Thallion Pharmaceuticals Inc.
TSX : TLN

Thallion Pharmaceuticals Inc.

October 12, 2010 16:05 ET

Thallion Announces 2010 Third Quarter Results

MONTRÉAL, QUÉBEC--(Marketwire - Oct. 12, 2010) - Thallion Pharmaceuticals Inc. (TSX:TLN) today announced its operational and financial results for the three-month and nine-month periods ended August 31, 2010.

"We are on track to initiate the Phase II Shigamabs® trial in South America prior to the end of 2010, allowing us to capture the seasonal high period for STEC infection in the southern hemisphere," said Dr. Allan Mandelzys, Chief Executive Officer of Thallion Pharmaceuticals Inc. "We continue to advance this novel dual-antibody approach for patients suffering from a condition that has no existing medical treatment today. With a strong development partner like LFB Biotechnologies providing funding support for the clinical program, we are in a great position to drive development forward with sufficient cash-on-hand to manage the trial through to pivotal clinical data."

Operational Highlights

  • Successfully obtained the required regulatory approvals to conduct the Phase II trial evaluating Shigamabs® as a treatment for E. coli infections in Argentina, Chile and Peru.
  • Manufactured new lots of clinical grade material for the Phase II trial.
  • Identified more than 12 sites for the conduct of the Shigamabs® trial, which is on track to initiate in the fourth quarter of calendar 2010.

Financial Highlights

Collaboration and licensing revenues for the three-month and nine-month periods ended August 31, 2010 were $1,282,788 and $2,330,104, respectively, compared to nil for both the three-month and nine-month periods ended August 31, 2009. Revenue for the three-month and nine-month periods is entirely related to the development and license agreement signed with LFB in February 2010 for the Company's ongoing development of Shigamabs®.

Research and development expenses before tax credits (R&D) for the three-month and nine-month periods ended August 31, 2010 were $1,288,069 and $3,575,242, respectively, an increase of 9 percent compared to $1,180,377 for the three-month period in 2009 and a decrease of 35 percent compared to $5,505,652 for the nine-month period in 2009. The change in the three-month period is attributable to greater R&D activity related to the development of Shigamabs® as the Company prepares for the initiation of a Phase II study in South America later this year, partially offset by reduced personnel costs relating to the restructuring of the Company's research activities in the fourth quarter of 2009. The change in the nine-month period is primarily due to the suspension of the development of TLN-232 and TLN-4601 in July 2009 and December 2009, respectively. 

General and administrative (G&A) expenses for the three-month and nine-month periods ended August 31, 2010 were $626,274 and $3,316,650, respectively, a decrease of 30 percent compared to $897,760 for the three-month period in 2009 and an increase of 3 percent compared to $3,215,264 for the nine-month period in 2009. The change in the three-month period is primarily attributed to a reduction in G&A employees in the first quarter of 2010 and a reduction in the accretion expense relating to the Company's corporate headquarters that resulted from a final settlement reached with the landlord in June 2010 which is reflected in the three-month period. The change in the nine-month period is primarily due to reductions in personnel as well as one-time cash incentive bonuses paid to certain employees pursuant to the execution of the definitive development and license agreement signed with LFB in February 2010, partially offset by one-time severance costs incurred in the nine-month period ended August 31, 2009. 

The Company recorded a net loss of $351,394 or $0.01 per share in the three-month period ended August 31, 2010, compared with $3,025,762 or $0.09 per share in the corresponding period in 2009. For the nine-month period ended August 31, 2010, the Company recorded a net loss of $3,751,980 or $0.12 per share, compared to $9,262,858 or $0.29 per share for the same period last year. The decreases in net loss are mainly attributable to higher collaboration and licensing revenues and reductions in R&D expenses and stock-based compensation expenses.

As at August 31, 2010, the Company's unrestricted cash position amounted to $8,591,531 which consists of cash, cash equivalents and short-term investments. The Company's liquidity availability amounted to $9,440,865 compared with $9,073,557 on November 30, 2009. The increase in liquidity is primarily due to the up-front and clinical development funding received from LFB following final execution of the development and license agreement signed in February 2010, the collection of the note receivable from Caprion Proteomics Inc. and the collection of investment tax credits receivable, partially offset by the final settlement of the Company's lease obligations related to a redundant facility and its corporate headquarters. 

As of October 12, 2010, Thallion had 32,194,566 common shares outstanding. The number of stock options and common share purchase warrants outstanding at October 12, 2010 were 2,417,600 and 530,000, respectively.

About Thallion Pharmaceuticals Inc.

Thallion Pharmaceuticals Inc. (TSX:TLN) is a biotechnology company developing pharmaceutical products in the areas of infectious disease and oncology. The Company's clinical programs include Shigamabs® and TLN-4601, a novel anti-cancer therapy. Shigamabs® is a dual antibody product for the treatment of Shiga toxin producing E. coli bacterial infections which is anticipated to enter Phase II clinical testing in the second half of 2010. Additional information about Thallion can be obtained at www.thallion.com.

Forward-Looking Statements

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and other similar expressions which constitute "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking statements reflect Thallion's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, changing market conditions, the successful and timely completion of clinical studies, the establishment of corporate alliances, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time-to-time in Thallion's ongoing filings with the Canadian securities regulatory authorities which filings can be found at www.sedar.com. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Thallion undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.

THALLION PHARMACEUTICALS INC.
Consolidated Balance Sheets
August 31, 2010 and November 30, 2009
 
  2010   2009  
  (Unaudited)   (Audited)  
Assets            
  Current assets:            
  Cash and cash equivalents $ 4,569,553   $ 1,665,929  
  Short-term investments   4,021,978     5,910,559  
  Restricted cash   -     1,590,024  
  Sales tax and other receivable   403,490     252,935  
  Tax credits receivable   511,533     1,159,268  
  Receivable from Premium Brands Holdings Corporation   337,801     337,801  
  Receivable from Caprion Proteomics Inc.   -     1,835,000  
  Deposits and prepaid expenses   920,446     465,971  
    10,764,801     13,217,487  
Long-term deposit   -     100,000  
Restricted cash   1,000,000     1,000,000  
Capital assets   172,434     214,202  
  $ 11,937,235   $ 14,531,689  
             
Liabilities and Shareholders' Equity            
Current liabilities:            
  Accounts payable and accrued liabilities $ 1,381,946   $ 1,482,111  
  Current portion of lease exit obligations   -     1,397,494  
    1,381,946     2,879,605  
             
Long-term portion of lease exit obligations   -     1,925,531  
Deferred revenues   4,514,718     -  
             
Shareholders' Equity:            
  Capital stock   115,512,823     115,502,723  
  Warrants   1,375,000     9,986,860  
  Contributed surplus   20,158,835     11,491,077  
             
  Deficit   (131,006,087 )   (127,254,107 )
             
  Total shareholders' equity   6,040,571     9,726,553  
  $ 11,937,235   $ 14,531,689  
 
 
 
 
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Operations
Three and nine-month periods ended August 31, 2010 and 2009
(Unaudited)
 
  Three-month
period ended
August 31
  Nine-month
period ended
August 31
 
  2010   2009   2010   2009  
Revenues                        
  Collaboration and licensing revenues $ 1,282,788   $ -   $ 2,330,104   $ -  
  Interest revenues   15,639     11,951     52,133     70,026  
    1,298,427     11,951     2,382,237     70,026  
Costs and expenses                        
  Research and development   1,288,069     1,180,377     3,575,242     5,505,652  
  Tax credits   (90,149 )   (220,413 )   (545,483 )   (804,286 )
    1,197,920     959,964     3,029,759     4,701,366  
                         
  General and administrative   626,274     897,760     3,316,650     3,215,264  
  Stock options cancellation costs   -     1,067,062     -     1,067,062  
  Amortization of capital assets   14,987     127,697     44,113     379,433  
  Foreign exchange gain   (189,360 )   (14,770 )   (256,305 )   (30,241 )
    1,649,821     3,037,713     6,134,217     9,332,884  
                         
Net loss $ (351,394 ) $ (3,025,762 ) $ (3,751,980 ) $ (9,262,858 )
                         
Net basic and diluted loss per share $ (0.01 ) $ (0.09 ) $ (0.12 ) $ (0.29 )
                         
Weighted average number of outstanding shares   32,194,566     32,144,316     32,174,363     32,144,316  
 
 
 
 
Consolidated Statements of Comprehensive Loss
Three and nine-month periods ended August 31, 2010 and 2009
(Unaudited)
 
  Three-month
period ended
August 31
  Nine-month
period ended
August 31
 
  2010   2009   2010   2009  
Net loss $ (351,394 ) $ (3,025,762 ) $ (3,751,980 ) $ (9,262,858 )
Other comprehensive loss                        
  Unrealized gain on available for sale investments   -     -     -     265  
Comprehensive loss $ (351,394 ) $ (3,025,762 ) $ (3,751,980 ) $ (9,262,593 )
 
 
 
 
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Cash Flows
Three and nine-month periods ended August 31, 2010 and 2009
(Unaudited)
 
  Three-month
period ended
August 31
  Nine-month
period ended
August 31
 
  2010   2009   2010   2009  
Cash flows from operating activities:                        
Net loss $ (351,394 ) $ (3,025,762 ) $ (3,751,980 ) $ (9,262,858 )
Adjustments for:                        
  Accretion in carrying value of lease liability   -     77,295     239,274     231,883  
  Lease exit costs   -     -     15,572     -  
  Amortization of capital assets   14,987     127,697     44,113     379,433  
  Loss on disposal of capital assets   (11,014 )   -     (11,014 )   6,637  
  Gain on disposal of short-term investments   -     -     -     (14,013 )
  Stock options cancellation costs   -     1,067,062     -     1,067,062  
  Stock-based compensation   23,358     3,340     59,968     222,547  
    (324,063 )   (1,750,368 )   (3,404,067 )   (7,369,309 )
Changes in operating assets and liabilities:                        
  Sales tax and other receivable   16,097     (30,495 )   (150,555 )   21,338  
  Tax credits receivable   (90,149 )   512,337     647,735     (71,535 )
  Receivable from Premium Brands Holdings Corporation   -     (732,751 )   -     (732,751 )
  Receivable from Caprion Proteomics Inc.   -     -     1,835,000     -  
  Deposits and prepaid expenses   (168,769 )   32,702     (454,475 )   58,799  
  Decrease in long-term deposit   -     100,000     100,000     100,000  
  Accounts payable and accrued liabilities   (630,243 )   (432,152 )   (100,165 )   (174,017 )
  Deferred revenues   148,983     -     4,514,718     -  
  Sub-lease revenues collected   -     -     454,794     -  
  Payment of lease exit obligations   (2,400,000 )   (53,730 )   (4,032,665 )   (470,875 )
    (3,124,081 )   (604,089 )   2,814,387     (1,269,041 )
    (3,448,144 )   (2,354,457 )   (589,680 )   (8,638,350 )
                         
Cash flows from financing activities:                        
Issuance of common shares   -     -     6,030     -  
Proceeds from reorganization   -     8,850,000     -     8,850,000  
Costs of reorganization   -     (1,016,837 )   -     (1,016,837 )
    -     7,833,163     6,030     7,833,163  
                         
Cash flows from investing activities:                        
Acquisition of short-term investments   (5,701 )   (297,338 )   (2,311,419 )   (3,934,146 )
Proceeds from disposal of short-term investments   3,200,000     2,402,357     4,200,000     4,416,635  
Restricted cash   -     (2,298,062 )   1,590,024     (2,298,062 )
Additions to capital assets   (3,117 )   (589 )   (5,436 )   (21,038 )
Proceeds from disposal of capital assets   13,009     -     14,105     23,000  
    3,204,191     (193,632 )   3,487,274     (1,813,611 )
                         
Net increase (decrease) in cash and cash equivalents   (243,953 )   5,285,074     2,903,624     (2,618,798 )
Cash and cash equivalents, beginning of period   4,813,506     959,511     1,665,929     8,863,383  
Cash and cash equivalents, end of period $ 4,569,553   $ 6,244,585   $ 4,569,553   $ 6,244,585  

Contact Information