Allon Therapeutics Inc.

Allon Therapeutics Inc.

November 12, 2007 09:30 ET

Allon Therapeutics Releases Third Quarter Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 9, 2007) - Allon Therapeutics Inc. (TSX:NPC), The Neuro Protection Company™, today reported its third quarter operating results. Highlights of this quarter include the continued advancement of the Company's three Phase II human efficacy programs, with patient screening having been completed in the Phase II Alzheimer's trial that is expected to report data in Q1 2008. Subsequent to the end of the quarter, the Company announced that enrollment was complete.

"The Allon team has continued to diligently execute the Phase II efficacy trial and the Company remains on track to release the first set of human efficacy data from our AL-108 compound in the first quarter of 2008," said Gordon McCauley, President and CEO of Allon. "The data from this trial will be transformational for the Company. Our management team and expert advisers look forward to this important milestone being complete and are actively planning the subsequent studies that we anticipate in Alzheimer's."

In addition, Allon initiated dosing in the Company's Phase II efficacy trial evaluating Al-108 as a treatment for schizophrenia-related cognitive impairment. This trial being conducted in collaboration with the National Institutes of Health funded group Treatment Units for Research on Neurocognition in Schizophrenia (TURNS), recently announced the addition of an imaging-biomarker component that both the Company and TURNS experts believe will increase the understanding of how AL-108 can improve a patient's cognitive performance through structural changes in the brain.

The Company's third Phase II efficacy trial evaluating Al 208 as a treatment for the Mild Cognitive Impairment associated with Coronary Artery Bypass Graft Surgery (MCI-CABG) continues to progress and the Company expects to report data by the middle of 2008.

"Having significantly improved our cash position in the second quarter, the Company continues to utilise our funds diligently, focusing on the advancement of all three Phase II clinical programs while continuing to evaluate potential opportunities that can create further value for our shareholders," said Matthew Carlyle, CFO of Allon. "With the expected completion of the Phase II Alzheimer's trial in Q1 2008 and enrollment completion in the Phase II MCI-CABG trial by the middle of 2008, it is expected the Company's burn rate will remain consistent through the next few quarters while preparing for the subsequent studies we anticipate."

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

- The appointment of Dr. Annette Kleiser as Vice President of Business Development for the Company. Dr. Kleiser will lead the Company's strategic business development initiatives and will work closely with the Company's existing external advisors.

- The Company's Alzheimer's program was selected as one of the "Top 10" not yet partnered biotech programs in the world and the company, subsequent to quarter end participated at the prestigious Windhover Therapeutics Area Partnership conference.


For the three months ended September 30, 2007, Allon reported a net loss of $3,242,315 ($0.05 per share) compared to a net loss of $1,975,807 ($0.06 per share) for the three months ended September 30, 2006 (Q3 2006). For the nine months ended September 30, 2007 (YTD 2007), Allon reported a net loss of $8,612,351 ($0.17 per share) compared to a net loss of $5,604,981 ($0.17 per share) for the nine months ended September 30, 2006 (YTD 2006).

The most significant factor contributing to the increased loss during the quarter and YTD was research and development expenses associated with the advancement of Allon's three Phase II clinical trials.


For the three month period ended September 30, 2007, research and development expenses were $2,118,261 compared to $1,471,652 in Q3 2006. The YTD 2007 research and development expenses were $5,720,051 compared to $3,862,493 for the comparable period in 2007.


For the three month period ended September 30, 2007, general and administrative expenses were $529,214 compared to $392,279 in Q3 2006. Year-to-date general and administrative expenses were $1,669,378 compared to $1,377,110 for the same period 2006. The quarter and year-to-date increases result from expanded business development activities, investor relations initiatives and recruitment of additional personnel.


Amortization expense for the three month period ended September 30, 2007 was $136,416 compared to $135,990 in Q3 2006. Year-to-date amortization was $409,415 compared to $427,145.


For the three month period ended September 30, 2007, the Company incurred other expenses of $458,424 compared to other income of $24,114 in Q3 2006. Year-to-date, the Company incurred other expenses of $813,507 compared to $87,770 for the same period 2006. The most significant factors contributing to the $482,538 and $725,737 increased quarter over quarter and year-to-date expenses are increased foreign exchange loss on translation of US balances to Canadian dollars, partly offset by increased interest earned on cash reserves. The Company's policy is to maintain sufficient US denominated cash, cash equivalent and short-term investment balances to match its anticipated US dollar operating expenses.


At September 30, 2007 the Company had cash and short-term investments of $16,660,146 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. The Company has no exposure to liquidity or other risks associated with certain Asset-Backed Securities. At September 30, 2007 maturities on investments ranged from 30 days to 5 months.

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 $15.9 million at September 30, 2007, an increase of $6.5 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 September 30, 2007 and expected interest income will be sufficient to fund operations and commitments to the middle of 2009.

About Allon

Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. Allon has 3 Phase II human efficacy trials underway pursuing three large underserved markets: Alzheimer's disease, schizophrenia and cognitive impairment. The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC" (Neuroprotection CompanyTM) 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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