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Is AEterna Zentaris the Next Hot Cancer Stock?

|Includes: AEterna Zentaris, Inc. (AEZS), KERX
AEterna Zentaris holds European rights to a potentially blockbuster cancer drug (perifosine) - the North American rights to perifosine are held by KERX (Keryx Biopharmaceuticals, Inc.). Keryx should be initiating two phase 3 trials for perifosine, one trial for "Multiple Myeloma", and the other trial for "Refractory Advanced Colorectal Cancer" this year (2010). Keryx pays all the fees for the trials (which should mean a lot less risk for AEZS), and if final results are positive, AEterna will file for European approval. Just last week, AEterna received scientific advice from the EMEA stating the trial Keryx will conduct for Multiple Myeloma will be sufficient to provide all data necessary for a marketing approval of perifosine in that indication. AEterna has also requested scientific advice from the EMEA for perifosine in "Refractory Advanced Colorectal Cancer", which could come out any day.

However, AEterna Zentaris has more going for it than just perifosine, they also have Macimorelin (AEZS-130), a drug that could potentially become the first "Oral Growth Hormone Deficiency Diagnositic Test". The existing tests for GHD cause side effects that so far have not been seen with AEZS-130. AEterna also has an orphan-drug designation for this drug in the United States.

AEterna also holds worldwide rights to AEZS-108, a drug indicated for the treatment of ovarian cancer and endometrial cancer. On May 6, AEterna received orphan-drug designation for treatment of ovarian cancer.

Jeurgen Engel, Ph.D., President and CEO of AEterna Zentaris, said the following: "We intend to file, as quickly as possible, the NDA for the use of macimorelin (AEZS-130) as a diagnostic test for GHD (Growth Hormone Deficiency) in adults, the timing of which will depend on the outcome of the Company's discussions with the FDA and the completion of the clinical program ultimately agreed upon. We believe an approval for this indication can be achieved in 2011."

As you can see, AEterna has multiple future catalysts (EMEA scientific advice on RACC trial, ASCO presentation, and AEZS-130 Phase 3 trial results), a strong pipeline (consisting of perifosine, AEZS-130, and AEZS-108), and, in our opinion, is greatly undervalued at $1.68.

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