Allon reports 2010 audited operating results and updates 2011 plans
VANCOUVER, B.C. — March 10, 2011 — Allon Therapeutics Inc. (TSX: NPC) today announced its audited operating results for 2010 and updated clinical development plans for 2011.
Gordon McCauley, Allon’s President and CEO, said the Company’s most significant achievement in 2010 was the launch of a pivotal Phase 2/3 clinical trial to evaluate its lead drug candidate, davunetide, as a treatment for progressive supranuclear palsy (PSP), a rapidly progressing and fatal movement disorder with dementia which is often misdiagnosed as Parkinson’s or Alzheimer’s disease.
“This is the most advanced clinical trial we have undertaken and reaffirms that davunetide is the most advanced tau-based therapy in the world. We’re running this trial with a Special Protocol Assessment (SPA) from the U.S. Food and Drug Administration (FDA) meaning that the data from this study if positive may be used as part of a marketing approval,” McCauley said.
“This multinational trial will treat approximately 300 patients at leading medical institutions in the United States, Canada, Europe and Australia,” McCauley said. “We are on track to complete patient enrolment by the end of 2011 and to report data about a year later.”
McCauley also said another important focus for 2011 is continued development of a davunetide formulation that Allon intends to direct at more prevalent neurodegenerative diseases such as Alzheimer’s disease, Parkinson’s disease, and schizophrenia. The Company’s objective is to have a subcutaneous depot formulation of davunetide ready for clinical trials by the time it has results from the PSP study.
“We believe that this second product will provide effective market segmentation, generate incremental intellectual property, and exploit the efficacy data we have already generated in many of the target diseases,” McCauley said.
McCauley said Allon launched the pivotal Phase 2/3 trial targeted at PSP because it is the Company’s fastest path to approval based on the human efficacy data generated to date. In addition, davunetide for PSP has commercial and financial advantages:
- Designation of davunetide for PSP as an Orphan Drug in the United States and the European Union brings significant commercial incentives for the company; and
- The trial can be completed with the Company’s existing financial resources.
McCauley said the launch of the pivotal Phase 2/3 trial was preceded by several key achievements during 2010, including:
- Orphan Drug designation for davunetide as a treatment for PSP in the U.S. and in Europe, the world’s two largest pharmaceutical markets;
- Granting of Fast Track status in the U.S. for davunetide in the treatment of PSP;
- Completion of a Phase 1 clinical trial that expanded the demonstrated safety range and pharmacokinetic profile of davunetide at dosage levels higher than previously investigated in the Company’s clinical trials; and
- An agreement on an SPA that ensures the pivotal Phase 2/3 trial design meets the FDA’s expectations for a pivotal study.
Other 2010 achievements
Other achievements during 2010 included:
- Two financing agreements for a total of $20 million that ensure Allon has the financial resources to fund its clinical development milestones.
- Results from an imaging study of schizophrenia patients showing that 12 weeks of treatment with davunetide resulted in a statistically significant increase in levels of a biomarker that is an important indicator of brain cell health. These results also have significance for other neurodegenerative conditions, such as brain injury, stroke, Alzheimer’s disease and Parkinson’s disease.
- Receipt of a second grant from the Michael J. Fox Foundation for Parkinson’s Research to conduct pre-clinical research that will help determine the potential of davunetide as a treatment for PD. The first grant, received in 2007, generated research that found intranasal davunetide treatment significantly improved motor function and brain pathology in a mouse model which replicates certain characteristics of Parkinson’s leading to a recent peer-reviewed publication.
- Receipt of two non-taxable grants totalling approximately $500,000 from the U.S. government under the Qualifying Therapeutic Discovery Project program. Recipients must show reasonable potential to develop 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 U.S.
- Granted a Japanese patent covering the composition of matter of the Company’s lead product davunetide and other peptides in its neuroprotection drug platform.
Results of operations
Allon reported a net loss of $16,591,113 ($0.21 per share) for the year ended December 31, 2010, compared to a net loss of $7,341,985 ($0.09 per share) for the year ended December 31, 2009, representing a year over year increase in net loss of $9,249,128.
For the fiscal year ended December 31, 2010, research and development expenses were $12,140,132 compared to $3,891,750 for the fiscal year ended December 31, 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 year ended December 31, 2010, general and administrative expenses were $3,766,596 compared to $2,840,193 for the year ended December 31, 2009. The increase of $926,403 compared to 2009 resulted primarily from expenses related to the standby equity distribution agreement, commercial research activities, and increase in investor relations activities.
Amortization expense for the year ended December 31, 2010 was $545,108 compared to $546,766 for the year ended December 31, 2009. 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.
The Company’s other income and expenses are primarily comprised of interest income and foreign exchange gains and losses and gain on disposal of investments. The Company earned interest revenue of $23,750 in 2010 compared to $103,058 in 2009. Reduced interest earnings resulted from lower interest rates and lower cash balances during 2010 compared to 2009.
Foreign exchange translation loss was $200,660 in 2010. This compared to loss of $175,309 in 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. The foreign exchange translation losses for both 2010 and 2009 resulted from the decline of the U.S. dollar against the Canadian dollar.
During the second quarter of 2010, the Company disposed of investments previously written-off, resulting in a gain of $37,633.
At December 31, 2010, the Company had cash and cash equivalents of $7,860,284 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.
Allon is currently enrolling patients in a pivotal Phase 2/3 clinical trial evaluating davunetide as a potential treatment for progressive supranuclear palsy (PSP), a rapidly-progressing and fatal movement disorder with dementia which is often misdiagnosed as Parkinson’s or Alzheimer’s disease. Allon reached agreement on a Special Protocol
Assessment with the U.S. Food and Drug Administration, as well as Orphan Drug and Fast Track Status in the U.S. Similarly, Allon has Orphan Status for davunetide in the EU.
Davunetide is derived from a naturally occurring neuroprotective brain protein known as activity dependent neuroprotective protein (ADNP). Allon’s human clinical and pre-clinical data suggest that davunetide works on microtubules, structures in the brain critical to communication between cells, and central to the tau pathway. Davunetide has shown statistically significant impacts on memory, activities of daily living, and a biomarker of brain cell function and integrity. Allon has extensive intellectual property protecting davunetide.
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.
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 an SPA with the FDA. This pivotal trial is based upon statistically significant human efficacy demonstrated in amnestic mild cognitive impairment, cognitive impairment associated with schizophrenia, and positive biomarker data.
The Company is listed on the Toronto Stock Exchange under the trading symbol “NPC” (Neuro Protection Company™) and based in Vancouver.
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.