. Deferred gain
On
August 10, 2021, the Company entered into a trademark maintenance and assignment option agreement with ARES Trading SA, a subsidiary
of Merck KGaA (“Merck”), with respect to the trademarks owned by the Company on Cetrotide® (cetrorelix acetate
for injection). As consideration for having been granted the option, Merck has agreed to pay the Company a total of $
| 8 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
5. Employee future benefits
The change in the Company’s employee future benefit obligations is summarized as follows:
Nine months ended September 30, 2023 | Year ended December 31, 2022 | |||||||||||||||
| Pension | Other | |||||||||||||||
| benefit plans | benefit plans | Total | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Change in plan liabilities | ||||||||||||||||
| Balances – Beginning of the period | ||||||||||||||||
| Current service cost | ||||||||||||||||
| Interest cost | ||||||||||||||||
| Actuarial gain from changes in financial assumptions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Benefits paid | ( | ) | ( | ) | ( | ) | ||||||||||
| Impact of foreign exchange rate changes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balances – End of the period | ||||||||||||||||
| Change in plan assets | ||||||||||||||||
| Balances – Beginning of the period | ||||||||||||||||
| Interest income from plan assets | ||||||||||||||||
| Employer contributions | ||||||||||||||||
| Employee contributions | ||||||||||||||||
| Benefits paid | ( | ) | ( | ) | ( | ) | ||||||||||
| Remeasurement of plan assets | ( | ) | ||||||||||||||
| Change in asset ceiling | ( | ) | ( | ) | ||||||||||||
| Impact of foreign exchange rate changes | ( | ) | ( | ) | ( | ) | ||||||||||
| Balances – End of the period | ||||||||||||||||
| Net liability of the unfunded plans | ||||||||||||||||
| Net liability of the funded plans | ||||||||||||||||
| Net amount recognized as Employee future benefits | ||||||||||||||||
| Amounts recognized: | ||||||||||||||||
| In net loss | ||||||||||||||||
| Actuarial gain on defined benefit plans in other comprehensive loss | ||||||||||||||||
The
calculation of the employee future benefit obligation is sensitive to the discount rate assumption and other assumptions such as the
rate of the pension benefit increase. Discount rates were
| 9 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
Share capital
The Company has authorized an unlimited number of 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.
| Common shares | Amount | |||||||
| # | $ | |||||||
| Balance – December 31, 2022 | ||||||||
| - | - | |||||||
| Balance – September 30, 2023 | ||||||||
On
July 15, 2022, the Company’s shareholders and board of directors approved an amendment to the Company’s articles of incorporation
to effect a
Share-based compensation
On January 17, 2023, the Company granted (2022 – ) stock options under the Long-Term Incentive Plan. The stock options have a term of seven years and will vest over a period of three years. The fair value at grant date is estimated using a Black-Scholes option pricing model, considering the terms and conditions upon which the options were granted, using the following assumptions:
| September 30, 2023 | September 30, 2022 | |||||||
| Expected dividend yield | $ | $ | ||||||
| Expected volatility | % | % | ||||||
| Risk-free annual interest rate | % | % | ||||||
| Expected life (years) | ||||||||
| Share price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Grant date fair value | $ | $ | ||||||
The expected volatility of these stock options was determined using historical volatility rates and the expected life was determined using the weighted average life of past options issued.
| 10 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
The compensation expense for the three months ended September 30, 2023, was $ (2022 – $) and for the nine months ended September 30, 2023, was $ (2022 – $) recognized over the vesting period. Option activity for the nine months ended September 30, 2023, and 2022, was as follows:
| Stock options | Weighted average exercise price | |||||||
| # | $ | |||||||
| Balance – January 1, 2023 | ||||||||
| Granted | ||||||||
| Cancelled / Forfeited | ( | ) | ||||||
| Balance – September 30, 2023 | ||||||||
| Stock options | Weighted average exercise price | |||||||
| # | $ | |||||||
| Balance – January 1, 2022 | ||||||||
| Granted | ||||||||
| Cancelled / Forfeited | ( | ) | ||||||
| Balance – September 30, 2022 |
Deferred share units
On June 14, 2023, the Company granted (2022 – ) DSUs under the Long-Term Incentive Plan. The compensation expense for the nine months ended September 30, 2023, was $ (2022 - $) and is presented in selling, general and administrative expenses. DSU activity for the nine months ended September 30, 2023, was as follows:
| 2023 | 2022 | |||||||
| # | # | |||||||
| Balance – January 1, | ||||||||
| Granted | ||||||||
| Balance – September 30, | ||||||||
| 11 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
7. Supplemental disclosure of cash flow information
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Trade and other receivables | ( | ) | ( | ) | ||||||||||||
| Inventory | ( | ) | ( | ) | ||||||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||||||||||
| Payables and accrued liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deferred revenues | ( | ) | ( | ) | ||||||||||||
| Taxes payable | ||||||||||||||||
| Provision for restructuring and other costs | ( | ) | ( | ) | ||||||||||||
| Employee future benefits | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deferred gain | ||||||||||||||||
| ( | ) | ( | ) | |||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Basic and diluted weighted-average shares outstanding | ||||||||||||||||
| Basic and diluted loss per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Items excluded from the calculation of diluted net loss per share due to their anti-dilutive effect: | ||||||||||||||||
| Stock options and DSUs | ||||||||||||||||
| Warrants | ||||||||||||||||
9. Segment information
The Company operates in a single operating segment, being the biopharmaceutical segment.
| 12 |
Aeterna Zentaris Inc.
Notes to the Condensed Interim Consolidated Financial Statements
As of September 30, 2023, and for the three and nine months ended September 30, 2023, and 2022
(In thousands of US dollars, except share and per share data and as otherwise noted)
(Unaudited)
10. Commitments
Significant expenditure contracted for at the end of the reporting period but not recognized as liabilities is as follows:
| TOTAL | ||||
| $ | ||||
| Less than 1 year | ||||
| 1 - 3 years | ||||
| 4 - 5 years | ||||
| More than 5 years | ||||
In
2021, 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. The Company may have to pay up to $
| 13 |