News
Allon Therapeutics releases first quarter operating results
VANCOUVER, May 14, 2007— Allon Therapeutics Inc. (the “Corporation”) (TSX:NPC), the Neuroprotection CompanyTM reported today in its first quarter operating results that the Company remains on track to achieve all of it’s 2007 milestones, including initiating a third Phase II human clinical trial.
The Company announced on January 8th that the United States National Institute of Mental Health-funded project, Treatment Units for Research on Neurocognition and Schizophrenia (TURNS) had selected Allon’s drug for a Phase II clinical trial. The Phase II trial is evaluating the Company’s product AL-108 as a treatment for schizophrenia-related cognitive impairment.
Other achievements and milestones in the first quarter of 2007 included:
- Allon began enrolling patients in its Phase II human efficacy trial in Alzheimer’s;
- Progressing AL-208 into the randomized portion of its Phase II human efficacy trial evaluating the Company’s product AL-208 as a treatment for the mild cognitive impairment associated with coronary artery bypass graft (MCI-CABG) surgery;
- The Michael J. Fox Foundation selected Allon from hundreds of applicants to receive funding for preclinical research to evaluate the effectiveness of AL-108 as a treatment for Parkinson’s disease;
- On March 7th, 2007 Allon announced that the results of the completed Phase Ib clinical trial of AL-108 met all of its objectives. The trial confirmed that AL-108 is safe and well tolerated in 32 healthy elderly subjects after seven days of dosing;
- Further to the announced collaboration with the TURNS group, Allon successfully filed an IND (Investigational New Drug) application with the United States Food and Drug Administration (FDA) to begin human clinical trials evaluating the Company’s drug, AL-108 as a treatment for schizophrenia- related cognitive impairment.
Gordon McCauley, President and CEO of Allon said the Company continues to execute on its milestones while broadening the opportunity for the Company’s programs through external funding.
“The first quarter was a good example of the consistent track record the company has displayed for 3 years, in achieving each milestone,” McCauley said. “Being selected by prestigious groups such as TURNS and The Michael J. Fox Foundation further complements our disciplined use of capital and validates the progress the Company has made in the clinic.”
RESULTS OF OPERATIONS
Allon reported a net loss of $2,818,519 ($0.06 per share) for the three months ended March 31, 2007 (Q1 2007) compared to $1,644,839 ($0.05 per share) for the three months ended March 31, 2006 (Q1 2006). The $1,173,680 increased loss is mainly the result of increased clinical activity in Q1 2007 compared to Q1 2006 as the Company has two ongoing Phase II clinical studies which were not initiated until Q2 and Q4 2006 respectively. The increase is also partially a result of the $149,537 future income tax recovery in Q1 2006 which offset non cash expenses as compared to nil in Q1 2007. The future tax liability, which resulted from the 2004 purchase of medical technology, was fully recovered in the first quarter of 2006.
RESEARCH AND DEVELOPMENT
For the three month period ended March 31, 2007, research and development expenses were $2,061,861 compared to $1,175,031 in Q1 2006. The $886,830 increase over Q1 2006 relates to the Company’s advancement of its clinical and drug development programs in two ongoing Phase II trials, primarily the upfront costs associated with the AL-108 Alzheimer’s trial.
GENERAL AND ADMINISTRATIVE
For the three month period ended March 31, 2007, general and administrative expenses were $585,367 compared to $531,247 in Q1 2006. The $54,120 increase over Q1 2006 relates to increased personnel and contracted resources, shareholder services and filing fees incurred to increase the Company’s investor base and related communications. The increase was partly offset by lower recruiting fees from those incurred in Q1 2006.
AMORTIZATION
Amortization expenses for the three month period ended March 31, 2007 were $136,430 compared to $157,085 in Q1 2006. The $20,655 decrease from prior year primarily resulted from a prior year, one-time adjustment of $23,092 to amortization expense. The adjustment occurred due to change in method used to account for depreciation of property, plant and equipment from declining balance to straight line. The change in method resulted from a change in the accounting estimate of the salvage value of depreciable tangible assets and was accounted for prospectively. The Company does not expect the change in estimate to have a material impact in future periods.
OTHER (INCOME)/EXPENSES
For the three month period ended March 31, 2006, the Company incurred other expenses of $34,861 compared to earning other income of $68,987 in Q1 2006. The $103,848 increase in expense is primarily due to increased stock based compensation and foreign exchange loss, partly offset by increased interest income on cash and short-term investments.
During Q1 2007, stock based compensation expense increased to $95,859 from $51,922 in Q1 2006. The increased expense is the result of the vesting of options issued in prior years to new and existing employees and directors in accordance with Allon’s compensation policy. For the three months ended March 31, 2007, Allon recorded a foreign exchange loss of $48,353 that primarily resulted the translation of US balances. During the same period in 2006, the Company recorded a gain of $42,849 that resulted from gains on US dollar investments, partly offset by losses on translation of US balances. Interest earned from short-term investments and cash balances was $109,351 during Q1 2007 compared to $78,080 for the same period in 2006. Higher interest revenues are attributed to increased cash and short-term investment balances during the quarter and higher rates of return on investments.
LIQUIDITY
At March 31, 2007 the Company had cash and short-term investments of $7,827,345 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. At March 31, 2007 maturities on investments ranged from 30 days to 4 months. On May 8, Allon announced that it entered into a bought deal agreement with a syndicate of underwriters. Under the agreement, the syndicate has agreed to purchase 12,500,000 units (the “Units”) at a price of $1.20 per Unit, resulting in gross proceeds of $15 million. The transaction is subject to the receipt of all necessary regulatory and stock exchange approvals. There were 2.5 million stock options exercisable at prices between $.001 and $1.72 per share and 6.2 million warrants outstanding and exercisable at a price of $1.00. If all outstanding stock options and warrants were exercised, proceeds of $1.6 million and $6.2 million would be generated respectively.
CAPITAL RESOURCES
The Company had working capital of $6.8 million at March 31, 2007, a decrease of $2.6 million from December 31, 2006. The decrease was in large part due to significant up-front costs associated with the early stages of the AL-108 Phase II clinical trial. The Company believes that its cash and short-term investments as at March 31, 2007 and expected interest income will be sufficient to fund operations and commitments into the middle of 2008.
SUBSEQUENT EVENTS
On Tuesday May 8th, 2007 Allon announced that it had entered into a “bought deal” agreement with a syndicate of underwriters. Under the agreement, the syndicate has agreed to purchase 12,500,000 units (the “Units”) at a price of $1.20 per Unit, resulting in gross proceeds of $15 million. The dealers will have the option, exercisable for a period of 30 days after the closing date, to acquire up to an additional 1,875,000 Units or up to 937,500 Common Share purchase warrants (representing 15% of the Offering) issued by the Corporation on the Closing Date at the issue price to cover over-allotments, if any. The transaction is subject to the receipt of all necessary regulatory and stock exchange approvals.
“Once closed this financing will considerably improve the Company’s balance sheet and will provide Allon with the opportunity to exploit the full potential of our drugs and continue pursuing further opportunities to advance the business,” said Gordon McCauley, President and CEO of Allon.
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: www.allontherapeutics.com
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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FOR FURTHER INFORMATION PLEASE CONTACT:
Allon Therapeutics Inc. - Investor and Media Contact
Aaron Keay
Manager, Investor Relations
(604) 742-2540 or Cell: (604) 323-6911
Email: akeay@allontherapeutics.com
Website: www.allontherapeutics.com
