Stock Alert for AEterna Zentaris Inc. (USA)($AEZS)

AEterna Zentaris Inc. (USA) (NASDAQ: $AEZS)

AEterna Zentaris Inc. (AEZS) is a global biopharmaceutical company focused on endocrine therapy and oncology. The Company’s product pipeline encompasses compounds at all stages of development, from drug discovery through marketed products. The products of the Company include Cetrorelix, AEZS-108, Perifosine, Ozarelix, AEZS-112 and AEZS-130. On March 31, 2008, the Company completed the selling of the Company’s product, Impavido, to Paladin Labs Inc. (Paladin). On March 5, 2009, the Company entered into a development, commercialization and license agreement with sanofi-aventis for the development, registration and marketing of cetrorelix in benign prostatic hyperplasia (BPH) for the U.S. market.

Æterna Zentaris Inc. was founded in 1991 and is headquartered in Quebec City, Canada.

Share Statistics (6-May-10)			FY 2007	FY 2008	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	AEZS	Revenue, $Mn	42.07M	38.48M	8.5%	7.24M	40.18M	455.0%
Current price	$1.38	Gross marg.	69.3%	49.9%	28.0%	75.1%	90.6%	17.1%
52wk Range:	$3.25-0.75	Oper. margin	-82.6%	-162.1%	38.5%	-225.4%	28.6%	112.7%
Avg Vol (3m):	1.949.140	Net margin	-89.0%	-145.7%	63.7%	-162.4%	46.1%	128.4%
Market Cap.	102.40M
Dil. Shares Outst.	74.2M	EPS, $	-0.61	-1.12	83.6%	-0.27	0.30	211.1%

Source: Reuters.com, SEC Filings.

Financial Summary

Revenues were $40.2 million for the fourth quarter ended December 31, 2009, compared to $7.2 million for the same quarter in 2008. The significant increase in revenues is due primarily to the Company’s having recognized the remaining unamortized portion, or approximately $30.4 million, of the upfront payment received from sanofi-aventis as part of its development and marketing agreement for cetrorelix in BPH.

Net research and development (“R&D”) expenses were $10.6 million for the quarter ended December 31, 2009, compared to $12.2 million for the same quarter in 2008. The decrease in R&D expenses primarily relates to lower costs having been incurred in connection with the Company’s Phase 3 program for cetrorelix in BPH, given the progressive completion through the end of 2009 of efficacy and safety studies associated with that compound.

Selling, general and administrative (“SG&A”) expenses were $6.2 million for the quarter ended December 31, 2009, compared to $3.0 million for the same quarter in 2008. The increase in SG&A expenses is predominantly related to the expensing of the remaining unamortized portion, or approximately $3.0 million, of the royalty paid to Tulane University in connection with the agreement entered into with, and subsequently terminated by, sanofi-aventis.

Net earnings were $12.0 million, or $0.19 per basic and diluted share, for the quarter ended December 31, 2009, compared to a net loss of $14.5 million, or $0.27 per basic and diluted share,
for the same quarter in 2008. The significant increase in net earnings is largely attributable to the significant increase in license fee revenues, combined with lower comparative R&D expenses, as discussed above, partly offset by increased SG&A expenses and depreciation and amortization charges.

Cash and cash equivalents were $38.1 million as at December 31, 2009.

CONSOLIDATED RESULTS AS AT AND FOR THE FULL YEAR ENDED DECEMBER 31, 2009

Revenues were $63.2 million for the year ended December 31, 2009, compared to $38.5 million for the year ended December 31, 2008. The increase in revenues in 2009 is almost exclusively attributable to license fee revenues related to the upfront payment received from sanofi-aventis, partly offset by lower royalty revenues having been recognized in 2009 in connection with AEZS’ agreement with Merck Serono for Cetrotide^®.

R&D costs were $44.2 million for the year ended December 31, 2009, compared to $57.4 million for the year ended December 31, 2008. The decrease in R&D costs is largely attributable to a lower volume of expenses having been incurred in 2009 related to the continued advancement during the first nine months of 2009, followed by the winding down of the Company’s development activities linked to cetrorelix in BPH subsequent to its announcements that its related Phase 3 studies did not reach their primary endpoints.

SG&A expenses decreased to $16.0 million for the year ended December 31, 2009, compared to $17.3 million for the year ended December 31, 2008. The decrease is related to comparative euro-to-U.S. dollar exchange rate fluctuations and to the absence in 2009 of certain non-recurring corporate expenses due to cost-saving measures that were implemented beginning in the second quarter of 2008, despite the additional selling expenses charged during 2009 as pertaining to the royalty paid to Tulane University.

Net loss was $24.7 million, or $0.43 per share for the year ended December 31, 2009, compared to $59.8 million, or $1.12 per basic and diluted share, for the year ended December 31, 2008. The significant decrease in net loss is due to the significant year-over-year increase in license fee revenues, associated mainly with agreements for cetrorelix and ozarelix, combined with lower comparative R&D, SG&A and income tax expenses, partly offset by lower comparative sales and royalties and increased depreciation and amortization expenses and foreign exchange losses.

Financial Strength (6-May-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	2.31	5.28	2.56	0.71
Current Ratio (MRQ)	2.54	5.72	3.07	0.84
Long-Term Debt to Equity (MRQ)	1.55	20.42	24.12	124.73
Total Debt to Equity (MRQ)	2.17	25.03	30.90	184.89

Source: Reuters.com, SEC Filings.

Analyst Consensus

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast amongst six polled investment analysts. Against the AEterna Zentaris Inc company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	2	1	2	1	0	2
4 weeks ago	2	1	2	1	0	2
2 months ago	2	1	2	1	0	2
3 months ago	2	1	2	1	0	2
Last year	3	3	1	0	0	1

Source: www.ft.com

Consensus Estimates Analysis

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Jun-10	2	6.43	7.05	5.81	10.50
Quarter Ending Sep-10	2	6.51	7.16	5.86	11.00
Year Ending Dec-10	6	26.55	31.70	22.40	37.91
Year Ending Dec-11	4	25.12	27.36	22.57	38.57
EARNINGS (per share)
Quarter Ending Jun-10	2	-0.09	-0.08	-0.09	-0.09
Quarter Ending Sep-10	2	-0.09	-0.08	-0.09	-0.08
Year Ending Dec-10	6	-0.44	-0.34	-0.60	-0.40
Year Ending Dec-11	4	-0.33	-0.20	-0.45	-0.17

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=AEZS.W

Investment Highlights

AEZS recently announced that it has received from the U.S. Food and Drug Administration (FDA) orphan-drug designation for AEZS-108, its doxorubicin targeted conjugate compound, for the treatment of ovarian cancer. AEZS-108 is currently in a Phase 2 trial in advanced ovarian and advanced endometrial cancer in Europe.

2009 Highlights

Perifosine

• Updated positive Phase 2 efficacy and safety data as well as new survival data for perifosine in combination therapy for relapsed/refractory multiple myeloma, were presented at the American Society of Hematology’s (“ASH”) annual meeting. Results showed that the overall response rate was 41% and median overall survival was reported at 25 months for all evaluable patients. The combination therapy maintained an acceptable safety profile and no unexpected adverse events were reported.
• Positive Phase 2 data on perifosine in advanced metastatic colon cancer and in advanced renal cell carcinoma were presented at the American Society of Clinical Oncology’s (“ASCO”) annual meeting. The data demonstrated perifosine’s anti-cancer activity and efficacy both as a single agent and in combination therapy. Data at ASCO and ASH meetings were generated by the Company’s North American partner, Keryx Biopharmaceuticals (“Keryx”).
• A Phase 3 registration trial with perifosine in relapsed/refractory multiple myeloma was initiated under a Special Protocol Assessment (“SPA”). Perifosine was also granted Orphan Drug and Fast Track designations by the Food and Drug Administration (“FDA”) in this same indication. The trial is being conducted by Keryx.

AEZS-108

• Positive Phase 2 preliminary results with AEZS 108 in platinum-resistant and taxane-pretreated ovarian cancer were disclosed, which showed that the study met its primary efficacy endpoint of five or more responders in 41 evaluable patients.
• Positive Phase 2 preliminary results with AEZS-108 in advanced or recurrent endometrial cancer were disclosed. The study met its pre-defined primary efficacy endpoint of five or more responder patients. The trial in endometrial and ovarian cancer was conducted in collaboration with the German oncology study cooperative group, Arbeitsgemeinschaft Gynackologisehe Onkologie (“AGO”). Data for both indications were presented at the American Association for Cancer Research’s (“AACR”) annual meeting.

AEZS-112

• Phase 1 results with AEZS 112 in advanced solid tumors or lymphoma were disclosed, showing prolonged courses of stable disease, excellent tolerability and potential for long-term use as a combination treatment for cancer.

AEZS-130

• A Poster was presented at the Endocrine Society’s (“ENDO”) annual meeting, on AEZS 130 (SolorelTM), reporting the first clinical data relating to its use as a simple oral diagnostic test for adult Growth Hormone Deficiency (GHD).

Cetrorelix

• A licensing agreement with sanofi-aventis U.S. (“sanofi-aventis”) for the development, registration and marketing of cetrorelix in benign prostatic hyperplasia (“BPH”) for the U.S. market was signed. The agreement provided Æterna Zentaris with a $30 million gross upfront payment.
• Results of two Phase 3 efficacy studies with cetrorelix in BPH, which did not achieve their primary endpoint, were disclosed.
• The Company’s licensing agreement with sanofi-aventis for cetrorelix in BPH, subsequent to the aforementioned Phase 3 results, was terminated.

Corporate Developments

• The Company completed two registered direct offerings of common shares and warrants to certain U.S. institutional investors, for combined gross proceeds of $15.5 million.

Subsequent to Year-End

• A statistically significant benefit in survival from updated results of a Phase 2 study of perifosine in advanced metastatic colon cancer was reported by Keryx.
• A publication in the February 2010 issue of the Journal of Clinical Cancer Research reported positive Phase 2 results for perifosine as a single agent for the treatment of advanced Waldenstrom’s macroglobulinemia.
• The FDA granted an SPA for the Phase 3 trial of perifosine in combination therapy for refractory metastatic colorectal cancer. The trial is to be conducted by Keryx.
• The Committee for Orphan Medicinal Products of the European Medicines Agency issued a positive opinion to Æterna Zentaris for orphan medicinal product designation for perifosine in multiple myeloma.

Source: http://www.aezsinc.com/

Technical Analysis

Source: http://stockcharts.com

AEZS is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

AEZS’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, AEZS is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The MACD for AEZS currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
May-6-2010	symbol	Share, $	$ Mn	2009	2010	2009	2010
Helix Biopharma Corp.	HBP	2.39	142.92M	n/a	n/a	36.59	n/a
Protox Therapeutics Inc.	PRX	0.60	57.92M	n/a	n/a	n/a	n/a
Spectrum Pharmaceuticals Inc.	SPPI	4.81	236.51M	n/a	n/a	6.69	n/a
Drug Manufacturers Median			145.78M	14.30	n/a	21.64	n/a
AEterna Zentaris Inc.	AEZS	1.38	102.40M	n/a	n/a	1.41	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	n/a
Sales	n/a	n/a
Net Shares Purchased (Sold)	n/a	n/a
Total Insider Shares Held	n/a	n/a
% Net Shares Purchased (Sold)	n/a	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	n/a
% Change in Institutional Shares Held	n/a

Source: Yahoo Finance

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.