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Aeolus Pharmaceuticals Inc. (AOLS.OB) Announces First Quarter Fiscal Year 2013 Financial Results


2/20/2013 9:15:12 AM

MISSION VIEJO, CA--(Marketwire - February 19, 2013) - Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS)

  • Beginning Third Year of $118.4 Million BARDA Advance Research and Development Contract
  • Balance Sheet Strengthened With $3,225,000 Financing
  • Net Cash Used In Operations Reduced To Only $279,000 During the Quarter

Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS), a biotechnology company leveraging significant government funding to develop a platform of novel compounds to protect against radiological and chemical threats and for use in oncology, announced today financial results for the three months ended December 31, 2012.

The Company reported a net income of approximately $4,028,000, which includes a non-cash adjustment for decreases in valuation of warrants of approximately $4,510,000 related to decreases in the fair value of warrants that are included as a component of other income (expenses) in the statement of operations, for the three months ended December 31, 2012, compared to a net income of approximately $2,977,000, which includes a non-cash adjustment for decreases in valuation of warrants of approximately $3,688,000 related to decreases in the fair value of warrants that are included as a component of other income (expenses) in the statement of operations, for the three months ended December 31, 2011

"We've completed the second year of our contract with BARDA, which has allowed us to leverage our shareholder's investment with $19.5 million of funding for the advanced development of our lead drug AEOL 10150. Our team has delivered key development milestones, such as developing and validating murine and NHP models for lung acute radiation syndrome, improving our manufacturing processes, enhancing our understanding of the mechanism of action of our drug and initiating murine efficacy studies," stated John L. McManus, President and Chief Executive Officer. "With the closing of our recent financing, the Company now has adequate funding to operate through the end of 2014, by which time we hope to be generating revenue from procurement of AEOL 10150 as a medical countermeasure."

Revenue for the three months ended December 31, 2012 was approximately $1,342,000, which compares to approximately $2,215,000 for the three months ended December 31, 2011. The revenue is from the collaboration with BARDA announced on February 11, 2011, and the variance reflects the timing of work performed under the contract.

Research and development expenses decreased about $901,000 to approximately $1,169,000 for the three months ended December 31, 2012, from approximately $2,077,000 for the three months ended December 31, 2011. The decrease is primarily attributable to the timing of work related to the BARDA Contract.

General and administrative expenses decreased about $201,000 to approximately $655,000 for the three months ended December 31, 2012 from approximately $856,000 for the three months ended December 31, 2011. The increase is primarily attributable to the timing of work related to the BARDA Contract.

Aeolus is filing today with the SEC its Quarterly Report on Form 10-Q for the quarter ended December 31, 2012. Aeolus urges its investors to read this quarterly filing as well as its Annual Report on Form 10-K, as amended, also filed with the SEC, for further details concerning the Company. The Quarterly Report on Form 10-Q and the Annual Report on Form 10-K are also available on the Company's website, at http://www.aeoluspharma.com.

About AEOL 10150
AEOL 10150 is a broad-spectrum catalytic antioxidant specifically designed to neutralize reactive oxygen and nitrogen species. The neutralization of these species reduces oxidative stress, inflammation, and subsequent tissue damage-signaling cascades resulting from radiation exposure. AEOL 10150 could have a profound beneficial impact on people who have been exposed, or are about to be exposed, to high-doses of radiation in the treatment of oncology.

AEOL 10150 has already performed well in preclinical and non-clinical studies, was well-tolerated in two human clinical trials, and has demonstrated statistically significant survival efficacy in an acute radiation-induced lung injury model. The Company believes it could have a profound beneficial impact on people who have been exposed, or are about to be exposed, to high-doses of radiation, whether from cancer therapy or a nuclear event.

About Aeolus Pharmaceuticals
Aeolus Pharmaceuticals is developing a platform of a new class of broad-spectrum, catalytic-antioxidant compounds that protect healthy tissue from the damaging effects of radiation. Its first compound, AEOL 10150, is being developed for oncology indications, where it is used in combination with radiation therapy. It is also being developed, with funding by the US Department of Health and Human Services, as a medical countermeasure against chemical and radiological weapons, where its initial target indications are as a protective agent against the effects of acute radiation syndrome and delayed effects of acute radiation exposure. Aeolus' strategy is to leverage the substantial investment in toxicology, manufacturing, and preclinical and clinical studies made by US Government agencies in AEOL 10150, including the contract with BARDA valued, with options, at up to $118.4 million, to efficiently develop the compound for use in oncology. For more information, please visit Aeolus's corporate website at www.aeoluspharma.com.

Forward-Looking Statements

The statements in this press release that are not purely statements of historical fact are forward-looking statements. Such statements include, but are not limited to, those relating to Aeolus' product candidates, as well as its proprietary technologies and research programs, the Company's potential initiation of large efficacy studies in mice and NHPs, as well as a phase 1 study in healthy normal volunteers, the BARDA Contract, and the Company's expectation regarding the generation of revenue from procurement of AEOL 10150 as a medical countermeasure. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Aeolus' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. Important factors that could cause results to differ include risks associated with uncertainties of progress and timing of clinical trials, scientific research and product development activities, difficulties or delays in development, testing, obtaining regulatory approval, the need to obtain funding for pre-clinical and clinical trials and operations, the scope and validity of intellectual property protection for Aeolus' product candidates, proprietary technologies and their uses, and competition from other biopharmaceutical companies, and whether BARDA exercises one or more additional options under the BARDA Contract. Certain of these factors and others are more fully described in Aeolus' filings with the Securities and Exchange Commission, including, but not limited to, Aeolus' Annual Report on Form 10-K for the year ended September 30, 2012. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

                                                                            
                        AEOLUS PHARMACEUTICALS, INC.                        
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                   (In thousands, except per share data)                    
                                                                            
                                                December 31,  September 30, 
                                                    2012           2012     
                                               -------------  ------------- 
                                                (Unaudited)                 
                    ASSETS                                                  
Current assets:                                                             
  Cash and cash equivalents                    $           2  $         281 
  Accounts receivable                                  1,550            882 
  Prepaids and other current assets                       54             61 
                                               -------------  ------------- 
    Total current assets                               1,606          1,224 
Investment in CPEC LLC                                    32             32 
                                               -------------  ------------- 
    Total assets                               $       1,638  $       1,256 
                                               =============  ============= 
                                                                            
     LIABILITIES AND STOCKHOLDERS' DEFICIT                                  
Current liabilities:                                                        
  Accounts payable and accrued expenses        $       3,064  $       2,272 
                                               -------------  ------------- 
    Total current liabilities                          3,064          2,272 
                                                                            
Warrant liability                                     14,809         19,319 
                                               -------------  ------------- 
    Total liabilities                                 17,873         21,591 
                                                                            
Commitments and contingencies (Note H)                                      
                                                                            
Stockholders' deficit:                                                      
  Preferred stock, $.01 par value per share,                                
   10,000,000 shares authorized:                                            
  Series B nonredeemable convertible preferred                              
   stock, 1,600,000 and 1,600,000 shares                                    
   authorized as of December 31, 2012 and                                   
   September 30, 2012, respectively; 526,080                                
   and 526,080 shares issued and outstanding                                
   as of December 31, 2012 and September 30,                                
   2012, respectively                                      5              5 
  Common stock, $.01 par value per share,                                   
   200,000,000 shares authorized; 62,731,963                                
   and 62,731,963 shares issued and                                         
   outstanding as of December 31, 2012 and                                  
   September 30, 2012, respectively                      627            627 
  Additional paid-in capital                         159,819        159,747 
  Accumulated deficit                               (176,686)      (180,714)
                                               -------------  ------------- 
    Total stockholders' deficit                      (16,235)       (20,335)
                                               -------------  ------------- 
    Total liabilities and stockholders'                                     
     deficit                                   $       1,638  $       1,256 
                                               =============  ============= 
                                                                            
                                                                            
                        AEOLUS PHARMACEUTICALS, INC.                        
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                                (Unaudited)                                 
                   (In thousands, except per share data)                    
                                                                            
                                                      Three Months Ended    
                                                         December 31,       
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
Revenue:                                                                    
  Contract revenue                                 $     1,342  $     2,215 
                                                                            
Costs and expenses:                                                         
  Research and development                               1,169        2,070 
  General and administrative                               655          856 
                                                   -----------  ----------- 
    Total costs and expenses                             1,824        2,926 
                                                   -----------  ----------- 
Loss from operations                                      (482)        (711)
Non-cash financing charges and change in fair                               
 value of warrants (Notes C and E)                       4,510        3,688 
Interest income (expense), net                              --           -- 
Other income (expense), net                                 --           -- 
                                                   -----------  ----------- 
Net income (loss)                                  $     4,028  $     2,977 
                                                   ===========  =========== 
                                                                            
Net income (loss) per weighted share attributable                           
 to common stockholders:                                                    
  Basic                                            $     2,049  $     1,487 
                                                   -----------  ----------- 
  Diluted                                          $      (200) $      (415)
                                                   ===========  =========== 
                                                                            
  Basic net income (loss) per common share         $      0.03  $      0.02 
                                                   -----------  ----------- 
  Diluted net income (loss) per common share       $      0.00  $     (0.01)
                                                   ===========  =========== 
                                                                            
Weighted average common shares outstanding:                                 
  Basic                                                 62,732       60,471 
                                                   -----------  ----------- 
  Diluted                                               65,635       78,690 
                                                   ===========  =========== 
                                                                            
                                                                            
                        AEOLUS PHARMACEUTICALS, INC.                        
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                                (Unaudited)                                 
                               (In thousands)                               
                                                                            
                                                      Three Months Ended    
                                                         December 31,       
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
Cash flows from operating activities:                                       
  Net income (loss)                                $     4,028  $     2,977 
  Adjustments to reconcile net income (loss) to                             
   net cash provided by (used in) operating                                 
   activities:                                                              
    Stock-based compensation                                72          197 
    Change in fair value of warrants                    (4,510)      (3,688)
    Change in assets and liabilities:                                       
      Accounts receivable                                 (668)         177 
      Prepaid and other assets                               7            7 
      Accounts payable and accrued expenses                792          998 
                                                   -----------  ----------- 
Net cash provided by (used in) operating                                    
 activities                                               (279)         668 
                                                   -----------  ----------- 
                                                                            
Net decrease in cash and cash equivalents                 (279)         668 
Cash and cash equivalents at beginning of period           281          518 
                                                   -----------  ----------- 
Cash and cash equivalents at end of period         $         2  $     1,186 
                                                   ===========  =========== 
                                                                            

Contact:
Russell Skibsted
Sr. Vice President and Chief Financial Officer
Aeolus Pharmaceuticals, Inc.
1-(949) 481-9825

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