Thallion Pharmaceuticals Inc.

Thallion Pharmaceuticals Inc.

April 24, 2013 17:00 ET

Thallion Announces 2013 First Quarter Operating Results

MONTRÉAL, QUÉBEC--(Marketwired - April 24, 2013) - Thallion Pharmaceuticals Inc. (TSX VENTURE:TLN) today announced its operational and financial results for the 2013 first quarter ended February 28, 2013.

With the completion of the SHIGATEC Phase II trial and recently announced decision to temporarily suspend the future development of its Shigamabs® program, the Company has elected to restructure its organization and materially reduce current expenditures during its ongoing strategic review process. Effective this week, Thallion has reduced its clinical and administrative headcount, representing the Company's most significant operating cost for its 2013 fiscal year, by approximately 70%. As a result, the Company will record a one-time charge of approximately $550,000 in severance and termination costs for the second quarter ended May 31, 2013.

"I would like to express my deepest gratitude to the employees of Thallion for their professionalism and dedication to this Company", said Dr. Allan Mandelzys, Chief Executive Officer of Thallion. "The management of Thallion remains committed to minimizing the operational burn during the strategic review process and to ultimately leverage our assets in a corporate transaction that is of the greatest potential value to our shareholders."

Effective today, the Company has also announced that Mr. Roberto Bellini has resigned from the Board of Directors in order to pursue other interests. He had been a member of Thallion's Board since 2007. "On behalf of Thallion's Board and management, I would like to thank Roberto for his deep commitment to the Company, and for his guidance, thoughtfulness and important contributions throughout his tenure", said Lloyd M. Segal, Thallion's Chairman.

Operational Highlights

  • The Special Committee comprised of independent directors of the Board continues to actively evaluate potential corporate opportunities with a view to maximizing shareholder value.
  • To limit operational spend during the strategic review process, the Company has undergone a corporate restructuring and significantly reduced headcount, subsequent to quarter end.
  • The Company has met the specific conditions under its indemnity agreement with Premium Brands Holding Corporation and as such, the irrevocable letter of credit in favour of Premium Brands was removed and the Company's restricted cash position of $1,000,000 was reinstated as unrestricted cash, subsequent to quarter end.
  • The Company closed out the SHIGATEC Phase II clinical study, subsequent to quarter end.
  • Thallion has obtained court approval to delay the holding of its 2013 Annual General Meeting of Shareholders to be held by no later than September 27, 2013, subsequent to quarter end.
  • Mr. Roberto Bellini resigned from the Company's Board of Directors effective April 24, 2013.

Financial Highlights

Collaboration and licensing revenues for the three-month period ended February 28, 2013, were $9,656,256 compared to $616,557 for the three-month period ended February 29, 2012. The increase in first quarter revenue is due to the early termination of the development and license agreement with LFB in February 2013; as the Company will no longer be continuing the development of Shigamabs® under the agreement nor receiving any further payments, the deferred revenue balance was recognized as collaboration and licensing revenues in the first quarter of 2013.

Research and development (R&D) expenses before tax credits amounted to $470,203 in the first quarter of 2013, compared with $1,028,563 in the first quarter of 2012. The Company completed enrollment of the 45 patients recruited in the SHIGATEC Phase II trial in January 2012, consequently the 54% decrease in R&D costs is the result of reduced clinical trial expenditures, decreased costs related to manufacturing activities and other miscellaneous cost reductions.

General and administrative expenses amounted to $641,547 in the first quarter of 2013 compared with $613,128 in the first quarter of 2012. This slight increase is primarily the result of having collected $25,000 in proceeds from the disposal of an asset held for sale in the first quarter of 2012.

The Company recorded net earnings of $8,771,812 or $0.27 per share in the first quarter of 2013, compared with a net loss of $835,254 or $0.03 per share in the first quarter of 2012. This increase in net earnings is primarily due to the recognition of $9,656,256 in collaboration and licensing revenues as a result of the early termination of the agreement with LFB, described above.

As at February 28, 2013, the Company's unrestricted cash position amounted to $9,542,208, which consists of cash and short-term investments. The Company's liquidity availability amounted to $10,544,945 compared with $11,289,797 on November 30, 2012. The Company's working capital amounted to $9,832,624 as at February 28, 2013, compared to $10,705,174 as at November 30, 2012, a decrease of $872,550. The decreases in liquidity and working capital are primarily due to activities related to the Company's first quarter 2013 operations.

As of April 24, 2013, the Company had 32,194,566 common shares outstanding and a total of 3,676,450 stock options.

About Thallion Pharmaceuticals Inc.

Thallion Pharmaceuticals Inc. (TSX VENTURE:TLN) is a biotechnology company developing pharmaceutical products in the areas of infectious disease and oncology. The Company's lead clinical program Shigamabs® is a dual antibody product for the treatment of Shiga toxin-producing E. coli bacterial infections and has recently completed a Ph II clinical trial. Additional information about Thallion can be obtained at

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, risks relating to the outcome of the strategic review process. 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:

Condensed Consolidated Statements of Financial Position
February 28,
November 30,
Current assets:
Cash$ 1,844,989 $ 7,236,228
Short-term investments7,697,219 3,124,580
Foreign exchange forward contracts- 13,275
Sales tax receivable and other assets61,542 28,650
Balance of sale receivable601,306 605,675
Tax credits receivable401,431 323,314
Deposits and prepaid expenses51,763 153,553
10,658,250 11,485,275
Restricted cash1,000,000 1,000,000
Property and equipment34,584 36,306
1,034,584 1,036,306
$ 11,692,834 $ 12,521,581
Liabilities and Equity
Current liabilities:
Trade and other payables$ 825,626 $ 780,101
Deferred revenues- 9,656,256
Share capital115,512,823 115,512,823
Warrants1,375,000 1,375,000
Contributed surplus20,378,144 20,367,972
Equity attributable to equity holders of the Company10,867,208 2,085,224
$ 11,692,834 $ 12,521,581
Condensed Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)
Three-month periods ended
February 28,
February 29,
Collaboration and licensing revenues$ 9,656,256 $ 616,557
Research and development470,203 1,028,563
Tax credits(78,117)(94,882)
392,086 933,681
General and administrative641,547 613,128
Finance (income) costs
Interest income(17,323)(16,142)
Foreign exchange (gain) loss(153,541)49,110
Changes in fair value of foreign exchange forward contracts21,675 (127,966)
884,444 1,451,811
Net earnings (loss) and comprehensive income (loss) attributable to equity holders of the Company$ 8,771,812 $ (835,254)
Basic and diluted earnings (loss) per share$ 0.27 $ (0.03)
Condensed Consolidated Statements of Cash Flows
Three-month periods ended
February 28,
February 29,
Cash flows used in operating activities:
Net earnings (loss)$ 8,771,812 $ (835,254)
Adjustments for:
Depreciation2,663 3,255
Interest income(17,323)(16,142)
Interest received16,472 19,780
Gain on disposal of property and equipment- (25,331)
Effect of exchange rate fluctuations on cash held918 95,433
Effect of exchange rate fluctuations on balance of sale receivable(22,037)-
Recognition of deferred revenues(9,656,256)-
Decrease (increase) in fair value of open foreign exchange forward contracts13,275 (84,375)
Stock-based compensation10,172 9,882
Changes in operating assets and liabilities:
Sales tax receivable and other assets(32,041)(13,336)
Tax credits receivable(78,117)(94,882)
Deposits and prepaid expenses21,694 19,119
Trade and other payables125,621 (491,523)
Provisions- (55,224)
Deferred revenues- 414,059
37,157 (221,787)
Cash flows (used in) from investing activities:
Proceeds from disposal of investment in Caprion Proteomics Inc.26,406 -
Acquisition of short-term investments(6,556,903)(1,010,186)
Proceeds from disposal/maturity of short-term investments1,984,264 1,000,000
Additions to property and equipment(941)-
Proceeds from disposal of property and equipment- 25,331
Net decrease in cash(5,390,321)(1,039,394)
Cash, beginning of period7,236,228 5,005,687
Effect of exchange rate fluctuations on cash held(918)(95,433)
Cash, end of period$ 1,844,989 $ 3,870,860

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