Allon Therapeutics Inc.

Allon Therapeutics Inc.

March 29, 2006 17:27 ET

Allon Reports 2005 Audited Operating Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 29, 2006) - Allon Therapeutics Inc. (TSX:NPC), The Neuro Protection Company™, reported today its 2005 audited operating results. The Company made significant progress in 2005 - and year-to-date in 2006 - toward achieving its goal to develop drugs that halt or prevent serious degenerative diseases and injury to the central nervous system.

"The Allon team successfully achieved its 2005 milestones and made additional progress on both the clinical and corporate front that positions the Company to continue its momentum through 2006," said Gordon McCauley, Allon's President and Chief Executive Officer. "We expect to have two compounds in Phase II clinical trials this year and we are actively considering a third target indication for which we can begin an additional human clinical trial."

Matthew Carlyle, Allon's Chief Financial Officer said: "Allon's 2005 financial results are in line with our expectations and reflect the Company's efficient use of capital and disciplined financial management. Last year Allon spent approximately$3 on core research and development activities for every $1 spent on administration, which far outpaces peers in our group. We expect this ratio to continue to improve over the next year."


For the fiscal year ended December 31, 2005 the Company reported a net loss of $5,549,367 ($0.19 per share) compared to a loss of $1,652,155 ($0.12 per share) for the year ended December 31, 2004. The increased loss of $3,897,212 is due to the Company's change in business from a biotechnology investment company to a research and development company and is directly related to the Company's clinical and drug development programs. The change in business resulted from the sale of the Company's investment management assets and acquisition of Allon Therapeutics, Inc (Allon USA) on September 28, 2004. While the change in business resulted in a significant increase in research and development expenses to $4,975,629 in 2005 from $734,539 in 2004, general and administrative expenses increased modestly to $1,472,055 in 2005 from $1,409,246 in 2004.

During the fiscal year ended December 31, 2005, the Company did not earn any income compared to consulting income of $345,872 for the same period in 2004.

For the fiscal year ended December 31, 2005, research and development expenses were $4,975,629 compared to $734,539 for the same period in 2004, all of which were incurred in the fourth quarter, following the purchase of Allon USA. The $4,241,090 increase over prior year relates to the Company's advancement of its clinical and drug development programs, primarily focused on Phase I clinical trials for both AL-108 and AL-208.

For the fiscal year ended December 31, 2005, general and administrative expenses were $1,472,055 compared to $1,409,246 for the same period in 2004. The nominal increase of $62,809 reflects the additional personnel resources required to provide administrative support for research and development activities.

For the year ended December 31, 2005, the Company incurred other expenses of $18,135 compared to $72,058 in 2004. The reduced expense of $53,923 is primarily due to increased interest income, partly offset by increases in stock based compensation expense and foreign exchange loss.

At December 31, 2005, the Company had cash and short-term investments of $9,545,304 compared to $9,266,403 at December 31, 2004.

The Company believes that its cash and short-term investments as at December 31, 2005 and expected interest income will be sufficient to fund operations and commitments into Q3 2007.

Highlights of the year:

AL-108 & AL-208

The Company successfully completed and released results of a Phase Ia clinical trial evaluating product AL-108 as a treatment for Alzheimer's disease. Allon had intended to complete a Phase Ib trial for AL-108 in 2005 but opted to conduct additional pre-clinical work to compile more data for the next stage of development, which is a Phase Ib trial designed to determine the safety and tolerability of the drug in patients most at risk for Alzheimer's disease. The Company also expects to commence in PII trial in Alzheimer's disease in 2006.

The Company also began and completed a Phase I clinical trial evaluating the safety and tolerability of AL-208 as a treatment for mild cognitive impairment post coronary artery bypass surgery (MCI post-CABG). Results released in 2006 showed AL-208 was safe and well tolerated in healthy adults and in two additional groups of healthy elderly.

Toronto Stock Exchange listing

On September 21, 2005, Allon began trading on the Toronto Stock Exchange under the symbol "NPC" (Neuro Protection Company). The Company's move to the TSX from the TSX Venture Exchange Market provides additional exposure for Allon to investors and reflects its clinical and corporate progress.

$6.3 Million Financing

On August 29, 2005, Allon completed a private placement of common shares to a group of largely institutional investors at a price of $1.05 per share for gross proceeds of $6.3 million. The placement proceeds will be used to fund ongoing clinical development of AL-108 and AL-208 to the commencement of Phase IIa clinical trials for both products.

Selection by the Alzheimer's Disease Cooperative Study

Clinical development of Allon's AL-108 was one of seven projects selected by the Alzheimer's Disease Cooperative Study in the United States to be included in a submission for Phase II clinical trial funding to the U.S. National Institutes of Health (NIH).

Pre-clinical Studies

During 2005, Allon completed several successful pre-clinical studies that confirm the neuroprotective mechanism of action of its compounds and add to the body of research confirming their potential to protect against and treat serious neurodegenerative diseases and conditions.

Two studies of note confirm that lead products AL-108 and AL-208 penetrate the blood brain barrier and reach their target therapeutic areas in the central nervous system and that AL-108 and compound AL-209 have the potential to become new treatments for diseases of the optic nerve and retina.

Management Team and Board Appointments

Over the last year, Allon made several changes to its board of directors and senior management including splitting the role of Chairman and CEO in April of 2005, with Dr. James Miller continuing as Executive Chairman and Gordon McCauley adding CEO to his existing responsibilities as President. In addition, Karole Sutherland was appointed Vice-President, Clinical Operations.

Subsequently, in 2006, McCauley was appointed to the Board of Directors, as was Dr. Martin Barkin, a biotechnology and public healthcare executive and advisor.

Plans for 2006

At the beginning of 2006, Allon announced several milestones for the year:

- Release Phase I clinical trial results for AL-208 for MCI post-CABG;

- Commence and complete a AL-208 Phase Ib multi-dose clinical trial to preserve the opportunity to use this drug in chronic indications;

- Commence and complete a AL-108 Phase Ib multi-dose clinical trial for Alzheimer's disease;

- File a Canadian clinical trial application for AL-208 Phase IIa for MCI post-CABG;

- Commence a AL-208 Phase IIa clinical trial for MCI post-CABG;

- Commence a AL-108 Phase IIa clinical trial for Alzheimer's disease;

- Define a third Phase II trial;

- Continue development of our pre-clinical pipeline.

About Allon

Allon Therapeutics Inc. is a clinical-stage Canadian biotechnology company developing drugs that protect against neurodegenerative conditions such as Alzheimer's, cognitive impairment, stroke, traumatic brain injury, multiple sclerosis and neuropathy. The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC" (Neuro Protection Company™) and based in Vancouver.

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