August 11, 2010 / 2:17 PM / 7 years ago

UPDATE 1-Allon says on track to develop rare brain disease drug

* Says to start clinical trial in second half of 2010

* Posts Q2 loss

Aug 11 (Reuters) - Canada’s Allon Therapeutics (NPC.TO) said it was on track to develop its treatment for a rare brain disease and would commence a clinical trial in the second half of the year.

The Vancouver, British Columbia-based company is developing davunetide, used for the treatment of progressive supranuclear palsy (PSP) that affects the frontal and temporal lobes of the brain.

The trial will be held at several medical centres in the United States in collaboration with the Memory and Aging Center of the University of California, San Francisco (UCSF).

“We believe there is a strong rationale to pursue approval in PSP,” the company said in a statement.

The company has already entered into an agreement with a fund managed by Yorkville Advisors, which has committed up to C$10 million of equity capital over the next three years.

For the quarter ended June 30, the company reported a net loss of C$2.7 million, or 3 Canadian cents a share, compared with a net loss of C$1.2 million, or 2 Canadian cents a share.

Shares of the company closed at 46 Canadian cents Tuesday on the Toronto Stock Exchange. (Reporting by Ashutosh Joshi in Bangalore; Editing by Prem Udayabhanu)

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