MONTREAL - Thallion Pharmaceuticals Inc. (TSXV:TLN) has lost future financial backing from a partner and will now reduce activities while conducting a strategic review that could lead to a sale of the biotechnology company or other transactions.
The announcement Wednesday follows the termination of a research and development agreement with LFB Biotechnologies, which had been a partner in Thallion's Shigamabs program.
Shigamabs is being evaluated as a treatment for certain types of food-borne E. coli bacterial infections that pose health hazards, especially for young children and elderly adults.
LFB has agreed to give up its rights to the data and other know-how from the joint research program and will pay outstanding manufacturing costs and remaining costs associated with a clinical study.
However, LFB will cease to make future quarterly payments to Thallion.
Thallion says the strategic review will consider whether to continue as an independent company or if it would be better to be sold or merged.
In the meantime, the company said, Thallion will complete a one-year patient followup and close out the Shigatec Phase 2 trial over the next three months. Other spending on the program will be temporarily suspended.
Based on Thallion's closing stock price on Tuesday, it had a total market value of less than $3.4 million. The stock closed at 10.5 cents and has traded no higher than 20 cents in the past year.
"With more than $10 million in capital, limited liabilities and a clean balance sheet, we believe Thallion's intrinsic value continues to far exceed its current market capitalization," CEO Allan Mandelzys said.
"With the help of our advisers and the support of our board, we are hopeful in leveraging our cash, management team and clinical development expertise to generate the best value-creating opportunities available for the benefit of all our shareholders."
Mandelzys said Thallion was disappointed by LFB's withdrawal but that it was understandable "in these challenging economic times."
Guillaume Bologna, executive vice-president of LFB Biotechnologies for development & business development, said Thallion has been an excellent partner and Shigamabs has potential but "an internal pipeline prioritization necessitated a reallocation of our resources."