Thallion Pharmaceuticals Inc. (TSX VENTURE:TLN) today announced its operational
and financial results for the 2013 second quarter ended May 31, 2013.
As announced on June 18, 2013, and again on July 10, 2013 following the
execution of an amendment to the Acquisition Agreement (the "Agreement"), BELLUS
Health Inc. (BELLUS Health) has agreed to acquire the Company by way of a court
supervised plan of arrangement (the "Arrangement"). Under the terms of the
amended Agreement, BELLUS Health has offered approximately $6.332 million in
cash, or $0.1765 per share (on a fully-diluted basis), subject to certain
adjustments as described below, and one contingent value right (CVR) per common
share, entitling the holder thereof to: (A) its pro rata share of 100% of any
additional purchase price consideration to be received from Premium Brands
Holding Corp. in 2016 (which could generate up to approximately $1.45 million)
(or $0.0404 per CVR), (B) its pro rata share of 5% of the Shigamabs(R) revenue
generated or received by BELLUS Health, including from any sale or other use of
the Shigamabs(R) technology, capped at $6.5 million (or $0.1812 per CVR), and
(C) its pro rata share of 100% of any net proceeds generated from the licensing,
selling or otherwise commercializing of (i) diagnostic products or services
using certain Caprion Proteomics Inc. products, and (ii) all issued patents or
pending patents pertaining to such Caprion Proteomics Inc. products, in respect
of which Thallion has an ownership interest or monetary entitlement. An annual
and special meeting of Thallion shareholders to consider and approve the
Arrangement is scheduled for 10 am on August 6, 2013.
"With the help of our financial advisors and the support of our board, we
concluded that the proposed transaction with BELLUS Health would generate the
best value for our shareholders and offer a compelling opportunity for the
future development of Shigamabs(R)," said Dr. Allan Mandelzys, Chief Executive
Officer of Thallion. "The up-front cash payment that our shareholders will
receive under the Arrangement along with the possibility for future
consideration under the terms of the amended CVRs, demonstrate not only the
current value, but the potential added value to be realized from this
transaction."
Financial Highlights
Collaboration and licensing revenues for the three-month and six-month periods
ended May 31, 2013, were nil and $9,656,256 respectively, compared to $532,036
and $1,148,593 for the three-month and six-month periods ended May 31, 2012.
Pursuant to the early termination of the development and license agreement with
LFB Biotechnologies ("LFB") in February 2013, the Company will not receive any
further payments under this agreement and consequently, the deferred revenue
balance of $9,656,256 was recognized as collaboration and licensing revenues in
the first quarter of 2013.
Research and development (R&D) expenses before tax credits for the three-month
and six-month periods ended May 31, 2013 were $662,306 and $1,132,509
respectively, compared to $895,470 and $1,924,033 for the three-month and
six-month periods ended May 31, 2012. This reflects a decrease in costs of
$233,164 or 26% in the three-month period ended May 31, 2013, and a decrease in
costs of $791,524 or 41% in the six-month period ended May 31, 2013. These
decreases are the result of reduced clinical trial expenses, reduced
manufacturing costs and overall cost reductions, offset by net employee
severance and termination costs related to the Company's corporate
restructuring.
General and administrative (G&A) expenses for the three-month and six-month
periods ended May 31, 2013 were $517,423 and $1,158,970 respectively, compared
to $626,731 and $1,239,859 for the same periods in 2012. These decreases are
primarily due to the reversal of bonus provisions for executives and overall
cost reductions, offset by net employee severance and termination costs related
to corporate restructuring.
The Company recorded a net loss of $1,098,472 or $0.03 per share in the
three-month period ended May 31, 201 3, compared with $723,971 or $0.02 per
share in the corresponding period in 2012. For the six-month period ended May
31, 2013, the Company recorded net earnings of $7,673,340 or $0.24 per share,
compared to a net loss of $1,559,225 or $0.05 per share for the same period last
year. This increase in net earnings in the first half of 2013 is largely
attributable to the recognition of $9,656,256 in collaboration and licensing
revenues as a result of the previously mentioned early termination of the
development and license agreement with LFB.
As at May 31, 2013, the Company's unrestricted cash position amounted to
$9,062,707, which consists of cash and short-term investments. The Company's
liquidity availability amounted to $10,276,558 compared with $11,289,797 on
November 30, 2012. The decrease in liquidity is primarily due to the use of cash
related to operations in addition to employee severance and termination payments
made during the six month period ended May 31, 2013. 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 July 25, 2013, the Company had 32,194,566 common shares outstanding and a
total of 3,676,450 stock options remain outstanding.
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(R) 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 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 the
Arrangement, the results expected to be achieved from the successful completion
of the Arrangement and the ability to obtain all required approvals and consents
and otherwise satisfy all other conditions to complete the Arrangement. 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.
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.
Financial results included below:
THALLION PHARMACEUTICALS INC.
Condensed Consolidated Statements of Financial Position
(unaudited)
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May 31, November 30,
2013 2012
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Assets
Current assets:
Cash $ 1,418,733 $ 7,236,228
Short-term investments 7,643,974 3,124,580
Foreign exchange forward contracts - 13,275
Sales tax receivable and other assets 63,731 28,650
Balance of sale receivable 595,903 605,675
Tax credits receivable 467,351 323,314
Deposits and prepaid expenses 57,222 153,553
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10,246,914 11,485,275
Restricted cash - 1,000,000
Property and equipment 29,650 36,306
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29,650 1,036,306
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$ 10,276,564 $ 12,521,581
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Liabilities and Equity
Current liabilities:
Trade and other payables $ 293,490 $ 780,101
Provision for employee terminations 207,267 -
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500,757 780,101
Deferred revenues - 9,656,256
Equity:
Share capital 115,512,823 115,512,823
Warrants 1,375,000 1,375,000
Contributed surplus 20,385,215 20,367,972
Deficit (127,497,231) (135,170,571)
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Equity attributable to equity holders of
the Company 9,775,807 2,085,224
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$ 10,276,564 $ 12,521,581
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THALLION PHARMACEUTICALS INC.
Condensed Consolidated Statements of (Loss) Earnings and Comprehensive
(Loss) Income
(unaudited)
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Three-month periods ended Six-month periods ended
----------------------------------------------------
May 31, May 31, May 31, May 31,
2013 2012 2013 2012
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Revenues
Collaboration and
licensing revenues $ - $ 532,036 $ 9,656,256 $ 1,148,593
----------------------------------------------------------------------------
Expenses
Research and
development 662,306 895,470 1,132,509 1,924,033
Tax credits (65,920) (95,715) (144,037) (190,597)
----------------------------------------------------
596,386 799,755 988,472 1,733,436
General and
administrative 517,423 626,731 1,158,970 1,239,859
Finance (income) costs
Interest income (23,329) (15,597) (40,652) (31,739)
Foreign exchange
loss (gain) 7,992 (54,344) (145,549) (5,234)
Changes in fair
value of foreign
exchange forward
contracts - (100,538) 21,675 (228,504)
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1,098,472 1,256,007 1,982,916 2,707,818
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Net (loss) earnings and
comprehensive (loss)
income attributable to
equity holders of the
Company $ (1,098,472) $ (723,971) $ 7,673,340 $ (1,559,225)
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Basic and diluted (loss)
earnings per share $ (0.03) $ (0.02) $ 0.24 $ (0.05)
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Weighted average number
of outstanding shares 32,194,566 32,194,566 32,194,566 32,194,566
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THALLION PHARMACEUTICALS INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
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Six-month periods ended
--------------------------------
May 31, May 31,
2013 2012
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Cash flows used in operating activities:
Net earnings (loss) $ 7,492,047 $ (1,559,225)
Adjustments for:
Depreciation 5,472 6,678
Interest income (40,652) (31,739)
Interest received 32,186 31,898
Loss (gain) on disposal of property and
equipment 2,125 (25,331)
Effect of exchange rate fluctuations on
cash held (8,062) 20,517
Effect of exchange rate fluctuations on
balance of sale receivable 9,772 -
Recognition of deferred revenues (9,656,256) -
Decrease (increase) in fair value of open
foreign exchange forward contracts 13,275 (122,231)
Stock-based compensation 17,243 26,289
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(2,132,850) (1,653,144)
Changes in operating assets and liabilities:
Sales tax receivable and other assets (26,609) (776)
Tax credits receivable (144,037) (190,597)
Deposits and prepaid expenses 96,331 26,645
Trade and other payables (305,324) (707,581)
Provision for employee termination 207,267 (55,224)
Deferred revenues - 917,636
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(172,372) (9,897)
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(2,305,222) (1,663,041)
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Cash flows (used in) from investing
activities:
Acquisition of short-term investments (11,571,382) (1,020,332)
Proceeds from disposal/maturity of short-
term investments 7,051,988 1,000,000
Restricted cash 1,000,000 -
Additions to property and equipment (941) (1,003)
Proceeds from disposal of property and
equipment - 25,331
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(3,520,335) 3,996
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Net decrease in cash (5,825,557) (1,659,045)
Cash, beginning of period 7,236,228 5,005,687
Effect of exchange rate fluctuations on cash
held 8,062 (20,517)
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Cash, end of period $ 1,418,733 $ 3,326,125
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FOR FURTHER INFORMATION PLEASE CONTACT:
Michael Singer
Chief Financial Officer
(514) 940-3600
(514) 336-2343 (FAX)
info@thallion.com
www.thallion.com
Thallion Pharmaceuticals (TSXV:TLN)
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