All amounts are in US Dollars
QUEBEC CITY, Nov. 11, 2015 /PRNewswire/ - Aeterna Zentaris Inc. (NASDAQ: AEZS) (TSX: AEZ) (the "Company") today urged its shareholders to vote FOR a special resolution authorizing the consolidation of the Company's issued and outstanding common shares at a consolidation ratio of between 8-for-1 and 100-for-1 (the "Share Consolidation") at a special meeting (the "Meeting") of shareholders to be held on Monday, November 16, 2015 and highlighted the support for the Share Consolidation that it has received from Institutional Shareholder Services Inc. ("ISS") and Glass Lewis & Co. The Company issued the following statement:
Aeterna Zentaris is pleased that ISS and Glass Lewis, two leading independent proxy research and advisory firms, have published reports recommending that the Company's shareholders vote FOR the Share Consolidation. In the supportive recommendation from ISS, they note: "Stock consolidations, while not immediately adding to shareholder value, should enhance the long-term growth prospects of the company by broadening its financing alternatives. Continued low trading prices of the company's shares can put them below investment grade for many institutions, limiting the potential capital base for the company and its prospects for raising new capital as needed." The Company urges shareholders to consider management's continued efforts to transform the Company into a profitable, growth-oriented company, delivering long-term value to shareholders, employees, patients and their healthcare providers and to vote in favor of the Share Consolidation.
Commenting on the upcoming vote, Mr. David A. Dodd, Chairman, President and Chief Executive Officer of the Company, highlighted the steps taken by management to transform the Company, stating, "Shareholders should consider our recommendation that they vote in favor of the Share Consolidation in light of the significant accomplishments achieved over the last two years to transform the Company towards becoming a growth-oriented, profitable pharmaceutical company." Mr. Dodd summarized the accomplishments as follows: "Over the past two years, costs have been significantly reduced, a commercial platform capable of handling a full product portfolio has been established, two potentially high-value products are being progressed rapidly through the regulatory process and development/commercial partnerships and relationships have been established with major pharmaceutical companies to maximize the value of our portfolio pipeline."
The Company today also provided more details regarding each of the following aspects of the progress toward its transformation:
Optimizing Resource Utilization through Corporate Restructuring and Cost Reduction
- Since January 2014, the Company reduced headcount by a net of approximately 44 positions, resulting in an operating expenditure reduction of approximately $3 million-to-$4 million annually, excluding various one-time severance and other directly related costs; these savings offset to a significant degree the expenses associated with the Company's commercial operations.
- The Company obtained a direct cash contribution of $1 million through the sale of discontinued equipment in Frankfurt and reduced the monthly lease costs for the Frankfurt facility by approximately 50% by subleasing unnecessary lab and office space at that facility.
Building Commercial Value through Co-Promotions and In-Licensing of Commercial-Stage Products
- The Company's dedicated, contracted sales force of 23, currently co-promoting EstroGel® and Saizen®, provides increasing commission revenues and is expected to become profitable as success with the co-promoted products builds.
- An established commercial and field organization that is able to immediately promote additions to a product portfolio is a strong incentive to potential partners toward the successful pursuit of commercial-stage products to in-license or acquire.
Maximizing Pipeline Development and Speed-to-FDA Registration
- Approximately 90% of our third-party R&D costs relate to our two pivotal Phase 3 programs for Zoptrex™ and Macrilen™; the current pace and focus have resulted in these programs proceeding toward completion and, hopefully, registration dossier submission earlier than previously anticipated.
Partnering to Optimize Commercial Success and Value of Zoptrex™ and Macrilen™
- Discussions related to partnering and, where feasible, out-licensing, are an ongoing focus and pursuit for both Zoptrex™ and Macrilen™. In addition to the successful out-license of Zoptrex™ to Sinopharm A-Think, for development in China, Hong Kong and Macau, discussions with other potential partners relative to other geographic territories continue. Similarly, such partnering opportunities for Macrilen™ are being pursued. The goals are to maximize the commercial success and shareholder value of these two close-to-market products.
Discussing the rationale for the Share Consolidation, Mr. Dodd stated, "We concluded that a share consolidation presented the best alternative for achieving a stock price that will meet and maintain the NASDAQ listing requirements. We believe that remaining a NASDAQ listed company is crucial to our liquidity and our future financing opportunities. Also, following the Share Consolidation, the Company will have a capital structure that is more supportive of financing both the acquisition of commercial-stage products and the completion of the development of Zoptrex™ and Macrilen™."
The Company also explained that in the past several weeks it had considered, among other things, a share repurchase and the recently concluded arrangement with certain of the holders of its Series B Warrants as a means of improving its capital structure. Commenting on the analysis, Mr. Dodd stated, "While a share repurchase may have increased or supported our stock price, we rejected that course of action because we believed that our cash was insufficient to purchase enough shares to return us to above $1.00, which is required to regain compliance with NASDAQ listing requirements. Our current share base, following the extreme dilution resulting from the Series B Warrants, is simply too large. Furthermore, we concluded that eliminating the overhang from the Series B Warrants and preserving our cash to continue our development programs was the better course of action."
The Management Information Circular (the "Circular") sent to shareholders contains, among other things, details concerning the Share Consolidation, reasons that the Company's Board of Directors recommends the Share Consolidation, requirements for the Share Consolidation to be implemented and the procedure for receiving new shares if the Share Consolidation is implemented, as well as the procedures for voting at the Meeting and other related matters. Shareholders are urged to carefully review the Circular and accompanying materials as they contain important information regarding the Share Consolidation and its consequences to shareholders. A copy of the Circular is available on SEDAR at www.sedar.com and on the EDGAR section of the U.S. Securities and Exchange Commission's website at www.sec.gov.
The Board of Directors UNANIMOUSLY recommends that Shareholders vote FOR the Share Consolidation.
YOUR VOTE IS IMPORTANT. VOTE TODAY!
A proxy form or voting instruction form accompanied the Meeting materials you received by mail. Instructions on how to vote, which vary depending on whether you are a registered or beneficial shareholder of the Company, are provided in the Circular and the proxy form or voting instruction form.
If you have any questions or require more information with regard to the procedures for voting, please contact Laurel Hill Advisory Group, the Company's proxy solicitation agent, toll free at 1-877-452-7184, collect at 416-304-0211 or by email at email@example.com.
About Aeterna Zentaris
Aeterna Zentaris is a specialty biopharmaceutical company engaged in developing and commercializing novel treatments in oncology, endocrinology and women's health. For more information, visit www.aezsinc.com.
This press release contains forward-looking statements made pursuant to the safe harbor provisions of the US Securities Litigation Reform Act of 1995. All statements that express expectations or projections about the future, including statements about the Company's growth strategy, the success of its commercial efforts and its efforts to obtain regulatory approval for its compounds, are forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that could cause the Company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue R&D projects and clinical trials, the successful and timely completion of clinical studies, the risk that safety and efficacy data from any of our Phase 3 trials may not coincide with the data analyses from previously reported Phase 1 and/or Phase 2 clinical trials, the ability of the Company to effectively commercialize one or more of its products or product candidates, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process, the ability to protect our intellectual property, the potential of liability arising from shareholder lawsuits and general changes in economic conditions. Investors should consult the Company's quarterly and annual filings with the Canadian and US securities commissions for additional information on risks and uncertainties relating to forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. The Company does not undertake to update these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, unless required to do so by a governmental authority or by applicable law.
SOURCE Aeterna Zentaris Inc.