¨
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Registration Statement Pursuant to Section 12(b) or 12(g) of The Securities Exchange Act of 1934
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ý
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Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 for the fiscal year ended
December 31, 2017
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¨
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Transition Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
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¨
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Shell Company Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Shares
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NASDAQ Capital Market
Toronto Stock Exchange
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 4A.
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Item 5.
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Item 6.
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Item 7.
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Item 8.
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Item 9.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16A.
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Item 16B.
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Item 16C.
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Item 16D.
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Item 16E.
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Item 16F.
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Item 16G.
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Item 16H.
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Item 17.
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Item 18.
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Item 19.
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Item 1.
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Identity of Directors, Senior Management and Advisers
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A.
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Directors and senior management
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B.
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Advisers
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C.
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Auditors
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Item 2.
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Offer Statistics and Expected Timetable
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A.
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Offer statistics
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B.
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Method and expected timetable
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Item 3.
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Key Information
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A.
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Selected financial data
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December 31,
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|||||||||||||
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2017
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2016
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2015
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2014
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|
2013
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|||||
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$
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|
$
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$
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|
$
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|
$
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|||||
Revenues
|
|
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|
|
|
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|||||
Sales commission and other
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465
|
|
|
414
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|
|
297
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|
|
—
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|
|
96
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|
License fees
|
458
|
|
|
497
|
|
|
248
|
|
|
11
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|
|
6,079
|
|
|
923
|
|
|
911
|
|
|
545
|
|
|
11
|
|
|
6,175
|
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Operating expenses
|
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|
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|||||
Cost of Sales
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—
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|
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—
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|
|
—
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|
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—
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|
|
51
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Research and development costs
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10,704
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|
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16,495
|
|
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17,234
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|
|
23,716
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|
|
21,284
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General and administrative expenses
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8,198
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|
|
7,147
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|
|
11,308
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|
|
9,840
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|
|
11,091
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Selling expenses
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5,095
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|
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6,745
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|
|
6,887
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|
|
3,850
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|
|
1,225
|
|
|
23,997
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30,387
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|
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35,429
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37,406
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|
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33,651
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Loss from operations
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(23,074
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)
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(29,476
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)
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(34,884
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)
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(37,395
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)
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(27,476
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)
|
|
|
|
|
|
|
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|
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|||||
Gain (loss) due to changes in foreign currency exchange rates
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502
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(70
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)
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(1,767
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)
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1,879
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(1,512
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)
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Change in fair value of warrant liability
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2,222
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4,437
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(10,956
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)
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18,272
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|
|
1,563
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Warrant exercise inducement fee
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—
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|
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—
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|
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(2,926
|
)
|
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—
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|
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—
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Other finance income
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75
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|
|
150
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|
|
305
|
|
|
168
|
|
|
185
|
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Net finance income (costs)
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2,799
|
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4,517
|
|
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(15,344
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)
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20,319
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|
|
236
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Loss before income taxes
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(20,275
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)
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(24,959
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)
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(50,228
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)
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(17,076
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)
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(27,240
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)
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Income tax recovery
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3,479
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|
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—
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|
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—
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|
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(111
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)
|
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—
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Net loss from continuing operations
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(16,796
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)
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(24,959
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)
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(50,228
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)
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(17,187
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)
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(27,240
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)
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Net income from discontinued operations
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—
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|
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—
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|
|
85
|
|
|
623
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|
34,055
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Net (loss) income
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(16,796
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)
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(24,959
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)
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(50,143
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)
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(16,564
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)
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6,815
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Other comprehensive (loss) income:
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|||||
Items that may be reclassified subsequently to profit or loss:
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Foreign currency translation adjustments
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(1,430
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)
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569
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1,509
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(1,158
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)
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1,073
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Items that will not be reclassified to profit or loss:
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|||||
Actuarial gain (loss) on defined benefit plans
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694
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(1,479
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)
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844
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(1,833
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)
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2,346
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Comprehensive (loss) income
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(17,532
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)
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(25,869
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)
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(47,790
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)
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(19,555
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)
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10,234
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Net loss per share (basic diluted) from continuing operations
1
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(1.12
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)
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(2.41
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)
|
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(18.17
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)
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(29.12
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)
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(92.41
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)
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Net income per share (basic and diluted) from discontinued operations
1
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—
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|
|
—
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|
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0.03
|
|
|
1.06
|
|
|
115.52
|
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Net (loss) income per share (basic and diluted)
1
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(1.12
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)
|
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(2.41
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)
|
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(18.14
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)
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(28.06
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)
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23.11
|
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Weighted average number of shares outstanding:
1
|
|
|
|
|
|
|
|
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|||||
Basic and diluted
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14,958,704
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|
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10,348,879
|
|
|
2,763,603
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|
|
590,247
|
|
|
294,765
|
|
1
|
Adjusted to reflect the November 17, 2015 100-to-1 Share Consolidation
|
|
|
As at December 31,
|
|||||||||||||
|
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2017
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2016
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|
2015
|
|
2014
|
|
2013
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Cash and cash equivalents
|
|
7,780
|
|
|
21,999
|
|
|
41,450
|
|
|
34,931
|
|
|
43,202
|
|
Restricted cash equivalents
|
|
381
|
|
|
496
|
|
|
255
|
|
|
760
|
|
|
865
|
|
Total assets
|
|
22,195
|
|
|
31,659
|
|
|
51,498
|
|
|
47,435
|
|
|
59,196
|
|
Warrant liability (current and non-current portion)
|
|
3,897
|
|
|
6,854
|
|
|
10,891
|
|
|
8,225
|
|
|
18,010
|
|
Share capital
|
|
222,335
|
|
|
213,980
|
|
|
204,596
|
|
|
150,544
|
|
|
134,101
|
|
Shareholders' (deficiency) equity
|
|
(2,783
|
)
|
|
6,212
|
|
|
21,615
|
|
|
14,484
|
|
|
17,064
|
|
B.
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Capitalization and indebtedness
|
C.
|
Reasons for the offer and use of proceeds
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D.
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Risk factors
|
•
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the inability to complete product development in a timely manner that results in a failure or delay in receiving the required regulatory approvals to commercialize a product;
|
•
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not obtaining necessary regulatory approvals from the U.S. Food and Drug Administration ("FDA"), European Medicines Agency ("EMA") and other agencies that may delay or prevent us from bringing a product to market, which may affect the price of our securities;
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•
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the timing of regulatory submissions and approvals;
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•
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the timing and willingness of any current or future collaborators to invest the resources necessary to commercialize Macrilen™ (macimorelin) or other products;
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•
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the nature and timing of licensing fee revenues;
|
•
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the outcome of litigation, including the securities class action litigation pending against us that is described elsewhere in this Annual Report on Form 20-F;
|
•
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foreign currency fluctuations;
|
•
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the timing of the achievement and the receipt of milestone payments from current or future collaborators; and
|
•
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failure to enter into new or the expiration or termination of current agreements with collaborators.
|
•
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meet the requirements of these authorities from multiple countries and jurisdictions and their related statutes, regulations, and guidances;
|
•
|
meet the requirements for informed consent;
|
•
|
meet the requirements for institutional review boards; and
|
•
|
meet the requirements for good clinical practices
|
•
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receipt of approvals from the EMA, and similar foreign regulatory authorities;
|
•
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successfully contracting with qualified third party manufacturers to manufacture Macrilen™ (macimorelin);
|
•
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developing appropriate distribution and marketing infrastructure and arrangements for our product;
|
•
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launching and growing commercial sales of the product;
|
•
|
out-licensing Macrilen™ (macimorelin) to third parties; and
|
•
|
acceptance of the product in the medical community, among patients and with third party payers.
|
•
|
not all of the third parties are contractually prohibited from developing or commercializing, either alone or with others, products that are similar to or competitive with our product candidates and, with respect to our contracts that do contain such contractual prohibitions or restrictions, prohibitions or restrictions do not always apply to the affiliates of the third parties and they may elect to pursue the development of any additional product candidates and pursue technologies or products either on their own or in collaboration with other parties, including our competitors, whose technologies or products may be competitive with ours; the third parties may under-fund or fail to commit sufficient resources to marketing, distribution or other development of our products;
|
•
|
the third parties may cease to conduct business for financial or other reasons;
|
•
|
we may not be able to renew such agreements;
|
•
|
the third parties may not properly maintain or defend certain intellectual property rights that may be important to the commercialization of our products;
|
•
|
the third parties may encounter conflicts of interest, changes in business strategy or other issues which could adversely affect their willingness or ability to fulfill their obligations to us (for example, pharmaceutical companies historically have re-evaluated their priorities following mergers and consolidations, which have been common in recent years in this industry);
|
•
|
delays in, or failures to achieve, scale-up to commercial quantities, or changes to current raw material suppliers or product manufacturers (whether the change is attributable to us or the supplier or manufacturer) could delay clinical studies, regulatory submissions and commercialization of our products; and
|
•
|
disputes may arise between us and the third parties that could result in the delay or termination of the development, manufacturing or commercialization of our product candidates, resulting in litigation or arbitration that could be time-consuming and expensive, or causing the third parties to act in their own self-interest and not in our interest or those of our shareholders or other stakeholders.
|
•
|
our ability to develop appropriate distribution and marketing infrastructure and arrangements for our product;
|
•
|
the lack of complementary products, which may put us at a competitive disadvantage relative to companies with more extensive product lines;
|
•
|
enforcement action by the FDA, EMA or other regulatory authorities, or lawsuit by a competitor, resulting from the Company or any of its vendors, licenses, agents, or sales representatives marketing a product off-label;
|
•
|
compliance issues with healthcare fraud and abuse laws and regulations from multiple countries and jurisdictions; and
|
•
|
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
|
•
|
the difficulty or inability to secure financing to acquire or in-license products;
|
•
|
the incurrence of substantial debt or dilutive issuances of securities to pay for the acquisition or in-licensing of new products;
|
•
|
the disruption of our business and diversion of our management's time and attention;
|
•
|
higher than expected development, acquisition or in-license and integration costs;
|
•
|
exposure to unknown liabilities; and
|
•
|
the difficulty in locating products that are in our targeted therapeutic areas and that are compatible with other products in our portfolio.
|
•
|
the duration of changes to and results of our clinical trials for any future products going forward;
|
•
|
unexpected delays or developments in seeking regulatory approvals;
|
•
|
the time and cost involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;
|
•
|
unexpected developments encountered in implementing our business development and commercialization strategies;
|
•
|
the potential addition of commercialized products to our portfolio;
|
•
|
the outcome of litigation, including the securities class action litigation pending against us that is described elsewhere in this Annual Report on Form 20-F; and
|
•
|
further arrangements, if any, with collaborators.
|
•
|
demonstration of clinical efficacy and safety;
|
•
|
the prevalence and severity of any adverse side effects;
|
•
|
limitations or warnings contained in the product's approved labeling;
|
•
|
availability of alternative treatments for the indications we target;
|
•
|
the advantages and disadvantages of Macrilen™ (macimorelin) or future products relative to current or alternative treatments;
|
•
|
the availability of acceptable pricing and adequate third-party reimbursement; and
|
•
|
the effectiveness of marketing and distribution methods for the products.
|
•
|
clinical and regulatory developments regarding our product candidates;
|
•
|
delays in our anticipated development or commercialization timelines;
|
•
|
developments regarding current or future third-party collaborators and licensee(s);
|
•
|
announcements by us regarding technological, product development or other matters;
|
•
|
arrivals or departures of key personnel;
|
•
|
governmental or regulatory action affecting our product candidates and our competitors' products in the U.S., Canada and other countries;
|
•
|
developments or disputes concerning patent or proprietary rights;
|
•
|
actual or anticipated fluctuations in our revenues or expenses;
|
•
|
general market conditions and fluctuations for the emerging growth and biopharmaceutical market sectors; and
|
•
|
economic conditions in the U.S., Canada or abroad.
|
16,440,760
|
|
|
Common Shares issued and outstanding
|
—
|
|
|
Preferred Shares issued and outstanding
|
3,417,840
|
|
|
Common Shares issuable upon exercise of outstanding warrants
|
711,252
|
|
|
Stock Options outstanding
|
1,162,995
|
|
|
Additional Common Shares available for future grants under our stock option plan
|
•
|
responding to proxy contests and other actions by activist shareholders may be costly and time‑consuming, and may disrupt our operations and divert the attention of management and our employees;
|
•
|
perceived uncertainties as to the potential outcome of any proxy contest may result in our inability to consummate potential acquisitions, collaborations or in‑licensing opportunities and may make it more difficult to attract and retain qualified personnel and business partners; and
|
•
|
if individuals that have a specific agenda different from that of our management or other members of our Board of Directors are elected to our board as a result of any proxy contest, such an election may adversely affect our ability to effectively and timely implement our strategic plan and to create value for our shareholders.
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Item 4.
|
Information on the Company
|
A.
|
History and development of the Company
|
B.
|
Business overview
|
•
|
$4,000,000 on achieving $25,000,000 annual net sales,
|
•
|
$10,000,000 on achieving $50,000,000 annual net sales,
|
•
|
$20,000,000 on achieving $100,000,000 annual net sales,
|
•
|
$40,000,000 on achieving $200,000,000 annual net sales, and
|
•
|
$100,000,000 on achieving $500,000,000 annual net sales.
|
•
|
Measurement of blood levels of Insulin Growth Factor ("IGF")-1, which is typically used as the first test when GHD is suspected. However, this test is not used to definitively diagnose GHD because many growth hormone deficient patients show normal IGF-1 levels.
|
•
|
The Insulin Tolerance Test ("ITT"), which has historically been considered the gold standard for the evaluation of AGHD because of its high sensitivity and specificity. However, the ITT is inconvenient to both patients and physicians, administered
|
•
|
The Glucagon Stimulation Test ("GST") is considered relatively safe by endocrinologists. The mechanism of action for this test is unclear. Also, this test takes up to three to four hours. It produces side effects in up to one-third of the patients with the most common being nausea during and after the test. This test is administered intramuscularly (IM).
|
•
|
The GHRH + ARG test (growth hormone releasing hormone-arginine stimulation) which is an easier test to perform in an office setting and has a good safety profile but is considered to be costly to administer compared to the ITT and the GST. GHRH + ARG is approved in the EU and has been proposed to be the best alternative to ITT, but GHRH is no longer available in the United States. This test is administered intravenously (IV).
|
•
|
it is safer and more convenient than the ITT because it does not require the patient to become hypoglycemic;
|
•
|
Macrilen™ (macimorelin) is administered orally, while the ITT requires an intravenous injection of insulin;
|
•
|
Macrilen™ (macimorelin) is a more robust test than the ITT leading to evaluable test results;
|
•
|
Macrilen™ (macimorelin) results are highly reproducible;
|
•
|
the evaluation of AGHD using Macrilen™ (macimorelin) is less time-consuming and labor-intensive than the ITT; and
|
•
|
the evaluation can be conducted in the physician's office rather than in a hospital-like setting.
|
•
|
We out-licensed the development compound macimorelin acetate to Ardana Bioscience in 2004. Ardana Bioscience subsequently initiated the clinical development program of macimorelin acetate as an orally active compound intended to be used in the diagnosis of AGHD. Following agreement with the FDA on the study design, Ardana Bioscience initiated a pivotal Phase 3 study in 2007, which tested the compound compared to a test of growth hormone- releasing hormone ("GHRH") + L-Arginine ("ARG"), using a competitor's compound. The study was discontinued in 2008 due to Ardana Bioscience's bankruptcy. We terminated Ardana Bioscience's license to the compound due to its bankruptcy.
|
•
|
On October 19, 2009, we announced that we had initiated activities intended to complete the clinical development of Macrilen™ (macimorelin) for use in evaluating AGHD. We had already assumed the sponsorship of the Investigational New Drug Application ("IND") from Ardana Bioscience and discussed with the FDA the best way to complete the ongoing Phase 3 clinical trial and subsequently to file an NDA for approval of Macrilen™ (macimorelin) for use in evaluating AGHD. The pivotal Phase 3 trial was designed to investigate the safety and efficacy of the oral administration of Macrilen™ (macimorelin) as a growth hormone stimulator for use in evaluating AGHD. It was accepted by the FDA that for the ongoing part of the
|
•
|
On December 20, 2010, we announced we had reached agreement with the FDA on a Special Protocol Assessment ("SPA") for Macrilen™ (macimorelin), enabling us to complete the ongoing registration study required to gain approval for use in evaluating AGHD. The first part of the study, conducted by our former licensee, Ardana, was a two-way cross-over study and included 43 patients with confirmed AGHD or multiple pituitary hormone deficiencies and a low IGF-1. A control group of ten subjects without AGHD was matched to patients for age, gender, body mass index and (for females) estrogen status.
|
•
|
On July 26, 2011, we announced the completion of the Phase 3 study of Macrilen™ (macimorelin) as a first oral product for use in evaluating AGHD and the decision to meet with the FDA for the future filing of an NDA for the registration of Macrilen™ (macimorelin) in the United States.
|
•
|
On June 26, 2012, we announced that the final results from a Phase 3 trial for Macrilen™ (macimorelin) showed that the drug is safe and effective in evaluating AGHD. Jose M. Garcia, MD, PhD, then of the Baylor College of Medicine and the Michael E. DeBakey VA Medical Center, disclosed these data during an oral presentation at the 94th ENDO Annual Meeting and Expo in Houston, Texas. The study had originally been designed as a cross-over trial of Macrilen™ (macimorelin) compared to the GHRH + ARG test in AGHD patients and in controls matched for body mass index ("BMI"), estrogen status, gender and age. After 43 AGHD patients and ten controls had been tested, the GHRH + ARG test became unavailable because the competitor's compound was withdrawn from the market. The study was completed by testing ten more AGHD patients and 38 controls with Macrilen™ (macimorelin) alone. Of the 53 AGHD subjects enrolled, 52 received Macrilen™ (macimorelin), and 50 who had confirmed AGHD prior to study entry were included in this analysis, along with 48 controls. Two AGHD subjects could not be matched due to the combination of young age, high BMI and estrogen use. The objective of this clinical trial was to determine the efficacy and safety of Macrilen™ (macimorelin) in the evaluation of AGHD. Mean peak growth hormone ("GH") levels in AGHD patients and controls following Macrilen™ (macimorelin) administration were 2.36ng/mL (range 0.03-33) and 17.71ng/mL (range 10.5-94), respectively. The ROC plot analysis yielded an optimal GH cut-point of 2.7ng/mL, with 82% sensitivity, 92% specificity and a 13% misclassification rate. Obesity (BMI>30) was present in 58% of cases and controls, and peak GH levels were inversely associated with BMI in controls. Adverse events ("AE") were seen in 37% of AGHD patients and in 21% of controls following Macrilen™ (macimorelin). In contrast, 61% of AGHD subjects and 30% of controls experienced AEs with L ARG+GHRH. The most common AEs after Macrilen™ (macimorelin) were unpleasant taste (19.2%) and diarrhea (3.8%) for the AGHD patients and unpleasant taste (4.2%) and diarrhea (4.2%) for the matched controls. No clinically meaningful changes from baseline in ECG results during the study for AGHD patients were observed; however, one control subject had an ECG change (T wave abnormality and QTc interval prolongation) one hour after treatment with Macrilen™ (macimorelin) that was considered a serious treatment-related adverse event and resolved spontaneously within 24 hours. The subject had been pre-treated with citalopram, a drug that was later reported by the FDA to be associated with QT prolongation, although the patient had stopped this medication seven days prior to dosing. In an expert statement of January 9, 2015, Prof. Dr. W. Haverkamp, Centrum Herz-, Kreislauf- und Gefäßmedizin, Charité, Berlin, considered the observed QT prolongation to be not related to Macrilen™ (macimorelin). Overall, this study demonstrated that Macrilen™ (macimorelin) is safe and effective for use in evaluating AGHD.
|
•
|
In November 2013, we filed an NDA for Macrilen™ (macimorelin) for the evaluation of AGHD by evaluating the pituitary gland secretion of growth hormone in response to an oral dose of the product. The FDA accepted the NDA for substantive review in January 2014. On November 6, 2014, the FDA informed us, by issuing a Complete Response Letter ("CRL"), that it had determined that our NDA could not be approved in its then present form. The CRL stated that the planned analysis of our pivotal trial did not meet its stated primary efficacy objective as agreed to in the SPA. The CRL further mentioned issues related to the lack of complete and verifiable source data for determining whether patients were accurately diagnosed with AGHD. The FDA concluded that, "in light of the failed primary analysis and data deficiencies noted, the clinical trial does not by itself support the indication." To address the deficiencies identified above, the CRL stated that we needed to demonstrate the efficacy of Macrilen™ (macimorelin) as a diagnostic test for GHD in a new, confirmatory clinical study. The CRL also stated that a serious event of electrocardiogram QT interval prolongation occurred for which attribution to drug could not be excluded. Therefore, a dedicated thorough QT study to evaluate the effect of macimorelin on the QT interval would be necessary.
|
•
|
Following receipt of the CRL, we assembled a panel of experts in the field of growth-hormone deficiency, including experts in the field from both the United States and the EU. The panel met on January 8, 2015, during which we discussed our conclusions from the CRL, as well as the potential design of a new pivotal study. The panel advised us to continue to seek approval for Macrilen™ (macimorelin) because of their confidence in its efficacy and because there currently is no FDA-approved diagnostic test for AGHD. In parallel, we collected information on timelines and costs for such a study.
|
•
|
During an end-of-review meeting with the FDA on March 6, 2015, we agreed with the FDA on the general design of the confirmatory Phase 3 study of Macrilen™ (macimorelin) for the evaluation of AGHD, as well as evaluation criteria. We agreed with the FDA that the confirmatory study will be conducted as a two-way crossover with the ITT as the benchmark comparator.
|
•
|
On April 13, 2015, we announced plans to conduct a new, confirmatory Phase 3 clinical study to demonstrate the efficacy of Macrilen™ (macimorelin) for the evaluation of AGHD, as well as a dedicated thorough QT study to evaluate the effect of Macrilen™ (macimorelin) on myocardial repolarization. The confirmatory Phase 3 clinical study of Macrilen™ (macimorelin), entitled "Confirmatory validation of oral macimorelin as a growth hormone (GH) stimulation test (ST) for the diagnosis of AGHD in comparison with the insulin tolerance test (ITT)", was designed as a two-way crossover study with the ITT as the benchmark comparator and involved 31 sites in the United States and Europe. The study population was planned to include at least 110 subjects (at least 55 ITT-positive and 55 ITT-negative) with a medical history documenting risk factors for AGHD, and was planned to include a spectrum of subjects from those with a low risk of having AGHD to those with a high risk of having the condition.
|
•
|
On May 26, 2015, we announced that we had received written scientific advice from the EMA regarding the further development plan, including the study design, for the new confirmatory Phase 3 clinical study of Macrilen™ (macimorelin) for use in evaluating AGHD. As a result of the advice, we believe that the confirmatory Phase 3 study that was agreed with the FDA meets the EMA's study-design expectations as well, allowing for U.S. and European approval, if the study is successful.
|
•
|
On November 19, 2015, we announced the enrollment of the first patient in the confirmatory Phase 3 clinical study of Macrilen™ (macimorelin).
|
•
|
On October 26, 2016, we announced completion of patient recruitment for the confirmatory Phase 3 clinical trial of Macrilen™ (macimorelin) as a growth hormone stimulation test for the evaluation of AGHD.
|
•
|
The dedicated thorough QT study to evaluate the effect of macimorelin on the QT interval, as requested by the FDA in the CRL, was conducted and completed in 2016.
|
•
|
On January 4, 2017, we announced that, based on an analysis of top-line data, the confirmatory Phase 3 clinical trial of Macrilen™ (macimorelin) failed to achieve one of its co-primary endpoints. Under the study protocol, the evaluation of AGHD with Macrilen™ (macimorelin) would be considered successful, if the lower bound of the two-sided 95% confidence interval for the primary efficacy variables was 75% or higher for "percent negative agreement" with the ITT, and 70% or higher for the "percent positive agreement" with the ITT. While the estimated percent negative agreement met the success criteria, the estimated percent positive agreement did not reach the criteria for a successful outcome. Therefore, the results did not meet the pre-defined equivalence criteria which required success for both the percent negative agreement and the percent positive agreement.
|
•
|
On February 13,
2017, we announced that, after reviewing the raw data on which the top-line data were based, we had concluded that Macrilen™ (macimorelin) had demonstrated performance supportive of achieving FDA registration and that we intended to pursue registration. The announcement set forth the facts on which our conclusion was based. The Company met with the FDA at the end of March 2017 to discuss this position.
|
•
|
On March 7, 2017, we announced that the Pediatric Committee ("PDCO") EMA agreed to the Company's Pediatric Investigation Plan ("PIP") for Macrilen™ (macimorelin) and agreed that the Company may defer conducting the PIP until after it files a Marketing Authorization Application ("MAA") seeking marketing authorization for the use of Macrilen™ (macimorelin) for the evaluation of AGHD.
|
•
|
On July 18, 2017, we were provided a PDUFA date of December 30, 2017 by the FDA.
|
•
|
On November 27, 2017, the EMA accepted our MMA submission for Macrilen™ (macimorelin).
|
•
|
On December 20, 2017, the FDA approved the market authorization for Macrilen™ (macimorelin), to be used in the diagnosis of patients with adult growth hormone deficiency (AGHD).
|
•
|
On March 23, 2018, we received from the EMA a Day 120 List of Questions, which was issued in connection with our MMA submission for Macrilen™ (macimorelin). We are in the process of reviewing.
|
•
|
$4,000,000 on achieving $25,000,000 annual net sales
|
•
|
$10,000,000 on achieving $50,000,000 annual net sales
|
•
|
$20,000,000 on achieving $100,000,000 annual net sales
|
•
|
$40,000,000 on achieving $200,000,000 annual net sales
|
•
|
$100,000,000 on achieving $500,000,000 annual net sales
|
•
|
U.S. patent 5,843,903 covers zoptarelin doxorubicin and other related targeted cytotoxic anthracycline analogs, pharmaceutical compositions comprising the compounds as well as their medical use for the treatment of tumors. This patent expired in November 2015.
|
•
|
European patent 0 863 917 B1 covers zoptarelin doxorubicin and other related targeted cytotoxic anthracycline analogs, pharmaceutical compositions comprising the compounds as well as their medical use for the treatment of tumors. This patent expired in November 2016.
|
•
|
Japanese patent 3 987 575 covers zoptarelin doxorubicin and other related targeted cytotoxic anthracycline analogs, pharmaceutical compositions comprising the compounds as well as their medical use for the treatment of tumors. This patent expired in November 2016.
|
•
|
Chinese patent ZL96198605.0 covers zoptarelin doxorubicin and other related targeted cytotoxic anthracycline analogs, pharmaceutical compositions comprising the compounds as well as their medical use for the treatment of tumors. This patent expired in November 2016.
|
•
|
Hong Kong patent 1017363 covers zoptarelin doxorubicin and other related targeted cytotoxic anthracycline analogs, pharmaceutical compositions comprising the compounds as well as their medical use for the treatment of tumors. This patent expired in November 2016.
|
•
|
U.S. patent 6,861,409 covers Macrilen™ (macimorelin) and U.S. patent 7,297,681 covers other related growth hormone secretagogue compounds, each also covering pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. U.S. patent 6,861,409 and U.S. patent 7,297,681 both expire in August 2022.
|
•
|
European patent 1 289 951 covers Macrilen™ (macimorelin) and European patent 1 344 773 covers other related growth hormone secretagogue compounds, pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. EP patent 1 289 951 and EP patent 1 344 773 both expire in June 2021.
|
•
|
Japanese patent 3 522 265 covers Macrilen™ (macimorelin) and pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. This patent expires in June 2021.
|
•
|
Canadian patent 2,407,659 covers Macrilen™ (macimorelin) and pharmaceutical compositions comprising the compounds as well as their medical use for elevating the plasma level of growth hormone. This patent expires in June 2021.
|
•
|
U.S. patent 8,192,719 covers a method of assessing pituitary-related growth hormone deficiency in a human or animal subject
|
•
|
European patent 1 984 744 covers a method of assessing pituitary-related growth hormone deficiency by oral administration of Macrilen™ (macimorelin). This patent expires in February 2027.
|
•
|
Japanese patent 4 852 728 covers a method of assessing pituitary-related growth hormone deficiency by oral administration of Macrilen™ (macimorelin). This patent expires in February 2027.
|
•
|
U.S. patent 7,741,277 covers AEZS-138 (disorazol Z - LHRH conjugate). This patent expires in January 2028 (including PTA).
|
•
|
U.S. patent 8,470,776 covers methods of treatment for compound AEZS-138 (disorazol Z - LHRH conjugate). This patent expires in February 2029 (including PTA).
|
•
|
European patent application 2,066,679 covers AEZS-138 (disorazol Z - LHRH conjugate) as well as methods of treatment for this compound. If granted, this patent will expire in September 2027.
|
•
|
Japanese patent 5,340,155 covers AEZS-138 (disorazol Z - LHRH conjugate) as well as methods of treatment for this compound. This patent expires in September 2027.
|
C.
|
Organizational structure
|
D.
|
Property, plants and equipment
|
Location
|
|
Use of space
|
|
Square Footage
|
|
Type of interest
|
|
315 Sigma Drive, Summerville SC 29486
|
|
Partially occupied for management, administration, commercial operations and business development
|
|
300
|
|
|
Leasehold
|
Weismüllerstr. 50
D-60314
Frankfurt-am-Main, Germany
|
|
Occupied for management, R&D, business development and administration
|
|
36,168
|
|
|
Leasehold
|
Item 4A
|
Unresolved Staff Comments
|
Item 5.
|
Operating and Financial Review and Prospects
|
A.
|
Operating Results
|
|
|
Three months ended December 31,
|
|
Years ended December 31,
|
|||||||||||
(in thousands, except share and per share data)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||
Sales commission and other
|
|
59
|
|
|
94
|
|
|
465
|
|
|
414
|
|
|
297
|
|
License fees
|
|
119
|
|
|
210
|
|
|
458
|
|
|
497
|
|
|
248
|
|
|
|
178
|
|
|
304
|
|
|
923
|
|
|
911
|
|
|
545
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and development costs
|
|
526
|
|
|
4,619
|
|
|
10,704
|
|
|
16,495
|
|
|
17,234
|
|
General and administrative expenses
|
|
2,778
|
|
|
1,757
|
|
|
8,198
|
|
|
7,147
|
|
|
11,308
|
|
Selling expenses
|
|
452
|
|
|
1,526
|
|
|
5,095
|
|
|
6,745
|
|
|
6,887
|
|
|
|
3,756
|
|
|
7,902
|
|
|
23,997
|
|
|
30,387
|
|
|
35,429
|
|
Loss from operations
|
|
(3,578
|
)
|
|
(7,598
|
)
|
|
(23,074
|
)
|
|
(29,476
|
)
|
|
(34,884
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Gain (loss) due to changes in foreign currency exchange rates
|
|
72
|
|
|
(396
|
)
|
|
502
|
|
|
(70
|
)
|
|
(1,767
|
)
|
Change in fair value of warrant liability
|
|
(478
|
)
|
|
(245
|
)
|
|
2,222
|
|
|
4,437
|
|
|
(10,956
|
)
|
Warrant exercise inducement fee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,926
|
)
|
Other finance income
|
|
21
|
|
|
19
|
|
|
75
|
|
|
150
|
|
|
305
|
|
Net finance income (costs)
|
|
(385
|
)
|
|
(622
|
)
|
|
2,799
|
|
|
4,517
|
|
|
(15,344
|
)
|
Loss before income taxes
|
|
(3,963
|
)
|
|
(8,220
|
)
|
|
(20,275
|
)
|
|
(24,959
|
)
|
|
(50,228
|
)
|
Income tax recovery
|
|
3,479
|
|
|
—
|
|
|
3,479
|
|
|
—
|
|
|
—
|
|
Net loss from continuing operations
|
|
(484
|
)
|
|
(8,220
|
)
|
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,228
|
)
|
Net income from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
Net loss
|
|
(484
|
)
|
|
(8,220
|
)
|
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,143
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|||||
Items that may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency translation adjustments
|
|
(238
|
)
|
|
870
|
|
|
(1,430
|
)
|
|
569
|
|
|
1,509
|
|
Items that will not be reclassified to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|||||
Actuarial gain (loss) on defined benefit plans
|
|
59
|
|
|
1,143
|
|
|
694
|
|
|
(1,479
|
)
|
|
844
|
|
Comprehensive loss
|
|
(663
|
)
|
|
(6,207
|
)
|
|
(17,532
|
)
|
|
(25,869
|
)
|
|
(47,790
|
)
|
Net loss per share (basic and diluted) from continuing operations
1
|
|
(0.03
|
)
|
|
(0.71
|
)
|
|
(1.12
|
)
|
|
(2.41
|
)
|
|
(18.17
|
)
|
Net income per share (basic and diluted) from discontinued operations
1
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
Net loss per share (basic and diluted)
1
|
|
(0.03
|
)
|
|
(0.71
|
)
|
|
(1.12
|
)
|
|
(2.41
|
)
|
|
(18.14
|
)
|
Weighted average number of shares outstanding:
1
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic and Diluted
|
|
16,440,760
|
|
|
11,565,210
|
|
|
14,958,704
|
|
|
10,348,879
|
|
|
2,763,603
|
|
1
|
Adjusted to reflect the November 17, 2015 100-to-1 Share Consolidation
|
|
|
Three months ended December 31,
|
|
Years ended December 31,
|
|
|||||||||||
(in thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||
Third-party costs
|
|
(539
|
)
|
|
3,233
|
|
|
3,936
|
|
|
11,829
|
|
|
11,891
|
|
|
Employee compensation and benefits
|
|
822
|
|
|
845
|
|
|
4,868
|
|
*
|
3,216
|
|
|
3,699
|
|
|
Facilities rent and maintenance
|
|
273
|
|
|
232
|
|
|
1,898
|
|
**
|
873
|
|
|
940
|
|
|
Other costs
***
|
|
86
|
|
|
309
|
|
|
138
|
|
|
579
|
|
|
727
|
|
|
Gain on disposal of equipment
|
|
(116
|
)
|
|
—
|
|
|
(136
|
)
|
|
(2
|
)
|
|
(23
|
)
|
|
|
|
526
|
|
|
4,619
|
|
|
10,704
|
|
|
16,495
|
|
|
17,234
|
|
|
(in thousands, except percentages)
|
|
Three months ended December 31,
|
||||||||||
Product Candidate
|
|
2017
|
|
2016
|
||||||||
|
|
$
|
|
%
|
|
$
|
|
%
|
||||
Zoptrex™
|
|
(89
|
)
|
|
16.5
|
|
|
1,453
|
|
|
44.9
|
|
Macrilen™
|
|
(471
|
)
|
|
87.4
|
|
|
1,568
|
|
|
48.5
|
|
LHRH - Disorazol Z
|
|
—
|
|
|
(0.2
|
)
|
|
16
|
|
|
0.5
|
|
Erk inhibitors
|
|
1
|
|
|
—
|
|
|
86
|
|
|
2.7
|
|
Other
|
|
20
|
|
|
(3.7
|
)
|
|
110
|
|
|
3.4
|
|
|
|
(539
|
)
|
|
100.0
|
|
|
3,233
|
|
|
100.0
|
|
(in thousands, except percentages)
|
|
Years ended December 31,
|
||||||||||||||||
Product Candidate
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||
Zoptrex™
|
|
2,495
|
|
|
63.4
|
|
|
6,742
|
|
|
57.0
|
|
|
8,635
|
|
|
72.6
|
|
Macrilen™
|
|
1,237
|
|
|
31.4
|
|
|
4,326
|
|
|
36.6
|
|
|
1,555
|
|
|
13.1
|
|
LHRH - Disorazol Z
|
|
44
|
|
|
1.1
|
|
|
294
|
|
|
2.5
|
|
|
212
|
|
|
1.8
|
|
Erk Inhibitors
|
|
18
|
|
|
0.5
|
|
|
130
|
|
|
1.1
|
|
|
1,081
|
|
|
9.1
|
|
Other
|
|
142
|
|
|
3.6
|
|
|
337
|
|
|
2.8
|
|
|
408
|
|
|
3.4
|
|
|
|
3,936
|
|
|
100.0
|
|
|
11,829
|
|
|
100.0
|
|
|
11,891
|
|
|
100.0
|
|
(in thousands, except for per share data)
|
|
Three months ended
|
||||||||||
|
|
December 31, 2017
|
|
September 30, 2017
|
|
June 30, 2017
|
|
March 31, 2017
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Revenues
|
|
178
|
|
|
241
|
|
|
243
|
|
|
261
|
|
Loss from operations
|
|
(3,578
|
)
|
|
(7,200
|
)
|
|
(6,679
|
)
|
|
(5,617
|
)
|
Net loss
|
|
(484
|
)
|
|
(9,631
|
)
|
|
(2,550
|
)
|
|
(4,131
|
)
|
Net loss per share (basic and diluted)*
|
|
(0.03
|
)
|
|
(0.61
|
)
|
|
(0.18
|
)
|
|
(0.31
|
)
|
(in thousands, except for per share data)
|
|
Three months ended
|
||||||||||
|
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Revenues
|
|
304
|
|
|
269
|
|
|
96
|
|
|
242
|
|
Loss from operations
|
|
(7,598
|
)
|
|
(7,703
|
)
|
|
(7,184
|
)
|
|
(6,991
|
)
|
Net loss
|
|
(8,220
|
)
|
|
(6,055
|
)
|
|
(7,008
|
)
|
|
(3,676
|
)
|
Net loss per share (basic and diluted)*
|
|
(0.71
|
)
|
|
(0.61
|
)
|
|
(0.71
|
)
|
|
(0.37
|
)
|
|
|
December 31,
|
||||
(in thousands)
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Cash and cash equivalents
1
|
|
7,780
|
|
|
21,999
|
|
Trade and other receivables and other current assets
|
|
958
|
|
|
744
|
|
Restricted cash equivalents
|
|
381
|
|
|
496
|
|
Inventory
|
|
643
|
|
|
—
|
|
Property, plant and equipment
|
|
101
|
|
|
204
|
|
Deferred tax assets
|
|
3,479
|
|
|
—
|
|
Other non-current assets
|
|
8,853
|
|
|
8,216
|
|
Total assets
|
|
22,195
|
|
|
31,659
|
|
Payables and other current liabilities
|
|
2,987
|
|
|
3,745
|
|
Provision for restructuring costs
|
|
2,296
|
|
|
33
|
|
Current portion of deferred revenues
|
|
486
|
|
|
426
|
|
Warrant liability
|
|
3,897
|
|
|
6,854
|
|
Non-financial non-current liabilities
2
|
|
15,312
|
|
|
14,389
|
|
Total liabilities
|
|
24,978
|
|
|
25,447
|
|
Shareholders' (deficiency) equity
|
|
(2,783
|
)
|
|
6,212
|
|
Total liabilities and shareholders' (deficiency) equity
|
|
22,195
|
|
|
31,659
|
|
1.
|
Approximately $0.6 million and $1.5 million were denominated in EUR as at
December 31, 2017
and
December 31, 2016
, respectively, and approximately $1.0 million and $3.7 million were denominated in Canadian dollars as at
December 31, 2017
and
December 31, 2016
, respectively.
|
2.
|
Comprised mainly of employee future benefits, provisions for onerous contracts and non-current portion of deferred revenues.
|
B.
|
Liquidity, Cash Flows and Capital Resources
|
•
|
$4,000,000 on achieving $25,000,000 annual net sales,
|
•
|
$10,000,000 on achieving $50,000,000 annual net sales,
|
•
|
$20,000,000 on achieving $100,000,000 annual net sales,
|
•
|
$40,000,000 on achieving $200,000,000 annual net sales, and
|
•
|
$100,000,000 on achieving $500,000,000 annual net sales.
|
(in thousands)
|
|
Three months ended December 31,
|
|
Years ended December 31,
|
|||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2015
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
Cash and cash equivalents - Beginning of period
|
|
12,173
|
|
|
21,052
|
|
|
21,999
|
|
|
41,450
|
|
|
34,931
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash used in operating activities
|
|
(4,527
|
)
|
|
(8,131
|
)
|
|
(22,913
|
)
|
|
(29,010
|
)
|
|
(33,929
|
)
|
Cash provided by operating activities from discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
|
(4,527
|
)
|
|
(8,131
|
)
|
|
(22,913
|
)
|
|
(29,010
|
)
|
|
(33,844
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net proceeds from issuance of common shares
|
|
—
|
|
|
9,361
|
|
|
8,030
|
|
|
9,924
|
|
|
49,427
|
|
Payment pursuant to warrant amendment agreements and Series B Warrants exercise inducement fee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,629
|
)
|
|
|
—
|
|
|
9,361
|
|
|
8,030
|
|
|
9,924
|
|
|
40,798
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash provided by (used in) investing activities
|
|
140
|
|
|
(9
|
)
|
|
307
|
|
|
(314
|
)
|
|
913
|
|
|
|
140
|
|
|
(9
|
)
|
|
307
|
|
|
(314
|
)
|
|
913
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
|
(6
|
)
|
|
(274
|
)
|
|
357
|
|
|
(51
|
)
|
|
(1,348
|
)
|
Cash and cash equivalents - End of period
|
|
7,780
|
|
|
21,999
|
|
|
7,780
|
|
|
21,999
|
|
|
41,450
|
|
C.
|
Research and development, patents and licenses, etc.
|
D.
|
Trend Information
|
•
|
$4,000,000 on achieving $25,000,000 annual net sales,
|
•
|
$10,000,000 on achieving $50,000,000 annual net sales,
|
•
|
$20,000,000 on achieving $100,000,000 annual net sales,
|
•
|
$40,000,000 on achieving $200,000,000 annual net sales, and
|
•
|
$100,000,000 on achieving $500,000,000 annual net sales.
|
E.
|
Off-Balance Sheet Arrangements
|
F.
|
Tabular disclosure of contractual obligations
|
(in thousands)
|
|
Minimum lease payments
|
|
Minimum sublease receipts
|
|
Service and manufacturing
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Less than 1 year
|
|
448
|
|
|
(143
|
)
|
|
403
|
|
1 - 3 years
|
|
633
|
|
|
(26
|
)
|
|
283
|
|
4 - 5 years
|
|
105
|
|
|
—
|
|
|
259
|
|
More than 5 years
|
|
100
|
|
|
—
|
|
|
250
|
|
Total
|
|
1,286
|
|
|
(169
|
)
|
|
1,195
|
|
(in thousands)
|
|
$
|
|
Less than 1 year
|
|
522
|
|
1 – 3 years
|
|
1,094
|
|
4 – 5 years
|
|
1,122
|
|
More than 5 years
|
|
16,589
|
|
Total
|
|
19,327
|
|
Item 6.
|
Directors, Senior Management and Employees
|
A.
|
Directors and senior management
|
Name and Place of Residence
|
|
Position with Aeterna Zentaris
|
|
|
|
Ammer, Nicola
|
|
Chief Medical Officer, Vice President Clinical Development
|
Frankfurt, Germany
|
|
|
|
|
|
Cardiff, Michael
|
|
Director
|
Ontario, Canada
|
|
|
|
|
|
Clavijo, James
|
|
Chief Financial Officer
|
Florida, United States
|
|
|
|
|
|
Dodd, David
|
|
Director
|
South Carolina, United States
|
|
|
|
|
|
Egbert, Carolyn
|
|
Chair of the Board of Directors
|
Texas, United States
|
|
|
|
|
|
Ernst, Juergen
|
|
Director
|
North Rhine-Westphalia, Germany
|
|
|
|
|
|
Garrison, Brian
|
|
Sr Vice President, Global Commercial Operations
|
Pennsylvania, United States
|
|
|
|
|
|
Grau, Günther
|
|
Vice President, Finance
|
Frankfurt, Germany
|
|
|
|
|
|
Guenther, Eckhard
|
|
Vice President, Alliance Management
|
Hessen, Germany
|
|
|
|
|
|
Limoges, Gérard
|
|
Director
|
Quebec, Canada
|
|
|
|
|
|
Teifel, Michael
|
|
Vice President, Non-Clinical Sciences
|
Hessen, Germany
|
|
|
|
|
|
Ward, Michael
|
|
President and Chief Executive Officer
|
Illinois, United States
|
|
|
|
|
|
B.
|
Compensation
|
Type of Compensation
|
|
Annual Retainer for the year 2017
(in US$) |
Monthly Retainer for the year 2017
|
Chair of the Board Retainer
|
|
80,000
|
-
|
Board Member Retainer
|
|
40,000
|
-
|
Audit Committee Chair Retainer
|
|
20,000
|
-
|
Audit Committee Member Retainer
|
|
5,000
|
-
|
NGCC Chair Retainer
|
|
15,000
|
-
|
NGCC Member Retainer
|
|
3,000
|
-
|
SRC Chair Retainer
|
|
-
|
7,500
|
SRC Member Retainer
|
|
-
|
7,500
|
|
|
Option-based Awards
|
|
Share-based Awards
|
||||||||||||||||
Name
|
|
Issuance Date
|
|
Number of
Securities
Underlying
Unexercised
Options
(1)
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
Value of
Unexercised In-the-money
Options
(2)
|
|
Issuance Date
|
|
Number of
Shares or
Units of Shares
that have Not
Vested
|
|
Market or Payout
Value of Share-based
Awards that have Not Vested
|
||||
|
|
(mm-dd-yyyy)
|
|
(#)
|
|
($)
|
|
(mm-dd-yyyy)
|
|
($)
|
|
(mm-dd-yyyy)
|
|
(#)
|
|
($)
|
||||
Cardiff, Michael
|
|
05-10-2016
|
|
20,000
|
|
3.48
|
|
05-09-2023
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
12-06-2016
|
|
7,850
|
|
3.45
|
|
12-06-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
60,000
|
|
2.05
|
|
08-15-2024
|
|
18,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Egbert, Carolyn
|
|
05-10-2016
|
|
10,000
|
|
3.48
|
|
05-09-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
7,850
|
|
3.45
|
|
12-06-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
60,000
|
|
2.05
|
|
08-15-2024
|
|
18,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Ernst, Juergen
|
|
05-10-2016
|
|
10,000
|
|
3.48
|
|
05-09-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
7,850
|
|
3.45
|
|
12-06-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
60,000
|
|
2.05
|
|
08-15-2024
|
|
18,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Limoges, Gérard
|
|
05-10-2016
|
|
10,000
|
|
3.48
|
|
05-09-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12-06-2016
|
|
7,850
|
|
3.45
|
|
12-06-2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
08-15-2017
|
|
60,000
|
|
2.05
|
|
08-15-2024
|
|
18,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
The number of securities underlying unexercised options represents all awards outstanding as at December 31, 2017.
|
(2)
|
"Value of unexercised in-the-money options" at financial year-end is calculated based on the difference between the closing prices of the Common Shares on the NASDAQ on the last trading day of the fiscal year (December 29, 2017) of $2.36 and the exercise price of the options, multiplied by the number of unexercised options.
|
Name
|
|
Fees earned
|
|
Share-based
Awards |
|
Option-based
Awards (1) |
|
Non-Equity
Incentive Plan Compensation |
|
Pension
Value |
|
All Other
Compensation |
|
Total
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Cardiff, Michael
|
|
92,022
|
|
—
|
|
78,000
|
|
—
|
|
—
|
|
—
|
|
170,022
|
Egbert, Carolyn
|
|
139,022
|
|
—
|
|
50,000
|
|
—
|
|
—
|
|
—
|
|
189,022
|
Ernst, Juergen
|
|
77,524
|
|
—
|
|
50,000
|
|
—
|
|
—
|
|
—
|
|
127,524
|
Limoges, Gérard
|
|
73,207
|
|
—
|
|
50,000
|
|
—
|
|
—
|
|
—
|
|
123,207
|
Dodd, David A.
|
|
17,826
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17,826
|
Newport, Kenneth
(2)
|
|
25,565
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
25,565
|
•
|
Mr. David A. Dodd, who served as our President and Chief Executive Officer up to and including July 20, 2017;
|
•
|
Mr. Michael V. Ward, who served as our Interim President and Chief Executive Officer pursuant to a services contract and not as our employee, from July 20, 2017 up to and including October 1, 2017; and currently serves as President and Chief Executive Officer as an employee from October 1, 2017;
|
•
|
Mr. Jeffrey Whitnell, who served as our Interim Chief Financial Officer from September 25, 2017 up to December 7, 2017;
|
•
|
Ms. Genevieve Lemaire, who served as our Vice President, Finance and Chief Accounting Officer and as our interim principal financial officer pursuant to a services contract and not as our employee, up to and including September 30, 2017; and
|
•
|
Mr. Philip A. Theodore, Senior Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary up to and including July 28, 2017; and Jude Dinges, our Senior Vice President and Chief Commercial Officer up to and including November 3, 2017; and Dr. Richard Sachse, our Senior Vice President and Chief Scientific and Chief Medical Officer, who were our three most highly compensated executive officers (other than our Chief Executive Officer, our current and former Chief Accounting Officer and interim principal financial officer) during 2017.
|
•
|
providing the opportunity for an executive to earn compensation that is competitive with the compensation received by executives serving in the same or measurably similar positions within comparable companies;
|
•
|
providing the opportunity for executives to participate in equity-based incentive compensation plans;
|
•
|
aligning executive compensation with our corporate objectives; and
|
•
|
attracting and retaining highly qualified individuals in key positions.
|
Goal
|
|
Result
|
Strengthen Financial Leadership
|
Hire new CFO (contingent on positive results for Macrilen™ and/or Zoptrex™)
|
On September 25, 2017, the Company announced the appointment of Jeffrey Whitnell to the position of Interim CFO. Mr. Whitnell resigned as CFO effective December 7, 2017. On March 5, 2018, the Company appointed James Clavijo as CFO, effective that date.
|
Financing
|
Secure minimum of $15 Million (contingent on positive results for Macrilen™ and/or Zoptrex™), within parameters to be determined by the Board at the time of the financing
|
Not completed. The Company worked on securing the Strongbridge License Agreement
|
Investment Banking Relationships
|
Identify 2-3 new improved-tier
investment-banking relationships for presentation to and evaluation by the Board
|
Not completed. The Company continues to work to establish improved investment banking relationships
|
Zoptrex™
|
Report top-line results
|
Results were unsuccessful.
|
If trial successful, submit regulatory dossier
|
In light of the results of Zoptrex
TM
study, the Company shifted its focus to the commercialization of Macrilen
TM
(macimorlein)
|
|
Macrilen™
|
Report top-line results
|
Results were released. FDA approval issued on December 20, 2017.
|
If confirmatory trial successful, complete submission dossier
|
||
Commercial Operations
|
Launch Macrilen™ field selling
|
Not completed. The Company worked on securing the Strongbridge License Agreement
|
Achieve total revenues of $2.34 Million:
Macrilen™: $1.0 M
|
The Company achieved revenues of $0.9 million in 2017. Revenues of Macrilen
TM
(macimorlein) reported in 2018
|
|
Apifiny®: $700,000
Saizen®: $343,000
|
The Company achieved sales of $0.5 million in 2017
|
|
Business Development
|
Out-license Zoptrex™ for Europe and other non-US territories
|
Not completed. Results were unsuccessful
|
Out-license Macrilen™ for Europe and other non-US territories
|
Not completed. The Company continues to explore out-licensing opportunities
|
|
Present proposal for in-license of Lutrate Depot to Board
|
Not completed
|
•
|
any amendment to Section 3.2 of the Stock Option Plan (which sets forth the limit on the number of options that may be granted to insiders) that would have the effect of permitting, without having to obtain shareholder approval on a "disinterested vote" at a duly convened shareholders' meeting, the grant of any option(s) under the Stock Option Plan otherwise prohibited by Section 3.2;
|
•
|
any amendment to the number of securities issuable under the Stock Option Plan (except for certain permitted adjustments, such as in the case of stock splits, consolidations or reclassifications);
|
•
|
any amendment that would permit any option granted under the Stock Option Plan to be transferable or assignable other than by will or in accordance with the applicable laws of estates and succession;
|
•
|
the addition of a cashless exercise feature, payable in cash or securities, which does not provide for a full deduction of the number of underlying securities from the Stock Option Plan reserve;
|
•
|
the addition of a deferred or restricted share unit component or any other provision that results in employees receiving securities while no cash consideration is received by us;
|
•
|
with respect to any Participant, whether or not such Participant is an "insider" and except in respect of certain permitted adjustments, such as in the case of stock splits, consolidations or reclassifications:
|
•
|
any reduction in the exercise price of any option after the option has been granted, or
|
•
|
any cancellation of an option and the re-grant of that option under different terms, or
|
•
|
any extension to the term of an option beyond its Outside Expiry Date to a Participant who is an "insider" (except for extensions made in the context of a "blackout period");
|
•
|
any amendment to the method of determining the exercise price of an option granted pursuant to the Stock Option Plan;
|
•
|
the addition of any form of financial assistance or any amendment to a financial assistance provision which is more favorable to employees; and
|
•
|
any amendment to the foregoing amending provisions requiring Board, shareholder and regulatory approvals.
|
•
|
amendments of a "housekeeping" or clerical nature or to clarify the provisions of the Stock Option Plan;
|
•
|
amendments regarding any vesting period of an option;
|
•
|
amendments regarding the extension of an option beyond an Early Expiry Date in respect of any Participant, or the extension of an option beyond the Outside Expiry Date in respect of any Participant who is a "non-insider";
|
•
|
adjustments to the number of issuable Common Shares underlying, or the exercise price of, outstanding options resulting from a split or a consolidation of the Common Shares, a reclassification, the payment of a stock dividend, the payment of a special cash or non-cash distribution to our shareholders on a
pro rata
basis provided such distribution is approved by our shareholders in accordance with applicable law, a recapitalization, a reorganization or any other event which necessitates an equitable adjustment to the outstanding options in proportion with corresponding adjustments made to all outstanding Common Shares;
|
•
|
discontinuing or terminating the Stock Option Plan; and
|
•
|
any other amendment which does not require shareholder approval under the terms of the Stock Option Plan.
|
|
|
Option-based Awards
|
|
Share-based Awards
|
|||||||||||||
Name
|
|
Issuance Date
|
|
Number of
Securities Underlying Unexercised Options (1) |
|
Option
Exercise Price |
|
Option
Expiration Date |
|
Value of
Unexercised In-the-money Options (2) |
|
Issuance Date
|
|
Number of
Shares or Units of shares that have Not Vested |
|
Market or Payout
Value of Share-based Awards that have Not Vested |
|
|
|
(mm-dd-yyyy)
|
|
(#)
|
|
($)
|
|
(mm-dd-yyyy)
|
|
($)
|
|
|
|
(#)
|
|
($)
|
|
Dodd, David A.
(3)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Theodore, Philip
(4)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Dinges, Jude
(5)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Sachse, Richard
|
|
12/21/2015
|
|
40,000
|
|
|
4.58
|
|
12/20/2022
|
|
—
|
|
—
|
|
—
|
|
—
|
|
11/08/2016
|
|
2,800
|
|
|
3.50
|
|
11/08/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
12/06/2016
|
|
57,360
|
|
|
3.45
|
|
12/06/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
12/16/2016
|
|
28,950
|
|
|
3.80
|
|
12/16/2023
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Ward, Michael V.
(6)
|
|
08/15/2017
|
|
150,000
|
(3)
|
|
2.05
|
|
08/15/2024
|
|
46,500
|
|
—
|
|
—
|
|
—
|
Lemaire, Genevieve
(7)
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Whitnell, Jeffrey
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
(1)
|
The number of securities underlying unexercised options represents all awards outstanding at December 31, 2017.
|
(2)
|
"Value of unexercised in-the-money options" at financial year-end is calculated based on the difference between the closing price of the Common Shares on the NASDAQ on the last trading day of the fiscal year (December 29, 2017) of $2.36 and the exercise price of the options, multiplied by the number of unexercised options.
|
(3)
|
Mr. Dodd ceased to be the Company's President and Chief Executive Officer on July 20, 2017. All outstanding stock options held by Mr. Dodd were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
(4)
|
Mr. Theodore ceased to be the Company's Senior Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary on July 28, 2017. All outstanding stock options held by Mr. Theodore were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
(5)
|
Mr. Dinges' employment was terminated on November 3, 2017. All outstanding stock options held by Mr. Dinges were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
(6)
|
Michael V. Ward was appointed President and Chief Executive Officer effective October 1, 2017 and was granted 150,000 stock options in connection with his appointment as Interim President and Chief Executive Officer.
|
Name
|
|
Option-based awards — Value
vested during the year (1) |
|
Share-based awards —
Value vested during the year |
|
Non-equity incentive plan compensation — Value earned during the year
|
|
|
($)
|
|
($)
|
|
($)
|
Dodd, David A.
|
|
—
|
|
—
|
|
—
|
Theodore, Philip A.
|
|
—
|
|
—
|
|
—
|
Dinges, Jude
|
|
—
|
|
—
|
|
—
|
Sachse, Richard
|
|
—
|
|
—
|
|
120,000
|
Ward, Michael V.
|
|
—
|
|
—
|
|
—
|
Lemaire, Genevieve
(2)
|
|
—
|
|
—
|
|
—
|
Whitnell, Jeffrey
|
|
—
|
|
—
|
|
—
|
(1)
|
Represents the aggregate dollar value that would have been realized if the options had been exercised on the vesting date, based on the difference between the closing price of the Common Shares on the NASDAQ and the exercise price on such vesting date.
|
|
Non-equity incentive plan compensation
|
|
||||||||||||||||||||||
Name and principal position
|
Years
|
|
Salary
|
|
Share
based awards |
|
Option based awards (1)
|
|
Annual
incentive plan |
|
Long-term
incentive plans |
Pension
Value |
|
All other compensation (2)
|
|
Total
compensation |
||||||||
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
($)
|
|
($)
|
|
($)
|
||||||||
Ward, Michael V.
(3)
President and Chief Executive Officer
|
2017
|
|
121,461
|
|
—
|
|
|
248,091
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
369,552
|
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Whitnell, Jeffrey
(4)
Former Interim Chief Financial Officer
|
2017
|
|
76,920
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
76,920
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Dodd, David A.
(5)
Former President and Chief Executive Officer |
2017
|
|
273,770
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
273,770
|
|
|
2016
|
|
475,000
|
|
—
|
|
|
712,500
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
1,187,500
|
|
||
2015
|
|
475,000
|
|
—
|
|
|
358,690
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
833,690
|
|
||
Lemaire, Genevieve
(6)
Former Vice President, Finance and Chief Accounting Officer |
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
237,552
|
|
(7)
|
237,552
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
210,156
|
|
|
210,156
|
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Sachse, Richard
(7)
Former Senior Vice President, Chief Scientific Officer and Chief Medical Officer |
2017
|
|
222,000
|
|
—
|
|
|
257,000
|
|
|
100,000
|
|
|
—
|
|
37,067
|
|
(8)
|
—
|
|
|
616,067
|
|
|
2016
|
|
222,000
|
|
—
|
|
|
257,000
|
|
|
55,500
|
|
|
—
|
|
37,067
|
|
(8)
|
—
|
|
|
571,567
|
|
||
2015
|
|
221,900
|
|
—
|
|
|
168,795
|
|
|
111,000
|
|
|
—
|
|
47,349
|
|
(8)
|
—
|
|
|
549,044
|
|
||
Dinges, Jude
(8)
Former Senior Vice President and Chief Commercial Officer |
2017
|
|
277,596
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
277,596
|
|
|
2016
|
|
320,000
|
|
—
|
|
|
240,000
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
560,000
|
|
||
2015
|
|
320,000
|
|
—
|
|
|
168,795
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
488,795
|
|
||
Theodore, Philip A.
(9)
Former Senior Vice President, Chief Administrative Officer and General Counsel |
2017
|
|
196,154
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
196,154
|
|
|
2016
|
|
320,000
|
|
—
|
|
|
240,000
|
|
|
64,000
|
|
|
—
|
|
—
|
|
|
—
|
|
|
624,000
|
|
||
2015
|
|
320,000
|
|
—
|
|
|
168,795
|
|
|
35,000
|
|
|
—
|
|
—
|
|
|
—
|
|
|
523,795
|
|
(1)
|
The value of option-based awards represents the closing price of the Common Shares on the NASDAQ on the last trading day preceding the date of grant multiplied by the Black-Scholes factor as at such date and the number of stock options granted on such date. The following table sets forth the value of the option-based awards and the corresponding Black-Scholes factor:
|
(2)
|
“All Other Compensation” represents perquisites and other personal benefits which, in the aggregate, amount to $50,000 or more, or are equivalent to 10% or more of a Named Executive Officer's total salary for the financial year ended December 31, 2017. The type and amount of each perquisite, the value of which exceeds 25% of the total value of perquisites, is separately disclosed for each Named Executive Officer, if applicable.
|
(3)
|
Mr. Ward became our Interim Presdient and Chief Executive Officer on July 20, 2017. All values reflective are for partial year considerations. Effective December 11, 2017, Mr. Ward's base salary increased to $325,000 upon approval of Macrilen
TM
(macrilomen) by the FDA.
|
(4)
|
Mr. Whitnell resigned effective December 7, 2017.
|
(5)
|
Mr. Dodd ceased to be the Company's President and Chief Executive Officer on July 20, 2017. All outstanding stock options held by Mr. Dodd were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
(6)
|
Ms. Lemaire provides services to us as a contractor and not as an employee. She is compensated for her services at the rate of CAN$170 per hour. She is not entitled to participate in or to receive benefits pursuant to any of our programs customarily made available to our employees. The amount shown represents all payments to her pursuant to her agreement with us.
|
(7)
|
We maintain a reinsured benevolent fund (
Rückgedeckte Unterstützungskasse
), which is a type of private defined contribution pension plan, for Dr. Sachse. We contribute to a private pension provider an amount equal to 2.4% of Dr. Sachse’s salary, up to a monthly salary limit of €6,050, plus an additional contribution of 18% of the amount of Dr. Sachse’s salary that exceeds the monthly limit. Dr. Sachse also contributes a percentage of his salary to the plan. We are liable to Dr. Sachse for the pension benefits that have been promised, if the private pension provider does not, or cannot, pay the promised pension payments. We obtained reinsurance against the insolvency or liquidation of the private pension provider. The table below sets forth additional information regarding Dr. Sachse’s pension plan. The difference between (i) the sum of the Accumulated Value at Start of Year column plus the Compensatory column and (ii) the Accumulated Value at End of Year column is attributable to Dr. Sachse’s contributions to the pension plan during the year ended December 31, 2017, as well as changes in the foreign exchange rate, his contributions being made in euros.
|
Accumulated value at start of year
|
Compensatory
|
Accumulated value at year end
|
$106,391
|
$27,248
|
$133,639
|
(8)
|
Jude Dinges' employment was terminated on November 3, 2017. All outstanding stock options held by Mr. Dinges were cancelled effective as of his termination date in accordance with the provisions of the Stock Option Plan.
|
C.
|
Board practices
|
D.
|
Employees
|
E.
|
Share ownership
|
Name
|
No. of Common Shares owned or held
|
Percent
(1)
|
No. of stock options held
(2)
|
No. of currently exercisable options
|
|||||||
Cardiff, Michael
|
—
|
|
|
—
|
|
87,850
|
|
|
9,284
|
|
|
Dinges, Jude
|
6,533
|
|
|
*
|
|
—
|
|
|
—
|
|
|
Dodd, David A.
|
34,003
|
|
|
*
|
|
—
|
|
|
—
|
|
|
Egbert, Carolyn
|
1,920
|
|
|
*
|
|
77,850
|
|
|
5,951
|
|
|
Ernst, Juergen
|
1,348
|
|
|
*
|
|
77,850
|
|
|
5,951
|
|
|
Guenther, Eckhard
|
—
|
|
|
—
|
|
15,398
|
|
|
6,801
|
|
|
Lemaire, Geneviève
|
2,350
|
|
|
*
|
|
—
|
|
|
—
|
|
|
Limoges, Gérard
|
1,200
|
|
|
*
|
|
77,850
|
|
|
5,951
|
|
|
Newport, Kenneth
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Sachse, Richard
|
—
|
|
|
—
|
|
129,380
|
|
|
56,461
|
|
|
Teifel, Michael
|
—
|
|
|
—
|
|
30,350
|
|
|
13,451
|
|
|
Theodore, Philip A.
|
10,894
|
|
|
*
|
|
—
|
|
|
—
|
|
|
Total
|
58,248
|
|
|
*
|
|
496,528
|
|
|
103,850
|
|
*
|
Less than 1%
|
(1)
|
Based on
16,440,760
Common Shares outstanding as at
December 31, 2017
.
|
(2)
|
For information regarding option expiration dates and exercise price refer to the tables included under the caption "Outstanding Option-Based Awards and Share-Based Awards".
|
Item 7.
|
Major Shareholders and Related Party Transactions
|
A.
|
Major shareholders
|
B.
|
Related party transactions
|
C.
|
Interests of experts and counsel
|
Item 8.
|
Financial Information
|
A.
|
Consolidated statements and other financial information
|
B.
|
Significant changes
|
Item 9.
|
The Offer and Listing
|
A.
|
Offer and listing details
|
|
NASDAQ (US$)
|
TSX (CAN$)
|
||||||
|
High
|
Low
|
High
|
Low
|
||||
2017
|
3.65
|
|
0.84
|
|
4.81
|
|
1.13
|
|
2016
|
4.94
|
|
2.67
|
|
6.62
|
|
3.85
|
|
2015
|
84.20
|
|
4.00
|
|
104.00
|
|
5.39
|
|
2014
|
150.00
|
|
52.00
|
|
166.00
|
|
57.00
|
|
2013
|
323.00
|
|
103.00
|
|
327.00
|
|
108.00
|
|
2018
|
|
|
|
|
||||
First quarter
1
|
2.41
|
|
1.56
|
|
3.01
|
|
2.08
|
|
2017
|
|
|
|
|
||||
Fourth quarter
|
2.70
|
|
1.87
|
|
3.48
|
|
2.38
|
|
Third quarter
|
2.87
|
|
0.98
|
|
3.57
|
|
1.28
|
|
Second quarter
|
3.35
|
|
0.84
|
|
4.50
|
|
1.13
|
|
First quarter
|
3.65
|
|
2.45
|
|
4.81
|
|
3.24
|
|
2016
|
|
|
|
|
||||
Fourth quarter
|
4.94
|
|
3.25
|
|
6.62
|
|
4.40
|
|
Third quarter
|
3.73
|
|
3.30
|
|
4.83
|
|
4.26
|
|
Second quarter
|
4.38
|
|
3.01
|
|
5.69
|
|
3.90
|
|
First quarter
|
4.40
|
|
2.67
|
|
6.08
|
|
3.85
|
|
Most recent 6 months
|
|
|
|
|
||||
February 2018
|
2.18
|
|
1.79
|
|
2.66
|
|
2.30
|
|
January 2018
|
2.41
|
|
2.07
|
|
3.01
|
|
2.59
|
|
December 2017
|
2.70
|
|
1.96
|
|
3.48
|
|
2.50
|
|
November 2017
|
2.10
|
|
1.87
|
|
2.72
|
|
2.38
|
|
October 2017
|
2.29
|
|
1.88
|
|
2.87
|
|
2.40
|
|
September 2017
|
2.23
|
|
1.84
|
|
2.74
|
|
2.23
|
|
B.
|
Plan of distribution
|
C.
|
Markets
|
D.
|
Selling shareholders
|
E.
|
Dilution
|
F.
|
Expenses of the issue
|
Item 10.
|
Additional Information
|
A.
|
Share capital
|
B.
|
Memorandum and articles of association
|
•
|
relates primarily to his or her remuneration as our director, officer, employee or agent or as a director, officer, employee or agent of an affiliate of us;
|
•
|
is for indemnity or insurance for director's liability as permitted by the CBCA; or
|
•
|
is with our affiliate.
|
•
|
borrow money upon our credit;
|
•
|
issue, reissue, sell or pledge our debt obligations;
|
•
|
give a guarantee on our behalf to secure performance of an obligation of any person; and
|
•
|
mortgage, hypothecate, pledge or otherwise create a security interest in all or any of our property, owned or subsequently acquired, to secure any of our obligations.
|
1.
|
the first date (the "Stock Acquisition Date") of a public announcement of facts indicating that a person has become an Acquiring Person; and
|
2.
|
the date of the commencement of, or first public announcement of the intention of any person (other than us or any of our subsidiaries) to commence a take-over bid or a share exchange bid for more than 20% of our outstanding Common Shares other than a Permitted Bid or a Competing Permitted Bid (as defined below), so long as such take-over bid continues to satisfy the requirements of a Permitted Bid or a Competing Permitted Bid, as the case may be.
|
1.
|
the take-over bid must be made by means of a take-over bid circular;
|
2.
|
the take-over bid must be made to all holders of Common Shares wherever resident, on identical terms and conditions, other than the bidder;
|
3.
|
the take-over bid must not permit Common Shares tendered pursuant to the bid to be taken up or paid for:
|
a)
|
prior to the close of business on a date that is not less than 105 days following the date of the relevant take-over bid or such shorter minimum period that a take-over bid (that is not exempt from any of the requirements of
|
b)
|
then only if at the close of business on the date Common Shares (and/or "Convertible Securities", as defined in the Rights Plan) are first taken up or paid for under such take-over bid, outstanding Common Shares and Convertible Securities held by shareholders other than any other Acquiring Person, the bidder, the bidder’s affiliates or associates, persons acting jointly or in concert with the bidder and any employee benefit plan, deferred profit-sharing plan, stock participation plan or trust for the benefit of our employees or the employees of any of our subsidiaries, unless the beneficiaries of such plan or trust direct the manner in which the Common Shares are to be voted or direct whether the Common Shares are to be tendered to a take-over bid (collectively, "Independent Shareholders") that represent more than 50% of the aggregate of (I) then outstanding Common Shares and (II) Common Shares issuable upon the exercise of Convertible Securities, have been deposited or tendered pursuant to the take-over bid and not withdrawn;
|
4.
|
the take-over bid must allow Common Shares and/or Convertible Securities to be deposited or tendered pursuant to such take-over bid, unless such take-over bid is withdrawn, at any time prior to the close of business on the date Common Shares and/or Convertible Securities are first taken up or paid for under the take-over bid;
|
5.
|
the take-over bid must allow Common Shares and/or Convertible Securities to be withdrawn until taken up and paid for; and
|
6.
|
in the event the requirement set forth in clause 3.b) above is satisfied, the bidder must make a public announcement of that fact and the take-over bid must remain open for deposits and tenders of Common Shares for not less than ten days from the date of such public announcement.
|
•
|
the acquisition of our Common Shares by a person in the ordinary course of that person's business as a trader or dealer in securities;
|
•
|
the acquisition or control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and
|
•
|
the acquisition or control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of our voting interests, remains unchanged.
|
C.
|
Material contracts
|
•
|
$4,000,000 on achieving $25,000,000 annual net sales,
|
•
|
$10,000,000 on achieving $50,000,000 annual net sales,
|
•
|
$20,000,000 on achieving $100,000,000 annual net sales,
|
•
|
$40,000,000 on achieving $200,000,000 annual net sales, and
|
•
|
$100,000,000 on achieving $500,000,000 annual net sales.
|
•
|
a "Change of Control" shall be deemed to have occurred in any of the following circumstances: (i) subject to certain exceptions, upon the acquisition by a person (or one or more persons who are affiliates of one another or who are acting jointly or in concert) of a beneficial interest in our securities representing in any circumstance 50% or more of the voting rights attaching to our then outstanding securities; (ii) upon a sale or other disposition of all or substantially all of our assets; (iii) upon a plan of liquidation or dissolution of us; or (iv) if, for any reason, including our amalgamation, merger or consolidation with or into another company, the individuals who, during the term of the change of control agreement, constituted the Board (and any new directors whose appointment by the Board or whose nomination for election by our shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors during the term of the change of control agreement or whose appointment or nomination for election was previously so approved) cease to constitute a majority of the members of the Board;
|
•
|
termination of employment for "Cause" includes (but is not limited to) (i) if the Executive commits any fraud, theft, embezzlement or other criminal act of a similar nature, or (ii) if the Executive commits an act of serious misconduct or willful or gross negligence in the performance of his duties.
|
Name
|
Termination Provisions
Value ($) (1) (2) |
Sachse, Richard
|
120,000
|
Ward, Michael V.
|
511,500
|
(1)
|
The termination values assume that the triggering event took place on the last business day of our financial year-end (December 31, 2017).
|
(2)
|
Value of earned/unused vacation and amounts owing for expense reimbursement are not included as they are not considered as “incremental” payments made in connection with termination of employment.
|
D.
|
Exchange controls
|
•
|
dealers in stocks, securities or currencies;
|
•
|
securities traders that use a mark-to-market accounting method;
|
•
|
banks and financial institutions;
|
•
|
insurance companies;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
tax-exempt organizations;
|
•
|
retirement plans, individual plans, individual retirement accounts and tax-deferred accounts;
|
•
|
partnerships or other pass-through entities for U.S. federal income tax purposes and their partners or members;
|
•
|
persons holding Common Shares as part of a hedging or conversion transaction straddle or other integrated or risk reduction transaction;
|
•
|
persons who or that are, or may become, subject to the expatriation provisions of the Code;
|
•
|
persons whose functional currency is not the U.S. dollar; and
|
•
|
direct, indirect or constructive owners of 10% or more of the total combined voting power of all classes of our voting stock or 10% or more of the total value of shares of all classes of our stock.
|
•
|
an individual citizen or resident of the United States;
|
•
|
a corporation or other entity classified as a corporation for U.S. federal income tax purposes created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust, if (a) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more "U.S. persons" (within the meaning of the Code) have the authority to control all substantial decisions of the trust, or (b) a valid election is in effect to be treated as a U.S. person for U.S. federal income tax purposes.
|
F.
|
Dividends and paying agents
|
G.
|
Statement by experts
|
H.
|
Documents on display
|
I.
|
Subsidiary information
|
Item 11.
|
Quantitative and Qualitative Disclosures About Market Risk
|
•
|
The Company's loans and receivables are comprised of cash and cash equivalents, trade and other receivables and restricted cash equivalents.
|
•
|
Financial liabilities at FVTPL are currently comprised of the Company's warrant liability.
|
•
|
Other financial liabilities include payables, accrued liabilities, and provision for restructuring costs.
|
(in thousands)
|
|
Carrying
amount |
|
-30%
|
|
+30%
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Warrant liability
|
|
3,897
|
|
|
1,359
|
|
|
(1,474
|
)
|
Total impact on net loss – decrease / (increase)
|
|
|
|
1,359
|
|
|
(1,474
|
)
|
Item 12.
|
Description of Securities Other than Equity Securities
|
A.
|
Debt securities
|
B.
|
Warrants and rights
|
C.
|
Other securities
|
D.
|
American depositary shares
|
Item 13.
|
Defaults, Dividend Arrearages and Delinquencies
|
Item 14.
|
Material Modifications to the Rights of Security Holders and Use of Proceeds
|
Item 15.
|
Controls and Procedures
|
Item 16A.
|
Audit Committee Financial Expert
|
Item 16B.
|
Code of Ethics
|
Item 16C.
|
Principal Accountant Fees and Services
|
(a)
|
Audit Fees
|
(b)
|
Audit-related Fees
|
(c)
|
Tax Fees
|
(d)
|
All Other Fees
|
(e)
|
Audit Committee Pre-Approval Policies and Procedures
|
(f)
|
Work performed by Full-time, Permanent Employees of Principal Accountant
|
Item 16D.
|
Exemptions from the Listing Standards for Audit Committees
|
Item 16E.
|
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|
Item 16F.
|
Change in Registrant's Certifying Accountant
|
Item 16G.
|
Corporate Governance
|
Item 16H.
|
Mine Safety Disclosure
|
Item 17
|
Financial Statements
|
Item 18.
|
Financial Statements
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Financial Position
|
(in thousands of US dollars)
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||
|
|
$
|
|
$
|
||
ASSETS
|
|
|
|
|
||
Current assets
|
|
|
|
|
||
Cash and cash equivalents (note 6)
|
|
7,780
|
|
|
21,999
|
|
Trade and other receivables (note 8)
|
|
221
|
|
|
365
|
|
Inventory (note 7)
|
|
643
|
|
|
—
|
|
Prepaid expenses and other current assets
|
|
737
|
|
|
379
|
|
Total current assets
|
|
9,381
|
|
|
22,743
|
|
Restricted cash equivalents
|
|
381
|
|
|
496
|
|
Property, plant and equipment (note 9)
|
|
101
|
|
|
204
|
|
Deferred tax assets (note 20)
|
|
3,479
|
|
|
—
|
|
Identifiable intangible assets (note 10)
|
|
90
|
|
|
70
|
|
Other non-current assets
|
|
150
|
|
|
593
|
|
Goodwill (note 11)
|
|
8,613
|
|
|
7,553
|
|
Total assets
|
|
22,195
|
|
|
31,659
|
|
LIABILITIES
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
||
Payables and accrued liabilities (note 12)
|
|
2,987
|
|
|
3,745
|
|
Provision for restructuring costs (note 13)
|
|
2,296
|
|
|
33
|
|
Current portion of deferred revenues (note 5)
|
|
486
|
|
|
426
|
|
Total current liabilities
|
|
5,769
|
|
|
4,204
|
|
Deferred revenues (note 5)
|
|
55
|
|
|
474
|
|
Warrant liability (note 14)
|
|
3,897
|
|
|
6,854
|
|
Employee future benefits (note 18)
|
|
14,229
|
|
|
13,414
|
|
Provisions (note 15)
|
|
1,028
|
|
|
501
|
|
Total liabilities
|
|
24,978
|
|
|
25,447
|
|
SHAREHOLDERS' (DEFICIENCY) EQUITY
|
|
|
|
|
||
Share capital (note 16)
|
|
222,335
|
|
|
213,980
|
|
Other capital
|
|
88,772
|
|
|
88,590
|
|
Deficit
|
|
(314,161
|
)
|
|
(298,059
|
)
|
Accumulated other comprehensive income
|
|
271
|
|
|
1,701
|
|
Total shareholders' (deficiency) equity
|
|
(2,783
|
)
|
|
6,212
|
|
Total liabilities and shareholders' (deficiency) equity
|
|
22,195
|
|
|
31,659
|
|
/s/ Carolyn Egbert
|
|
/s/ Gérard Limoges
|
Carolyn Egbert
Chair of the Board
|
|
Gérard Limoges
Director
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Changes in Shareholders' (Deficiency) Equity
|
For the years ended December 31, 2017, 2016 and 2015
|
(in thousands of US dollars, except share data)
|
|
|
Common shares (number of)
1
|
|
Share capital
|
|
Other capital
|
|
Deficit
|
|
Accumulated other comprehensive income
|
|
Total
|
||||||
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||
Balance - January 1, 2017
|
|
12,917,995
|
|
|
213,980
|
|
|
88,590
|
|
|
(298,059
|
)
|
|
1,701
|
|
|
6,212
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,796
|
)
|
|
—
|
|
|
(16,796
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,430
|
)
|
|
(1,430
|
)
|
Actuarial gain on defined benefit plan (note 18)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
694
|
|
|
—
|
|
|
694
|
|
Comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,102
|
)
|
|
(1,430
|
)
|
|
(17,532
|
)
|
Share issuances pursuant to the exercise of pre-funded warrants (note 16)
|
|
301,343
|
|
|
977
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
977
|
|
Share issuances in connection with "At-the-Market" drawdowns (note 16)
|
|
3,221,422
|
|
|
7,378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,378
|
|
Share-based compensation costs
|
|
—
|
|
|
—
|
|
|
182
|
|
|
—
|
|
|
—
|
|
|
182
|
|
Balance - December 31, 2017
|
|
16,440,760
|
|
|
222,335
|
|
|
88,772
|
|
|
(314,161
|
)
|
|
271
|
|
|
(2,783
|
)
|
1
|
Issued and paid in full.
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Changes in Shareholders' (Deficiency) Equity
|
For the years ended December 31, 2017, 2016 and 2015
|
(in thousands of US dollars, except share data)
|
|
|
Common shares (number of)
1, 2
|
|
Share capital
|
|
Pre-funded warrants
|
|
Other capital
|
|
Deficit
|
|
Accumulated other comprehensive income (loss)
|
|
Total
|
|||||||
|
|
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||||
Balance - January 1, 2016
|
|
9,928,697
|
|
|
204,596
|
|
|
—
|
|
|
87,508
|
|
|
(271,621
|
)
|
|
1,132
|
|
|
21,615
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,959
|
)
|
|
—
|
|
|
(24,959
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency translation adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
569
|
|
|
569
|
|
Actuarial loss on defined benefit plan (note 18)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,479
|
)
|
|
—
|
|
|
(1,479
|
)
|
Comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,438
|
)
|
|
569
|
|
|
(25,869
|
)
|
Share issuances in connection with public offerings (note 16)
|
|
1,150,000
|
|
|
3,377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,377
|
|
Pre-funded warrant issuances in connection with a public offering (note 16)
|
|
—
|
|
|
—
|
|
|
2,789
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,789
|
|
Share issuances pursuant to the exercise of pre-funded warrants (note 16)
|
|
950,000
|
|
|
2,789
|
|
|
(2,789
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share issuances in connection with "at-the-market" drawdowns (note 16)
|
|
889,298
|
|
|
3,218
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,218
|
|
Share-based compensation costs
|
|
|
|
—
|
|
|
—
|
|
|
1,082
|
|
|
—
|
|
|
—
|
|
|
1,082
|
|
|
Balance - December 31, 2016
|
|
12,917,995
|
|
|
213,980
|
|
|
—
|
|
|
88,590
|
|
|
(298,059
|
)
|
|
1,701
|
|
|
6,212
|
|
Balance - January 1, 2015
|
655,091
|
|
|
150,544
|
|
|
—
|
|
|
86,639
|
|
|
(222,322
|
)
|
|
(377
|
)
|
|
14,484
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50,143
|
)
|
|
—
|
|
|
(50,143
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,509
|
|
|
1,509
|
|
Actuarial loss on defined benefit plan (note 18)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
844
|
|
|
—
|
|
|
844
|
|
Comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49,299
|
)
|
|
1,509
|
|
|
(47,790
|
)
|
Share issuances in connection with public offerings (note 16)
|
3,250,481
|
|
|
14,322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,322
|
|
Pre-funded warrant issuances in connection with a public offering (note 16)
|
—
|
|
|
—
|
|
|
8,653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,653
|
|
Share issuances pursuant to the exercise of pre-funded warrants (note 16)
|
346,294
|
|
|
8,653
|
|
|
(8,653
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Share issuances pursuant to the exercise of warrants (other than pre-funded warrants)
|
5,676,831
|
|
|
31,077
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,077
|
|
Share-based compensation costs
|
|
|
|
|
|
|
869
|
|
|
—
|
|
|
—
|
|
|
869
|
|
|||
Balance - December 31, 2015
|
9,928,697
|
|
|
204,596
|
|
|
—
|
|
|
87,508
|
|
|
(271,621
|
)
|
|
1,132
|
|
|
21,615
|
|
2
|
Adjusted to reflect the November 17, 2015
100
-to-1 Share Consolidation (see
note 1 - Business overview
and
note 16 - Share capital
).
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Comprehensive Loss
|
For the years ended December 31, 2017, 2016 and 2015
|
(in thousands of US dollars, except share and per share data)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Revenues
|
|
|
|
|
|
|
|||
Sales commission and other
|
|
465
|
|
|
414
|
|
|
297
|
|
License fees (note 5)
|
|
458
|
|
|
497
|
|
|
248
|
|
Total revenues
|
|
923
|
|
|
911
|
|
|
545
|
|
Operating expenses (note 17)
|
|
|
|
|
|
|
|||
Research and development costs
|
|
10,704
|
|
|
16,495
|
|
|
17,234
|
|
General and administrative expenses
|
|
8,198
|
|
|
7,147
|
|
|
11,308
|
|
Selling expenses
|
|
5,095
|
|
|
6,745
|
|
|
6,887
|
|
Total operating expenses
|
|
23,997
|
|
|
30,387
|
|
|
35,429
|
|
Loss from operations
|
|
(23,074
|
)
|
|
(29,476
|
)
|
|
(34,884
|
)
|
Gain (loss) due to changes in foreign currency exchange rates
|
|
502
|
|
|
(70
|
)
|
|
(1,767
|
)
|
Change in fair value of warrant liability (note 14)
|
|
2,222
|
|
|
4,437
|
|
|
(10,956
|
)
|
Warrant exercise inducement fee (note 14)
|
|
—
|
|
|
—
|
|
|
(2,926
|
)
|
Other finance income
|
|
75
|
|
|
150
|
|
|
305
|
|
Net finance income (costs)
|
|
2,799
|
|
|
4,517
|
|
|
(15,344
|
)
|
Loss before income taxes
|
|
(20,275
|
)
|
|
(24,959
|
)
|
|
(50,228
|
)
|
Income tax recovery (note 20)
|
|
3,479
|
|
|
—
|
|
|
—
|
|
Net loss from continuing operations
|
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,228
|
)
|
Net income from discontinued operations
|
|
—
|
|
|
—
|
|
|
85
|
|
Net loss
|
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,143
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|||
Items that may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments
|
|
(1,430
|
)
|
|
569
|
|
|
1,509
|
|
Items that will not be reclassified to profit or loss:
|
|
|
|
|
|
|
|||
Actuarial gain (loss) on defined benefit plans (note 18)
|
|
694
|
|
|
(1,479
|
)
|
|
844
|
|
Comprehensive loss
|
|
(17,532
|
)
|
|
(25,869
|
)
|
|
(47,790
|
)
|
Net loss per share (basic and diluted) from continuing operations (note 24)¹
|
|
(1.12
|
)
|
|
(2.41
|
)
|
|
(18.17
|
)
|
Net income per share (basic and diluted) from discontinued operations (note 24)¹
|
|
—
|
|
|
—
|
|
|
0.03
|
|
Net loss per share (basic and diluted) (note 24)¹
|
|
(1.12
|
)
|
|
(2.41
|
)
|
|
(18.14
|
)
|
Weighted average number of shares outstanding (note 24):¹
|
|
|
|
|
|
|
|||
Basic and Diluted
|
|
14,958,704
|
|
|
10,348,879
|
|
|
2,763,603
|
|
1
|
Adjusted to reflect the November 17, 2015
100
-to-1 Share Consolidation (see
note 1 - Business overview
and
note 16 - Share capital
).
|
Aeterna Zentaris Inc.
|
Consolidated Statements of Cash Flows
|
For the years ended December 31, 2017, 2016 and 2015
|
(in thousands of US dollars)
|
|
Year ended December 31,
|
|||||||
|
2017
|
|
2016
|
|
2015
|
|||
|
$
|
|
$
|
|
$
|
|||
Cash flows from operating activities
|
|
|
|
|
|
|||
Net loss for the year
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,228
|
)
|
Items not affecting cash and cash equivalents:
|
|
|
|
|
|
|
||
Change in fair value of warrant liability (note 14)
|
(2,222
|
)
|
|
(4,437
|
)
|
|
10,956
|
|
Provision for restructuring costs (note 13)
|
3,083
|
|
|
(8
|
)
|
|
932
|
|
Recapture of inventory previously written off (note 7)
|
(643
|
)
|
|
—
|
|
|
—
|
|
Depreciation, amortization and impairment (notes 9 and 10)
|
94
|
|
|
280
|
|
|
341
|
|
Deferred income taxes (note 20)
|
(3,479
|
)
|
|
—
|
|
|
—
|
|
Share-based compensation costs (note 16)
|
182
|
|
|
1,082
|
|
|
919
|
|
Employee future benefits (note 18)
|
246
|
|
|
382
|
|
|
351
|
|
Amortization of deferred revenues (note 5)
|
(458
|
)
|
|
(345
|
)
|
|
(248
|
)
|
Foreign exchange (gain) loss on items denominated in foreign currencies
|
(553
|
)
|
|
87
|
|
|
1,581
|
|
Gain on disposal of property, plant and equipment
|
(136
|
)
|
|
(1
|
)
|
|
(264
|
)
|
Other non-cash items
|
(19
|
)
|
|
(83
|
)
|
|
154
|
|
Gain associated with the extinguishment of warrant liability
|
—
|
|
|
—
|
|
|
(162
|
)
|
Transaction cost allocated to warrants issued (note 16)
|
—
|
|
|
56
|
|
|
2,208
|
|
Series B Warrant exercise inducement fee (note 14)
|
—
|
|
|
—
|
|
|
2,926
|
|
Changes in operating assets and liabilities (note 19)
|
(2,212
|
)
|
|
(1,064
|
)
|
|
(3,395
|
)
|
Net cash provided by operating activities of discontinued operations
|
—
|
|
|
—
|
|
|
85
|
|
Net cash used in operating activities
|
(22,913
|
)
|
|
(29,010
|
)
|
|
(33,844
|
)
|
Cash flows from financing activities
|
|
|
|
|
|
|||
Proceeds from issuances of common shares, warrants (including pre-funded warrants), net of cash transaction costs of $250, $1,107, and $4,223 in 2017, 2016, and 2015, respectively (note 16)
|
7,788
|
|
|
9,924
|
|
|
49,427
|
|
Proceeds from warrants exercised (note 14)
|
242
|
|
|
—
|
|
|
—
|
|
Series B Warrant exercise inducement fee (note 14)
|
—
|
|
|
—
|
|
|
(2,926
|
)
|
Payment pursuant to warrant amendment agreements (note 16)
|
—
|
|
|
—
|
|
|
(5,703
|
)
|
Net cash provided by financing activities
|
8,030
|
|
|
9,924
|
|
|
40,798
|
|
Cash flows from investing activities
|
|
|
|
|
|
|||
Purchase of property, plant and equipment (note 9)
|
(4
|
)
|
|
(66
|
)
|
|
(26
|
)
|
Disposals of property, plant and equipment (note 9)
|
161
|
|
|
2
|
|
|
505
|
|
Decrease (increase) in restricted cash equivalents
|
150
|
|
|
(250
|
)
|
|
434
|
|
Net cash provided by (used in) investing activities
|
307
|
|
|
(314
|
)
|
|
913
|
|
Effect of exchange rate changes on cash and cash equivalents
|
357
|
|
|
(51
|
)
|
|
(1,348
|
)
|
Net change in cash and cash equivalents
|
(14,219
|
)
|
|
(19,451
|
)
|
|
6,519
|
|
Cash and cash equivalents – Beginning of year
|
21,999
|
|
|
41,450
|
|
|
34,931
|
|
Cash and cash equivalents – End of year
|
7,780
|
|
|
21,999
|
|
|
41,450
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Methods
|
|
Annual rates and period
|
Equipment
|
|
Declining balance and straight-line
|
|
20%
|
Furniture and fixtures
|
|
Declining balance and straight-line
|
|
10% and 20%
|
Computer equipment
|
|
Straight-line
|
|
25% and 33
1
/3%
|
Leasehold improvements
|
|
Straight-line
|
|
Remaining lease term
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
i.
|
the service provided;
|
ii.
|
the amount of revenue can be measured reliably; and
|
iii.
|
it is probable that the economic benefits associated with the transaction will flow to the Company.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Cash on hand and balances with banks
|
|
7,780
|
|
|
21,999
|
|
|
|
7,780
|
|
|
21,999
|
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Finished goods inventory
|
|
556
|
|
|
—
|
|
Semi-finished goods inventory
|
|
87
|
|
|
—
|
|
|
|
643
|
|
|
—
|
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Trade accounts receivable
|
|
20
|
|
|
155
|
|
Value added tax
|
|
186
|
|
|
130
|
|
Other
|
|
15
|
|
|
80
|
|
|
|
221
|
|
|
365
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Cost
|
|||||||||||||
|
|
Equipment
|
|
Furniture and fixtures
|
|
Computer equipment
|
|
Leasehold improvements
|
|
Total
|
|||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
At January 1, 2016
|
|
4,039
|
|
|
19
|
|
|
746
|
|
|
19
|
|
|
4,823
|
|
Additions
|
|
27
|
|
|
—
|
|
|
19
|
|
|
20
|
|
|
66
|
|
Disposals / Retirements
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
Impact of foreign exchange rate changes
|
|
(147
|
)
|
|
—
|
|
|
(25
|
)
|
|
(2
|
)
|
|
(174
|
)
|
At December 31, 2016
|
|
3,919
|
|
|
19
|
|
|
737
|
|
|
37
|
|
|
4,712
|
|
Additions
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
4
|
|
Disposals / Retirements
|
|
(2,160
|
)
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
(2,203
|
)
|
Impact of foreign exchange rate changes
|
|
507
|
|
|
—
|
|
|
94
|
|
|
5
|
|
|
606
|
|
At December 31, 2017
|
|
2,268
|
|
|
19
|
|
|
790
|
|
|
42
|
|
|
3,119
|
|
|
Accumulated depreciation
|
|||||||||||||
|
Equipment
|
|
Furniture and fixtures
|
|
Computer equipment
|
|
Leasehold improvements
|
|
Total
|
|||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
At January 1, 2016
|
3,873
|
|
|
—
|
|
|
683
|
|
|
11
|
|
|
4,567
|
|
Disposals / Retirements
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
Depreciation expense
|
70
|
|
|
2
|
|
|
36
|
|
|
4
|
|
|
112
|
|
Impact of foreign exchange rate changes
|
(144
|
)
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(169
|
)
|
At December 31, 2016
|
3,799
|
|
|
2
|
|
|
692
|
|
|
15
|
|
|
4,508
|
|
Disposals / Retirements
|
(2,135
|
)
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
(2,178
|
)
|
Depreciation expense
|
50
|
|
|
2
|
|
|
30
|
|
|
18
|
|
|
100
|
|
Impact of foreign exchange rate changes
|
496
|
|
|
—
|
|
|
90
|
|
|
2
|
|
|
588
|
|
At December 31, 2017
|
2,210
|
|
|
4
|
|
|
769
|
|
|
35
|
|
|
3,018
|
|
|
Carrying amount
|
|||||||||||||
|
Equipment
|
|
Furniture and fixtures
|
|
Computer equipment
|
|
Leasehold improvements
|
|
Total
|
|||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|||||
At December 31, 2016
|
120
|
|
|
17
|
|
|
45
|
|
|
22
|
|
|
204
|
|
At December 31, 2017
|
58
|
|
|
15
|
|
|
21
|
|
|
7
|
|
|
101
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Year ended December 31, 2017
|
|
Year ended December 31, 2016
|
||||||||||||||
|
|
Cost
|
|
Accumulated amortization
|
|
Carrying value
|
|
Cost
|
|
Accumulated amortization
|
|
Carrying value
|
||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||
Balances – Beginning of the year
|
|
30,032
|
|
|
(29,962
|
)
|
|
70
|
|
|
31,151
|
|
|
(30,914
|
)
|
|
237
|
|
Additions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
Impairment (loss) reversal*
|
|
—
|
|
|
44
|
|
|
44
|
|
|
—
|
|
|
(85
|
)
|
|
(85
|
)
|
Recurring amortization expense*
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
|
—
|
|
|
(83
|
)
|
|
(83
|
)
|
Impact of foreign exchange rate changes
|
|
4,214
|
|
|
(4,200
|
)
|
|
14
|
|
|
(1,124
|
)
|
|
1,120
|
|
|
(4
|
)
|
Balances – End of the year
|
|
34,246
|
|
|
(34,156
|
)
|
|
90
|
|
|
30,032
|
|
|
(29,962
|
)
|
|
70
|
|
|
|
Cost
|
|
Accumulated impairment loss
|
|
Carrying amount
|
|||
|
|
$
|
|
$
|
|
$
|
|||
At January 1, 2016
|
|
7,836
|
|
|
—
|
|
|
7,836
|
|
Impact of foreign exchange rate changes
|
|
(283
|
)
|
|
—
|
|
|
(283
|
)
|
At December 31, 2016
|
|
7,553
|
|
|
—
|
|
|
7,553
|
|
Impact of foreign exchange rate changes
|
|
1,060
|
|
|
—
|
|
|
1,060
|
|
At December 31, 2017
|
|
8,613
|
|
|
—
|
|
|
8,613
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Trade accounts payable
|
|
1,222
|
|
|
2,044
|
|
Accrued research and development costs
|
|
127
|
|
|
340
|
|
Salaries, employment taxes and benefits
|
|
390
|
|
|
156
|
|
Current portion of onerous contract provisions (note 15)
|
|
173
|
|
|
295
|
|
Other accrued liabilities
|
|
1,075
|
|
|
910
|
|
|
|
2,987
|
|
|
3,745
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Resource Optimization Program
|
|
2015 Corporate Restructuring
|
|
2017 German Restructuring
|
|
Total
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
At January 1, 2016
|
|
75
|
|
|
557
|
|
|
—
|
|
|
632
|
|
Utilization of provision
|
|
(43
|
)
|
|
(523
|
)
|
|
—
|
|
|
(566
|
)
|
Change in the provision
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
Impact of foreign exchange rate changes
|
|
1
|
|
|
(26
|
)
|
|
—
|
|
|
(25
|
)
|
At December 31, 2016
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
Provision recognized
|
|
—
|
|
|
—
|
|
|
3,115
|
|
|
3,115
|
|
Utilization of provision
|
|
(33
|
)
|
|
—
|
|
|
(157
|
)
|
|
(190
|
)
|
Change in the provision
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
(32
|
)
|
Impact of foreign exchange rate changes
|
|
—
|
|
|
—
|
|
|
88
|
|
|
88
|
|
At December 31, 2017
|
|
—
|
|
|
—
|
|
|
3,014
|
|
|
3,014
|
|
Less: current portion
|
|
—
|
|
|
—
|
|
|
(2,296
|
)
|
|
(2,296
|
)
|
Non-current portion*
|
|
—
|
|
|
—
|
|
|
718
|
|
|
718
|
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Balance – Beginning of the year
|
|
6,854
|
|
|
10,891
|
|
|
8,225
|
|
Share purchase warrants issued during the year (note 16)
|
|
—
|
|
|
400
|
|
|
28,678
|
|
Derecognition due to early expiry (note 16)
|
|
—
|
|
|
—
|
|
|
(5,865
|
)
|
Share purchase warrants exercised during the year
|
|
(735
|
)
|
|
—
|
|
|
(31,103
|
)
|
Change in fair value of share purchase warrants
|
|
(2,222
|
)
|
|
(4,437
|
)
|
|
10,956
|
|
Balance - End of the year
|
|
3,897
|
|
|
6,854
|
|
|
10,891
|
|
Less: current portion
|
|
—
|
|
|
—
|
|
|
(1,411
|
)
|
Non-current portion
|
|
3,897
|
|
|
6,854
|
|
|
9,480
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
Years ended December 31,
|
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||||||||
|
Number
|
|
Weighted average exercise price (US$)
|
|
Number
|
|
Weighted average exercise price (US$)
|
|
Number
|
|
Weighted average exercise price (US$)
|
|
||||||
Balance – Beginning of the year
|
3,779,245
|
|
|
9.66
|
|
*
|
2,842,309
|
|
|
11.30
|
|
*
|
287,852
|
|
|
104.46
|
|
|
Issued (note 16)
|
—
|
|
|
—
|
|
|
945,000
|
|
|
4.70
|
|
|
3,076,956
|
|
|
5.94
|
|
*
|
Exercised
|
(331,730
|
)
|
**
|
1.07
|
|
|
—
|
|
|
—
|
|
|
(298,088
|
)
|
|
4.24
|
|
|
Expired (note 16)
|
(29,675
|
)
|
|
345.00
|
|
|
(8,064
|
)
|
|
4.23
|
|
|
(224,111
|
)
|
|
66.90
|
|
|
Non-current portion
|
3,417,840
|
|
|
7.59
|
|
|
3,779,245
|
|
|
9.66
|
|
|
2,842,309
|
|
|
11.30
|
|
|
*
|
As adjusted (
note 16 - Share capital
)
|
|
|
|
|||
Exercise price ($)
|
|
Number
|
|
Weighted average remaining contractual life (years)
|
|
1.07
|
|
115,844
|
|
|
2.19
|
4.70
|
|
945,000
|
|
|
2.34
|
7.10
|
|
2,331,000
|
|
|
2.96
|
185.00
|
|
25,996
|
|
|
0.58
|
|
|
3,417,840
|
|
|
2.74
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
Number of equivalent shares
|
|
Market-value per share price
|
|
Weighted average exercise price
|
|
Risk-free annual interest rate
|
|
Expected volatility
|
|
Expected life (years)
|
|
Expected dividend yield
|
||||||
|
|
|
($)
|
|
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
||||||
July 2013 Warrants
|
25,996
|
|
|
2.36
|
|
|
185.00
|
|
|
1.75
|
%
|
|
136.18
|
%
|
|
0.58
|
|
0.00
|
%
|
March 2015 Series A Warrants (e)
|
115,844
|
|
|
2.36
|
|
|
1.07
|
|
|
1.90
|
%
|
|
132.24
|
%
|
|
2.19
|
|
0.00
|
%
|
December 2015 Warrants
|
2,331,000
|
|
|
2.36
|
|
|
7.10
|
|
|
1.97
|
%
|
|
137.02
|
%
|
|
2.96
|
|
0.00
|
%
|
November 2016 Warrants (f)
|
945,000
|
|
|
2.36
|
|
|
4.70
|
|
|
1.91
|
%
|
|
145.04
|
%
|
|
2.34
|
|
0.00
|
%
|
(a)
|
Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the warrants.
|
(b)
|
Based on the historical volatility of the Company's stock price over the most recent period consistent with the expected life of the warrants, as well as on future expectations.
|
(c)
|
Based upon time to expiry from the reporting period date.
|
(d)
|
The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future.
|
(e)
|
For the
March 2015
Series A Warrants, the inputs and assumptions applied to the Black-Scholes option pricing model have been further adjusted to take into consideration the value attributed to certain anti-dilution provisions. Specifically, the weighted average exercise price is subject to adjustment (see
note 16 - Share capital
).
|
(f)
|
For the
November 2016
Warrants, the Company reduced the fair value of these warrants to take into consideration the fair value of the
$10
call option, which was also calculated using the Black-Scholes pricing model. (see
note 16 - Share capital
).
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Onerous contract provisions (detailed below)
|
|
310
|
|
|
404
|
|
Non-current portion of provision for restructuring costs (note 13)
|
|
718
|
|
|
—
|
|
Other
|
|
—
|
|
|
97
|
|
|
|
1,028
|
|
|
501
|
|
|
|
Cetrotide
®
onerous contracts*
|
|
Onerous lease**
|
|
Total
|
|||
|
|
$
|
|
$
|
|
$
|
|||
At January 1, 2016
|
|
803
|
|
|
234
|
|
|
1,037
|
|
Change in the provision
|
|
(24
|
)
|
|
—
|
|
|
(24
|
)
|
Utilization of provision
|
|
(196
|
)
|
|
(113
|
)
|
|
(309
|
)
|
Unwinding of discount and effect of changes in the discount and foreign exchange rates
|
|
(9
|
)
|
|
4
|
|
|
(5
|
)
|
At December 31, 2016
|
|
574
|
|
|
125
|
|
|
699
|
|
Less: current portion (note 12)
|
|
(181
|
)
|
|
(114
|
)
|
|
(295
|
)
|
|
|
393
|
|
|
11
|
|
|
404
|
|
|
|
|
|
|
|
|
|||
At December 31, 2016
|
|
574
|
|
|
125
|
|
|
699
|
|
Change in the provision
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
Utilization of provision
|
|
(145
|
)
|
|
(119
|
)
|
|
(264
|
)
|
Unwinding of discount and effect of changes in the discount and foreign exchange rates
|
|
64
|
|
|
3
|
|
|
67
|
|
At December 31, 2017
|
|
473
|
|
|
9
|
|
|
482
|
|
Less: current portion (note 12)
|
|
(163
|
)
|
|
(9
|
)
|
|
(172
|
)
|
|
|
310
|
|
|
—
|
|
|
310
|
|
*
|
Recorded following the transfer of the Cetrotide
®
Business (discontinued operations).
|
**
|
Represents the present value of the future lease payments that the Company is obligated to make pursuant to a non-cancellable operating lease in the United States, net of estimated future sublease income. The estimate may vary as a result of changes in the utilization of the leased premises and of the sublease arrangement. The lease expired in January 2018.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Years ended December 31,
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
US dollar-denominated options
|
|
Number
|
|
Weighted average exercise price (US$)
|
|
Number
|
|
Weighted average exercise price (US$)
|
|
Number
|
|
Weighted average exercise price (US$)
|
||||||
Balance – Beginning of the year
|
|
966,539
|
|
|
7.23
|
|
|
272,874
|
|
|
25.88
|
|
|
33,956
|
|
|
187.36
|
|
Granted
|
|
390,000
|
|
|
2.05
|
|
|
713,573
|
|
|
3.47
|
|
|
243,000
|
|
|
5.17
|
|
Forfeited
|
|
(643,271
|
)
|
|
6.02
|
|
|
(10,034
|
)
|
|
99.22
|
|
|
(4,082
|
)
|
|
136.17
|
|
Cancelled
|
|
—
|
|
|
—
|
|
|
(9,874
|
)
|
|
157.00
|
|
|
—
|
|
|
—
|
|
Expired
|
|
(853
|
)
|
|
704.88
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Balance – End of period
|
|
712,415
|
|
|
4.66
|
|
|
966,539
|
|
|
7.23
|
|
|
272,874
|
|
|
25.88
|
|
|
|
Years ended December 31,
|
||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||
Canadian dollar-denominated options
|
|
Number
|
|
Weighted average exercise price (CAN$)
|
|
Number
|
|
Weighted average exercise price (CAN$)
|
|
Number
|
|
Weighted average exercise price (CAN$)
|
||||||
Balance – Beginning of the year
|
|
1,858
|
|
|
820.27
|
|
|
3,787
|
|
|
845.46
|
|
|
4,909
|
|
|
1,010.40
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
(1,028
|
)
|
|
967.63
|
|
|
(271
|
)
|
|
923.20
|
|
Cancelled
|
|
—
|
|
|
—
|
|
|
(901
|
)
|
|
758.00
|
|
|
—
|
|
|
—
|
|
Expired
|
|
(355
|
)
|
|
1,728.15
|
|
|
—
|
|
|
—
|
|
|
(851
|
)
|
|
1,772.17
|
|
Balance – End of the year
|
|
1,503
|
|
|
605.84
|
|
|
1,858
|
|
|
820.27
|
|
|
3,787
|
|
|
845.46
|
|
|
|
US$ options outstanding as at December 31, 2017
|
|||||||
Exercise price
(US$) |
|
Number
|
|
Weighted average remaining
contractual life (years) |
|
Weighted average exercise price
(US$) |
|||
2.05 to 2.75
|
|
390,000
|
|
|
6.62
|
|
|
2.05
|
|
2.76 to 3.47
|
|
168,864
|
|
|
5.93
|
|
|
3.45
|
|
3.48 to 3.49
|
|
50,000
|
|
|
5.35
|
|
|
3.48
|
|
3.50 to 4.19
|
|
32,498
|
|
|
5.94
|
|
|
3.77
|
|
4.20 to 1,044.00
|
|
71,053
|
|
|
4.89
|
|
|
23.09
|
|
|
|
712,415
|
|
|
6.17
|
|
|
4.66
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
US$ options exercisable as at December 31, 2017
|
|||||||
Exercise price
(US$) |
|
Number
|
|
Weighted average remaining
contractual life (years) |
|
Weighted average exercise price
(US$) |
|||
2.76 to 3.47
|
|
56,851
|
|
|
5.93
|
|
|
3.45
|
|
3.48 to 3.49
|
|
16,669
|
|
|
5.35
|
|
|
3.48
|
|
3.50 to 4.19
|
|
10,834
|
|
|
5.94
|
|
|
3.77
|
|
4.20 to 1,044.00
|
|
49,055
|
|
|
4.86
|
|
|
31.39
|
|
|
|
133,409
|
|
|
5.46
|
|
|
13.75
|
|
|
|
CAN$ options both outstanding and exercisable as at December 31, 2017
|
|||||||
Exercise price
(CAN$) |
|
Number
|
|
Weighted average remaining
contractual life (years) |
|
Weighted average exercise price
(CAN$) |
|||
330.00 to 360.00
|
|
197
|
|
|
0.92
|
|
|
330.00
|
|
360.01 to 480.00
|
|
333
|
|
|
0.87
|
|
|
390.00
|
|
480.01 to 741.00
|
|
502
|
|
|
1.94
|
|
|
570.00
|
|
741.01 to 912.00
|
|
471
|
|
|
2.87
|
|
|
912.00
|
|
|
|
1,503
|
|
|
1.86
|
|
|
605.84
|
|
|
|
Years ended December 31,
|
||||
|
|
2017
|
|
|
2016
|
|
Expected dividend yield
|
(a)
|
0.00
|
%
|
|
0.00
|
%
|
Expected volatility
|
(b)
|
137.60
|
%
|
|
115.10
|
%
|
Risk-free annual interest rate
|
(c)
|
1.53
|
%
|
|
1.80
|
%
|
Expected life (years)
|
(d)
|
3.26
|
|
|
4.92
|
|
Weighted average share price
|
|
$2.05
|
|
|
$3.47
|
|
Weighted average exercise price
|
|
$2.05
|
|
|
$3.47
|
|
Weighted average grant date fair value
|
|
$1.62
|
|
|
$2.80
|
|
(a)
|
The Company has not paid dividends and it does not intend to pay dividends in the foreseeable future.
|
(b)
|
Based on the historical volatility of the Company's stock price over the most recent period consistent with the expected life of the stock options, as well as on future expectations.
|
(c)
|
Based on United States Treasury Government Bond interest rates with a term that is consistent with the expected life of the stock options.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
(d)
|
Based upon historical data related to the exercise of stock options, on post-vesting employment terminations and on future expectations related to exercise behavior.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Key management personnel compensation
(1)
|
|
|
|
|
|
|
|||
Salaries and short-term employee benefits
|
|
2,081
|
|
|
2,430
|
|
|
2,957
|
|
Termination benefits
|
|
—
|
|
|
—
|
|
|
843
|
|
Post-employment benefits
|
|
59
|
|
|
78
|
|
|
119
|
|
Share-based compensation costs
|
|
87
|
|
|
1,051
|
|
|
828
|
|
|
|
2,227
|
|
|
3,559
|
|
|
4,747
|
|
Other employees compensation:
|
|
|
|
|
|
|
|||
Salaries and short-term employee benefits
|
|
3,584
|
|
|
3,574
|
|
|
4,431
|
|
Termination benefits
|
|
1,806
|
|
|
—
|
|
|
245
|
|
Post-employment benefits
|
|
441
|
|
|
500
|
|
|
511
|
|
Share-based compensation costs
|
|
95
|
|
|
31
|
|
|
91
|
|
|
|
5,926
|
|
|
4,105
|
|
|
5,278
|
|
Goods and services
(2)
|
|
13,575
|
|
|
21,217
|
|
|
21,429
|
|
Leasing costs, net of sublease receipts of $359 in 2017, $345 in 2016 and $380 in 2015
(3)
|
|
2,247
|
|
|
1,131
|
|
|
1,452
|
|
Refundable tax credits and grants
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
Onerous contract expenses resulting from the Restructuring
|
|
—
|
|
|
—
|
|
|
(202
|
)
|
Transaction costs related to share purchase warrants
|
|
—
|
|
|
56
|
|
|
2,208
|
|
Depreciation and amortization
|
|
138
|
|
|
195
|
|
|
271
|
|
Impairment (reversal) losses
|
|
(44
|
)
|
|
85
|
|
|
70
|
|
Operating foreign exchange (gains) losses
|
|
(72
|
)
|
|
39
|
|
|
199
|
|
|
|
15,844
|
|
|
22,723
|
|
|
25,404
|
|
|
|
23,997
|
|
|
30,387
|
|
|
35,429
|
|
(1)
|
Key management includes the Company's directors and members of the executive management team.
|
(2)
|
Goods and services include third-party R&D costs, laboratory supplies, professional fees, contracted sales force costs, marketing services, insurance and travel expenses.
|
(3)
|
Leasing costs also include changes in the onerous lease provision (note 15 - provisions), other than attributable to the unwinding of the discount.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Pension benefit plans
Years ended December 31, |
|
Other benefit plans
Years ended December 31, |
||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
||||||
Balances – Beginning of the year
|
|
13,197
|
|
|
12,375
|
|
|
14,619
|
|
|
217
|
|
|
281
|
|
|
433
|
|
Current service cost
|
|
107
|
|
|
87
|
|
|
103
|
|
|
14
|
|
|
13
|
|
|
14
|
|
Interest cost
|
|
237
|
|
|
282
|
|
|
260
|
|
|
3
|
|
|
—
|
|
|
8
|
|
Actuarial (gain) loss arising from changes in financial assumptions
|
|
(694
|
)
|
|
1,479
|
|
|
(844
|
)
|
|
(115
|
)
|
|
—
|
|
|
(34
|
)
|
Benefits paid
|
|
(485
|
)
|
|
(399
|
)
|
|
(410
|
)
|
|
(66
|
)
|
|
(60
|
)
|
|
(97
|
)
|
Impact of foreign exchange rate changes
|
|
1,783
|
|
|
(627
|
)
|
|
(1,353
|
)
|
|
31
|
|
|
(17
|
)
|
|
(43
|
)
|
Balances – End of the year
|
|
14,145
|
|
|
13,197
|
|
|
12,375
|
|
|
84
|
|
|
217
|
|
|
281
|
|
Amounts recognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In net loss
|
|
(344
|
)
|
|
(369
|
)
|
|
(363
|
)
|
|
98
|
|
|
(13
|
)
|
|
12
|
|
In other comprehensive loss
|
|
(1,089
|
)
|
|
(852
|
)
|
|
2,197
|
|
|
(31
|
)
|
|
17
|
|
|
43
|
|
|
|
Pension benefit plans
|
|
Other benefit plans
|
||||||||
|
|
Years ended December 31,
|
|
Years ended December 31,
|
||||||||
Actuarial assumptions
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
Discount rate
|
|
1.70
|
|
1.60
|
|
2.40
|
|
1.70
|
|
1.60
|
|
2.40
|
Pension benefits increase
|
|
1.80
|
|
1.80
|
|
1.80
|
|
1.80
|
|
1.80
|
|
2.40
|
Rate of compensation increase
|
|
2.00
|
|
2.00
|
|
2.00
|
|
2.00
|
|
2.00
|
|
2.00
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
2017
|
|
2016
|
|
2015
|
Retiring at the end of the reporting period:
|
|
|
|
|
|
|
Male
|
|
20
|
|
20
|
|
20
|
Female
|
|
24
|
|
24
|
|
24
|
Retiring 20 years after the end of the reporting period:
|
|
|
|
|
|
|
Male
|
|
22
|
|
22
|
|
22
|
Female
|
|
26
|
|
26
|
|
26
|
|
|
$
|
|
2018
|
|
522
|
|
2019
|
|
541
|
|
2020
|
|
553
|
|
2021
|
|
558
|
|
2022
|
|
564
|
|
Thereafter
|
|
16,589
|
|
|
|
19,327
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|||
Trade and other receivables
|
|
158
|
|
|
228
|
|
|
270
|
|
Prepaid expenses and other current assets
|
|
(343
|
)
|
|
(45
|
)
|
|
(111
|
)
|
Other non-current assets
|
|
39
|
|
|
(233
|
)
|
|
58
|
|
Payables and accrued liabilities
|
|
(1,113
|
)
|
|
(313
|
)
|
|
(1,013
|
)
|
Deferred revenues
|
|
—
|
|
|
555
|
|
|
—
|
|
Provision for restructuring costs (note 13)
|
|
(190
|
)
|
|
(566
|
)
|
|
(1,840
|
)
|
Employee future benefits (note 18)
|
|
(551
|
)
|
|
(459
|
)
|
|
(507
|
)
|
Provisions
|
|
(212
|
)
|
|
(231
|
)
|
|
(252
|
)
|
|
|
(2,212
|
)
|
|
(1,064
|
)
|
|
(3,395
|
)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Current tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
Deferred tax:
|
|
|
|
|
|
|
|||
Origination and reversal of temporary differences
|
|
6,395
|
|
|
9,199
|
|
|
8,581
|
|
Adjustments in respect of prior years
|
|
(149
|
)
|
|
36
|
|
|
—
|
|
Change in unrecognized tax assets
|
|
(2,767
|
)
|
|
(9,235
|
)
|
|
(8,581
|
)
|
Income tax recovery
|
|
3,479
|
|
|
—
|
|
|
—
|
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
Combined Canadian federal and provincial statutory income tax rate
|
|
26.8
|
%
|
|
26.9
|
%
|
|
26.9
|
%
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Income tax recovery based on combined statutory income tax rate
|
|
5,434
|
|
|
6,714
|
|
|
13,511
|
|
Change in unrecognized tax assets
|
|
(2,701
|
)
|
|
(9,235
|
)
|
|
(8,581
|
)
|
Change in unrecognized tax assets related to OCI
|
|
(228
|
)
|
|
436
|
|
|
(269
|
)
|
Share issuance costs
|
|
164
|
|
|
224
|
|
|
—
|
|
Permanent difference attributable to the use of local currency for tax reporting
|
|
(71
|
)
|
|
(30
|
)
|
|
(1,297
|
)
|
Change in enacted rates used
|
|
(358
|
)
|
|
(16
|
)
|
|
—
|
|
Permanent difference attributable to net change in fair value of warrant liability
|
|
595
|
|
|
1,194
|
|
|
(3,754
|
)
|
Share-based compensation costs
|
|
(49
|
)
|
|
(291
|
)
|
|
(248
|
)
|
Difference in statutory income tax rate of foreign subsidiaries
|
|
768
|
|
|
972
|
|
|
1,135
|
|
Permanent difference attributable to expiring loss carry forward
|
|
—
|
|
|
—
|
|
|
(563
|
)
|
Adjustments in respect of prior years
|
|
(149
|
)
|
|
36
|
|
|
—
|
|
Other
|
|
74
|
|
|
(4
|
)
|
|
66
|
|
|
|
3,479
|
|
|
—
|
|
|
—
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Deferred tax assets
|
|
|
|
|
||
Current:
|
|
|
|
|
||
Operating losses carried forward
|
|
3,479
|
|
|
—
|
|
Non-current:
|
|
|
|
|
||
Operating losses carried forward
|
|
696
|
|
|
1,009
|
|
Intangible assets
|
|
4,812
|
|
|
5,199
|
|
|
|
8,987
|
|
|
6,208
|
|
Deferred tax liabilities
|
|
|
|
|
||
Current:
|
|
|
|
|
||
Payables and accrued liabilities
|
|
—
|
|
|
109
|
|
|
|
—
|
|
|
109
|
|
Non-current:
|
|
|
|
|
||
Property, plant and equipment
|
|
5
|
|
|
7
|
|
Deferred revenues
|
|
5,316
|
|
|
5,658
|
|
Warrant liability
|
|
—
|
|
|
386
|
|
Other
|
|
187
|
|
|
48
|
|
|
|
5,508
|
|
|
6,099
|
|
|
|
5,508
|
|
|
6,208
|
|
Deferred tax assets (liabilities), net
|
|
3,479
|
|
|
—
|
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
|
|
$
|
|
$
|
||
Deferred tax assets
|
|
|
|
|
||
Current:
|
|
|
|
|
||
Deferred revenues and other provisions
|
|
584
|
|
|
217
|
|
|
|
584
|
|
|
217
|
|
Non-current:
|
|
|
|
|
||
Deferred Revenues
|
|
—
|
|
|
—
|
|
Operating losses carried forward
|
|
82,421
|
|
|
71,654
|
|
Research and development costs
|
|
9,167
|
|
|
9,195
|
|
Unused tax credits
|
|
8,019
|
|
|
8,019
|
|
Employee future benefits
|
|
2,296
|
|
|
2,275
|
|
Property, plant and equipment
|
|
407
|
|
|
175
|
|
Share issuance expenses
|
|
841
|
|
|
941
|
|
Onerous contract provisions
|
|
—
|
|
|
26
|
|
Intangible assets
|
|
—
|
|
|
189
|
|
Other
|
|
335
|
|
|
144
|
|
|
|
103,486
|
|
|
92,618
|
|
Unrecognized deferred tax assets
|
|
104,070
|
|
|
92,835
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
December 31, 2017
|
Loans and
receivables |
|
Financial
liabilities at FVTPL |
|
Other
financial liabilities |
|
Total
|
||||
|
$
|
|
$
|
|
$
|
|
$
|
||||
Cash and cash equivalents (note 6)
|
7,780
|
|
|
—
|
|
|
—
|
|
|
7,780
|
|
Trade and other receivables (note 8)
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
Restricted cash equivalents
|
381
|
|
|
—
|
|
|
—
|
|
|
381
|
|
Payables and accrued liabilities (note 12)
|
—
|
|
|
—
|
|
|
(2,689
|
)
|
|
(2,689
|
)
|
Provision for restructuring costs (note 13)
|
—
|
|
|
—
|
|
|
(1,806
|
)
|
|
(1,806
|
)
|
Warrant liability (note 14)
|
—
|
|
|
(3,897
|
)
|
|
—
|
|
|
(3,897
|
)
|
|
8,196
|
|
|
(3,897
|
)
|
|
(4,495
|
)
|
|
(196
|
)
|
December 31, 2016
|
|
Loans and receivables
|
|
Financial liabilities at FVTPL
|
|
Other financial liabilities
|
|
Total
|
||||
|
|
$
|
|
$
|
|
$
|
|
$
|
||||
Cash and cash equivalents (note 6)
|
|
21,999
|
|
|
—
|
|
|
—
|
|
|
21,999
|
|
Trade and other receivables (note 8)
|
|
235
|
|
|
—
|
|
|
—
|
|
|
235
|
|
Restricted cash equivalents
|
|
496
|
|
|
—
|
|
|
—
|
|
|
496
|
|
Payables and accrued liabilities (note 12)
|
|
—
|
|
|
—
|
|
|
(3,352
|
)
|
|
(3,352
|
)
|
Provision for restructuring costs (note 13)
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
(33
|
)
|
Warrant liability (note 14)
|
|
—
|
|
|
(6,854
|
)
|
|
—
|
|
|
(6,854
|
)
|
Other non-current liabilities (note 15)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
(97
|
)
|
|
|
22,730
|
|
|
(6,854
|
)
|
|
(3,482
|
)
|
|
12,394
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Carrying
amount |
|
-30%
|
|
+30%
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Warrant liability
|
|
3,897
|
|
|
1,359
|
|
|
(1,474
|
)
|
Total impact on net loss – decrease / (increase)
|
|
|
|
1,359
|
|
|
(1,474
|
)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
United States
|
|
452
|
|
|
410
|
|
|
217
|
|
China
|
|
262
|
|
|
249
|
|
|
302
|
|
Singapore
|
|
—
|
|
|
101
|
|
|
—
|
|
British Virgin Islands
|
|
206
|
|
|
100
|
|
|
—
|
|
Switzerland
|
|
—
|
|
|
—
|
|
|
312
|
|
Other
|
|
3
|
|
|
51
|
|
|
45
|
|
|
|
923
|
|
|
911
|
|
|
876
|
|
Amounts presented:
|
|
|
|
|
|
|
|||
Within discontinued operations
|
|
—
|
|
|
—
|
|
|
331
|
|
Within continuing operations
|
|
923
|
|
|
911
|
|
|
545
|
|
|
|
923
|
|
|
911
|
|
|
876
|
|
*
|
Non-current assets include property, plant and equipment, identifiable intangible assets and goodwill.
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Years ended December 31,
|
|||||||
|
|
2017
|
|
2016
|
|
2015
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Net loss from continuing operations
|
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,228
|
)
|
Net income from discontinued operations
|
|
—
|
|
|
—
|
|
|
85
|
|
Net loss
|
|
(16,796
|
)
|
|
(24,959
|
)
|
|
(50,143
|
)
|
Basic and diluted weighted average number of shares outstanding
|
|
14,958,704
|
|
|
10,348,879
|
|
|
2,763,603
|
|
Items excluded from the calculation of diluted net loss per share because the exercise price was greater than the average market price of the common shares or due to their anti-dilutive effect
|
|
|
|
|
|
|
|||
Stock options
|
|
713,918
|
|
|
968,397
|
|
|
276,661
|
|
Share purchase warrants
|
|
3,417,840
|
|
|
3,779,245
|
|
|
2,842,309
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
|
|
Minimum lease payments
|
|
Minimum sublease receipts
|
|
Service and manufacturing
|
|||
|
|
$
|
|
$
|
|
$
|
|||
Less than 1 year
|
|
448
|
|
|
(143
|
)
|
|
403
|
|
1 - 3 years
|
|
633
|
|
|
(26
|
)
|
|
283
|
|
4 - 5 years
|
|
105
|
|
|
—
|
|
|
259
|
|
More than 5 years
|
|
100
|
|
|
—
|
|
|
250
|
|
Total
|
|
1,286
|
|
|
(169
|
)
|
|
1,195
|
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Aeterna Zentaris Inc.
|
Notes to Consolidated Financial Statements
|
As at December 31, 2017 and December 31, 2016 and for the years ended December 31, 2017, 2016 and 2015
|
(tabular amounts in thousands of US dollars, except share/option/warrant and per share/option/warrant data and as otherwise noted)
|
Item 19.
|
Exhibits
|
1.1
|
|
|
1.2
|
|
|
1.3
|
|
|
1.4
|
|
|
2.1
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
8.1
|
|
|
11.1
|
|
|
11.2
|
|
|
11.3
|
|
|
12.1
|
|
|
12.2
|
|
|
13.1
|
|
|
13.2
|
|
|
15.1
|
|
AETERNA ZENTARIS INC.
|
|
/s/ Michael V. Ward
|
|
Michael V. Ward
|
President and Chief Executive Officer
|
SECTION 1 -
|
PURPOSE:
|
1.1
|
The Corporation wishes to employ at the Effective Date the Executive as its President and Chief Executive Officer, performing the associated duties of this position and such other duties as may be assigned from time to time by the Corporation, and the Executive agrees to be employed in such manner on the terms and conditions set forth herein.
|
SECTION 2 -
|
DUTIES:
|
2.1
|
The Executive agrees to devote his full business time, attention, skill and efforts to the faithful performance and discharge of his duties and responsibilities as President and Chief Executive Officer in conformity with the highest professional standards, in a prudent and workmanlike manner and in a manner consistent with the obligations imposed under applicable law. The Executive shall promote the best interests of the Corporation in carrying out the Executive’s duties and responsibilities, and he shall not take any action, or fail to take any action which failure could, or could reasonably be expected to, have an adverse effect on the business of the Corporation.
|
2.2
|
The Executive discloses, represents and affirms that he has no obligation toward any person or entity, including former employers, that would be incompatible with this Agreement or that could create an impediment to or conflict of interest with the performance of his duties with the Corporation.
|
SECTION 3 -
|
COMPENSATION:
|
3.1
|
Annual Base Salary.
The Corporation shall pay the Executive a base annual salary (the
Base Salary)
which initially shall be Two Hundred and Fifty Thousand US (US$250,000.00), subject to applicable taxable withholding and deductions and payable in accordance with the Corporation’s standard payroll practices for executive officers. The Base Salary shall be reviewed annually by the Board or a committee of the Board and may be increased in accordance with the Corporation’s compensation policy. The Corporation shall increase the Base Salary to Three Hundred and Twenty Five Thousand US (US$325,000.00) upon approval of Macrilen by the U.S. Food and Drug Administration. Finally, all or part of the Executive’s Base Salary may be paid through an Affiliate of the Corporation.
|
3.2
|
Annual Cash Bonus.
The Executive shall be eligible to earn an annual cash bonus (the
Annual Bonus).
The granting of an Annual Bonus, if any, shall be based on both the performance of the business and the Executive and it is subject to the approval by the Board in its sole discretion. The amount of the Annual Bonus shall be calculated based upon the formula of the Annual Bonus plan for executives, which currently ranges in target from 0 to 65%. The Annual Bonus, if any, payable for any calendar year shall be paid no later than March 15 of the following calendar year. To be eligible to receive any Annual Bonus, the Executive must be a current employee in good standing of the Corporation at the time that Annual Bonus payments are made.
|
3.3
|
Stock Options.
Subject to any required shareholder or regulatory approval, the Executive shall be eligible to receive an annual grant of stock options to purchase shares of the Corporation’s publically-traded common stock (the “Common Stock”), subject to vesting, exercise, pricing and all other applicable, terms of the Corporation’s Stock Option Plan. Granting of such annual stock options shall also be subject to the prior approval and the sole discretion of the Board. If any shareholder or regulatory approval is required, the Corporation shall promptly undertake all reasonable efforts to secure such approval.
|
3.4
|
Business Expenses.
The Corporation shall reimburse the Executive, upon presentation of valid receipts or vouchers, for reasonable entertainment, travel and other business expenses, incurred on behalf of or at the request of the Corporation, so long as they are in incurred accordance with the Corporation’s policies and rules for such reimbursements.
|
3.5
|
Car Allowance.
The Corporation shall pay the Executive an annual, taxable car allowance in the amount of Twenty Thousand US Dollars (US$20,000.00), payable in accordance with the Corporation’s policy as it applies to executives. The Executive shall assume and pay all related operating costs of the vehicle, including insurance, registration, maintenance, repairs and fuel expenses.
|
SECTION 4 -
|
VACATION:
|
4.1
|
The Executive shall be entitled to a paid annual vacation of four (4) weeks in accordance with the Corporation’s vacation policy for executives, subject to the approval of the Board. All of the vacation shall be taken during each calendar year and shall not be carried over in any amount into succeeding years. Unused vacation shall not be payable in cash to the Executive.
|
SECTION 5 -
|
OTHER BENEFITS:
|
5.1
|
Subject to eligibility requirements and participation rules, the Executive may participate in all of the employee benefit plans maintained by the Company which are available to executive employees of the Corporation who work in the same location as the Executive.
|
SECTION 6 -
|
TERMINATION:
|
6.1
|
At-Will Employment.
Nothing in this Agreement shall be construed to alter the at-will employment relationship between the Corporation and the Executive. Subject to the terms set forth in this Agreement, either the Corporation or the Executive may terminate Executive’s employment at any time for any reason, with or without Cause, as defined in Section 6.3 below.
|
6.2
|
Termination for Cause.
The Executive’s employment may be terminated by the Corporation upon simple notice in writing transmitted to the Executive, without the Corporation (or any of its Affiliates) being bound to pay any compensation whatsoever if termination is for any of the following reasons, each of which constitutes Cause:
|
(a)
|
The Executive is declared bankrupt or insolvent or makes an assignment of substantially all of his property or is placed under protective supervision.
|
(b)
|
The Executive becomes physically or mentally disabled to such an extent as to render him unable to perform the essential functions of his job duties normally and adequately for an aggregate of twelve (12) weeks during a period of twelve (12) consecutive months. In such a case, the Executive may continue to benefit under short-term and long-term disability insurance plans, subject to the terms of such plans, if any. The Corporation’s ability to terminate the Executive as a result of any disability shall be to the extent permitted by applicable state or federal law.
|
(c)
|
The Executive materially fails or refuses to adequately perform the duties or responsibilities assigned by the Corporation or its Board.
|
(d)
|
The Executive engages in fraud, theft, embezzlement or other criminal act of a similar nature, or commits an act of serious misconduct or willful or gross negligence in the performance of his duties.
|
(f)
|
The Executive conducts himself, by speech or behavior, in such a manner as to cause embarrassment, scandal or ridicule to the Corporation, any of its affiliates or any of their employees or to create, foment or engender a disrespectful, divisive or hostile workplace environment.
|
(i)
|
Provided, however, that the reason set forth in subsection 6.2(c) shall not constitute Cause unless the Executive is given a reasonable period (at least 10 days) to effect a cure or a correction and fails to do so (and provided that the reason is curable or correctible as determined in the reasonable discretion of the Board). Furthermore, whether a Cause event has occurred shall be determined in the reasonable discretion of the Board.
|
6.1
|
Good Reason.
The Executive shall have the right to resign at any time for any of the following reasons, each of which shall constitute Good Reason:
|
6.2
|
Termination by Death.
In the event of the Executive’s death during his period of employment, the Corporation’s obligation to make payments under this Agreement shall terminate on the date of death, except the Corporation shall pay the Executive’s estate or surviving designated beneficiary or beneficiaries, as appropriate, any earned but unpaid salary and bonus and reimburse business expenses incurred but not reimbursed as of his date of death. Vesting of any stock options outstanding on the date of death shall be exercisable only to the extent the Executive’s right to exercise was vested on his date of death.
|
6.3
|
Voluntary Termination.
If the event Executive wishes to resign for any reason other than Good Reason or the Corporation wishes to terminate his employment without Cause, the Executive shall give, or receive, as applicable at least thirty (30) days prior written notice of such resignation or termination, whichever is applicable. Any such notice shall not relieve either the Executive or the Corporation of their mutual obligations to perform under this Agreement or to relieve the Corporation to compensate the Executive during such notice period for any earned but unpaid salary and bonus and reimburse business expenses incurred but not reimbursed as of his date of termination.
|
6.4
|
Termination Without Cause Or Resignation For Good Reason.
In the event that the Executive has a “separation from service” within the meaning of a §409A of the US Internal Revenue Code of 1986, as amended (a “Separation from Service”) as a result of the Corporation terminating the Executive’s employment without Cause or the Executive resigning for Good Reason, except for a termination under Section 6.2, the Corporation shall pay to Executive an amount equal to at least 18 months of his then Base Salary (the “Severance Pay”). [The Severance Pay shall not be prorated for partial years of service]. The Severance Pay shall be paid out in equal installments in accordance with the Corporation’s standard payroll cycle (less applicable tax withholdings) over a period of one year, commencing with the first regular payroll date that is at least seven days after the Corporation receives the Release referenced below from Executive, and assuming Executive does not revoke the release. The right to payment of the Severance Pay is conditioned upon Executive’s executing, and not revoking, a full and general Release of all claims in a form satisfactory to the Corporation and full compliance with the terms of this Agreement. If necessary, all payments due under this Section 6.7 by the Corporation may be delayed as required by §409A of the US Internal Revenue Code of 1986 (the “Code”); the payments shall be so delayed by six (6) months and one day, and the first six (6) months’ Severance Pay shall be paid in a lump sum on the first payroll date thereafter. The Corporation has the right to cease making payments under this paragraph at any time it determines Executive is in breach of Sections 7,8, or 9 of this Agreement.
|
6.5
|
Clawback of any Erroneously Paid Compensation.
If, after a payment is made to the Executive pursuant to Section 3, 4, 5 or 6, the Corporation finds, after full consideration of the facts, that the Executive engaged in fraud, theft, embezzlement or any other criminal act of a similar nature in the performance of his duties to the Corporation, the Executive must immediately repay to the Corporation all amounts that were paid to him pursuant to Section 3, 4, 5 or 6 of the Agreement.
|
SECTION 7 -
|
NO-COMPETITION, NO SOLICITATION AND LOYALTY:
|
7.1
|
During the duration of the Executive’s employment and for a period of one (1) year following the date of termination of his employment, Executive shall not compete with the Corporation, directly or indirectly, in the development and commercialization of the same or substantially similar endocrine therapies and oncology treatments that the Corporation is developing, including, without limitation, as an executive, director, officer, employer, principal, agent, fiduciary, administrator of another’s property, associate, independent contractor, franchisor, franchisee, distributor or consultant of or for a competing entity, unless such participation is fully disclosed to the Board and approved in writing in advance by the Chairman of the Board. In addition, the Executive shall not have any interest whatsoever in such an enterprise, including, without limitation, as owner, shareholder, partner, limited partner, lender or silent partner. This non-competition covenant is limited in geographic scope to those geographic areas in the United States, Canada and Europe in which the same or substantially similar endocrine therapies and oncology treatments are developed and commercialized by the Corporation or its Affiliates. The term of the non-competition covenant shall be tolled during any period in which Executive has violated the covenant for any reason.
|
7.2
|
The foregoing stipulation shall nevertheless not prevent the Executive from purely passive investments in the shares or other securities of a corporation or entity other than the Corporation whose securities are publicly traded on a recognized stock exchange where the securities so held by the Executive do not represent more than five percent (5%) of the voting shares of such other corporation or entity and do not allow for its control.
|
7.3
|
The Executive also undertakes, for the same period and in respect of the same territory referred to hereinabove in Section 7.1 not to solicit clients of the Corporation or its Affiliates with which he had any contact during the period of his employment with the Corporation, or do anything whatsoever to induce or to lead any person to end, in whole or in part, business relations with the Corporation or any of its affiliates.
|
7.4
|
The Executive also undertakes, for the same period and in respect of the same territory referred to hereinabove in Section 7.1 not to interfere in the relations which the Corporation or which any of its affiliates has with their distributors, suppliers, representatives, agents and other parties with whom the Corporation or any of its affiliates deals, including inducing or attempting to induce such entities to cease doing business with the Corporation or its affiliates.
|
7.5
|
The Executive also undertakes, for the same period and in respect of the same territory referred to in Section 7.1 not to induce, attempt to induce or otherwise solicit the personnel of the Corporation to leave their employment with the Corporation or any of its affiliates nor to hire the personnel of the Corporation or any of its affiliates for any enterprise in which the Executive has an interest.
|
7.6
|
The Executive acknowledges that the provisions of this Section 7 are reasonably limited as to the time period, the geographic area and the nature of the activities to what the parties deem necessary to protect the legitimate interests of the Corporation and its affiliates, while allowing the Executive to earn his living.
|
7.7
|
Nothing in this Section 7 shall operate to reduce or extinguish the obligations of the Executive arising at law or under this contract which survive at the termination of this Agreement in reason of their nature and, in particular, without limiting the foregoing, the Executive’s duty of loyalty and obligation to act faithfully, honestly and ethically.
|
SECTION 8 -
|
CONFIDENTIALITY:
|
8.1
|
The Executive acknowledges that he has received and will receive or conceive, in carrying on or in the course of his work during his employment with the Corporation, confidential information pertaining to the activities, the technologies, the operations and the business, past, present and future, of the Corporation, which information is not in the public domain. The Executive acknowledges that such confidential information belongs to the Corporation and that its disclosure or unauthorized use could be damaging or prejudicial to the Corporation and contrary to their best interests.
|
8.2
|
The term confidential information includes, among other things:
|
8.2.1
|
products, formulae, processes and composition of products, as well as raw materials and ingredients, of whatever kind, that are used in their manufacture;
|
8.2.2
|
technical knowledge and methods, quality control processes, inspection methods, laboratory and testing methods, information processing programs and systems, manufacturing processes, plans, drawings, tests, test reports and software;
|
8.2.3
|
equipment, machinery, devices, tools, instruments and accessories;
|
8.2.4
|
financial information, production cost data, marketing strategies, raw materials supplies, suppliers, staff and client lists and related information, marketing plans, sales techniques and policies, including pricing policies, sales and distribution data and present and future expansion plans;
|
8.2.5
|
research, experiments, inventions, discoveries, developments, improvements, ideas, industrial secrets and know-how; and
|
8.2.6
|
Personnel information of employees of the Corporation.
|
8.3
|
The Executive agrees to keep confidential and not disclose to any third party both the existence and the terms of this Agreement, except if disclosure is required by regulation or law. In the event Executive is required to disclose the existence or terms of this Agreement pursuant to subpoena or other duly issued court order, Executive shall give prompt notice to the Corporation of such subpoena or court order to allow the Corporation sufficient opportunity to contest such subpoena or court order.
|
8.4
|
Nothing in this Section 8 shall be read to prevent Executive from discussing or disclosing confidential information in connection with an investigation by the SEC, the EEOC, the NLRB or another state or federal agency, or from filing and/or pursuing a charge or complaint with any such agency.
|
SECTION 9 -
|
OWNERSHIP OF INTELLECTUAL PROPERTY:
|
9.1
|
The Executive hereby assigns and agrees to assign to the Corporation all of his intellectual property rights as of their creation and to make full and prompt disclosure to the Corporation of all information relating to anything made or designed by him or that may be made or designed by him during the period of his employment, whether alone or jointly with other persons, or within a period of two (2) years following the termination of his employment and resulting from or arising out of any work performed by the Executive on behalf of the Corporation (or its affiliates) or connected with any matter relating or possibly relating to any business in which the Corporation or any of its affiliates or related or associated companies is involved unless specifically released from such obligation in writing by the Corporation’s Board of Directors.
|
9.2
|
In addition, the Executive renounces all legal rights in any document or work realized during the period of his employment related to his employment by the Corporation. The Executive acknowledges that the Corporation has the right to use, modify or reproduce any such document or work realized by the Executive, at its entire discretion, without the Executive’s authorization and without his name being mentioned.
|
9.3
|
At any time during the period of his employment or after the termination of his employment, the Executive shall sign, acknowledge and deliver, at the Corporation’s expense, but without compensation other than a reasonable sum for his time devoted thereto if his employment has then terminated, any document required by the Corporation to give effect to Section 9.1, including patent applications and documents evidencing the assignment of ownership. The Executive shall also provide such other assistance as the Corporation or one of its affiliates may require with respect to any proceeding or litigation relating to the protection or defense of intellectual property rights belonging to the Corporation or any of its affiliates.
|
9.4
|
The entirety of this Section 9 shall be binding on the Executive’s heirs, assigns and legal representatives.
|
SECTION 10 -
|
OWNERSHIP OF FILES AND OTHER PROPERTY:
|
10.1
|
Any property of the Corporation, including any file, sketch, drawing, letter, report, memorandum or other document, any equipment, machinery, tool, instrument or other device, any diskette, recording tape, compact disc, software, electronic communication device or any other property, which comes into the Executive’s control or possession during his employment with the Corporation in the performance or in the course of his duties, regardless of whether he has participated in its preparation or design, how it may have come under his control or into his possession and whether it is an original or a copy, shall at all times remain the property of the Corporation and, upon the termination of the Executive’s employment, shall promptly be returned to the Corporation or its designated representative. The Executive may not keep a copy or give one to a third party without the prior expressly written permission of the Chairman of the Board.
|
SECTION 11 -
|
NON DISPARAGEMENT:
|
11.1
|
Except as may be required by law, neither the Corporation nor the Executive shall make any negative or derogatory statements or remarks, verbally or in writing, in any medium, including social media, about the other to any person or entity outside the Corporation.
|
SECTION 12 -
|
TERMINATION OF PRIOR CONTRACTS:
|
12.1
|
As of the effective date hereof, this Agreement supersedes and cancels any prior agreement, verbal or written, with respect to the Executive’s employment with the Corporation, except for any change in control agreement executed with this Agreement. Without limiting the foregoing language of this Section 12.1, the CEO Consulting Agreement, dated June 2, 2017, is hereby superseded and cancelled as of the Effective Date.
|
SECTION 13 -
|
AMENDMENT OF THE AGREEMENT:
|
13.1
|
To be valid and enforceable, any amendment to this Agreement must be confirmed in writing by each of the Corporation and the Executive.
|
SECTION 14 -
|
NOTICES:
|
14.1
|
Any notice given hereunder shall be given in writing and sent by registered or certified mail or hand-delivered. If such notice is sent by registered or certified mail, it shall be deemed to have been received five (5) business days following the date of its mailing if the postal services are working normally. If such is not the case, the notice must be hand- delivered or served by bailiff, at the discretion of the sender. In the case of hand-delivery or service, the notice shall be deemed to have been received the same day. It is agreed that if the delivery date is a non-business day, the notice shall be deemed to have been received on the following business day.
|
SECTION 15 -
|
SUCCESSORS:
|
15.1
|
This Agreement shall be binding on the successors, heirs, assignees and legal representatives of all of the parties hereto.
|
SECTION 16 -
|
CHOICE OF LAW AND JURISDICTION:
|
16.1
|
This Agreement shall be governed by and interpreted in accordance with the laws, including conflicts of laws, by the State of Delaware in the United States of America. Subject to Section 18, any lawsuit that arises from or relates to this Agreement shall be brought exclusively in Dover, Delaware.
|
SECTION 17 -
|
SEVERABILITY:
|
17.1
|
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement, which can be given effect without the invalid provisions or applications and, to this end, the provisions of this Agreement are declared to be severable. Moreover, if any provision of this Agreement is deemed to be overbroad or otherwise unenforceable as written, the parties agree that such provision should be modified and reformed, and then enforced, to the maximum extent permitted by applicable law.
|
SECTION 18 -
|
MEDIATION AND ARBITRATION:
|
18.1
|
The Corporation and the Executive hereby expressly agree that with respect to any dispute arising under this Agreement, such dispute shall be addressed first through confidential mediation, and if that fails, through confidential and binding arbitration. Any such mediation shall take place in Delaware before a single mediator selected by the agreement of the parties. The Corporation shall bear all fees and expenses of the mediator. The parties shall bear the expense of their own attorneys’ fees. If the mediation fails to result in a prompt settlement, the arbitration shall be conducted in Delaware by one arbitrator who is designated in accordance with the then current employment rules and procedures of the American Arbitration Association. The arbitrator shall prepare and publish a reasoned award. Each of the parties hereto shall bear their own, respective, costs of such arbitration. Nothing in this provision shall prevent or limit the Corporation from having the right to file suit in court to obtain injunctive relief to enforce the covenants in Sections 7, 8, 9 or 10 of this Agreement.
|
SECTION 19 -
|
LANGUAGE:
|
19.1
|
All of the parties hereto expressly agree that this Agreement be drafted, read and interpreted in the English language.
|
SECTION 20 -
|
COUNTERPARTS:
|
20.1
|
This Agreement may be executed in counterparts, each of which shall be deemed one and the same Agreement.
|
1.1
|
The Corporation wishes to employ at the Effective Date the Executive as its Chief Financial Officer, performing the associated duties of this position and such other duties as may be assigned from time to time by the Corporation, and the Executive agrees to be employed in such manner on the terms and conditions set forth herein.
|
2.1
|
The Executive agrees to devote his full business time, attention, skill and efforts to the faithful performance and discharge of his duties and responsibilities as Chief Financial Officer in conformity with the highest professional standards, in a prudent and workmanlike manner and in a manner consistent with the obligations imposed under applicable law. The Executive shall promote the best interests of the Corporation in carrying out the Executive’s duties and responsibilities, and he shall not take any action, or fail to take any action which failure could, or could reasonably be expected to, have an adverse effect on the business of the Corporation.
|
2.2
|
The Executive discloses, represents and affirms that he has no obligation toward any person or entity, including former employers, that would be incompatible with this Agreement or that could create an impediment to or conflict of interest with the performance of his duties with the Corporation.
|
2.3
|
The Executive and the Corporation agree that the Executive’s principal place of business is at the Corporation’s office in South Carolina and that any reassignment of his principal place of business will be to a place in the United States mutually agreed upon by the Executive and the Corporation. The Executive understands that his duties and responsibilities will require him to travel to outside the United States from time to time to further the business and interests of the Corporation.
|
3.1
|
Annual Base Salary.
The Corporation shall pay the Executive a base annual salary (the
Base Salary
) which initially shall be Two Hundred Seventy Five Thousand US (US$275,000), subject to applicable taxable withholding and deductions and payable in accordance with the Corporation’s standard payroll practices for executive officers. The Base Salary shall be reviewed annually by the Board or a committee of the Board and may be increased in accordance with the Corporation’s compensation policy. Finally, all or part of the Executive’s Base Salary may be paid through an Affiliate of the Corporation.
|
3.2
|
Annual Cash Bonus.
The Executive shall be eligible to earn an annual cash bonus of between 0-30% of the Executive’s Base Salary (the
Annual Bonus
). The granting of an Annual Bonus, if any, shall be based on the performance of the business and the Executive and it is subject to the approval by the Board in its sole discretion. The Annual Bonus, if any, payable for any calendar year shall be paid no later than March 15 of the following calendar year. To be eligible to receive any Annual Bonus, the Executive must be a current employee in good standing of the Corporation at the time that Annual Bonus payments are made.
|
3.3
|
Stock Options.
Subject to any required shareholder or regulatory approval, the Executive shall be eligible to receive an annual grant of stock options to purchase shares of the Corporation’s publicly-traded common stock (the “Common Stock”), subject to vesting, exercise, pricing and all other applicable, terms of the Corporation’s Stock Option Plan. Granting of such annual stock options shall also be subject to the prior approval and the sole discretion of the Board. If any shareholder or regulatory approval is required, the Corporation shall promptly undertake all reasonable efforts to secure such approval. At the next scheduled Board meeting at which stock option grants may be made in accordance with applicable stock exchange rules and regulations, the Executive will receive a grant of options to purchase 100,000 shares.
|
3.4
|
Business Expenses.
The Corporation shall reimburse the Executive, upon presentation of valid receipts or vouchers, for reasonable entertainment, travel and other business expenses, incurred on behalf of or at the request of the Corporation, so long as they are in incurred accordance with the Corporation’s policies and rules for such reimbursements.
|
3.5
|
Car Allowance.
The Corporation shall pay the Executive an annual taxable car allowance in the amount of Twenty Thousand Dollars ($20,000.00), payable in accordance with the Corporation’s policy as it relates to executives. The Executive shall assume and pay all related operating costs of the vehicle, including insurance, registration, maintenance, repairs and fuel expenses.
|
4.1
|
The Executive shall be entitled to a paid annual vacation of four (4) weeks in accordance with the Corporation’s vacation policy for executives, subject to the approval of the Corporation’s CEO or his designee. All of the vacation shall be taken during each calendar year and shall not be carried over in any amount into succeeding years. Unused vacation shall not be payable in cash to the Executive.
|
5.1
|
Subject to eligibility requirements and participation rules, the Executive may participate in all of the employee benefit plans maintained by the Company which are available to executive employees of the Corporation who work in the same location as the Executive.
|
6.1
|
At-Will Employment.
Nothing in this Agreement shall be construed to alter the at-will employment relationship between the Corporation and the Executive. Subject to the terms set forth in this Agreement, either the Corporation or the Executive may terminate Executive’s employment at any time for any reason, with or without Cause, as defined in Section 6.3 below.
|
6.2
|
Termination During Probationary Period.
During the period ending 90 days from the Effective Date the Corporation may terminate Executive’s employment for any reason, with or without cause, as defined in Section 6.3 below, without the Corporation (or any of its Affiliates) being bound to pay any of the compensation provided for in Section 6.7, and without being bound to provide the 30 day notice required by Section 6.6.
|
6.3
|
Termination for Cause.
The Executive’s employment may be terminated by the Corporation upon simple notice in writing transmitted to the Executive, without the Corporation (or any of its Affiliates) being bound to pay any compensation whatsoever if termination is for any of the following reasons, each of which constitutes Cause:
|
(a)
|
The Executive is declared bankrupt or insolvent or makes an assignment of substantially all of his property or is placed under protective supervision.
|
(b)
|
The Executive becomes physically or mentally disabled to such an extent as to render him unable to perform the essential functions of his job duties normally and adequately for an aggregate of twelve (12) weeks during a period of twelve (12) consecutive months. In such a case, the Executive may continue to benefit under short-term and long-term disability insurance plans, subject to the terms of such plans, if any. The Corporation’s ability to terminate the Executive as a result of any disability shall be to the extent permitted by applicable state or federal law.
|
(c)
|
The Executive materially fails or refuses to adequately perform the duties or responsibilities assigned by the Corporation or its Board.
|
(d)
|
The Executive engages in fraud, theft, embezzlement or other criminal act of a similar nature, or commits an act of serious misconduct or willful or gross negligence in the performance of his duties.
|
(e)
|
The Executive misuses or abuses alcohol, drugs or controlled substances.
|
(f)
|
The Executive materially breaches Sections 7, 8 or 9 of this Agreement.
|
(g)
|
Provided, however, that the reason set forth in subsection 6.2(c) shall not constitute Cause unless the Executive is given a reasonable period (at least 30 days) to effect a cure or a correction and fails to do so (and provided that the reason is curable or correctible as determined in the reasonable discretion of the Board). Furthermore, whether a Cause event has occurred shall be determined in the reasonable discretion of the Board.
|
6.4
|
Good Reason.
The Executive shall have the right to resign at any time for any of the following reasons, each of which shall constitute Good Reason:
|
6.5
|
Termination by Death.
In the event of the Executive’s death during his period of employment, the Corporation’s obligation to make payments under this Agreement shall terminate on the date of death, except the Corporation shall pay the Executive’s estate or surviving designated beneficiary or beneficiaries, as appropriate, any earned but unpaid salary and bonus and reimburse business expenses incurred but not reimbursed as of his date of death. Vesting of any stock options outstanding on the date of death shall be exercisable only to the extent the Executive’s right to exercise was vested on his date of death.
|
6.6
|
Voluntary Termination.
If the event Executive wishes to resign for any reason other than Good Reason or the Corporation wishes to terminate his employment without Cause, the Executive shall give, or receive, as applicable at least thirty (30) days prior written notice of such resignation or termination, whichever is applicable. Any such notice shall not relieve either the Executive or the Corporation of their mutual obligations to perform under this Agreement or to relieve the Corporation to compensate the Executive during such notice period for any earned but unpaid salary and bonus and reimburse business expenses incurred but not reimbursed as of his date of termination.
|
6.7
|
Termination Without Cause Or Resignation For Good Reason.
In the event that the Executive has a “separation from service” within the meaning of a §409A of the US Internal Revenue Code of 1986, as amended (a “Separation from Service”) as a result of the Corporation terminating the Executive’s employment without Cause or the Executive resigning for Good Reason, except for a termination under Section 6.2, the Corporation shall pay to Executive an amount equal to at least 6 months of his then Base Salary (the “Severance Pay”). This amount shall be increased by one month of base salary for each full year of service, starting with Executive’s completion of two full years of service and stopping at a maximum of 12 months of Base Salary after seven full years of service. The Severance Pay shall not be prorated for partial years of service. The Severance Pay shall be paid out in equal installments in accordance with the Corporation’s standard payroll cycle (less applicable tax withholdings) over a period of one year, commencing with the first regular payroll date that is at least seven days after the Corporation receives the Release referenced below from Executive, and assuming Executive does not revoke the release. The right to payment of the Severance Pay is conditioned upon Executive’s executing, and not revoking, a full and general Release of all claims in a form satisfactory to the Corporation and full compliance with the terms of this Agreement. If necessary, all payments due under this Section 6.7 by the Corporation may be delayed as required by §409A of the US Internal Revenue Code of 1986 (the “Code”); the payments shall be so delayed by six (6) months and one day, and the first six (6) months’ Severance Pay shall be paid in a lump sum on the first payroll date thereafter. The Corporation has the right to cease making payments under this paragraph at any time it determines Executive is in breach of Sections 7, 8, or 9 of this Agreement.
|
6.8
|
Clawback of any Erroneously Paid Compensation.
If, after a payment is made to the Executive pursuant to Section 3, 4, 5 or 6, the Corporation finds, after full consideration of the facts, that the Executive engaged in fraud, theft, embezzlement or any other criminal act of a similar nature in the performance of his duties to the Corporation, the Executive must immediately repay to the Corporation all amounts that were paid to him pursuant to Section 3, 4, 5 or 6 of the Agreement.
|
7.1
|
During the duration of the Executive’s employment and for a period of one (1) year following the date of termination of his employment, Executive shall not compete with the Corporation, directly or indirectly, in the development and commercialization of the same or substantially similar endocrine therapies and oncology treatments that the Corporation is developing, including, without limitation, as an executive, director, officer, employer, principal, agent, fiduciary, administrator of another’s property, associate, independent contractor, franchisor, franchisee, distributor or consultant of or for a competing entity, unless such participation is fully disclosed to the Board and approved in writing in advance by the Chairman of the Board. In addition, the Executive shall not have any interest whatsoever in such an enterprise, including, without limitation, as owner, shareholder, partner, limited partner, lender or silent partner. This non‑competition covenant is limited in geographic scope to those geographic areas in the United States, Canada and Europe in which the same or substantially similar endocrine therapies and oncology treatments are developed and commercialized by the Corporation or its Affiliates. The term of the non-competition covenant shall be tolled during any period in which Executive has violated the covenant for any reason.
|
7.2
|
The foregoing stipulation shall nevertheless not prevent the Executive from purely passive investments in the shares or other securities of a corporation or entity other than the Corporation whose securities are publicly traded on a recognized stock exchange where the securities so held by the Executive do not represent more than five percent (5%) of the voting shares of such other corporation or entity and do not allow for its control.
|
7.3
|
The Executive also undertakes, for the same period and in respect of the same territory referred to hereinabove in Section 7.1 not to solicit clients of the Corporation or its Affiliates with which he had any contact during the period of his employment with the Corporation, or do anything whatsoever to induce or to lead any person to end, in whole or in part, business relations with the Corporation or any of its affiliates.
|
7.4
|
The Executive also undertakes, for the same period and in respect of the same territory referred to hereinabove in Section 7.1 not to interfere in the relations which the Corporation or which any of its affiliates has with their distributors, suppliers, representatives, agents and other parties with whom the Corporation or any of its affiliates deals, including inducing or attempting to induce such entities to cease doing business with the Corporation or its affiliates.
|
7.5
|
The Executive also undertakes, for the same period and in respect of the same territory referred to in Section 7.1 not to induce, attempt to induce or otherwise solicit the personnel of the Corporation to leave their employment with the Corporation or any of its affiliates nor to hire the personnel of the Corporation or any of its affiliates for any enterprise in which the Executive has an interest.
|
7.6
|
The Executive acknowledges that the provisions of this Section 7 are reasonably limited as to the time period, the geographic area and the nature of the activities to what the parties deem necessary to protect the legitimate interests of the Corporation and its affiliates, while allowing the Executive to earn his living.
|
7.7
|
Nothing in this Section 7 shall operate to reduce or extinguish the obligations of the Executive arising at law or under this contract which survive at the termination of this Agreement in reason of their nature and, in particular, without limiting the foregoing, the Executive’s duty of loyalty and obligation to act faithfully, honestly and ethically.
|
8.1
|
The Executive acknowledges that he has received and will receive or conceive, in carrying on or in the course of his work during his employment with the Corporation, confidential information pertaining to the activities, the technologies, the operations and the business, past, present and future, of the Corporation, which information is not in the public domain. The Executive acknowledges that such confidential information belongs to the Corporation and that its disclosure or unauthorized use could be damaging or prejudicial to the Corporation and contrary to their best interests.
|
8.2
|
The term confidential information includes, among other things:
|
8.2.1
|
products, formulae, processes and composition of products, as well as raw materials and ingredients, of whatever kind, that are used in their manufacture;
|
8.2.2
|
technical knowledge and methods, quality control processes, inspection methods, laboratory and testing methods, information processing programs and systems, manufacturing processes, plans, drawings, tests, test reports and software;
|
8.2.3
|
equipment, machinery, devices, tools, instruments and accessories;
|
8.2.4
|
financial information, production cost data, marketing strategies, raw materials supplies, suppliers, staff and client lists and related information, marketing plans, sales techniques and policies, including pricing policies, sales and distribution data and present and future expansion plans;
|
8.2.5
|
research, experiments, inventions, discoveries, developments, improvements, ideas, industrial secrets and know-how; and
|
8.2.6
|
Personnel information of employees of the Corporation.
|
8.3
|
The Executive agrees to keep confidential and not disclose to any third party both the existence and the terms of this Agreement, except if disclosure is required by regulation or law. In the event Executive is required to disclose the existence or terms of this Agreement pursuant to subpoena or other duly issued court order, Executive shall give prompt notice to the Corporation of such subpoena or court order to allow the Corporation sufficient opportunity to contest such subpoena or court order.
|
9.1
|
The Executive hereby assigns and agrees to assign to the Corporation all of his intellectual property rights as of their creation and to make full and prompt disclosure to the Corporation of all information relating to anything made or designed by him or that may be made or designed by him during the period of his employment, whether alone or jointly with other persons, or within a period of two (2) years following the termination of his employment and resulting from or arising out of any work performed by the Executive on behalf of the Corporation (or its affiliates) or connected with any matter relating or possibly relating to any business in which the Corporation or any of its affiliates or related or associated companies is involved unless specifically released from such obligation in writing by the Corporation’s Board of Directors.
|
9.2
|
In addition, the Executive renounces all legal rights in any document or work realized during the period of his employment related to his employment by the Corporation. The Executive acknowledges that the Corporation has the right to use, modify or reproduce any such document or work realized by the Executive, at its entire discretion, without the Executive’s authorization and without his name being mentioned.
|
9.3
|
At any time during the period of his employment or after the termination of his employment, the Executive shall sign, acknowledge and deliver, at the Corporation’s expense, but without compensation other than a reasonable sum for his time devoted thereto if his employment has then terminated, any document required by the Corporation to give effect to Section 9.1, including patent applications and documents evidencing the assignment of ownership. The Executive shall also provide such other assistance as the Corporation or one of its affiliates may require with respect to any proceeding or litigation relating to the protection or defense of intellectual property rights belonging to the Corporation or any of its affiliates.
|
9.4
|
The entirety of this Section 9 shall be binding on the Executive’s heirs, assigns and legal representatives.
|
10.1
|
Any property of the Corporation, including any file, sketch, drawing, letter, report, memorandum or other document, any equipment, machinery, tool, instrument or other device, any diskette, recording tape, compact disc, software, electronic communication device or any other property, which comes into the Executive’s control or possession during his employment with the Corporation in the performance or in the course of his duties, regardless of whether he has participated in its preparation or design, how it may have come under his control or into his possession and whether it is an original or a copy, shall at all times remain the property of the Corporation and, upon the termination of the Executive’s employment, shall promptly be returned to the Corporation or its designated representative. The Executive may not keep a copy or give one to a third party without the prior expressly written permission of the Chairman of the Board.
|
11.1
|
Except as may be required by law, neither the Corporation nor the Executive shall make any negative or derogatory statements or remarks, verbally or in writing, in any medium, including social media, about the other to any person or entity outside the Corporation.
|
12.1
|
As of the effective date hereof, this Agreement supersedes and cancels any prior agreement, verbal or written, with respect to the Executive’s employment with the Corporation, except for any change in control agreement executed with this Agreement.
|
13.1
|
To be valid and enforceable, any amendment to this Agreement must be confirmed in writing by each of the Corporation and the Executive.
|
14.1
|
Any notice given hereunder shall be given in writing and sent by registered or certified mail or hand-delivered. If such notice is sent by registered or certified mail, it shall be deemed to have been received five (5) business days following the date of its mailing if the postal services are working normally. If such is not the case, the notice must be hand-delivered or served by bailiff, at the discretion of the sender. In the case of hand-delivery or service, the notice shall be deemed to have been received the same day. It is agreed that if the delivery date is a non-business day, the notice shall be deemed to have been received on the following business day.
|
15.1
|
This Agreement shall be binding on the successors, heirs, assignees and legal representatives of all of the parties hereto.
|
16.1
|
This Agreement shall be governed by and interpreted in accordance with the laws, including conflicts of laws, by the State of South Carolina in the United States of America. Subject to Section 18, any lawsuit that arises from or relates to this Agreement shall be brought exclusively in Charleston, South Carolina.
|
17.1
|
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement, which can be given effect without the invalid provisions or applications and, to this end, the provisions of this Agreement are declared to be severable. Moreover, if any provision of this Agreement is deemed to be overbroad or otherwise unenforceable as written, the parties agree that such provision should be modified and reformed, and then enforced, to the maximum extent permitted by applicable law.
|
18.1
|
The Corporation and the Executive hereby expressly agree that with respect to any dispute arising under this Agreement, such dispute shall be addressed first through confidential mediation, and if that fails, through confidential and binding arbitration. Any such mediation shall take place in Charleston, South Carolina before a single mediator selected by the agreement of the parties. The Corporation shall bear all fees and expenses of the mediator. The parties shall bear the expense of their own attorneys’ fees. If the mediation fails to result in a prompt settlement, the arbitration shall be conducted in Charleston, South Carolina by one arbitrator who is designated in accordance with the then current employment rules and procedures of the American Arbitration Association. The arbitrator shall prepare and publish a reasoned award. Each of the parties hereto shall bear their own, respective, costs of such arbitration. Nothing in this provision shall prevent or limit the Corporation from having the right to file suit in court to obtain injunctive relief to enforce the covenants in Sections 7, 8, 9 or 10 of this Agreement.
|
19.1
|
All of the parties hereto expressly agree that this Agreement be drafted, read and interpreted in the English language.
|
20.1
|
This Agreement may be executed in counterparts, each of which shall be deemed one and the same Agreement.
|
|
|
|
|||
|
Aeterna Zentaris Inc.
(Canada)
|
|
|||
|
|
|
|||
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
|
100%
|
|
|
|
|
|||
Aeterna Zentaris GmbH
(Germany)
|
|
Aeterna Zentaris, Inc.
(Delaware)
|
|||
|
|
|
|||
|
|
|
|
||
|
100%
|
|
|
||
|
|
|
|||
Zentaris IVF GmbH
(Germany)
|
|
|
|
|
|
|
|
|
|
|
•
|
Federal Price Reporting Laws (including Medicaid Drug Rebate Statute, Public Health Services Act, and Veterans Health Care Act)
|
•
|
Failing to include the value of discounts and rebates (including “off invoice” discounts) in certain prices reported to the government
|
•
|
Providing “false invoices” to customers to assist them in obtaining a larger government reimbursement than they deserve
|
•
|
Failing to correct the fact that a price provided to the government is clearly inaccurate
|
•
|
Making inadequate efforts to check the accuracy of the prices submitted to the government
|
•
|
Allowing employees with insufficient training and supervision to calculate prices reported to the government
|
•
|
Encouraging a customer to bill inappropriately for a Company product, or
|
•
|
Providing false product information or kickbacks (as described in more detail in other sections of these policies) to formulary committee members or prescribers in order to get Company products reimbursed by a federal healthcare program
|
•
|
knowingly presenting, or causing to be presented, false or improper claims to a state or federal government employee or agent
|
•
|
violating the Federal Healthcare Anti-Kickback Statute
|
•
|
engaging in certain arrangements or contracts with entities or individuals who have been excluded from participation in federal healthcare programs, and
|
•
|
providing certain financial incentives or inducements to individual beneficiaries of federal healthcare programs
|
•
|
Inappropriate relationships with formulary committee members, payments to pharmacy benefits managers (PBMs), and formulary placement payments in order to have manufacturer’s products included on a plan’s formulary
|
•
|
Inappropriate relationships with physicians, including “switching” arrangements, certain services payments, gratuities, and improper entertainment, and
|
•
|
Illegal off-label promotion
|
•
|
Could my behavior harm the Company’s reputation?
|
•
|
How would my action look as a headline in tomorrow’s newspaper?
|
•
|
How would my family or friends view my decision?
|
•
|
Would I be comfortable if someone treated me the same way?
|
•
|
Am I asking the right people for input?
|
1.
|
I have reviewed this annual report on Form 20-F of Aeterna Zentaris Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as at, and for, the periods presented in this report;
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4.
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The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as at the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
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5.
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The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
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(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
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1.
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I have reviewed this annual report on Form 20-F of Aeterna Zentaris Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as at, and for, the periods presented in this report;
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4.
|
The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as at the end of the period covered by this report based on such evaluation; and
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(d)
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
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5.
|
The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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