Healthcare Industry News:  Aeterna Zentaris 

Biopharmaceuticals Licensing

 News Release - August 3, 2006

AEterna Zentaris Enters a License and Collaboration Agreement for Ozarelix with Nippon Kayaku for the Japanese Market

QUEBEC CITY, Canada, Aug. 3 (HSMN NewsFeed) - Aeterna Zentaris Inc. (TSX: AEZ ; Nasdaq: AEZS ) announced today that it has entered into a licensing and collaboration agreement with Nippon Kayaku for its fourth generation luteinizing hormone-releasing hormone (LHRH) antagonist, ozarelix. Under the terms of the agreement, Aeterna Zentaris granted Nippon Kayaku an exclusive license to develop and market ozarelix for all potential oncological indications in Japan. In return, Aeterna Zentaris is to receive an upfront payment upon signature, and is eligible to receive payments upon achievement of certain development and regulatory milestones, in addition to low double-digit royalties on potential net sales. Further financial details were not disclosed.

"While representing additional revenues, the agreement with Nippon Kayaku, a major player in oncology in the Japanese market, is another clear vote of confidence towards our LHRH antagonist therapeutic approach and, more specifically, towards one of our lead compounds, ozarelix. This compound could be suitable to treat multiple forms of hormone-dependent cancer, including prostate cancer for which promising Phase 2 data were recently disclosed," said Gilles Gagnon, President and CEO of Aeterna Zentaris. "The agreement marks yet another milestone but most importantly, reflects our commitment to develop a solid oncology franchise."

"We are delighted with this additional collaboration with our long-time partner Nippon Kayaku who has extensive expertise in drug development and currently prepares the market launch in Japan of CetrotideŽ, our LHRH antagonist indicated for in vitro fertilization programs," stated Dr. Jurgen Engel, Executive Vice President, Global R&D and Chief Operating Officer at Aeterna Zentaris. "The agreement will allow us to further develop this promising, innovative therapeutic approach and expand our reach as we offer new hope to the millions of people affected by cancer worldwide."

About Ozarelix

Ozarelix is a promising fourth generation LHRH antagonist aiming for extended suppression of testosterone levels that does not require a sophisticated depot technology for long-lasting activity. This compound is suitable for both malign and benign tumor therapy. Its advantages over existing therapies include no flare-up effects, rapid and durable responses, reduced side-effects and possible intermittent/chronic therapy.

Furthermore, positive results of an open-label, randomized-controlled Phase 2 dose-finding trial with ozarelix in prostate cancer were recently disclosed. Originally designed for 48 patients, the trial was extended to 64 patients where 4 groups of 16 patients received different intramuscular dosage regimens of the luteinizing hormone-releasing hormone (LHRH) antagonist, ozarelix, to assess its safety and efficacy. The study achieved its primary end-point of defining a tolerable dosage regimen of ozarelix that would ensure continuous suppression of testosterone at castration level

(< 0.5 ng/ml)

for a three-month test period. An important secondary efficacy end-point of the study aimed at assessing tumour response as determined by a 50% or greater reduction of serum PSA levels, compared to baseline, was also achieved.

About Prostate Cancer

According to Decision Resource, 395,000 new cases of prostate cancer were diagnosed in 2005 in the 7 major markets around the world. Treatment costs in these markets for this indication in 2005 were estimated at some US$3.3 billion.

About Nippon Kayaku

Founded in 1916, Nippon Kayaku is a leading Japanese pharmaceutical, agriculture, and chemical company with over US$1.4 billion in revenues. In their Pharmaceutical Division, they manufacture and sell anti-cancer drugs, cardiovascular drugs, immunosuppressants, and other pharmaceuticals and diagnostics for prescription. In the anti-cancer drug field more specifically, they offer a line-up of 17 branded anti-cancer drug products, and are at the top level worldwide both in terms of technology and business performance. They are working with cutting-edge technologies, and have recently entered the clinical phase in development of DDS (Drug Delivery System) pharmaceuticals utilizing nanotechnology.

About Aeterna Zentaris Inc.

Aeterna Zentaris Inc. is a growing global biopharmaceutical company engaged in the discovery, development and marketing of therapies for cancer and endocrine disorders. Aeterna Zentaris also owns 48.26% of the equity of Atrium Biotechnologies Inc. (TSX: ATB ) and 64.69% of its voting rights. Atrium is a developer, manufacturer and marketer of science-based products for the cosmetics, pharmaceutical, chemical and nutritional industries.

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Forward-Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, the availability of funds and resources to pursue R&D projects, the successful and timely completion of clinical studies, the ability of the Company to take advantage of business opportunities in the pharmaceutical industry, uncertainties related to the regulatory process and general changes in economic conditions. Investors should consult the Company's quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties relating to the forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The Company does not undertake to update these forward-looking statements.


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