Allon Therapeutics releases Q2 operating results and provides corporate update
VANCOUVER, Aug. 7, 2012 /PRNewswire/ - Allon Therapeutics Inc. (TSX: NPC) today announced its unaudited operating results for the three and six-month periods ended June 30, 2012. Allon also said that its successful $10 million equity financing completed during the second quarter and ongoing progress in its pivotal clinical trial have kept the Company on track to achieve its objective of securing marketing approval for its lead neuroprotective drug candidate davunetide as a treatment for progressive supranuclear palsy (PSP), a rapidly progressing and fatal degenerative brain disease.
Gordon McCauley, President and CEO of Allon Therapeutics, said the quarter's progress ensures that the Company has the resources needed to complete the trial, analyze the data and to advance davunetide towards commercialization. "Our shareholders and employees stand with thousands of patients, caregivers, families, and health professionals in search of a treatment for PSP, a debilitating and fatal neurodegenerative disease with no approved treatments," McCauley said, "and from a commercial perspective we believe this market is in excess of $700 million in the U.S. and Europe."
Allon shareholders voted at the Company's annual general meeting June 13 to approve the terms of the $10 million brokered private placement equity offering previously announced by the Company May 2. The approval triggered the conversion of subscription receipts sold as part of the financing making the full $10 million raised available to the Company for development of davunetide.
The fully enrolled pivotal trial is proceeding under a Special Protocol Assessment with the U.S. Food and Drug Administration. The trial is expected to complete patient dosing and release top-line data in Q4 2012. The trial is based upon statistically significant human efficacy demonstrated in patients with amnestic mild cognitive impairment, cognitive impairment associated with schizophrenia, and positive biomarker data.
DSMB approves trial protocol
Another important event for the Company during the Second Quarter was the final review of the pivotal trial by the independent Data Safety Monitoring Board (DSMB).
The DSMB completed its fourth review and unanimously recommended continuing the trial without any change or modification to the protocol. A DSMB is a group of clinical experts with the primary responsibility of monitoring the safety and well-being of subjects and to assure scientific integrity of the study. While the Company, investigators, patients and others are blinded as to whether a patient is given drug or placebo, the DSMB is independent of the company and the clinical investigators, and reviewing unblinded data.
Data shows davunetide impacts cell life
The Company presented preclinical data May 12 at the 12th International Stockholm/Springfield Symposium on Advances in Alzheimer Therapy showing that davunetide acted to prevent the death of brain cells of animals in controlled studies. This research was also recently published in the International Journal of Alzheimer's Disease.
The article, "Tau and Caspase 3 as Targets for Neuroprotection", was authored by Professor Illana Gozes, scientific founder of Allon. The manuscript and presentation describe the neuroprotective effect of davunetide at preventing apoptosis, or cell death, in different cellular pathways associated with neurodegenerative diseases like Alzheimer's and PSP.
PSP is considered a tauopathy, involving the tau protein in brain cells. Allon has previously demonstrated, in both preclinical and clinical studies, that davunetide has an impact on the tau pathology. The current evaluation of davunetide in a pivotal clinical trial as a potential treatment for PSP makes it the most advanced tau therapy in the world. The Company believes that success in treating PSP with davunetide would define the opportunity to evaluate davunetide in other tau-related diseases, such as Alzheimer's, subtypes of frontotemporal dementia, as well as other neurodegenerative diseases like schizophrenia and Parkinson's.
Trial data presented to Alzheimer's conference
In a subsequent event, Allon announced July 16 that data presented at the Alzheimer's Association International Conference (AAIC) in Vancouver confirm the integrity of patient enrollment and the importance of cognitive impairment in the pivotal clinical trial. The data describe the baseline demographics of subjects enrolled in the pivotal trial as well as baseline cognitive data.
Dr. Michael Gold, Allon's Chief Medical Officer and Vice-President of Clinical Development, said, "These data confirm that Allon enrolled exactly the kind of patients we set out to enroll in our clinical trial. In addition, as perhaps the largest data-set of well-characterized PSP patients ever assembled, this information yields novel insights into the extent and nature of cognitive impairment in PSP patients."
Results of operations
Allon reported a net loss of $3,243,214 ($0.03 per share) for the three months ended June 30, 2012, compared to a net loss of $2,919,833 ($0.04 per share) for the three months ended June 30, 2011, representing an increase in net loss of $323,381. For the six months ended June 30, 2012, the Company reported a net loss of $6,021,918 ($0.06 per share), compared to a net loss of $5,893,909 ($0.08 per share) for the six months ended June 30, 2011. This increase in net loss is explained in the following description of significant variances from the comparable periods in 2011.
For the three and six months ended June 30, 2012, research and development expenses were $2,254,941 and $4,395,471 compared to $2,199,221 and $4,213,017 for the three and six months ended June 30, 2011. Research and development expenses were slightly higher compared to the same period in 2011 due to an increase in clinical trial activities related to PSP. Research and development expenses for the three and six months ended June 30, 2012 also included amortization and depreciation expenses of $127,453 and $254,824 (2011 - $127,813 and $255,352) and share-based compensation of $17,013 and $38,584 (2011 - $15,429 and $24,187).
For the three and six months ended June 30, 2012, general and administrative expenses were $819,281 and $1,455,430 compared to $688,099 and $1,538,984 for the three and six months ended June 30, 2011. General and administrative expenses for the three and six months ended June 30, 2012 were comparable to the same periods in 2011 with lower expenses associated with corporate development activities partly offset by higher compensation expenses in the second quarter of 2012. Included in general and administrative expenses for the three and six months ended June 30, 2012 were share-based compensation of $72,489 and $153,503 (2011 - $49,468 and $95,201) and amortization and depreciation expenses of $2,130 and $5,004 (2011 - $3,284 and $7,080).
The Company's other income and expenses are comprised of loss on debt repayment, interest income/expense and foreign exchange gains/losses. During the second quarter of 2012, the Company completed a brokered private placement equity offering of $10.0 million. Concurrent with this equity offering, the Company repaid the $2.5 million convertible loan it entered into in March 2012 with Neuro Discovery II Limited Partnership. Upon repayment of the loan, the Company recognized a loss of $110,055 representing the unamortized discount on the loan.
During the three and six months ended June 30, 2012, the Company incurred interest expense of $31,595 and $57,339 in relation to the convertible loan entered into on March 7, 2012. The Company earned interest revenue of $1,479 and $1,521 during the three and six months ended June 30, 2012 compared to $1,489 and $6,390 for the same period in 2011. Reduced interest earnings resulted from lower average cash balances during the three and six months ended June 30, 2012 compared to the same period in 2011.
Foreign exchange loss was $28,821 and $5,144 for the three and six months ended June 30, 2012. This compared to a loss of $34,002 and $148,298 for the same periods in 2011. The Company's foreign exchange exposure is primarily limited to the translation of U.S. dollar denominated balances in cash, cash equivalents and accounts payable to Canadian dollars. The foreign exchange loss for 2012 resulted from the impact of the U.S. dollar's appreciation against the Canadian dollar on the Company's U.S. dollar denominated accounts payable. This compared to the same period in 2011 when even though the U.S. dollar declined, the Company had a larger U.S. dollar cash balance which generated an exchange loss that more than offset the exchange gain from its U.S. dollar denominated accounts payable.
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 clinical trial in an orphan indication, progressive supranuclear palsy (PSP), under a Special Protocol Assessment (SPA) with the U.S. Food and Drug Administration (FDA). The trial is fully enrolled and on track to complete the study, analyse the data and release top-line results before the end of 2012. This pivotal trial is based upon statistically significant human efficacy demonstrated in patients with amnestic mild cognitive impairment, cognitive impairment associated with schizophrenia, and in positive biomarker data.
The Company is listed on the Toronto Stock Exchange under the trading symbol "NPC".
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.
SOURCE Allon Therapeutics Inc.