Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

November 08, 2011 17:00 ET

Allon Therapeutics Releases Q3 Operating Results and Provides Corporate Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 8, 2011) - Allon Therapeutics Inc. (TSX:NPC) today announced its unaudited operating results for the three and nine month periods ended September 30, 2011. Allon also said that two events subsequent to the end of the Third Quarter have kept the Company on track to achieve its objective of securing marketing approval for its lead neuroprotective drug candidate davunetide as a potential treatment for progressive supranuclear palsy (PSP), a rapidly progressing and fatal degenerative brain disease.

Gordon McCauley, Allon's President and CEO, said the two subsequent events – enrollment completion of 300 patients in the pivotal phase 2/3 trial that is evaluating davunetide and the completion of a $5.44 million equity financing – are critical milestones in the Company's effort to complete patient dosing and release data by late 2012.

"We expect that this pivotal trial will provide the clinical data sufficient for a regulatory application for marketing approval," said McCauley. "Furthermore, having strengthened our balance sheet we can continue to advance davunetide toward commercialization."

Pivotal trial enrolment

Allon announced October 20, 2011 that it had successfully achieved the enrollment objective of 300 patients in the pivotal phase 2/3 clinical trial more than two months ahead of schedule.

Enrollment began in the fourth quarter of 2010. The trial is being conducted under a Special Protocol Assessment (SPA) with 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. Allon has obtained Orphan Drug and Fast Track Status in the U.S. and Orphan Status in the EU.

This pivotal trial is based upon statistically significant human efficacy demonstrated in previous studies in related neurodegenerative diseases. The trial 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.

The market opportunity for PSP treatments in the U.S. and EU is conservatively estimated at $700 million. McCauley also said that success in treating PSP with davunetide would define the opportunity to use davunetide in other diseases with similar pathologies, such as Alzheimer's and several subtypes of frontotemporal dementias as well as other neurodegenerative diseases like schizophrenia and Parkinson's.

Equity financing

Allon announced October 18, 2011 that it had successfully completed an equity financing that included a public offering of units and common shares resulting in gross proceeds of $4,357,843 and a subscription receipt for $1,084,033.

The issuance of the subscription receipt to Neuro Discovery II Limited Partnership, is subject to the approval of a majority of non-Neuro Discovery shareholders. Accordingly, Allon will hold a meeting of its shareholders within 70 days of the October 18th closing of the offering. Details of the offering can be found in the October 18th news release.

The net proceeds from the financing will be used for clinical trial activities related to completion of enrollment and ongoing patient dosing for the PSP study, including manufacturing expenses in relation to clinical drug supplies, and general administrative expenses, working capital and general corporate purposes.

Additional Q3 achievements

Allon announced September 28, 2011 that it had been granted a U.S. patent covering the composition of matter for the D-isomer of NAP (davunetide). The D-isomer of davunetide is known as AL-408 in the Company's pipeline. This new patent strengthens Allon's intellectual property estate which includes 15 patent families, 59 issued patents and more than 30 pending applications worldwide.

Previous pre-clinical studies have demonstrated that AL-408 has potent neuroprotective effects in a number of in vitro and in vivo models of neurotoxicity. In an animal model of fetal alcohol syndrome, AL-408 increased survival and improved cognitive performance. AL-408 has also shown potential neuroprotective activity in a preclinical model of amyotrophic lateral sclerosis (ALS).

The Company announced August 4, 2011 that it had been granted a U.S. patent covering the method of use for its lead product davunetide and its associated neuroprotective technology platform as a treatment for schizophrenia. Allon's earlier U.S. patents and pending patent applications cover davunetide and its technology platform for neurodegenerative diseases, including progressive supranuclear palsy, Alzheimer's disease, and Parkinson's disease.

On July 19th, 2011, the Company announced new findings that 12 weeks of treatment with davunetide appears to prevent cortical thinning of important parts of the brains of schizophrenia patients. Allon has previously announced the presentation of imaging data looking at the biochemical changes that are thought to underlie the deficits seen in schizophrenia patients.

Results of operations

Allon reported a net loss of $2,983,887 ($0.04 per share) for the three months ended September 30, 2011, compared to a net loss of $2,747,119 ($0.04 per share) for the three months ended September 30, 2010, representing an increase in net loss of $236,768. For the nine months ended September 30, 2011, the Company reported a net loss of $8,877,797 ($.11 per share), compared to a net loss of $8,524,659 ($0.11 per share) for the nine months ended September 30, 2010. This increase in net loss is explained in the following description of significant variances from the comparable periods in 2010.

For the three and nine months ended September 30, 2011, research and development expenses were $2,235,554 and $6,448,571 compared to $1,877,249 and $6,042,696 for the three and nine months ended September 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 nine months ended September 30, 2011, general and administrative expenses were $665,722 and $2,204,706 compared to $848,435 and $2,589,746 for the three and nine months ended September 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 foreign exchange gains/losses plus a small amount of interest income. Foreign exchange loss was $82,831 and $231,130 for the three and nine months ended September 30, 2011. This compared to loss of $26,677 and gain of $49,899 for the same periods in 2010. The Company's foreign exchange exposure is primarily limited to the translation of U.S. dollar denominated balances in cash, cash equivalents and accounts payable to Canadian dollars. The increase in foreign exchange loss in the third quarter of 2011 resulted from the impact of the strengthening of the U.S. dollar against the Canadian dollar on the Company's U.S. dollar denominated accounts payables. This compared to the same period in 2010 when the U.S. dollar weakened, resulting in foreign exchange loss in the Company's U.S. dollar denominated cash and cash equivalent.

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".

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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