The following excerpt is from the company's SEC filing.
at JUNE 30, 2020 and for the three-month AND SIX-MONTH periodS ended JUNE 30, 2020 and 2019
thousands of US dollars)
Interim Consolidated Financial Statements
Condensed Interim Consolidated Statements of Financial Position
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Deficiency)
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
Condensed Interim Consolidated Statements of Cash Flows
Notes to Condensed Interim Consolidated Financial Statements
Inter im Consolidated Statements of Financial Position
June 30, 2020
December 31, 2019
Cash and cash equivalents
Trade and other receivables (note 5)
Prepaid expenses and other current assets (note 21)
Total current assets
Restricted cash equivalents
Right of use assets (note 6)
Property, plant and equipment
Identifiable intangible assets
Goodwill (note 7)
Payables and accrued liabilities (note 8)
Provision for restructuring and other costs (note 9)
Income taxes payable
Current portion of deferred revenues
Current portion of lease liabilities (note 10)
Current portion of warrant liability (note 11)
Total current liabilities
Lease liabilities (note 10)
Warrant liability (note 11)
Employee future benefits (note 12)
Non-current provision for restructuring and other costs (note 9)
SHAREHOLDERS’ EQUITY (DEFICIENCY)
Warrants (note 13)
Accumulated other comprehensive income (“AOCI”)
Total shareholders’ equity (deficiency)
Total liabilities and shareholders’ equity (deficiency)
and contingencies (note 20)
events (note 21)
accompanying notes are an integral part of these condensed interim consolidated financial statements.
by the Board of Directors
of the Board
Interim Consolidated Statements of Changes in Shareholders’ Equity (Deficiency)
the three MONTHS ended june 30, 2020 and 2019
thousands of US dollars, unaudited)
Common shares (number of)
Balance - April 1, 2020
Other comprehensive loss:
Foreign currency translation adjustments
Actuarial (loss) on defined benefit plan (note 12)
Reclassification of warrant liability to equity (note 11(b))
Issuance of common shares, net (note 13)
Share-based compensation costs (note 14)
Balance – June 30, 2020
Balance - April 1, 2019
Balance – June 30, 2019
the six months ended june 30, 2020 and 2019
Balance - January 1, 2020
Reclassification of warrants upon registration (note 11(b))
Issuance of common shares and warrants, net (note 13 and note 11(a), respectively)
Balance - January 1, 2019
Interim Consolidated Statements of Comprehensive Loss
the three AND SIX months ended JUNE 30, 2020 and 2019
thousands of US dollars, except share and per share data)
Three months ended
Six months ended
Revenues (note 4)
Cost of sales
Research and development costs
General and administrative expenses
Restructuring costs (note 9)
Impairment of right of use asset
Gain on modification of building lease (notes 6 and 10)
Impairment of prepaid asset
Total operating expenses (note 14)
Loss from operations
Gain (loss) due to changes in foreign currency exchange rates
(Loss) gain on change in fair value of warrant liability (note 11)
Other finance (costs) income
Net finance (costs) income
Net (loss) income
Other comprehensive (loss):
Items that may be reclassified subsequently to profit or loss:
Items that will not be reclassified to profit or loss:
Actuarial (loss) on defined benefit plans (note 12)
Net (loss) income per share [basic and diluted]
Weighted average number of shares outstanding (note 19):
Interim Consolidated Statements of Cash Flows
the three AND SIX months ended june 30, 2020 and 2019
Cash flows from operating activities
Net (loss) income for the period
Items not affecting cash and cash equivalents:
Loss (gain) on change in fair value of warrant liability (note 11)
Transaction costs of warrants issued and expensed as finance cost
Provision for restructuring costs utilized (note 9)
Depreciation and amortization
Amortization of deferred revenues
Foreign exchange (loss) on items denominated in foreign currencies
Gain on disposal of property, plant and equipment
Other non-cash items
Interest accretion on lease liabilities (note 10)
Payment of income taxes
Changes in operating assets and liabilities (note 15)
Net cash used in operating activities
Cash flows from financing activities
Issuance of common shares and warrants (notes 13 and 11, respectively)
Transaction costs (note 13)
Payments on lease liabilities (note 10)
Net cash provided by (used in) financing activities
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Change in restricted cash equivalents
Net cash provided by 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
to Condensed Interim Consolidated Financial Statements
at JUNE 30, 2020 and for the three AND SIX months ended JUNE 30, 2020 and 2019
in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted) (Unaudited)
of business and liquidity and basis of preparation
of business and liquidity
Zentaris Inc. (“Aeterna Zentaris” or the “Company”) is a specialty biopharmaceutical company commercializing
and developing therapeutics and diagnostic tests. The Company’s lead product, Macrilen™ (macimorelin), is the first
and only United States Food and Drug Administration (“FDA”) and European Commission approved oral test indicated for
the diagnosis of patients with adult growth hormone deficiency (“AGHD”). Macrilen™ (macimorelin) is currently
marketed in the U.S. through a license and assignment agreement (the “License Agreement”) with Novo Nordisk A/S (“Novo”).
Aeterna Zentaris is also pursuing the development of macimorelin for the diagnosis of child-onset growth hormone deficiency (“CGHD”),
an area of significant unmet need. In addition, we are actively pursuing business development opportunities for the commercialization
of macimorelin in Europe and the rest of the world in addition to other non-strategic assets to monetize their value.
Company’s principal focus is on the commercialization of Macrilen™ (macimorelin) and it currently does not have any
other approved products. Under the terms of License Agreement, Novo is funding 70% of the pediatric clinical trial submitted to
the European Medicines Agency (“EMA”) and FDA, the Company’s sole development activity. In November 2019, Novo
contracted the Company’s wholly owned German subsidiary (“AEZS Germany”) to provide supply chain services for
the manufacture of Macrilen™ (macimorelin). In April 2020, we announced the results from AEZS-130-P01 (“Study P01”)
to establish a dose that can both be safely administered to pediatric patients and cause a clear rise in growth hormone concentration
in subjects ultimately diagnosed as not having growth hormone deficiency. The Company plans to proceed with the pivotal second
study, AEZS-130-P02 (“Study P02”), with an expected start date in the first quarter of 2021 and an expected completion
date in July 2022, according to the pediatric investigation plan (“PIP”) agreement with the EMA. Study P02 is designed
to investigate the diagnostic efficacy and safety of macimorelin acetate in pediatric patients from 2 years of age to 18 years
of age with suspected growth hormone deficiency.
at June 30, 2020, a substantial portion of the Company’s cash is held in AEZS Germany, the Company’s principle operating
subsidiary. AEZS Germany is the counter-party to the License Agreement described above with Novo, and as such, for generating
future revenue earned under the License Agreement. Management considers the cash resources available to AEZS Germany in executing
its obligations under the License Agreement. In the event the current and medium term liabilities of AEZS Germany exceed the fair
values ascribed to its assets, under German solvency laws, it may no longer be possible for AEZS Germany’s operations to
continue or for AEZS Germany to transfer cash to Aeterna Zentaris or its U.S. subsidiary, if needed.
2020, the COVID-19 pandemic began causing significant financial market declines and social dislocation. The situation is dynamic
with various cities and countries around the world responding in different ways to address the outbreak. The spread of COVID-19
may impact the Company’s operations, including the potential interruption of our clinical trial activities and the Company’s
supply chain, or that of the Company’s licensee. For example, the COVID-19 outbreak may delay enrollment in the Company’s
clinical trials due to prioritization of hospital resources toward the outbreak, and some patients may be unwilling to be enrolled
in the Company’s trials or be unable to comply with clinical trial protocols if quarantines impede patient movement or interrupt
healthcare services, which would delay the Company’s ability to conduct clinical trials or release clinical trial results
and could delay the Company’s ability to obtain regulatory approval and commercialize the Company’s product candidates.
The pandemic may also impact the ability of the Company’s suppliers to deliver components or raw materials on a timely basis
or at all. In addition, hospitals may reduce staffing and reduce or postpone certain treatments in response to the spread of an
infectious disease. The Company’s licensee may be impacted due to significant delays of diagnostic activities in the U.S.
To date, the Company has not experienced significant business disruption from COVID-19.
unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS”) applicable to the preparation of interim
financial statements, including IAS 34, Interim Financial Reporting. These unaudited condensed interim consolidated financial
statements should be read in conjunction with the Company’s annual consolidated financial statements as at and for the year
ended December 31, 2019.
unaudited condensed interim consolidated financial statements were approved by the Board of Directors (the “Board”)
on August 5, 2020.
accounting policies in these condensed interim consolidated financial statements are consistent with those presented in the Company’s
annual consolidated financial statements except as noted below:
Company accounts for share purchase warrants that meet the fixed-for-fixed criteria as equity-settled.
share units (“DSUs) are classified as other capital. The Company grants DSUs to members of its Board of Directors who are
not employees or officers of the Company. DSUs cannot be redeemed until the holder is no longer a director of the Company and
are considered equity-settled instruments. Under the terms of the DSU agreement, the DSUs vest immediately upon grant. The value
attributable to the DSUs is based on the market value of the share price at the time of grant and share based compensation expense
is recognized in general and administrative expenses on the consolidated statements of loss and comprehensive (loss) income. At
the time of redemption, each DSU may be exchanged for one common share of the Company.
consideration received by the Company in connection with the exercise of DSUs is credited to share capital. Any other capital
component of the share-based compensation is transferred to share capital upon the issuance of shares.
accounting estimates and judgements
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.
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. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods affected.
significant spread of COVID-19 within the U.S., Canada, Germany and elsewhere has resulted in a widespread health crisis and has
had adverse effects on local, national and global economies generally, the markets the Company serves, its operations and the
market price of its common shares.
factors, including the duration of the outbreak, the severity of the disease and the actions to contain or treat its impact, could
cause interruptions in the Company’s operations and supply chain, which could impact the Company’s ability to accurately
measure the net realizable value of inventory and fair value of trade and other receivables.
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 of December 31, 2019 and 2018 and for the years ended December 31, 2019 and 2018.
of adoption of new IFRS standards in 2020
1 Presentation of financial statements and IAS 8 Accounting policies, changes in accounting estimates and errors (amendment)
amendments to IAS 1 and IAS 8 clarify the definition of material and seek to align the definition used in the Conceptual Framework
with that in the standards themselves as well as ensuring the definition of material is consistent across all IFRS. The Company
adopted these amendments effective January 1, 2020. The adoption of these amendments did not have a significant impact on the
Company’s condensed interim consolidated financial statements.
framework for financial reporting
with the revised Conceptual Framework published in March 2018, the IASB also issued Amendments to References to the Conceptual
Framework in IFRS Standards. The Company adopted the Revised Conceptual Framework effective January 1, 2020. The adoption of these
amendments did not have a significant impact on the Company’s condensed interim consolidated financial statements.
Pronouncements issued but not yet effective
1 – Presentation of financial statements
amendment to IAS 1 clarifies how to classify debt and other liabilities as either current or non-current. The amendment will be
effective for annual periods beginning on or after January 1, 2022. The Company is currently evaluating the new guidance and impacts
on its consolidated financial statements.
improvements to IFRS standards 2018-2020
annual improvements process addresses issues in the 2018-2020 reporting cycles including changes to IFRS 9, Financial Instruments,
IFRS 1, First Time adoption of IFRS, IFRS 16, Leases, and IAS 41, Biological Assets.
The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities.
The amendment to IFRS 1 allows a subsidiary adopting IFRS at a later date than its parent to also measure cumulative translation
differences using the amounts reported by the parent based on the parent’s date of transition to IFRS.
The amendment to IFRS 16’s illustrative example 13 removes the illustration of payments from the lessor related to leasehold
amendments will be effective for annual periods beginning on or after January 1, 2022. The Company is currently evaluating the
new guidance and impacts on its consolidated financial statements.
37 - Onerous contracts - Cost of fulfilling a contract
amendment to IAS 37 clarifies the meaning of costs to fulfil a contract and that before a separate provision for an onerous contract
is established, an entity recognizes any impairment loss that has occurred on assets used in fulfilling the contract, rather than
on assets dedicated to the contract. This amendment will be effective for annual periods beginning on or after January 1, 2022.
The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
16 - Proceeds before intended use
amendment to IAS 16 prohibits an entity from deducting from the cost of an item of Property, plant and equipment any proceeds
received from selling items produced while the entity is preparing the assets for its intended use (for example, the proceeds
from selling samples produced when testing a machine to see if it is functioning properly). It also clarifies that an entity is
testing whether the asset is functioning properly when it assesses the technical and physical performance of the asset. The amendment
also requires certain related disclosures. This amendment will be effective for annual periods beginning on or after January 1,
2022. The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
arrangement and supply chain agreement
January 16, 2018, the Company entered into the License Agreement which provides (i) for the “right to use” license
relating to the Adult Indication, (ii) for the right to acquire a license for the Pediatric Indication if and when the FDA approves
a pediatric indication, (iii) that the licensee is to fund 70% of the costs of a pediatric clinical trial submitted for approval
to the EMA under the agreed Pediatric Investigation Plan (“PIP”) studies to be run by the Company with customary oversight
from a joint steering committee (the “JSC”) and (iv) an interim supply arrangement (“Supply Arrangement”).
Strongbridge Ireland Limited (“Strongbridge”), effective December 19, 2018, sold the U.S. and Canadian rights to Macrilen™
(macimorelin) to Novo for a payment plus tiered royalties on net sales. The service agreement under which Novo agreed to fund
Strongbridge’s Macrilen™ (macimorelin) field organization as a contract field force to promote the product in the
U.S. was terminated as of December 1, 2019.
Novo’s acquisition of the U.S. and Canadian rights to Macrilen™ (macimorelin), the JSC has met regularly to discuss
Novo’s commercialization plan for the U.S. and Canada, their supply chain needs and the enrollment of patients and protocols
of the two PIP studies. The Company expects that quarterly meetings will continue as forecasts for sales, inventory build and
needs for the PIP study progresses.
income earned under the License Agreement for the six-month period ending June 30, 2020 was $24 (2019 - $21) and, during the six-month
period ended June 30, 2020, the Company invoiced Novo $310 for its share of PIP study costs (2019 - $621) that are recorded within
research and development costs on the condensed interim consolidated statements of comprehensive loss.
Company agreed, in the Supply Arrangement to the License Agreement, to supply ingredients for the manufacture of Macrilen™
(macimorelin) during an interim period at a price that is set ‘at cost’ without any profit margin. In November 2019,
Novo contracted AEZS Germany, to provide supply chain services including API batch production and delivery of certain API and
semi-finished goods, as well as the provision of ongoing support activities. During the six-month period ended June 30, 2020,
the Company invoiced Novo $85 for supply chain activities and recognized as revenue $81 (2019 – $33 invoiced and recognized
as revenue $45) and invoiced and recognized as revenue $1,016 in product sales (2019 - $806).
and other receivables
Trade accounts receivable (net of expected credit losses of $60 (December 31, 2019 - $55))
Value added tax and income tax receivable
of use assets
Vehicles and equipment
At January 1, 2020
Modification of building lease
Impact of foreign exchange rate changes
At June 30, 2020
As at December 31, 2019
the renegotiation of the building lease agreement completed effective April 30, 2020 (note 10), a modification was recorded to
the building right of use asset in the amount of $259, representing the reduction in the square footage leased from the landlord.
change in carrying value is as follows:
At January 1, 2019
At December 31, 2019
evaluated goodwill for impairment based on the Company’s share price, which declined during the first quarter of 2020 and
remained low during the second quarter of 2020, and the Company’s declining cash balance from continuing losses to June
30, 2020. This assessment is based on fair value less costs of disposal based on the Company’s market capitalization at
June 30, 2020, its issued and outstanding common shares less estimated cost of disposal of approximately $1,132. There was no
impairment assessed at June 30, 2020.
and accrued liabilities
Trade accounts payable
Salaries, employment taxes and benefits
Accrued audit fees
PIP study payables
Accrued offering costs (note 21)
Other accrued liabilities
for restructuring and other costs
June 6, 2019, the Company announced that it was reducing the size of its German workforce to more closely reflect the Company’s
ongoing commercial activities in Frankfurt. AEZS Germany and its Works Council approved a restructuring that affected 8 employees
that was completed by January 31, 2020.
changes in the Company’s provision for restructuring and other costs can be summarized as follows:
German Restructuring: severance
Balance – January 1, 2020
Utilization of provision
Change in provision
Less current portion
Balance – Beginning of period
Interest paid as charged to comprehensive income (loss) as other finance costs
Payment against lease liabilities
Modification of lease liability
Balance – End of period
Current lease liabilities
Non-current lease liabilities
March 31, 2020, the Company and its landlord mutually agreed to modify its existing building lease agreement for its German subsidiary,
extended the lease term for its portion of the reduced space from April 30, 2021 to March 31, 2022 and, retained one sub-lessee
until April 30, 2021.
May 5, 2020, the sub-lessee terminated its lease with the Company effective April 30, 2020. Concurrent with this termination,
the Company was able to renegotiate a further reduction in leased square footage with the landlord, which resulted in a lease
modification and a resulting gain of $34 which is recorded in the condensed interim consolidated statements of comprehensive loss.
change in the Company’s warrant liability can be summarized as follows:
Issuance of warrants (a)
Warrants exercised during the period
Net gain on change in fair value of warrant liability
Warrant liability reclassified to equity (b)
Long-term portion of warrant liability
table presented below shows the inputs and assumptions applied to the Black-Scholes option pricing model in order to determine
the fair value of all warrants outstanding as at June 30, 2020.
Number of equivalent shares
Market value per share price
Weighted average exercise price
Risk-free annual interest rate
Expected life (years)
Expected dividend yield
December 2015 Warrants
on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the warrants.
on the historical volatility of the Company’s stock price over the most recent period consistent with the expected life
of the warrants, as well as on future expectations.
upon time to expiry from the reporting period date.
Company has not paid dividends and it does not intend to pay dividends in the foreseeable future.
summary of the activity related to the Company’s share purchase warrants that are classified as a liability is provided
Reclassified to equity (b)
February 21, 2020, the Company closed a registered direct offering for 3,478,261 common shares, at a purchase price of $1.29 per
share, priced at-the-market (note 13). Additionally, the Company issued to the investors unregistered warrants to purchase up
to an aggregate of 2,608,696 common shares in a concurrent private placement. The warrants have an exercise price of $1.20 per
common share, are exercisable immediately and will expire five and one-half years following the date of issuance. The Company
also issued 243,478 warrants to the placement agent with an exercise price of $1.62 per common share, which are exercisable immediately
and will expire five years following the date of issuance.
July 7, 2020, the Company closed a public offering for gross proceeds of $12,000, with the issuance of common shares and warrants,
see note 21.
September 20, 2019, the Company entered into a securities purchase agreement for $4,988 (before total transaction costs of $786)
of its common shares in a registered direct offering and warrants to purchase common shares in a concurrent private placement
(together, the “Offering”). The combined purchase price for one common share and one warrant was $1.50 (note 13).
Under the terms of the securities purchase agreement, the Company sold 3,325,000 common shares. In a concurrent private placement,
the Company issued warrants to purchase up to an aggregate of 3,325,000 common shares. The warrants are exercisable commencing
six months from the date of issuance, have an exercise price of $1.65 per share and expire 5 years following the date of issuance.
issued warrants contain a provision where if, at any time while the warrants are outstanding, the Company completes a Fundamental
Transaction (as defined in the warrant agreements) but is generally understood to be a change of control of the Company, the warrant
holders will have the right to receive payment for the unexercised warrant (as defined in the warrant agreements).
liability reclassified to equity
Company had issued 3,325,000 unregistered investor warrants in the September 2019 closed direct offering as well as 2,608,696
unregistered investor warrants and 234,478 unregistered placement agent warrants in the February 2020 closed direct offering transaction.
The terms of the warrant agreement stated that if the warrants remained unregistered, the warrant holder could elect to exercise
the warrants by way of a cashless exercise. This violated the fixed-for-fixed criterion due to the cashless exercise option, and
accordingly these warrants had been accounted for as a liability.
June 16, 2020, the Company registered the common shares underlying these warrants by way of a registration statement which eliminated
the cashless exercise option on the warrants, on a one-for-one basis. Accordingly, as of June 16, 2020, the warrant liability
was measured at fair value using Black-Scholes option pricing model, with the amount of the remeasurement loss recognized in the
condensed interim consolidated statements of comprehensive loss. The carrying value of the warrants was then reclassified from
warrant liability to other capital within equity (note 13).
table presented below shows the inputs and assumptions applied to the Black-Scholes option pricing model in order to determine
the fair value of such warrants as at June 16, 2020.
September 2019 Warrants
February 2020 Investor Warrants
February 2020 Placement Agent Warrants
March 10, 2020, the Company had 28,144 share purchase warrants expire, each with an exercise price of $1.07. On May 1, 2020, the
Company had 945,000 share purchase warrants expire, each with an exercise price of $4.70.
Company sponsors a pension plan in Germany (The Aeterna Zentaris GmbH Pension Plan). The change in the Company’s accrued
benefit obligations is summarized as follows:
Year ended December 31, 2019
Pension benefit plans
Other benefit plans
Balances – Beginning of the period
Current service cost
Actuarial loss arising from changes in financial assumptions
Balances – End of the period
In net income (loss)
In other comprehensive loss
calculation of the pension benefit obligation is sensitive to the discount rate assumption. Effective March 31, 2020, the Company
incorporated a decline of 10.35% in its pension liabilities based on publicly available actuarial information. Effective June
30, 2020, based on publicly available actuarial information, this decline was predominantly reversed. The discount rate as at
March 31, 2020 was 1.8% while at June 30, 2020, it was 1.1% (December 31, 2019: 1.1%).
and other capital
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.
February 21, 2020, the Company closed a registered direct offering for 3,478,261 common shares, at a purchase price of $1.29 per
share, priced at-the-market. Additionally, 2,608,696 investor share purchase warrants were issued at an exercise price of $1.20
per common share and 243,478 broker share purchase warrants were issued at an exercise price of $1.62 per common share (note 11(a)).
The net cash proceeds to the Company from the offering totaled approximately $3,900. The gross proceeds of $4,500 was allocated
as $2,326 to warrants based on the ascribed fair value (note 11) and the remaining gross proceeds of $2,174 were allocated to
share capital. The transaction costs of $600 were allocated between share capital and warrants based on their relative fair values.
The fair value of the share capital was recorded within equity net of the allocated transaction costs. The transaction costs of
$310 allocated to the warrant liability were recorded as expense in the statement of comprehensive (loss) income.
the second quarter of 2020, directors who were no longer on the Board redeemed their DSUs in full whereby 111,300 common shares
July 7, 2020, the Company closed a public offering for $12,000 in gross proceeds, with the issuance of common shares and warrants,
see note 21.
September 20, 2019, the Company entered into a securities purchase agreement with U.S. institutional investors to purchase $4,988
(before total transaction costs of $786) of its common shares in a registered direct offering and warrants to purchase common
shares in a concurrent private placement (together, the “Offering”). The combined purchase price for one common share
and one warrant was $1.50. Under the terms of the securities purchase agreement, the Company sold 3,325,000 common shares. In
a concurrent private placement, the Company issued warrants to purchase up to an aggregate of 3,325,000 common shares (note 11(a)).
The gross proceeds of $4,988 was allocated as $3,457 to warrants based on the ascribed fair value and the remaining gross proceeds
of $1,531 were allocated to share capital. The transaction costs of $795 were allocated between share capital and warrants based
on their relative fair values. The fair value of the share capital was recorded within equity net of the allocated transaction
costs. The transaction costs of $550 allocated to the warrant liability were recorded as expense in the statement of comprehensive
May 8, 2019, the shareholders re-approved the Company’s shareholder rights plan (the “Rights Plan”) that provides
the Board and the Company’s shareholders with additional time to assess any unsolicited take-over bid for the Company and,
where appropriate, to pursue other alternatives for maximizing shareholder value. Under the Rights Plan, one right has been issued
for each currently issued common share, and one right will be issued with each additional common share that may be issued from
time to time.
Company accounts for costs associated with share-based compensation from security grants under its long-term incentive plan (the
“LTIP”) and stock option plans as other capital in its consolidated statements of changes in shareholders’ equity
(deficiency) and as operating expenses in its condensed interim consolidated statements of comprehensive loss.
following tables summarize the activity under the LTIP and the Stock Option Plan:
Six months ended
US$ Stock options
CAN$ Stock options
December 31, 2019
following table summarizes the activity regarding warrants that were reclassified into equity:
ended December 31, 2019
Balance – Beginning
of the period
liability reclassified to equity (note 11(b))
– End of the period
nature of the Company’s operating expenses from operations include the following:
Six months ended June 30,
Key management personnel:
Salaries and short-term employee benefits
Cost of inventory used and services provided
Third-party research and development
Other goods and services
Leasing costs, net of sublease receipts of $107 (2019 - $58)
Impairment of right of use asset (note 6)
Depreciation of right of use assets (note 6)
Operating foreign exchange losses
disclosure of cash flow information
Changes in operating assets and liabilities:
Company’s objective in managing capital, consisting of shareholders’ equity, with cash and cash equivalents and restricted
cash being its primary components, is to ensure sufficient liquidity to fund operating expenses and working capital requirements.
Over the past several years, the Company has raised capital via public equity and registered direct offerings and issuances under
various at-the-market sales programs as its primary source of liquidity. The policy on dividends is to retain cash to keep funds
available to finance the activities required to advance the Company’s product development portfolio and to pursue appropriate
commercial opportunities as they may arise. The Company is not subject to any capital requirements imposed by any regulators or
by any other external source.
instruments and financial risk management
assets and liabilities as at June 30, 2020 and December 31, 2019 are presented below.
Financial assets at amortized cost
Financial Liabilities at FVTPL
Financial liabilities at amortized cost
Financial liabilities at FVTPL
13, establishes a hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to
unobservable inputs (Level 3 measurement). The input levels discussed in IFRS 13 are:
1 – Unadjusted quoted prices in active markets for identical assets or liabilities.
2 – Inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly
(i.e. prices) or indirectly (i.e. derived from prices).
3 – Inputs for an asset or liability that are not based on observable market data (unobservable inputs).
note 11 - Warrant liability, the Black-Scholes valuation methodology uses “Level 2” inputs in calculating fair value.
carrying values of the Company’s cash and cash equivalents, trade and other receivables, restricted cash equivalents, payables
and accrued liabilities and provision for restructuring and other costs approximate their fair values due to their short-term
maturities or to the prevailing interest rates of the related instruments, which are comparable to those of the market.
following provides disclosures relating to the nature and extent of the Company’s exposure to risks arising from financial
instruments, including credit risk, liquidity risk and market risk (share price risk) and how the Company manages those risks.
risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
As at June 30, 2020, trade accounts receivable for an amount of approximately $121 were with five counterparties of which $60
was past due and impaired and fully provided for (December 31, 2019 - $265 with four counterparties and $55 past due and impaired
and fully provided for). The licensee is obligated to pay its quarterly royalties, 45 days after quarter-end. At June 30, 2020,
the Company has provided for all outstanding and unpaid amounts relating to its operations before its licensing of Macrilen
(macimorelin). The licensee has paid all amounts owing within 60 days of invoicing. The maximum exposure to credit risk
approximates the amount outstanding in the Company’s consolidated statement of financial position.
risk is the risk that the Company will not be able to meet its financial obligations as they become due. As indicated in note
16 - Capital disclosure, the Company manages this risk through the management of its capital structure. It also manages liquidity
risk by continuously monitoring actual and projected cash flows. The Board reviews and approves the Company’s operating
and capital budgets, as well as any material transactions occurring outside of the ordinary course of business. The Company has
adopted an investment policy in respect of the safety and preservation of its capital to ensure the Company’s liquidity
needs are met. The instruments are selected with regard to the expected timing of expenditures and prevailing interest rates.
change in fair value of the Company’s warrant liability, which is measured at FVTPL, results from the periodic “mark-to-market”
revaluation, via the application of option pricing models, of currently outstanding share purchase warrants. These valuation models
are impacted, among other inputs, by the market price of the Company’s common shares. As a result, the change in fair value
of the warrant liability, which is reported in the consolidated statements of comprehensive loss, has been and may continue in
future periods to be materially affected most notably by changes in the Company’s common share closing price, which on the
NASDAQ ranged from $1.44 to $0.42 during the six-months ended June 30, 2020.
using the Euro as their functional currency
Company is exposed to foreign exchange risk due to its investments in foreign operations whose functional currency is the Euro.
As at June 30, 2020, if the US dollar had increased or decreased by 10% against the Euro, with all variables held constant, net
income for the six-month period ended June 30, 2020 would have been lower or higher by approximately $37 (2019 - $546).
Company operates in a single operating segment, being the biopharmaceutical segment.
(loss) income per share
following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to
Basic weighted average number of shares outstanding
Net (loss) income per share (basic)
Dilutive effect of stock options
Dilutive effect of share purchase warrants
Diluted weighted average number of shares outstanding
Net (loss) income per share (diluted)
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
Deferred share units
Warrants (number of equivalent shares)
(loss) income per share is calculated by dividing net (loss) income 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 and share purchase warrants. In periods with reported net losses, all stock options and
share purchase 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 share purchase warrants have not been included in the computation of net
loss per share because to do so would be anti-dilutive.
Service and manufacturing
Less than 1 year
1 - 3 years
4 - 5 years
More than 5 years
the normal course of operations, the Company may become involved in various claims and legal proceedings related to, for example,
contract terminations and employee-related and other matters.
class action lawsuit
March 9, 2020, the Company settled the previously disclosed class-action lawsuit against it pending in the U.S. District Court
for New Jersey. The settlement payment of $6,500 will be funded entirely by the Company’s insurers. The class-action lawsuit
alleged that the Company and certain of its former officers and directors violated the Securities Exchange Act of 1934 in connection
with certain public statements between August 30, 2011 and November 6, 2014, regarding the safety and efficacy of Macrilen™
(macimorelin) and the prospects for the approval of the Company’s NDA for the product by the FDA. This settlement remains
subject to execution of final settlement documents and approval by the U.S. District Court for the District of New Jersey.
July 7, 2020, the Company closed a public offering of 26,666,666 units at a price to the public of $0.45 per unit, for gross proceeds
of $12,000, before deducting placement agent fees and other offering expenses payable by the Company, estimated at $1,500. Each
unit contained one common share (or common share equivalent in lieu thereof) and one investor share purchase warrant to purchase
one common share. In total, 26,666,666 common shares, 26,666,666 investor share purchase warrants at an exercise price of $0.45
per share expiring July 7, 2025 and 1,866,667 placement agent warrants with an exercise price of $0.5625 per share, expiring July
1, 2025 were issued. As at June 30, 2020, the Company had incurred $537 in offering costs which were deferred and classified in
the condensed interim consolidated statements of financial position, in the line “Prepaid expenses and other current assets”
and $480 in accrued issuance costs were included within “Payables and accrued liabilities” in the condensed interim
consolidated statements of financial position. Upon the completion of the public offing on July 7, 2020, the deferred offering
costs were netted against the gross proceeds of the offering within equity. As a result of the public offering, the Company
believes it has stockholders’ equity of at least $2.5 million as of the date of this filing and thereby satisfies the minimum
stockholders’ equity requirement for continued listing on The Nasdaq Capital Market (“Nasdaq”). The Company
received Nasdaq’s formal confirmation of such compliance on July 30, 2020.
Additionally, on August
3, 2020, the Company announced that it had entered into a securities purchase agreement with several institutional investors in
the United States providing for the sale and issuance of 12,427,876 common shares at a purchase price of $0.56325 per common share
in a registered direct offering priced at-the-market under Nasdaq rules. The offering resulted in gross proceeds of approximately
$7,000 and closed on August 5, 2020. Concurrently, the Company issued to the purchasers unregistered warrants to purchase up to
an aggregate of 9,320,907 common shares. The warrants are exercisable for a period of five and one-half years, exercisable immediately
following the issuance date and have an exercise price of $0.47 per common share. In addition, the Company has issued unregistered
warrants to the placement agent to purchase up to an aggregate of 869,952 common shares, with an exercise price of $0.7040625
per share and an expiration date of August 3, 2025.
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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Other recent filings from the company include the following:
AEterna Zentaris Inc. Just Received a Notice of Effectiveness - Sept. 14, 2020
AEterna Zentaris Inc. just filed a prospectus, suggesting it plans to soon issue some securities - Sept. 11, 2020
Registration statement for certain foreign private issuers - Sept. 2, 2020