Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

September 22, 2011 13:40 ET

Allon Therapeutics Amends Terms of Offering and Prices Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 22, 2011) -

THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES.

Allon Therapeutics Inc. ("Allon Therapeutics" or the "Company") (TSX:NPC) announced today that, further to its press release dated September 14, 2011, that GMP Securities L.P. (the "Lead Agent"), on behalf of a syndicate of agents, including Canaccord Genuity Corp. (together, the "Agents"), will carry out the Company's offering (the "Offering") of a minimum of $4.3 million of units ("Units"), and a maximum of $7.5 million of Units on a best efforts agency basis at a price of $0.25 per Unit. Each unit consists of one common share and a one-half (½) of a common share purchase warrant. Each warrant is exercisable at a price of $0.40 for a period of 60 months from the closing of the Offering.

A current insider of the Company has indicated they will subscribe for $3 million of dollars of securities under the Offering, of which $1-million will be held in escrow subject to shareholder approval as described below. The minimum amount under the Offering is exclusive of the $1 million to be held in escrow as described below. The Offering is being made in each of the provinces of Canada (other than the Province of Quebec) by way of a short form prospectus and in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended. The Units were also offered on a private placement basis in certain jurisdictions outside of Canada and the United States pursuant to applicable prospectus exemptions.

The Company has granted the Agents an over-allotment option to purchase additional units and/or additional warrants, in an amount up to 15% of the number of units sold pursuant to the offering, exercisable at any time up to 30 days from the closing of the offering.

Neuro Discovery II Limited Partnership ("Neuro Discovery"), a current insider of the Company, has indicated that they will subscribe for the equivalent of 12 million Units however under TSX rules applicable to insider participation it is required to make the purchase of the 4,121,084 shares and the 6,000,000 warrants underlying such Units subject to the approval of a majority of disinterested shareholders (the "Shareholders Condition"). Accordingly Neuro Discovery will purchase and acquire 7,878,916 shares on the closing of the Offering for total consideration of $1,969,729 and will be obligated to purchase and acquire 4,121,084 common shares and 6,000,000 warrants for total consideration of $1,030,271 on the date the Shareholders Condition is satisfied. The securities subject to the Shareholders Condition will be represented by a subscription receipt which will be paid for concurrently with completion of the Units offering and the $1,030,271 will be held in escrow to be released to the Company upon satisfaction of the Shareholders Condition or returned to Neuro Discovery if the Shareholders Condition is not satisfied. The Company has agreed to use its best efforts to convene a special meeting by not later than the date this is 70 days from the closing date of the offering to seek the required disinterested shareholder approval. Neuro Discovery Limited Partnership and Neuro Discovery II Limited Partnership, funds under common management, will own or control 23,490,952 shares (23.5% assuming the minimum) on completion of the Offering and satisfaction of the Shareholders Condition, and potentially 29,490,952 shares (25.0% assuming the minimum) on a fully diluted basis assuming the Shareholders Condition is satisfied.

The Company will file an amended and restated preliminary prospectus in respect of the Offering in order to, among other things, reflect the plan of distribution and pricing and to facilitate the subscription by Neuro Discovery in compliance with the TSX Rules by creating and qualifying for issuance the subscription receipts.

The Offering is scheduled to close on or about October 11 2011 subject to satisfaction of customary closing conditions, including the receipt of all necessary regulatory and stock exchange approvals. The net proceeds from the sale of the Units shall be used for (i) clinical trial activities related to the davunetide development program for PSP, including manufacturing expenses in relation to clinical drug supplies, and (ii) General administrative expenses, working capital and general corporate purposes.

The securities described herein 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 accordingly, may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities laws or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the issuer and its management, as well as financial statements.

About Allon Therapeutics Inc.

Allon Therapeutics Inc. is a clinical-stage biotechnology company focused on bringing to market innovative central nervous system therapies. Allon's lead drug, davunetide, is proceeding in a pivotal Phase 2/3 clinical trial in an orphan indication, progressive supranuclear palsy (PSP), under a Special Protocol Assessment (SPA) with the Food and Drug Administration (FDA). This pivotal trial is based upon statistically significant human efficacy demonstrated in amnestic mild cognitive impairment, cognitive impairment associated with schizophrenia, and positive biomarker data.

The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC".

About Davunetide

Allon is currently enrolling patients in a pivotal Phase 2/3 clinical trial evaluating davunetide as a potential treatment for progressive supranuclear palsy (PSP), a rapidly-progressing and fatal movement disorder with dementia which is often misdiagnosed as Parkinson's or Alzheimer's disease. Allon reached agreement on a SPA with the FDA, as well as Orphan Drug and Fast Track Status in the U.S. Similarly, Allon has Orphan Status for davunetide in the EU.

Davunetide is derived from a naturally occurring neuroprotective brain protein known as activity dependent neuroprotective protein (ADNP). Allon's human clinical and pre-clinical data suggest that davunetide works on microtubules, structures in the brain critical to communication between cells, and central to the tau pathway. Davunetide has shown statistically significant impacts on memory, activities of daily living, and a biomarker of brain cell function and integrity. Allon has extensive intellectual property protecting davunetide.

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 http://www.sedar.com/ and should be considered carefully. Readers are cautioned not to place undue reliance on such forward-looking statements. Similarly, nothing in this press release is meant to promote a pharmaceutical product or make a regulated claim of efficacy.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this press release, which has been prepared by management.

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