AEterna Zentaris Inc (NASDAQ:AEZS) Looking To Rebound

Ever since the FDA issued a CRL in November 2014 to AEterna Zentaris Inc (NASDAQ:AEZS), it's been all downhill for shareholders. The FDA rejection was in response to a previous Phase 3 study that failed to achieve its primary endpoint. But AEZS has been trying to correct this and it's taken some time to do so. Based on guidance from the FDA, AEZS is conducting a new Phase 3 study to assess the efficacy of Macrilen (macimorelin) for use in evaluating adult growth hormone deficiency (AGHD) and a dedicated QT study to evaluate the effect of Macrilen on myocardial repolarization. The studies will address the issues cited in the agency's Complete Response Letter (CRL) that the company received on November 6, 2014. The new studies will take around 18 months to complete and cost $5 million to $6 million.The good news is that so far preliminary feedback has been positive. Last month, AEZS concluded a successful meeting of the clinical investigators for the confirmatory Phase 3 trial of Macrilen, a novel orally-active ghrelin agonist for use in evaluating adult growth hormone deficiency (“AGHD”). As a result, the Company is confident that it will complete the confirmatory trial by year-end 2016. AGHD affects approximately 75,000 adults across the US, Canada and Europe.There is strong demand for Macrilen if it gets FDA approval. Patients who are believed to have AGHD are now very often evaluated by means of the insulin tolerance test (“ITT”). However, the ITT is inconvenient to the patients and physicians and contra-indicated in certain patients, such as patients with coronary heart disease or seizure disorder, because it requires the patient to experience hypoglycemia to obtain a result. Some physicians will not induce full hypoglycemia, intentionally compromising accuracy to increase safety and comfort for the patient. Furthermore, administration of the ITT is expensive because the patient must be constantly monitored by a physician for the 2-4 hour duration of the test and the test must be administered in a setting where emergency equipment is available and where the patient may be quickly hospitalized. The ITT is not used for patients with co-morbidities, such as CV, seizure disorder or a history of brain cancer or for patients who are elderly and frail, due to safety concerns.Macrilen would be preferred because it it does not require the patient to become hypoglycemic. Macrilen is administered orally, while the ITT requires an intravenous infusion of insulin. Furthermore, the evaluation of AGHD using Macrilen is much less time consuming and labor intensive than the ITT. This makes it less expensive to conduct the evaluation and it can be conducted in the physician’s office rather than in a hospital setting.

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As of January 19th, five patients at three separate centers have been enrolled in the Phase 3 study. Eventually, the study population will consist of approximately 110 subjects (at least 55 ITT-positive and 55 ITT-negative) with a medical history documenting risk factors for AGHD, and will include a spectrum of subjects from those with a low risk of having AGHD to those with a high risk of having the condition. The primary endpoint is validation of a single oral dose of macimorelin for the diagnosis of AGHD, using the ITT as a comparator.AEZS also has Zoptrex enrolled in a Phase 3 clinical trial. If approved by the FDA, this would be the first systemic therapy for the treatment of advanced and recurrent endometrial cancer. Zoptrex is a new concept in oncology whereby a “targeting” peptide is conjugated to a cytotoxic drug in order to facilitate targeted delivery of the cytotoxic agent to cancer cells expressing the corresponding target peptide receptor. Potential benefits of this targeted approach include better efficacy and a more favorable safety profile with lower incidence and severity of side effects as compared to the cytotoxic agent alone. The Zoptrex Phase 3 clinical program, which is fully-enrolled, is being conducted under a Special Protocol Assessment with the US FDA and, in October 2015, received endorsement and support for trial continuation to completion from the independent Data and Safety Monitoring Board. Completion of the clinical trial is expected by the end of Q3 2016.

The Company intends to commercialize Zoptrex, if approved, in the U.S. market. Zoptrex has been out-licensed to Sinopharm A-Think, the largest China-based pharmaceutical company, for the development, manufacturing and commercialization for all human indications, in the territories of China, Hong Kong and Macao. Discussions are underway with potential additional partners relative to the development and commercialization rights in other geographic territories. Zoptrex has also demonstrated encouraging results in Phase 2 clinical programs completed in both ovarian and prostate cancer therapy.

AEZS also co-promotes three products: EstroGel (estradiol gel), a leading gel application of estrogen therapy, from Ascend Therapeutics; Saizen [somatropin (rDNA origin) for injection], a recombinant human growth hormone supplement from EMD Serono; and APIFINY, the first non-PSA blood test for use in evaluating and managing the risk of prostate cancer, from Armune Bioscience.

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Currently trading at a $19 million market cap, AEZS has seen a flurry of insider buying recently. Last month, insiders purchased just over 29k shares including 16k shares purchased by CEO David Dodd. He said:

“I am personally convinced that our business is strong and improving. The Company has two products in Phase 3 studies and a portfolio of three products that it co-promotes. Aeterna Zentaris expects to complete both Phase 3 studies by the end of 2016 and, if the studies meet their primary endpoints, to file NDAs for both products as rapidly as practicable. The Company has sufficient cash on hand to fund operations through the conclusion of the Phase 3 studies and through first quarter, 2017. During the past few years, the business has been streamlined, eliminating over 50% of headcount in the process. I personally believe that Aeterna Zentaris is now a highly focused and much more efficient company. I and other members of the executive management team believed it important to concretely demonstrate to our fellow shareholders our renewed and continued commitment to and confidence in Aeterna Zentaris by increasing our personal investment in and exposure to the Company’s Common Shares. We believe that Aeterna Zentaris’ outlook is promising and the focus is on continuing to progress on the milestones that are intended to deliver increased value and growth to all shareholders.”

We think AEZS is on the cusp of some major developments and we like what we're seeing from the company. We will be updating Insider Financial with any new developments from AEZS. Sign up today and stay on top of AEZS!

Disclosure: We have no position in AEZS either long or short. We have not been compensated for this article.