Aeterna Zentaris : Condensed Interim Consolidated Financial Statements As of March 31, 2024, and for the three months ended March 31, 2024, and 2023 - Form 6-K

Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

(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 the Condensed Interim Consolidated Financial Statements	6

1

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Financial Position

(In thousands of US dollars)

(Unaudited)

		As of March 31, 2024			As of December 31, 2023
		$			$
ASSETS
Current assets
Cash and cash equivalents			29,545				34,016
Trade and other receivables			190				222
Inventory			64				66
Income taxes receivable			118				121
Prepaid expenses and other current assets			1,278				1,942
Total current assets			31,195				36,367
Non-current assets
Restricted cash equivalents			326				332
Property and equipment			271				317
Total non-current assets			597				649
Total assets			31,792				37,016
LIABILITIES
Current liabilities
Payables and accrued liabilities (note 4)			4,315				3,622
Provisions			422				429
Income taxes payable			109				111
Deferred revenues (note 3)			252				218
Lease liabilities			154				160
Total current liabilities			5,252				4,540
Non-current liabilities
Deferred revenues (note 3)			1,471				1,544
Lease liabilities			80				119
Employee future benefits (note 5)			12,019				12,617
Total non-current liabilities			13,570				14,280
Total liabilities			18,822				18,820
Shareholders' equity
Share capital (note 6)			293,410				293,410
Warrants			5,085				5,085
Contributed surplus			90,718				90,710
Deficit			(375,264	)			(369,831	)
Accumulated other comprehensive loss			(979	)			(1,178	)
Total Shareholders' equity			12,970				18,196
Total liabilities and shareholders' equity			31,792				37,016

Commitments (note 11)

Subsequent event (note 12)

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

2

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

For the three months ended March 31, 2024, and 2023

(In thousands of US dollars)

(Unaudited)

		Share capital			Warrants			Contributed surplus			Deficit			Accumulated other comprehensive loss			Total
		$			$			$			$			$			$
Balance - December 31, 2023			293,410				5,085				90,710				(369,831	)			(1,178	)			18,196
Net loss			-				-				-				(5,752	)			-				(5,752	)
Other comprehensive loss:
Foreign currency translation adjustments			-				-				-				-				199				199
Actuarial gain on defined benefit plans (note 5)			-				-				-				319				-				319
Comprehensive loss															(5,433	)			199				(5,234	)
Share-based compensation costs			-				-				8				-				-				8
Balance - March 31, 2024			293,410				5,085				90,718				(375,264	)			(979	)			12,970

		Share capital			Warrants			Contributed surplus			Deficit			Accumulated other comprehensive loss			Total
		$			$			$			$			$			$
Balance - December 31, 2022			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			-				-				-				(162	)			-				(162	)
Comprehensive income															(4,417	)			(168	)			(4,585	)
Share-based compensation costs			-				-				17				-				-				17
Balance - March 31, 2023			293,410				5,085				90,349				(356,501	)			(1,135	)			31,208

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

3

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

For the three months ended March 31, 2024, and 2023

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

(Unaudited)

		Three months ended
		March 31,
		2024			2023
		$			$
Revenues (note 3)			4				2,128
Expenses
Cost of sales			16				17
Research and development			2,584				4,012
Selling, general and administrative (note 10)			3,514				2,306
Total expenses			6,114				6,335
Loss from operations			(6,110	)			(4,207	)
Gain (loss) due to changes in foreign currency exchange rates			77				(59	)
Interest income			285				13
Other finance costs			(4	)			(2	)
Net finance income (costs)			358				(48	)
Loss before income taxes			(5,752	)			(4,255	)
Income tax recovery			-				-
Net loss			(5,752	)			(4,255	)
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustments			199				(168	)
Items that will not be reclassified to profit or loss:
Actuarial gain (loss) on defined benefit plans (note 5)			319				(162	)
Comprehensive loss			(5,234	)			(4,585	)
Basic and diluted loss per share (note 8)			(4.74	)			(3.51	)
Weighted average number of shares outstanding (basic and diluted)1			1,213,969				1,213,969

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

1	On May [3], 2024, the Company's shares were consolidated on a 1-for-4 reverse stock split, which has been reflected retrospectively in the financial statements and further discussed in note 6.

4

Aeterna Zentaris Inc.

Condensed Interim Consolidated Statements of Cash Flows

For the three months ended March 31, 2024, and 2023

(In thousands of US dollars)

(Unaudited)

		Three months ended
		March 31,
		2024			2023
		$			$
Cash flows from operating activities
Net loss for the period			(5,752	)			(4,255	)
Items not affecting cash and cash equivalents:
Depreciation and amortization			44				40
Share-based compensation costs			8				17
Employee future benefits			130				135
Net foreign exchange differences			(6	)			8
Amortization of deferred revenues			-				(760	)
Provisions			-				(8	)
Other non-cash items			5				1
Changes in operating assets and liabilities (note 7)			1,281				761
Net cash used in operating activities			(4,290	)			(4,061	)
Cash flows from financing activities
Payments on lease liabilities			(42	)			(38	)
Net cash used in financing activities			(42	)			(38	)
Cash flows from investing activities
Purchase of property and equipment			(5	)			(2	)
Net cash used in investing activities			(5	)			(2	)
Effect of exchange rate changes on cash and cash equivalents			(134	)			50
Net change in cash and cash equivalents			(4,471	)			(4,051	)
Cash and cash equivalents - Beginning of period			34,016				50,611
Cash and cash equivalents - End of period			29,545				46,560

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

5

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

1.Business overview

Summary of business

Aeterna Zentaris 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 ("EMA") approved oral test indicated for the diagnosis of patients with adult growth hormone deficiency ("AGHD"). Macimorelin is currently marketed under the tradename Ghryvelin™ in the European Economic Area and the United Kingdom through an exclusive licensing agreement with Pharmanovia. The Company's several other license and commercialization partners are also seeking approval for commercialization of macimorelin in Israel and the Palestinian Authority, the Republic of Korea, Turkey and several non-European Union Balkan countries. The Company is actively pursuing business development opportunities for the commercialization of macimorelin in North America, Asia and the rest of the world.

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 14, 2024.

2.Basis of presentation

These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting as issued by the International Accounting Standards Board.

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, 2023.

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 amendments

Several amendments apply for the first time in 2024, 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.

6

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

Critical accounting estimates and judgements

The preparation of condensed interim consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of the Company's assets, liabilities, revenues, expenses and related disclosures. Judgements, 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 judgements 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 judgements 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, 2023.

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:

		Three months ended
		March 31,
		2024			2023
		$			$
Royalties			4				18
License fees			-				760
Development services			-				1,339
Supply chain			-				11
			4				2,128

The Company recorded revenue for the transfer of services overtime for the three months ended March 31, 2024, $nil(2023 - $2,110). Revenue recorded at a point in time for the three months ended March 31, 2024, was $4(2023 - $18).

7

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

Liabilities related to contracts with customers

The following table provides a summary of deferred revenue balances:

		March 31, 2024
		Current			Non-current			Total
		$			$			$
Pharmanovia			244				1,350				1,594
NK Meditech			8				121				129
			252				1,471				1,723

		December 31, 2023
		Current			Non-current			Total
		$			$			$
Pharmanovia			209				1,420				1,629
NK Meditech			9				124				133
			218				1,544				1,762

4.Payables and accrued liabilities

		Three months ended
		March 31,
		2024			2023
		$			$
Trade accounts payable			2,402				1,866
Accrued research and development costs			438				804
Accrued employee benefits			411				343
Payroll tax and other statutory liabilities			60				78
Other accrued liabilities			1,004				531
			4,315				3,622

8

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

5.Employee future benefits

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

		Three months ended March 31, 2024			Year ended December 31, 2023
		Pension			Other
		benefit plans			benefit plans			Total			Total
		$			$			$			$
Change in plan liabilities
Balances - Beginning of the year			23,622				98				23,720				21,750
Current service cost (residual value)			32				3				35				120
Interest cost			185				-				185				807
Actuarial loss (gain) arising from changes in financial assumptions			(319	)			-				(319	)			1,213
Benefits paid			(183	)			-				(183	)			(815	)
Impact of foreign exchange rate changes			(524	)			(3	)			(527	)			645
Balances - End of the period			22,813				98				22,911				23,720
Change in plan assets
Balances - Beginning of the year			11,103				-				11,103				10,591
Interest income from plan assets			88				-				88				396
Employer contributions			9				-				9				36
Employee contributions			3				-				3				13
Benefits paid			(63	)			-				(63	)			(266	)
Remeasurement of plan assets			-				-				-				15
Impact of foreign exchange rate changes			(248	)			-				(248	)			318
Balances - End of the year			10,892				-				10,892				11,103
Net liability of the unfunded plans			11,184				98				11,282				11,682
Net liability of the funded plans			737				-				737				935
Net amount recognized as Employee future benefits			11,921				98				12,019				12,617
Amounts recognized:
In net loss			126				4				130				520
Actuarial gain (loss) on defined benefit plans in other comprehensive (gain) loss			319				-				319				(1,195	)

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 3.40% as of March 31, 2024 and 3.30% as of December 31, 2023, causing the variances in the actuarial gain on defined benefit plan during the three months ended March 31, 2024.

9

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

6.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.

Subsequent to the end of the reporting period of March 31, 2024, on May 1, 2024, the Company's board of directors approved an amendment to the Company's articles of incorporation to effect a 1-for-4reverse stock split ("reverse split") of the Company's common shares, deferred share units (DSU), stock options and warrants outstanding as of the effective date. Accordingly, all common shares, DSU, stock options, warrants and per share amounts in these interim condensed consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split. The reverse split was effected in the markets on May 3, 2024.

		Common shares			Amount
		#			$
Balance - December 31, 2023			1,213,969				293,410
			-				-
Balance - March 31, 2024			1,213,969				293,410

Share-based compensation

During the three months ended March 31, 2024, the Company granted nil(2023 - 3,500) stock options and nil(2023 - nil) deferred share units under the Long-Term Incentive Plan. The compensation expense for the three months ended March 31, 2024, was $8(2023 - $17) recognized over the vesting period. Option activity for the three months ended March 31, 2024, and 2023, was as follows:

		Stock options			Weighted average exercise price
		#			$
Balance - December 31, 2023			13,350				50.04
Forfeited			(167	)			42.04
Balance - March 31, 2024			13,183				50.14

		Stock options			Weighted average exercise price
		#			$
Balance - December 31, 2022			10,508				80.20
Granted			3,500				15.00
Balance - March 31, 2023			14,008				63.91

10

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

7.Supplemental disclosure of cash flow information

		Three months ended
		March 31,
		2024			2023
		$			$
Changes in operating assets and liabilities:
Trade and other receivables			74				203
Inventory			-				5
Prepaid expenses and other current assets			625				626
Payables and accrued liabilities			711				235
Deferred revenues			-				(154	)
Provision for restructuring and other costs			-				(9	)
Employee future benefits			(129	)			(145	)
			1,281				761

8.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.

		Three months ended
		March 31,
		2024			2023
		$			$
Net loss			(5,752	)			(4,255	)
Basic and diluted weighted-average shares outstanding			1,213,969				1,213,969
Basic and diluted loss per share			(4.74	)			(3.51	)
Items excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
Stock options and DSUs			62,413				38,238
Warrants			114,405				114,405

9.Segment information

The Company operates in a singleoperating segment, being the biopharmaceutical segment.

10.Related party transactions

During the three months ended March 31, 2024, the Company recorded a termination benefit payment of $324(€300) within selling, general and administrative expenses.

11

Aeterna Zentaris Inc.

Notes to the Condensed Interim Consolidated Financial Statements

As of March 31, 2024, and for the three months ended March 31, 2024, and 2023

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

(Unaudited)

11.Commitments

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

		TOTAL
		$
Less than 1 year			4,335
1 - 5 years			75
		4,410

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 $38,756upon achieving certain sales volumes, regulatory or other milestones related to specific products.

12.Subsequent event

On December 14, 2023, the Company and Ceapro Inc. ("Ceapro") jointly announced the signing of a definitive agreement to combine their operations in an all-stock merger of equals. Pursuant to the agreement, the transaction will be effected by way of a plan of arrangement under the Canada Business Corporations Act pursuant to which, following the 1-for-4reverse split on May 3, 2024, each outstanding Ceapro common share will be exchanged for0.02360of an Aeterna common share with the result that Ceapro will become a wholly-owned subsidiary of Aeterna (the "Transaction"). When completed, the Transaction will be considered a reverse acquisition and the historical financial statements following the business combination will be those of Ceapro. Additionally, as part of the Transaction, Aeterna will issue to its shareholders immediately prior to the closing of the transaction, 0.47698of a share purchase warrant ("Transaction Warrants") for each Aeterna common share held as of such date. Holders of Aeterna's currently outstanding warrants will also be issued transaction warrants in accordance with the anti-dilution provisions of such warrants. Each whole transaction warrant will be exercisable to purchase one common share of Aeterna at a nominal exercise price of $0.01. The transaction also provides the outstanding options to acquire Ceapro common shares to be replaced by options allowing current holders to acquire common shares of Aeterna on similar terms, as adjusted by the exchange ratio in the transaction. Following the closing of the Transaction, the former shareholders of Ceapro will own 50% of Aeterna and the pre-transaction securityholders of Aeterna will own the remaining 50%, assuming the exercise of all Transaction Warrants.The transaction required the approval of shareholders of both Companies and the Alberta court, which were obtained on March 12, 2024, and March 28, 2024 respectively, and is subject to closing conditions customary for transactions of this nature, including applicable stock exchange approvals. It is anticipated that the transaction will close in the second quarter of 2024, subject to the satisfaction of the conditions of the agreement.

12