Allon Therapeutics Inc.

Allon Therapeutics Inc.

August 10, 2007 18:06 ET

Allon Therapeutics Releases Second Quarter Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 10, 2007) - Allon Therapeutics Inc. (TSX:NPC), The Neuro Protection Company™, reported today in its first quarter operating results that the Company continues to progress all three Phase II human efficacy clinical programs and has also strengthened its cash position with the completion of a $15.7 million bought deal financing.

In the second quarter, Allon continued to advance all three Phase II efficacy trials currently in development, while also advancing the Company's pre-clinical pipeline and additional research in new indications. AL-108 is currently being evaluated as a treatment for Alzheimer's and the Company remains on track to complete the trial in late 2007 and report data in the first half of 2008. Allon is also evaluating AL-108 in a Phase II efficacy trial for schizophrenia-related cognitive impairment in collaboration with TURNS, and is expecting to begin dosing in the third quarter of this year. The Company's third Phase II efficacy trial is evaluating Al-208 as treatment for the mild cognitive impairment associated with coronary artery bypass graft surgery (MCI-CABG) and the Company is progressing towards its goal of completion by the end of 2007.

The Company also announced on May 29th the closing of a bought deal financing generating gross proceeds to Allon of $15.7 million. Gordon McCauley, President and CEO of Allon said the Company plans to utilise the proceeds from the financing to continue progressing Allon's compounds through the multiple Phase II trials, advance pipeline compounds, particularly AL-309, and pursue other corporate development opportunities.

"The second quarter financing provides Allon with the necessary capital to fund the three ongoing Phase II clinical programs and to fully exploit the potential opportunity of the Company's unique class of compounds," said McCauley. "Having now substantially improved our cash position, the Company will continue to focus these funds in a disciplined manner, while looking at potential opportunities that can create value for our shareholders."

Other achievements and milestones in the second quarter of 2007 included:

- Being granted a US patent covering additional composition of matter for the products in the ADNP platform including AL-108 and AL-208 which broadens the intellectual property of Allon's patent portfolio; and

- The Company was invited to give a plenary presentation to address and illustrate the neuroprotective effect of Allon's drug, AL-108 and explain the development strategy behind the two Phase II clinical trials, one for Alzheimer's disease and one for schizophrenia-related cognitive impairment at the 3rd Annual CNS Diseases Congress, June 25th to 26th, 2007.


Allon reported a net loss of $2,551,517 ($0.05 per share) for the three months ended June 30, 2007 (Q2 2007) compared to a net loss of $1,984,335 ($0.06 per share) for the three months ended June 30, 2006 (Q2 2006). For the six months ended June 30, 2007 (YTD 2007), Allon reported a net loss of $5,370,036 ($0.11 per share) compared to a net loss of $3,629,174 ($0.11 per share) for the six months ended June 30, 2006 (YTD 2006).

The increased quarter over quarter loss of $567,182 and YTD increased loss of $1,740,862 relate to the progression of Allon's AL-108 and AL-208 compounds from Phase I to Phase II clinical trials.

During the three months and YTD ended June 30, 2007, Allon continued to advance its two Phase II clinical studies with AL-108 and AL-208 and commenced pre-clinical studies of AL-309. During the three months ended June 30, 2006, Allon completed dosing for a Phase Ib clinical trial of AL-208 and commenced enrollment for its Phase II clinical trial of AL-208. YTD 2006 expenses included the advancement of AL-208 from Phase Ib to Phase II clinical trial, pre-clinical work relating to both AL-108 and AL-208 and preparatory costs for a Phase Ib clinical trial in AL-108 that was conducted during the second half of 2006.


For the three month period ended June 30, 2007, research and development expenses were $1,539,929 compared to $1,215,810 in Q2 2006. The $324,119 increase over Q2 2006 relates to the Company's advancement of its clinical and drug development programs in two ongoing Phase II clinical trials.


For the three month period ended June 30, 2007, general and administrative expenses were $554,797 compared to $453,584 in Q2 2006. Year-to-date general and administrative expenses were $1,140,164 compared to $984,831 for the same period last year. The $101,213 increase over Q2 2006 and $155,333 year-to-date increase over YTD 2006 primarily result from additional resources required to increase corporate development and investor relations activities and additional costs associated with reporting jurisdictions in Canada.


Amortization expense for the three month period ended June 30, 2007 was $136,569 compared to $134,070 in Q2 2006. Year-to-date amortization was $272,999 compared to $291,155. The $2,499 increase from Q2 2006 results from an increase in business equipment. The year over year decrease of $18,156 primarily resulted from a prior year, one-time adjustment of $23,092 to amortization expense during Q1 2006.


For the three month period ended June 30, 2006, the Company incurred other expenses of $320,222 compared to $180,871 in Q2 2006. Year-to-date, the Company incurred other expenses of $355,083 compared to $111,884 for the same period last year. The $139,351 and 243,199 increased quarter over quarter and year-to-date expenses are primarily due to increased foreign exchange loss on translation of US balances to Canadian dollars and increased stock based compensation, partly offset by increased interest earned on cash reserves.


At June 30, 2007 the Company had cash and short-term investments of $19,243,816 compared to $10,369,753 at December 31, 2006. Short-term investments are held in high-grade, liquid commercial paper and other low risk investments which are recorded at fair value. At June 30, 2007 maturities on investments ranged from 30 days to 8 months.

During the quarter ended June 30, 2007 Allon completed a bought deal financing, issuing 13,059,933 units (the "Units"), comprised of one share and one half share purchase warrant at a price of $1.20 per Unit. An additional 103,699.5 warrants were also purchased as part of the transaction resulting in gross proceeds of $15.7 million. Each whole warrant will entitle the holder thereof to purchase one common share at an exercise price of $1.65 for a term of 24 months. Allon expects cash on hand and interest revenue to fund operations into 2009.

The Company has 2.5 million stock options exercisable at prices ranging from $.001 to $1.72 per share and 12.9 million warrants outstanding and exercisable at prices ranging from $1.00 to $1.65. If all outstanding stock options and warrants were exercised, proceeds of $1.6 million and $17.2 million would be generated respectively.


The Company had working capital of $18.9 million at June 30, 2007, an increase of $9.5 million from December 31, 2006. The increased working capital results from the completion of the bought deal equity financing that increased cash reserves by $14.5 million, partly offset by costs associated with ongoing enrollment for the AL-108 and AL-208 Phase II clinical trials.

With the continued advancement of two of its drug programs in three Phase II clinical trials, Allon has entered into contracts that will remain in effect over several reporting periods. These contracts are performance based with payment subject to the achievement of clinical trial milestones and may be cancelled with written notice.

The Company believes that its cash and short-term investments as at June 30, 2007 and expected interest income will be sufficient to fund operations and commitments into 2009.

About Allon

Allon Therapeutics Inc. is a clinical-stage Canadian biotechnology company developing drugs that protect against neurodegenerative conditions such as Alzheimer's, cognitive impairment, stroke, traumatic brain injury, multiple sclerosis and neuropathy. The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC" (Neuro Protection Company™) and based in Vancouver. For additional information please visit the company's website:

Forward Looking Statements

There are forward-looking statements contained herein that are not based on historical fact, including without limitation statements containing the words "believes", "may", "plans", "will", "estimate", "continue," "anticipates", "intends", "expects", and similar expressions. Such forward-looking statements involve 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 such forward-looking statements. Such factors include, among others, Allon's stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market Allon's products, the ability to protect its intellectual property and dependence on collaborative partners. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments.

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