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AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) Rallies On High Implied Volatility

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

AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) stock continues to experience high implied volatility in the options market which is sometimes an indication that a major move, up or down, may be in the cards. The direction of the spike is the big puzzle given that the biopharmaceutical company is fresh from posting a wider than expected first quarter net loss.

Q1 Financial Results

For the first three months of the year, the Canadian-based developer of novel pharmaceutical therapies says it generated a net (-$4.1) million loss in revenues compared to a net (-$3.7) million loss in the previous year – the wider loss was attributed to lower net finance income.

AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) revenues in the quarter totaled $261,000, an improvement from revenues of $242,000 generated in the same period last year. The increase has been attributed to the amortization of upfront payments received in connection with one of the company’s licensing agreements for Zoptrex.

Research and development expenses in Q1 2017 dropped to $2.5 million from $3.7 million. Aeterna attributes the decline to lower third-party costs for Zoptrex given that the company had already completed clinical trials in the quarter. General and administrative expenses remained stable in the quarter, coming in at $1.9 million.

AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) Net Finance income in the quarter dropped by more than half to $1.5 million from $3.3 million. The decrease was caused by a change in fair value in connection with warrant liabilities. The company exited the quarter with $17.8 million in cash and cash equivalents – a drop from $22 million as of December 31, 2016.

Clinical Trial Setback

The biopharmaceutical company says it has suffered a major setback on the development of Zoptrex as a novel treatment for women struggling with recurrent or metastatic endometrial cancer. The drug failed to achieve its primary endpoint of increase in the median period of overall survival in a Phase 3 study. The study results mean the company cannot pursue regulatory approval.

“Based on this outcome, we do not anticipate conducting clinical trials of Zoptrex™ with respect to any other indications.” Regarding the company’s plans Mr. Dodd, CEO, continued, “Our focus has now shifted entirely to filing our new drug application (“NDA”) for Macrilen™ and, if the product is approved, to its commercial launch as soon as possible. We will also optimize our resources to be consistent with our focus on Macrilen™-related efforts,” said CEO, David A. Dodd.

A quarterly net loss and disappointmenting Zoptrex trials raises serious questions about the direction of AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) shares given the high implied volatility in the market.

AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) was up by 22.92% in Friday trading session ending the week at $1.18 a share.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.