Thallion Pharmaceuticals Inc.
TSX : TLN

Thallion Pharmaceuticals Inc.

July 13, 2011 17:00 ET

Thallion Announces 2011 Second Quarter Results

MONTREAL, QUEBEC--(Marketwire - July 13, 2011) - Thallion Pharmaceuticals Inc. (TSX:TLN) today announced its operational and financial results for the three-month and six-month periods ended May 31, 2011.

Operational Highlights

  • Enrolled the first patients in the second cohort (high dose cohort) of the Phase II SHIGATEC trial evaluating Shigamabs® as a treatment for Shiga toxin-producing E. coli (STEC) infection.

  • Subsequent to quarter-end, temporarily suspended screening and enrollment in the SHIGATEC study high dose cohort as a precautionary measure due to a preliminary product out-of-specification finding observed during routine long-term stability testing of its current anti-Stx1 monoclonal antibody clinical batch.

  • Received positive recommendation from the Independent Data Monitoring Committee (IDMC). The IDMC completed a planned safety analysis of the first cohort of the targeted 21 patients and recommended the trial continue as per the protocol.

  • Received shareholder approval to implement a Normal Course Issuer Bid which provides flexibility to the Company through an option to purchase shares in the open market, if, as and when the Board considers it in the best interests of the Corporation to do so.

"Although disappointed with the temporary suspension of screening and enrollment in the SHIGATEC study, we are also mindful that this situation is occurring during the seasonal low period for STEC infection in the southern hemisphere when the rate of patient recruitment is slower," said Dr. Allan Mandelzys, Thallion's Chief Executive Officer. "We remain absolutely committed to this core development program and ongoing clinical study, and we are doing everything possible to re-initiate patient enrollment in the most expeditious manner. As the recent devastating outbreak in Europe clearly demonstrates, the need for a viable treatment for Shiga toxin-producing E. coli (STEC) infections is an urgent one."

Financial Highlights

Collaboration and licensing revenues for the three-month and six-month periods ended May 31, 2011 were $1,021,034 and $1,854,916, respectively, compared to $1,011,316 for the three-month and $1,047,316 for the six-month periods ended May 31, 2010. Revenue recognized in the first half of 2010 and 2011 is 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 six-month periods ended May 31, 2011 were $1,085,332 and $2,246,195, a decrease of two percent from the three-month and six-month periods of 2010, $1,115,674 and $2,287,173 respectively. R&D expenses remained relatively stable with the completion of substantially all activities related to the first cohort of the Phase II SHIGATEC trial and the second quarter initiation of patient enrollment in the second, high dose cohort of the trial, compared to the clinical, regulatory and CMC activities occurring in the second quarter of fiscal 2010.

General and administrative (G&A) expenses for the three-month and six-month periods ended May 31, 2011 were $666,079 and $1,278,653, respectively. G&A expenses decreased by 26 percent during the three-month period primarily due to reduced head office and lease related expenses as the part of the relocation of the Company's corporate headquarters. G&A expenses decreased by 40 percent during the six-month period, after excluding one-time costs related to incentive bonuses and severance costs recorded in the first quarter of fiscal 2010.

The Company recorded a net loss of $797,908 or $0.02 per share in the three-month period ended May 31, 2011, compared with $841,219 or $0.03 per share in the corresponding period in 2010. For the six-month period ended May 31, 2011, the Company recorded a net loss of $1,816,674 or $0.06 per share, compared to $3,400,586 or $0.11 per share for the same period last year. The decrease in net loss is primarily due to higher collaboration and licensing revenues and a reduction in G&A expenses.

As at May 31, 2011, the Company's unrestricted cash position amounted to $7,902,827 which consists of cash and short-term investments. The Company's liquidity availability amounted to $8,527,063 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 half of 2011 offset by Shigamabs® development funding received from LFB. Furthermore, the Company's working capital amounted to $7,713,925 as at May 31, 2011 compared to $8,485,919 as at November 30, 2010, a decrease of $771,994 due primarily to activities related to the Company's first six months of operations.

As of July 13, 2011, Thallion had 32,194,566 common shares outstanding. The number of stock options and common share purchase warrants outstanding at July 13, 2011 were 2,871,950 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.

Financial results included below:

THALLION PHARMACEUTICALS INC.
Consolidated Balance Sheets
May 31, 2011 and November 30, 2010
CONSOLIDATED BALANCE SHEETS
2011 2010
(Unaudited) (Audited)
Assets
Current assets:
Cash $ 4,638,096 $ 6,228,340
Short-term investments 3,264,731 4,026,441
Foreign exchange forward contracts - 175,082
Sales tax and other receivables 16,027 57,226
Tax credits receivable 624,236 434,066
Receivable from Premium Brands Holdings Corporation - 292,249
Deposits and prepaid expenses 474,963 436,043
Asset held for sale 63,575 63,575
9,081,628 11,713,022
Restricted cash 1,000,000 1,000,000
Capital assets 51,630 55,204
$ 10,133,258 $ 12,768,226
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,244,700 $ 3,227,103
Foreign exchange forward contracts 123,003 -
1,367,703 3,227,103
Deferred revenues 5,607,704 4,610,503
Shareholders' Equity:
Capital stock 115,512,823 115,512,823
Warrants 1,375,000 1,375,000
Contributed surplus 20,221,041 20,177,136
Deficit (133,951,013 ) (132,134,339 )
Total shareholders' equity 3,157,851 4,930,620
$ 10,133,258 $ 12,768,226
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Operations and Comprehensive Loss
Three and six-month periods ended May 31, 2011 and 2010
(Unaudited)
Three-month period ended
May 31
Six-month period ended
May 31
2011 2010 2011 2010
Revenues
Collaboration and licensing revenues $ 1,021,034 $ 1,011,316 $ 1,854,916 $ 1,047,316
Interest revenues 12,704 17,277 27,925 36,494
1,033,738 1,028,593 1,882,841 1,083,810
Costs and expenses
Research and development 1,085,332 1,115,674 2,246,195 2,287,173
Tax credits (98,575 ) (107,346 ) (190,170 ) (455,334 )
986,757 1,008,328 2,056,025 1,831,839
General and administrative 666,079 889,178 1,278,653 2,690,376
Amortization of capital assets 5,160 14,799 10,129 29,126
Foreign exchange loss (gain) and changes in fair value of forward exchange contracts 173,650 (42,493 ) 354,708 (66,945 )
1,831,646 1,869,812 3,699,515 4,484,396
Net loss and comprehensive loss $ (797,908 ) $ (841,219 ) $ (1,816,674 ) $ (3,400,586 )
Net basic and diluted loss per share $ (0.02 ) $ (0.03 ) $ (0.06 ) $ (0.11 )
Weighted average number of outstanding shares 32,194,566 32,182,052 32,194,566 32,164,150
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Shareholders' Equity
Three and six-month periods ended May 31, 2011 and year ended November 30, 2010
(Unaudited)
Number of common shares outstanding Capital stock Number of warrants outstanding Warrants Contributed surplus Deficit Total
Balance, November 30, 2010 32,194,566 $ 115,512,823 530,000 $ 1,375,000 $ 20,177,136 $ (132,134,339 ) $ 4,930,620
Stock-based compensation - - - - 21,690 - 21,690
Net loss - - - - - (1,018,766 ) (1,018,766 )
Balance, February 28, 2011 32,194,566 $ 115,512,823 530,000 $ 1,375,000 $ 20,198,826 $ (133,153,105 ) $ 3,933,544
Stock-based compensation - - - - 22,215 - 22,215
Net loss - - - - - (797,908 ) (797,908 )
Balance, May 31, 2011 32,194,566 $ 115,512,823 530,000 $ 1,375,000 $ 20,221,041 $ (133,951,013 ) $ 3,157,851
Number of common shares outstanding Capital stock Number of warrants outstanding Warrants Contributed surplus Deficit Total
Balance, November 30, 2009 32,144,316 $ 115,502,723 9,530,000 $ 9,986,860 $ 11,491,077 $ (127,254,107 ) $ 9,726,553
Exercise of stock options 11,500 1,380 - - - - 1,380
Stock-based compensation - - - - 19,038 - 19,038
Net loss - - - - - (2,559,367 ) (2,559,367 )
Balance, February 28, 2010 32,155,816 $ 115,504,103 9,530,000 $ 9,986,860 $ 11,510,115 $ (129,813,474 ) $ 7,187,604
Exercise of stock options 38,750 8,720 - - (4,070 ) - 4,650
Expiry of warrants - - (9,000,000 ) (8,611,860 ) 8,611,860 - -
Stock-based compensation - - - - 17,572 - 17,572
Net loss - - - - - (841,219 ) (841,219 )
Balance, May 31, 2010 32,194,566 $ 115,512,823 530,000 $ 1,375,000 $ 20,135,477 $ (130,654,693 ) $ 6,368,607
Stock-based compensation - - - - 23,358 - 23,358
Net loss - - - - - (351,394 ) (351,394 )
Balance, August 31, 2010 32,194,566 $ 115,512,823 530,000 $ 1,375,000 $ 20,158,835 $ (131,006,087 ) $ 6,040,571
Stock-based compensation - - - - 18,301 - 18,301
Net loss - - - - - (1,128,252 ) (1,128,252 )
Balance, November 30, 2010 32,194,566 $ 115,512,823 530,000 $ 1,375,000 $ 20,177,136 $ (132,134,339 ) $ 4,930,620
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Cash Flows
Three and six-month periods ended May 31, 2011 and 2010
(Unaudited)
Three-month period ended
May 31
Six-month period ended
May 31
2011 2010 2011 2010
Cash flows (used in) from operating activities:
Net loss $ (797,908 ) $ (841,219 ) $ (1,816,674 ) $ (3,400,586 )
Adjustments for:
Accretion in carrying value of lease liability - 107,031 - 239,274
Lease exit costs - 15,572 - 15,572
Amortization of capital assets 5,160 14,799 10,129 29,126
Gain on disposal of capital assets (191 ) - (22,897 ) -
Decrease in fair value of foreign exchange
forward contracts
144,428 - 298,085 -
Stock-based compensation 22,215 17,572 43,905 36,610
(626,296 ) (686,245 ) (1,487,452 ) (3,080,004 )
Changes in operating assets and liabilities:
Sales tax and other receivables 27,055 (45,053 ) 41,199 (166,652 )
Tax credits receivable (98,575 ) (107,346 ) (190,170 ) 737,884
Receivable from Premium Brands Holdings Corporation - - 292,249 -
Receivable from Caprion Proteomics Inc. - - - 1,835,000
Deposits and prepaid expenses (142,778 ) (121,590 ) (38,920 ) (285,706 )
Decrease in long-term deposit - 100,000 - 100,000
Accounts payable and accrued liabilities (210,631 ) 422,173 (1,982,403 ) 530,078
Deferred revenues 365,073 537,731 997,201 4,365,735
Sub-lease revenues collected - 227,397 - 454,794
Payment of lease exit obligations - (232,508 ) - (1,632,665 )
(59,856 ) 780,804 (880,844 ) 5,938,468
(686,152 ) 94,559 (2,368,296 ) 2,858,464
Cash flows from financing activities:
Issuance of common shares - 4,650 - 6,030
- 4,650 - 6,030
Cash flows from investing activities:
Acquisition of short-term investments (2,025,673 ) (2,006,335 ) (2,030,252 ) (2,305,718 )
Proceeds from disposal of short-term investments 2,000,000 1,000,000 2,791,962 1,000,000
Restricted cash - - - 1,590,024
Additions to capital assets - (2,319 ) (6,555 ) (2,319 )
Proceeds from disposal of capital assets 191 - 22,897 1,096
(25,482 ) (1,008,654 ) 778,052 283,083
Net (decrease) increase in cash (711,634 ) (909,445 ) (1,590,244 ) 3,147,577
Cash, beginning of period 5,349,730 5,722,951 6,228,340 1,665,929
Cash, end of period $ 4,638,096 $ 4,813,506 $ 4,638,096 $ 4,813,506

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