Thallion Pharmaceuticals Inc.
TSX : TLN

Thallion Pharmaceuticals Inc.

February 22, 2012 17:00 ET

Thallion Announces 2011 Year End Results

MONTRÉAL, QUÉBEC--(Marketwire - Feb. 22, 2012) - Thallion Pharmaceuticals Inc. (TSX:TLN) today announced its operational and financial results for the three-month and twelve-month periods ended November 30, 2011.

Fourth Quarter Operational Highlights

  • Resumed patient enrollment for the high dose (3 mg/kg) cohort of the Phase II SHIGATEC trial, evaluating Shigamabs® as a treatment for Shiga toxin-producing E. coli (STEC) infection.
  • Presented blinded results at the 49th Infectious Disease Society of America (IDSA) Annual Meeting from the low dose cohort of STEC-infected children, showing the treatment to be safe and well tolerated.
  • Completed patient enrollment for the high dose cohort of the Phase II SHIGATEC trial, subsequent to quarter end.

2011 Operational Highlights

  • Completed patient enrollment of 22 patients for the low dose (1 mg/kg) cohort of the Company's Phase II SHIGATEC trial.
  • Received a positive recommendation from the Independent Data Monitoring Committee (IDMC) after a completed planned safety analysis of the first cohort (low dose) that the trial continue as per the study protocol.
  • Initiated patient enrollment of the targeted 21 patients for the high dose cohort of the Company's Phase II SHIGATEC trial.
  • Dr. Allan Mandelzys, Chief Executive Officer, appeared on Bloomberg and BNN television programs to discuss the Company's Shigamabs® product and the STEC infection outbreak in Europe.
  • Dr. Didier Reymond, Executive Vice President, Clinical Development, delivered a presentation entitled "Characterization of a new Shiga-toxin antibody" as an invited speaker at the EHEC/HUS in Germany 2011 Scientific Symposium in Berlin.

"With the completion of patient enrollment in our Phase II SHIGATEC trial, we anticipate announcing top line results in the second quarter of 2012," said Dr. Allan Mandelzys, Chief Executive Officer of Thallion Pharmaceuticals Inc. "STEC infection continues to be a public health concern, highlighted in particular, by last summer's German outbreak that infected more than 4,000 individuals, and Thallion remains committed to advancing the development of Shigamabs® to address this unmet medical need."

Financial Highlights

Collaboration and licensing revenues for the three-month period ended November 30, 2011, were $578,177 compared to $1,513,550 for the corresponding period in 2010. Collaboration and licensing revenues for the twelve-month period ended November 30, 2011, were $3,205,428 compared to $3,843,654 for the same period last year. The decreases in revenues are primarily due to the Company's revised cost estimates for both Phase II and Phase III SHIGATEC studies which directly impacted the percentage of completion calculation used to recognize revenues.

Research and development (R&D) expenses before tax credits for the three-month period ended November 30, 2011, were $1,569,188 compared with $1,941,406 for the three-month period ended November 30, 2010. R&D expenses for the twelve-month period ended November 30, 2011, were $4,869,071 compared with $5,516,648 for the corresponding period in 2010. The change in fiscal 2011 is due to savings realized from the phase-out of the TLN-4601 and TLN-232 programs in 2010, reduced operating expenses as a result of the Company's change in headquarters, as well as $519,017 in milestone payments due to Sunol Molecular Corporation in 2010. These decreases were partially offset by an increase in R&D activities related to Shigamabs in 2011.

General and administrative (G&A) expenses for the three-month period ended November 30, 2011, were $1,048,940 compared with $903,026 for the corresponding period last year. General and administrative expenses for the twelve-month period ended November 30, 2011, were $2,992,744 compared with $4,204,104 for the corresponding period last year. The change in fiscal 2011 is due to reduced severance costs and reductions in G&A personnel, as well as cost savings from the relocation of head office and lease related expenses, partially offset by a $250,000 provision for a contingent loss pursuant to the arbitration proceedings.

The net loss for the three-month period ended November 30, 2011, was $1,732,618 or $0.05 per share compared to $1,128,252 or $0.04 per share in the fourth quarter of 2010. The net loss for the twelve-month period ended November 30, 2011, was $4,447,118 or $0.14 per share compared to $4,880,232 or $0.15 per share for the corresponding period in 2010. The changes in net loss were mainly attributable to a reduction in G&A and R&D expenses partially offset by lower collaboration and licensing revenues.

As at November 30, 2011, the Company's unrestricted cash position amounted to $8,290,115, which consists of cash and short-term investments. The Company's liquidity availability amounted to $8,533,803 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 year ended November 30, 2011, offset by Shigamabs® development funding received from LFB.

As of February 22, 2012, the Company had 32,194,566 common shares outstanding and a total of 2,768,450 stock options outstanding.

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 the Company 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
November 30, 2011 and 2010
2011 2010
Assets
Current assets:
Cash $ 5,005,687 $ 6,228,340
Short-term investments 3,284,428 4,026,441
Foreign exchange forward contracts 103,445 175,082
Sales tax and other receivables 10,270 57,226
Tax credits receivable 243,688 434,066
Receivable from Premium Brands Holdings Corporation - 292,249
Deposits and prepaid expenses 359,705 436,043
Asset held for sale - 63,575
9,007,223 11,713,022
Restricted cash 1,000,000 1,000,000
Capital assets 42,269 55,204
$ 10,049,492 $ 12,768,226
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 2,475,454 $ 3,227,103
Deferred revenues 7,001,794 4,610,503
Shareholders' Equity:
Capital stock 115,512,823 115,512,823
Warrants 1,375,000 1,375,000
Contributed surplus 20,265,878 20,177,136
Deficit (136,581,457 ) (132,134,339 )
Total shareholders' equity 572,244 4,930,620
$ 10,049,492 $ 12,768,226
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Operations
Years ended November 30, 2011 and 2010
2011 2010
Revenues
Collaboration and licensing revenues $ 3,205,428 $ 3,843,654
Interest revenues 57,912 68,118
3,263,340 3,911,772
Costs and expenses
Research and development 4,869,071 5,516,648
Tax credits (315,381 ) (739,453 )
4,553,690 4,777,195
General and administrative 2,992,744 4,219,676
Write-off of asset held for sale 63,575 -
Amortization of capital assets 20,453 49,869
Foreign exchange loss (gain) and changes in fair value of forward exchange contracts 79,996 (254,736 )
7,710,458 8,792,004
Net loss and comprehensive loss $ (4,447,118 ) $ (4,880,232 )
Net basic and diluted loss per share $ (0.14 ) $ (0.15 )
Weighted average number of outstanding shares 32,194,566 32,179,400
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Cash Flows
Years ended November 30, 2011 and 2010
2011 2010
Cash flows from operating activities:
Net loss $ (4,447,118 ) $ (4,880,232 )
Adjustments for:
Accretion in carrying value of lease liability - 239,274
Lease exit costs - 15,572
Accretion in carrying value of note receivable - (15,000 )
Write-off of asset held for sale 63,575 -
Amortization of capital assets 20,453 49,869
Gain on disposal of capital assets (22,897 ) (104,613 )
Decrease (increase) in fair value of foreign exchange forward contracts 71,637 (175,082 )
Stock-based compensation 88,742 78,269
(4,225,608 ) (4,791,943 )
Changes in operating assets and liabilities:
Sales tax and other receivables 46,956 195,709
Tax credits receivable 190,378 725,202
Receivable from Premium Brands Holdings Corporation 292,249 45,552
Receivable from Caprion Proteomics Inc. - 1,850,000
Deposits and prepaid expenses 76,338 29,928
Decrease in long-term deposit - 100,000
Accounts payable and accrued liabilities (751,649 ) 1,744,992
Deferred revenues 2,391,291 4,610,503
Sub-lease revenues collected - 454,794
Payment of lease exit obligations - (4,032,665 )
2,245,563 5,724,015
(1,980,045 ) 932,072
Cash flows from financing activities:
Issuance of common shares - 6,030
- 6,030
Cash flows from investing activities:
Acquisition of short-term investments (2,049,949 ) (2,315,882 )
Proceeds from disposal of short-term investments 2,791,962 4,200,000
Restricted cash - 1,590,024
Additions to capital assets (7,518 ) (16,721 )
Proceeds from disposal of capital assets 22,897 166,888
757,392 3,624,309
Net (decrease) increase in cash (1,222,653 ) 4,562,411
Cash, beginning of year 6,228,340 1,665,929
Cash, end of year $ 5,005,687 $ 6,228,340

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