Thallion Pharmaceuticals Inc. (TSX:TLN) today announced its operational and
financial results for the three-month and twelve-month periods ended November
30, 2009.
Operational Highlights
- Signed a definitive development and commercialization agreement with LFB
Biotechnologies ("LFB") for Shigamabs(R), subsequent to the end of the
quarter, under which Thallion is eligible to receive up to EUR95 million
(approximately C$150 million) from LFB. The funding includes an up-front
licensing fee of EUR1.5 million (approximately C$2.3 million), funding for
substantially all future clinical development costs, as well as
milestone payments. The agreement grants LFB an exclusive license for the
commercial rights to Shigamabs(R) in Europe, South America and other
territories of strategic interest to LFB, including Russia, Turkey, China,
South Korea and Northern African countries, while Thallion retained the
rights for North America and the rest of world. Thallion is eligible to
receive tiered, double digit royalties based on product sales.
- Sold its subordinated promissory note in Caprion Proteomics Inc.
("Caprion") back to Caprion for an immediate cash payment of $1.85
million, while retaining the Company's approximate 15 percent equity
interest in Caprion.
- Appointed Dr. Allan Mandelzys to the position of Chief Executive Officer
and as a member of the Board of Directors. Furthermore, after resigning
from his position as Chief Executive Officer, Lloyd M. Segal was appointed
as Executive Chairman of the Board of Directors, subsequent to the end of
the quarter.
- Completed a review of strategic alternatives, conducted by a Special
Committee of independent Directors of the Board, with the completion of a
corporate reorganization and non-dilutive capital transaction for gross
proceeds to Thallion of $8.85 million under a court supervised Plan of
Arrangement.
- Discontinued its Phase II trial evaluating TLN-4601 as a treatment for
glioblastoma multiforme ("GBM") due to a lack of measurable efficacy after
analysis of the interim data.
- Suspended its Phase II trial evaluating TLN-232 as a treatment for
metastatic melanoma due to an ongoing dispute with the licensor.
"Thallion is now clearly focused on advancing the clinical development of our
treatment for E. coli infections, Shigamabs(R), in collaboration with our
development and commercialization partner, LFB Biotechnologies. Together with
LFB, we intend to immediately initiate activities to prepare for the launch of
the Phase II Shigamabs(R) study in South America in the second half of 2010,"
said Dr. Allan Mandelzys, Chief Executive Officer of Thallion Pharmaceuticals
Inc. "The activities and decisions made during 2009 served to strengthen our
balance sheet and reduce our ongoing expenditures. With the Shigamabs(R)
agreement now in place, under which LFB has agreed to fund substantially all
future development costs, we have sufficient capital through to the potential
commercialization of Shigamabs(R) based on our existing strategic plans."
Financial Highlights
Interest revenues for the three-month period ended November 30, 2009 were $8,221
compared with $94,474 for the corresponding period in 2008. Interest revenues
for the twelve-month period ended November 30, 2009 were $78,247 compared with
$658,109 for the same period last year. These decreases resulted from lower
yields earned on cash investments in addition to the maturity of cash
equivalents and short-term investments used to fund the Company's operations
throughout the periods.
Research and development (R&D) expenses for the three-month period ended
November 30, 2009 were $946,910 compared with $1,879,421 for the three-month
period ended November 30, 2008. Research and development expenses for the
twelve-month period ended November 30, 2009 were $6,452,562 compared with
$9,504,964 for the corresponding period in 2008. The decreases are primarily due
to the suspension of the TLN-232 Phase II trial and the suspension, and
subsequent discontinuation, of the TLN-4601 Phase II trial each of which
occurred in the second half of 2009. The remaining variance is primarily the
result of the reduction of fifteen research and development employees in 2009
and reduced research and development operating costs in 2009 compared to 2008 as
the Company completed the final operational integration of two operating
facilities at the end of the second quarter of 2008.
General and administrative (G&A) expenses for the three-month period ended
November 30, 2009 were $969,897 compared with $1,045,173 for the corresponding
period last year. General and administrative expenses for the twelve-month
period ended November 30, 2009 were $4,185,161 compared with $4,440,896 for the
corresponding period last year. These decreases are primarily the result of
reduced stock-based compensation expenses attributed to the vesting and
cancellation of the Company's stock options pursuant to the July 2009
Arrangement. A stock-based compensation expense of $1,067,062 related to the
July 2009 Arrangement has been recorded as a non-recurring item during the year.
The loss before non-recurring items for the three-month period ended November
30, 2009 was $2,160,577 compared to $2,402,399 for the three-month period ended
November 30, 2008. The loss before non-recurring items for the twelve-month
period ended November 30, 2009 was $10,356,373 compared to $12,534,411 for the
corresponding period in 2008. The changes in loss before non-recurring items are
primarily due to reductions in R&D and G&A expenses.
Non-recurring items for the year ended November 30, 2009 included lease exit
costs of $1,833,448 in addition to recording $1,948,243 of lease exit costs for
the comparative period in 2008. The Company had been maintaining two operating
facilities following the March 14, 2007 amalgamation of Ecopia Biosciences Inc.
and Caprion Pharmaceuticals Inc., one of which had become redundant as a result
of the final operational integration that was completed at the end of the second
quarter of 2008. On December 14, 2009, the Company signed a binding lease
settlement agreement with its landlord to terminate the remaining portion of the
lease in consideration of a $1,150,000 termination payment. Furthermore, in the
fourth quarter of 2009, certain restructuring initiatives were undertaken by the
Company resulting in a portion of the research headquarters becoming redundant
and no longer being of use.
Non-recurring items for the year ended November 30, 2009 also included
$1,067,062 in non- recurring stock-based compensation expense attributable to
the vesting and cancellation of stock options pursuant to the July 2009
Arrangement, a gain on settlement of note receivable from Caprion Proteomics
Inc. of $1,835,000 and the write-off of $2,526,422 of capital assets as a result
of certain restructuring initiatives.
Net loss for the three-month period ended November 30, 2009 was $4,685,447 or
$0.15 per share, compared to $2,622,092 or $0.08 per share for the three-month
period ended November 30, 2008. The increase is mainly attributable to lease
exit costs and the write-off of capital assets, partially offset by the gain on
settlement of the Company's note receivable and reductions in R&D and G&A
expenses.
Net loss for the year ended November 30, 2009 was $13,948,305 or $0.43 per share
per share, compared to $15,107,960 or $0.47 per share for the year ended
November 30, 2008. The decrease in net loss is mainly attributable to the gain
on settlement of the Company's note receivable and reductions in R&D and G&A
expenses, partially offset by the write-off of capital assets, lease exit costs
and stock-based compensation expenses.
As at November 30, 2009, the Company's cash position amounted to $7,576,488,
which consists of cash and cash equivalents and short-term investments. A
receivable from Premium Brands Holdings Corporation pursuant to the July 2009
Arrangement relating to fiscal 2009 Revenue Quebec tax credits remaining in Old
Thallion amounted to $337,801 and tax credits receivable from Revenue Quebec
amounted to $1,159,268. Consequently, the Company's liquidity availability
amounted to $9,073,557 compared with $13,557,838 on November 30, 2008. The
decrease in liquidity is primarily due to cash expenses relating to operations
during 2009 offset by $5,535,101 in net unrestricted cash received from Premium
Brands Income Fund pursuant to the July 2009 Arrangement.
Subsequent to the end of the quarter, Thallion sold its subordinated promissory
note in Caprion for an immediate cash payment of $1,850,000 and received the
up-front licensing fee of EUR1.5 million (approximately C$2.3 million) from LFB
related to the Shigamabs(R) agreement.
As at February 23, 2010, the Company had 32,155,816 common shares outstanding.
The number of options and warrants outstanding at February 23, 2010, were
2,492,425 and 9,530,000 respectively.
Outlook
- The Company, together with its partner LFB, intend to submit an amended
protocol to select South American regulatory agencies to initiate a
Phase II study evaluating Shigamabs(R) as a treatment for Shiga toxin-
producing E. coli, or STEC, infections. The amended protocol will be
based on a clinical protocol previously approved by both the Argentinean
and Chilean authorities.
- Thallion and LFB intend to initiate the Phase II Shigamabs(R) clinical
study in South America in the second half of 2010, coinciding with the
start of the high incidence season for STEC infection in the Southern
hemisphere.
Notice of Conference Call
Thallion will hold a conference call today, February 23, 2010, at 4:30 p.m. ET
hosted by Dr. Allan Mandelzys, Chief Executive Officer and Mr. Michael Singer,
Chief Financial Officer to discuss the Company's financial results and corporate
developments. To access the conference call by telephone, dial 647-427-7450 or
888-231-8191. To access the telephone replay, dial 416-849-0833 or 800-642-1687
and enter reservation number 58427486. A live audio webcast of the call will be
available at www.thallion.com. The webcast will be archived for 90 days.
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(R) and TLN-4601, a novel
anti-cancer therapy. Shigamabs(R) is a dual antibody product for the treatment
of Shiga toxin producing E. coli bacterial infections which is anticipated to
enter Phase II clinical testing in the second half of 2010. 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, 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, 2009 and 2008
2009 2008
---------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 1,665,929 $ 8,863,383
Short-term investments 5,910,559 3,876,579
Restricted cash 1,590,024 291,962
Sales tax receivable and other 246,768 253,923
Accounts receivable 6,167 88,369
Tax credits receivable 1,159,268 817,876
Receivable from Premium Brands Holdings
Corporation 337,801 -
Receivable from Caprion Proteomics Inc. 1,835,000 -
Deposits and prepaid expenses 465,971 468,011
---------------------------------------------------------------------------
13,217,487 14,660,103
Long-term deposit 100,000 200,000
Restricted cash 1,000,000 -
Capital assets 214,202 3,258,947
---------------------------------------------------------------------------
$ 14,531,689 $ 18,119,050
---------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,482,111 $ 1,935,668
Current portion of lease exit obligations 1,397,494 608,505
---------------------------------------------------------------------------
2,879,605 2,544,173
Long-term portion of lease exit obligations 1,925,531 1,042,769
Shareholders' Equity:
Capital stock 115,502,723 115,502,723
Warrants 9,986,860 9,986,860
Contributed surplus 11,491,077 2,348,592
Deficit (127,254,107) (113,305,802)
Accumulated other comprehensive loss - (265)
---------------------------------------------------------------------------
(127,254,107) (113,306,067)
---------------------------------------------------------------------------
Total shareholders' equity 9,726,553 14,532,108
---------------------------------------------------------------------------
$ 14,531,689 $ 18,119,050
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THALLION PHARMACEUTICALS INC.
Consolidated Statements of Operations
Years ended November 30, 2009 and 2008
2009 2008
--------------------------------------------------------------------------
Revenues
Contract revenues $ - $ 162,547
Interest revenues 78,247 658,109
--------------------------------------------------------------------------
78,247 820,656
Costs and expenses
Research and development 6,452,562 9,504,964
Tax credits (679,193) (1,207,532)
--------------------------------------------------------------------------
5,773,369 8,297,432
General and administrative 4,185,161 4,440,896
Amortization of capital assets 505,939 592,995
Foreign exchange (gain) loss (29,849) 23,744
--------------------------------------------------------------------------
10,434,620 13,355,067
--------------------------------------------------------------------------
Loss before non-recurring items (10,356,373) (12,534,411)
Non-recurring items
Lease exit costs 1,833,448 1,948,243
Stock-based compensation 1,067,062 -
Gain on settlement of note receivable (1,835,000) -
Write-off of capital assets 2,526,422 625,306
--------------------------------------------------------------------------
3,591,932 2,573,549
--------------------------------------------------------------------------
Net loss $ (13,948,305) $ (15,107,960)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net basic and diluted
loss per share $ (0.43) $ (0.47)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted average number
of outstanding shares 32,144,316 32,124,644
--------------------------------------------------------------------------
--------------------------------------------------------------------------
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Comprehensive Loss
Years ended November 30, 2009 and 2008
------------------------------------------------------------------------
2009 2008
------------------------------------------------------------------------
Net loss $ (13,948,305) $ (15,107,960)
Other comprehensive loss
Unrealized gain on available for sale
investments 265 54,360
------------------------------------------------------------------------
Comprehensive loss $ (13,948,040) $ (15,053,600)
------------------------------------------------------------------------
------------------------------------------------------------------------
THALLION PHARMACEUTICALS INC.
Consolidated Statements of Cash Flows
Years ended November 30, 2009 and 2008
2009 2008
---------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (13,948,305) $ (15,107,960)
Adjustments for:
Accretion in carrying value of lease
liability 309,177 143,952
Lease exit costs 1,833,448 1,948,243
Gain on settlement of note receivable (1,835,000) -
Write-off of capital assets 2,526,422 625,306
Amortization of capital assets 505,939 592,995
Loss on disposal of capital assets 9,599 -
Loss on disposal of short-term investments (14,013) 63,670
Stock-based compensation 1,309,322 583,183
---------------------------------------------------------------------------
(9,303,411) (11,150,611)
Changes in operating assets and liabilities:
Sales tax receivable and other 10,075 105,224
Accounts receivable 82,202 (20,209)
Interest receivable (2,920) 292,444
Tax credits receivable (341,392) 1,669,626
Receivable from Premium Brands Holdings
Corporation (337,801) -
Deposits and prepaid expenses 2,040 243,006
Decrease in long-term deposit 100,000 100,000
Accounts payable and accrued liabilities (453,557) (1,203,580)
Payment of lease exit obligations (470,874) (440,921)
---------------------------------------------------------------------------
(1,412,227) 745,590
---------------------------------------------------------------------------
(10,715,638) (10,405,021)
---------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from reorganization 8,850,000 -
Costs of reorganization (1,016,837) -
Redemption of special preferred shares - (1)
---------------------------------------------------------------------------
7,833,163 (1)
---------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of short-term investments (8,846,255) (6,712,821)
Proceeds from disposal of short-term
investments 6,826,553 15,511,017
Restricted cash (2,298,062) -
Additions to capital assets (22,215) (136,705)
Proceeds from disposal of capital assets 25,000 -
---------------------------------------------------------------------------
(4,314,979) 8,661,491
---------------------------------------------------------------------------
Net decrease in cash and cash equivalents (7,197,454) (1,743,531)
Cash and cash equivalents, beginning of year 8,863,383 10,606,914
---------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 1,665,929 $ 8,863,383
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