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Aeterna Zentaris Inc. (NASDAQ: $AEZS): A First-Mover in Oral AGHD Diagnostics

Aeterna Zentaris

Aeterna Zentris’s lead product, macimorelin, is the first and only US FDA and European Commission-approved oral diagnostic test for adult growth hormone deficiency (AGHD).

Aeterna Zentris Inc. is a biopharmaceutical company focused on research, development, and commercializing treatments and diagnostic tools for rare or orphan endocrine diseases.

The global endocrine drug market has many segments. Diabetes drug treatment holds the greatest market share, but the market relating to growth hormone deficiency is expected to grow at a CAGR of 8.2% from 2020 to 2027.

Macimorelin is currently being pushed within the US to replace IIT and GST as the new gold standard for AGHD testing.

Additionally, the clinical success and compelling safety profile of macimorelin are being leveraged by the firm to develop testing for childhood-onset growth hormone deficiency (CGHD), which remains an untapped market.

This will position the firm as a first-mover within the market, allowing them to build a strong brand and gain customer loyalty.


Macimorelin is an oral ghrelin agonist that stimulates the production of GH in the pituitary gland. Macimorelin mimics endogenous ghrelin and binds to the GH secretagogue receptor.

This activates the receptors in the hypothalamus and pituitary gland to stimulate the release of growth hormone into the circulatory system.

Macrilen is administrated orally and has a short test time of 1.5 hours, with blood samples being drawn at 30, 45, 60, and 90 minutes.

The short testing time and minimum side effects make the test more attractive than previously available options.

Aeterna Zentris’s Strategic Partnerships For Future Growth

Aeterna Zentris has an ongoing partnership with Novo Nordisk, an industry leader in growth hormone deficiency treatment that has recently moved towards using macimorelin to test for accurate and early diagnosis of AGHD.

The firm also has a partnership with Consilient Health Ltd., an Irish pharmaceutical company that commercializes macimorelin in the UK and parts of Europe.

In the third quarter of 2020, Aeterna Zentaris received an upfront payment of €5 million and €1 million from Novo Nordisk and Consilient Health Ltd, respectively. This left the company with a cash position of $21.7 million and a cash runway of around four years. This enables the company to continue significant investment in R&D as it continues to pursue a more diverse product pipeline.

Novo Nordisk’s commitment to finance €9 million of the clinical trial costs for Aeterna’s CGHD treatment infers a sense of confidence in the likelihood of success for the company’s clinical trials. If these trials were to succeed, it would expand the company’s reach into an untapped market.

R&D expenditure to revenue has averaged 830% since 2016, showing a keen focus on product development.

If the company is able to diversify its revenue, it will hold a much stronger position within the market and will be able to withstand volatility in the sales of individual products.

Return on equity (ROE) for AEZS declined to -25.13%. This is attributable to the fact that the firm is still in its growth stage and has not yet reached profitability with a net margin of -296%.

Figures calculated using data from last quarterly statements.

Despite Nasdaq’s warning to AEZS for not maintaining a minimum bid price, on August 3, 2020, AEZS sold 12.4 million shares at 56¢ per share. The 10-day average share price prior to announcing the issue was 45¢ per share, highlighting investor interest in the company.

A Risky Bid

One factor that should concern Aeterna Zentaris’s shareholders is the companies ability to diversify its product pipeline.

A biotech company with all its eggs in one basket is a risky bid.

The firm is working towards an additional use case of macimorelin as a therapeutic agent for an undisclosed neurodegenerative disease and towards repurposing development candidates from previous programs. However, the success of these ventures is hard to predict.

With a first-mover advantage in the market for the oral diagnosis of AGHD with strong partnerships with industry leaders providing access to the USA, Canada, Europe, and some Asian markets, Aeterna Zentris shows the potential of being a good growth investment and is a buy from us.

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