Allon Therapeutics secures $2.5 million bridge financing with major shareholder
VANCOUVER, March 9, 2012 /CNW/ - Allon Therapeutics Inc. (TSX: NPC) announced today it has secured a bridge financing to strengthen the Company's financial resources as it continues on schedule with its pivotal clinical trial investigating lead neuroprotective drug candidate davunetide as a potential treatment for progressive supranuclear palsy (PSP), a rapidly progressing and fatal degenerative brain disease.
Gordon McCauley, Allon's President and CEO, said the bridge financing facility is a $2.5 million loan from major shareholder Neuro Discovery II Limited Partnership (NDI) to ensure that the Company maintains financial flexibility as it continues to advance davunetide towards commercialization. Allon successfully completed patient enrollment of its pivotal trial on schedule in the fourth quarter of 2011 and expects to complete patient treatment, analyze data and release top-line data by late 2012.
"It is significant that NDI has provided this bridge loan facility", McCauley said, "and has thereby shown its confidence that the trial results will determine that davunetide should be commercialized as a treatment for a terrible brain disease. There are currently no approved therapies for PSP and the market potential in the U.S. and European Union exceeds $700 million a year."
Under the terms of the one-year 12% interest bearing bridge loan, NDI has the right to convert the loan at any time for common shares at a discount to the prevailing five day volume weighted average price, $0.20 for a maximum of 12.5 million shares. No more than 10,055,666 shares may be acquired without prior Allon shareholders' approval which will be sought at the June 2012 annual shareholders' meeting. If the required shareholders' approval is not received, the balance of the loan will be due in cash. In the event of conversion of the entire loan, NDI together with its affiliates would own or control a maximum of 38% of Allon's issued shares. Completion of the loan is subject to Toronto Stock Exchange conditional approval as of the date hereof.
In addition, the loan amount may convert in full or in part and participate in any Allon equity financing prior to the maturity date on the same terms as third parties, subject to the Company obtaining the necessary TSX approval.
This bridge loan facility follows the Company's December 2011 equity financing that raised gross proceeds of $5.4 million.
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, in 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 is expected to complete patient dosing and release top-line data by late 2012. This pivotal trial is based upon statistically significant human efficacy demonstrated in patients with amnestic mild cognitive impairment (a precursor to Alzheimer's disease), 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.