Exhibit 99.2

Second Quarter 2018

Management's Discussion and Analysis

of Financial Condition and Results of Operations

Introduction

This Management's Discussion and Analysis ("MD&A") provides a review of the results of operations, financial condition and cash flows of Aeterna Zentaris Inc. for the three and six months ended June 30, 2018. In this MD&A, "Aeterna Zentaris", the "Company", "we", "us", "our" and the "Group" mean Aeterna Zentaris Inc. and its subsidiaries. This discussion should be read in conjunction with the information contained in our unaudited condensed interim consolidated financial statements and the accompanying notes thereto as at June 30, 2018 and for the three and six months ended June 30, 2018 and 2017. Our condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting.

All amounts in this MD&A are presented in US dollars, except as otherwise noted.

This MD&A was approved by our Board of Directors on August 9, 2018.

Company Overview

Aeterna Zentaris is a specialty biopharmaceutical company focused on developing Macrilen™ (macimorelin), an orally available ghrelin agonist, and making it commercially available to patients with adult growth hormone deficiency (AGHD).

Macrilen™ (macimorelin), is a novel orally-active small molecule that stimulates the secretion of growth hormone. Macrilen™ (macimorelin) has been granted orphan drug designation by the FDA for the evaluation of growth hormone deficiency. We own the worldwide rights to this novel patented compound.

Macrilen™ (macimorelin) is our proposed trade name for macimorelin, which proposed trade name was conditionally approved by the FDA. In Europe, we intend on using an alternate trade name since Macrilen™ was rejected as a trade name in that jurisdiction, by the European Medicines Agency (the "EMA"), because of its similarity to the names of other medicines. On March 28, 2018, we applied to the EMA for two new invented names for macimorelin: Macimorelin GH test and Macimorelin Zentaris.

On January 16, 2018, we entered into a license and assignment agreement with Strongbridge Ireland Limited ("Strongbridge") to carry out development, manufacturing, registration and commercialization of Macrilen™ (macimorelin) in the United States and Canada (the "Strongbridge License Agreement") pursuant to which we received an upfront cash payment of $24.0 million from Strongbridge. Under the terms of the license agreement and, for as long as Macrilen™ (macimorelin) is patent-protected, we will be entitled to a 15% royalty on annual net sales up to $75.0 million and an 18% royalty on annual net sales above $75.0 million. Following the end of patent protection in United States or Canada for Macrilen™ (macimorelin), we will be entitled to a 5% royalty on net sales in that country.

In addition, we will also receive one-time payments from Strongbridge following the first achievement of the following commercial milestone events:

• $4.0 million on achieving $25.0 million annual net sales,

• $10.0 million on achieving $50.0 million annual net sales,

• $20.0 million on achieving $100.0 million annual net sales,

• $40.0 million on achieving $200.0 million annual net sales, and

• $100.0 million on achieving $500.0 million annual net sales.

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Second Quarter MD&A - 2018

Upon approval by the FDA of a pediatric indication for Macrilen™ (macimorelin), we will receive a one-time milestone payment of $5.0 million from Strongbridge.

The commercial success of Macrilen™ (macimorelin) will depend on several factors, including, but not limited to, the receipt of approvals from the EMA and similar foreign regulatory authorities; Strongbridge developing appropriate distribution and marketing infrastructure and arrangements and launching and growing commercial sales of Macrilen™ (macimorelin); and acceptance of Macrilen™ (macimorelin) in the medical community, among patients and with third party payers.

On July 23, 2018, Strongbridge launched product sales of Macrilen™ (macimorelin) in the United States.

We continue to explore various alternatives to monetize our rights to macimorelin in other countries around the globe. We are not currently conducting any clinical studies, but expect to start enrollment for the clinical trial for a pediatric indication of Macrilen™ (macimorelin) in late 2018.

Our common shares are listed on both the NASDAQ Capital Market ("NASDAQ") and on the Toronto Stock Exchange ("TSX") under the symbol "AEZS".

About Forward-Looking Statements

This document contains forward-looking statements (as defined by applicable securities legislation) made pursuant to the safe-harbor provision of the U.S. Securities Litigation Reform Act of 1995, which reflect our current expectations regarding future events. Forward-looking statements may include, but are not limited to statements preceded by, followed by, or that include the words "will," "expects," "believes," "intends," "would," "could," "may," "anticipates," and similar terms that relate to future events, performance, or our results. Forward-looking statements involve known and unknown risks and uncertainties, including those discussed in this MD&A and in our Annual Report on Form 20-F, under the caption "Key Information - Risk Factors" filed with the relevant Canadian securities regulatory authorities in lieu of an annual information form and with the U.S. Securities and Exchange Commission ("SEC"). Known and unknown risks and uncertainties could cause our actual results to differ materially from those in forward-looking statements. Such risks and uncertainties include, among others, our now heavy dependence on the success of Macrilen™ (macimorelin) and related out-licensing arrangements and the continued availability of funds and resources to successfully launch the product, the ability of Aeterna Zentaris to enter into out-licensing, development, manufacturing and marketing and distribution agreements with other pharmaceutical companies and keep such agreements in effect, reliance on third parties for the manufacturing and commercialization of our product candidates, potential disputes with third parties, leading to delays in or termination of the manufacturing, development, out-licensing or commercialization of our product candidates, or resulting in significant litigation or arbitration, and, more generally, uncertainties related to the regulatory process, our ability to efficiently commercialize or out-license Macrilen™ (macimorelin), the degree of market acceptance of Macrilen™ (macimorelin), our ability to obtain necessary approvals from the relevant regulatory authorities to enable us to use the desired brand names for our products, the impact of securities class action litigation, the litigation involving two of our former officers, litigation brought by Cogas Consulting, LLC, or other litigation, on our cash flow, results of operations and financial position; any evaluation of potential strategic alternatives to maximize potential future growth and stakeholder value may not result in any such alternative being pursued, and even if pursued, may not result in the anticipated benefits, our ability to take advantage of business opportunities in the pharmaceutical industry, our ability to protect our intellectual property, the potential of liability arising from shareholder lawsuits and general changes in economic conditions. Investors should consult our quarterly and annual filings with the Canadian and U.S. securities commissions for additional information on risks and uncertainties. Given these uncertainties and risk factors, readers are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, unless required to do so by a governmental authority or applicable law.

About Material Information

This MD&A includes information that we believe to be material to investors after considering all circumstances. We consider information and disclosures to be material if they result in, or would reasonably be expected to result in, a significant change in the market price or value of our securities, or where it is likely that a reasonable investor would consider the information and disclosures to be important in making an investment decision.

We are a reporting issuer under the securities legislation of all of the provinces of Canada, and our securities are registered with the SEC. We are therefore required to file or furnish continuous disclosure information, such as interim and annual financial statements, MD&A, proxy or information circulars, annual reports on Form 20-F, material change reports and press releases with the appropriate securities regulatory authorities. Copies of these documents may be obtained free of charge upon request from our Corporate Secretary or on the Internet at the following addresses: www.aezsinc.com, www.sedar.com and www.sec.gov.

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Second Quarter MD&A - 2018

Key Developments

Macrilen™ (macimorelin), a ghrelin receptor agonist, is a novel orally-active small molecule that stimulates the secretion of growth hormone. Macrilen™ (macimorelin) has been granted orphan drug designation by the FDA for the evaluation of growth hormone deficiency. We own the worldwide rights to this novel patented compound. Macrilen™ (macimorelin) is our proposed trade name for macimorelin. The proposed trade name was conditionally approved by the FDA, but rejected by the EMA, on December 16, 2017, because of its similarity to the names of other medicines. On March 28, 2018, we applied for two new invented names for macimorelin: Macimorelin GH test and Macimorelin Zentaris.

On March 7, 2017, we announced that the Pediatric Committee of the EMA agreed to our Pediatric Investigation Plan ("PIP") for Macrilen™(macimorelin) and agreed that we may defer conducting the PIP until after we file a Market Authorization Application ("MAA") seeking marketing authorization for the use of Macrilen™(macimorelin) for the evaluation of AGHD.

On July 18, 2017, we announced that we had been notified by the FDA that our New Drug Application ("NDA") seeking approval of Macrilen^TM (macimorelin) for the evaluation of AGHD had been accepted as a complete response to the FDA's November 5, 2014 complete response letter and granted a PDUFA date of December 30, 2017.

On November 27, 2017, we announced that the MAA for the use of Macrilen^TM (macimorelin) for the evaluation of AGHD has been accepted by the EMA for regulatory review. The start of the EMA review procedure for the MAA has been confirmed by EMA as November 23, 2017.

On December 20, 2017, we announced that the FDA granted marketing approval for Macrilen^TM (macimorelin) to be used in the diagnosis of patients with AGHD. On January 17, 2018, we announced that through AEZS Germany, we entered into the Strongbridge License Agreement to carry out development, manufacturing, registration and commercialization of Macrilen™ (macimorelin) in the United States and Canada. On July 23, 2018, Strongbridge launched product sales of Macrilen™ (macimorelin) in the United States. We continue to explore various alternatives to monetize our rights to macimorelin in other countries around the globe.

On March 23, 2018, we received from the EMA a Day 120 List of Questions, which was issued in connection with our MMA submission for Macrilen^TM (macimorelin). We submitted our responses to the EMA for its Day 120 List of Questions on July 20, 2018.

Outsourcing and Out-Licensing Non-Strategic Activities/Assets

Zoptrex™

On May 1, 2017, we announced that the ZoptEC pivotal Phase 3 clinical study of Zoptrex™ (zoptarelin doxorubicin) in women with locally advanced, recurrent or metastatic endometrial cancer did not achieve its primary endpoint of demonstrating a statistically significant increase in the median period of overall survival of patients treated with Zoptrex™ (zoptarelin doxorubicin) as compared to patients treated with doxorubicin. The results of the study are not supportive to pursue regulatory approval by the FDA. Based on this outcome, we do not anticipate conducting clinical trials of Zoptrex™ (zoptarelin doxorubicin) with respect to any other indications. We also discontinued the development of AEZS-138/Disorazol Z, as it was based on the same concept as Zoptrex™ (zoptarelin doxorubicin).

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Second Quarter MD&A - 2018

Commercial Operations

Our commercial operations were significantly reduced in the fourth quarter of 2017. We eliminated our contract sales team in its entirety, as well as remaining sales management in November 2017, in accordance with the terms of our agreement with inVentiv Commercial Services, LLC, an affiliate of inVentiv Health, Inc. ("inVentiv"), a contract-sales organization.

Pursuant to termination of the inVentiv agreement, we ended our co-promotion with EMD Serono, Inc. ("EMD Serono") and Armune BioScience, Inc. ("Armune").

Until termination of our sales team in November 2017, the inVentiv sales force promoted two products during 2017:

Saizen^®[somatropin (rDNA origin) for injection] is a prescription medicine indicated for the treatment of growth hormone deficiency in children and adults. We promoted Saizen^®pursuant to our promotional services agreement (the "EMD Serono Agreement") with EMD Serono, which we entered into in May 2015 and amended as of December 31, 2016. The EMD Serono Agreement, as amended, provided that we were to promote Saizen^®in specific agreed-upon U.S. territories to adult and pediatric endocrinologists in exchange for a sales commission that was based upon new patient starts of the product. The agreement was terminated in accordance with its terms on December 13, 2017.

APIFINY^® is the only cancer-specific, non-PSA blood test for the evaluation of the risk of prostate cancer. The test was developed by Armune, a medical diagnostics company that develops and commercializes unique proprietary technology exclusively licensed from the University of Michigan for diagnostic and prognostic tests for cancer. We entered into a co-marketing agreement with Armune in November 2015 (the "Armune Agreement"), which was amended effective as of June 1, 2016, which allowed us to exclusively promote APIFINY^®throughout the entire United States. We received a commission for each test performed resulting from our targeted promotion without regard to any established baseline. The Armune Agreement, as amended, had a three-year term that renewed automatically for successive one-year periods. The parties agreed in January 2018 that the Armune Agreement was terminated.

Effective November 3, 2017, we terminated the employment of Jude Dinges, our Senior Vice President and Chief Commercial Officer.

Corporate Activities

In July 2017, Aeterna Germany, and its Works Council approved a restructuring program (the "2017 German Restructuring"), which was rolled out as a consequence of the negative Phase 3 clinical trial results of Zoptrex™ (zoptarelin doxorubicin) announced on May 1, 2017 and the related impact on our product pipeline. This was also part of the continued strategy to transition into a commercially operating specialty biopharmaceutical organization focused on the development and commercialization of Macrilen™ (macimorelin), including through out-licensing arrangements and pursuing in-licensing opportunities. The goal of the 2017 German Restructuring is to reduce to a minimum our research and development ("R&D") activities and has resulted in the termination of 24 employees of the German subsidiary.

We started implementing the 2017 German Restructuring in the fourth quarter of 2017, with staff departures expected to be completed over a period of approximately 18 months. Total initial restructuring costs associated with the 2017 German Restructuring include severance accruals and other directly related costs ($2,002,000) and an onerous lease provision ($1,113,000), for a total of $3,115,000. For the six months ended June 30, 2018, $1,476,000 of severance and other costs and $210,000 of onerous lease provisions were utilized. In addition, a reversal of $214,000 due to changes in assumptions for severance and $97,000 of currency exchange adjustments were recorded.

Board of Directors

On May 8, 2018, the following individuals were elected to the Board of Directors: Carolyn Egbert, Michael Cardiff, Juergen Ernst, Gerard Limoges, Dr. Brent Norton, Jonathan Pollack, and Robin Smith Hoke.

CEO Appointment and CFO Resignation and Appointment

On July 20, 2017, the board of directors ("Board") announced the appointment of Michael Ward as the President and Chief Executive Officer ("CEO"). Further, on September 25, 2017, we announced the appointment of Jeffrey Whitnell to the position of Interim Chief Financial Officer ("CFO"). Mr. Whitnell resigned as CFO effective December 7, 2017.

On March 5, 2018, we appointed James Clavijo as the CFO, effective that date.

Executive Appointment

On May 31, 2018, we announced the appointment of Olaf Althaus as General Manager and Managing Director of Aeterna Germany effective June 1, 2018.

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Second Quarter MD&A - 2018

Strategic Review Committee

On July 20, 2017, we announced that the Board had established a special committee of independent directors (the "Strategic Review Committee") to develop, consider, investigate and exercise oversight relating to potential strategic alternatives to maximize potential future growth and stakeholder value of the Company, including continuing to execute on our existing business plan and/or considering and recommending changes to our management and governance.

On August 8, 2017, we announced that the Strategic Review Committee engaged a consulting firm and a financial advisor to assist in its efforts. The Strategic Review Committee retained Stifel, Nicolaus & Company as advisor in part to validate the commercial potential of Macrilen™ (macimorelin) to assist it in determining the best means of maximizing value, which included evaluating and recommending modes of distribution including entering into partnerships or building an internal sales force, raising capital including through an investment from a strategic partner, or selling some or all of the Company and our assets. On January 16, 2018, through Aeterna Germany, we entered into the Strongbridge License Agreement.

In January 2018, in accordance with the written mandate of the Strategic Review Committee, the members of the Strategic Review Committee determined that the responsibilities of the Strategic Review Committee had been satisfied and were at an end and the Strategic Review Committee was dissolved effective as of January 22, 2018.

Contingencies

Securities class action litigation

We and certain of our current and former officers are defendants in a class-action lawsuit pending in the U.S. District Court for the District of New Jersey (the "Court"), brought on behalf of shareholders of the Company. The lawsuit alleges violations of the Securities Exchange Act of 1934 (the "Exchange Act") in connection with allegedly false and misleading statements made by the defendants between April 2, 2012 and November 6, 2014 (the "Class Period"), regarding the safety and efficacy of Macrilen™ (macimorelin), and the prospects for the approval of our NDA for the product by the FDA. The plaintiffs represent a class comprised of purchasers of our common shares during the Class Period and seek damages, costs and expenses and such other relief as determined by the Court. On September 14, 2015, the Court dismissed the lawsuit stating that the plaintiffs failed to state a claim, but granted the plaintiffs leave to amend. On October 14, 2015, the plaintiffs filed a second amended complaint against us. We subsequently filed a motion to dismiss because we believed that the second amended complaint also failed to state a claim.

On March 2, 2016, the Court issued an order granting our motion to dismiss the complaint in part and denying it in part. The Court dismissed certain of our current and former officers from the lawsuit. The Court allowed the claim that we omitted material facts from our public statements during the Class Period to proceed against us and our former Chief Executive Officer, who departed in 2013, while dismissing such claims against other current and former officers. The Court also allowed a claim for "controlling person" liability to proceed against certain current and former officers. On March 16, 2016, we filed a motion for reconsideration of the Court's March 2, 2016 order and on April 6, 2016 we filed an answer to the second amended complaint. On June 30, 2016, the Court issued an order denying our motion for reconsideration. On February 28, 2018, the Court granted a motion for class certification which we appealed. We filed an interlocutory petition for review on March 14, 2018. Lead Plaintiff's opposition to the petition was received on March 26, 2018. We filed an interlocutory petition for review on March 14, 2018. Lead Plaintiff's opposition to the petition was received on March 26, 2018. The Third Circuit Court granted the petition for interlocutory review on June 20, 2018, and the appeal is pending. While the appeal is pending, the proceedings have been stayed in the trial court.

Our directors' and officers' insurance policies ("D&O Insurance") provide for reimbursement of certain costs and expenses incurred in connection with the defense of this lawsuit, including legal and professional fees, as well as other loss (damages, settlements, and judgments), if any, subject to certain policy exclusions, restrictions, limits, deductibles and other terms. We believe that the D&O Insurance applies to the purported class-action lawsuit; however, the insurers have issued standard reservations of rights letters reserving all rights under the D&O Insurance. Legal and professional fees are expensed as incurred, and no reserve is established for them. During the second quarter of 2016, we exceeded the deductible amount applicable to this claim. Therefore, we believe that the insurers will bear most of the costs for the our defense in future periods, subject to our policy limits.

While we believe that we have meritorious defenses and intend to defend this lawsuit vigorously, management cannot currently predict the outcome of this suit or reasonably estimate any potential loss that may result from this suit. Accordingly, we have not recorded any liability related to the lawsuit. No assurance can be given with respect to the ultimate outcome of such proceedings, and we could incur substantial unreimbursed legal fees, damages, settlements, judgments, and other expenses in connection with these proceedings that may not qualify for coverage under, or may exceed the limits of, its applicable D&O Insurance and could have a material adverse impact on the our financial condition, results of operations, liquidity and cash flows.

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Second Quarter MD&A - 2018

Litigation pertaining to former officers of our Company

In late July 2017, we terminated for cause the employment agreement of Mr. David A. Dodd, the former President and Chief Executive Officer and it also terminated the employment of Mr. Philip A. Theodore, the former Senior Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary. All outstanding stock options held by both former officers were cancelled effective as of their respective termination dates, in accordance with the provisions of our 2016 stock option plan.

On August 3, 2017, we announced that it had filed a lawsuit against both Messrs. Dodd and Theodore for damages suffered by us for breach of confidence and/or breach of fiduciary duty in an amount to be determined prior to trial. We are also seeking, among other things, an injunction to prevent both Messrs. Dodd and Theodore (i) from continuing to use the our confidential and proprietary information without authorization and (ii) from mounting a proxy contest that will be premised upon the breaches of fiduciary and statutory duties and breaches of confidence alleged in the lawsuit. We engaged external counsel to conduct an internal investigation related to this lawsuit, which is still ongoing.    

On December 21, 2017, Messrs. Dodd and Theodore brought a counterclaim against our Company and its Chair, Carolyn Egbert, in the amount of CAN$6.0 million alleging, among other things, that defamatory statements were made against Messrs. Dodd and Theodore. Our Company and its Chair consider the counterclaim against them to be entirely without merit, and intend to vigorously defend against the counterclaim but cannot predict at this time the outcome or potential losses, if any, with respect to this lawsuit.

In August 2017, Mr. Dodd filed a lawsuit in the Court of Common Pleas of South Carolina against us for damages of approximately $1.7 million alleging breach of his employment contract. He is also requesting that all of his outstanding stock options vest effective upon his termination date.  On September 5, 2017, the lawsuit in the Court of Common Pleas of South Carolina was moved to the Federal Court in South Carolina. The court has set a scheduling order, with discovery now set to end in August 2018. While we believe we have meritorious defenses and intend to continue to defend this lawsuit vigorously, we cannot predict the outcome.

Cogas Litigation

Cogas Consulting, LLC ("Cogas") filed a lawsuit against us in state court in Fulton County, Georgia on February 2, 2018. The lawsuit has been removed to federal court in Georgia.  In the lawsuit, Cogas alleges that its employee (and sole shareholder) John Sharkey is entitled to a "success fee" commission on the Strongbridge License Agreement.  Cogas is claiming damages in the form of a lost commission on the transaction.  Cogas claims its commission is 5% on payments we receive within the first three years after January 14, 2018.  Cogas alleges it is entitled to 5% of the $24.0 million Strongbridge already paid us, plus 5% of any royalty Strongbridge pays us through January 17, 2021.

In March 2018, we initiated an arbitration process with the International Centre for Dispute Resolution related to the dispute with Cogas and subsequently moved to stay the lawsuit in federal court in Georgia pending the resolution of the arbitration proceedings. The motion to stay is currently pending.  We plan to vigorously litigate our dispute with Cogas but cannot predict at this time the outcome or potential losses, if any, with respect to this dispute.

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Second Quarter MD&A - 2018

Condensed Interim Consolidated Statements of Comprehensive Income (Loss) Information

	Three months ended June 30,				Six months ended June 30,
(in thousands, except share and per share data)	2018		2017		2018		2017
	$		$		$		$
Revenues
Sales commission and other	79		131		169		284
Licensing revenue	89		112		24,657		220
Total revenues	168		243		24,826		504
Cost of goods sold	197		—		197		—
Research and development costs	974		3,599		1,807		6,054
General and administrative expenses	2,004		1,874		4,790		3,755
Selling expenses	497		1,449		2,138		2,991
Total operating expenses	3,475		6,922		8,735		12,800
(Loss) income from operations	(3,504	)	(6,679	)	15,894		(12,296	)
Gain due to changes in foreign currency exchange rates	677		196		725		261
Change in fair value of warrant liability	(134	)	3,914		1,694		5,317
Other finance income	126		19		144		37
Net finance income	669		4,129		2,563		5,615
(Loss) income before income taxes	(2,835	)	(2,550	)	18,457		(6,681	)
Income tax recovery (expense)	233		—		(6,635	)	—
Net (loss) income	(2,602	)	(2,550	)	11,822		(6,681	)
Other comprehensive income (loss):
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation adjustments	(28	)	(659	)	(250	)	(792	)
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit plans	205		194		205		635
Comprehensive (loss) income	(2,425	)	(3,015	)	11,777		(6,838	)
Net (loss) income per share (basic)	(0.16	)	(0.18	)	0.72		(0.49	)
Net (loss) income per share (diluted)	(0.16	)	(0.18	)	0.70		(0.49	)
Weighted average number of shares outstanding:
Basic	16,440,760		14,086,508		16,440,760		13,776,045
Diluted	16,440,760		14,086,508		16,489,364		13,776,045

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Second Quarter MD&A - 2018

2018 compared to 2017

Revenues

Licensing revenue was $0.1 million and $24.7 million for the three and six months ended June 30, 2018, respectively, as compared to $0.1 million and $0.2 million for the same period in 2017. A slight decrease in the licensing revenues in the second quarter of fiscal 2018 compared to the same period in 2017 is due to elimination of sales programs.

The increase in the year-to-date licensing revenues is primarily due to the receipt in January 2018, of the $24.0 million upfront payment from Strongbridge for the license of Macrilen™ (macimorelin). The payment is treated as earned revenue in accordance with IFRS 15, Revenue from Contracts with Customers as it is a "right to use" license. In addition, due to events that occurred in first quarter of 2018, we consider our performance obligations under the Zoptrex™ licensing agreements to be fulfilled, therefore we recognized deferred revenues of $0.5 million relating to non-refundable upfront payments that we previously received for licensing and technology transfer arrangements entered into with respect to the development of Zoptrex™ in various territories.

Sales commission and other were$0.1 million and $0.2 million for the three and six months ended June 30, 2018, compared to $0.1 million and $0.3 million for the same period in 2017. For the second quarter of 2018, the decrease in sales commission revenues is due to elimination of sales programs. In the first quarter of 2018, we received a $90,000 termination agreement payment from a customer. In 2017, those revenues mainly resulted from our sales team exceeding pre-established unit sales baseline thresholds under our co-promotion agreement to sell Saizen^®. In 2017, we also generated sales commission in connection with our promotion of APIFINY^®.

Operating Expenses

R&D costs were $1.0 million and $1.8 million for the three and sixmonths endedJune 30, 2018, as compared to $3.6 million and $6.1 million for the same periods in 2017. The decrease in R&D costs in both the three-month period ended March 31, 2018 and the six-month period ended June 30, 2018 as compared to the same periods in 2017, is mainly attributable to lower comparative third-party costs, which principally constitute expenses incurred for the completion of the clinical trials for Macrilen™ (macimorelin) and Zoptrex™.

Additionally, the decrease in our R&D costs for the three and six months ended June 30, 2018, as compared to the same periods in 2017, is attributable to lower employee compensation and benefits costs, as well as lower facilities rent and maintenance costs. A substantial portion of this decrease is due to the realization of cost savings in connection with our ongoing efforts to streamline our R&D activities, as our primary R&D focus will be related to Macrilen™ (macimorelin).

The following table summarizes our net R&D costs by nature of expense:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2018		2017		2018	2017
	$		$		$	$
Third-party costs	123		2,580		297	4,000
Employee compensation and benefits	722		831		1,235	1,637
Facilities rent and maintenance	(5	)	198		39	400
Other costs *	134		(10	)	236	17
	974		3,599		1,807	6,054

 ___________________________

* Includes mainly depreciation, amortization, impairment, reversal of impairment, gain on disposal of equipment and operating foreign exchange losses.

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Second Quarter MD&A - 2018

The following table summarizes third-party R&D costs, by product candidate, incurred by us during the three and six months ended June 30, 2018 and 2017.

(in thousands, except percentages)	Three months ended June 30,						Six months ended June 30,
Product Candidate	2018				2017		2018				2017
	$		%		$	%	$		%		$	%
Zoptrex™	(26	)	(21.1	)	1,983	76.8	(18	)	(6.1	)	2,795	69.9
Macrilen™	114		92.7		556	21.6	252		84.8		1,103	27.6
LHRH - Disorazol Z	—		—		—	—	1		0.3		1	—
Erk inhibitors	1		0.8		4	0.2	3		1.0		16	0.4
Other	34		27.6		37	1.4	59		19.9		85	2.1
	123		100.0		2,580	100.0	297		100.0		4,000	100.0

Third-party costs attributable to Zoptrex™ and Macrilen™ (macimorelin) decreased considerably during the three and six month periods ended June 30, 2018 as compared to the same periods in 2017, mainly since we completed the clinical portion of the ZoptEC trial and the Macrilen™ (macimorelin) trial in 2017 and 2016, respectively. The comparatively higher third-party costs attributable to Macrilen™ (macimorelin) in 2017 are related to the detailed analysis of the results as well as the preparation of the NDA filing that was submitted to the FDA on June 30, 2017.

Excluding the impact of foreign exchange rate fluctuations, we expect that we will incur overall R&D costs of between $1.0 million and $2.0 million for the year ended December 31, 2018.

G&A expenses were $2.0 million and $4.8 million for the three and six months ended June 30, 2018, as compared to $1.9 million and $3.8 million for the same period in 2017. The increase for both periods is primarily related to fees associated with legal and other professional fees.

Excluding the impact of foreign exchange rate fluctuations and the recording of transaction costs related to potential financing activities (not currently known or estimable), we expect that G&A expenses will range between $8.0 million and $10.5 million in 2018.

Selling expenses were $0.5 million and $2.1 million for the three and six months ended June 30, 2018, as compared to $1.4 million and $3.0 million for the same period in 2017. Most of the selling expenses for the three and six months ended June 30, 2018 were for the payment of fees for the execution of the Strongbridge License Agreement. For the three months and six months ended June 30, 2017, the costs were for our sales force co-promotion activities as well as our sales management team. Based on currently available information, we expect selling expenses to range between $2.0 million and $2.5 million in 2018.

Net finance income was $0.7 million and $2.6 million for the three and six months ended June 30, 2018, as compared to $4.1 million and $5.6 million, for the same periods in 2017. The decrease in finance income is mainly attributable to the change in fair value of warrant liability. Such change in fair value results from the periodic "mark-to-market" revaluation, via the application of pricing models, of outstanding share purchase warrants. The closing price of our common shares, which, on the NASDAQ, fluctuated from $1.19 to $2.62 during the six months ended June 30, 2018, compared to $0.84 to $3.65 during the same period in 2017, also had a direct impact on the change in fair value of warrant liability.

Net (loss) income for the three and six months ended June 30, 2018was $2.6 million loss (or $(0.16) per share) and $11.8 million profit (or $0.72 per share), as compared to a net loss of $2.6 million (or $0.18 per share) and $(6.7) million or $(0.49) per share or the same periods in 2017. The increase in net income for the six months ended June 30, 2018 is a result of the revenue recognition of the $24.0 million upfront payment received for the Strongbridge License Agreement.

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Second Quarter MD&A - 2018

Quarterly Consolidated Results of Operations Information

(in thousands, except for per share data)	Three months ended
	June 30, 2018		March 31, 2018	December 31, 2017		September 30, 2017
	$		$	$		$
Revenues	168		24,658	178		241
Income (loss) from operations	(3,504	)	19,398	(3,578	)	(7,200	)
Net income (loss)	(2,602	)	14,424	(484	)	(9,631	)
Net income (loss) per share (basic)*	(0.16	)	0.88	(0.03	)	(0.61	)
Net income (loss) per share (diluted)*	(0.16	)	0.87	(0.03	)	(0.61	)

(in thousands, except for per share data)	Three months ended
	June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016
	$		$		$		$
Revenues	243		261		304		269
Loss from operations	(6,679	)	(5,617	)	(7,598	)	(7,703	)
Net loss	(2,550	)	(4,131	)	(8,220	)	(6,055	)
Net (loss) per share (basic)*	(0.18	)	(0.31	)	(0.71	)	(0.61	)
Net (loss) per share (diluted)*	(0.18	)	(0.31	)	(0.71	)	(0.61	)

_________________________

* Net income (loss) per share is based on the weighted average number of shares outstanding during each reporting period, which may differ on a quarter-to-quarter basis. As such, the sum of the quarterly net loss per share amounts may not equal full-year net loss per share.

Historical quarterly results of operations and net income (loss) cannot be taken as reflective of recurring revenue or expenditure patterns or of predictable trends, largely given the non-recurring nature of certain components of our historical revenues, due most notably to unpredictable quarterly variations attributable to our net finance income, which in turn are comprised mainly of the impact of the periodic "mark-to-market" revaluation of our warrant liability and of foreign exchange gains and losses. In addition, we cannot predict what the revenues from royalties will be from the Strongbridge License Agreement associated with Macrilen™ (macimorelin).

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Second Quarter MD&A - 2018

Condensed Interim Consolidated Statement of Financial Position Information

(in thousands, except share and per share data)	As at June 30,	As at December 31,
	2018	2017
	$	$
Cash and cash equivalents 1	19,946	7,780
Trade and other receivables and other current assets	1,367	958
Inventory	1,397	643
Restricted cash equivalents	373	381
Property, plant and equipment	75	101
Deferred tax assets	—	3,479
Other non-current assets	8,476	8,853
Total assets	31,634	22,195
Payables and other current liabilities	2,146	2,987
Current portion of deferred revenues	—	486
Warrant liability	2,203	3,897
Provision for restructuring costs	566	2,296
Taxes payable	2,904	—
Non-financial non-current liabilities 2	14,305	15,312
Total liabilities	22,124	24,978
Shareholders' equity (deficiency)	9,510	(2,783	)
Total liabilities and shareholders' equity (deficiency)	31,634	22,195

_________________________

1. Approximately $0.7 million and $0.6 million were denominated in EUR as at June 30, 2018 and December 31, 2017, respectively, and approximately $0.7 million and $1.0 million were denominated in Canadian dollars as at June 30, 2018 and December 31, 2017, respectively.

2. Comprised mainly of employee future benefits and provisions for onerous contracts.

The increase in cash and cash equivalents as at June 30, 2018, as compared to December 31, 2017, is due to the upfront payment received from Strongbridge and net cash used in operating activities including variations in components of our working capital.

The decrease in deferred tax assets as at June 30, 2018, as compared to December 31, 2017, is due to recognition of a tax liability and the use of the deferred tax asset during the six months ended June 30, 2018. Correspondingly a net increase in taxes payable is also recognized in the same six months ended June 30, 2018.

The decrease in our warrant liability from December 31, 2017 to June 30, 2018 is mainly due to a net fair value revaluation gain of $1.7 million, which was recorded pursuant to our periodic "mark-to-market" revaluation of the underlying outstanding share purchase warrants. The revaluation gain is mainly explained by the decrease of the price of our common shares during the period.

The increase in shareholders' equity (deficiency) as at June 30, 2018,as compared to December 31, 2017, is attributable primarily to the recognition of the $24.0 million upfront payment from Strongbridge as revenue in the six months ended June 30, 2018.

Financial Liabilities, Obligations and Commitments

We are committed to various operating leases for its premises. Expected future minimum lease payments, which also include future payments in connection with utility service agreements, and future minimum sublease receipts under non-cancellable operating leases, as well as future payments in connection with service and manufacturing agreements, as at June 30, 2018 are as follows:

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Second Quarter MD&A - 2018

(in thousands)	Minimum lease payments	Minimum sublease receipts		Service and manufacturing
	$	$		$
Less than 1 year	384	(130	)	1,576
1 - 3 years	645	—		325
4 - 5 years	35	—		—
Total	1,064	(130	)	1,901

Outstanding Share Data

As atAugust 9, 2018 we had 16,440,760, common shares issued and outstanding, as well as 161,000 deferred stock units and 973,717 stock options outstanding. Share purchase warrants outstanding as at August 9, 2018represented a total of3,417,840 equivalent common shares.

Capital Disclosures

Our objective in managing capital, consisting of shareholders' equity, with cash and cash equivalents and restricted cash equivalents being its primary components, is to ensure sufficient liquidity to fund R&D costs, selling expenses, G&A expenses and working capital requirements.

Over the past several years, we have raised capital via public equity offerings and issuances under various at-the -market ("ATM") sales programs and licensing agreements as our primary source of liquidity. We did not raise any capital in 2018 under an ATM program, and we terminated the then-current ATM sales agreement effective May 4, 2018.

Our capital management objective remains the same as that in previous periods. The policy on dividends is to retain cash to keep funds available to finance the activities required to advance our product development portfolio and to pursue appropriate commercial opportunities as they may arise.

We are not subject to any capital requirements imposed by any regulators or by any other external source.

Liquidity, Cash Flows and Capital Resources

Our current principal sources of liquidity are existing cash on hand and cash flows from operations. At June 30, 2018, we had $19.9 millionof cash and cash equivalents. We expect existing cash balances and operating cash flows will provide us with adequate funds to support our current operating plan for at least twelve months after the date of the issuance of this MD&A and for the foreseeable future. There can be no assurance, however, that unplanned capital requirements or other future events, will not require us to seek debt or equity financing and, if so required, that it will be available on terms acceptable to us, if at all.

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Second Quarter MD&A - 2018

The variations in our liquidity by activity are explained below.

(in thousands)	Six months ended June 30,
	2018	2017
Cash and cash equivalents - Beginning of period	7,780	21,999
Cash flows from operating activities:
Net cash provided by (used in) operating activities	11,940	(12,852	)
Cash flows from financing activities:
Net cash provided by financing activities	—	4,512
Cash flows from investing activities:
Net cash provided by (used in) investing activities	11	46
Effect of exchange rate changes on cash and cash equivalents	215	226
Cash and cash equivalents - End of period	19,946	13,931

Operating Activities

Cash provided by (used in) operating activities totaled $11.9 million for the six months ended June 30, 2018, as compared to ($12.9 million) for the same period in 2017. The increase in cash used in operating activities for the six months ended June 30, 2018, as compared to the same period in 2017, is mainly due to the $24.0 million upfront payment received from Strongbridge.

We expect net cash provided by operating activities to range from $4.0 million to $7.0 million for the year ending December 31, 2018. This guidance may vary significantly in future periods and it can also be significantly impacted by ongoing business development initiatives.

Financing Activities

Cash flows from financing activities were nil for the three and six months ended June 30, 2018, as compared to $4.5 million for the same periods in 2017. The decrease is mainly due to the fact that we did not have any financing activities in 2018, while in 2017 we raised capital from certain ATM programs.

Critical Accounting Policies, Estimates and Judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues, expenses and related disclosures. Judgments, estimates and assumptions are based on historical experience, expectations, current trends and other factors that management believes to be relevant when our consolidated financial statements are prepared.

Management reviews, on a regular basis, our accounting policies, assumptions, estimates and judgments in order to ensure that the consolidated financial statements are presented fairly and in accordance with IFRS. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Critical accounting estimates and assumptions, as well as critical judgments used in applying accounting policies in the preparation of our interim condensed consolidated financial statements were the same as those that applied found in note 3 to our annual consolidated financial statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 except for those related to the adoption of IFRS 15.

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Second Quarter MD&A - 2018

Recent Accounting Pronouncements

The IASB continues to issue new and revised IFRS. A listing of the recent accounting pronouncements promulgated by the IASB and not yet adopted by us is included in note 2 to our audited annual consolidated financial statements for the year ended December 31, 2017 and in note 3 to our condensed interim consolidated financial statements as at June 30, 2018 and for the three and six months ended June 30, 2018 and 2017.

Outlook for 2018

Product Development

Macrilen™ (macimorelin)

The commercial success of Macrilen™ (macimorelin) will depend on several factors, including, but not limited to, the receipt of approvals from the EMA and similar foreign regulatory authorities; developing appropriate distribution and marketing infrastructure and arrangements for our product; launching and growing commercial sales of the product; and acceptance of the product in the medical community, among patients and with third party payers. We are not currently conducting any clinical studies.

We continue to explore various alternatives to monetize our rights to macimorelin in other countries around the globe.

Commercial Operations

Our commercial operations were significantly reduced in the first quarter of 2018 and in the fourth quarter of 2017. We eliminated our contract sales team in its entirety, as well as remaining sales management in November 2017, in accordance with the terms of our agreement with inVentiv Commercial Services, LLC, an affiliate of inVentiv, a contract-sales organization.

Pursuant to termination of the inVentiv agreement, we ended our co-promotion with EMD Serono and Armune.

Summary of key expectations for revenues, operating expenditures and cash flows

The following represents forward-looking information and users are cautioned that actual results may vary.

Excluding the impact of future foreign exchange rate fluctuations, we expect that we will incur R&D costs of between $1.0 million and $2.0million for the year ending December 31, 2018. We expect most of the expenses related to R&D to be for employee, commercial service, patent and consultant costs related to the Macrilen™ (macimorelin) PIP study (which Strongbridge will fund 70%).

Based on currently available information, we expect selling expenses to range between $2.0 million and $2.5 million during the year ending December 31, 2018. We expect most of the expenses related to selling to be for website, branding and marketing.

Excluding the impact of foreign exchange rate fluctuations, we expect G&A expenses to range between $8.0 million and $10.5 million for the year ending December 31, 2018. We expect most of the expenses related to G&A to be for employee, insurance, rent, travel, and professional fees, such as legal, accounting and public company related expenses.

Excluding any foreign exchange impacts, as well as income from new business development initiatives, we expect that our overall use of cash for operations in December 31, 2018 will range from $11.0 million to $15.0 million, as we continue to fund ongoing operating activities and working capital requirements and as outlined in the above paragraphs.

Financial Risk Factors and Other Instruments

The nature and extent of our exposure to risks arising from financial instruments, including credit risk, liquidity risk and market risk (share price risk) and how we manage those risks are described in note 13 to our condensed interim consolidated financial statements as at June 30, 2018 and for the three-month and six-month periods ended June 30, 2018 and 2017.

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Second Quarter MD&A - 2018

Related Party Transactions and Off-Balance Sheet Arrangements

As at June 30, 2018, other than employment agreements and indemnification agreements with management, there are no related party transactions, except those eliminated upon consolidation.

As at June 30, 2018, we did not have any interests in special purpose entities or any other off-balance sheet arrangements.

Risk Factors and Uncertainties

An investment in our securities involves a high degree of risk. In addition to the other information included in this MD&A and in the related unaudited condensed interim consolidated financial statements, investors are urged to carefully consider the risks described under the caption "Risk Factors and Uncertainties" in our most recent Annual Report on Form 20-F for the year ended December 31, 2017, for a discussion of the various risks that may materially affect our business. The risks and uncertainties not presently known to us or that we currently deem immaterial may also materially harm our business, operating results and financial condition and could result in a complete loss of your investment.

Our most recent Annual Report on Form 20-F was filed with the relevant Canadian securities regulatory authorities in lieu of an annual information form at www.sedar.com and with the SEC at www.sec.gov, and investors are urged to consult such risk factors.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the three-month period ended June 30, 2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of certain events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, including conditions that are remote.

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