Allon Therapeutics Releases Second Quarter Operating Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 10, 2009) - Allon Therapeutics Inc. NPC reported today in its Second Quarter 2009 operating results that the Company continues on a path to achieve its 2009 clinical development and financial milestones. The Company achieved a major milestone July 9 when it released top-line Phase IIa clinical trial data demonstrating that its lead neuroprotective drug candidate, davunetide, has a statistically significant impact on the capacity of schizophrenia patients to carry out important activities in their daily lives. Gordon McCauley, Allon's President and CEO, said the trial results reconfirm the potential of davunetide to treat other patient groups suffering from cognitive impairment. In 2008, Allon reported Phase IIa results showing that davunetide had a positive impact on memory function in patients with amnestic mild cognitive impairment (aMCI), a precursor to Alzheimer's disease (AD). The Phase IIa schizophrenia trial was managed by TURNS (Treatment Units for Research on Neurocognition and Schizophrenia), with substantial financial support from the National Institute of Mental Health (NIMH), part of the U.S. National Institutes of Health. The TURNS group intends to present and publish the full results for this trial later this year. In addition, TURNS and Allon collaborated on a companion study looking at changes in brain imaging in a small subset of the patients in the main trial. The Company will disclose these results when they are received from TURNS. McCauley said the Company's next steps in Alzheimer's disease and schizophrenia will be defined after negotiation of a development and commercialization partnership with a major pharmaceutical company. "We anticipate that prospective pharmaceutical partners will see this new schizophrenia data as complementary to the human efficacy data they've already seen from aMCI. We continue to work toward the completion of a partnership, and we anticipate that it will only advance once we're in a position to share the imaging data with prospective partners." Phase II trial in FTD Allon reported June 25 that it will begin a Phase II clinical trial later this year to evaluate whether davunetide has the potential to become the first effective treatment for a number of brain disorders broadly categorized as frontotemporal dementia (FTD). The study will evaluate the effect of davunetide for the treatment of Progressive Supranuclear Palsy (PSP), one type of FTD. A smaller study in other related forms of FTD will be carried out in parallel. Physicians and researchers who specialize in FTD are enthusiastic about evaluating davunetide in FTD patients, primarily because about 50% of all FTD cases and essentially all PSP cases involve the presence of altered forms of the brain protein tau. Based on the Company's clinical and pre-clinical data, Allon's technology is recognized as the most clinically advanced tau-related therapy. Allon expects that FTD and/or its subtypes will qualify for orphan drug status in both North America and Europe. This status brings important competitive advantages for the commercialization of a drug. Product Optimization McCauley reported that the Company is undertaking a program to optimize the formulation of davunetide for use in future clinical trials. This process involves adjusting the dosing concentrations of the drug to optimize its administration convenience and cost effectiveness. Allon intends to complete this optimization process before commencing the Phase II clinical trial in FTD. Results of Operations Allon reported a net loss of $1,204,940 ($0.02 per share) for the three months ended June 30, 2009, compared to a net loss of $2,713,823 ($0.05 per share) for the three months ended June 30, 2008, representing a decrease in net loss of $1,508,883. For the six months ended June 30, 2009, Allon reported a net loss of $3,214,529 ($0.04 per share), compared to a net loss of $7,063,560 ($0.12 per share) for the six months ended June 30, 2008, representing a decrease in net loss of $3,849,031. For the three and six months ended June 30, 2009, research and development expenses were $541,645 and $1,740,581 compared to $1,690,702 and $5,455,310 for the three and six months ended June 30, 2008. The decline in research and development expenses resulted from a decrease in clinical trial activity. During the first half of 2008, the Company had as many as three ongoing Phase II clinical programs, two of which were completed in the first and third quarters of 2008 respectively. For the three and six months ended June 30, 2009, general and administrative expenses were $548,180 and $1,298,865 compared to $894,693 and $1,590,745 for the three and six months ended June 30, 2008. The decrease of $346,513 and $291,880 compared to 2008 resulted from reduced expenditures on business development and investor relations activity. Amortization expense for the three and six months ended June 30, 2009 was $136,848 and $273,460 compared to $136,876 and $275,365 for the three and six months ended June 30, 2008. Allon amortizes tangible assets and intellectual property on a straight-line basis. The small decline compared to the previous year was primarily the result of certain assets being fully amortized. For the three and six months ended June 30, 2009, the Company recognized other income of $21,733 and $98,377 compared to $8,448 and $257,860 for the three and six months ended June 30, 2008. The increase of $13,285 for the three months ended June 30, 2009, compared to the same period in 2008, was due to lower foreign exchange translation loss partly offset by lower interest revenues. The decline of $159,483 for the six months ended June 30, 2008, compared to the same period in 2008, was due to reduced interest earnings resulted from significantly lower interest rates which more than offset higher cash balances. At June 30, 2009 the Company had cash and cash equivalents of $14,523,830 compared to $19,093,499 of cash and cash equivalents at December 31, 2008. The company's cash equivalents are held in high-grade, liquid commercial paper, government bonds or other low risk investments which are recorded at fair value. 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 davunetide intranasal (AL-108) and davunetide intravenous (AL-108) are derived from ADNP, while preclinical stage drug AL-309 is derived from ADNF. ADNP drugs davunetide intranasal (AL-108) and davunetide intravenous (AL-208) are focused on Alzheimer's disease and cognitive impairment. ADNF drug candidate 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 focused on developing the first drugs that impact the progression of neurodegenerative diseases. Allon's drug davunetide has demonstrated human efficacy in amnestic mild cognitive impairment, a precursor to Alzheimer's disease, and schizophrenia-related cognitive impairment. Allon has Phase II human efficacy programs pursuing large underserved markets: Alzheimer's disease, frontotemporal dementia, and schizophrenia-related cognitive impairment. The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC" (Neuro Protection Company(TM)) 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.