Allon Therapeutics Inc.

TSX : NPC


Allon Therapeutics Inc.

March 03, 2010 09:00 ET

Allon Enters Into $10 Million Standby Equity Distribution Agreement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 3, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Allon Therapeutics Inc. (TSX:NPC) announced today it has entered into a standby equity distribution agreement (SEDA) with YA Global Master SPV Ltd., a fund managed by Yorkville Advisors, LLC. Under the terms of the agreement, Yorkville has committed to provide up to $10 million of equity capital over the next three years, if and when drawn by Allon at Allon's discretion.

Gordon McCauley, Allon's President and CEO, said the facility is an effective corporate finance tool providing a flexible, low-cost source of capital, in an amount and at the time of Allon's choosing, with a built-in minimum price.

"Allon's corporate finance team has done an excellent job managing our resources. Consequently, we already have sufficient cash on hand to execute our business plan into 2011. With a number of important value milestones in the near term, the addition of this instrument allows us to continue our focus on execution," said McCauley.

"We are enthusiastic about our investment in Allon Therapeutics and believe the development of therapeutic treatments for neurodegenerative diseases like Alzheimer's and dementia is entering a very exciting and critical phase," said Dr. Michael J. Nowak, Managing Director at Yorkville Advisors.

Terms of the Financing

At Allon's sole discretion, the Company can draw on Yorkville's commitment from time-to-time, and there are no restrictions on Allon's corporate finance or strategic activities during the term of the agreement. Allon can terminate the agreement at any time without the payment of any additional fees. Newly issued common shares will be priced at a 5% discount to the 5-day weighted average of Allon shares at the time of draw down, and are subject to a minimum price set by the Company in advance. There are no warrants or any other derivative instruments issued by Allon under this agreement, and the Company is not required to pay any banking fees or commissions as part of this agreement.

In connection with the SEDA, the Company must file and clear a short-form shelf prospectus with the applicable securities authorities in Canada. The SEDA, which will be publicly filed, is subject at this time to certain conditions, including the shelf prospectus, and customary regulatory approvals. The shares will be issued in reliance on exemptions or exclusions from registration under US Securities laws.

About Yorkville Advisors

Yorkville Advisors, LLC is the investment manager to a family of funds, which specializes in providing flexible, innovative finance investments in publicly listed companies worldwide. Pioneered eight years ago by Yorkville, a SEDA offers companies a cost effective way to raise capital to fund their business plans, growth strategies, or other corporate uses. Yorkville has offices in Jersey City, New Jersey; Jupiter, Florida; London and Hong Kong. It also has joint venture agreements in Italy and Greece. http://www.yorkvilleadvisors.com.

About Allon's neuroprotective platforms

Allon's two neuroprotective technology platforms are based on two naturally occurring proteins produced by the brain in response to a range of insults. The platforms are activity-dependent neuroprotective protein (ADNP) and activity-dependent neurotrophic factor (ADNF).

Because the two platforms are based on different proteins, the drugs from each are different molecules with different therapeutic mechanisms and distinct commercial opportunities. Clinical-stage drugs based on davunetide are derived from ADNP, while preclinical stage drug AL-309 is derived from ADNF. Davunetide is focused on Alzheimer's disease, cognitive impairment in schizophrenia, and frontotemporal dementia. ADNF drug candidate AL-309 is being developed for the treatment of peripheral neuropathies and is administered orally or subcutaneously.

About Allon

Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. Allon's drug davunetide has demonstrated human efficacy in amnestic mild cognitive impairment, a precursor to Alzheimer's disease, and cognitive impairment associated with schizophrenia. Allon has Phase II human efficacy programs pursuing large underserved markets, such as Alzheimer's disease and cognitive impairment associated with schizophrenia, and in orphan markets, such as frontotemporal dementias. The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC" (Neuro Protection Company™) and based in Vancouver. For additional information please visit the Company's website: www.allontherapeutics.com.

Legal Note

This news release does not constitute an offer to sell nor a solicitation of an offer to buy any securities in the United States. The shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold within the United States or to U.S. persons (as defined in Regulation S under the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws, or unless an exemption or exclusion from such registration is available. Absent the availability of an exemption or exclusion from registration, any public offering of securities made in the United States must be made by means of a prospectus containing detailed information about the company and its management, as well as financial statements.

Forward Looking Statements

Statements contained herein, other than those which are strictly statements of historical fact may include forward-looking information. Such statements will typically contain words such as "believes", "may", "plans", "will", "estimate", "continue", "anticipates", "intends", "expects", and similar expressions. While forward-looking statements represent management's outlook based on assumptions that management believes are reasonable, forward-looking statements by their nature are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by them. Such factors include, among others, the inherent uncertainty involved in scientific research and drug development, Allon's early stage of development, lack of product revenues, its additional capital requirements, the risks associated with successful completion of clinical trials and the long lead-times and high costs associated with obtaining regulatory approval to market any product which Allon may eventually develop. Other risk factors include the limited protections afforded by intellectual property rights, rapid technology and product obsolescence in a highly competitive environment and Allon's dependence on collaborative partners and contract research organizations. These factors can be reviewed in Allon's public filings at www.SEDAR.com and should be considered carefully. Readers are cautioned not to place undue reliance on such forward-looking statements.

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