Allon Therapeutics Releases Second Quarter Operating Results

VANCOUVER, BRITISH COLUMBIA–(EMWNews – Aug. 12, 2008) – Allon Therapeutics Inc. (TSX:NPC) reported today in its Second Quarter 2008 operating results that the Company achieved all its clinical and financial objectives during the quarter and is on track to achieve all its 2008 milestones, including a partnership with a large pharmaceutical company.

Gordon McCauley, President and CEO of Allon, said the Company expects to release top-line data from two Phase II human clinical trials and begin a Phase IIb trial before the end of 2008.

“In addition, we are on track to complete a development and commercialization partnership with a large pharmaceutical company that fully values the significant potential of our technology,” McCauley said.

McCauley also said that data Allon presented in July to the International Conference on Alzheimer’s Disease and Related Disorders (ICAD 2008) has resulted in a strong positive response from Alzheimer’s physicians and researchers.

Allon made several presentations to ICAD 2008 validating the therapeutic potential of addressing the “tangles” component of the classic Alzheimer’s “plaques and tangles” pathology.

The data presented to ICAD included the complete human efficacy and safety data from Allon’s Phase IIa trial in amnestic mild cognitive impairment (aMCI) patients, a precursor to Alzheimer’s disease, and animal data from several studies. McCauley said the data showed the potential for AL-108 as a treatment for Alzheimer’s disease by improving specific memory function in humans and also reducing the classic Alzheimer’s “tangle” pathology in mice.

The clinical data was presented by Dr. Donald E. Schmechel, a Duke University geriatrics professor and the principal investigator of the clinical trial, and by Professor Illana Gozes of Tel Aviv University, discoverer of AL-108 and Chief Scientific Officer of Allon. The animal data were presented by Prof. Gozes and one of her research collaborators.

“The interest of Alzheimer’s physicians and researchers has substantially increased Allon’s standing in the Alzheimer’s community and resulted in international media coverage about our program and the increasing prominence of the ‘tangles pathway’ as a treatment target for the disease,” McCauley said. “Having completed a $20 million financing subsequent to the end of the second quarter, we also have the financial resources to capitalize on this interest.”

Milestones achieved during the Second Quarter included:

– Announced a $20 million bought deal public equity financing, which was closed subsequent to the end of the quarter. This gives Allon the necessary financial resources to complete a Phase IIb study in Alzheimer’s and from which to negotiate a big pharma partnership;

– The appointment of successful drug development executive J. Steven Whitaker, M.D., J.D. as Vice President, Clinical Development and Chief Medical Officer;

– Completion of patient enrolment in the randomized portion of the Company’s Phase II human clinical trial evaluating AL-208 as a treatment for the mild cognitive impairment (MCI) that commonly occurs following coronary artery bypass graft (CABG) surgery;

– Completed dosing in a Phase I human clinical trial to evaluate the pharmacokinetics of AL-108 and AL-208 in healthy adults and Alzheimer’s patients. Positive results were subsequently released on August 12, 2008;

– Results of preclinical studies that demonstrated the potential of product candidate AL-309 – the lead candidate in Allon’s second neuroprotection technology platform – as a treatment for peripheral neuropathy.

Milestones ahead

Allon expects to complete the following milestones during 2008:

– Report top-line results during the Third Quarter from the randomized portion of a Phase II human clinical trial evaluating AL-208 as a treatment for MCI post-CABG surgery.

– Complete enrolment during the Third Quarter and report top-line results during the Fourth Quarter from a Phase II trial evaluating AL-108 as a treatment for schizophrenia-related cognitive impairment.

– Begin enrolling patients in a Phase IIb clinical trial evaluating AL-108 in mild to moderate Alzheimer’s patients.

– Complete a development and commercialization partnership with a large pharmaceutical company.

– Conduct preclinical studies that will enable an Investigational New Drug application with the United States Food and Drug Administration for approval to begin evaluating AL-309 in human clinical trials.

Results of Operations

Matthew Carlyle, Chief Financial Officer, reported that research and developments costs declined in Q2 2008 compared with Q1 2008, thereby reducing overall company expenditures for Q2 2008 and for the first half of 2008. These cost reductions resulted from the completion of a Phase II clinical trial in AL-108 aMCI during Q1 2008 and completion of patient dosing in a Phase II clinical trial in AL-208 MCI-CABG halfway through Q2 2008. The Company expects its overall rate of spending for Q3 and Q4 will be comparable to its rate of spending during Q2.

The Company reported a net loss of $2,713,823 ($0.05 per share) for the three month period ended June 30, 2008 and $7,063,560 ($0.12 per share) for the six month period ended June 30, 2008.

Net losses for the three and six month periods ended June 30, 2007 were $2,551,517 ($0.05 per share) and $5,370,036 ($0.11 per share) representing quarter over quarter and year-to-date increases of $162,306 and $1,693,524.

For the three months ended June 30, 2008, research and development expenditures were $1,690,702, compared to $1,556,913 for the same period in 2007. For the six months ended June 30, 2008, research and development expenditures were $5,455,310, compared to $3,668,858 for the same period in 2007. Research and development projects during the quarter included the AL-208 Phase II clinical trial in MCI-CABG, the AL-108 Phase II clinical trial in schizophrenia, the Phase I pharmacokinetic trial, and continuation of pre-clinical studies to advance pipeline products, primarily AL-309, into future clinical development. Although the majority of costs related to the schizophrenia trial are funded by TURNS (Treatment Units for Research on Neurocognition and Schizophrenia), which is supported by the U.S. National Institute of Mental Health, Allon is covering some costs of the trial, including sharing costs for the imaging-biomarker component of the trial with TURNS and with the National Association for Research in Schizophrenia and Affective Disorders (NARSAD).

For the three months ended June 30, 2008, general and administrative expenses were $894,693 compared to $597,201 for the three months ended June 30, 2007. For the six months ended June 30, 2008 general and administrative expenses were $1,590,745 compared to $1,228,343. Quarter over quarter expenses increased by $297,492 compared to a $362,402 year to date increase over 2007. The increased expenses primarily resulted from additional business development and investor relations initiatives, and the addition of personnel to support these activities.

Amortization expense for three month period ended June 30, 2008 was $136,876 compared to $136,569 for the three month period ended June 30, 2007. Amortization expense for the six month period ended June 30, 2008 was $275,365 compared to $272,999 for the six month period ended June 30, 2007. Tangible assets are depreciated on a straight-line basis over the expected life of the asset. Intangible assets are depreciated on a straight-line basis over the life of the patent.

For the three month period ended June 30, 2008, the Company recognized other income of $8,448 compared to other expenses of $260,834 for the three month period ended June 30, 2007. The Company recognized other income of $257,860 for the six month period ended June 30, 2008 compared to other expenses of $199,837 for the six months ended June 30, 2007. The $269,282 and $457,697 quarter over quarter and year-to-date increases are primarily due to the changes in foreign exchange and interest income.

At June 30, 2008 the Company had cash and short-term investments of $5,834,449 compared to $13,126,865 at December 31, 2007. Short-term investments are held in high-grade, liquid commercial paper and other low risk investments which are recorded at fair value. The Company has no exposure to liquidity or other risks associated with certain Asset-Backed Securities. At June 30, 2008 maturities on investments ranged from 30 days to 2 months.

The Company’s complete Second Quarter unaudited financial statements and managements’ discussion and analysis are available at www.sedar.com.

About Allon’s neuroprotective platforms

Allon’s two neuroprotective technology platforms are based on two naturally occurring proteins secreted 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 AL-108 and AL-208 are derived from ADNP, while preclinical stage drug AL-309 is derived from ADNF.

About Allon

Allon Therapeutics Inc. is a clinical-stage biotechnology company developing treatments for major neurodegenerative conditions. In Q1 2008, Allon’s drug AL-108 demonstrated human efficacy in amnestic mild cognitive impairment, a precursor to Alzheimer’s disease. Allon has Phase II human efficacy programs pursuing three large underserved markets: Alzheimer’s disease, stroke and schizophrenia-related cognitive impairment. 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.

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 and Allon disclaims any obligation to update or announce changes in any such factors except in its periodic filings.