Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

March 18, 2008 17:30 ET

Allon Reports 2007 Audited Operating Results and Updates 2008 Plans

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 18, 2008) - Allon Therapeutics Inc. (TSX:NPC), today announced its audited operating results for 2007 and updated clinical development plans for 2008.

The Company said it will launch a Phase IIb clinical trial in 2008 in mild-to-moderate Alzheimer's patients to follow up on positive (Phase IIa) human efficacy results reported last month in patients with amnestic mild cognitive impairment (aMCI), a precursor to Alzheimer's. The Company will also release results in 2008 from two Phase II human efficacy trials in its schizophrenia and intravenous delivery programs and from a Phase I pharmacokinetic trial in healthy adult subjects and Alzheimer's disease patients.

Gordon McCauley, President and CEO of Allon, said clinical and corporate progress during 2007 and the successful Phase IIa human efficacy results in aMCI patients reported February 26, 2008 have confirmed the Company's potential to develop the first drugs that impact the progression of neurodegenerative diseases.

"These are diseases that have terrible consequences for millions of people and to date there are no therapies that impact their progression," said McCauley. "The efficacy results we announced last month showing our drug AL-108 works in humans has brought Allon to the forefront in the pursuit of a disease-modifying treatment - and we will continue to work diligently in 2008 to advance this product toward commercialization."

Highlights of 2007

Allon's 2007 highlights include:

- Completion of dosing in a Phase IIa clinical trial evaluating AL-108 as treatment for patients with aMCI, a precursor to Alzheimer's disease (AD).

- Commencement of the randomized stage of the Phase II clinical trial evaluating AL-208 (intravenous) as a treatment for the mild cognitive impairment (MCI) that commonly results from coronary artery bypass graft (CABG) surgery. The Company expects results of this trial to support additional clinical development in neurodegenerative indications where intravenous or systemic delivery is preferable.

- Commencement of patient enrolment during Q3 2007 for a Phase II clinical trial evaluating AL-108 as a treatment for schizophrenia associated cognitive impairment. Preceding events included filing an investigational new drug application with the United States Food and Drug Administration and a collaboration with TURNS (Treatment Units for Research on Neurocognition and Schizophrenia). TURNS was created by the U.S. National Institute of Mental Health to identify drugs that improve cognition and that can be combined with anti-psychotic drugs administered to control the psychotic episodes that characterize schizophrenia.

- Receipt of funding from the Michael J. Fox Foundation for Parkinson's Research to evaluate the effectiveness of AL-108 in preclinical models of Parkinson's disease.

- Completion of a $15.7 million bought deal financing that the Company expects will fund its business plan to the middle of 2009.

- Release of preclinical data confirming the oral bioavailablity of AL-309, the Company's lead drug candidate from its second neuroprotective technology platform, Activity Dependent Neurotrophic Factor (ADNF).

- Receipt of a U.S. patent covering additional composition of matter for drugs derived from the Company's lead neuroprotective technology platform, Activity Dependent Neuroprotective Protein (ADNP) platform. Allon's drugs AL-108 and AL-208 plus additional preclinical-stage drug candidates are based on the ADNP platform.

- Release of positive results from a Phase Ib clinical trial evaluating AL-108 as a treatment for Alzheimer's. The trial confirmed that AL-108 was safe and well tolerated by 32 healthy elderly subjects after seven days of dosing.

Subsequent events 2008

On February 26, 2008, the Company announced top-line results demonstrating statistically significant dose dependent and durable human efficacy of its drug AL-108 in a Phase IIa clinical trial in patients with aMCI, a precursor to Alzheimer's. Statistically significant efficacy was achieved on key endpoints that measured short-term, working and recognition memory - three types of memory that are clinically relevant in AD. The trial also demonstrated that AL-108 was safe and well tolerated by patients.

On February 19, 2008, the Company added a second arm to a Phase I pharmacokinetics trial first announced January 10, 2008. The trial began evaluating the cerebrospinal fluid and plasma pharmacokinetics of the Company's drugs AL-108 and AL-208 in healthy adult subjects. The second arm added Alzheimer's patients to the trial.

Milestones for 2008

In addition to the positive Phase IIa data recently released, the Company has set the following milestones for 2008:

- Complete a development and commercialization partnership with a major pharmaceutical company.

- Complete enrolment and dosing, analyze data and release results of a Phase II clinical trial evaluating the safety, tolerability and effect of AL-208 as treatment for MCI resulting from ischemic damage during CABG surgery. Trial results will indicate AL-208's potential as a treatment for neurodegenerative indications where intravenous or systemic delivery is preferred.

- Complete enrolment and dosing, analyze data and release results of a Phase II clinical trial evaluating the safety, tolerability and effect of AL-108 on cognitive impairment associated with schizophrenia. Approved schizophrenia drugs treat only psychotic symptoms and not the cognitive impairment suffered by most patients that frequently begins before psychotic symptoms emerge.

- Complete and release results of a Phase I human clinical trial evaluating the cerebrospinal fluid (CSF) pharmacokinetics of AL-108 and AL-208 in healthy adult subjects and in Alzheimer's patients.

- Commence a Phase IIb trial to evaluate AL-108 in patients with mild-to-moderate AD.

Financials

Matthew Carlyle, Allon's Chief Financial Officer, reported that the Company's 2007 financial results reflected the Company's strategy to advance a balanced clinical development program targeted at major underserved neurodegenerative diseases with a prudent and disciplined use of capital.

"Our numerous achievements in 2007 and early 2008 are the evidence that Allon's financial resources have been successfully managed to increase shareholder value and to attain our development milestones. The $15.7 million equity financing completed in Q2 2007 will allow us to complete our ongoing clinical development programs and fund operations into mid-2009," said Carlyle.

Allon reported a net loss of $12,681,350 ($0.24 per share) for the year ended December 31, 2007 compared to a net loss of $9,184,051 ($0.26 per share) for the year ended December 31, 2006, representing a year over year increased loss of $3,497,299. The year over year increase is largely due to increases in research and development expenses.

For the fiscal year ended December 31, 2007, research and development expenses were $9,091,320 compared to $6,778,158 for the fiscal year ended December 31, 2006. The advancement of Allon's three Phase II clinical programs as well as continued development of its pre-clinical compounds resulted in the year over year increase of $2,313,162 in research and development expenses.

For the fiscal year ended December 31, 2007, general and administrative expenses were $2,633,847 compared to $2,169,964 for the fiscal year ended December 31, 2006. During the fiscal year ended December 31, 2007, G&A expenses increased by $463,883 over the same period in 2006. Compared to the 37% overall increase in Company expenditures, year over year growth for general and administrative expenses was only 21%.

Amortization expense for the fiscal year ended December 31, 2007 was $546,288 compared to $563,290 for the fiscal year ended December 31, 2006. Allon depreciates tangible assets and intellectual property on a straight line basis.

For the fiscal year ended December 31, 2007, the Company incurred other expenses of $409,895 compared to other income of $177,824 for the fiscal year ended December 31, 2006. The $587,719 increased expense is primarily due to increased foreign exchange loss on translation of US balances to Canadian dollars, partly offset by increased interest earned on cash reserves.

At December 31, 2007 the Company had cash and cash equivalents of $13.1 million and working capital of $11.9 million compared to cash and cash equivalents of $10.4 million and working capital of $9.4 million at December 31, 2006. Allon expects cash on hand and interest revenue to fund operations to the middle of 2009.

About Allon

Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. In Q1 '08 Allon's drug AL-108 demonstrated robust human efficacy in amnestic Mild Cognitive Impairment, a precursor to Alzheimer's disease. Allon has two other Phase II human efficacy trials underway pursuing three large underserved markets: Alzheimer's disease, stroke and cognitive impairment associated with schizophrenia. The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC" (Neuroprotection Company™) and based in Vancouver. For additional information please visit the Company's website: www.allontherapeutics.com.

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 and Allon disclaims any obligation to update or announce changes in any such factors except in its periodic filings.

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