UPDATE 2-Aeterna seeks partner for BPH treatment

(Adds details from conference call)

By Scott Anderson

TORONTO, Oct 2 (Reuters) - A new management team at AEterna Zentaris (AEZ.TO) (AEZS.O) put its stamp on the Canadian biotechnology company on Tuesday, unveiling a strategic plan that includes commercialization of its key Cetrorelix drug and the sale of some non-core assets.

The company has seen a major management overhaul in the past year, including the appointment of a new president and chief executive, David Mazzo.

It said it will seek a commercialization partner for Cetrorelix, its treatment for benign prostatic hyperplasia (BPH), the increase in the size of the prostate in middle-aged and elderly men.

AEterna Zentaris expects to launch Cetrorelix, which is currently in Phase 3 trials, as a BPH treatment by 2011.

Mazzo said during a conference call that the preferred partner would be a global pharmaceutical company with an established presence in the United States and a specialty in men's health.

AEterna estimates that Cetrorelix has a BPH market potential of about $500 million in the United States alone.

Mazzo said he expects a deal to be firmed up at least 18 months before the 2011 launch.

AEterna also plans to move into Phase 2b trials for Cetrorelix as an endometriosis treatment and will announce a timetable for this program in the near future. Endometriosis is a condition in which endometrium, the tissue that lines the uterus, grows outside the uterus.

For this treatment it sees a market of an additional $200 million.

AEterna will also seek partnerships for its other products with an eye on Asia and especially Japan, which it said "remains a market of interest."

"We have prioritized our pipeline, developed a partnering strategy and determined the value of our most immediate assets," Mazzo said.

"After a rigorous review of projects, risks, plans and commercial opportunities, we are more bullish than ever about unrealized intrinsic value of AEterna and our ability to unlock it to the benefit of patients and shareholders."

On the financial side, the company said it expects its 2007 cash burn to be in the range of $25 million to $27 million, with a cash reserve at the end of 2007 of about $35 million.

To help shave costs, the company said it plans to divest certain assets including its Echelon Biosciences lipid research unit and a Quebec City building. It did not disclose the amount of savings it expects from these moves.

Maher Yaghi, a biotech analyst at Desjardins Securities in Montreal, said the company's presentation was timely due to uncertainty following the management upheaval of the past year.

"Investors have been waiting for a while to see what the new CEO had to say," he said.

AEterna stock was 3 Canadian cents lower at C$2.49 on the Toronto Stock Exchange on Tuesday afternoon and down 7 cents at $2.45 on Nasdaq.

($1=$1 Canadian)