Thallion Pharmaceuticals Inc.
TSX : TLN

Thallion Pharmaceuticals Inc.

October 05, 2012 17:00 ET

Thallion Announces 2012 Third Quarter Results

MONTRÉAL, QUÉBEC--(Marketwire - Oct. 5, 2012) - Thallion Pharmaceuticals Inc. (TSX:TLN) today announced its operational and financial results for the three-month and nine-month periods ended August 31, 2012.

"The proceeds from the sale of Caprion Proteomics have significantly strengthened our balance sheet and enhances our financial flexibility," said Dr. Allan Mandelzys, Chief Executive Officer of Thallion Pharmaceuticals. "We are continuing to explore strategic ways in which to best utilize this increased capital to the benefit of our shareholders."

Operational Highlights

  • Sale of Caprion Proteomics Inc. to an affiliate of Chicago Growth Partners, including Thallion's interest in the company for immediate cash proceeds of $3,859,660 as well as up to $574,663 in future cash proceeds, currently held in escrow, for a potential total cash consideration of $4,434,323.
  • Subsequent to quarter end, Philippe Couillard, P.C., MD resigned from the Company's Board of Directors due to his renewed political activities, effective October 5, 2012. Mr. Couillard had served on the Board since July 2010.

Financial Highlights

Collaboration and licensing revenues for the three-month and nine-month periods ended August 31, 2012, were $234,743 and $1,383,336 respectively, compared to $772,335 and $2,627,251 in the corresponding periods of 2011. These decreases in revenues are primarily due to the anticipated decline in research and development expenses in the first nine months of 2012. Furthermore, the Company revised its estimate for clinical and manufacturing costs necessary to complete both the Phase II and anticipated Phase III Shigamabs studies in the fourth quarter of 2011, which directly impacts the percentage of completion calculation used to recognize revenues and results in lower revenue recognition in the first nine months of 2012.

Research and development (R&D) expenses before tax credits for the three-month and nine-month periods ended August 31, 2012 were $446,789 and $2,370,822, respectively. This represents a 58% decrease in cost from $1,054,747 in the three-month period ended August 31, 2011, and a 28% decrease in cost from $3,303,606 in the nine-month period ended August 31, 2011. The decrease is primarily the result of reduced clinical trial expenditures associated with the Phase II SHIGATEC trial as both patient enrollment and the core portion of the study were completed during the first quarter of 2012.

General and administrative (G&A) expenses for the three-month and nine-month periods ended August 31, 2012 were $531,480 and $1,771,339, respectively, compared with $642,008 and $1,902,910 in the three-month and nine-month periods ended August 31, 2011. This decrease is the result of reduced legal and intellectual property costs as well as ongoing cost reduction efforts.

The Company recorded net earnings of $3,722,541 or $0.12 per share in the third quarter of 2012 and net earnings of $2,163,316 or $0.07 per share in the nine-month period ended August 31, 2012, primarily the result of the $4,434,323 gain recorded on the disposal of the investment in Caprion Proteomics Inc.

Excluding this one-time gain, the Company recorded a net loss of $711,782 or $0.02 per share in the third quarter of 2012, compared with a net loss of $870,583 or $0.03 per share in the third quarter of 2011, reflecting a decrease of $158,801 or 18% quarter over quarter. When excluding this one-time gain, the Company recorded a net loss of $2,271,007 or $0.07 per share in the nine-month period ended August 31, 2012, compared with a net loss of $2,662,041 or $0.08 per share in the nine-month period ended August 31, 2011, reflecting a decrease of $391,034 or 15% period over period. These decreases in net loss are mainly attributable to anticipated decreases in R&D expenditures based on completion of the core Phase II SHIGATEC study in January 2012 and higher foreign exchange gains recognized in the first nine months of 2012 as a result of changes in the fair value of foreign exchange forward contracts, partially offset by the anticipated lower collaboration and licensing revenues.

As at August 31, 2012, the Company's unrestricted cash position amounted to $10,320,715, which consists of cash and short-term investments. The Company's liquidity availability amounted to $10,435,016 compared with $8,533,803 on November 30, 2011. Furthermore, the Company's working capital amounted to $10,210,865 as at August 31. 2012 compared to $6,337,693 as at November 30, 2011.

The increases in liquidity and working capital are primarily due to the one-time gain realized from the sale of the Company's investment in Caprion Proteomics Inc. in July 2012 as well as the ongoing Shigamabs® development funding received from LFB, partially offset by the reduction of current liabilities and the use of cash related to operations during the first nine months of 2012. The Company believes that its cash position will be sufficient to finance its operations and capital requirements for at least the next twelve months.

As of October 5, 2012, the Company had 32,194,566 common shares and a total of 3,676,450 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", "August", "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.
Condensed Consolidated Statements of Financial Position
(unaudited)
August 31, 2012 November 30, 2011
Assets
Current assets:
Cash $ 7,205,941 $ 5,005,687
Short-term investments 3,114,774 3,284,428
Foreign exchange forward contracts 182,175 103,445
Sales tax receivable and other assets 8,737 10,270
Balance of sale receivable 574,663 -
Tax credits receivable 114,301 243,688
Deposits and prepaid expenses 178,945 233,774
11,379,536 8,881,292
Restricted cash 1,000,000 1,000,000
Property and equipment 40,139 42,269
1,040,139 1,042,269
$ 12,419,675 $ 9,923,561
Liabilities and Equity
Current liabilities:
Trade and other payables $ 891,242 $ 2,210,613
Provisions 277,429 332,986
1,168,671 2,543,599
Deferred revenues 8,666,278 7,001,794
Equity:
Share capital 115,512,823 115,512,823
Warrants 1,375,000 1,375,000
Contributed surplus 20,353,703 20,310,461
Deficit (134,656,800 ) (136,820,116 )
Equity attributable to equity holders of the Company 2,584,726 378,168
$ 12,419,675 $ 9,923,561
THALLION PHARMACEUTICALS INC.
Condensed Consolidated Statements of Earnings (Loss) and
Comprehensive Income (Loss) (unaudited)
Three-month periods ended August 31 Nine-month periods ended August 31
2012 2011 2012 2011
Revenues
Collaboration and licensing revenues $ 234,743 $ 772,335 $ 1,383,336 $ 2,627,251
Expenses
Research and development 446,789 1,054,747 2,370,822 3,303,606
Tax credits (117,084 ) (50,764 ) (307,681 ) (240,934 )
329,705 1,003,983 2,063,141 3,062,672
General and administrative 531,480 642,008 1,771,339 1,902,910
Write-off of asset held for sale - 63,575 - 63,575
Finance (income) costs
Interest income (14,454 ) (14,732 ) (46,193 ) (42,657 )
Foreign exchange loss (gain) 185,743 (16,829 ) 180,509 (23,345 )
Changes in fair value of foreign exchange forward contracts (85,949 ) (35,087 ) (314,453 ) 326,137
946,525 1,642,918 3,654,343 5,289,292
(711,782 ) (870,583 ) (2,271,007 ) (2,662,041 )
Gain on disposal of investment in Caprion Proteomics Inc. 4,434,323 - 4,434,323 -
Net earnings (loss) and comprehensive income (loss) attributable to equityholders of the Company $ 3,722,541 $ (870,583 ) $ 2,163,316 $ (2,662,041 )
Basic and diluted earnings (loss) per share $ 0.12 $ (0.03 ) $ 0.07 $ (0.08 )
Weighted average number of outstanding shares 32,194,566 32,194,566 32,194,566 32,194,566
THALLION PHARMACEUTICALS INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine-month periods ended
August 31
2012 2011
Cash flows used in operating activities:
Net earnings (loss) $ 2,163,316 $ (2,662,041 )
Adjustments for:
Depreciation 10,409 15,288
Finance income - interest income (46,193 ) (42,657 )
Interest received 49,163 23,989
Gain on disposal of property and equipment (25,331 ) (22,897 )
Gain on disposal of investment in Caprion Proteomics Inc. (4,434,323 ) -
Write-off of asset held for sale - 63,575
Effect of exchange rate fluctuations on cash held 287,198 28,292
Decrease (increase) in fair value of open
foreign exchange forward contracts (78,730 ) 285,298
Stock-based compensation 43,242 66,222
(2,031,249 ) (2,244,931 )
Changes in operating assets and liabilities:
Sales tax receivable and other assets (1,437 ) 68,832
Tax credits receivable 129,387 264,825
Receivable from Premium Brands
Holdings Corporation - 292,249
Deposits and prepaid expenses 54,829 241,454
Trade and other payables (1,319,371 ) (1,418,385 )
Provisions (55,557 ) (321,993 )
Deferred revenues 1,664,484 1,573,130
472,335 700,112
(1,558,914 ) (1,544,819 )
Cash flows from investing activities:
Proceeds from disposal of investment in Caprion Proteomics Inc. 3,859,660 -
Acquisition of short-term investments (1,030,346 ) (2,040,140 )
Proceeds from disposal/maturity of short-term investments 1,200,000 2,791,962
Additions to property and equipment (8,279 ) (6,555 )
Proceeds from disposal of property and equipment 25,331 22,897
4,046,366 768,164
Net increase (decrease) in cash 2,487,452 (776,655 )
Cash, beginning of period 5,005,687 6,228,340
Effect of exchange rate fluctuations on cash held (287,198 ) (28,292 )
Cash, end of period $ 7,205,941 $ 5,423,393

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