Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

March 30, 2007 16:00 ET

Allon Reports 2006 Audited Operating Results and Updates 2007 Plans

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 30, 2007) - Allon Therapeutics Inc. (TSX:NPC), The Neuro Protection Company™, today reported its audited operating results for 2006 and updated its 2007 plans to advance three Phase II clinical trials that will determine the effectiveness of its products as treatments for the causes of Alzheimer's disease and other neurodegenerative conditions.

Gordon McCauley, President and CEO of Allon, said the Company made significant progress during 2006 toward its objective of developing drugs to treat processes underlying degenerative disease and injury of the central nervous system. Drugs on the market today treat only the symptoms of these diseases and conditions.

2006 highlights included:

- Commencement of two Phase II clinical trials in Alzheimer's disease and in mild cognitive impairment (MCI) experienced by patients who undergo coronary artery bypass graft (CABG) surgery;

- Demonstration in multiple Phase I clinical trials that the Company's drug candidates are safe and well tolerated in humans; and

- Completion of a $10 million equity financing ensuring the Company has the resources to fund its business plan through mid-2008.

"Our drugs work through a mechanism that is common to numerous neurodegenerative diseases and injuries - and our strategy for human clinical trials is based on this multi-disease potential," said McCauley. "First, we designed and completed Phase I human clinical trials to build a broad platform of safety data. Now, based on our Phase I safety data, we have multiple Phase II programs to evaluate human efficacy in specific diseases and conditions."

McCauley said 2007 will be an important year for Allon because it will launch a third Phase II clinical trial in schizophrenia-related cognitive impairment at mid-year and announce the Company's first efficacy results by the end of the year.

"Our milestones for 2007 include what is a defining event for a development-stage company such as Allon - the announcement of efficacy results from clinical trials."

"We expect to announce top line efficacy results from one trial late this year and from the other two Phase II trials in the first half of 2008," said McCauley. "We believe that we have implemented a sound and strategically balanced clinical plan for our compounds and we anticipate the results eagerly."

Matthew Carlyle, Allon's Chief Financial Officer, noted the Company's 2006 financial results were in line with the Company's expectations and reflect Allon's disciplined use of capital.

"Allon's 2006 financial results display a continued focus on core research and development activities as demonstrated by the numerous milestones we achieved. The $10.0 million equity financing completed in the fourth quarter of 2006 will allow us to continue to push forward in our three phase II programs over the course of 2007 and into 2008."

Highlights of 2006

Allon achieved the following during 2006:

- Released positive results from a Phase I clinical trial evaluating product AL-208 as a treatment for MCI post-CABG.

- Began and completed a Phase Ib multi-dose clinical trial evaluating AL-208 as a treatment for MCI post-CABG.

- Began and completed a Phase Ib multi-dose clinical trial evaluating product AL-108 as a treatment for Alzheimer's disease.

- Began a Phase II clinical trial in Canada and the United States evaluating AL-208 as a treatment for MCI post-CABG.

- Began a Phase II clinical trial in the U.S. evaluating AL-108 for amnestic mild cognitive impairment, a precursor to Alzheimer's disease.

- Defined an indication for a third Phase II clinical trial.

- Completed a $10 million equity financing.

- Demonstrated in preclinical studies that AL-108 has an impact on both classic hallmarks of Alzheimer's disease.

Highlights of early 2007

Allon has achieved the following during early 2007:

- Signed a collaboration on January 8, 2007 with Treatment Units for Research of Neurocognition in Schizophrenia (TURNS), a project funded by the U.S. National Institute of Mental Health. Under the collaboration, TURNS will fund and conduct a Phase II clinical trial beginning mid-year 2007 to evaluate the efficacy of AL-108 as a treatment for schizophrenia-related cognitive impairment. According to TURNS, this condition is the primary limiting factor affecting recovery for schizophrenia patients and is not impacted by the first and second generation anti-psychotic drugs currently used to treat schizophrenia.

- Announced January 24, 2007 that Allon had received funding from The Michael J. Fox Foundation for Parkinson's Research (MJFF) to evaluate AL-108 in preclinical models as a potential treatment of Parkinson's disease. The Company has begun the studies and, if the results are positive, would be in a position to begin a Phase II clinical trial to evaluate the drug's effectiveness in Parkinson's patients in 2008.

- Filed an investigational new drug application February 21, 2007 for regulatory approval to begin the TURNS-funded Phase II clinical trial evaluating AL-108 in schizophrenia-related cognitive impairment.

- Announced March 7, 2007 positive results from the Phase Ib clinical trial evaluating AL-108 as a treatment for Alzheimer's disease. The trial confirmed that AL-108 is safe and was well tolerated by 32 healthy elderly subjects after seven days of dosing.
Milestones for 2007

Allon has announced the following milestones for the remainder of 2007:

- Begin a Phase II clinical trial for AL-108 in schizophrenia-related cognitive impairment.

- Complete and release efficacy data from a Phase II clinical trial in MCI post-CABG surgery.

- Complete enrolment for a U.S. Phase II clinical trial evaluating AL-108 for amnestic mild cognitive impairment, a precursor to Alzheimer's disease.

- Prepare an IND for AL-309, a compound from the Company's second neuroprotection platform.

- Advance commercial development activities.

Financials

Allon reported a net loss of $9,184,051 ($0.26 per share) for the year ended December 31, 2006 compared to $5,549,367 ($0.19 per share) for the year ended December 31, 2005. The $3,634,684 increased loss includes a $1,301,057 non-cash decrease in the amount of future income tax recovery to $149,537 in 2006 from $1,450,594 in 2005. The tax liability, which resulted from the 2004 purchase of medical technology, was fully offset in the first quarter of 2006. After eliminating the non-cash effect of the tax liability, the 2006 pre-tax loss was $9,333,588 compared to a 2005 pre-tax loss of $6,999,961 resulting in an increase of $2,333,627 that primarily reflects direct costs associated with the progression of Company's clinical development program into multiple Phase II clinical trials during 2006. The increase also reflects increased personnel requirements to support both research and development and corporate advancements.

For the fiscal year ended December 31, 2006, research and development expenses were $6,721,548 compared to $4,975,629 for the same period in 2005. The $1,745,919 increase over prior year relates to the Company's advancement of its drug development programs into multiple Phase II trials and expansion of its compounds into new indications.

For the fiscal year ended December 31, 2006, general and administrative expenses were $2,028,912 compared to $1,472,055 for the same period in 2005. The $556,857 increase reflects the additional resources required to support business development initiatives.

During 2006 increased expenses related to additional staff and expenses for corporate development and investor relations activities. The 2006 increases were partly offset by 2005 expenses incurred in conjunction with Allon's graduation from a Venture issuer to a listed member of the TSX.

Amortization expenses for the year ended December 31, 2006 increased to $563,290 compared to $534,142 for the same period in 2005. The $29,148 increase primarily relates to a one-time adjustment of $23,092 to amortization expense.

For the year ended December 31, 2006, the Company incurred other expenses of $19,838 compared to $18,135 in 2005. The increased expense of $1,703 is primarily due to increased stock-based compensation and loss on investments partly offset by increased interest income and decreased foreign exchange loss.

At December 31, 2006, the Company had cash, cash equivalents and short-term investments totaling $10,369,753. The Company believes that its cash and short-term investments as at December 31, 2006 and expected interest income will be sufficient to fund operations and commitments into the middle of 2008.

About Allon

Allon Therapeutics Inc. is a Canadian biotechnology company with 3 Phase II programs advancing its neuroprotective drugs against conditions such as Alzheimer's, cognitive impairment, stroke, and neuropathy. 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.

Forward-Looking Statements

There are forward-looking statements contained herein that are not based on historical fact, including without limitation statements containing the words "believes", "may", "plans", "will", "estimate", "continue", "anticipates", "intends", "expects", and similar expressions. Such forward-looking statements involve 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 such forward-looking statements. Such factors include, among others, Allon's stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market Allon's products, the ability to protect its intellectual property and dependence on collaborative partners. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.

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