Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

May 15, 2008 16:58 ET

Allon Therapeutics Releases First Quarter Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 15, 2008) - Allon Therapeutics Inc. (TSX:NPC) The Neuro Protection Company™, reported today in its First Quarter 2008 operating results that progress achieved during the quarter has kept the Company on a path to achieve its 2008 clinical development and financial milestones, including a development and commercialization partnership with a major pharmaceutical company. The Company's most significant achievement during the First Quarter was the release of top-line data February 26 demonstrating statistically significant human efficacy of its drug AL-108 in a Phase IIa clinical trial in patients with amnestic mild cognitive impairment (aMCI), a precursor to Alzheimer's disease (AD).

The Phase IIa trial demonstrated statistically significant efficacy 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.

Gordon McCauley, CEO and President of Allon, said the robust efficacy demonstrated by the Phase IIa trial, from which detailed results will be released during the summer, has given the Company a strong position for partnership discussions with several major pharmaceutical companies.

"We will follow the successful Phase IIa trial with a Phase IIb study in late 2008 evaluating AL-108 in patients with mild-to-moderate AD," said McCauley. "We are optimistic that we will complete a partnership that fully values the significant potential of our technology."

Other progress during the First Quarter included:

- Commencement of dosing in a Phase I clinical trial to evaluate the pharmacokinetics of AL-108 (intranasal administration) and AL-208 (intravenous administration) in the blood and cerebrospinal fluid of healthy adult subjects and Alzheimer's patients. Results of the trial will be released during the Second Quarter.

- Continuation of patient enrolment in a Phase II clinical trial evaluating the safety, tolerability and effect of AL-108 on schizophrenia cognitive impairment. Results of the trial are expected to be released in the Fourth Quarter.

- Continuation of patient enrolment in a Phase II clinical trial evaluating the safety, tolerability and effect of AL-208 as a treatment for mild cognitive impairment (MCI) resulting from ischemic damage during coronary artery bypass graft (CABG) surgery. Trial results will indicate AL-208's potential as a treatment for neurodegenerative indications where intravenous or systemic delivery is preferable. Results of the trial will be released mid-year.

- Planning of a Phase IIb clinical trial evaluating the safety, tolerability and effect of AL-108 in patients with mild-to-moderate Alzheimer's disease. This trial, expected to commence in the Fourth Quarter, will follow-up on the successful Phase IIa trial in patients with aMCI, a precursor to Alzheimer's.

- Subsequent to the end of the First Quarter, on May 1st the Company released preclinical data that demonstrate the potential of the Company's proprietary product candidate AL-309 as a treatment for peripheral neuropathy. AL-309 is the lead candidate in Allon's second neuroprotection technology platform, derived from Activity Dependent Neurotrophic Factor (ADNF).

Results of Operations

Matthew Carlyle, Chief Financial Officer, reported that the First Quarter increase in net loss year over year was a result of the Company's accelerating clinical development program.

"As expected, the increase in our research and development spending was driven by the concurrent expenses of our Phase II aMCI trial completed in the quarter, our ongoing Phase II MCI-CABG trial, the commencement and expansion of our Phase I pharmacokinetics trial and our ongoing preclinical work in preparation for our Phase IIb Alzheimer's trial," said Carlyle. "Our R&D spending level will decline considerably in the Second and Third Quarters as the ongoing projects are completed."

Carlyle said the Company's ongoing Phase II trial evaluating AL-108 as a treatment for cognitive impairment associated with schizophrenia is not funded from Allon's R&D budget. The trial is funded by TURNS (Treatment Units for Research on Neurocognition and Schizophrenia), which is supported by the U.S. National Institute of Mental Health. Allon is sharing the costs for the imaging-biomarker component of the trial, with TURNS and support from the National Association for Research in Schizophrenia and Affective Disorders (NARSAD).

The Company reported a net loss of $4,349,737 ($0.07 per share) for the three months ended March 31, 2008, compared to a net loss of $2,818,519 ($0.06 per share) for the three months ended March 31, 2007, representing a quarter over quarter increased loss of $1,531,218.

For the three months ended March 31, 2008, research and development expenses were $3,764,608 compared to $2,111,945 for the three months ended March 31. 2007. Quarter over quarter research and development expenses increased by $1,652,663 and accounted for 82% of the Company's $4,599,149 operating expenses. Research and development expenses included costs for Allon's three Phase II clinical trials, a Phase I clinical trial, pre-clinical studies to prepare for a Phase IIb in Alzheimer's and to advance pipeline products. During the quarter, the Company completed its AL-108 Phase IIa clinical trial in aMCI and released top-line data demonstrating statistically significant efficacy. The Company expects to complete patient dosing in its Phase II clinical trial in MCI-CABG and expects to release results in mid-2008. With the completion of the AL-108 clinical trial in aMCI and AL-208 clinical trial in MCI-CABG in Q2 2008, the Company expects both research and development and overall expenses to significantly decrease during the second quarter and remainder of 2008.

For the three months ended March 31, 2008, general and administrative expenses were $696,052, compared to $631,142 for the three months ended March 31, 2007. During the three months ended March 31, 2008, general and administrative expenses increased by $64,910 over the same period in 2007. The increase primarily results from the addition of 1.5 fulltime employees and modest increases in overhead, partly offset by decreases in stock-based compensation expense and lower legal fees.

For the three months ended March 31, 2008, the Company recognized other income of $249,412, compared to other income of $60,998 for the three months ended March 31, 2007. The $188,414 increase is primarily due to the recognition of a foreign exchange gain on translation during the quarter, compared to a loss recorded during the same period in 2007.

At March 31, 2008 the Company had cash and short-term investments of $9,088,483 compared to $13,126,865 at December 31, 2007. Short-term investments are held in high-grade, liquid commercial paper and other low risk investments which are recorded at fair value. The Company has no exposure to liquidity or other risks associated with certain Asset-Backed Securities. At March 31, 2008 maturities on investments ranged from 30 days to 2 months.

The Company's complete First Quarter unaudited financial statements and managements' discussion and analysis are available at www.sedar.com.

About Allon's neuroprotective platforms

Allon's two neuroprotective technology platforms are based on two naturally occurring proteins secreted by the brain in response to a range of insults. The platforms are activity-dependent neuroprotective protein (ADNP) and activity-dependent neurotrophic factor (ADNF). Because the two platforms are based on different proteins, the drugs from each are different molecules with different therapeutic mechanisms and distinct commercial opportunities. Clinical-stage drugs AL-108 and AL-208 are derived from ADNP, while preclinical stage drug AL-309 is derived from ADNF.

About Allon

Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. In Q1 2008, Allon's drug AL-108 demonstrated human efficacy in amnestic mild cognitive impairment, a precursor to Alzheimer's disease. Allon has two other Phase II human efficacy trials under way 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" (Neuro Protection CompanyTM) 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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