Thallion Announces 2011 Year End Results

MONTREAL, QUEBEC--(Marketwire -02/22/12)- Thallion Pharmaceuticals Inc. (TSX: TLN.TO - News) 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.TO - News) 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
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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
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                                                9,007,223        11,713,022
Restricted cash                                 1,000,000         1,000,000
Capital assets                                     42,269            55,204
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                                             $ 10,049,492      $ 12,768,226
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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)
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  Total shareholders' equity                      572,244         4,930,620

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                                             $ 10,049,492      $ 12,768,226
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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
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                                                3,263,340         3,911,772
Costs and expenses
  Research and development                      4,869,071         5,516,648
  Tax credits                                    (315,381)         (739,453)
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                                                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)
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                                                7,710,458         8,792,004
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Net loss and comprehensive loss              $ (4,447,118)     $ (4,880,232)
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Net basic and diluted loss per share              $ (0.14)          $ (0.15)
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Weighted average number of outstanding
 shares                                        32,194,566        32,179,400
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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)
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                                                2,245,563         5,724,015
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                                               (1,980,045)          932,072
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Cash flows from financing activities:
  Issuance of common shares                             -             6,030
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                                                        -             6,030
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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
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                                                  757,392         3,624,309
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Net (decrease) increase in cash                (1,222,653)        4,562,411
Cash, beginning of year                         6,228,340         1,665,929
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Cash, end of year                             $ 5,005,687       $ 6,228,340
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