Top Small-cap Alert – Aeterna Zentaris Responds anemically to Positive Results of AEZS-108 Studies
  • Stock Alert for AEterna Zentaris Inc. (AEZS)
  • Stock Alert for AEterna Zentaris Inc. (USA)($AEZS)
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    Stock Alert for AEterna Zentaris Inc. (AEZS)

    AEterna Zentaris Inc. (NASDAQ: AEZS)

    AEterna Zentaris Inc. (AEZS) is a late-stage drug development company specializing in oncology and endocrine therapy. The Company’s product pipeline encompasses compounds at all stages of development, from drug discovery through marketed products. The priorities in oncology are its phase III program with perifosine in multiple myeloma and its phase II program in multiple cancers, including metastatic colon cancer, as well as phase II program with AEZS-108 in advanced endometrial and advanced ovarian cancer combined with potential developments in other cancer indications. In endocrinology, the Company’s program is the reactivation of a phase III trial with AEZS-130 (SolorelTM) as a growth hormone (GH) stimulation test for the diagnosis of GH deficiency in adults (AGHD).

    The Company was founded in 1991 and is headquartered in Quebec City, Canada.

    Share Statistics (28-June-10) FY

    2008

    FY

    2009

    %

    Chg

    Q1 2009 Q1

    2010

    %

    Chg

    Symbol AEZS Revenue, $Mn 38.48 63.24 64.3% 6.11 6.42 5.1%
    Current price $1.20 Gross marg. 49.9% 73.9% 48.1% 39.6% 28.0% -29.3%
    52wk Range: 0.75-3.01 Oper. margin -37.9% -114.3%
    Avg Vol (3m): 4,820,630 Net margin -145.7% 26.5% -118.2% -198.5% -93.6% -52.8%
    Market Cap. 89.05M
    Shares Outstanding 83.13M EPS, $ -1.05 -0.30 -71.4% -0.23 -0.10 -56.5%

    Source: Reuters.com, SEC Filings.

    Financial Summary

    Revenues were $6.4 million for the three-month period ended March 31, 2010, compared to $6.1 million for the same period in 2009. The increase is mainly due to a comparative increase in sales of Cetrotide(R) to certain customers in the first quarter of 2010. This increase was partly offset by lower amortization of upfront license fee payments in 2010 related to the Company’s agreement with sanofi-aventis U.S. LLC, which was entered into in March 2009, in connection with AEZS’s now discontinued development program involving cetrorelix for the treatment of Benign Prostatic Hyperplasia (BPH), and subsequently terminated.

    Research and development (R&D) costs, net of tax credits and grants, were $5.7 million for the three-month period ended March 31, 2010, compared to $11.4 million for the same period in 2009. The comparative decrease in net R&D costs is almost entirely attributable to the winding down and termination of development activities related to cetrorelix in BPH, despite the presence in the first quarter of 2010 of residual expenditures associated with certain remaining contractual obligations.

    Selling, general and administrative (SG&A) expenses were $2.8 million for the three-month period ended March 31, 2010, compared to $3.6 million for the same period in 2009. This decrease is primarily related to lower comparative salary and benefit costs, lower legal expenses and other cost-saving measures.

    Net loss was $5.9 million, or $0.09 per basic and diluted share, for the three-month period ended March 31, 2010, compared to $12.4 million, or $0.23 per basic and diluted share, for the same period in 2009. This decrease is mainly related to lower comparative net R&D costs, lower SG&A expenses and higher foreign exchange gains, partly offset by lower comparative license fee revenues and lower sales and royalty margins.

    Cash and cash equivalents were $26.9 million as of March 31, 2010. This amount excludes an estimated $13.7 million of net proceeds received in connection with the registered direct offering completed on April 20, 2010.

    Source: AEterna Zentaris Inc.


    Financial Strength (28-June-2010) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 2.28 3.80 2.08 0.80
    Current Ratio (MRQ) 2.52 4.11 2.49 0.96
    LT Debt to Equity (MRQ) 3.72 15.04 18.23 133.99
    Total Debt to Equity (MRQ) 5.58 19.32 23.51 200.21
    Interest Coverage (TTM) -3.99 1.53 40.03

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    Buy Outperform Hold Underperform Sell No Opinion

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

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

    Source: www.ft.com

    Consensus Estimates Analysis

    # of Estimates Mean High Low 1 Year Ago
    SALES (in millions)
    Quarter Ending Jun-10 2 6.12 6.14 6.11 6.10
    Quarter Ending Sep-10 2 6.13 6.22 6.04 6.60
    Year Ending Dec-10 6 24.11 31.70 15.00 27.52
    Year Ending Dec-11 5 19.97 26.60 12.30 36.73
    EARNINGS (per share)
    Quarter Ending Jun-10 2 -0.09 -0.09 -0.10 -0.16
    Quarter Ending Sep-10 2 -0.10 -0.10 -0.10 -0.14
    Year Ending Dec-10 6 -0.44 -0.35 -0.60 -0.58
    Year Ending Dec-11 5 -0.44 -0.34 -0.59 -0.19

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

    Investment Highlights

    AEZS is a drug development company specializing in oncology and endocrine therapy. It boasts of multiple innovative compounds in late stage development.

    Late-stage Drug Development Priorities

    Perifosine

    Perifosine is the first orally active Akt inhibitor in phase III registration trials for multiple myeloma and colorectal cancer conducted by our partner Keryx under a Special Protocol Assessment reached with the FDA, which has also granted perifosine Fast Track designation for both indications, as well as orphan-drug designation for multiple myeloma. Furthermore, perifosine received from the European Medicines Agency, a positive opinion for orphan medicinal product designation and a positive Scientific Advice for multiple myeloma. Perifosine is also in current multiple phase II clinical studies, including renal cell carcinoma.

    AEZS-108

    AEZS-108, which has been granted orphan-drug designation by the FDA for ovarian cancer, represents a new targeting concept in oncology using a cytotoxic peptide conjugate, which is a hybrid molecule composed of a synthetic peptide carrier and doxorubicin. The design of AEZS-108 allows for the specific binding and selective uptake of the cytotoxic conjugate by LHRH-receptor-positive tumors. Final phase II results in advanced endometrial cancer are expected by the end of 2010 (results in advanced colorectal cancer were disclosed at ASCO, June 2010).

    AEZS-130

    AEZS-130, a growth hormone secretagogue (GHS), is a novel synthetic small molecule acting as a ghrelin mimetic that is orally active and stimulates the secretion of growth hormone (GH). A pivotal phase III trial was initiated in the United States to investigate its safety and efficacy as a GH stimulation test for the diagnosis of adult GH deficiency (AGHD) for which orphan-drug designation has been granted by the FDA. In addition to the diagnostic indication, AEZS-130, based on results of phase I studies, has potential applications for the treatment of cachexia, a condition frequently associated with severe chronic diseases such as cancer, chronic obstructive pulmonary disease and AIDS. The trade name of AEZS-130 as a diagnostic test is SolorelTM.

    2010 Milestones

    Perifosine

    -Enrollment progression for the pivotal phase III trial in multiple myeloma and colorectal cancer (conducted by Keryx)

    -Report phase 1/2 results in multiple myeloma, metastatic colon cancer, pediatric solid tumors and other cancers (colon cancer and pediatric study results announced at ASCO, June 2010)

    -Update on European and Asian development and registration strategy

    AEZS-108

    -Report final phase II results in advanced ovarian and endometrial cancer (ovarian cancer results presented at ASCO, June 2010)

    -Initiation of additional clinical studies in advanced ovarian or endometrial cancer

    -Initiation of one or more phase 1/2 trials in other LHRH-expressing cancer types (IND granted for urothelial (bladder) cancer)

    AEZS-130

    -Completion of phase III trial as diagnostic test for adult growth hormone deficiency (GDH)

    -Filing of an NDA in United Statesw as diagnostic test for adult GHD pending successful completion of phase III study

    -Initiation of clinical studies in pediatric GHD

    -Development and registration strategy update:

    – Rest of the world as diagnostic test for adult and pediatric GHD

    – Explore potential for therapeutic use

    Recent Company News

    The Company recently announced a collaborative study with Almac’s Diagnostics division for AEZS-108, the Company’s doxorubicin luteinizing hormone-releasing hormone (LHRH) targeted conjugate compound, which is being investigated in multiple cancers. The Company said the collaboration is aimed at determining LHRH receptor expression through the development of a companion diagnostic tool.

    “This state of the art companion diagnostic tool will allow us to develop improved methods of selecting the most appropriate patients to be treated with AEZS-108 in order to enhance the efficiency of our clinical trials and help us with the future successful development of AEZS-108 in a number of different LHRH expressing cancer,” AEZS president and CEO Juergen Engel Ph.D said in a press release.

    AEZS last week announced that it has completed its previously announced registered direct offering of $12.1 million units comprised of common shares and common share purchase warrants to certain institutional investors. Net proceeds from this offering, after deducting placement agent fees and other offering expenses total approximately $11.3 million.  According to the Company, proceeds from the transaction will be used to fund its AEZS-108, AEZS-112 and AEZS-130 programs and for other general corporate and working capital purposes.

    Source: AEterna Zentaris Inc.

    Technical Analysis

    Source: http://stockcharts.com

    AEZS is below its 13-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

    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 bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of zero, which implies that the underlying moving averages are trending lower.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    June28-2010 symbol Share, $ $ Mn 2010 2011 2010 2011
    Celgene Corp. CELG 55.89 25,760 20.93 16.99 7.69 6.69
    EntreMed Inc. ENMD 0.44 44.28 n/a n/a n/a n/a
    Pfizer Inc. PFE 14.54 117,280 6.70 6.41 1.73 1.77
    Abbott Laboratories ABT 47.18 72,830 11.34 10.17 2.05 1.90
    Merck & Co. Inc. MRK 35.94 112,070 10.60 9.31 2.44 2.46
    Biotechnology Median 15.58 n/a 7.96 n/a
    AEterna Zentaris Inc. AEZS 1.20 89.05 n/a n/a 3.49 4.40

    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

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