COSCIENS Biopharma 6K Current report | CSCI 9 May 23

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Exhibit 99.1

Aeterna Zentaris Inc.

Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 2023 and 2022

(In thousands of US dollars)

(Unaudited)

Condensed Interim Consolidated Statements of Financial Position	2
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity	3
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss	4
Condensed Interim Consolidated Statements of Cash Flows	5
Notes to Condensed Interim Consolidated Financial Statements	6

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Financial Position

(In thousands of US dollars)

(Unaudited)

	As of March 31, 2023			As of December 31, 2022
	$			$
ASSETS
Current assets
Cash and cash equivalents		46,560			50,611
Trade and other receivables		557			732
Inventory		227			229
Income taxes receivable		1,450			1,428
Prepaid expenses and other current assets		1,914			2,488
Total current assets		50,708			55,488

Non-current assets
Restricted cash equivalents		326			322
Property and equipment		248			216
Total non-current assets		574			538
Total assets		51,282			56,026

LIABILITIES
Current liabilities
Payables and accrued liabilities		4,130			3,828
Provisions		44			45
Income taxes payable		109			108
Deferred revenues (note 3)		2,017			2,949
Lease liabilities		134			114
Total current liabilities		6,434			7,044

Non-current liabilities
Deferred revenues (note 3)		1,777			1,684
Deferred gain		111			110
Lease liabilities		76			65
Employee future benefits (note 4)		11,498			11,159
Provisions		178			188
Total non-current liabilities		13,640			13,206
Total liabilities		20,074			20,250

Shareholders’ equity
Share capital (note 5)		293,410			293,410
Warrants		5,085			5,085
Other capital		90,349			90,332
Deficit		(356,501	)		(352,084	)
Accumulated other comprehensive loss		(1,135	)		(967	)
Total Shareholders’ equity		31,208			35,776
Total liabilities and shareholders’ equity		51,282			56,026

Commitments (note 9)

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

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity

For the three months ended March 31, 2023 and 2022

(In thousands of US dollars)

(Unaudited)

	Share capital		Warrants		Other capital		Deficit			Accumulated other comprehensive loss			Total
	$		$		$		$			$			$
Balance – January 1, 2023		293,410		5,085		90,332		(352,084	)		(967	)		35,776
Net loss		-		-		-		(4,255	)		-			(4,255	)
Other comprehensive loss:
Foreign currency translation adjustments		-		-		-		-			(168	)		(168	)
Actuarial loss on defined benefit plans and remeasurement of the net defined benefit liability (note 4)		-		-		-		(162	)		-			(162	)
Comprehensive loss		-		-		-		(4,417	)		(168	)		(4,585	)
Share-based compensation costs (note 5)		-		-		17		-			-			17
Balance – March 31, 2023		293,410		5,085		90,349		(356,501	)		(1,135	)		31,208

	Share capital		Warrants		Other capital		Deficit			Accumulated other comprehensive loss			Total
	$		$		$		$			$			$
Balance – January 1, 2022		293,410		5,085		89,788		(334,619	)		(678	)		52,986
Balance – Value		293,410		5,085		89,788		(334,619	)		(678	)		52,986
Net loss		-		-		-		(2,640	)		-			(2,640	)
Other comprehensive loss:
Foreign currency translation adjustments		-		-		-		-			37			37
Actuarial gain on defined benefit plans and remeasurement of the net defined benefit liability		-		-		-		2,749			-			2,749
Comprehensive income		-		-		-		109			37			146
Comprehensive income (loss)		-		-		-		109			37			146
Share-based compensation costs (note 5)		-		-		27		-			-			27
Balance – March 31, 2022		293,410		5,085		89,815		(334,510	)		(641	)		53,159
Balance – Value		293,410		5,085		89,815		(334,510	)		(641	)		53,159

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

For the three months ended March 31, 2023 and 2022

(In thousands of US dollars, except share and per share data)

(Unaudited)


	Three months ended
	March 31,
	2023			2022
	$			$
Revenues (note 3)		2,128			1,517

Expenses
Cost of sales		17			79
Research and development		4,012			2,390
Selling, general and administrative		2,306			1,861
Total expenses		6,335			4,330

Loss from operations		(4,207	)		(2,813	)

Gain (loss) due to changes in foreign currency exchange rates		(59	)		174
Other finance (costs) income		11			(1	)
Net finance (costs) income		(48	)		173

Loss before income taxes		(4,255	)		(2,640	)

Income tax recovery		-			-
Net loss		(4,255	)		(2,640	)

Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustments		(168	)		37
Items that will not be reclassified to profit or loss:
Actuarial gain (loss) on defined benefit plans and remeasurement of the net defined benefit liability (note 4)		(162	)		2,749
Comprehensive loss		(4,585	)		146

Basic and diluted loss per share (note 7)		(0.88	)		(0.54	)

Weighted average number of shares outstanding (basic and diluted)		4,855,876			4,855,876

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the three months ended March 31, 2023 and 2022

(In thousands of US dollars)

(Unaudited)

	$			$
	Three months ended
	March 31,
	2023			2022
	$			$
Cash flows from operating activities
Net loss for the period		(4,255	)		(2,640	)
Items not affecting cash and cash equivalents:
Provision		(8	)		(2	)
Depreciation and amortization		40			36
Share-based compensation costs		17			27
Employee future benefits		135			99
Amortization of deferred revenues		(760	)		(828	)
Net foreign exchange differences		8			(174	)
Other non-cash items		1			14
Refund of income taxes		-			881
Changes in operating assets and liabilities (note 6)		761			1,126
Net cash used in operating activities		(4,061	)		(1,461	)

Cash flows from financing activities
Payments on lease liabilities		(38	)		(34	)
Net cash used in financing activities		(38	)		(34	)

Cash flows from investing activities
Purchase of property and equipment		(2	)		(6	)
Net cash used in investing activities		(2	)		(6	)

Effect of exchange rate changes on cash and cash equivalents		50			(203	)

Net change in cash and cash equivalents		(4,051	)		(1,704	)

Cash and cash equivalents – Beginning of period		50,611			65,300
Cash and cash equivalents – End of period		46,560			63,596

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 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 (the “Company” or “Aeterna”) 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-approved oral test indicated for the diagnosis of patients with adult growth hormone deficiency (“AGHD”). Macrilen^® is currently marketed in the US through a license agreement (the “Novo Amendment”) between the Company and Novo Nordisk Health Care AG (“Novo”) until May 2023 and in the United Kingdom and Europe through a license agreement with Atnahs Pharma UK Limited (“Pharmanovia”) under the trade name of Ghryvelin™. 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 May 9, 2023.

2. Basis of presentation

These 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.

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 interpretations not yet adopted

Several amendments apply for the first time in 2023, but do not have an impact on the interim condensed consolidated financial statements of the Company. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Critical accounting estimates and judgements

The 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.

Management 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 applicable to interim financial statements. Critical 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 and for the year ended December 31, 2022.

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 2023 and 2022

(In thousands of US dollars, except share and per share data and as otherwise noted)

(Unaudited)

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:

Summary of revenue from transfer of goods and services

	2023		2022
	Three months ended March 31,
	2023		2022
	$		$
License fees		760		432
Development services		1,339		966
Product sales		-		57
Royalties		18		19
Supply chain		11		43
Total		2,128		1,517

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 $1,658 (€1,540), comprised of; the combined adult indication performance obligation of $1,233 (€1,145), and the combined pediatric indication performance obligation of $425 (€395). The Company will continue to recognize revenue over time using an output method based on units of licensed product supplied to Pharmanovia. The total units that the Company expects to supply to Pharmanovia is an estimate, based on current projections and anticipated market demand, and therefore will be a significant judgment that will be relied upon when using the outputs method to recognize revenue.

Liabilities related to contracts with customers

The following table provides a summary of deferred revenue balances:

Summary of deferred revenue

	March 31, 2023
	Current		Non-current		Total
	$		$		$
Novo Amendment		2,005		-		2,005
Pharmanovia License Agreement		10		1,648		1,658
NK License Agreement		2		129		131
		2,017		1,777		3,794

	December 31, 2022
	Current		Non-current		Total
	$		$		$
Novo Amendment		2,914		-		2,914
Consilient Health		35		1,556		1,591
NK License Agreement		-		128		128
		2,949		1,684		4,633

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 2023 and 2022

(In thousands of US dollars, except share and per share data and as otherwise noted)

(Unaudited)

4. Employee future benefits

The change in the Company’s employee future benefit obligations is summarized as follows:

Summary of net defined benefit liability asset

	benefit plans			benefit plans		Total			Total
	Three months ended March 31, 2023								Year ended December 31, 2022
	Pension			Other
	benefit plans			benefit plans		Total			Total
	$			$		$			$
Change in plan liabilities
Balances – Beginning of the period		21,657			93		21,750			29,412
Current service cost		30			3		33			142
Interest cost		200			1		201			295
Actuarial loss (gain) from changes in financial assumptions		148			-		148			(5,915	)
Benefits paid		(194	)		-		(194	)		(752	)
Impact of foreign exchange rate changes		334			1		335			(1,432	)
Balances – End of the period		22,175			98		22,273			21,750

Change in plan assets
Balances – Beginning of the period		10,591			-		10,591			11,927
Interest income from plan assets		99			-		99			120
Employer contributions		8			-		8			45
Employee contributions		2			-		2			10
Benefits paid		(71	)		-		(71	)		(247	)
Remeasurement of plan assets		(14	)		-		(14	)		(641	)
Impact of foreign exchange rate changes		160			-		160			(623	)
Balances – End of the period		10,775			-		10,775			10,591

Net liability of the unfunded plans		10,913			98		11,011			10,787
Net liability of the funded plans		487			-		487			372
Net amount recognized as Employee future benefits		11,400			98		11,498			11,159

Amounts recognized:
In net loss		131			4		135			295
Actuarial (loss) gain on defined benefit plans and remeasurement of the net defined benefit liability in other comprehensive loss		(162	)		-		(162	)		5,262

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 3.70% as of March 31, 2023 and 3.75% as of December 31, 2022, causing the variances in the actuarial loss (gain) on defined benefit plan during the quarter ended March 31, 2023.

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 2023 and 2022

(In thousands of US dollars, except share and per share data and as otherwise noted)

(Unaudited)

5. Shareholders’ equity

Shareholders equity

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.

Summary of share capital

	Common shares		Amount
	#		$
Balance – December 31, 2022		4,855,876		293,410

		-		-
Balance – March 31, 2023		4,855,876		293,410

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 1-for-25 share consolidation (reverse split) of the Company’s common shares. The Company’s outstanding stock options, DSUs and warrants were also adjusted to reflect the 1-for-25 share consolidation (reverse split) of the Company’s common shares. Accordingly, all common shares, DSU, warrants, stock options and per share amounts in these interim condensed consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the share consolidation (reverse split). Outstanding warrant and stock options were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased. The share consolidation (reverse split) was affected on July 21, 2022.

Share-based compensation

On January 17, 2023, the Company granted 14,000 (2022 – 2,000) 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:

Summary of assumptions to determine share-based compensation costs over the life of awards

	March 31, 2023			March 31, 2022
Expected dividend yield	$	0.00		$	0.00
Expected volatility		104.46	%		115.75	%
Risk-free annual interest rate		3.56	%		1.59	%
Expected life (years)		5.45			5.72
Share price	$	3.75		$	8.88
Exercise price	$	3.75		$	8.88
Grant date fair value	$	2.99		$	7.47

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.

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 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 March 31, 2023 was $17 (2022 – $27) recognized over the vesting period. Option activity for the three months ended March 31, 2023 and 2022, was as follows:

Summary of number and weighted average exercise prices of share options

	Stock options		Weighted average exercise price
	#		$
Balance – December 31, 2022		42,030		20.05
Granted		14,000		3.75
Cancelled / Forfeited		-		-
Balance – March 31, 2023		56,030		15.98

	Stock options			Weighted average exercise price
	#			$
Balance – December 31, 2021		43,455			22.00
Granted		2,000			8.88
Cancelled / Forfeited		(2,399	)		10.98
Balance – March 31, 2022		43,056			21.95

6. Supplemental disclosure of cash flow information

Disclosure of changes in operating assets and liabilities

	$			$
	Three months ended
	March 31,
	2023			2022
	$			$
Changes in operating assets and liabilities:
Trade and other receivables		203			474
Inventory		5			(206	)
Prepaid expenses and other current assets		626			711
Payables and accrued liabilities		235			159
Deferred revenues		(154	)		8
Provision for restructuring and other costs		(9	)		-
Employee future benefits		(145	)		(20	)
Increase (decrease) in operating assets and liabilities		761			1,126

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2023, and for the three months ended March 31, 2023 and 2022

(In thousands of US dollars, except share and per share data and as otherwise noted)

(Unaudited)

7. Net loss per share

The following table sets forth pertinent data relating to the computation of basic and diluted net loss per share attributable to common shareholders.

Summary of pertinent data relating to computation of basic and diluted net loss per share


	Three months ended March 31,
	2023			2022
Net loss		(4,255	)		(2,640	)
Basic and diluted weighted-average shares outstanding		4,855,876			4,855,876

Basic and diluted loss per share		(0.88	)		(0.54	)

Items excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
Stock options and DSUs		152,950			59,976
Share purchase warrants		457,648			457,648
Anti-dilutive shares

8. Segment information

The Company operates in a single operating segment, being the biopharmaceutical segment.

9. Commitments

Significant expenditure contracted for at the end of the reporting period but not recognized as liabilities is as follows:

Schedule of expected future minimum lease payments

	TOTAL
	$
Less than 1 year		9,224
1 - 3 years		1,982
4 - 5 years		29
More than 5 years		-
Total		11,235

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 $38,912 upon achieving certain sales volumes, regulatory or other milestones related to specific products.

COSCIENS Biopharma (CSCI) 6-KCurrent report (foreign)