Good morning, and welcome, everyone, to Aeterna Zentaris' 2012 Second Quarter Financial and Operating Results Conference Call. With me today are Juergen Engel, President and CEO; Paul Blake, Chief Medical Officer; Dennis Turpin, Chief Financial Officer; and Nick Pelliccione, Senior VP of Regulatory Affairs and Quality Assurance.

Please note that during this call we will be making forward-looking statements regarding future events and performance of Aeterna Zentaris that involve risks and uncertainties that could cause actual events and results to differ materially. These risks are described in further detail in the company's press releases and reports filed with the U.S.

and Canadian securities regulatory authorities. These forward-looking statements represent the company's judgment as of today, Wednesday, August 15, 2012, and the company disclaims any intent or obligation to update these forward-looking statements unless we are required to do so by applicable law or by securities regulatory authority.

However, we may choose to update and if we do so, we will disseminate the updates to the investing public.

It's now my pleasure to introduce the President and CEO of Aeterna, Dr. Juergen Engel.

Good morning to all of you, and thanks for joining us. As you well know, at the start of the quarter, unfortunately, the Phase III trial in colorectal cancer with perifosine had an unexpected negative outcome.

Immediately after learning of the top line results, we started executing our strategy regarding future possibilities for perifosine in multiple myeloma, our other latent early-stage products as well as cost-cutting measures to be taken.

We first proceeded with an analysis of prior clinical data for perifosine in multiple myeloma. We then consulted with key opinion leaders in this indication, as well as with our licensee partners, and evaluated costs involved in continuing development of perifosine in multiple myeloma.

As a result, we decided to continue the Phase III multiple myeloma study after strong support from our lead investigators, Doctors Richardson and Anderson from the Dana-Farber Cancer Institute, as well as from our partner, Yakult Honsha, who also decided to initiate a Phase I trial in multiple myeloma in Japan to later contribute to our running multi-national Phase III study.

In order to continue this Phase III trial on our own, we regained North American rights from our former licensee, Keryx. For earlier projects, we put a non-dilutive financing strategy in place, as shown by the following examples.

The preclinical development for our tumor vaccine, AEZS-120, was financed by a grant from the German government, representing approximately 50% of the total costs. For our AEZS-130 proof-of-concept study in cancer cachexia, we designed a CRADA with the VA Medical Center in Houston.

The AEZS-108 Phase I/Phase II prostate cancer study is funded by a USD 1.6 million NIH grant through the principal investigator.

For other early-stage projects regarding the development of our AEZS-108 technology platform, we have access to approximately USD 2.5 million from the German government to pursue development and support of our discovery activities with 5 to 6 employees in Frankfurt being completely financed from these funds. Recently, we filed an application to increase this grant.

In order to finance the development of earlier projects in our pipeline, including AEZS-129; AEZS-136, our Erk/PI3K inhibitors; and AEZS-112, our tubulin binder, during the quarter, we hired Berlin [ph] company to design and implement a vehicle to fund and conduct development activities in China, financed by specialized funds or companies and also operated by Chinese potential partners. Should this venture be successful, it would help reduce our burn rate, and we would also benefit from the advancement of these projects in the rest the world.

We also recently signed a screening agreement with the National Cancer Institute of the United States to test our early-project candidates as well as selected compounds from our substance library of 120,000 compounds.

As part of our cost-cutting measures, we also implemented a human resources attrition policy. As a result, the employment of approximately 16% of the workforce located in Frankfurt, Germany, affecting all disciplines, has been terminated or will terminate over the next year.

Importantly, these savings will be realized without any short burden to the company's cash position, as all reductions have been and will continue to be implemented without any severance pay.

The company's net salary costs are further reduced by the fact that another approximately 7% of the workforce in Frankfurt are currently refunded by existing government, research and development grants associated with early projects.

Refinancing salary expenses through grants or by providing R&D services for fee for partners will continue to remain central to our HR policy. We have also put on hold some of our earlier-stage R&D projects to prioritize our later-stage clinical development candidates.

We will review earlier-stage projects if and when we are successful in raising non-dilutive funding.

In order to regain NASDAQ listing compliance, we have asked shareholders' authorization to execute, at proper time and if deemed advisable, a reverse split of our common shares. Results of the voting will be disclosed later this morning at the Special Shareholder Meeting and will be made public thereafter.

Now, let me update you and -- on our main R&D projects. As just stated, we will regain full North American rights to perifosine in all indications after agreeing with Keryx to terminate the license agreement for this compound.

Under the terms of the agreement, all intellectual property and development data, including often practicing [ph] nations, clinical supplies, APIs and IND applications on perifosine generated by Keryx, will be transferred to us.

first, our decision was based on the existing solid preclinical data and on data provided by 3 clinical studies involving around 170 patients; secondly, it was based on support from key opinion leaders in this field, including 2 that were involved in the last 4 drugs approved for multiple myeloma.

Additionally, we believe that market opportunity, examples of other drugs enjoying success after facing setbacks such as Avastin, Iressa and Sutent, as well as a reasonable investment of between $2.5 million and $3 million in external costs required to move forward with the study up to the predefined interim analysis, also made this a sound decision for the company. Preclinical and CMC data are nearly completed for NDA filing.

We now have 88 sites for the Phase III trial in multiple myeloma in the U.S., Canada, Europe, Korea, Russia and Israel. As of end of July, recruitment stood at about 110 patients.

Approximately 80 events, defined as disease progression or death, will trigger the first interim analysis by an independent Data Safety Monitoring Board, which will look at both toxicity and efficacy data. Once the DSMB will have completed its analysis, it will recommend the best course of action to the company.

This interim analysis is expected to occur during the first quarter of 2013. At our next conference call, we will update you on our expected top cost to perform the remainder of the study after the interim analysis, if applicable.

Still, with perifosine, Yakult Honsha, our licensee for perifosine in Japan, are currently conducting and sponsoring a Phase I trial in multiple myeloma initiated in June. This is an open-labeled, 2-step Phase I trial in which perifosine is combined with Velcade and dexamethasone in patients who had previously been treated with Velcade.

The trial is expected to include 18 patients. The primary endpoint is safety, while secondary endpoints include response rate, progression-free survival and time to tumor progression.

Results from our Phase I trial with perifosine in chemo-resistant and radio-resistant neuroblastoma were presented during a poster session at the Advances in Neuroblastoma Research Conference in Toronto in June.

Data showed that perifosine was well tolerated without major toxicity, hence, compatible with good quality of life. Perifosine monotherapy may help in progression-free survival of patients with persistent/stable MIBG-positivity in skeletal sites.

Perifosine may have a possible role with chemotherapy, radiation therapy and/or other agents active in PI3K/Akt pathway. We and our partners are reviewing the possibilities for further development of perifosine in this rare but devastating disease.

In January of this year, Yakult had initiated the Phase I/II trial in colorectal cancer with perifosine. Yakult has recently decided to put the trial on hold until the ongoing analysis of biomarkets at the MD Anderson Cancer Center and funded through a grant has been completed.

Results of the analysis are expected during the fourth quarter of this year.

To conclude on perifosine, we believe that we have put forward a solid strategy based on the compounds confirmed anti-cancer activity in multiple myeloma with strong support from experts in this indication and from partners at reasonable costs.

Now, let me turn to update you on AEZS-108, our LHRH agonist peptide carrier linked to doxorubicin. In endometrial cancer, we expect to file a special protocol assessment during September with the response from the FDA expected within 60 days after the submission.

Thereafter, we plan to initiate the trial, which would serve as a basis for approval of AEZS-108 in its first indication. Our plan is to include up to 700 patients with advanced endometrial cancer who relapsed after being treated with a platinum/taxane regimen.

This would be a comparative study against doxorubicin, using overall survival as our primary endpoint. Study size are planned in the U.S., Canada, Europe and other countries, and we expect recruitment to take about 2 years.

Our strategy to finance this trial is to use proceeds from our recent ATM programs combined with potential partnerships and/or additional future financing activities as a reminder that we hold the world-wide rights to this compound.

Endometrial cancer is the most common gynecological malignancy according to the American Cancer Society. An estimated about 47,000 cases of endometrial cancer were to be diagnosed in the U.S.

with about 20% of recurrent disease.

To all our knowledge, no drug has been approved in this indication in North America or in Europe except for Germany, which represents an important unmet medical need. The Phase II trial with AEZS-108 in castration- and taxane-resistant prostate cancer is currently ongoing.

It is funded by a grant from the NIH and is being conducted by Dr. Jacek Pinsky, associate professor at the Norris Comprehensive Cancer Center at USC in Los Angeles.

This is a single-arm study with a Phase I lead into Phase II clinical trial. The primary endpoint of the Phase I portion is safety.

Earlier this year, we reported updated interim results for the Phase I portion at the ASCO GU Cancer Symposium in San Francisco. Results demonstrated, for the first time, the internalization of AEZS-108 in separating tumor cells of patients, thus validating the principle of the tumor-targeting therapy was AEZS-108 in the clinical setting.

The primary objective of the Phase II portion is to evaluate the clinical benefit of AEZS-108 for these patients. The trial will enroll up to 55 patients for those portions.

So far, 15 patients have been recruited. We expect to be providing some updated results at upcoming scientific conferences.

In chemotherapy, refractory triple-negative breast cancer, in addition to the Sylvester Comprehensive Cancer Center in Miami, to other sites have been identified in Germany, Universities of Göttingen and Würzburg, to initiate a Phase II trial with AEZS-108 in this indication. The protocol has been finalized and is being in reviewed at all 3 sites.

This is an open-label, randomized, 2-arm multi-center study involving up to 74 patients with an interim analysis planned when 37 patients will have been recruited.

The primary study endpoint will be progression-free survival. Secondary endpoints will also include overall response rate and overall survival.

The study will also evaluate AEZS-108's toxicity profile and patients' quality of life related to conventional cytotoxic chemotherapy. Patients with triple-negative breast cancer have poorer outcomes compared to other breast cancer subtypes and are in need of a safe and effective therapeutic regimen.

Because LHRH receptor expressed in the majority of cases of triple-negative breast cancer, we believe AEZS-108 could represent a novel targeted treatment for these patients.

Now, for AEZS-130, our novel orally-active ghrelin agonist as a diagnostic test for growth hormone deficiency in adults. As stated in the press release a few weeks ago, after our most recent discussions with the FDA, we have requested Fast Track designation, which would give us the opportunity to submit our NDA on a rolling basis.

This means we could submit certain modules of our NDA progressively with the expectation that review of those portions of the NDA would be complete or well underway before we complete the final part of the NDA submission.

The FDA Fast Track program is designed, among other things, to facilitate the development and expedite the review of new drugs that demonstrate the potential to address unmet medical needs. The FDA should respond to our request within 60 days.

Should we obtain agreement on our Fast Track designation and rolling submission strategy, we would expect to begin filing modules before year-end and complete the NDA submission in the first quarter of 2013. Should we not obtain Fast Track designation, we would then expect to file our NDA all at once in the first quarter of 2013.

We are considering submitting the same data as a new drug submission in Canada since the regulatory requirements are relatively similar to those in the United States.

Furthermore, a pediatric study is required for the development in Europe and would also help -- be helpful in the U.S. and Canada.

Such a study is being planned after our NDA submission in the U.S. We believe that AEZS-130 could become the first orally administered test approved for the diagnosis of other growth hormone deficiency as well as the only currently approved test in the U.S., potentially providing patients with a safe, accurate and convenient test.

Market research indicates that, annually, about 50,000 tests for growth hormone deficiency are performed in the U.S. alone out of approximately 160,000 in the G7 countries at cost of about USD 500 per test.

AEZS-130 in other growth hormone deficiency, it represents an interesting business opportunity for our company. To this effect, we are planning to perform additional marketing analysis that would contribute to our discussions for future partnerships or in deciding to market AEZS-130 ourselves.

We hold worldwide rights to AEZS-130, which has been granted orphan-drug designation by the FDA for diagnostic use in growth hormone deficiency. Last week, we announced that AEZS-130 had been granted a patent for use in growth hormone deficiency in the U.S., which will expire in 2022 with a possible extension of up to 5 years.

Additionally, AEZS-130 is being developed as a therapeutic agent. Dr.

Jose Garcia, assistant professor at Baylor College and VA Medical Center in Houston, is currently conducting a Phase IIa trial, assessing the safety and efficacy of repeated doses of AEZS-130 in 18 to 26 patients with cancer cachexia. The study is being conducted under a CRADA between Aeterna Zentaris and the DeBakey VA Medical Center, which is funding the study.

The primary objective is safety and efficacy, which will be measured as chance of body rate, IGF-1 plasma levels and quality of life score. Patient screening has started.

Treatment with AEZS-130 in cancer cachexia may lead to better quality of life for patients, especially since there are no approved treatments for these conditions available.

Another promising compound in our pipeline, ozarelix, an LHRH antagonist, made good progress as our partner, Spectrum, announced yesterday the initiation of patient enrollment for the second part of the randomized Phase II clinical program in men with prostate cancer for hormonal treatment as indicated. The objective of the international, multi-center, randomized, open-label study is to assess the safety and efficacy of immensely dosing regimen of ozarelix administered subcutaneously versus solid SV port.

The company will enroll an additional 150 patients in part 2 of the clinical program.

Finally, among the specific projects that we have discussed so far this morning, let me touch on AEZS-120. This compound is our life recombinant oral tumor vaccine candidate based on an approved oral typhoid vaccine, which has been safely applied in more than 350 million doses over more than 20 years.

We are currently in the planning process to file a CTA in Europe in order to initiate a Phase I trial in prostate cancer before year-end or at the turn of 2013.

Regarding our early-stage R&D projects, as already stated, we have put forth a strategy based on collaborations, public grants and reimbursement programs that would contribute to lessen our burn rate but still increasing shareholder value. As you can see, over the last few months, we have implemented certain measures that we feel will be beneficial to the company and shareholders in the short and long term.

I can assure you that our team remains committed to the success of this company.

I will now turn the call over to our CFO, Dennis Turpin, for our financial activities.

Thank you, Juergen. First, let me update you on our financing activities regarding the At-the-Market issuance program.

During the 3-month period ended June 30, 2012, pursuant to our ATM program, we issued a total of 2.6 million common shares for gross proceeds of approximately $1.9 million. Subsequent to the quarter, between July 2 and August 1, we issued a total of 1 million common shares additional under the ATM program for an aggregate gross proceeds of approximately $500,000.

We have decided at that date to seize issuing common shares under the ATM program and this is now expired at this time today.

Now, regarding our Q2 2012 operating burn, it was lower than expected at nearly $2.2 million per month. Our cash and cash equivalents totaled $39.8 million as of June 30, 2012, compared to $46.9 million at December 31, 2011.

This allows us to continue to move our key product candidates through the pipeline and represent at least more than 12 months of cash from today.

In more details now, revenues were $7.5 million for the quarter ended June 30, 2012, compared to $6.5 million for the same quarter in 2011. This increase is largely attributable to comparative higher deliveries of Cetrotide to certain customers and to higher research and development services provided, partly offset by the relative weakening of the euro against the U.S.

dollar.

R&D costs, net of refundable tax, credits and grants, were slightly lower at $5.2 million for the quarter ended June 30, 2012, compared to $5.6 million for the same quarter in 2011.

The net income amounted to $4.5 million for the quarter compared to a net loss of $10.6 million for the same quarter in 2011. This significant increase in net finance income is mainly due to the change in fair value of our warrant liability, as well as to FX gains related to the comparative weakness of the euro against the U.S.

dollars. Please note that the warrant liability change in value is caused by the significant decrease in our stock price during the quarter, and it is a non-cash event.

Going forward, we expect our burn rate to be controlled at nearly $2.6 million per month in average for the remainder of the year 2012.

Thank you for your attention. Now, Juergen?

Thank you, Dennis. My colleagues and I will now answer your questions.

I'm therefore turning the call over to the operator for instructions on the question-and-answer period.

One quick question regarding the perifosine study. In terms of the interim analysis, could you remind us what the basis is of the analysis for -- that is planned for deciding whether or not to move forward with that study?

Is it a futility analysis? And if you can share with us the hurdle rate and what the comparisons will be done in terms of that analysis?

Will it be just to the study or will it be to the current standards of care?

Paul will answer your questions.

Charles, you're asking for a lot more detail than where we're willing to give. But in principle, the analysis will be looking at aspects of safety and efficacy within the study.

And we've worked hard with the DSMB and, in particular, with the statistician there to make sure that we are completely in line with expectations for interim analysis. We're using conventional techniques that the FDA has seen and agreed to in the past.

And we will be looking for both early signals of efficacy as well as any safety alerts in there. We're not prepared to give any numerical details on the specific techniques that are being used.

Okay. And you anticipate that, that will occur when -- you said, I think, first quarter?

Yes. The trigger is about 80 progressions, which could include disease progression or death.

And it's a worded [ph] capital, it's about 80, so it may be a few less or a few more. And we anticipate that will be some time in the first quarter of next year, 2013.

Okay. And then, what if -- maybe Dennis can remind me.

What is owed, if anything, to Keryx should there be success with perifosine?

In fact, when we recuperated the North American rights, the -- what we owed to Keryx is a low-single digit royalty on future net sales, nothing else. And we gained back these rights, but we also accessed to all data that were produced by Keryx during our relationship.

We also accessed to...

No milestone payments, excuse me, Dennis?

Yes, no milestone payments to be paid to Keryx at all, just low-single digit royalty on future net sales.

Okay. And then if I could hop over to 108 and ask you.

Thanks for the color on what you're planning on doing in terms of the study. You talked about enrollment perhaps taking about 2 years.

If you started that study, call it -- well, first of all, if you got the SPA, when would you anticipate starting that enrollment period? Would it be by the end of this year, or would it be mid-year next year?

And then, what are the time -- what's the timeframe to first data? And would that be final or would it be some interim analysis?

Right. Charles, Paul here again.

I'll have a go at that and then my colleagues can chip in and add if necessary. I think we could start the study rather quickly in a matter of weeks once we've got the Special Protocol Assessment agreed with the FDA.

As you may know, we've already met with the FDA and the European Medicines Agency with a process called Parallel Scientific Advice. So we've taken that comments and suggestions into account.

We've revised the protocol. We're hoping to submit it shortly for the Special Protocol Assessment.

We've got opinion leaders lined up with us on both sides of the Atlantic. So we could start that off, if we were keen to do so, within a few weeks of receiving that.

I think recruitment will take about 2 years. But obviously, we need to revise that in light of what the FDA does say through the SPA process.

There may be some tweaks that could change that, but I hope not. And we would plan to have 2 interim analyses in that study, just as they are planned in the perifosine multiple myeloma trial.

People with advanced endometrial cancer who have progressed despite having had chemotherapy, even though it's not approved, are likely to have a very poor prognosis. So the signals could come relatively quickly after recruitment gets going.

And the way that you spoke about -- you could start the study within a few weeks if there's some deliberation as to whether or not you will? And if not, are you considering partnering the drug?

I think, to answer your question specifically, you need to be a little bit more precise. Obviously, we'd have to go through the regulatory permissions once the SPA was agreed with the FDA to get the approval to start the study in a variety of countries, looking to recruit hundreds of patients with a relatively rare condition.

That's the reality of advanced endometrial cancer, not endometrial cancer itself, which is one of the commoner gynecological malignancies. We'd need to get the regulatory permissions agreed, the IOBs [ph] approved and so on.

So there are all those mechanics and depending on what you mean by study start, do you mean having the regulatory commission having the site open, having the first patients screened or the first patient dosed? That start period will take some months, but we'll start it very quickly after we get the SPA approved.

Partnering discussions are ongoing but, as you know, this sometimes takes time. And the start of the study will depend also on our financial situation.

And what we have in mind is to be independent for -- at the start of the study from the availability of the companion diagnostic test to follow the proposal of the EMA and FDA to start the study as an all-comer study.

Maybe just to clarify on that last point. So maybe, for AEZS-108, can you maybe give us an update on the diagnostic test and whether it will be -- how it will be needed for the Phase III study given that, I think, you're saying that it -- you may start without the diagnostic test?

Maybe just give some elaboration on that?

Yes. And I will start and Paul will fill -- complete the answer.

As I mentioned, this will -- according to the advice [indiscernible] from the both regulatory authorities, will call -- was a so-called all-comer study. But we are not preselecting patients according to the LHRH receptor status.

There are several reasons. One of them is that, according to the literature, there is a high percentage of LHRH receptor-positive patients in this indication.

So in the literature, it's about 80%. This is one of the reasons, and therefore, the companion diagnostic test has not to be -- got to be ready and finished at the time when we start the study, but during the course of the study.

And the work is ongoing with Ventana to establish a new more specific monoclonal antibody.

Okay. So you expect to have the diagnostic test ready during the study?

Yes.

Okay. And will the fact of having some patients recruited with the diagnostic tests and the others without, would that interfere with the analysis of the data?

Paul?

It doesn't interfere with the analysis, but it does make it a little bit more complex and it also makes the sample size estimation a little bit more complex because we need to estimate what the -- like the efficacy is going to be in patients who don't have the receptor that is the targets, and so we need to be a little bit conservative there and make sure we have enough patients. And we have to do the statistical analysis plan ensuring that everybody, particularly at the agencies, understands that the primary analysis will be on the subset of patients who are LHRH positive rather than on all-comers in an intention to treat fashion, which is more conventional.

Okay, perfect. And can you just give us some color in terms of the choice of the comparator?

I know before, there was some consideration of liposomal doxorubicin. And now, I think you -- I understand you cited doxorubicin.

Maybe just give us some clarifications in terms of what led to the selection of the comparator, just in general?

There are 2 reasons: one is pragmatic and one is clinical. I think you probably know that there was a worldwide shortage of Doxil.

So for a time, that's not completely been relieved yet. So the physical availability of the -- acts as a comparator was a limitation.

But also, advanced endometrial cancer has not been very frequently studied. But in those papers that are available to us, it seems that the clinical benefits of conventional doxorubicin is slightly better than the benefit for Doxil.

So we also don't want to give the patients who are randomized to the comparator arm anything inferior or not as good as can be.

Interesting. Okay.

And I guess, finally, I know Dennis mentioned this, but maybe you can just perhaps repeat it if I didn't -- hear it correctly. Can you give us the update on the burn rate for the second half of this year?

And what do you expect the cash burn rate to be towards -- I think, it's at least 12 months, so maybe give us a bit more detail?

Yes, the -- as I mentioned during the call, the cash is expected to be $2.6 million to burn per month, in average, for the remainder of the year 2012. And as far as the cash position, we have $39.8 million and this is more -- much, much more than 12 months of cash.

Okay. Thank you.

To conclude the conference call, we thank you for your attention and look forward to speaking with you in the near future.