VANCOUVER, BRITISH COLUMBIA, Nov 01, 2010 (MARKETWIRE via COMTEX) -- Allon Therapeutics Inc. announced today it has closed a financing agreement with Isar Pharma K/S ("Isar"), a wholly owned limited partnership of Nordic Biotech Venture Fund II K/S under which Allon has received U.S. $10 million to advance davunetide, Allon's lead neuroprotective drug candidate. Isar's investment is convertible into common shares of Allon at U.S. $0.44 which represents a 10% premium to the 10-day volume weighted average price of Allon prior to closing.
Allon President and CEO Gordon McCauley said the proceeds will ensure the Company has the financial resources to execute its business plan over the next two years, laying the foundation for the commercialization of davunetide as the first approved treatment for progressive supranuclear palsy (PSP).
"Isar's investment brings another sophisticated global investor to Allon," said McCauley. "We're pleased that Isar sees the commercial potential of davunetide and has provided the resources to ensure that our pivotal study in PSP is fully funded," McCauley added.
Florian Schonharting, partner and co-founder of Nordic Biotech Advisors ApS, said, "Through Isar, we want to participate in the future success of davunetide. Our review of the preclinical and clinical data convinces us that davunetide could well be a successful treatment in several neurodegenerative diseases where no effective treatments are available today."
Terms of the Agreement
Isar Pharma K/S, has paid Allon U.S. $10 million (Cdn $10.2 million) in return for a convertible royalty and revenue obligation on davunetide. Isar can elect to convert its interest into common shares of Allon at any time at a conversion price of U.S. $0.44 (Cdn $0.45) which represents a 10 percent premium to the 10-day volume weighted average price of Allon prior to closing. Allon can generally force conversion at the conversion price over the next three years when the share price is two times the conversion price, or during the following 4 years, at three times the conversion price. Until conversion, Allon has agreed to pay to Isar the greater of an 8 percent royalty from sales of davunetide or 20 percent of what it receives for commercializing the product. Allon will also pay 20 percent of all non-royalty revenue received in a partnership. The payment obligations decrease proportionately as the investment is converted. The number of shares issuable on conversion is limited to a maximum of 19.99 percent of Allon's outstanding shares at any time unless and until Allon shareholders resolve both to allow conversions beyond 19.99 percent and to terminate the shareholder rights plan both of which management will recommend at the next annual meeting. TSX conditional acceptance has been obtained for the agreement.
Allon expects to begin a pivotal trial in PSP patients in Q4. The Company's progress thus far in 2010 in its PSP program includes:
-- Orphan Drug designation for davunetide for a treatment for PSP in the
United States and the European Union, the world's two largest
-- Fast Track status in the U.S. for davunetide for the treatment of PSP;
-- Completion of a Phase 1 clinical trial that began enrolling patients
January 28, 2010. The resulting Phase 1 data expanded the demonstrated
safety range and pharmacokinetic profile of davunetide at dosage levels
higher than previously used in the Company's clinical trials; and
-- Completion of a successful pilot study at University of California, San
Francisco in patients with PSP and other frontotemporal dementias. The
study met its primary endpoint of safety and tolerability, and also
achieved its second objective to determine the perspectives of PSP
patients and their caregivers on the battery of tests proposed for a
larger efficacy trial.
Davunetide is derived from a naturally occurring neuroprotective brain protein known as activity dependent neuroprotective protein (ADNP). Allon's laboratory and animal studies have shown that davunetide improves cognition in a number of disease models through a mechanism believed to involve effects on microtubules, structures in the brain critical to communication between cells.
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.
Nordic Biotech Advisors ApS is the investment advisor to Nordic Biotech K/S and Nordic Biotech Venture Fund II K/S, and was founded in 2001 by Christian Hansen and Florian Schonharting. Key investors in the Nordic Biotech fund family are major institutions and family foundations. Its focus is developing and commercializing biopharmaceutical products.
Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. Allon's drug davunetide has demonstrated human efficacy in amnestic mild cognitive impairment, a precursor to Alzheimer's disease, and cognitive impairment associated with schizophrenia. Allon has Phase 2 human efficacy programs pursuing large underserved markets, such as Alzheimer's disease and cognitive impairment associated with schizophrenia, and in orphan markets, such as frontotemporal dementias. 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.