Exhibit 99.5

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 2, 2007

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

and

MANAGEMENT INFORMATION CIRCULAR

March 9, 2007

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Æterna Zentaris Inc. (the “Corporation” or “Æterna Zentaris”) will be held at Le Centre Sheraton Montreal Hotel, 1201 René-Lévesque Boulevard West, Salon Drummond, Montreal, Quebec, on Wednesday, May 2, 2007, at 10:30 a.m. (Montreal time) for the following purposes:

1. to receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2006, together with the auditors’ report thereon;

2. to elect directors;

3. to appoint auditors and authorize the directors to determine their compensation;

4. to consider and, if deemed advisable, adopting a resolution approving the making of certain amendments to the Corporation’s Stock Option Plan;

5. to consider and, if deemed advisable, adopting a resolution, approving, ratifying and confirming the amendment to and restatement of the Corporation’s shareholder rights plan adopted by the Corporation’s Board of Directors on March 2, 2007; and

6. to transact such other business as may properly come before the meeting.

The record date for the determination of shareholders of Æterna Zentaris entitled to receive notice of and to vote at the meeting is March 9, 2007.

As shareholders of Æterna Zentaris, it is very important that you read this material carefully and vote your shares, either by proxy or in person at the meeting.

The following pages tell you more about how to exercise your right to vote your shares and provide additional information relating to the matters to be dealt with at the meeting.

By order of the Board of Directors,

Mario Paradis, CA

Corporate Secretary

Quebec City, Quebec, March 9, 2007

Shareholders unable to attend the meeting are requested to complete and sign the enclosed form of proxy and return it in the stamped envelope provided. To be valid, proxies must reach the office of Computershare Trust Company of Canada, Share Ownership Management, 1500 University Street, 7th Floor, Montreal, Quebec, H3A 3S8, no later than at the close of business on the last business day preceding the date of the meeting or any adjournment thereof.

Æterna Zentaris Inc., 1405 du Parc-Technologique Boulevard, Quebec City, Quebec, G1P 4P5

MANAGEMENT INFORMATION CIRCULAR

1. INTRODUCTION

This management information circular (the “Circular”) is being furnished in connection with the solicitation of proxies by and on behalf of the management of Æterna Zentaris Inc. (the “Corporation” or “Æterna Zentaris”) for use at the annual meeting of shareholders of the Corporation (the “Meeting”) and any adjournment(s) or postponement(s) thereof. No person has been authorized to give any information or make any representation in connection with any matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized.

In addition to solicitation by mail, employees or agents of the Corporation may solicit proxies by telephone or by other means. The cost of any such solicitation will be borne entirely by the Corporation. The Corporation may also reimburse brokers and other persons holding the Corporation’s common shares (the “Common Shares”) in their names, or in the names of nominees, for their costs incurred in sending proxy materials to beneficial or non-registered owners and obtaining their proxies or voting instructions.

Information contained in this Circular is given as of March 9, 2007 unless otherwise specifically stated. All dollar amounts in the Circular are denominated in Canadian dollars, unless otherwise indicated.

2. INFORMATION CONCERNING VOTING AT THE MEETING

Your Vote is Important

As a shareholder of the Corporation, it is very important that you read the following information on how to vote your Common Shares, either by proxy or in person at the Meeting. These securityholder materials are being sent to both registered and non-registered shareholders of the Corporation. If you are a non-registered shareholder, and the Corporation or its agent has sent these materials directly to you, your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding Common Shares on your behalf. By choosing to send these materials directly to registered shareholders and certain non-registered shareholders, the Corporation or its agent (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your proxy as specified in this Circular and in the form of proxy.

Voting

You can attend the Meeting or you can appoint someone else to vote for you as your proxyholder. A shareholder entitled to vote at the Meeting may, by means of a proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the Meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy. Voting by proxy means that you are giving the person named on your form of proxy the authority to vote your Common Shares for you at the Meeting or any adjournment thereof.

You can choose from among three different ways to vote your Common Shares by proxy:

1. by telephone;

2. on the Internet; or

3. by mail.

The persons who are named on the form of proxy are directors or officers of the Corporation and will vote your shares for you. You have the right to appoint someone else to be your proxyholder. If you appoint someone else, he or she must attend the Meeting to vote your Common Shares.

How to Vote – Registered Shareholders

You are a registered shareholder if your name appears on your share certificate. If you are not sure whether you are a registered shareholder, please contact Computershare Trust Company of Canada (“Computershare”) by telephone toll-free at 1-800-564-6253 or by e-mail at service@computershare.com.

By Proxy

By Telephone

Voting by proxy using the telephone is only available to shareholders located in Canada and the United States. Call toll-free in Canada 1-866-732-VOTE (8683) and 1-312-588-4290 toll-free in the United States from a touchtone telephone and follow the instructions provided. Your voting instructions are then conveyed by using touchtone selections over the telephone.

You will need your 6-digit Control Number. You will find this number on your form of proxy or in the e-mail addressed to you if you have chosen to receive this Circular electronically.

If you choose the telephone, you cannot appoint any person other than the directors or officers named on your form of proxy as your proxyholder.

The cut-off time for voting by telephone is 5:00 p.m. (Eastern daylight time) on Monday, April 30, 2007.

On the Internet

Go to the website www.computershare.com/proxy and follow the instructions on the screen. Your voting instructions are then conveyed electronically over the Internet.

You will need your 6-digit Control Number. You will find this number on your form of proxy or in the e-mail addressed to you if you have chosen to receive this Circular electronically.

If you return your proxy via the Internet, you can appoint a person other than the persons named in the form of proxy as your proxyholder. This person does not have to be a shareholder. Indicate the name of the person you are appointing in the space provided on the form of proxy. Complete your voting instructions, and date and submit the form. Make sure that the person you appoint is aware that he or she has been appointed and attends the meeting.

The cut-off time for voting over the Internet is 5:00 p.m. (Eastern daylight time) on Monday, April 30, 2007.

By Mail

Complete your form of proxy and return it in the envelope provided to you or by delivery to one of Computershare’s principal offices in Calgary, Halifax, Montréal, Toronto, Vancouver or Winnipeg for receipt before 5:00 p.m. (Eastern daylight time) on April 30, 2007 or with the Secretary of the Meeting prior to commencement of the Meeting on the day of the Meeting or on the day of any adjournment thereof. A list of addresses for the principal offices of Computershare is set forth on page 29 of this Circular.

If you return your proxy by mail, you can appoint a person other than the directors or officers named in the form of proxy as your proxyholder. This person does not have to be a shareholder. Fill in the name of the person you are appointing in the blank space provided on the form of proxy. Complete your voting instruction on the form of proxy, and date and sign the form. Make sure that the person you appoint is aware that he or she has been appointed and attends the Meeting.

Please see the section titled “Completing the Form of Proxy” for more information.

In Person at the Meeting

You do not need to complete or return your form of proxy.

You will receive an admission ticket at the Meeting upon registration at the registration desk.

How to Vote – Non-Registered Shareholders

The information set forth in this section should be reviewed carefully by the non-registered shareholders of the Corporation. Shareholders who do not hold their shares in their own name should note that only proxies deposited by shareholders who appear on the records maintained by the Corporation’s registrar and transfer agent as registered holders of shares will be recognized and acted upon at the Meeting.

Non-registered shareholders may vote shares that are held by their nominees in one of two manners. Applicable securities laws and regulations, including National Instrument 54-101 — Communication with Beneficial Owners of Securities of a Reporting Issuer, require nominees of non-registered shareholders to seek their voting instructions in advance of the Meeting. Non-registered shareholders will receive (or will have received) from their nominees either a request for voting instructions or a proxy form for the number of shares held by them. The nominees’ voting instructions or proxy forms will contain instructions relating to signature and return of the document and these instructions should be carefully read and followed by non-registered shareholders to ensure that their shares are accordingly voted at the Meeting.

Non-registered shareholders who would like their shares to be voted for them must therefore follow the voting instructions provided by their nominees.

Non-registered shareholders who wish to vote their shares in person at the Meeting must insert their own name in the space provided on the request for voting instructions or proxy form, as the case may be, in order to appoint themselves as proxyholder and follow the signature and return instructions provided by their nominees. Non-registered shareholders who appoint themselves as proxyholders should present themselves at the Meeting to a representative of Computershare. Non-registered shareholders should not otherwise complete the form sent to them by their nominees as their votes will be taken and counted at the Meeting.

All references to “shareholders” in this Circular are to registered shareholders unless specifically stated otherwise.

You are a non-registered shareholder if your bank, trust company, securities broker or dealer or other financial institution or intermediary (“your nominee”) holds your Common Shares for you. If you are not sure whether you are a non-registered shareholder, please contact Computershare by telephone toll-free at 1-800-564-6253 or by e-mail at service@computershare.com.

By Proxy

Your nominee is required to ask for your voting instructions before the Meeting. Please contact your nominee if you did not receive a request for voting instructions in this package.

In most cases, non-registered shareholders will receive a voting instruction form which allows you to provide your voting instructions on the Internet, by telephone or by mail. You will need your Control

Number found on your voting instruction form, if you choose to vote on the Internet or by telephone. Alternatively, non-registered shareholders may complete the voting instruction form and return it by mail, as directed in the voting instruction form.

In Person at the Meeting

You can vote your Common Shares in person at the Meeting if you have instructed your nominee to appoint you as proxyholder.

To do this, write your name in the space provided on the voting instruction form and otherwise follow the instructions of your nominee.

Completing the Form of Proxy

You can choose to vote “FOR” or “AGAINST” Resolutions 2007-1 (Stock Option Plan amendment) and 2007-2 (Amended and Restated Shareholder Rights Plan) and “FOR” or “WITHHOLD” with respect to the election of directors and the appointment of auditors. If you are a non-registered shareholder voting your Common Shares, please follow the instructions provided in the voting instruction form that you should have received together with this Circular.

When you sign the form of proxy without appointing an alternate proxyholder, you authorize Éric Dupont, Gilles Gagnon and Mario Paradis, respectively the Executive Chairman of the Board, the President and Chief Executive Officer and the Corporate Secretary of the Corporation, to vote your Common Shares for you at the Meeting in accordance with your instructions.

Management is not aware of any other matters that will be presented for action at the Meeting. If, however, other matters properly come before the Meeting, the persons designated in the enclosed form of proxy will vote in accordance with their judgment, pursuant to the discretionary authority conferred by the proxy with respect to such matters.

You have the right to appoint someone other than the management proxy nominees to be your proxyholder. If you are appointing someone else to vote your Common Shares for you at the Meeting, fill in the name of the person voting for you in the blank space provided on the form of proxy.

If you do not specify how you want your Common Shares voted, your proxyholder will vote your shares in favour of each item scheduled to come before the Meeting, including all amendments or variations thereto, and as he or she sees fit on any other matter that may properly come before the Meeting.

A proxyholder has the same rights as the shareholder by whom it was appointed to speak at the Meeting in respect of any matter, to vote by way of ballot at the Meeting and, except where a proxyholder has conflicting instructions from more than one shareholder, to vote at the Meeting in respect of any matter by way of any show of hands.

If you are an individual shareholder, you or your authorized attorney must sign the form of proxy. If you are a corporation or other legal entity, an authorized officer or attorney must sign the form of proxy.

Changing your Vote

In addition to revocation in any other manner permitted by law, a shareholder giving a proxy and submitting it by mail may revoke it by an instrument in writing executed by the shareholder or the shareholder’s attorney authorized in writing and deposited either at the Montréal office of the Corporation’s transfer agent, Computershare, located at 7th Floor, 1500 University Street, Montréal, Quebec, H3A 3S8, or at the Corporation’s registered office, located at 1405 du Parc-Technologique Boulevard, Quebec City, Quebec, G1P 4P5, at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used, or with the chair of the Meeting on the day of the Meeting, or any adjournment thereof. If the voting instructions were conveyed by telephone or over the

Internet, conveying new voting instructions by any of these two means or by mail within the applicable cut-off times will revoke the prior instructions.

Voting Requirements

Resolutions 2007-1 (Stock Option Plan amendment) and 2007-2 (Amended and Restated Shareholder Rights Plan) reproduced at Schedule A to the Circular must be approved by more than fifty percent (50%) of votes cast at the Meeting by proxy or in person. Computershare will act as scrutineer at the Meeting and will count and tabulate the votes.

3. VOTING SHARES, QUORUM AND PRINCIPAL SHAREHOLDERS

Voting Shares and Quorum

As of March 9, 2007, there were 53,179,470 Common Shares issued and outstanding. Shareholders of record on March 9, 2007 are entitled to receive notice of and vote at the Meeting. The list of shareholders entitled to vote at the Meeting will be available for inspection on and after March 19, 2007 during usual business hours at the Montréal office of the Corporation’s transfer agent, Computershare, located at 7th Floor, 1500 University Street, Montréal, Quebec, H3A 3S8, as well as at the Meeting.

A quorum is present at the Meeting if the holders of not less than 20% of the Common Shares are present in person or represented by proxy, irrespective of the number of shareholders actually in attendance at the Meeting. If a quorum is present at the opening of the Meeting, the shareholders present or represented by proxy may proceed with the business of the Meeting notwithstanding that a quorum is not present throughout the Meeting. If a quorum is not present within thirty (30) minutes of the opening of the Meeting, the shareholders present or represented by proxy may adjourn the Meeting to a fixed time and place but may not transact any other business.

Principal Shareholders

As of March 9, 2007, to the knowledge of the officers and directors of the Corporation, the only entities that beneficially owned, directly or indirectly, or exercised control or direction over, more than 10% of the votes attached to the Common Shares are indicated in the table below:

Name of shareholder	Common Shares	Total Percentage of Voting Rights
	(#)	(%)
Solidarity Fund (QFL)	9,752,069	18.34

SGF Santé Inc.	8,810,878	16.57

4. PRESENTATION OF THE FINANCIAL STATEMENTS

The Annual Report including the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2006 and the auditors’ report thereon will be submitted at the Meeting.

5. ELECTION OF DIRECTORS

The Corporation’s Articles provide that the Board of Directors (the “Board”) of the Corporation shall be composed of a minimum of five and a maximum of fifteen directors. Directors are elected annually by the shareholders of the Corporation, but the directors may from time to time appoint one or more directors, provided that the total number of directors so appointed does not exceed one third of the number of directors elected at the last annual meeting of shareholders. Management of the Corporation proposes the eleven persons named in the table appearing on page 7 of the Circular (and in the form of proxy or voting instruction form enclosed together with this Circular) as candidates for election as directors. Each elected director will remain in office until termination of the next annual meeting of the shareholders or until his or her successor is elected or appointed, unless his or her post is vacated earlier. Each of the candidates proposed by Management of the Corporation is currently a director of the Corporation.

Under the terms of a shareholders’ agreement signed on November 12, 1999 between Solidarity Fund (QFL) and the Corporation, Solidarity Fund (QFL) was granted the right to designate one member of the Board of the Corporation, provided that Solidarity Fund (QFL) holds at the relevant time at least 499,999 Common Shares. Likewise, under the terms of contractual agreements among the Corporation, SGF Santé Inc. and Dr. Éric Dupont concerning, among other matters, the election of directors, provided that SGF Santé Inc. holds at least 5% of the Corporation’s issued and outstanding voting shares, (a) the Corporation will propose for election as a director of the Corporation, at each annual meeting of the shareholders (i) one candidate designated by SGF Santé Inc., provided that the candidate receives a favourable recommendation from the Corporate Governance, Nominating and Human Resources Committee, and (ii) one candidate jointly designated by SGF Santé Inc. and Dr. Éric Dupont, (b) the Corporation will solicit proxies from its shareholders for the election of such candidates as directors of the Corporation, and (c) Dr. Éric Dupont will exercise the voting rights attached to his Common Shares, on any resolution relating to the election of directors to be submitted to the beneficial holders of any participating shares of the Corporation, in favour of the election of the candidates so designated. In this respect and in accordance with the agreements mentioned above, Mr. Pierre Laurin and Mr. José P. Dorais are the candidates currently designated by Solidarity Fund (QFL) and SGF Santé Inc., respectively, and are named in the table appearing on page 7.

Unless instructions are given to abstain from voting with regard to the election of directors, the persons whose names appear on the enclosed form of proxy will vote in favour of the election of the eleven nominees whose names are set out in the table appearing on page 7 of the Circular. Management of the Corporation does not foresee that any of the nominees listed below will be unable or, for any reason, unwilling to perform his or her duties as a director. In the event that the foregoing occurs for any reason, prior to the election, the persons indicated on the enclosed form of proxy reserve the right to vote for another candidate of their choice unless otherwise instructed by the shareholder in the form of proxy to abstain from voting on the election of directors.

Name and Place of Residence	Principal Occupation	Director since	Number of Common Shares Held
Marcel Aubut Quebec, Canada	Managing Partner Heenan Blaikie Aubut (law firm)	1996	57,500
Stormy Byorum, MBA(1) New York, USA	Senior Managing Director Stephens Cori Capital Advisors (strategic and financial advisory services company)	2001	12,000
José P. Dorais Quebec, Canada	Partner Miller Thomson Pouliot LLP (law firm)	2006	—
Éric Dupont, PhD(2) Quebec, Canada	Executive Chairman of the Board Æterna Zentaris Inc.	1991	3,767,413
Jürgen Engel Frankfurt, Germany	Executive Vice President, Global R&D and Chief Operating Officer Æterna Zentaris Inc. Chairman and Managing Director Zentaris GmbH (a subsidiary of the Corporation)	2003	31,279
Jürgen Ernst, MBA(2) Brussels, Belgium	Vice Chairman of the Board Æterna Zentaris Inc. Corporate Director Former General Manager Pharmaceutical Sector of Solvay S.A. (international chemical and pharmaceutical group)	2005	8,850
Gilles Gagnon, MBA Quebec, Canada	President and Chief Executive Officer Æterna Zentaris Inc.	2002	70,617
Pierre Laurin, PhD(2) Quebec, Canada	Executive in Residence HEC Montreal (management faculty of university)	1998	11,200
Gérard Limoges, FCA(1) Quebec, Canada	Corporate Director Former Deputy Chairman of Ernst & Young LLP Canada	2004	5,000
Pierre MacDonald(1)(2) Quebec, Canada	Chairman of the Board Eurocopter Canada Ltd. (helicopter manufacturer)	2000	11,500
Gerald J. Martin California, USA	Corporate Director Former Vice President, Corporate Licensing and Technology Alliances at Abbott Laboratories Inc.	2006	—

(1) Member of the Audit Committee.

(2) Member of the Corporate Governance, Nominating and Human Resources Committee.

Mr. Marcel Aubut served as a director of Albums DF Ltée from September 5, 1997 to September 16, 2003. This company became bankrupt on December 6, 2003.

Mr. Pierre Laurin was, from May 1999 to May 2003, a director of Microcell Telecommunications Inc. (“Microcell”). Microcell entered into a Plan of Reorganization and of Compromise and Arrangement with its creditors and shareholders effective May 1, 2003 pursuant to the Companies’ Creditors Arrangement Act (Canada). Mr. Laurin was a member of the Special Committee of the Board of Directors of Microcell created in connection with the foregoing restructuring.

Mr. Pierre MacDonald served as a director of Slater Steel Inc. (“SSI”), a manufacturer of specialty steel products, from February 1998 to August 2004. SSI and its subsidiaries filed for creditor protection under the Companies’ Creditors Arrangement Act (Canada) and under Chapter 11 of the US Bankruptcy Code on June 2, 2003, and they have since conducted an orderly wind-down.

The Corporation does not have any direct information concerning shares beneficially owned by the above-mentioned persons or concerning Common Shares of the Corporation over which such persons exercise control or direction. This information was provided to the Corporation by the directors and nominees individually.

6. STATEMENT OF EXECUTIVE COMPENSATION

A. Compensation of Outside Directors

The following describes the compensation paid to the members of the Corporation’s Board and committees up until December 31, 2006. Each outside director received an annual base remuneration of $15,000. In January 2007, the Corporation also granted to each of its outside directors options to purchase 5,000 Common Shares which will vest over a period of three years. The outside directors also received an attendance fee of $1,500 for each Board meeting attended and a daily compensation of $1,500 for special work designated by the Board of Directors, if any. Attendance fees are reduced to $750 per meeting for a director participating in a Board meeting by telephone, teleconference or any other telecommunications device. The Vice Chairman of the Board and the Chairs of the Audit Committee and the Corporate Governance, Nominating and Human Resources Committee receive additional annual retainers of $15,000, $20,000 and $15,000, respectively. In addition, an attendance fee of $1,000 is paid to each outside director attending committee meetings, such fee being reduced to $500 for participation by telephone, teleconference or by any other telecommunication device.

In order to offer competitive compensation and recognize the growing complexity of their activities, the Board of Directors, upon the recommendation of the Corporate Governance, Nominating and Human Resources Committee, has decided to modify the compensation of the Corporation’s outside directors effective January 1, 2007 as follows:

· the annual base remuneration has been increased to $25,000;

· the attendance fee for attending Board and committee meetings has been increased to $2,000;

· the attendance fee for attending Board and committee meetings by telephone, teleconference or any other telecommunications device has been increased to $1,000 per meeting; and

· committee members will receive an additional annual base remuneration of $5,000 for the Audit Committee and $2,500 for the Corporate Governance, Nominating and Human Resources Committee.

All other conditions remain in place.

During the financial year ended December 31, 2006, the Corporation paid an aggregate amount of $322,191 (US$284,094) to all of its outside directors for services rendered. Outside directors are paid in their home country’s currency and are reimbursed for travel and other out-of-pocket expenses incurred while attending Board or committee meetings.

The number of Board and committee meetings held during the year ended December 31, 2006 and the attendance records of Board and committee members are presented in Schedule B to this Circular, “Statement of Corporate Governance Practices”.

B. Compensation of Executive Officers

The following table sets forth detailed information on the compensation of the President and Chief Executive Officer, the Vice President and Chief Financial Officer and the Corporation’s three other most highly compensated executive officers (including the Executive Chairman of the Board) (collectively, the “Named Executive Officers”), for services rendered in all capacities during the financial years ended December 31, 2006, 2005 and 2004.

SUMMARY COMPENSATION TABLE

	Annual Compensation				Long-term Compensation
	(all amounts are in Canadian dollars)				Awards		Payouts
Name and principal occupation	Year	Salary	Bonus	Other Annual Compensation(1)	Securities under Options Granted(2)	Shares or Units Subject to Resale Restrictions	LTIP Payouts	All Other Benefits
		($)	($)	($)	(#)	($)	($)	($)
Gilles Gagnon	2006	300,000	100,000	—	—	—	—	—
President and Chief	2005	300,000	112,500	—	75,000	—	—	—
Executive Officer	2004	250,000	150,000	—	110,000	—	—	—

Dennis Turpin	2006	175,000	100,000	—	—	—	—	—
Vice President and	2005	175,000	75,000	—	50,000	—	—	—
Chief Financial Officer	2004	160,000	100,000	—	90,000	—	—	—

Jürgen Engel(3)	2006	320,333	106,778	—	—	—	—	—
Executive Vice President,	2005	339,705	84,926	—	50,000	—	—	—
Global R&D and Chief	2004	339,549	121,268	—	100,000	—	—	—
Operating Officer

Manfred Peukert(3)	2006	205,013	79,727	—	—	—	—	—
Vice President Medical	2005	217,411	81,491	—	30,000	—	—	—
Affairs	2004	232,499	29,104	—	50,000	—	—	—

Éric Dupont	2006	250,000	—	—	—	—	—	—
Executive Chairman of	2005	250,000	—	—	60,000	—	—	—
the Board	2004	252,083	—	—	90,000	—	—	—

(1) Perquisites and other personal benefits that do not exceed the lesser of $50,000 or 10% of annual salary and bonuses are not included in this column.

(2) Usually stock options are granted to Named Executive Officers in December of each year. In 2006, the grant of stock options to the Corporation’s Named Executive Officers (an aggregate amount of 200,000) was postponed until January 2007 due to the payment of the special distribution of Subordinate Voting Shares of the capital of Atrium Biotechnologies Inc. (“Atrium”) to the Corporation’s shareholders on January 2, 2007.

(3) Amounts actually paid to such Named Executive Officers in Euros and converted to Canadian dollars at an average exchange rate of CDN$1.00 to €0.7024 in 2005, €0.6623 in 2005 and €0.6185 in 2004.

During the financial year ended December 31, 2006, the Corporation paid an aggregate amount of $2,427,574 (US$2,140,529) and granted an aggregate number of 30,000 stock options to all of its executive officers (excluding outside directors).

C. Stock Option Plan Information

The Corporation has established a stock option plan for its directors, executive officers, employees and persons providing continuous services to the Corporation (the “Stock Option Plan”) in order to attract and retain such persons, who will be motivated to work towards ensuring the Corporation’s success. The Board has full and complete authority to interpret the Stock Option Plan, to establish applicable rules and regulations applying to it and to make all other determinations it deems necessary or useful for the administration of the Stock Option Plan, provided that such interpretations, rules, regulations and determinations are consistent with the rules of all stock exchanges and quotation systems on which the securities of the Corporation are then traded and with all relevant securities legislation. Individuals eligible to participate under the Stock Option Plan will be determined by the Board of Directors or the Corporate Governance, Nominating and Human Resources Committee, as the case may be.

Options granted under the Stock Option Plan may be exercised at any time within a maximum period of ten years following the date of their grant. The Board of Directors or the Corporate Governance, Nominating and Human Resources Committee, as the case may be, designates, at its discretion, the individuals to whom stock options are granted under the Stock Option Plan and determines the number of Common Shares covered by each of such options, the grant date, the exercise price of each option, the expiry date, the vesting schedule and any other matter relating thereto, in each case in accordance with the applicable rules and regulations of the securities regulatory authorities. The price at which the Common Shares may be purchased may not be lower than the greater of the closing prices of the Common Shares on the Toronto Stock Exchange (the “TSX”) and the NASDAQ Global Market (the “NASDAQ”) on the last trading day preceding the date of grant of the option. Options granted under the Stock Option Plan generally vest in equal tranches over a three-year period (one-third each year, starting on the first anniversary of the grant date) or as otherwise determined by the Board of Directors or the Corporate Governance, Nominating and Human Resources Committee.

Unless the Board of Directors or the Corporate Governance, Nominating and Human Resources Committee decides otherwise, optionholders cease to be entitled to exercise their options under the Stock Option Plan: (i) immediately, in the event an optionholder who is an officer or employee of the Corporation resigns or voluntarily leaves his or her employment with the Corporation or one of its subsidiaries or the employment with the Corporation or one of its subsidiaries is terminated with cause and, in the case of an optionee who is a non-employee director or member of the Scientific Board of the Corporation or one of its subsidiaries, the date on which such optionee ceases to be a member of the relevant Board; (ii) six months following the date on which employment with the Corporation or any of its subsidiaries is terminated as a result of the death of an optionholder who is an officer or employee of the Corporation and, in the case of an optionee who is a non-employee director or member of the Scientific Board of the Corporation or one of its subsidiaries, six months following the date on which such optionee ceases to be a member of the relevant Board; (iii) 30 days following the date on which an optionholder’s employment with the Corporation or any of its subsidiaries is terminated for a reason other than those mentioned in (i) or (ii) above including, without limitation, upon the disability, long-term illness, retirement or early retirement of the optionholder; and (iv) where the optionholder is a service supplier, 30 days following the date on which such optionholder ceases to act as such, for any cause or reason.

Optionholders may not assign their options (nor any interest therein) other than by will or in accordance with the applicable laws of estates and succession.

In the event that, at any time, an offer to purchase is made to holders of all Common Shares, notice of such offer shall be given by the Corporation to each optionee and all unexercised options will become exercisable immediately at their respective exercise prices, but only to the extent necessary to enable optionees to tender their Common Shares in response to such offer.

The maximum number of Common Shares that may be issued under the Stock Option Plan is currently 4,253,277, which currently represents approximately 8% of all issued and outstanding Common Shares. Under the Stock Option Plan, no single optionholder may currently hold options to purchase more than 5% of the Corporation’s issued and outstanding Common Shares.

On March 2, 2007, the Board of Directors approved, subject to receiving the approvals of the TSX and the Corporation’s shareholders, the making of certain amendments to the Stock Option Plan, including: 1) extending the exercise period for options that would otherwise expire during a trading prohibition period or within seven (7) business days immediately after a trading prohibition period imposed by the Corporation, to a date which is seven (7) business days after the last day of such trading prohibition period; 2) amending the Stock Option Plan’s amending provision following the changes made by the TSX regarding the requirements that apply to security-based compensation arrangements; and 3) changing the maximum number of Common Shares issuable under the Stock Option Plan from a fixed number to a fixed percentage of the issued and outstanding Common Shares. The TSX has conditionally approved these amendments to the Stock Option Plan and shareholders will be asked at the Meeting to adopt Resolution 2007-1 approving such amendments. See Item 11 of the Circular, “Amendments to the Stock Option Plan”. The Board of Directors also approved, on March 2, 2007, certain amendments to the Stock Option Plan of a “housekeeping” or clerical nature, and amendments to comply with TSX policies which provide that the number of securities issuable to insiders, at any time, under all security-based compensation arrangements cannot exceed 10% of the issued and outstanding Common Shares and that the number of securities issued to insiders, within any one-year period, under all security-based compensation arrangements, cannot exceed 10% of the issued and outstanding Common Shares (the “10% Insider Limit”). These amendments have been approved by the TSX but are not subject to shareholder approval.

Options granted during the most recently completed financial year

There were no options granted to the Named Executive Officers during the financial year ended December 31, 2006. The aggregate number of Common Shares covered by options granted to the Corporation’s officers and employees other than the Named Executives Officers during such period was 45,000 at prices varying from $6.09 to $7.06 per Common Share, establishing at 3,490,092 the total number of Common Shares covered by options granted and outstanding pursuant to the Stock Option Plan as at December 31, 2006, which represents 6.6% of the total number of issued and outstanding Common Shares.

Options exercised during the most recently completed financial year and financial year-end option values

The following table summarizes for each of the Named Executive Officers the number of Common Shares acquired on options exercised, if any, during the financial year ended December 31, 2006, the aggregate value realized upon exercise, the total number of Common Shares covered by unexercised options, if any, held at December 31, 2006, and the value of such unexercised options as at the same date. During the financial year ended December 31, 2006, an aggregate of 22,000 options were exercised at prices varying from $3.76 and $5.70 by all optionholders under the Stock Option Plan.

Name	Common Shares Acquired on Exercise (#)	Aggregate Value Realized ($)	Unexercised Options at FY-end 2006 (#) Exercisable/ Unexercisable	Value of Unexercised In-the-Money Options at FY-end 2006 (1) ($) Exercisable/ Unexercisable
Gilles Gagnon, CEO	—	—	328,334 / 86,666	481,750 / 59,500
Dennis Turpin, CFO	—	—	306,666 / 63,334	320,833 / 39,667
Jürgen Engel	—	—	203,333 / 66,667	336,033 / 39,667
Manfred Peukert	—	—	78,334 / 36,666	105,850 / 23,800
Éric Dupont	—	—	360,000 / 70,000	403,300 / 47,600

(1) The value of an unexercised in-the-money option at financial year-end is the difference between the exercise price of the option and the closing price of a Common Share on the TSX on December 31, 2006, which was $4.72. On February 2, 2007, the TSX definitively approved an equitable adjustment to all unexercised options outstanding pursuant to the Stock Option Plan in order to reflect the one-time special distribution in kind of all of the Corporation’s 11,052,996 Subordinate Voting Shares of the capital of Atrium distributed to the Corporation’s shareholders on a pro rata basis. This special distribution was completed on January 2, 2007, although the “ex-distribution” date in respect thereof was December 27, 2006. The adjustment was a reduction in the exercise price of all outstanding stock options of $2.02 per Common Share.

These values have not been and may never be realized. The options have not been and may never be exercised; and actual gains, if any, upon exercise will depend upon the value of the Common Shares on the date of the exercise. There can be no assurance that these values will ever be realized. Values of unexercised options are based on exercise prices varying from $1.74 to $3.94 at the specific grant dates, as applicable and as equitably adjusted in connection with the Corporation’s special distribution of Subordinate Voting Shares of the capital of Atrium.

D. Pension Plan

Two of the Corporation’s Named Executive Officers, namely Prof. Dr. Jürgen Engel and Dr. Manfred Peukert, participate in a non-contributory defined benefit pension plan. Benefits payable under this plan correspond to 40% of the executive officer’s average salary of the last twelve (12) months during the first five working years after initial participation in this plan and increase by 0.4% for each additional year of employment.

The normal retirement age is 65 years, but early retirement in accordance with Germany’s social pension insurance is possible without reduction of the benefit. The following table shows total annual pension benefits payable pursuant to this plan. Upon the death of a participant, the surviving spouse and/or children of the participant will be entitled to a benefit equal to 60% of the benefits to which such participant was entitled. All benefits payable under this plan are in addition to German governmental social security benefits. Only basic salary is taken into consideration in calculating pension benefits.

Pension Plan Table

	Years of Service
Average Remuneration ($)*	15	20	25	30	35
200,000	$ 88,000	$ 92,000	$ 96,000	$ 100,000	$ 104,000
300,000	$ 132,000	$ 138,000	$ 144,000	$ 150,000	$ 156,000
400,000	$ 176,000	$ 184,000	$ 192,000	$ 200,000	$ 208,000
500,000	$ 220,000	$ 230,000	$ 240,000	$ 250,000	$ 260,000

* Remuneration refers to annual basic salary.

Years of credited service as at December 31, 2006 for the Corporation’s two Named Executive Officers who participate in this plan are as indicated below:

Jürgen Engel:		30 years and 4 months
Manfred Peukert:		30 years and 4 months

E. Employment and Change of Control Agreements

The Corporation and/or its subsidiaries have entered into employment agreements (the “Employment Agreements”) with each of the Named Executive Officers. The Employment Agreements provide that the Corporation will pay the executives a base salary, an annual bonus and stock options which will be reviewed annually in accordance with the Corporation’s policies. The Employment Agreements have an indefinite term, except for Prof. Dr. Engel, whose employment agreement is for a term of five years expiring in June 2008.

In addition, the Corporation has entered into change of control agreements (the “Change of Control Agreements”) with two of the Named Executive Officers. Under such agreements, if a change of control (as defined in the Change of Control Agreements) occurs and the Corporation terminates the employment of the executive without cause, or if the executive terminates his employment for good reason, then the executive will be entitled to receive a lump sum payment, less statutory deductions, of the equivalent of twenty-four (24) months in the case of Mr. Gagnon and eighteen (18) months in the case of Mr. Turpin of i) their annual base salary, ii) the maximum amount of their bonus, and iii) the benefits, calculated on a yearly basis, including car allowances, but excluding operating costs and excluding any stock options which were held by such executive at the time of termination of employment.

F. Report on Executive Compensation

Composition of the Corporate Governance, Nominating and Human Resources Committee

On December 31, 2006, the Corporate Governance, Nominating and Human Resources Committee (for the purposes of this section 6.F of the Circular, the “Committee”) was composed of four directors, namely Dr. Éric Dupont, Mr. Jürgen Ernst, Mr. Pierre Laurin and Mr. Pierre MacDonald (Chairman).

Mandate of the Committee

The mandate of the Committee (attached as Schedule E to this Circular) is to (i) assist the Board in developing the Corporation’s approach to corporate governance issues, (ii) propose new Board nominees, and (iii) assess the effectiveness of the Board and its committees, their respective chairs and individual directors. This committee also assists the Board in discharging its responsibilities relating to executive and other human resources hiring, assessment, compensation and succession planning matters.

Executive Compensation Policy

An executive compensation policy has been established to acknowledge and reward the contributions of the executive officers to the Corporation’s success and to ensure competitive compensation, in order that the Corporation may benefit from the expertise required to pursue its objectives.

In accordance with this policy, the compensation of the Corporation’s executive officers is based on three principal elements: (i) basic salary; (ii) performance bonuses; and (iii) the award of stock options. Each component is established with comparable companies in the North American biopharmaceutical industry with which the Corporation competes for talent. In addition, the policy is intended to align the executives’ interests with those of the Corporation’s shareholders and rewards superior performance. Incentive-based compensation is granted on the basis of criteria approved by the Committee.

Basic Salary

Basic salary is established according to the criteria set forth above and is intended to align with the median of those paid in the comparator group. They are reviewed annually by the Committee.

Short-term Incentive Compensation

The short-term incentive plan sets out the allocation of incentive awards based on the financial results, the achievement of the Corporation’s product development and strategic objectives, and the Corporation’s return on investment. These objectives are set at the beginning of each financial year as part of the revision of corporate strategies.

In the case of executive officers, a program is designed to maximize corporate and individual performance by establishing specific operational and financial goals and to provide financial incentives to executive officers based on their level of achievement of these goals. The granting of cash incentives require Committee and Board approval and are based upon an assessment of each individual’s performance, as well as the performance of the Corporation.

Long-term Compensation of Executive Officers

The long-term component of the compensation of the Corporation’s executive officers is based mainly on the Stock Option Plan, which permits the granting of a number of options that varies in accordance with the contribution of the officers and their responsibilities. To encourage retention and focus management on developing and successfully implementing the continuing growth strategy of the Corporation, stock options generally vest over a period of three years. Usually stock options are granted to executive officers in December of each year. In 2006, the grant of stock options to the Corporation’s executive officers was postponed until January 2007 due to the payment of the special distribution of Atrium’s Subordinate Voting Shares to the Corporation’s shareholders on January 2, 2007.

Control and Revision of the Compensation Plan

The Committee must ensure that the compensation of the Corporation’s executive officers is consistent with the overall compensation policy of the Corporation. The relative situation of the Corporation with regard to compensation is determined annually by means of studies, with respect to a reference market, composed of comparable businesses. Internal equity analyses are also conducted in order to make the required adjustments.

Compensation of the President and Chief Executive Officer

The compensation of the President and Chief Executive Officer is along the lines of the Corporation’s policy on management compensation. The President and Chief Executive Officer’s employment agreement also contains a non-competition clause but does not provide for any specific terms or modalities of remuneration.

In 2006, the President and Chief Executive Officer received a bonus pursuant to the Corporation’s short-term incentive plan. The annual bonus paid to the Chief Executive Officer in 2006 reflected his performance in the context of Corporation’s objectives, which were reviewed by the Committee for the Chief Executive Officer and the senior executive management of the Corporation for the 2006 fiscal year. The annual bonus paid in 2006 reflected the advancement of the Corporation’s product pipeline as well as its performance in relation to strategic objectives, business development, the Corporation’s return on investment and budgetary objectives established by the Committee for the Chief Executive Officer and the senior executive management team for the 2006 fiscal year.

Conclusion

In accordance with the Corporation’s executive compensation policy, a significant portion of the compensation of its executive officers is tied to the performance of the Corporation, the responsibilities inherent in their duties and, in particular, the performance of the Corporation’s publicly traded Common Shares and their long-term appreciation. The Committee reviews the compensation programs of the

executive officers annually in order to ensure their competitiveness and compliance with the objectives, values and strategies of the Corporation.

If the circumstances so require, the Committee may recommend employment conditions that are different from the policies in effect as well as the execution of non-standard employment contracts by the Corporation.

By the Corporate Governance, Nominating and Human Resources Committee:

Pierre MacDonald, Chairman

Éric Dupont

Jürgen Ernst

Pierre Laurin

7. PERFORMANCE GRAPH

On December 31, 2006, the closing price of a Common Share on the TSX was $4.72. The following graph shows the cumulative return of a $100 investment in the Common Shares made on December 31, 2001 on the TSX, compared with the total return of the S&P/TSX Composite Index for each financial year shown on this graph.

On May 28, 2004, the Corporation’s former Subordinate Voting Shares were changed, on a one-for-one basis, into an equal number of new Common Shares. On January 2, 2007, the Corporation effected a one-time special distribution in kind of all of its 11,052,996 Subordinate Voting Shares of the capital of Atrium on a pro rata basis to its shareholders. The “ex-distribution” date for the special distribution was December 27, 2006.

8. SECURITY-BASED COMPENSATION ARRANGEMENTS

A. Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth, as at December 31, 2006, the information with respect to all of the Corporation’s compensation plans pursuant to which equity securities of the Corporation are authorized for issuance:

Plan Category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights	(b) Weighted-average exercise price of outstanding options, warrants and rights (1) ($)	(c) Number of securities remaining available for further issuance under equity compensation plans (excluding securities reflected in column (a)
Equity compensation plans approved by securityholders	3,490,092	4.00	773,185
Equity compensation plans not approved by securityholders	—	—	—
Total:	3,490,092	4.00	773,185

(1): On February 2, 2007, the TSX definitively approved an equitable adjustment to all unexercised options outstanding pursuant to the Stock Option Plan in order to reflect the one-time special distribution in kind of all of the Corporation’s 11,052,996 Subordinate Voting Shares of the capital of Atrium distributed to the Corporation’s shareholders on a pro rata basis. This special distribution was completed on January 2, 2007, although the “ex-distribution” date in respect thereof was December 27, 2006. The adjustment was a reduction in the exercise price of all outstanding stock options of $2.02 per Common Share.

On January 4, 2007, the Board of Directors approved the granting of an aggregate of 410,000 options to the Corporation’s directors, executive officers and certain key employees, details of which will be provided in the Corporation’s management information circular that will be prepared in connection with the 2008 annual meeting of shareholders.

B. Principal Terms of the Corporation’s Security-Based Compensation Arrangements and Other Required Disclosure

Effective January 1, 2005, companies listed on the TSX are required to disclose, on an annual basis, in their information (or management proxy) circulars or other annual disclosure documents distributed to all security holders, the terms of their security-based compensation arrangements and any amendments adopted to such arrangements during the most recently completed financial year. Under the rules of the TSX Company Manual, security-based compensation arrangements include, for example, stock option plans, stock purchase plans where the listed issuer provides financial assistance or where the listed issuer matches the whole or a portion of the securities being purchased, and any other compensation or incentive mechanism involving the issuance or potential issuance of securities of the listed issuer. In general, arrangements or plans that do not involve the issuance from treasury or potential issuance from treasury of securities of the listed issuer are not security-based compensation arrangements for the purposes of the TSX Company Manual rules. The Corporation currently has in place only one such security-based compensation arrangement, namely its Stock Option Plan, the principal terms of which are described at Section 6.C of this Circular under the heading “STATEMENT OF EXECUTIVE COMPENSATION — Stock Option Plan Information”.

The table below indicates, the number of Common Shares (i) which were authorized for issuance as of February 26, 2004, (ii) issuable under outstanding stock options as at March 9, 2007, (iii) issued pursuant to the exercise of stock options under the Stock Option Plan since February 26, 2004 and (iv) remaining available for issuance under the Stock Option Plan as at March 9, 2007:

Common Shares under Stock Option Plan:	Number of Common Shares	As a Percentage of all Currently Issued and Outstanding Common Shares
Total Authorized for Issuance as of February 26, 2004:	4,543,744	8.54	%
·issuable under outstanding stock options (including stock options granted by the Corporation after January 1, 2007)	3,880,092	7.30	%
·issued pursuant to the exercise of stock options since February 26, 2004	290,467	0.55	%
·remaining available for issuance	373,185	0.70	%

9. STATEMENT OF CORPORATE GOVERNANCE PRACTICES

In 2005, the Canadian Securities Administrators (the “CSA”) adopted Multilateral Instrument 58-101 - Disclosure of Corporate Governance Practices (the “CSA Disclosure Instrument”) and National Policy 58-201 - Corporate Governance Guidelines (the “CSA Governance Policy”). The CSA Governance Policy provides guidance on governance practices for Canadian issuers. The CSA Disclosure Instrument requires issuers to make certain specified disclosure regarding their governance practices. The Board considers good corporate governance to be important to the effective operations of the Corporation. The Corporate Governance, Nominating and Human Resources Committee makes recommendations regarding the compliance of the Corporation’s practices with the CSA Governance Policy and oversees

disclosure obligations related thereto. The Committee proposes changes to the Corporation’s corporate governance practices and, where applicable, amends such governance practices from time to time.

Pursuant to the requirements of the CSA Disclosure Instrument, the Corporation sets out in Schedule B to this Circular the disclosure required by the CSA Disclosure Instrument (which are set out in Form 58-101F1 of the Instrument) and provides a response to each item, which together describe how the Corporation has integrated these “best practices” of corporate governance.

10. APPOINTMENT OF AUDITORS AND AUDIT COMMITTEE DISCLOSURE

A. Appointment of Auditors

The Board proposes that PricewaterhouseCoopers LLP, Chartered Accountants, be appointed as auditors of the Corporation and that the directors of the Corporation be authorized to determine their compensation upon the recommendation of the Audit Committee. PricewaterhouseCoopers LLP have acted as auditors of the Corporation since the financial year ended December 31, 1993.

Unless instructed to abstain from voting with regard to the appointment of auditors, the persons whose names appear on the enclosed form of proxy will vote in favour of the appointment of PricewaterhouseCoopers LLP and authorizing the directors of the Corporation to determine their compensation.

B. Audit Committee Disclosure

Multilateral Instrument 52-110 — Audit Committees (“MI 52-110”) requires issuers to disclose in their annual information forms certain information with respect to the existence, charter, composition, and education and experience of the members of their Audit Committees, as well as all fees paid to external auditors. The Corporation is including such required disclosure with respect to its Audit Committee in both this Circular and its Annual Information Form. The Audit Committee Charter is attached as Schedule D to this Circular and is also accessible on the Corporation’s Web site at www.aeternazentaris.com.

Composition of the Audit Committee

Ms. Stormy Byorum, Mr. Gérard Limoges, FCA, who is the Chair of the Committee, and Mr. Pierre MacDonald are the members of the Corporation’s Audit Committee, each of whom is independent and financially literate within the meaning of MI 52-110.

Education and Relevant Experience

The education and relevant experience of each of the members of the Audit Committee are described below.

Stormy Byorum — Ms. Byorum is currently Senior Managing Director of Stephens Cori Capital Advisors, a strategic and financial advisory services company. Before 1996, Ms. Byorum held various positions at Citicorp. Ms. Byorum holds a Master’s of Business Administration (MBA) degree from the University of Pennsylvania.

Gérard Limoges, FCA — Mr. Limoges served as the Deputy Chairman of Ernst & Young LLP Canada until his retirement in September 1999. After a career of 37 years with Ernst & Young, Mr. Limoges has been devoting his time as a director of a number of companies. Mr. Limoges began his career with Ernst & Young in Montreal in 1962. After graduating from the Management School of Université de Montréal (HEC Montréal) in 1966, he became a chartered accountant and partner of Ernst & Young in 1971.

Pierre MacDonald — Mr. MacDonald was Vice President of James Bay Energy Corporation where he was responsible for administration, finance, internal audit and information systems. He subsequently was the Senior Vice President for Eastern Canada for Bank of Montreal, a position which involved the review and evaluation of the financial statements and creditworthiness of borrowers in a wide variety of industries. He

then became Vice Chairman of the Treasury Board of the Government of Quebec. Mr. MacDonald served as the Chairman of the Audit Committee of Teleglobe Inc. for six years. He recently completed a term of six years as Chairman of the Risk Management Committee and member of the Audit Committee of the Export Development Corporation. Mr. MacDonald received Bachelor of Arts, Bachelor of Commerce and Masters of Commerce degrees from Laval University in Quebec.

Pre-Approval Policies and Procedures

Form 52-110F1 requires the Corporation to disclose whether its Audit Committee has adopted specific policies and procedures for the engagement of non-audit services and to prepare a summary of these policies and procedures. The mandate of the Audit Committee (attached as Schedule D to this Circular) provides that it is such committee’s responsibility to approve all audit engagement fees and terms as well as reviewing policies for the provision of non-audit services by the external auditors and, when required, the framework for pre-approval of such services. The Audit Committee delegates to its Chairman the pre-approval of such non-audit fees.

External Auditor Service Fees

In addition to performing the audit of the Corporation’s consolidated financial statements and its subsidiaries, PricewaterhouseCoopers LLP provided other services to the Corporation and its subsidiaries and billed the Corporation and its subsidiaries the following fees for each of the Corporation’s two most recently completed financial years. Fees for the financial year ended December 31, 2006 exclude all such fees billed by PricewaterhouseCoopers LLP to the Corporation’s former subsidiary, Atrium, since, on October 18, 2006, the Corporation initiated the divesture of its interest in Atrium upon closing of a secondary offering and completed the spin-off by distributing its remaining investment in Atrium to all shareholders on January 2, 2007.

Fees	Financial Year Ended December 31, 2006	Financial Year Ended December 31, 2005
Audit Fees(1)	252,084	576,757
Audit-Related Fees(2)	149,873	10,220
Tax Fees(3)	29,084	181,029
All Other Fees(4)	56,753	193,554	(5)
Total Fees:	487,794	961,560

(1) Refers to the aggregate fees billed by the Corporation’s external auditor for audit services.

(2) Refers to the aggregate fees billed for assurance and related services by the Corporation’s external auditor that are reasonably related to the performance of the audit or review of the Corporation’s financial statements and are not reported under (1) above, including professional services rendered by the Corporation’s external auditor for accounting consultations on proposed transactions, and consultations related to accounting and reporting standards.

(3) Refers to the aggregate fees billed for professional services rendered by the Corporation’s external auditor for tax compliance, tax advice and tax planning.

(4) Refers to the aggregate fees billed for products and services provided by the Corporation’s external auditor, other than the services reported under (1), (2) and (3) above.

(5) These fees were primarily incurred in connection with the preparation of a prospectus filed by the Corporation’s subsidiary, Atrium, as part of its initial public offering in April 2005.

11. AMENDMENTS TO THE STOCK OPTION PLAN

At the Meeting, shareholders will be asked to consider and, if deemed advisable, to adopt Resolution 2007-1, a copy of which is reproduced at Schedule A to this Circular, ratifying and approving certain amendments to the Stock Option Plan, which the Corporation’s directors unanimously approved on March 2, 2007, subject to obtaining shareholder and regulatory approval.

In 1995, shareholder and regulatory approval was obtained to implement the Stock Option Plan, with subsequent amendments approved by shareholders and the TSX in 1997, 1999, 2000, 2001, 2002, 2003 and 2004, in each case in order to increase the maximum number of Common Shares issuable under the Stock Option Plan. The purpose of the Stock Option Plan is to provide compensation incentives to selected employees that encourage alignment with shareholders and enhance the Corporation’s ability to attract, retain and motivate qualified personnel. Management is of the view that the Stock Option Plan contributes to the overall success of the Corporation.

On March 2, 2007, the Board of Directors approved, subject to receiving the approvals of the TSX and the shareholders of the Corporation: (i) changing the maximum number of Common Shares issuable under the Stock Option Plan from a fixed number to a fixed percentage of the issued and outstanding Common Shares of the Corporation; (ii) amending the Stock Option Plan’s amending provision following changes made by the TSX regarding the requirements that apply to security-based compensation arrangements; and (iii) extending by seven (7) business days the exercise period for options that would otherwise expire during a trading prohibition period, as determined pursuant to the Corporation’s information policy. In making the decision to amend the Stock Option Plan, the Corporate Governance, Nominating and Human Resources Committee and the Board of Directors considered a number of factors, including the number of options currently outstanding under the Plan, the Corporation’s human resources requirements, competitive benchmarks and the anticipated need to grant options in the future. Based on a review of each of these factors, the directors have unanimously determined that the proposed changes are both reasonable and in the best interests of the Corporation.

Maximum Number of Common Shares Issuable

The Corporation proposes to change the maximum number of Common Shares issuable under the Stock Option Plan from a fixed number (currently 4,543,744 Common Shares) to a maximum of 10% of the total number of Common Shares issued and outstanding at any given time (the “New Maximum”). The proposed New Maximum will permit the Corporation to have, on an ongoing basis, a maximum of 10% of the issued and outstanding Common Shares available for issuance pursuant to the exercise of options under the Stock Option Plan. For greater certainty, in the event that options are exercised, cancelled or expire in accordance with their terms, an equivalent number of such options will be available to be granted (or “reloaded”) under the Stock Option Plan. With the establishment of the New Maximum and based on the number of issued and outstanding Common Shares as of the date of this Circular, an additional 1,064,670 Common Shares will be listed and reserved for issuance under the Stock Option Plan. As at March 9, 2007, there were 3,880,092 options outstanding and unexercised and 373,185 options available for granting. Taking into account the additional Common Shares to be listed pursuant to the establishment of the New Maximum, there will be 1,437,855 Common Shares available for issuance pursuant to the exercise of options that have yet to be granted.

In a Staff Notice issued by the TSX in July 2006, the TSX required listed issuers that adopt stock option plans that do not have a fixed maximum number of securities issuable (which will be the case for the Corporation if the proposed amendments to the Stock Option Plan are approved by shareholders) to obtain shareholder approval for unallocated options under such plans three years after their institution and every three years thereafter. As a result, shareholders of the Corporation will be asked, not later than three years after the adoption of Resolution 2007-1 (assuming such resolution is adopted at the Meeting), to approve any unallocated options under the Stock Option Plan at such time.

Amendment Provision

The Stock Option Plan currently has a general amendment provision allowing the Board of Directors to suspend, terminate or to make amendments to the Stock Option Plan, subject to TSX and regulatory approval. In the past, such approval has been granted at the discretion of the TSX and the TSX determined as to whether the proposed amendment was or was not sufficiently material to require shareholder approval.

Recently, however, the TSX announced that by June 30, 2007, each listed issuer must formulate a detailed amendment provision in its stock option plan, failing which all future amendments (no matter how immaterial) would require shareholder approval. The purpose is to more clearly distinguish in the Stock Option Plan between the type of amendments that will require shareholder approval and those which can be made by the Board of Directors without shareholder approval. All amendments would continue to be subject to any required regulatory review or approval. The Corporation proposes to amend its Stock Option Plan amendment provision in accordance with this recent TSX rule change.

The Corporation proposes to add an amendment provision to the Stock Option Plan which sets out those circumstances where the Board of Directors may not, without the approval of the holders of the Common Shares, make amendments to the Stock Option Plan. Shareholder approval will be required for the following types of amendments to the Stock Option Plan: (i) any amendment to the provision prohibiting the grant of options beyond the 10% Insider Limit unless shareholder approval on a disinterested vote is obtained; ii) any amendment to the number of securities issuable under the Stock Option Plan; iii) any amendment which would permit any option granted under the Stock Option Plan to be transferable or assignable other than, by will or in accordance with the applicable laws of estates and succession; iv) the addition of a cashless exercise feature, payable in cash or securities, which does not provide for a full deduction of the number of underlying securities from the Stock Option Plan reserve; v) the addition of a deferred or restricted share unit or any other provision which results in employees receiving securities while no cash consideration is received by the Corporation; vi) with respect to an optionee who is an “insider” of the Corporation, any reduction in the exercise price of any option after the option has been granted or any cancellation of an option and the regrant of that option under different terms, except if such regrant occurs at least three (3) months after the related cancellation; vii) any extension to the term of an option beyond the original expiry date to an “insider” of the Corporation (subject to the proposed amendment discussed below under “Expiry Dates during Blackout Periods”); viii) any amendment to the method of determining the exercise price of an option granted pursuant to the Stock Option Plan; ix) the addition of any form of financial assistance or any amendment to a financial assistance provision which is more favourable to employees, and x) any amendment to the amendment provision of the Stock Option Plan.

Notwithstanding the foregoing proposed amendment, shareholder approval will not be required for any adjustments made to the number of issuable shares or the exercise price of outstanding options in accordance with the section of the Stock Option Plan which provides for appropriate adjustments in respect of certain events. Such events include subdivision or consolidation of shares, payment of dividends in stock (other than dividends in the ordinary course), payment of a special cash or non-cash dividend made on a prorata basis and approved by the Corporation’s shareholder as required under applicable law, reclassification or conversion of shares, recapitalization, reorganization or other events which necessitate adjustments to the outstanding options in proportion with adjustments to all Common Shares.

The Board of Directors may, subject to the receipt of the required regulatory approvals, and at its sole discretion, make all other amendments to the Stock Option Plan that are not described above. Without limiting the generality of the foregoing, the Board of Directors will be able to, inter alia: i) make any amendment of a “housekeeping” or clerical nature or to clarify the Stock Option Plan’s provisions; ii) make any amendment regarding any vesting period; iii) make any amendment to the provisions regarding the termination of an option as long as it does not entail an extension beyond the original expiry date with respect to any optionee who is an “insider” of the Corporation; iv) discontinue or terminate the Stock Option Plan; and v) with respect to any optionee who is a “non-insider” of the Corporation, make any amendments to the terms of an option to reduce the exercise price of such option after the option has been granted, or to cancel an option and regrant it under different terms.

Expiry Dates during Blackout Periods

A recent Staff Notice issued by the TSX recognizes that blackout periods imposed by issuers are an example of good corporate governance and that TSX limitations on extensions of option terms were not intended to penalize listed issuers, their insiders and employees who, under their companies’ trading policies and good corporate governance practices, are prohibited from exercising options during blackout periods. As a result, the TSX has provided that issuers may amend their stock option plans to provide a conditional extension to an expiration date that occurs during or immediately after a blackout period. Such extension would be permitted for a limited number of days after the end of the blackout period.

The Stock Option Plan currently provides that the expiry date of an option, which is set at the time of grant, shall not be later than the tenth anniversary of the date of the option grant. The Corporation proposes an amendment to provide that, if the expiry date occurs during a blackout period or within the seven (7) business days immediately after a blackout period imposed by the Corporation, the expiry date will be automatically extended to the date which is seven (7) business days after the last day of the blackout period. For the purposes of the foregoing, “blackout period” means the period during which trading in the Corporation securities is restricted in accordance with the policies of the Corporation and its affiliates.

Examples of such a blackout period would include the following: (i) where the option holder is subject to trading restrictions imposed by the Corporation under its trading “windows” policy, the period in which trading is restricted or is outside a permitted trading window, or such period of time where the option holder is in possession of undisclosed material information (as defined under applicable securities law) during a trading window; and (ii) such other restrictions on trading in securities of the Corporation as may be imposed by the Corporation from time to time.

This amendment will align the proper administration of the Stock Option Plan with the Corporation’s current trading policies and governance practices.

Shareholder Approval

These amendments to the Stock Option Plan were approved by the Board of Directors on March 2, 2007, subject to shareholder and regulatory approvals. The TSX has reviewed and approved these proposed additions to the Stock Option Plan. To be effective, the amendments to the Stock Option Plan must be approved by a resolution passed by a majority of the votes cast by shareholders at the Meeting.

Recommendation of the Board and Management

The Board and Æterna Zentaris’ management unanimously recommend that shareholders vote in favour of the amendments to the Stock Option Plan described above.

12. RECONFIRMATION OF THE SHAREHOLDER RIGHTS PLAN

At the Meeting, shareholders will be asked to consider, and if deemed advisable, to adopt Resolution 2007-2 approving, ratifying and confirming an Amended and Restated Shareholder Rights Plan Agreement adopted by the Board of Directors on March 2, 2007. On May 26, 2004, the shareholders of the Corporation confirmed the Shareholder Rights Plan Agreement adopted by the Board of Directors on March 29, 2004 (the “Original Rights Plan” and the Original Rights Plan as amended by the Amended and Restated Shareholder Rights Plan being hereinafter referred to as the “Rights Plan”). The Rights Plan has been effective since March 29, 2004 and will expire on the earlier of March 29, 2010 (subject to the reconfirmation by the shareholders at the Meeting) and the time at which the right to exercise rights shall terminate pursuant to the provisions of the Rights Plan pertaining to the redemption of rights and the waiver of the application of the Rights Plan, after which time it will automatically terminate.

The Rights Plan (including the amendments thereto and the restatement thereof) were not adopted by the Board of Directors in response to, or in anticipation of, any offer or take-over bid. The TSX has approved the Rights Plan (including the amendments thereto and the restatement thereof) subject to shareholder approval being obtained at the Meeting.

Resolution 2007-2, a copy of which is reproduced at Schedule A to this Circular, requires the approval of a majority of the votes cast in respect thereof by Independent Shareholders (as defined in the Rights Plan). “Independent Shareholders” is generally defined to mean all holders of Common Shares of the Corporation other than any Acquiring Person or Offeror (each as defined in the Rights Plan), their respective affiliates, associates, and persons acting jointly or in concert with such Acquiring Person or Offeror, as well as certain employee benefit plans. To the knowledge of management, as of the date hereof, all of the Corporation’s shareholders qualify as Independent Shareholders. If the resolution is not approved by shareholders at the Meeting, the Rights Plan and the Rights issued thereunder will terminate at the close of the Meeting.

Recommendation of the Board and Management

Æterna Zentaris’ Board of Directors and management unanimously recommend that shareholders vote in favour of the amendment to and restatement of the Rights Plan.

Objectives and Background of the Rights Plan

The fundamental objectives of the Rights Plan are to provide adequate time for the Corporation’s Board of Directors and shareholders to assess an unsolicited take-over bid for the Corporation, to provide the Board of Directors with sufficient time to explore and develop alternatives for maximizing shareholder value if a take-over bid is made, and to provide shareholders with an equal opportunity to participate in a take-over bid.

The Rights Plan encourages a potential acquiror who makes a take-over bid to proceed either by way of a “Permitted Bid”, which requires a take-over bid to satisfy certain minimum standards designed to promote fairness, or with the concurrence of the Corporation’s Board of Directors. If a take-over bid fails to meet these minimum standards and the Rights Plan is not waived by the Board of Directors, the Rights Plan provides that holders of Common Shares, other than the acquiror, will be able to purchase additional Common Shares at a significant discount to market, thus exposing the person acquiring Common Shares to substantial dilution of its holdings.

Summary of the Rights Plan

The following is a summary of the principal terms of the Rights Plan, which summary is qualified in its entirety by reference to the terms thereof. The Rights Plan is available on SEDAR at www.sedar.com under the Corporation’s SEDAR profile.

Operation of the Rights Plan

Pursuant to the terms of the Rights Plan, one right was issued in respect of each Common Share outstanding as at the close of business on March 29, 2004 (the “Record Time”). In addition, one right will be issued for each additional Common Share issued after the Record Time and prior to the earlier of the Expiration Time and the Separation Time (as defined below). The rights have an initial exercise price equal to the Market Price (as defined below) of the Common Shares as determined at the Separation Time, multiplied by five, subject to certain adjustments, and they are not exercisable until the Separation Time. Upon the occurrence of a Flip-in Event (as defined below), each right will entitle the holder thereof, other than an Acquiring Person (as defined below), to purchase from the Corporation one Common Share upon payment to the Corporation of 50% of the Market Price of the Common Shares on the TSX on the date of consummation or occurrence of such Flip-in Event, subject to certain anti-dilution adjustments.

Trading of Rights

Until the Separation Time, the rights trade with the Common Shares and are represented by the same share certificates as the Common Shares or an entry in the Corporation’s securities register in respect of any outstanding Common Shares. From and after the Separation Time and prior to the Expiration Time, the rights are evidenced by rights certificates and trade separately from the Common Shares. The rights do not carry any of the rights attaching to the Common Shares such as voting or dividend rights.

Separation Time

The rights will separate from the Common Shares to which they are attached and become exercisable at the time (the “Separation Time”) of the close of business on the eighth business day after the earliest to occur of:

1. the first date (the “Stock Acquisition Date”) of a public announcement of facts indicating that a person has become an Acquiring Person (as defined below);

2. the date of the commencement of, or first public announcement of the intention of any person (other than the Corporation or any of its subsidiaries) to commence a take-over bid or a share exchange bid for more than 20% of the outstanding Common Shares of the Corporation other than a Permitted Bid or a Competing Permitted Bid (as defined below); and

3. the date upon which a Permitted Bid or a Competing Permitted Bid ceases to be a Permitted Bid or a Competing Permitted Bid, as the case may be.

The Separation Time can also be such later time as may from time to time be determined by the Board of Directors.

Flip-in Event

The acquisition by a person (an “Acquiring Person”), including others acting jointly or in concert with such person, of more than 20% of the outstanding Common Shares, other than by way of a Permitted Bid, a Competing Permitted Bid or in certain other limited circumstances described in the Rights Plan, is referred to as a “Flip-in Event”.

Definition of Market Price

Market Price is generally defined in the Rights Plan, on any given day on which a determination must be made, as the average of the daily closing prices per Common Share on each of the 20 consecutive Trading Days (as defined below) through and including the Trading Day immediately preceding such date of determination; subject to certain exceptions. Trading Day is generally defined as the day on which the principal Canadian or United States securities exchange (as determined by the Board of Directors acting in good faith) on which the Common Shares are listed or admitted to trading is open for the transaction of business.

Exercise of Rights

Upon the Separation Time or the effective date of the Flip-in Event, whichever occurs first, each right (other than those held by the Acquiring Person) will entitle the holder thereof to purchase from the Corporation one Common Share upon payment to the Corporation of 50% of the Market Price of the Common Shares of the Corporation on the Stock Acquisition Date subject to certain anti-dilution adjustments.

Permitted Bid Requirements

The requirements of a Permitted Bid include the following:

1. the take-over bid must be made by means of a take-over bid circular;

2. the take-over bid must be made to all holders of Common Shares wherever resident, on identical terms and conditions, other than the bidder;

3. the take-over bid must not permit Common Shares tendered pursuant to the bid to be taken up or paid for (a) prior to the close of business on a date which is not less than 60 days following the date of the bid, and (b) then only if at such date more than 50% of the then outstanding Common Shares held by shareholders other than any other Acquiring Person, the bidder, the bidder’s affiliates or associates, persons acting jointly or in concert with the bidder and any employee benefit plan, deferred profit-sharing plan, stock participation plan or trust for the benefit of employees of the Corporation or any of its subsidiaries, unless the beneficiaries of such plan or trust direct the manner in which the Common Shares are to be voted or direct whether the Common Shares are to be tendered to a take-over bid (the “Independent Shareholders”), have been deposited or tendered to the take-over bid and not withdrawn;

4. the take-over bid must allow Common Shares to be deposited, unless the take-over bid is withdrawn, at any time up to the close of business on the date that the Common Shares are to be first taken up and paid for;

5. the take-over bid must allow Common Shares to be withdrawn until taken up and paid for; and

6. if more than 50% of the then outstanding Common Shares held by Independent Shareholders are deposited or tendered to the take-over bid and not withdrawn, the bidder must make a public announcement of that fact and the take-over bid must remain open for deposits and tenders of Common Shares for not less than 10 days from the date of such public announcement.

The Rights Plan allows a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid other than the requirements set out in clauses 3 and 6 above and must not permit Common Shares tendered or deposited pursuant to the bid to be taken up or paid for (a) prior to the close of business on a date which is not earlier than the latter of the last day on which the bid must be open for acceptance after the date of the bid under applicable Canadian provincial securities legislation and the earliest date on which Common Shares of the Corporation may be taken up and paid for under any earlier Permitted Bid or Competing Permitted Bid that is then in existence, and (b) then only if at such date more than 50% of the then outstanding Common Shares held by the Independent Shareholders have been deposited or tendered to the take-over bid and not withdrawn. In the event that the requirement set forth in (b) of this paragraph is satisfied, the competing bidder must make a public announcement of the fact and the take-over bid must remain open for deposits and tenders of Common Shares for not less than 10 days from the date of such public announcement.

Waiver and Redemption

The Board may, prior to the occurrence of a Flip-in Event, waive the dilutive effects of the Rights Plan in respect of, among other things, a particular Flip-in Event resulting from a take-over bid made by way of a take-over bid circular to all holders of Common Shares of the Corporation. In such an event, such waiver shall also be deemed to be a waiver in respect of any other Flip-in Event occurring under a take-over bid made by way of a take-over bid circular to all holders of Common Shares prior to the expiry of the first mentioned take-over bid.

The Board may, at any time prior to the Separation Time, elect to redeem all but not less than all of the outstanding rights at a price of $0.00001 each.

Amendment to the Rights Plan

The Rights Plan may be amended to correct any clerical or typographical error or to make such changes as are required to maintain the validity of the Rights Plan as a result of any change in any applicable legislation, regulations or rules thereunder, without the approval of the holders of the Common Shares or rights. Prior to the Separation Time, the Corporation may, with the prior consent of the holders of Common Shares, amend, vary or delete any of the provisions of the Rights Plan in order to effect any changes which the Board, acting in good faith, considers necessary or desirable. The Corporation may, with the prior consent of the holders of rights, at any time after the Separation Time and before the Expiration Time, amend, vary or delete any of the provisions of the Rights Plan.

The Rights Plan, including the amendments thereto and the restatement thereof, being submitted for approval, ratification and confirmation by the shareholders was approved by the Board of Directors on March 2, 2007 and was signed on March 5, 2007. The purpose of the amendments is to make improvements and clarifications to the wording of the Original Rights Plan, primarily so that the Rights Plan is in line with similar plans recently approved by shareholders of other publicly traded Canadians corporations. In addition, the price at which the Board of Directors may elect to redeem all but not less than all of the outstanding rights at any time prior to the Separation Time has been changed from $0.0001 to $0.00001 per right. Certain other minor amendments have been made to the Original Rights Plan to, among other things, reflect the fact such plan has been amended by the amended and restated Rights Plan. However, none of the foregoing amendments alters the substance of the Rights Plan. These amendments will become effective only at the time of reconfirmation and approval of the Rights Plan by the shareholders of the Corporation at the Meeting and are indicated in the blacklined version of the Rights Plan which is available from the Corporate Secretary of the Corporation upon request.

Fiduciary Duty of Board

The Rights Plan will not detract from or lessen the duty of the Board of Directors to act honestly and in good faith with a view to the best interests of the Corporation and its shareholders. The Board of Directors will continue to have the duty and power to take such actions and make such recommendations to the Corporation’s shareholders as are considered appropriate.

Exemptions for Investment Advisors

Fund managers, investment advisors (for fully-managed accounts), trust companies (acting in their capacities as trustees and administrators), statutory bodies whose business includes the management of funds, and administrators of registered pension plans are exempt from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, a take-over bid.

Certain Canadian Federal Income Tax Considerations of the Rights Plan

The Corporation will not be required to include any amount in computing its income for the purposes of the Income Tax Act (Canada) (the “ITA”) as a result of the issuance of the rights.

Under the ITA, the issuance of rights to a recipient could be considered a taxable benefit, the value of which is required to be included in computing the income of a Canadian resident recipient or is subject to withholding tax in the case of a recipient who is not resident in Canada. In any event, no amount in respect of the value of the rights is required to be included in computing income, or subject to withholding tax, if the rights do not have any value at the date of issue. The Corporation considers that the rights will have negligible value when issued, there being only a remote possibility that the rights will ever be exercised. A holder of rights could be required to include an amount in computing income or be subject to withholding tax under the ITA if the rights become exercisable or are exercised. A holder of rights may be subject to tax under the ITA in respect of the proceeds of disposition of such rights.

This statement is of a general nature only and is not intended to constitute nor should it be construed to constitute legal or tax advice to any particular holder of Common Shares. Such shareholders are advised to consult their own tax advisors regarding the consequences of acquiring, holding, exercising or otherwise disposing of their rights, taking into account their own particular circumstances and any applicable federal, provincial, territorial or foreign legislation.

Eligibility for Investment

Provided that the Corporation remains a “public corporation” for purposes of the ITA at all material times, the rights will be qualified investments under the ITA for registered retirement savings plans, registered education savings plans, registered retirement income funds and deferred profit-sharing plans. The issuance of rights will not affect the status of the Common Shares of the Corporation under the ITA for such purposes, nor will it affect the eligibility of such securities as investments for investors governed by certain Canadian federal and provincial legislation governing insurance companies, trust companies and pension plans.

13. INDEBTEDNESS OF DIRECTORS AND OFFICERS

Neither at any time during the financial year ended December 31, 2006 nor as at March 9, 2007 were any of the directors or officers indebted to the Corporation in respect of the purchase of securities of the Corporation or otherwise. On March 29, 2004, the Board of Directors of the Corporation adopted a resolution formally prohibiting (i) the making of any new loans to its directors and officers, and (ii) modifying the material terms of any such existing loans.

14. INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

The Corporation is not aware, other than as set out below, that any of its “informed persons” has had an interest in any material transaction carried out since the beginning of the Corporation’s last completed financial year or in any proposed transaction which has materially affected or is likely to materially affect the Corporation or any of its subsidiaries. Applicable securities legislation defines an “informed person” as meaning any one of the following: (a) a director or executive officer of a reporting issuer; (b) a director or executive officer of a person or company that is itself an informed person or subsidiary of a reporting issuer; (c) any person or company who beneficially owns, directly or indirectly, voting securities of a reporting issuer or who exercises control or direction over voting securities of a reporting issuer or a combination of both carrying more than 10 percent of the voting rights attached to all outstanding voting securities of the reporting issuer other than voting securities held by the person or company as underwriter in the course of a distribution; and (d) a reporting issuer that has purchased, redeemed or otherwise acquired any of its securities, for so long as it holds any of its securities.

In February 2006, Solidarity Fund (QFL) and SGF Santé Inc., each of whom holds more than 10% of the outstanding Common Shares of the Corporation, exercised its right to convert its portion of a convertible loan under a loan agreement originally entered into among the Corporation, Solidarity Fund (QFL) and SGF Santé Inc. in 2003, pursuant to which each of the foregoing shareholders loaned the Corporation a principal amount of $12,500,000. Upon conversion by Solidarity Fund (QFL) and SGF Santé Inc. of both all principal and interest due under the convertible loan agreement, the Corporation issued to each of them 3,477,544 Common Shares in accordance with the provisions of the agreement. Following the conversion and share issuance described above, there remains no amount of indebtedness outstanding under the loan agreement.

15. INSURANCE OF DIRECTORS AND OFFICERS

The Corporation purchases liability insurance for the benefit of its directors and officers, which protects them against certain liabilities incurred by them while acting in such capacity. In 2006, this insurance provided a maximum coverage of $25,000,000 per event and policy year. For the financial year ended December 31, 2006, the premium paid by the Corporation was $718,800. When the Corporation is authorized or required to indemnify insured persons, a deductible of $250,000 applies, except for securities-based claims, for which the deductible is $500,000. It is anticipated that the amount of premium to be paid in respect of such insurance for the 2007 fiscal year will be approximately $565,000.

16. SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING OF SHAREHOLDERS

Shareholder proposals must be submitted no later than December 7, 2007 in order that the Corporation may include them in its management information circular that will be prepared and mailed in connection with the Corporation’s annual meeting of shareholders in 2008.

17. ADDITIONAL INFORMATION

The Corporation will provide the following documents to any person or company upon request to the Corporate Secretary of the Corporation, at its head office at 1405 du Parc-Technologique Boulevard, Quebec City, Quebec, G1P 4P5:

(i) one copy of the audited annual financial statements of the Corporation for its most recently completed financial year together with the report of the auditors thereon, both contained in the Corporation’s 2006 Annual Report, and one copy of any interim financial statements of the Corporation published subsequent to the financial statements for its most recent financial year; and

(ii) one copy of this Circular.

In addition, the Corporation’s Annual Information Form will be available from the date of its filing with the securities commissions or similar securities regulatory authorities in Canada as well as any other document incorporated by reference in such Annual Information Form. The Corporation may require the payment of reasonable expenses if a request is received from a person who is not a holder of securities of the Corporation, unless the Corporation makes a distribution of its securities pursuant to a short-form prospectus, in which case such documents will be provided free of charge. Copies of the Corporation’s public disclosure documents, including financial statements, information circulars and annual information forms, are also available at the following Web sites: www.aeternazentaris.com, www.sedar.com, and www.sec.gov. Financial information related to the Corporation is provided in its audited consolidated financial statements and Management’s Discussion and Analysis thereon for the financial year ended December 31, 2006.

18. MAIL SERVICE INTERRUPTION

If there is a mail interruption prior to a shareholder mailing a completed proxy to Computershare, it is recommended that the shareholder deposit the completed proxy, in the envelope provided, at any of the following offices of Computershare:

Alberta 4820-52 Street S.E. Calgary, Alberta T2B 3R2	Nova Scotia 1969 Upper Water Street Suite 2008, Purdy’s Wharf, Tower II Halifax, Nova Scotia B3J 3R7	Quebec 7th Floor 1500 University Street Montréal, Quebec H3A 3S8

Ontario 11th Floor 100 University Avenue Toronto, Ontario M5J 2Y1	British Columbia 2nd Floor 510 Burrard Street Vancouver, British Columbia V6C 3B9	Manitoba 830, 201 Portage Avenue Winnipeg, Manitoba R3B 3K6

19. DIRECTORS’ APPROVAL

The contents and the sending of this Circular were approved by the Board of Directors of the Corporation.

Dated at Quebec City, Quebec, March 9, 2007.

Mario Paradis, CA

Corporate Secretary

SCHEDULE A

RESOLUTION 2007-1

Resolved as Resolution 2007-1:

THAT the amendments to the Corporation’s Stock Option Plan approved by the Board of Directors on March 2, 2007 (i) to change the maximum number of Common Shares issuable under the Stock Option Plan from a fixed number to a fixed percentage of the issued and outstanding Common Shares of the Corporation, (ii) to amend the Stock Option Plan’s amending provision to describe amendments that will require shareholder approval, and (iii) to provide for the limited extension of the expiry dates of options where such expiry date occurs within a blackout period or within the seven (7) business days immediately following a blackout period imposed by the Corporation, all as described in the Management Information Circular of the Corporation dated March 9, 2007, be and they are hereby approved; and

THAT any officer or director of the Corporation be, and each is hereby, authorized and directed to sign and deliver, for and on behalf of the Corporation, all such documents and do all such acts and things as may be considered necessary or desirable to give effect to this Resolution 2007-1.

RESOLUTION 2007-2

Resolved as Resolution 2007-2:

THAT the continuation of the Corporation’s Shareholder Rights Plan and its amendment and restatement as provided for in the Amended and Restated Rights Plan Agreement dated as of March 5, 2007 be, and it is hereby, approved, ratified and confirmed; and

SCHEDULE B

STATEMENT OF CORPORATE GOVERNANCE PRACTICES

NEW DISCLOSURE RULES AND POLICIES (FORM 58-101F1)

1. BOARD OF DIRECTORS

A. Disclose the identity of directors who are independent.

Mr. Aubut, Ms. Byorum, Mr. Dorais, Mr. Ernst, Mr. Laurin, Mr. Limoges, Mr. MacDonald and Mr. Martin are independent.

B. Disclose the identity of directors who are not independent and describe the basis for that determination.

Dr. Dupont is Executive Chairman of the Board, Mr. Gagnon is the President and Chief Executive Officer of the Corporation and Prof. Dr. Engel is the Chief Operating Officer of the Corporation.

C. Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the Board of Directors (the “Board”) does to facilitate its exercise of independent judgement in carrying out its responsibilities.

The Board is currently composed of a majority of independent directors, being eight (8) out of eleven (11) directors.

D. If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.

Name of director		Name of reporting issuer
Aubut, Marcel		Boralex Power Income Fund
Byorum, Stormy		Northwest Natural Gas
Laurin, Pierre		Atrium Biotechnologies Inc. Quebecor Inc.
Limoges, Gérard		Alexis Nihon Real Estate investment Trust Atrium Biotechnologies Inc. Engenuity Technologies Inc. Hart Stores Inc. Hartco Income Trust Noranda Income Fund
MacDonald, Pierre		AIM Trimark Canada Fund Inc. AIM Trimark Global Fund Inc.

E. Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If yes, disclose the number of meetings held since the beginning of the issuer’s most recently completed financial year. If not, describe what the Board does to facilitate open and candid discussion amongst its independent directors.

From time to time, the Chairman of the Board ensures that directors hold meetings at which senior management is not present.

F. Disclose whether or not the Chair of the Board is an independent director. If the Board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his role and responsibilities. If not, describe what the Board does to provide leadership for its independent directors.

Dr. Éric Dupont, Executive Chairman of the Board, is not an independent director. However, the Board is of the view that all independent directors carry out their duties and leadership at all meetings. Moreover, Mr. Jürgen Ernst, an independent director, was appointed Vice Chairman of the Board in November 2005.

G. Disclose the attendance record of each director for all Board meetings held since the beginning of the most recently completed financial year.

Board members	Board meetings	Committee meetings
Aubut, Marcel	8/8	N/A
Byorum, Stormy	7/8	3/4
Dorais, José P.	6/6	N/A
Dupont, Éric	8/8	6/6
Engel, Jürgen	8/8	N/A
Ernst, Jürgen	8/8	6/6
Gagnon, Gilles	8/8	N/A
Laurin, Pierre	8/8	5/6
Limoges, Gérard	8/8	4/4
MacDonald, Pierre	8/8	10/10
Martin, Gerald J.	7/8	N/A

2. BOARD MANDATE

Disclose the text of the Board’s written mandate. If the Board does not have a written mandate, describe how the Board delineates its role and responsibilities.

The Board of Directors adopted and approved a written mandate on February 28, 2006, a copy of which is attached as Schedule C to this Circular.

3. POSITION DESCRIPTIONS

A. Disclose whether or not the Board has developed written position descriptions for the chair and the chair of each Board committee. If not, briefly describe how the Board delineates the role and responsibilities of each such position.

The Board has adopted and approved a written description for the chair and the chair of each Board committee. The mandate of the Chairman of the Board states that he/she is responsible for the administration, development and efficient operation of the Board. He/she shall make sure that

the Board adequately discharges its mandate and that the Board’s responsibilities and boundaries with management are well understood by the directors. The mandates of each committee chair provide that each chair’s responsibility is to efficiently manage his or her respective committee. The Committee chair must ensure that the committee adequately discharges its mandate. Committee chairs must report regularly to the Board on the business of their committee.

B. Disclose whether or not the Board and CEO have developed a written position description for the CEO. If not, briefly describe how the Board delineates the role and responsibilities of the CEO.

The Board and the CEO have developed a written position description for the CEO. The Board expects the CEO and the Corporation’s senior management team to be responsible for the management of the Corporation’s strategic and operational agenda and for the execution of the decisions of the Board.

4. ORIENTATION AND CONTINUING EDUCATION

A. Briefly describe what measures the Board takes to orient new directors regarding:

(i) the role of the Board, its committees and its directors, and

(ii) the nature and operation of the issuer’s business.

The Board ensures that every new director possesses the capacities, expertise, availability and knowledge required to fill this position. In addition, the Chairman of the Board and the CEO meet new directors in order to give them information on the Corporation’s operations. Each new director receives an information book that includes the mandate of the Board and all corporate documents related to operations, product pipeline and financial condition.

B. Briefly describe what measures, if any, the Board takes to provide continuing education for its directors. If the Board does not provide continuing education, describe how the Board ensures that its directors maintain the skill and knowledge to meet their obligations as directors.

Continuous information is provided to all directors in respect of their role and responsibilities. Moreover, all revised corporate documents are systematically sent to directors (product pipeline, fact sheet, corporate presentation, etc.). At every meeting of the Board of Directors, directors have an opportunity to hear presentations by executive officers on various topics regarding the Corporation’s operations. In addition, one meeting per year is organized in Frankfurt, Germany in order to give Board members an opportunity to visit the Corporation’s German facilities.

5. ETHICAL BUSINESS CONDUCT

A. Disclose whether or not the Board has adopted a written code for the directors, officers, and employees. If the Board has adopted a written code:

(i) Disclose how a person or company may obtain a copy of the code.

The Corporation has adopted and updated at various points a Code of Ethical Conduct (the “Code”). The Code is attached as Schedule F to this Circular and is also accessible on the Corporation’s Web site at www.aeternazentaris.com.

(ii) Describe how the Board monitors compliance with its code or, if the Board does not monitor compliance, explain whether and how the Board satisfies itself regarding compliance with its code; and

A copy of the Code was sent to each director, officer and employee when it was adopted. In addition, each new employee also receives a copy of the Code when hired. The Corporation has selected an independent third-party supplier to provide a confidential and anonymous communication channel for reporting concerns about possible violations of the Code as well as financial and/or accounting irregularities or fraud.

(iii) Provide a cross-reference to any material change report filed since the beginning of the most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.

No material change report has been filed by the Corporation regarding departures from the Code.

B. Describe any steps the Board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest.

There is no director or executive officer of the Corporation who has a material interest in any transaction to which the Corporation is a party, other than ordinary course employment agreements.

C. Describe any other steps the Board takes to encourage and promote a culture of ethical business conduct.

On the Web site of the Corporation, under the section “Investor Relations/Governance”, the Corporation indicates its commitment to preserve its reputation for integrity and excellence, and conducting the businesses and activities of the Corporation honestly and ethically and in compliance with applicable laws, rules and regulations. A mechanism for confidential and anonymous disclosure has been put in place and is also available on the Web site of the Corporation.

6. NOMINATION OF DIRECTORS

A. Describe the process by which the Board identifies new candidates for Board nomination.

The selection of new candidates is made by the Corporate Governance, Nominating and Human Resources Committee. This committee establishes the criteria in respect of the complementarity and expertise that each candidate for election to the Board would bring to the Board. Next, the committee recommends to the Board new candidates for approval.

B. Disclose whether or not the Board has a nominating committee composed entirely of independent directors. If not, describe what steps the Board takes to encourage an objective nomination process.

The Corporate Governance, Nominating and Human Resources Committee is composed of a majority of unrelated directors. The Board is of the opinion that with three of four committee members being independent, the nomination process is objective.

C. If the Board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.

The Corporate Governance, Nominating and Human Resources Committee serves as the Corporation’s nominating committee. The responsibilities, powers and operation of this committee are set forth in its mandate, which is attached as Schedule E to this Circular.

7. COMPENSATION

A. Describe the process by which the Board determines the compensation for the directors and officers.

The compensation of directors and officers is recommended by the Corporate Governance, Nominating and Human Resources Committee to the Board for approval. Compensation is reviewed annually by means of studies, with respect to a reference market and composed of comparable businesses.

B. Disclose whether or not the Board has a compensation committee composed entirely of independent directors. If not, describe what steps the Board takes to ensure an objective process for determining such compensation.

The Corporate Governance, Nominating and Human Resources Committee serves as the Board’s compensation committee. The Corporate Governance, Nominating and Human Resources Committee is composed of a majority of unrelated directors. The Board is of the opinion that with three of four committee members being independent, the compensation process review is objective.

C. If the Board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.

The Corporate Governance, Nominating and Human Resources Committee serves as the Board’s compensation committee. The responsibilities, powers and operation of the Corporate Governance, Nominating and Human Resources Committee are described in the mandate, which is attached as Schedule E to this Circular.

D. If a compensation consultant or advisor has, at any time since the beginning of the most recently completed financial year, been retained to assist in determining compensation for any of the Corporation’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained.

The Corporate Governance, Nominating and Human Resources Committee has not retained any consultant or advisor during the most recently completed financial year.

8. OTHER BOARD COMMITTEES

If the Board has standing committees other than the audit, compensation and nominating committees, identify the committees and describe their function.

The Audit Committee and the Corporate Governance, Nominating and Human Resources Committee are the sole standing committees of the Board.

9. ASSESSMENTS

Disclose whether or not the Board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If not, describe how the Board satisfies itself that the Board, its committees and its individual directors are performing effectively.

The Corporate Governance, Nominating and Human Resources Committee is responsible for assessing the Board as a whole and each individual director. The Chairman of the Board, who is also a member of the Corporate Governance, Nominating and Human Resources Committee, meets with every Board member on an individual basis. Reports of the findings and recommendations, if any, are then presented to the Board of Directors and time is set aside at that meeting for a full and comprehensive discussion regarding Board and Committees effectiveness and any agreed upon improvements are implemented.

SCHEDULE C

MANDATE OF THE BOARD OF DIRECTORS

1. STEWARDSHIP RESPONSIBILITY

The Board of Directors (the “Board”) of Æterna Zentaris Inc. (the “Corporation”) assumes stewardship of the Corporation’s overall administration and supervises the management of the Corporation’s operations with the objective of increasing shareholder value.

Although management conducts the day-to-day operations of the Corporation, the Board has a duty of stewardship and regularly assesses and monitors management’s performance.

In spite of the fact that directors may be elected by the shareholders to bring a special expertise or point of view to Board deliberations, they are not chosen to represent a particular constituency. All decisions of each Board member must be made in the best interests of the Corporation.

Directors are expected to attend all Board meetings and review all meeting materials in advance. They are expected to take an active part in Board decisions. From time to time, the Board may delegate certain tasks to its committees. However, such delegation does not relieve the Board of its overall responsibilities and, unless the mandate of a committee of the Board specifically confers upon such committee decision-making authority with respect to a particular matter, the Board retains ultimate decision-making authority with respect to all matters, as authorized to exercice pursuant to the law, relating to the administration and affairs of the Corporation.

2. COMPOSITION OF THE BOARD AND OPERATION

The Corporation’s Articles provide that the Board shall be composed of a minimum of five (5) and a maximum of fifteen (15) directors. Directors are elected annually by the shareholders of the Corporation, but the directors may from time to time appoint one or more directors, provided that the total number of directors so appointed does not exceed one third (⅓) of the number of directors elected at the last annual meeting of shareholders. The mandate of each director terminates at the end of the annual shareholders’ meeting following that at which he or she was elected.

The Board is to be constituted of a majority of individuals who qualify as independent directors. An independent director is one who is independent of management and has no material relationship with, or receives no financial benefit from, the Corporation, other than directors’ fees and share ownership. As a general rule, the interests of an independent director should be aligned with those of shareholders.

The composition of the Board should provide a mix of skills, business expertise and experience in the Corporation’s areas of activities.

The Board must nominate its Chairman from among the directors of the Corporation. In addition, if the Chairman is a director who also is a member of senior management of, or is otherwise related to, the Corporation, the Board could also nominate a lead director, if appropriate, from among the independent directors to take on appropriate duties. From time to time, following meetings of the Board, the directors shall hold meetings at which senior management is not present in order to ensure a free and open discussion between directors.

The quorum at any meeting of the Board is a majority of directors in office and meetings of the Board are held at least quarterly and as required. In addition, a special meeting of the Board is held, at least once a year, to review the Corporation’s strategic plan.

The Chairman of the Board develops the agenda for each meeting of the Board in consultation with the Chief Executive Officer. The agenda and the appropriate materials are provided to directors of the Corporation on a timely basis prior to any meeting of the Board.

The Corporate Governance, Nominating and Human Resources Committee annually supervises the performance assessment of individual directors, the Board as a whole, the Board committees, and the Board and committee chairs.

3. RESPONSIBILITIES

The Board has the following responsibilities:

(a) Strategic Planning

(i) Approving the Corporation’s long-term strategy, taking into account, among other things, business opportunities and risks of the business.

(ii) Approving and monitoring the implementation of the Corporation’s annual business plan.

(iii) Advising management on strategic issues.

(b) Human Resources and Performance Assessment

(i) Choosing the Chief Executive Officer (the “CEO”) and approving the appointment of other senior management executives.

(ii) Monitoring and assessing the performance of the CEO and other members of senior management and approving their compensation, taking into consideration Board expectations and fixed goals and objectives.

(iii) Monitoring management and Board succession planning process.

(iv) Monitoring the size and composition of the Board and its committees based on the competencies, skills, and personal qualities sought in Board members.

(v) Approving the list of Board nominees to be submitted for election by shareholders.

(c) Financial Matters and Internal Control

(i) Monitoring the integrity and quality of the Corporation’s financial statements and the appropriateness of their disclosure.

(ii) Reviewing the general content and the Audit Committee’s report on the financial aspects of the Corporation’s Annual Information Form, Annual Report, Management Proxy Circular, Management’s Discussion and Analysis, prospectuses and any other document required to be disclosed or filed by the Corporation before such documents are publicly disclosed or filed with the appropriate regulatory authorities.

(iii) Approving operating and capital budgets, the issuance of securities and, subject to the schedule of authority adopted by the Board, any transaction outside the ordinary course of business, including proposals on mergers, acquisitions or other major transactions, such as investments, divestitures, stock consolidations, reclassifications or recapitalizations.

(iv) Determining dividend policies and procedures.

(v) Taking all reasonable measures to ensure that appropriate systems are in place to identify business risks and opportunities and overseeing the implementation of processes to manage these risks and opportunities.

(vi) Monitoring the quality and integrity of the Corporation’s accounting and financial reporting systems, disclosure controls and procedures, internal controls and management information systems, including by overseeing:

(a) the integrity and quality of the Corporation’s financial statements and other financial information and the appropriateness and adequacy of their disclosure;

(b) the review of the Audit Committee on external auditors’ independence and qualifications;

(c) the performance of the Corporation’s internal audit function, if any, and of the Corporation’s external auditors; and

(d) the Corporation’s compliance with applicable legal and regulatory requirements (including those related to environment, safety and security).

(vii) Monitoring the Corporation’s compliance with applicable legal and regulatory requirements.

(viii) Reviewing at least annually the Corporation’s communications policy and monitoring the Corporation’s communications with analysts, investors and the public.

(d) Corporate Governance Matters

(i) Taking all reasonable measures to satisfy itself as to the integrity of management and ensuring that management creates a culture of integrity throughout the Corporation.

(ii) Reviewing, on a regular basis, appropriate corporate governance structures and procedures, including the identification of decisions requiring approval of the Board and, where appropriate, measures for receiving stakeholder feedback, and the adequate public disclosure thereof.

(iii) Adopting and reviewing, on a regular basis, the Corporation’s Code of Ethical Conduct applicable to the Corporation’s directors, its CEO, its financial officers and its other officers and employees and monitoring compliance with such code.

(iv) Taking all reasonable measures to ensure the annual performance assessment of the Board, Board committees, Board and committee chairs and individual directors.

(v) Adopting orientation and continuing education programs for directors.

(e) Pension-Related Matters

(i) Monitoring the governance structure, funding, and investment policies for the Corporation’s pension plan(s).

Adopted and approved by the Board of Directors on February 28, 2006.

SCHEDULE D

AUDIT COMMITTEE CHARTER

1. MISSION STATEMENT

The Audit Committee (the “Committee”) will assist the Board of Directors in fulfilling its oversight responsibilities. The Audit Committee will review the financial reporting process, the system of internal control, the audit process, and the company’s process for monitoring compliance with laws and regulations and with the Code of Ethical Conduct. In performing its duties, the Committee will maintain effective working relationships with the Board of Directors, management, and the external auditors. To effectively perform his or her role, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership as well as the company’s business, operations, and risks.

The function of the Committee is oversight and while it has the responsibilities and powers set forth in this charter, it is neither the duty of the Committee to plan or to conduct audits or to determine that the company’s financial statements are complete, accurate and in accordance with generally accepted accounting principles, nor to maintain internal controls and procedures.

2. POWERS

The Board authorizes the Audit Committee, within the scope of its responsibilities, to:

· Perform activities within the scope of its charter.

· Engage independent counsel and other advisers as it deems necessary to carry out its duties.

· Set and pay the compensation for any advisors it employs.

· Ensure the attendance of company officers at meetings as appropriate.

· Have unrestricted access to members of management, employees and relevant information.

· Communicate directly with the internal and external auditors.

3. COMPOSITION

· The Audit Committee shall be formed of three members, each of which shall be a director not holding a management function.

· Each member shall provide a useful contribution to the Committee.

· All members shall be independent of management.

· All members must be financially literate.

· The chairperson of the Audit Committee shall be appointed by the Board from time to time.

· The term of the mandate of each member shall be one year.

· The quorum requirement for any meeting shall be two members.

· The secretary of the Audit Committee shall be the secretary of the company or any other individual appointed by the Board.

4. MEETINGS

· If deemed necessary, the Audit Committee may invite other individuals (such as the Executive Vice President and COO or the Vice President and CFO).

· External auditors shall be invited, if needed, to make presentations to the Audit Committee.

· The Committee shall meet at least four times a year. Special meetings may be held if needed. If deemed necessary, external auditors may invite members to attend any meeting.

· The Audit Committee will meet with the external auditors at least once a year without management presence.

· The minutes of each meeting shall be recorded.

5. ROLE AND RESPONSIBILITIES

A. Financial Information

i) Review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on the financial statements.

ii) Ask management and external auditors about significant risks and exposures and the plans to minimize such risks.

iii) Review the unaudited interim financial statements, the audited annual financial statements in addition to any documents which accompany such financial statements, such as the report of the external auditors, prior to filing or disclosure. Determine whether they are complete and consistent with the information known to Committee members, and assess whether the financial statements reflect appropriate accounting principles and recommend their approval to the Board of Directors.

iv) Review and recommend for approval by the Board, all public disclosure documents containing audited or unaudited financial information, including Management’s Discussion and Analysis of financial condition, all sections of the Annual Report and press releases concerning annual and interim financial results, and consider whether the information is adequate and consistent with members’ knowledge about the company and its operations.

v) Review the compliance of the President and Chief Executive Officer and of the Chief Financial Officer certification on the company’s controls and procedures disclosure of information and the attestation by management of the financial reports.

vi) Pay particular attention to complex and/or unusual transactions such as restructuring charges and derivative disclosures.

vii) Focus on judgmental areas such as those involving valuation of assets and liabilities including, for example, the accounting for and disclosure of: obsolete or slow-moving inventory; loan losses; warranty, product, and environmental liability; litigation reserves and other commitments and contingencies.

viii) Meet with management and the external auditors to review the financial statements and the results of the audit.

ix) Consider management’s handling of proposed audit adjustments identified by the external auditors.

x) Ensure that the external auditors communicate certain required matters to the Committee.

xi) Be briefed on how management develops and summarizes quarterly financial information, the extent to which the external auditors review quarterly financial information, and whether that review is performed on a pre- or post-issuance basis.

xii) Meet with management and, if a pre-issuance review was completed, with the external auditors, either by telephone or in person, to review the interim financial statements and the results of the review.

xiii) To gain insight into the fairness of the interim statements and disclosures, obtain explanations from management on whether:

· Actual financial results for the quarter or interim period varied significantly from budgeted or projected results;

· Changes in financial ratios and relationships in the interim financial statements are consistent with changes in the company’s operations and financing practices;

· Generally accepted accounting principles have been consistently applied;

· There are any actual or proposed changes in accounting or financial reporting practices;

· There are any significant or unusual events or transactions;

· The company’s financial and operating controls are functioning effectively;

· The company has complied with the terms and conditions of loan agreements or security indentures; and

· The interim financial statements contain adequate and appropriate disclosures.

xiv) Ensure that the external auditors communicate certain required matters to the Committee.

B. External Audit

i) Review the professional qualification of the auditors (including background and experience of partner and auditing personnel).

ii) Consider the independence of the external auditor and any potential conflicts of interest.

iii) Review on an annual basis the performance of the external auditors and make recommendations to the Board for their compensation, their appointment, retention and termination of their appointment.

iv) Oversee the work of the external auditors, including the resolution of disagreements between management and the external auditors regarding financial reporting.

v) Make sure to receive periodic reports from the external auditors.

vi) Review the external auditors’ scope and plan of the annual audit, as well as the approach for the current year in light of the company’s present circumstances and changes in regulatory and other requirements.

vii) Annually, or more frequently as may be required, consult with the external auditors, without the presence of management, as to internal controls, the fullness and accuracy of the financial statements, any significant difficulties encountered during the course of the audit or access to required information, the quality of financial personnel, the level of co-operation received from management any unresolved material differences of opinion or disputes.

viii) Discuss with the external auditor any audit problems encountered in the normal course of audit work, including any restriction on audit scope or access to information.

ix) Discuss with the external auditor the appropriateness of the accounting policies applied in the company’s financial reports and whether they are considered as aggressive, balanced or conservative.

x) Approve all audit engagement fees and terms as well as reviewing policies for the provision of non-audit services by the external auditors and, when required, the framework for pre-approval of such services.

xi) Ensure the company has appropriate policies regarding the hiring of audit firm personnel for senior positions after they have left the audit firm.

C. Internal Control

i) Evaluate whether management is setting the appropriate tone at the top by communicating the importance of internal controls and ensuring that all individuals possess an understanding of their roles and responsibilities.

ii) Understand the controls and processes implemented by management to ensure that the financial statements derive from the underlying financial systems, comply with relevant standards and requirements, and are subject to appropriate management review.

iii) Satisfy itself as to the adequacy of company’s review procedures regarding disclosure of other financial information.

iv) Gain an understanding of the current areas of financial risk and how these are being handled by the management.

v) Focus on the extent to which management reviews computer systems and applications, the security of such systems and applications, and the contingency plan for processing financial information in the event of a systems breakdown.

vi) Gain an understanding of whether internal control recommendations made by external auditors have been implemented by management.

vii) Ensure that the external auditors keep the Audit Committee informed about fraud, illegal acts, deficiencies in internal control, and any other matter deemed appropriate.

viii) Establish procedures for (1) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (2) for the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters.

D. Corporate governance

i) Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action) on any fraudulent acts or accounting irregularities.

ii) Periodically obtain updates from management, general counsel, and tax director regarding compliance.

iii) Be satisfied that all regulatory compliance matters have been considered in the preparation of the financial statements.

iv) Review the findings of any examinations by regulatory agencies.

v) Ensure that a Code of Ethical Conduct is formalized in writing and that all employees are aware of it.

vi) Review periodically the content of the Code of Ethical Conduct and make sure employees are informed of amendments.

vii) Evaluate whether management is setting the appropriate tone at the top by communicating the importance of the Code of Ethical Conduct and the guidelines for acceptable business practices.

viii) Review the program for monitoring compliance with the Code of Ethical Conduct.

ix) Periodically obtain updates from management and general counsel regarding compliance.

E. Other Responsibilities

i) Meet with the external auditors and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately.

ii) Ensure that significant findings and recommendations made by the external auditors are received and discussed on a timely basis.

iii) Review, with the company’s counsel, any legal matters that could have a significant impact on the company’s financial statements.

iv) Review the policies and procedures in effect for considering officers’ expenses and perquisites.

v) If necessary, institute special investigations and, if appropriate, hire special counsel or experts to assist.

vi) Perform other oversight functions as requested by the full Board.

vii) Regularly update the Board of Directors about Committee activities and make appropriate recommendations.

viii) Ensure the Board is aware of matters that may significantly impact on the financial condition or affairs of the business.

ix) Prepare any reports required by law or listing rules or requested by the Board, for example a report on the Audit Committee’s activities and duties to be included in the section on corporate governance in the Annual Report.

x) Prepare and review with the Board, in the manner the Committee deems appropriate, an annual performance evaluation of the Committee and its members, comparing its performance with the requirements of this charter.

xi) Review and update the Committee charter annually.

xii) Discuss any changes required to be made to this charter with the Board and ensure the charter and any such changes are approved by the Board.

Revised and approved by the Board of Directors on February 28, 2006.

SCHEDULE E

MANDATE OF THE CORPORATE

GOVERNANCE, NOMINATING AND HUMAN

RESOURCES COMMITTEE

The Corporate Governance, Nominating and Human Resources Committee (the “Governance Committee”) of Æterna Zentaris Inc. (the “Corporation”) is a committee of the Board of Directors of the Corporation (the “Board”) which assists the Board in developing the Corporation’s approach to corporate governance issues, proposing new Board nominees, assessing the effectiveness of the Board and its committees, their respective chairs and individual directors. This committee also assists the Board in discharging its responsibilities relating to executive and other human resources hiring, assessment, compensation and succession planning.

1. COMPOSITION OF THE COMMITTEE AND OPERATION

The Governance Committee is composed of a minimum of three (3) members, a majority of whom qualify as independent directors, as determined by the Board. Members of the Governance Committee are appointed and destituted by the Board. The quorum at any meeting is a majority of its members and meetings are held at least twice a year and as required.

The Chair of the Governance Committee develops the agenda for each meeting of the Governance Committee in consultation with the Chairman of the Board. The agenda and the appropriate materials are provided to members on a timely basis prior to any meeting. The Chair of the Governance Committee reports regularly to the Board on the business of the Governance Committee.

The Governance Committee may, in appropriate circumstances, engage external advisors and set and pay their compensation, subject to advising the Chairman of the Board thereof.

The Governance Committee annually reviews its mandate and reports to the Board on its adequacy. In addition, it annually assesses both its own performance as well as that of its members.

2. RESPONSIBILITIES

The Governance Committee has the following responsibilities:

(a) Board of Directors

(i) Monitoring the size and composition of the Board to ensure effective decision-making.

(ii) Developing and reviewing the policies and procedures for selecting directors by regularly assessing the qualifications, personal qualities, business background and diversified experience needed by the Board and the Corporation’s requirements.

(iii) Identifying candidates qualified to become Board members and recommending nominees for election at the next annual meeting of shareholders.

(iv) Assisting the Board in determining Board committee membership.

(v) Making recommendations to the Board with respect to directors’ compensation.

(vi) Reviewing periodically the mandates of the Board and its committees.

(vii) Developing and monitoring appropriate processes for the periodical performance assessment of the Board, Board committees, Board and committee chairs and individual directors.

(b) Corporate Governance Matters

(i) Reviewing corporate governance guidelines applicable to the Corporation, recommending to the Board any change(s) that should be made thereto and monitoring the disclosure of the Corporation’s corporate governance practices in accordance with applicable rules, regulations and recommended practices.

(ii) Developing for approval by the Board, monitoring and overseeing the disclosure of appropriate corporate governance structures and procedures, including the identification of decisions requiring approval of the Board and, where appropriate, measures for receiving feedback from shareholders.

(iii) Developing for approval by the Board, monitoring and overseeing the disclosure of a Code of Ethical Conduct applicable to the Corporation’s directors, its Chief Executive Officer (the “CEO”), its financial officers, and its other officers and employees.

(iv) Reviewing the annual statement of corporate governance practices for inclusion in the Corporation’s Management Proxy or Information Circular or Annual Information Form, in accordance with applicable rules and regulations.

(v) Developing and reviewing orientation and continuing education programs for directors.

(vi) Reviewing the policies with respect to the use of privileged information and taking all reasonable measures to ensure that such policy, and the calendar for prohibition or “black-out” periods, is provided to each member of the Board and each officer of the Corporation and to ensure the appropriate communication thereof to all employees, officers and directors of the Corporation.

(c) Senior Management

(i) Taking all reasonable measures to ensure that appropriate processes are in place regarding succession planning for the position of CEO and other members of senior management.

(ii) Ensuring that the CEO has put into place, and monitoring, succession planning systems and policies for management, including processes to identify, develop and retain the talent of outstanding executives.

(iii) Assisting the CEO in the recruiting of senior management, the terms and conditions of their appointment, retirement and termination and make a recommendation to the Board.

(iv) Annually reviewing and recommending to the Board the goals and objectives that the CEO is expected to attain, assessing the CEO in light of these goals and objectives and recommending to the Board the CEO’s compensation level and package.

(v) Reviewing the evaluation of the performance of the Corporation’s senior officers and recommending to the Board their compensation.

(vi) Reviewing the report on executive compensation for inclusion in the Corporation’s Management Proxy or Information Circular as well as all other executive compensation disclosure, in order to comply as best as possible with applicable rules and regulations.

(d) Other Human Resources Matters

(i) Taking all reasonable measures to ensure that appropriate human resources systems and procedures, such as hiring policies, competency profiles, training policies and compensation structures are in place so that the Corporation can attract, motivate and retain the quality of personnel required to meet its business objectives.

(ii) Maintaining an assessment and compensation philosophy that rewards the creation of shareholder value and reviewing such philosophy at least once a year and as required.

(iii) Making recommendations to the Board with respect to incentive compensation plans, including security-based compensation plans.

Nothing contained in this mandate is intended to expand applicable standards of conduct under statutory or regulatory requirements for the directors of the Corporation or the members of the Governance Committee.

Adopted and approved by the Board of Directors on February 28, 2006.

SCHEDULE F

CODE OF ETHICAL CONDUCT

Æterna Zentaris Inc. (“Æterna Zentaris”) and all of the directors, officers and employees of Æterna Zentaris and its subsidiaries (collectively with Æterna Zentaris, the “Company”) are committed to preserving the reputation of the Company for integrity and excellence and conducting the businesses and activities of the Company honestly and ethically and in compliance with applicable laws, rules and regulations.

Accordingly, the Board of Directors of Æterna Zentaris has adopted this Code of Ethical Conduct, which applies to all directors, officers and employees of the Company and its subsidiaries, including, but not limited to, Æterna Zentaris’ principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. This Code of Ethical Conduct is intended to meet the requirements for a code of ethics under the Sarbanes-Oxley Act of 2002 (and the related regulations adopted by the Securities and Exchange Commission) and the applicable Marketplace Rules of The Nasdaq Stock Market, Inc.

This Code of Ethical Conduct does not summarize all of the Company’s policies. You must also comply with the Company’s other policies which are set forth elsewhere. In addition, this Code of Ethical Conduct reflects general principles of conduct and does not anticipate or cover in detail every topic or situation. If you have a question about anything covered in this Code of Ethical Conduct or if you are unsure about whether some action would be consistent with this Code of Ethical Conduct, you agree to ask the Head of Legal Affairs of Zentaris GmbH or the Corporate Secretary of Æterna Zentaris (the “Compliance Officer”). Similarly, if you should encounter a situation in which you are unsure what to do, you agree to tell the Head of Legal Affairs of Zentaris GmbH or the Compliance Officer and ask for help.

Policies and Practice

General Conduct - Conflicts of Interest

You should act ethically, honestly and with integrity. Your duty to act ethically, honestly and with integrity includes avoiding actual or apparent conflicts of interest between your personal, private interests and the interests of the Company, including using your position to receive improper personal benefits. This obligation applies to both business relationships and personal activities. A “conflict of interest” exists whenever your interests (financial or otherwise) interfere or conflict in any way (or even appear to interfere or conflict) with the Company’s interests. A conflict of interest can arise when you take actions or have interests that may make it difficult to perform your work for the Company objectively and effectively. Conflicts of interest may also arise when you, or members of your family, receive improper personal benefits as a result of your position with the Company, regardless of from where those benefits are received.

You also owe the Company a duty to advance its legitimate interests when the opportunity to do so arises. You are prohibited from (i) taking for yourself personally opportunities that properly belong to the Company or are discovered through the use of the Company’s resources, property, information or your position with the Company; (ii) using corporate property, information (confidential or otherwise) or position for personal gain; or (iii) competing with the Company. You should conduct your personal affairs so that there can be no unfavorable reflection on the Company, either express or implied.

Compliance with Laws, Rules and Regulations

In performing your duties on behalf of the Company, you must comply with all applicable governmental laws, rules and regulations, as well as the rules and regulations of any stock exchanges and quotation systems on which Æterna Zentaris’ securities are listed.

Public Disclosure - Confidentiality of Non-Public Information

As a public company, Æterna Zentaris must provide full, fair, accurate, timely, and understandable disclosure in reports and documents that Æterna Zentaris files with, or submits to, the Securities and Exchange Commission or other regulators and in other public communications by Æterna Zentaris.

Consequently, the Company’s books, business records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal and regulatory requirements, including, if applicable, maintaining the financial and accounting records in accordance with generally accepted accounting principles, and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.

In addition, all employees, officers and directors of the Company are expected to comply with the Company’s disclosure controls and procedures to ensure that material information relating to the Company is timely recorded, processed, summarized and reported in accordance with all applicable laws, rules and regulations. You must ensure that all information or data that you report to management is accurate and honest, and you must fully and accurately comply with all audits, requests for special record keeping or retention of documents, documents or other material from or on behalf of the Company’s auditors or the Company’s management.

You must also take all reasonable measures to protect the confidentiality of non-public information about the Company and its customers obtained or created in connection with your activities and prevent the unauthorized disclosure of such information unless required by applicable law or regulation or legal or regulatory process.

Compliance with this Code of Ethical Conduct

All employees, officers and directors of the Company, regardless of level or seniority in the Company, have a duty to review, understand and adhere strictly to the guidelines set forth in this Code of Ethical Conduct.

The Company is committed to holding all employees, officers and directors accountable for adherence to this Code of Ethical Conduct.

Duty to Report Violations of this Code of Ethical Conduct - No Retaliation

The Company recognizes that employees may be reluctant in reporting certain types of potential issues relating to violations of the Code of Ethical Conduct. It is for that reason, in addition to those enumerated above, that the Company has selected an independent third party supplier to provide a confidential and anonymous communication channel for reporting concerns about possible violations of the Code of Ethical Conduct as well as financial and/or accounting irregularities or fraud.

All inquiries will be transmitted to the Chair of the Audit Committee and handled promptly and discreetly. Anonymity and confidentiality will be maintained insofar as is possible. The Company employees will not be penalized, dismissed, demoted or suspended and no retaliatory action will be taken against them for reporting or inquiring in good faith about potential breaches of the Code of Ethical Conduct, or for seeking guidance on how to handle suspected breaches.

Details, on how to access this reporting service or how to contact the Compliance Officer or the Subsidiaries Legal Department, are available on Æterna Zentaris’ Web site at www.aeternazentaris.com under section Investors/Governance.

Disciplinary Actions

The Company is committed to the appropriate, prompt investigation and follow-up of any violation or suspected violation of this Code of Ethical Conduct. Reports of violations will be investigated.

As far as legally possible, violations of this Code of Ethical Conduct may result in disciplinary measures, including, depending on the individual circumstances, the level of involvement and knowledge and the severity of the violation, (i) warning and/or reprimand; (ii) demotion; or (iii) termination of the employment.

In addition, violations of this Code of Ethical Conduct may also constitute violations of law and may result in civil and criminal penalties for you, your supervisors and/or the Company.

Waivers of any Provision of this Code of Ethical Conduct

Any request for a waiver of any provision of this Code of Ethical Conduct for a director, officer or employee of the Company must be in writing and addressed to the Compliance Officer. The Board of Directors of Æterna Zentaris must approve any waiver with respect to this Code of Ethical Conduct that involves a director or an executive officer of Æterna Zentaris. Waivers of any provision of this Code of Ethical Conduct for an officer or employee of the Company (other than a person who is a director or executive officer of Æterna Zentaris) may be made by the Compliance Officer.

Æterna Zentaris is required to publicly disclose any waivers granted to a director or executive officer of Æterna Zentaris, along with the reasons for such waivers, in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the relevant rules, if any, of any stock exchanges and quotation systems on which Æterna Zentaris’ securities are listed.

Amendments to this Code of Ethical Conduct

The Board of Directors of Æterna Zentaris may update or otherwise amend this Code of Ethical Conduct. When there are material changes, the Company will provide each director, officer and employee of the Company with an updated copy of the Code of Ethical Conduct.

Adopted and approved by the Board of Directors on March 29, 2004 and amended by the Board of Directors on November 3, 2004, December 13, 2005 and March 2, 2007.