COSCIENS Biopharma Inc.

Revenue for the three months ended September 30, 2018 was $0.7 million, up from $0.2 million in the same period of 2017. Revenue for the nine months ended September 30, 2018 was $25.5 million, compared with $0.7 million a year earlier, driven primarily by recording the $24 million upfront payment received from Strongbridge. Operating expenses were $3.2 million in Q3 2018 versus $7.4 million in Q3 2017, and $11.9 million for the first nine months of 2018 versus $20.2 million in 2017. R&D expense was $0.4 million in Q3 2018 versus $4.1 million last year, and $2.2 million for nine months versus $10.2 million. Net loss was $2.5 million in Q3 2018 versus $9.6 million in Q3 2017; nine-month net income was $9.3 million versus a net loss of $16.3 million. Cash from operations provided $2.4 million in Q3 and $9.5 million year to date, and unrestricted cash was $16.8 million at September 30. Guidance/commentary: Strongbridge’s royalty payment to Aeterna Zentaris is expected 60 days after quarter-end, with management estimating the first check at about $165,000 based on $1.1 million in Macrilen net sales. The company expects a European Commission decision in Q1 2019 and said its near-term strategy is to maximize Macrilen value through additional out-licensing outside the U.S. and Canada.

Michael Ward said the Strongbridge-to-Novo Nordisk transaction validates Macrilen’s market value and could improve the company’s out-licensing leverage in other regions. He emphasized that Aeterna’s strategy is to aggressively pursue partners outside the U.S. and Canada, with a strong focus on finding a partner who will make Macrilen a priority in endocrinology. His tone was constructive and optimistic, but centered on disciplined partnering rather than broadening the pipeline immediately.

Leslie Auld highlighted the company’s improved financial profile: Q3 revenue of $0.7 million, nine-month revenue of $25.5 million, and a nine-month net income of $9.3 million. She pointed to lower operating expenses, including R&D down to $0.4 million in Q3 from $4.1 million a year ago, and selling expense down to $0.4 million from $1.7 million. She also noted that cash from operations was positive by $9.5 million year to date, largely due to the Strongbridge upfront payment, and that unrestricted cash stood at $16.8 million.

The main analyst questions focused on the implications of Strongbridge’s sale to Novo Nordisk: royalty timing, whether Aeterna would share in the $145 million upfront, and whether the change would alter commercialization or rights under the license. Management said royalties are due 60 days after quarter-end at 15% of net sales up to $75 million annually and 18% above that, and estimated the first royalty check at about $165,000. Ward said he did not see a specific contractual trigger for Aeterna to receive part of the sale proceeds, but said the transaction could increase the value of Macrilen licensing opportunities globally. Questions also covered EMA timing, and Dr. Ammer clarified the company submitted its day 181 response on October 16 and still expects a European Commission decision in Q1 2019.