News Column

Thallion Announces 2013 First Quarter Operating Results

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MONTREAL, QUEBEC -- (Marketwired) -- 04/24/13 -- 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:

THALLION PHARMACEUTICALS INC.Condensed Consolidated Statements of Financial Position(unaudited)-------------------------------------------------------------------------------------------------------------------------------------------------------- February 28, November 30, 2013 2012----------------------------------------------------------------------------AssetsCurrent assets: Cash $ 1,844,989 $ 7,236,228 Short-term investments 7,697,219 3,124,580 Foreign exchange forward contracts - 13,275 Sales tax receivable and other assets 61,542 28,650 Balance of sale receivable 601,306 605,675 Tax credits receivable 401,431 323,314 Deposits and prepaid expenses 51,763 153,553---------------------------------------------------------------------------- 10,658,250 11,485,275Restricted cash 1,000,000 1,000,000Property and equipment 34,584 36,306---------------------------------------------------------------------------- 1,034,584 1,036,306---------------------------------------------------------------------------- $ 11,692,834 $ 12,521,581--------------------------------------------------------------------------------------------------------------------------------------------------------Liabilities and EquityCurrent liabilities: Trade and other payables $ 825,626 $ 780,101Deferred revenues - 9,656,256Equity: Share capital 115,512,823 115,512,823 Warrants 1,375,000 1,375,000 Contributed surplus 20,378,144 20,367,972 Deficit (126,398,759) (135,170,571)----------------------------------------------------------------------------Equity attributable to equity holders of the Company 10,867,208 2,085,224---------------------------------------------------------------------------- $ 11,692,834 $ 12,521,581----------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Condensed Consolidated Statements of Earnings (Loss) and ComprehensiveIncome (Loss)(unaudited)-------------------------------------------------------------------------------------------------------------------------------------------------------- Three-month periods ended -------------------------------- February 28, February 29, 2013 2012----------------------------------------------------------------------------Revenues Collaboration and licensing revenues $ 9,656,256 $ 616,557----------------------------------------------------------------------------Expenses Research and development 470,203 1,028,563 Tax credits (78,117) (94,882) -------------------------------- 392,086 933,681 General and administrative 641,547 613,128 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 contracts 21,675 (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)----------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Condensed Consolidated Statements of Cash Flows(unaudited)-------------------------------------------------------------------------------------------------------------------------------------------------------- Three-month periods ended -------------------------------- February 28, February 29, 2013 2012----------------------------------------------------------------------------Cash flows used in operating activities:Net earnings (loss) $ 8,771,812 $ (835,254)Adjustments for: Depreciation 2,663 3,255 Interest income (17,323) (16,142) Interest received 16,472 19,780 Gain on disposal of property and equipment - (25,331) Effect of exchange rate fluctuations on cash held 918 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 contracts 13,275 (84,375) Stock-based compensation 10,172 9,882---------------------------------------------------------------------------- (880,304) (832,752)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 expenses 21,694 19,119 Trade and other payables 125,621 (491,523) Provisions - (55,224) Deferred revenues - 414,059---------------------------------------------------------------------------- 37,157 (221,787)---------------------------------------------------------------------------- (843,147) (1,054,539)----------------------------------------------------------------------------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 investments 1,984,264 1,000,000 Additions to property and equipment (941) - Proceeds from disposal of property and equipment - 25,331---------------------------------------------------------------------------- (4,547,174) 15,145----------------------------------------------------------------------------Net decrease in cash (5,390,321) (1,039,394)Cash, beginning of period 7,236,228 5,005,687Effect of exchange rate fluctuations on cash held (918) (95,433)----------------------------------------------------------------------------Cash, end of period $ 1,844,989 $ 3,870,860----------------------------------------------------------------------------

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.

Thallion Pharmaceuticals Inc.
Michael Singer
Chief Financial Officer
(514) 940-3600
(514) 336-2343 (FAX)

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