Highlights

- Received authorization from the Therapeutic Products Directorate (TPD) of Health Canada to initiate a Phase II clinical trial of TLN-232, subsequent to the end of the quarter. The trial will evaluate TLN-232 as a monotherapy treatment for metastatic melanoma in patients that have failed at least one prior therapy.

- Also received authorization from the TPD of Health Canada to initiate a Phase II clinical trial of TLN-4601. The trial will evaluate TLN-4601 as a monotherapy treatment for patients with glioblastoma multiforme (GBM), an advanced form of brain cancer, as a second line therapy.

- Announced the deferral for initiation of the Shigamabs® Phase II/III multinational clinical trial.

- The Board of Directors has approved the nomination of two new members, Claude C. Bismuth, M.B.A., F.C.A. and Halvor Jaeger, M.D., F.C.P., who joined the Board effective July 10, 2008. Mr. Bismuth is a former Senior Life Sciences Partner at Ernst & Young and has also agreed to serve as a member of Thallion's Audit Committee. Dr. Jaeger is the Chief Executive Officer of Akela Pharma Inc. (TSX: AKL), a drug development company focused on developing therapies for the inhalation and pain markets.

- Expanded U.S. patent coverage on TLN-4601 having claims to methods of treating a broad range of solid and hematopoietic cancer conditions.

"We have now successfully advanced each of our two oncology candidates, TLN-4601 and TLN-232, into Phase II clinical trials for our chosen first indications. Each of our candidates has already demonstrated a clinical response in multiple cancer indications and work on targets that are gaining increased attention within the oncology field. As we advance these two trials we believe that each candidate represents an attractive licensing asset to potential partners. In the meantime, we will continue to set clear milestones and work to achieve them on schedule in order to advance our pipeline and further strengthen the confidence of our existing investors," said Lloyd M. Segal, Chief Executive Officer of Thallion Pharmaceuticals Inc. "We continue to engage potential partners that could support the development and commercialization of Shigamabs®. Obtaining the appropriate partner, or regional partners, is critical in order to offset the costs of a multinational pivotal trial in the current capital climate, as well as to provide the necessary point-of-care distribution that a successful Shigatoxin-producing bacterial infection therapy would require."

Financial Highlights

Total revenues for the three-month period ended May 31, 2008 were $176,754 compared with $1,731,093 for the corresponding period in 2007. Total revenues from the 2007 period included contract revenues related to Thallion's proteomics business which was sold on July 10, 2007 and as such, no longer formed part of the Company's revenues as of that date forward. Total revenues for the three-month period ended May 31, 2008 consisted entirely of interest revenues, compared with interest revenues of $295,493 during the same period in 2007. Contract and other revenues in the three-month period ended May 31, 2008 were nil compared with $1,435,600 for the same period last year.

Total revenues for the six-month period ended May 31, 2008 were $436,188 compared with $1,752,175 for the same period in 2007. Total revenues from the 2007 period included contract revenues related to Thallion's proteomics business which was sold on July 10, 2007 and as such, no longer formed part of the Company's revenues as of that date forward. Total revenues for the six-month period ended May 31, 2008 consisted entirely of interest revenue compared with $316,575 in interest revenues in the same period last year. Contract and other revenues in the six-month period ended May 31, 2008 were nil compared with $1,435,600 for the same period last year.

Research and development expenses before tax credits for the three-month period ended May 31, 2008 were $2,687,452 (including approximately $320,000 of external costs pertaining to Shigamabs®) compared with $3,904,575 for the three-month period ended May 31, 2007 (including approximately $235,000 of external costs pertaining to Shigamabs®). The change in research and development expenses before tax credits is a result of $1,335,483 of expenses during the three-month period ended May 31, 2007 related to the Company's proteomics business which was sold on July 10, 2007 and as such, no longer formed part of the Company's research and development expenses as of that date forward.

Research and development expenses before tax credits for the six-month period ended May 31, 2008 were $5,657,331 (including approximately $1,218,000 of external costs pertaining to Shigamabs®) compared with $5,513,332 for the six-month period ended May 31, 2007 (including approximately $235,000 of external costs pertaining to Shigamabs®). The research and development expenses before tax credits during the six-month period ended May 31, 2008 related entirely to Thallion's three clinical programs under development, compared to the corresponding period last year in which the Company completed the acquisition of Caprion's two clinical programs.

General and administrative expenses for the three-month period ended May 31, 2008 were $1,176,942 compared with $1,473,766 for the corresponding period last year. General and administrative expenses for the 2007 period included expenses related to Thallion's proteomics business which was sold on July 10, 2007 and as such, no longer formed part of the Company's general and administrative expenses as of that forward.

General and administrative expenses for the six-month period ended May 31, 2008 were $2,527,409 compared with $1,958,124 for the same period last year. The change in general and administrative expenses for the six-month period is primarily related to the addition of Caprion Pharmaceutical Inc.'s operations following the amalgamation of Ecopia BioSciences Inc. and Caprion on March 14, 2007.

The loss before non-recurring items for the second quarter of 2008 amounted to $3,549,261, compared to a loss before non-recurring items of $4,606,039 in the second quarter of 2007. The loss before non-recurring items for the six months ended May 31, 2008 was $7,563,348, compared to a loss before non-recurring items of $6,577,207 for the six months ended May 31, 2007. The changes in the Company's loss before non-recurring items are primarily due to changes in R&D and G&A expenses as a result of the amalgamation with Caprion on March 14, 2007 and the sale of the Company's proteomics business on July 10, 2007.

Net loss for the three-month period ended May 31, 2008 was $5,948,117 or $0.19 per share, compared to a net loss of $4,606,039 or $0.16 per share for the three-month period ended May 31, 2007. Net loss for the six-month period ended May 31, 2008 was $9,917,204 or 0.31 per share, compared to a net loss of $6,577,207 or $0.37 per share for the six-month period ended May 31, 2007. The increases in net loss are primarily due to non-recurring items, notably lease exit costs recorded in the second quarter of 2008 reflecting contractual lease obligations, reduced by expected sub-lease rentals, of a redundant facility as a result of the final operational integration completed at the end of the second quarter and related write-off of property, plant and equipment also recorded in the second quarter of 2008.

As at May 31, 2008, the Company's cash position amounted to $17,581,091, which consists of cash, cash equivalents and short-term investments. Tax credits receivable amounted to $1,326,999. Consequently, the Company's liquidity available amounted to $18,908,090 compared with $26,070,463 on November 30, 2007. The decrease in liquidity is primarily due to cash expenses relating to operations for the first six months of 2008.

As at July 10, 2008, the Company had 32,144,316 common shares outstanding, 9,530,000 warrants, and 2,508,505 options.

Outlook

Thallion is focused on advancing the development of its clinical assets to the next significant milestone events, specifically as it relates to its oncology candidates. These milestones include:

- Reporting final results from its TLN-232 Phase II renal cell carcinoma trial conducted in Europe at the European Society for Medical Oncology 2008 annual meeting in Stockholm, Sweden to be held in September.

- Initiating enrollment in its Phase II trial evaluating TLN-4601 as a monotherapy treatment for glioblastoma multiforme in the third quarter of 2008.

- Initiating enrollment in its Phase II trial of TLN-232 as a monotherapy for metastatic melanoma patients in the third quarter of 2008.

- Continuing its licensing discussions with the intent to complete a strategic partnership and initiate a multinational Phase II/III trial evaluating Shigamabs®.

- Continuing to pursue potential partners for each of the three programs to support development activities.

Notice of Conference Call

Thallion will hold a conference call on Monday, July 14, 2008, at 4:30 p.m. (ET) hosted by Mr. Lloyd M. Segal, 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 416-644-3414 or 800-733-7571. 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 oncology and infectious disease. Thallion has three clinical programs at a Phase II, or later, stage of development. Two late stage Phase II oncology trials which include: TLN-4601, a novel anti-cancer therapy derived from a nonpathogenic microorganism and TLN-232, a targeted therapy with potential efficacy in multiple oncology indications. The Company's third product candidate, Shigamabs®, is a dual antibody product for the treatment of Shigatoxin-producing E. coli bacterial infections. Additional information about the Company 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 the Company'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, 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 the Company'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. The Company 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.

THALLION PHARMACEUTICALS INC.Consolidated Balance SheetsMay 31, 2008 and November 30, 2007(Unaudited)                                                       2008          2007-------------------------------------------------------------------------Assets                                                           (audited)Current assets:  Cash and cash equivalents                      $7,822,022   $10,606,914  Short-term investments                          9,759,069    12,976,047  Sales tax receivable and other                    494,646       651,591  Accounts receivable                               180,132        68,160  Tax credits receivable                          1,326,999     2,487,502  Deposits and prepaid expenses                     720,863       711,017-------------------------------------------------------------------------                                                 20,303,731    27,501,231Long-term deposit                                   300,000       300,000Property, plant and equipment                     3,393,938     4,340,543-------------------------------------------------------------------------                                                $23,997,669   $32,141,774--------------------------------------------------------------------------------------------------------------------------------------------------Liabilities and Shareholders' EquityCurrent liabilities: Accounts payable and accrued liabilities        $2,706,855    $3,191,749 Deferred revenues                                   82,750             - Current portion of lease exit obligations          613,220             --------------------------------------------------------------------------                                                  3,402,825     3,191,749Long-term portion of lease exit obligations       1,115,330             -Redeemable special preferred shares                       -             1Shareholders' Equity:  Capital stock                                 115,502,723   115,450,222  Warrants                                        9,986,860     9,986,860  Contributed surplus                             2,115,700     1,765,409  Deficit                                      (108,115,046)  (98,197,842)  Accumulated other comprehensive loss              (10,723)      (54,625)-------------------------------------------------------------------------                                               (108,125,769)  (98,252,467)-------------------------------------------------------------------------  Total shareholders' equity                     19,479,514    28,950,024Commitments, contingencies and guarantees-------------------------------------------------------------------------                                                $23,997,669   $32,141,774--------------------------------------------------------------------------------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Consolidated Statements of Operations(Unaudited)                          Three-month period             Six-month period                                ended May 31                 ended May 31--------------------------------------------------------------------------------------------------------------------------------------------------                         2008           2007           2008          2007-------------------------------------------------------------------------Revenues  Contract revenues        $-     $1,409,874             $-    $1,409,874  Interest revenues   176,754        295,493        436,188       316,575  Other revenues            -         25,726              -        25,726-------------------------------------------------------------------------                      176,754      1,731,093        436,188     1,752,175Costs and expenses  Research and   development      2,687,452      3,904,575      5,657,331     5,513,332  Tax credits        (270,000)      (350,883)      (555,000)     (554,420)-------------------------------------------------------------------------                    2,417,452      3,553,692      5,102,331     4,958,912  General and   administrative   1,176,942      1,473,766      2,527,409     1,958,124  Amortization of   property, plant   and equipment      169,371        160,078        335,595       250,166  Amortization of   intangible assets        -        637,907              -       650,491  Financial expenses        -        408,522              -       408,522  Foreign exchange   loss                 7,250        103,167         34,201       103,167-------------------------------------------------------------------------                    3,771,015      6,337,132      7,999,536     8,329,382-------------------------------------------------------------------------Loss before non-recurring items             (3,594,261)    (4,606,039)    (7,563,348)   (6,577,207)Non-recurring items  Lease exit costs  1,728,550              -      1,728,550             -  Write-off of   property, plant   and equipment      625,306              -        625,306             --------------------------------------------------------------------------                    2,353,856              -      2,353,856             --------------------------------------------------------------------------Net loss          $(5,948,117)   $(4,606,039)   $(9,917,204)  $(6,577,207)--------------------------------------------------------------------------------------------------------------------------------------------------Net basic and diluted loss per share             $(0.19)        $(0.16)        $(0.31)       $(0.37)--------------------------------------------------------------------------------------------------------------------------------------------------Weighted average number of outstanding shares            32,144,316     28,185,401     32,104,972    17,702,753--------------------------------------------------------------------------------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Consolidated Statements of Comprehensive Loss(Unaudited)                          Three-month period             Six-month period                                ended May 31                 ended May 31--------------------------------------------------------------------------------------------------------------------------------------------------                         2008           2007           2008          2007-------------------------------------------------------------------------Net loss for the period       $(5,948,117)   $(4,606,039)   $(9,917,204)  $(6,577,207)Other comprehensive income  Unrealized (loss)   gain on   available for   sale investments   arising during   the period         (12,262)       (27,835)         3,909       (27,635)  Reclassification   adjustment for   (gains) and   losses included   in net loss          4,303              -         39,993             --------------------------------------------------------------------------Comprehensive loss             $(5,956,076)   $(4,633,874)   $(9,873,302)  $(6,604,842)--------------------------------------------------------------------------------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Consolidated Statements of Shareholders' EquityThree and six-month periods ended May 31, 2008 and 2007(Unaudited)                        Number of                   Number of                           shares       Capital      warrants                      outstanding         stock   outstanding     Warrants--------------------------------------------------------------------------Balance, November 30, 2007              31,994,316  $115,450,222     9,945,417   $9,986,860Issuance of share capital            150,000        52,501             -            -Expiry of warrants             -              -      (415,417)           -Stock-based compensation       -              -             -            -Net loss, first quarter 2008                  -              -             -            -Reclassification adjustment for gains and losses included in net income                        -              -             -            -Unrealized gains on available for sale investments arising during the period                    -              -             -            ---------------------------------------------------------------------------Balance, February 29, 2008             32,144,316    $115,502,723    9,530,000   $9,986,860Stock-based compensation                  -               -            -            -Net loss, second quarter 2008                  -               -            -            -Reclassification adjustment for gains and losses included in net income                        -               -            -            -Unrealized gains on available for sale investments arising during the period             -               -            -            ---------------------------------------------------------------------------Balance, May 31, 2008                 32,144,316    $115,502,723    9,530,000   $9,986,860----------------------------------------------------------------------------------------------------------------------------------------------------                                                  Accumulated                                                        other                      Contributed               comprehensive                          surplus       Deficit          loss        Total--------------------------------------------------------------------------Balance, November 30, 2007              $1,765,409  $(98,197,842)     $(54,625) $28,950,024Issuance of share capital                  -             -             -       52,501Expiry of warrants              -             -             -            -Stock-based compensation  191,225             -             -      191,225Net loss, first quarter 2008                   -     (3,969,087)           -   (3,969,087)Reclassification adjustment for gains and losses included in net income                         -              -       35,690       35,690Unrealized gains on available for sale investments arising during the period                     -              -       16,171       16,171--------------------------------------------------------------------------Balance, February 29, 2008              $1,956,634  $(102,166,929)     $(2,764) $25,276,524Stock-based compensation             159,066              -            -      159,066Net loss, second quarter 2008                   -     (5,948,117)           -   (5,948,117)Reclassification adjustment for gains and losses included in net income                         -              -        4,303        4,303Unrealized gains on available for sale investments arising during the period              -              -      (12,262)     (12,262)--------------------------------------------------------------------------Balance, May 31, 2008                  $2,115,700  $(108,115,046)    $(10,723) $19,479,514----------------------------------------------------------------------------------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Consolidated Statements of Shareholders' EquityThree and six-month periods ended May 31, 2008 and 2007(Unaudited)                        Number of                   Number of                           shares       Capital      warrants                      outstanding         stock   outstanding     Warrants--------------------------------------------------------------------------Balance, November 30, 2006               6,987,158   $54,567,028       782,084           $-Stock-based compensation                   -             -             -            -Net loss, first quarter 2007                   -             -             -            -Unrealized gains on available for sale investments arising during the period              -             -             -            ---------------------------------------------------------------------------Balance, February 28, 2007                   6,987,158   $54,567,028       782,084           $-Issuance of share capital         25,007,158    60,883,194             -            -Issuance of warrants            -             -     9,530,000   $9,986,860Expiry of warrants              -             -      (366,667)           -Stock-based compensation        -             -             -            -Net loss, second quarter 2007                   -             -             -            -Share issue costs               -             -             -            -Unrealized gains on available for sale investments arising during the period              -             -             -            ---------------------------------------------------------------------------Balance, May 31, 2007                  31,994,316  $115,450,222     9,945,417   $9,986,860----------------------------------------------------------------------------------------------------------------------------------------------------                                                  Accumulated                                                        other                      Contributed               comprehensive                          surplus       Deficit          loss        Total--------------------------------------------------------------------------Balance, November 30, 2006                $846,046  $(50,053,270)           $-   $5,359,804Stock-based compensation              89,490             -             -       89,490Net loss, first quarter 2007                   -    (1,971,168)            -   (1,971,168)Unrealized gains on available for sale investments arising during the period              -             -           200          200--------------------------------------------------------------------------Balance, February 28, 2007                    $935,536  $(52,024,438)         $200   $3,478,326Issuance of share capital                  -             -             -   60,883,194Issuance of warrants            -             -             -    9,986,860Expiry of warrants              -             -             -            -Stock-based compensation  191,834             -             -      191,834Net loss, second quarter 2007                   -    (4,606,039)            -   (4,606,039)Share issue costs               -    (3,287,835)            -   (3,287,835)Unrealized gains on available for sale investments arising during the period              -             -       (27,835)     (27,835)--------------------------------------------------------------------------Balance, May 31, 2007                  $1,127,370  $(59,918,312)     $(27,635) $66,618,505----------------------------------------------------------------------------------------------------------------------------------------------------THALLION PHARMACEUTICALS INC.Consolidated Statements of Cash Flows(Unaudited)                          Three-month period             Six-month period                                ended May 31                 ended May 31--------------------------------------------------------------------------------------------------------------------------------------------------                         2008           2007           2008          2007-------------------------------------------------------------------------Cash flows from operating activities:Net loss          $(5,948,117)   $(4,606,039)   $(9,917,204)  $(6,577,207)Adjustments for:  Lease exit costs  1,728,550              -      1,728,550             -  Write-off of   property, plant   and equipment      625,306              -        625,306             -  Amortization of   property, plant   and equipment      169,371        160,078        335,595       250,166  Amortization of   intangible assets        -        637,907              -       650,491  Loss on disposal   of patents               -              -              -         2,512  Stock-based   compensation       159,066        191,834        350,291       281,324-------------------------------------------------------------------------                   (3,265,824)    (3,616,220)    (6,877,462)  $(5,392,714)Changes in operating assets and liabilities:  Interest   receivable          81,287        110,415        181,434       120,865  Accounts   receivable        (107,314)         7,540       (111,972)        7,540  Sales tax   receivable and   other              (37,584)      (359,673)       (24,489)     (437,135)  Tax credits   receivable        (270,000)      (224,883)     1,160,503      (428,420)  Deposits and   prepaid expenses   110,108         84,831         (9,846)       54,314  Current assets   held for sale            -        (31,911)             -       (31,911)  Current   liabilities -   assets held for   sale                     -       (594,955)             -      (594,955)  Accounts payable   and accrued   liabilities       (212,044)    (3,889,149)      (432,393)   (3,356,673)  Deferred revenues       717              -         82,750             --------------------------------------------------------------------------                     (434,830)    (4,897,785)       845,987    (4,666,375)-------------------------------------------------------------------------                   (3,700,654)    (8,514,005)    (6,031,475)  (10,059,089)-------------------------------------------------------------------------Cash flows from financing activities:Proceeds from issuance of shares and warrants               -     45,040,000              -    45,040,000Share issue costs           -     (3,272,843)             -    (3,272,843)Redemption of special preferred shares                    (1)             -             (1)            -Decrease in bank indebtedness               -     (1,720,803)             -    (1,720,803)-------------------------------------------------------------------------                           (1)    40,046,354             (1)   40,046,354-------------------------------------------------------------------------Cash flows from investing activities:Acquisition of short-term investments       (2,553,518)    (4,999,116)    (3,546,040)   (5,299,116)Proceeds from disposal of short-term investments        6,771,228        731,116      6,806,920     2,414,211Additions to property, plant and equipment         (5,585)       (27,436)       (14,296)      (29,362)Costs relating to patent acquisitions               -       (168,496)             -      (259,638)Business acquisition, net of cash acquired           -       (961,833)             -    (1,040,543)-------------------------------------------------------------------------                    4,212,125     (5,425,765)     3,246,584    (4,214,448)-------------------------------------------------------------------------Net increase (decrease) in cash and cash equivalents          511,470     26,106,584     (2,784,892)   25,772,817Cash and cash equivalents, beginning of period             7,310,552         77,854     10,606,914       411,621-------------------------------------------------------------------------Cash and cash equivalents, end of period         $7,822,022    $26,184,438     $7,822,022   $26,184,438-------------------------------------------------------------------------