Æterna Laboratories Inc has concluded a definitive sales and purchase agreement with Degussa AG to acquire all the outstanding shares of Zentaris AG for €50 million (Cdn $81.5 million). Zentaris AG is a German-based biopharmaceutical company focused on oncology and endocrinology. The Boards of Æterna and Degussa have unanimously approved the transaction.

Zentaris strengthens Æterna's pipeline in oncology and diversifies the portfolio into a second growing therapeutic area, endocrinology. To complement Æterna's leading position in antiangiogenesis for oncology, Zentaris adds four clinical stage products (three Phase II, one Phase I) in nine indications in addition to six preclinical stage products to the portfolio. To establish Æterna's move into endocrinology, Zentaris brings one product with four indications (three in Phase II, one marketed) - Cetrotide which is approved and marketed for in vitro fertilization. Zentaris is expected to drive drug discovery at Æterna on a going-forward basis through a state-of-the-art drug discovery unit, including a 100,000 proprietary compound library and a privileged collaboration with the laboratory of a U.S. Nobel Laureate.

Æterna is also expected to benefit from Zentaris' established marketing alliances and strategic partnerships including among others:

- Serono International S.A.;
- Solvay Pharmaceuticals B.V.;
- Baxter Healthcare S.A.;
- Shionogi & Co., Ltd.;
- Nippon Kayaku Co., Ltd.; and
- The National Cancer Institute

Zentaris expects to generate approximately €20 million (Cdn $32.6 million) of revenue and to be cash flow positive in 2002. Zentaris is debt-free and is expected to have a working capital in excess of €23 million (Cdn $37.5 million) at December 31, 2002.

Dr. Éric Dupont, Chairman of the Board and Chief Executive Officer at Æterna said, "The acquisition of Zentaris represents a major milestone in our planned and communicated strategy. Zentaris provides Æterna with a deeper pipeline in oncology and an established portfolio in a second therapeutic area, endocrinology. Moreover, Zentaris is expected to be cash flow positive in 2002."

Gilles Gagnon, President and Chief Operating Officer at Æterna stated, "This agreement is a major step towards creating a global biopharmaceutical company, from drug discovery to market approval. Zentaris adds a strong pipeline of preclinical and clinical products, including a marketed product, as well as several development and marketing alliances. Zentaris' success has been a result of a strong management team with pharmaceutical experience, led by Professor Dr. Jürgen Engel."

Prof. Dr. Jürgen Engel, Chief Executive Officer of Zentaris stated, "We are very pleased and excited to be part of Æterna. The new structure allows Zentaris to grow internationally, to push forward with its promising preclinical and clinical projects and to provide an exciting perspective to its employees."

Æterna, through a newly created German subsidiary named Æterna GmbH, has acquired all the outstanding shares of Zentaris AG for €50 million (Cdn $81.5 million), to be settled as follows:

o €27 million (Cdn $44 million) cash, paid; and
o €23 million (Cdn $37.5 million), may be paid by Æterna GmbH upon the completion, in accordance with the terms of the transaction and not later than April 30, 2003, of the merger between Æterna GmbH and Zentaris. The €23 million balance of purchase price will be paid to Degussa using Zentaris' excess working capital, as a result of which Æterna will not be required to disburse additional funds in connection with this transaction.

HSBC Securities (Canada) Inc. acted as financial advisor to Æterna for this transaction. Sal. Oppenheim jr. & Cie. KGaA, acted as financial advisor on behalf of Degussa.