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Thallion Announces 2012 Fourth Quarter and Year End Operating Results


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© Marketwire 2013
2013-02-20 23:03:42 -

MONTREAL, QUEBEC -- (Marketwire) -- 02/20/13 -- Thallion Pharmaceuticals Inc. (TSX VENTURE:TLN) today announced its operational and financial results for the three-month and twelve-month periods ended November 30, 2012.


"This is a transformative period for Thallion as we explore new strategic opportunities that could benefit from our experienced team and our strong cash position and balance sheet," said Dr. Allan Mandelzys, Chief Executive Officer of Thallion Pharmaceuticals Inc. "The Special Committee of the Board is working closely with our external advisors to help identify and evaluate potential corporate opportunities, and to maximize the full value of our assets for the benefit of all shareholders."


Operational Highlights


--  Terminated the development and license agreement related to the
    Shigamabsr program with LFB Biotechnologies, subsequent to year end. 
--  Established a Special Committee comprised of independent directors of
    the Board to conduct both a strategic review of the Company and to
    identify and evaluate potential corporate opportunities, subsequent to
    year end. The Special Committee has engaged an investment bank to assist
    them in this process. 
--  Received positive binding Final Award from the International Chamber of
    Commerce International Court of Arbitration, concluding that all claims
    for damages by TLN-232 licensor, Expergen GmbH Drug Development, have
    been rejected, subsequent to year end. 
--  Voluntarily delisted from the Toronto Stock Exchange and commenced
    trading of its common shares on the TSX Venture Exchange on December 12,
    2012, under the symbol "TLN". 
--  Announced the sale of Caprion Proteomics Inc, including Thallion's
    equity stake in the business, resulting in immediate cash proceeds of
    approximately $3.9 million, with the potential for future consideration
    of approximately $0.6 million, currently held in escrow. 
--  Completed the core study of the SHIGATEC Phase II trial and announced
    that the primary endpoint of safety and tolerability had been met. 



Financial Highlights


Collaboration and licensing revenues for the three-month and twelve-month periods ended November 30, 2012, were $31,356 and $1,414,692 respectively, compared to $578,177 and $3,205,428 for the corresponding periods in 2011. The decreases in revenues are primarily due to the anticipated decline in research and development expenses related to clinical development of Shigamabs®.


Research and development (R&D) expenses before tax credits for the three-month and twelve-month periods ended November 30, 2012 were $337,121 and $2,707,943, respectively. This represents a 79% decrease in R&D costs from $1,569,263 in the three-month period ended November 30, 2011, and a 44% decrease in R&D costs from $4,872,869 in the twelve-month period ended November 30, 2011. These decreases are primarily the result of the anticipated reduction in the SHIGATEC clinical trial expenditures as the majority of patient recruitment had been completed by January 2012 and the lower costs associated with the extension phase relative to the core phase of the study.


General and administrative (G&A) expenses for the three-month and twelve-month periods ended November 30, 2012 were $347,134 and $2,143,804, respectively, compared with $691,863 and $2,594,773 for the corresponding periods in 2011. These decreases are primarily the result of reversing the $276,404 balance of provision for litigation, as well as reduced legal fees for corporate related activities and ongoing cost reduction efforts.



The Company recorded a net loss of $513,771 or $0.02 per share in the fourth quarter of 2012 and net earnings of $1,649,545 or $0.05 per share in the twelve-month period ended November 30, 2012, primarily as a result of the $4,460,729 one-time gain recorded on the disposal of the Company's equity investment in Caprion Proteomics Inc.


Excluding this one-time gain, the Company recorded an adjusted net loss of $2,811,184 or $0.09 per share in 2012, compared with a net loss of $4,032,492 or $0.13 per share in 2011, reflecting a decrease of $1,221,008 or 30% year-over-year. This improvement in net loss is mainly attributable to reduced R&D expenditures based on completion of the core Phase II SHIGATEC study in January 2012, lower G&A expenditures and higher foreign exchange gains recognized in 2012 as a result of changes in the fair value of foreign exchange forward contracts, partially offset by the lower collaboration and licensing revenues.


As at November 30, 2012, the Company's unrestricted cash position amounted to $10,360,808, which consists of cash and short-term investments. The Company's liquidity availability amounted to $10,684,122 as at November 30, 2012, compared with $8,533,803 on November 30, 2011. Furthermore, the Company's working capital amounted to $10,705,174 as at November 30, 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 from the sale of the Company's equity investment in Caprion Proteomics Inc. in July 2012 as well as the Shigamabs® development funding received from LFB, partially offset by the reduction of current liabilities and the use of cash related to operations in 2012. The Company believes that its cash position will be sufficient to finance its reduced research and development expenditures, operations and capital requirements for at least the next twelve months.


As of February 20, 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 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, risks relating to the development of the Shigamabs® clinical program and 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:


THALLION PHARMACEUTICALS INC.                                               
Consolidated Statements of Financial Position                               
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   November 30,  November 30,   December 1, 
                                           2012          2011          2010 
----------------------------------------------------------------------------
                                                                            
Assets                                                                      
Current assets:                                                             
  Cash                            $   7,236,228 $   5,005,687 $   6,228,340 
  Short-term investments              3,124,580     3,284,428     4,026,441 
  Foreign exchange forward                                                  
   contracts                             13,275       103,445       175,082 
  Sales tax receivable and other                                            
   assets                                28,650        10,270       120,801 
  Tax credits receivable                323,314       243,688       434,066 
  Receivable from Premium Brands                                            
   Holdings Corporation                       -             -       292,249 
  Balance of sale receivable            605,675             -             - 
  Deposits and prepaid expenses         153,553       233,774       436,043 
----------------------------------------------------------------------------
                                     11,485,275     8,881,292    11,713,022 
                                                                            
Restricted cash                       1,000,000     1,000,000     1,000,000 
Property and equipment                   36,306        42,269        55,204 
----------------------------------------------------------------------------
                                      1,036,306     1,042,269     1,055,204 
                                                                            
----------------------------------------------------------------------------
                                  $  12,521,581 $   9,923,561 $  12,768,226 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities and Equity                                                      
Current liabilities:                                                        
  Trade and other payables        $     780,101 $   2,210,613 $   3,037,971 
  Provisions                                  -       332,986       789,132 
----------------------------------------------------------------------------
                                        780,101     2,543,599     3,827,103 
                                                                            
Deferred revenues                     9,656,256     7,001,794     4,610,503 
                                                                            
Equity:                                                                     
  Share capital                     115,512,823   115,512,823   115,512,823 
  Warrants                            1,375,000     1,375,000     1,375,000 
  Contributed surplus                20,367,972    20,310,461    20,230,421 
  Deficit                          (135,170,571) (136,820,116) (132,787,624)
----------------------------------------------------------------------------
  Equity attributable to equity                                             
   holders of the Company             2,085,224       378,168     4,330,620 
                                                                            
----------------------------------------------------------------------------
                                  $  12,521,581 $   9,923,561 $  12,768,226 
----------------------------------------------------------------------------
                                                                            
                                                                            
THALLION PHARMACEUTICALS INC.                                               
Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)  
Years ended November 30, 2012 and 2011                                      
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                 November 30,  November 30, 
                                                         2012          2011 
----------------------------------------------------------------------------
Revenues                                                                    
                                                                            
Collaboration and licensing revenues            $   1,414,692 $   3,205,428 
                                                                            
----------------------------------------------------------------------------
                                                                            
Expenses                                                                    
                                                                            
  Research and development                          2,707,943     4,872,869 
  Tax credits                                        (400,194)     (315,381)
                                                ----------------------------
                                                    2,307,749     4,557,488 
                                                                            
  General and administrative                        2,143,804     2,594,773 
                                                                            
  Write-off of asset held for sale and                                      
   subsequent reversal                                                      
  of impairment loss                                  (25,331)       63,575 
                                                                            
  Finance (income) costs                                                    
  Interest income                                     (61,349)      (57,912)
  Foreign exchange loss (gain)                        103,382       (20,380)
  Changes in fair value of foreign exchange                                 
   forward contracts                                 (242,379)      100,376 
                                                                            
----------------------------------------------------------------------------
                                                    4,225,876     7,237,920 
                                                                            
----------------------------------------------------------------------------
Net operating loss before the following item       (2,811,184)   (4,032,492)
                                                                            
Gain on disposal of investment in Caprion                                   
 Proteomics Inc.                                    4,460,729             - 
                                                                            
----------------------------------------------------------------------------
                                                                            
Net earnings (loss) and comprehensive income                                
 (loss) attributable to equity holders of the                               
 Company                                        $   1,649,545 $  (4,032,492)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Basic and diluted earnings (loss) per share     $        0.05 $       (0.13)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Weighted average number of outstanding shares      32,194,566    32,194,566 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
THALLION PHARMACEUTICALS INC.                                               
Consolidated Statements of Cash Flows                                       
Years ended November 30, 2012 and 2011                                      
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                 November 30,  November 30, 
                                                         2012          2011 
----------------------------------------------------------------------------
Cash flows used in operating activities:                                    
Net earnings (loss)                             $   1,649,545 $  (4,032,492)
Adjustments for:                                                            
  Depreciation                                         14,242        20,453 
  Interest income                                     (61,349)      (57,912)
  Interest received                                    63,437        39,244 
  Gain on disposal of property and equipment                -       (22,897)
  Gain on disposal of investment in Caprion                                 
   Proteomics Inc.                                 (4,460,729)            - 
  Write-off of asset held for sale and                                      
   subsequent reversal of impairment loss             (25,331)       63,575 
  Effect of exchange rate fluctuations on cash                              
   held                                               208,877        18,538 
  Reversal of provisions                             (276,404)              
  Decrease in fair value of open foreign                                    
   exchange                                                                 
  forward contracts                                    90,170        71,637 
  Stock-based compensation                             57,511        80,040 
----------------------------------------------------------------------------
                                                   (2,740,031)   (3,819,814)
Changes in operating assets and liabilities:                                
  Sales tax receivable and other assets               (20,468)       65,624 
  Tax credits receivable                              (79,626)      190,378 
  Balance of sale receivable                           (4,606)            - 
  Receivable from Premium Brands Holdings                                   
   Corporation                                              -       292,249 
  Deposits and prepaid expenses                        80,221       202,269 
  Trade and other payables                         (1,430,512)     (827,358)
  Provisions                                          (56,582)     (456,146)
  Deferred revenues                                 2,654,462     2,391,291 
----------------------------------------------------------------------------
                                                    1,142,889     1,858,307 
----------------------------------------------------------------------------
                                                   (1,597,142)   (1,961,507)
----------------------------------------------------------------------------
                                                                            
Cash flows from investing activities:                                       
  Proceeds from disposal of investment in                                   
   Caprion Proteomics Inc.                          3,859,660             - 
  Acquisition of short-term investments            (2,040,152)   (2,049,949)
  Proceeds from disposal/maturity of short-term                             
   investments                                      2,200,000     2,791,962 
  Additions to property and equipment                  (8,279)       (7,518)
  Proceeds from disposal of property and                                    
   equipment                                           25,331        22,897 
----------------------------------------------------------------------------
                                                    4,036,560       757,392 
----------------------------------------------------------------------------
                                                                            
Net increase (decrease) in cash                     2,439,418    (1,204,115)
Cash, beginning of the year                         5,005,687     6,228,340 
Effect of exchange rate fluctuations on cash                                
 held                                                (208,877)      (18,538)
----------------------------------------------------------------------------
Cash, end of the year                           $   7,236,228 $   5,005,687 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.


Contacts:

Thallion Pharmaceuticals Inc.

Michael Singer

Chief Financial Officer

(514) 940-3610

(514) 336-2343 (FAX)
info@thallion.com :

www.thallion.com

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