Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

August 12, 2011 17:00 ET

Allon Therapeutics Provides Pivotal Study Update and Q2 Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 12, 2011) - Allon Therapeutics Inc. (TSX:NPC) today provided an update on progress in its pivotal clinical trial in progressive supranuclear palsy (PSP) and announced its unaudited operating results for the three months ended June 30, 2011. At this time, approximately 75% of the planned subjects have been enrolled in the pivotal study and it is on schedule to complete enrollment by the end of 2011. This Phase 2/3 pivotal trial is evaluating the efficacy and safety of Allon's lead neuroprotective drug candidate davunetide as a potential treatment for PSP, a rapidly progressing and fatal degenerative brain disease.

Gordon McCauley, Allon's President and CEO, said, "The commitment of PSP patients, caregivers, and clinicians, as reflected in the strong enrolment numbers, is very gratifying. We remain hopeful that this pivotal study will provide the data we need to ask for approval in this debilitating neurodegenerative disease. We are on track to complete enrolment by the end of 2011 and to report data about a year later."

In addition to this progress, the Company also recently announced analysis of magnetic resonance imaging (MRI) data from an earlier Phase 2a clinical trial that yielded new findings indicating that 12 weeks of treatment with davunetide appears to prevent cortical thinning of important parts of the brains of schizophrenia patients compared to placebo. The analysis was completed during the Second Quarter and the results were announced July 19.

"The new imaging data from schizophrenia patients is another positive validation of the potential of davunetide. We have now seen positive effects on human behaviour, capacity for activities of daily living, a putative biomarker of neuronal health and function, and with this new data on the structural components of the human brain thought to be related to disease," McCauley said.

Phase 2/3 pivotal trial in PSP

Allon has enrolled approximately 75% of the 300 patients specified in the protocol designed to assess efficacy and safety of davunetide in PSP patients. Enrollment began in the fourth quarter of 2010. The trial is being conducted under a Special Protocol Assessment (SPA) granted by the United States Food and Drug Administration (FDA), which ensures that the agreed clinical trial design meets the FDA's expectations for a pivotal study.

This multi-national study is being conducted at leading medical institutions in the United States, Canada, the United Kingdom, France, Germany, and Australia. Details can be found at clinical trials.gov.

PSP is one of a group of progressive neurodegenerative disorders called tauopathies that affect movement, speech, cognition and behavior, and for which there are no approved treatments. Approximately 25,000 and 50,000 persons, in the U.S. and EU respectively, have PSP.

Approximately half of all frontotemporal dementias (FTD) are tauopathies, or involve impairment of the tau protein in brain cells. Allon expects that demonstrating efficacy in PSP will define the opportunity to use davunetide in other tau-related diseases, such as Alzheimer's, schizophrenia, Parkinson's and tau-related FTD.

Imaging data in schizophrenia patients

Allon said the new imaging data are consistent with the neuroprotective effect of davunetide seen in previous clinical data sets and provide further confirmation of the strategy behind the Company's Phase 2/3 pivotal trial.

This ongoing analysis is being carried out by a group of scientists and physicians led by Dr. Jeffrey Lieberman, Chairman of the Department of Psychiatry at Columbia University School of Physicians and Surgeons, and Director of the New York Psychiatric Institute as part of a larger Phase 2a trial that assessed davunetide as a potential treatment for cognitive-impairment associated with schizophrenia (CIAS).

In the 23-patient study, the thickness of the cortex in specific regions of the brain decreased in the eight schizophrenia patients given placebo, whereas it did not change in the 15 patients treated with davunetide. The cortex is tissue in the human brain made up of neuronal cell bodies.

Dr. Lieberman said schizophrenia is a progressive neurodegenerative disease in which cortical thinning is believed to be responsible for some of the clinical symptoms.

"In our lab, we found that the cortex of schizophrenia patients is thinner than that of healthy control subjects. The extent and rate of cortical thinning in the davunetide study is similar to what we have seen previously in placebo-treated subjects."

"This preliminary evidence of a davunetide treatment effect is interesting and merits replication in a larger study of schizophrenia patients. This new finding is consistent with the hypothesis that davunetide prevents brain atrophy by a mechanism thought to involve the preservation of microtubule function," Dr. Lieberman said.

The analyses showed that the greatest treatment effect was seen in the dorsolateral prefrontal and temporal cortical regions of the brain. These areas are known to be impacted in CIAS.

Other achievements

Other achievements during the Second Quarter included:

  • Receipt of the Gold Leaf Award as the Early Stage Company of the Year (Health) from BIOTECanada, Canada's national biotechnology industry organization. The award was presented June 28 at the BIO 2011 International Convention in Washington, D.C.
  • A patent was granted by the United States Patent and Trademark Office covering the use and mode of delivery of davunetide, its parent protein ADNP and other derivatives of ADNP in mental diseases and disorders including schizophrenia.

Results of operations

Allon reported a net loss of $2,919,833 ($0.04 per share) for the three months ended June 30, 2011, compared to a net loss of $2,661,504 ($0.03 per share) for the three months ended June 30, 2010, representing an increase in net loss of $258,329. For the six months ended June 30, 2011, the Company reported a net loss of $5,893,909 ($.08 per share), compared to a net loss of $5,781,843 ($0.07 per share) for the six months ended June 30, 2010. This increase in net loss is explained in the following description of significant variances from the comparable period in 2010.

For the three and six months ended June 30, 2011, research and development expenses were $2,199,221 and $4,213,017 compared to $1,906,992 and $4,171,521 for the three and six months ended June 30, 2010. Research and development expenses were higher compared to the same periods in 2010 due to an increase in clinical trial activities related to PSP.

For the three and six months ended June 30, 2011, general and administrative expenses were $688,099 and $1,538,984 compared to $886,409 and $1,739,540 for the three and six months ended June 30, 2010. Decline in general and administrative expenses in 2011 as compared to 2010 was primarily due to lower expenses associated with corporate development activities.

The Company's other income and expenses are primarily comprised of interest income and foreign exchange gains/losses. The Company earned interest revenue of $1,489 and $6,390 during the three and six months ended June 30, 2011 compared to $6,256 and $15,009 for the same period in 2010. Reduced interest earnings resulted from lower cash balances during 2011 compared to the same period in 2010.

Foreign exchange loss was $34,002 and $148,298 for the three and six months ended June 30, 2011. This compared to gain of $88,009 and $76,576 for the same periods in 2010. The Company's foreign exchange exposure is primarily limited to the translation of U.S. dollar balances in cash and short-term investment accounts to Canadian dollars. The foreign exchange loss for 2011 resulted from the decline of the U.S. dollar against the Canadian dollar. This compared to the same period in 2010 when the U.S. dollar strengthened against the Canadian dollar.

At June 30, 2011, the Company had cash and cash equivalents of $1,828,158 compared to $7,860,284 of cash and cash equivalents at December 31, 2010. The Company's cash equivalents are held in high-grade, liquid and low risk investments and are recorded at fair value. The Company invests its cash reserve within the guidelines of the Company's investment policy, which mandates preservation of capital and maintaining liquidity while seeking the best available return.

The Company anticipates accessing additional capital in the next 12 months. However, there can be no assurance that the capital will be available as necessary or that it will be available on terms acceptable to the Company.

About Allon

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 U.S. Food and Drug Administration (FDA). This pivotal trial is based upon statistically significant human efficacy demonstrated in patients with amnestic mild cognitive impairment (a precursor to Alzheimer's disease) and cognitive impairment associated with schizophrenia, and in 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.

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. Similarly, nothing in this press release is meant to promote a pharmaceutical product or make a regulated claim of efficacy.

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