Oncothyreon third quarter net income increases to $9.9 million

Oncothyreon Inc. (NASDAQ: ONTY) today reported financial results for the third quarter ending September 30, 2011.

Net loss from operations increased to $6.4 million in the third quarter of 2011 from $4.3 million in the third quarter of 2010, and to $18.1 million for the nine months ended September 30, 2011 compared to $14.5 million for the comparable period in 2010. This increase in net loss from operations for the three and nine months ended September 30, 2011 compared to prior year periods was primarily the result of increased research and development expenses offset in part by a decrease in general and administrative expenses.

Research and development expenses increased to $5.4 million in the third quarter of 2011 from $2.7 million in the third quarter of 2010, and to $13.8 million for the first nine months of 2011 from $8.1 million for the first nine months of 2010, reflecting increased development activity for Oncothyreon's product candidates, PX-866 and ONT-10, and the upfront license payment to the Sanford Burnham Medical Research Institute for the in-licensing of an anti-Bcl-2 preclinical compound, which was announced in September 2011. General and administrative expenses decreased to $1.1 million in the third quarter of 2011 from $1.7 million in the third quarter of 2010, and to $4.5 million for the first nine months of 2011 from $6.4 million for the first nine months of 2010. The decrease in general and administrative expenses for the nine month period was primarily the result of a decrease in legal, accounting and consulting expenses related to regulatory compliance relative to the prior period.

Net income for the three months ended September 30, 2011 was $9.9 million, or $0.24 per basic share and $0.22 per diluted share, compared with a net loss of $4.4 million, or $0.17 per basic and diluted share, for the comparable period in 2010. Oncothyreon also reported a net loss of $31.2 million, or $0.85 per basic and diluted share, for the nine months ended September 30, 2011, compared with a net loss of $9.5 million, or $0.37 per basic and diluted share, for the nine months ended September 30, 2010.  The increase in net income for the three months ended September 30, 2011 compared to the prior year period was primarily attributable to non-cash income as a result of the change in fair value of warrant liability offset by increases in research and development expenses and decreases in general and administrative expenses.  The increase in net loss for the nine months ended September 30, 2011 compared to the prior year period was primarily attributable to a non-cash expense as a result of the change in fair value of warrant liability partially offset by increases in research and development expenses and decreases in general and administrative expenses.

As of September 30, 2011, Oncothyreon's cash, cash equivalents, short-term investments and long-term investments were $62.2 million, compared to $28.9 million as of December 31, 2010. The $33.3 million increase was primarily attributable to the closing of an underwritten public offering completed on May 4, 2011 of 11,500,000 shares of Oncothyreon common stock for net proceeds of $43.1 million, and to the $5.0 million in funding from the initial term loan with General Electric Capital Corporation. This increase was offset by $16.6 million cash used in operations and capital expenditures during the nine months ending September 30, 2011.

Financial Guidance

Oncothyreon believes the following financial guidance to be correct as of the date provided. Oncothyreon is providing this guidance as a convenience to investors and assumes no obligation to update it.

Expenses in 2011 are expected to be higher when compared to 2010, primarily as a result of the more advanced clinical development of PX-866, IND-enabling development activities for ONT-10 and the in-license of an anti-Bcl-2 preclinical compound from the Sanford Burnham Medical Research Institute. Oncothyreon currently expects cash used in operations in 2011 to be approximately $23.0 million. Oncothyreon estimates that its existing cash will be sufficient to fund operations for at least the next 12 months.