Thallion Pharmaceuticals Inc.
TSX : TLN

Thallion Pharmaceuticals Inc.

April 12, 2011 16:15 ET

Thallion Announces 2011 First Quarter Results; Completes First Cohort of Phase II SHIGATEC Trial

MONTRÉAL, QUÉBEC--(Marketwire - April 12, 2011) - Thallion Pharmaceuticals Inc. (TSX:TLN) today announced its operational and financial results for the 2011 first quarter which ended on February 28, 2011.

Operational Highlights

  • Completed patient enrollment of the targeted 21 patients for the low-dose cohort of the Company's Phase II SHIGATEC trial, evaluating Shigamabs® as a treatment for E. coli infection, in South America.

  • As planned, scheduled an Independent Data Monitoring Committee (IDMC) meeting to assess the safety and tolerability of Shigamabs® after the 56-day post-infusion follow-up period for all patients in the low-dose cohort.

"Patient enrollment in the first cohort of our SHIGATEC trial was completed on schedule in February. We anticipate proceeding with the second cohort in May 2011 at 17 clinical sites, upon a successful review by the IDMC," said Dr. Allan Mandelzys, Chief Executive Officer of Thallion Pharmaceuticals Inc. "Furthermore, we are now beginning to see tangible results from our proactive cost saving initiatives undertaken during 2010. Even with our Shigamabs® program in active Phase II development, operating expenses were down significantly in the first quarter and our working capital position remains strong, removing any need for raising additional capital in the foreseeable future."

Financial Highlights

Collaboration and licensing revenues for the three-month period ended February 28, 2011 were $833,882 compared to $36,000 for the corresponding period in 2010. Revenue recognized in the first quarter 2011 was related to the development and license agreement signed with LFB Biotechnologies (LFB) in February 2010 for the Company's ongoing development of Shigamabs®.

Research and development (R&D) expenses before tax credits amounted to $1,160,863 in the first quarter of 2011, compared with $1,171,499 in the first quarter of 2010. R&D expenses in the first quarter of 2010 included a $365,027 one-time royalty buy-down payment to Sunol, the Company's licensor to Shigamabs®, upon closing of the LFB transaction. Excluding this one-time royalty buy-down payment in 2010, the increase in R&D expenses is attributable to greater R&D activity related to Shigamabs® as the Company initiated its Phase II study in South America in November 2010.

General and administrative expenses amounted to $612,574 in the first quarter of 2011, a decrease of $1,188,624 or 66%, compared with $1,801,198 in the same period last year. Excluding one-time costs related to incentive bonuses and severance costs in the first quarter of 2010, G&A expenses decreased by $649,538 or 51% in the first quarter of 2011 when compared to 2010. This decrease is attributable to approximately $280,000 in reduced head office and lease related expenses, $180,000 in reduced legal fees for corporate related activities, $115,000 for general cost reduction efforts undertaken by the Company throughout 2010, and $75,000 in savings realized from a reduction in G&A employees.

The Company recorded a net loss of $1,018,766 or $0.03 per share in the first quarter of 2011, compared with $2,559,367 or $0.08 per share in the first quarter of 2010. This decrease in net loss is mainly attributable to higher collaboration and licensing revenues and reduced G&A expenses.

As at February 28, 2011, the Company's unrestricted cash position amounted to $8,588,788 which consists of cash and cash equivalents and short-term investments. The Company's liquidity availability amounted to $9,114,449 compared with $10,981,096 on November 30, 2010. The decrease in liquidity is primarily due to the reduction of accounts payable and accrued liabilities in addition to cash expenses relating to operations for the first three months of 2011, offset by Shigamabs® development funding received from LFB. Furthermore, the Company's working capital amounted to $8,119,385 as at February 28, 2011 compared to 8,485,919 as at November 30, 2010, a decrease of $366,534 due primarily to activities related to the Company's first quarter of operations.

As of April 12, 2011, the Company had 32,194,566 common shares outstanding. The number of options and common share purchase warrants outstanding on April 12, 2011, were 2,875,975 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 being evaluated in a Phase II clinical trial for the treatment of Shiga toxin producing E. coli bacterial infections. 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, the satisfaction of conditions provided in the development and commercialization agreement with LFB, 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
February 28, 2011 and November 30, 2010
20112010
(Unaudited)(Audited)
Assets
Current assets:
Cash$5,349,730$6,228,340
Short-term investments3,239,0584,026,441
Foreign exchange forward contracts21,425175,082
Sales tax and other receivables43,08257,226
Tax credits receivable525,661434,066
Receivable from Premium Brands Holdings Corporation-292,249
Deposits and prepaid expenses332,185436,043
Asset held for sale63,57563,575
9,574,71611,713,022
Restricted cash1,000,0001,000,000
Capital assets56,79055,204
$10,631,506$12,768,226
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities$1,455,331$3,227,103
Deferred revenues5,242,6314,610,503
Shareholders' Equity:
Capital stock115,512,823115,512,823
Warrants1,375,0001,375,000
Contributed surplus20,198,82620,177,136
Deficit(133,153,105)(132,134,339)
Total shareholders' equity3,933,5444,930,620
$10,631,506$12,768,226
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Operations and Comprehensive Loss
Three-month periods ended February 28, 2011 and 2010
(Unaudited)
20112010
Revenues
Collaboration and licensing revenues$833,882$36,000
Interest revenues15,22119,217
849,10355,217
Costs and expenses
Research and development1,160,8631,171,499
Tax credits(91,595)(347,988)
1,069,268823,511
General and administrative612,5741,801,198
Amortization of capital assets4,96914,327
Foreign exchange loss (gain) and changes in fair value of forward exchange contracts181,058(24,452)
1,867,8692,614,584
Net loss and comprehensive loss$(1,018,766)$(2,559,367)
Net basic and diluted loss per share$(0.03)$(0.08)
Weighted average number of outstanding shares32,194,56632,145,849
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Cash Flows
Three-month periods ended February 28, 2011 and 2010
(Unaudited)
20112010
Cash flows (used in) from operating activities:
Net loss$(1,018,766)$(2,559,367)
Adjustments for:
Accretion in carrying value of lease liability-132,243
Amortization of capital assets4,96914,327
Gain on disposal of capital assets(22,706)-
Decrease in fair value of foreign exchange forward contracts153,657-
Stock-based compensation21,69019,038
(861,156)(2,393,759)
Changes in operating assets and liabilities:
Sales tax and other receivables14,144(121,599)
Tax credits receivable(91,595)845,230
Receivable from Premium Brands
Holdings Corporation292,249-
Receivable from Caprion Proteomics Inc.-1,835,000
Deposits and prepaid expenses103,858(164,116)
Accounts payable and accrued liabilities(1,771,772)107,905
Deferred revenues632,1283,828,004
Sub-lease revenues collected-227,397
Payment of lease exit obligations-(1,400,157)
(820,988)5,157,664
(1,682,144)2,763,905
Cash flows from financing activities:
Issuance of common shares-1,380
-1,380
Cash flows from investing activities:
Acquisition of short-term investments(4,579)(299,383)
Proceeds from disposal and maturity of short-term investments791,962-
Restricted cash-1,590,024
Additions to capital assets(6,555)-
Proceeds from disposal of capital assets22,7061,096
803,5341,291,737
Net (decrease) increase in cash(878,610)4,057,022
Cash, beginning of period6,228,3401,665,929
Cash, end of period$5,349,730$5,722,951

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