Allon Therapeutics Inc.
TSX : NPC

Allon Therapeutics Inc.

November 08, 2010 17:01 ET

Allon Therapeutics Releases Third Quarter Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 8, 2010) - Allon Therapeutics Inc. (TSX:NPC) today announced its unaudited operating results for the three and nine months ended September 30, 2010. The Company also said that it expects to begin a pivotal Phase 2/3 clinical trial in the fourth quarter to evaluate the Company's lead neuroprotective drug davunetide as a treatment for progressive supranuclear palsy (PSP).

Gordon McCauley, President and CEO of Allon, said that PSP is an early onset movement disorder and dementia, and part of a group of progressive degenerative brain diseases that are often misdiagnosed as Alzheimer's or Parkinson's disease.

"Our human trials to date suggest that davunetide works in patients with diseases that have similar pathology to PSP," said McCauley. "Given these outcomes and that there is a validated rating scale measuring clinically relevant outcomes, we believe there is a strong rationale to pursue approval in PSP. We believe that this trial is designed to produce data on which we can base a New Drug Application to the U.S. Food and Drug Administration."

Recent Highlights

Allon announced November 1 that it had closed a U.S. $10 million financing agreement with a fund managed by Nordic Biotech Advisors, a sophisticated global investor, at a 10% premium to market. These funds will help ensure that the PSP study is fully funded.

In preparation for the PSP study, a small pilot study in PSP and related diseases in was carried out in collaboration with the University of California, San Francisco Memory and Aging Clinic. On October 8, Allon announced that this study successfully met its primary endpoint of safety and tolerability in patients with PSP and related disorders. The pilot study also appeared to generate a trend on a secondary outcome measure of cognition, notwithstanding the small size, mixed population, and short duration of the study.

Earlier this year, Allon received Orphan Drug designation for davunetide as a treatment for PSP in the United States and the European Union, the world's two largest pharmaceutical markets. In addition, the Company was granted Fast Track status in the U.S. for davunetide for the treatment of PSP.

On November 4, the Company announced that its wholly-owned United States subsidiary had been awarded two non-taxable grants totalling approximately $500,000 from the United States government under the Qualifying Therapeutic Discovery Project (QTDP) program. Therapeutic discovery projects that show reasonable potential to result in new therapies to treat areas of unmet medical need; prevent, detect, or treat chronic or acute disease and conditions; and reduce long-term health care costs in the United States are eligible for the QTDP program under the Patient Protection and Affordable Health Care Act of 2010. The grants awarded to the Company will help fund development of Allon's clinical-stage neuroprotective drug candidate davunetide as a treatment for PSP and preclinical-stage drug candidate AL-309 as a treatment for peripheral neuropathy.

Results of Operations

Allon reported a net loss of $2,737,230 ($0.04 per share) for the three months ended September 30, 2010, compared to a net loss of $1,550,965 ($0.02 per share) for the three months ended September 30, 2009, representing an increase in net loss of $1,186,265. For the nine months ended September 30, 2010, the Company reported a net loss of $8,635,392 ($0.11 per share), compared to a net loss of $4,765,494 ($0.06 per share) for the nine months ended September 30, 2009, representing an increase in net loss of $3,869,898.

For the three and nine months ended September 30, 2010, research and development expenses were $1,749,579 and $5,696,164 compared to $715,867 and $2,456,448 for the three and nine months ended September 30, 2009. The increase in research and development expenses resulted from an increase in clinical trial activity related to the Company's neuroprotective drug candidate, davunetide.

For the three and nine months ended September 30, 2010, general and administrative expenses were $841,215 and $2,577,010 compared to $650,527 and $1,949,392 for the three and nine months ended September 30, 2009. The increase of $190,688 and $627,618 compared to 2009 resulted primarily from expenses related to the standby equity distribution agreement, convertible revenue and royalty interest agreement, commercial research activities, and increase in investor relations activities.

Amortization expense for the three and nine months ended September 30, 2010 were $136,525 and $409,209 compared to $136,490 and $409,950 for the three and nine months ended September 30, 2009. Allon amortizes tangible assets and intellectual property on a straight-line basis.

The Company's other income and expenses are comprised of interest income, foreign exchange gains and losses, and gain on disposal of investments. The Company earned interest revenue of $5,242 and $20,251 during the three and nine months ended September 30, 2010 compared to $16,110 and $91,714 for the same period in 2009. Reduced interest earnings resulted primarily from lower cash balances and lower interest rates in 2010 compared to the same period in 2009.

Foreign exchange translation loss was $15,153 and $10,893 for the three and nine months ended September 30, 2010. This compared to a loss of $64,191 and $41,418 for the three and nine months ended September 30, 2009. 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.

During the second quarter of 2010, the Company disposed of investments previously written-off, resulting in a gain of $37,633.

As of September 30, 2010, the Company had cash and cash equivalents of $1,717,014 compared to $11,002,859 of cash and cash equivalents at December 31, 2009. The Company's cash equivalents are held in high-grade, liquid and low risk investments which may include commercial paper, government bonds and money market funds 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.

About PSP

PSP is one of a group of progressive disorders called frontotemporal dementia (FTD), that affect the frontal and temporal lobes of the brain, and for which there are no approved treatments. Approximately 20,000 and 50,000 persons in the U.S. and EU respectively have PSP.

Approximately half of FTDs, including PSP, are tauopathies, which are pathologies that 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 FTD subtypes that are tauopathies. PSP is often characterized by progressive difficulty with balance and walking, eye movement abnormalities, and cognitive and personality changes. Patients are typically diagnosed when they are between 45 and 65 years of age. PSP is associated with progressive disability and death often three years following onset. The disease is slightly more common in men than women, but there are no known geographical, occupational, or racial patterns.

About davunetide

Davunetide is derived from a naturally occurring neuroprotective brain protein known as activity dependent neuroprotective protein (ADNP). Allon's laboratory and animal studies have shown that davunetide improves cognition in a number of disease models through a mechanism believed to involve effects on microtubules, structures in the brain critical to communication between cells.

About Allon's neuroprotective platforms

Allon's two neuroprotective technology platforms are based on two naturally occurring proteins produced 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 based on davunetide are derived from ADNP, while preclinical stage drug AL-309 is derived from ADNF. Davunetide is focused on Alzheimer's disease, cognitive impairment associated with schizophrenia, and progressive supranuclear palsy (PSP). AL-309 is being developed for the treatment of peripheral neuropathies and is administered orally or subcutaneously.

About Allon

Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. Allon's drug davunetide has demonstrated human efficacy in amnestic mild cognitive impairment, a precursor to Alzheimer's disease, and cognitive impairment associated with schizophrenia. Allon has Phase 2 human efficacy programs pursuing large underserved markets, such as Alzheimer's disease and cognitive impairment associated with schizophrenia, and in orphan markets, such as frontotemporal dementias. 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: 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.

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