MISSISSAUGA, ON, Oct. 15 /PRNewswire-FirstCall/ -- Vasogen Inc.
(NASDAQ:VSGN; TSX:VAS) today reported the results of operations for
the three and nine months ended August 31, 2009. All dollar amounts
referenced herein are in Canadian dollars unless otherwise noted.
At August 31, 2009, our cash and cash equivalents totaled $4.8
million, compared with $5.8 million at May 31, 2009. Our net cash
used in operating activities for the three months ended August 31,
2009, was $1.0 million and included the payment of $0.4 million for
fees mainly related to our ongoing strategic review and $0.3
million for restructuring costs. The net loss for the third quarter
of 2009 was $1.2 million, or $0.05 per common share, compared with
a net loss of $2.6 million, or $0.12 per common share for the same
period in 2008. The $1.2 million loss for the three months ended
August 31, 2009 included a charge for fees of $0.7 million mainly
related to our ongoing strategic review, which included the cost of
the fairness opinion rendered by JMP Securities LLC in connection
with the proposed business combination with IntelliPharmaCeutics.
We incurred a net loss for the nine months ended August 31, 2009 of
$4.5 million, or $0.20 per common share, compared with a net loss
of $15.3 million, or $0.68 per common share for the same period in
2008. The loss for the nine months ended August 31, 2009 has
decreased when compared with the same period in 2008 due to the
significant restructuring expenditures that were incurred during
2008 and the resulting lower number of employees in 2009. A portion
of this decrease also relates to a $1.2 million non-cash provision
taken against our clinical supplies during the nine months ended
August 31, 2008. Corporate Update - On Monday August 17, 2009,
Vasogen Inc., IntelliPharmaCeutics Ltd. ("IPC US") and
IntelliPharmaCeutics Corp. ("IPC Opco" and together with IPC US,
"IPC") announced that they had entered into an arrangement
agreement, (the "IPC Arrangement Agreement"), which is subject to
shareholder and regulatory approvals, whereby Vasogen will combine
with IPC under a plan of arrangement (the "Plan of Arrangement")
and merger to continue as a publicly-traded entity to be called
IntelliPharmaCeutics International Inc. ("New IPC"). IPC are
privately-held specialty pharmaceutical companies that are focused
on developing and manufacturing new and generic controlled- release
pharmaceutical products using its broadly applicable, proprietary
delivery technologies. Currently, IPC has 15 product candidates in
its development pipeline several of which are partnered with
third-party drug companies. IPC's lead product candidates include
Dexmethylphenidate XR, a generic version of the marketed drug
Focalin XR(R), which is partnered with Par Pharmaceutical and is
currently the subject of an Abbreviated New Drug Application (ANDA)
filing with the U.S. Food and Drug Administration (FDA), and
Carvedilol CR, a generic version of the brand name drug Coreg CR,
an internal pipeline now in pivotal bioequivalence studies. - On
August 17, 2009, we also announced we had entered into an
arrangement agreement, subject to shareholder, unitholder and
regulatory approvals, with Cervus LP (TSXV:CVL.UN), an Alberta
based limited partnership, and its general partner Cervus GP Ltd.
(the "Cervus Arrangement Agreement"), that will reorganize Vasogen
prior to completion of the transaction with IPC pursuant to the
Plan of Arrangement, and which will provide gross proceeds to
Vasogen of approximately $7.5 million in non-dilutive capital. - On
August 11, 2009, the Staff of the NASDAQ Listing Qualifications
Department (the "Staff") notified the Company that it had not
regained compliance with the $1.00 minimum bid price requirement
set forth in Listing Rule 5550 (a)(2). On September 15, 2009, the
Staff further notified Vasogen that it believes the proposed
transaction with IPC is a business combination that will result in
a "change of control" and accordingly, under NASDAQ Listing Rule
5110(a), requires that the post-combination entity apply and be
approved for initial listing on NASDAQ. Under NASDAQ's rules, if
the Staff determines that the post-combination entity does not
qualify for initial listing, it will be subject to delisting.
Accordingly, on September 16, 2009, an initial listing application
was submitted to the NASDAQ Listing Qualifications Department on
behalf of the combined entity; the application remains pending. On
September 23, 2009, the parties appeared before a NASDAQ Listing
Qualifications Panel ("the Panel") and presented their plan to
comply with the minimum bid price requirement and the initial
listing requirements upon consummation of the transaction. To date,
the Panel has not rendered a decision. Pending the Panel's
decision, Vasogen's securities remain listed on NASDAQ. - To
further reduce the rate at which we use our cash during our
strategic review process, the employment of Graham Neil, our Vice-
President, Finance, and CFO, was terminated effective July 14,
2009. Mr. Neil has agreed to fulfill the role of CFO, in a
consulting capacity at substantially reduced compensation, to
assist the board of directors (the "Board") in bringing closure to
the ongoing strategic review process. We will conduct a live
webcast presentation of our Special Meeting of Shareholders being
held at the offices of McCarthy Tetrault, LLP, Suite 5300, Toronto
Dominion Bank Tower, 66 Wellington Street West, Toronto, on Monday,
October 19, 2009 at 10:00 a.m. ET. To participate via webcast,
please go to http://www.vasogen.com/. A re-broadcast of the
presentation will be available at http://www.vasogen.com/. Certain
statements in this document constitute "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and/or "forward-looking information"
under the Securities Act (Ontario). These statements include,
without limitation, our plans to complete the business combination
resulting from our strategic review, which is described in the
press release dated August 17, 2009, statements regarding the
status of development, or expenditures relating to our business,
plans to fund our current activities, statements concerning our
partnering activities, health regulatory submissions, strategy,
future operations, future financial position, future revenues and
projected costs. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should",
"expects", "plans", "anticipates", "believes", "estimated",
"predicts", "potential", "continue", "intends", "could", or the
negative of such terms or other comparable terminology. We made a
number of assumptions in the preparation of these forward-looking
statements. You should not place undue reliance on our
forward-looking statements, which are subject to a multitude of
risks and uncertainties that could cause actual results, future
circumstances or events to differ materially from those projected
in the forward-looking statements. These risks include, but are not
limited to, the outcome of our strategic review, securing and
maintaining corporate alliances, the need for additional capital
and the effect of capital market conditions and other factors,
including the current status of our programs, on capital
availability, the potential dilutive effects of any financing and
other risks detailed from time to time in our public disclosure
documents or other filings with the Canadian and U.S. securities
commissions or other securities regulatory bodies. Additional risks
and uncertainties relating to our Company and our business can be
found in the "Risk Factors" section of our Annual Information Form
and Form 20-F for the year ended November 30, 2008, as well as in
our other public filings, including our Management's Discussion and
Analysis for the period ended August 31, 2009. The forward-looking
statements are made as of the date hereof, and we disclaim any
intention and have no obligation or responsibility, except as
required by law, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise. The unaudited interim consolidated financial
statements, accompanying notes to the unaudited interim
consolidated financial statements, and Management's Discussion and
Analysis for the three and nine months ended August 31, 2009, will
be accessible on Vasogen's Website at http://www.vasogen.com/ and
will be available on SEDAR and EDGAR. Summary financial tables are
provided below. VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Interim
Consolidated Balance Sheets (In thousands of Canadian dollars)
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August November 31, 2009 30, 2008
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(Unaudited) Assets Current assets: Cash and cash equivalents $
4,843 $ 8,556 Tax credits recoverable 422 582 Prepaid expenses and
deposits 332 188
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5,597 9,326 Property and equipment 12 16
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$ 5,609 $ 9,342
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Liabilities and Shareholders' Equity Current liabilities: Accounts
payable $ 286 $ 101 Accrued liabilities 1,047 1,141
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1,333 1,242 Shareholders' equity Share capital: Authorized:
Unlimited common shares, without par value Issued and outstanding:
22,623,195 common shares (November 30, 2008 - 22,424,719) 365,730
365,677 Warrants 16,725 16,725 Contributed surplus 24,172 23,555
Deficit (402,351) (397,857)
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4,276 8,100
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$ 5,609 $ 9,342
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VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Interim Consolidated
Statements of Operations, Deficit and Comprehensive Income (In
thousands of Canadian dollars, except per share amounts)
(Unaudited)
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Period from December 1, Three months ended Nine months ended 1987
to August 31, August 31, August 31, 2009 2008 2009 2008 2009
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Expenses: Research and development $ 7 $ 1,096 $ 363 $ 8,734 $
248,074 General and administration 1,150 1,627 4,594 7,237 129,920
Foreign exchange loss (gain) 4 (59) 58 (194) 10,723
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Loss before the undernoted (1,161) (2,664) (5,015) (15,777)
(388,717) Interest expense on senior convertible notes payable - -
- - (1,279) Accretion in carrying value of senior convertible notes
payable - - - - (10,294) Amortization of deferred financing costs -
- - - (3,057) Loss on extinguishment of senior convertible notes
payable - - - - (6,749) Gain on sale of patents - - 487 - 487
Investment income 3 78 34 453 13,872 Change in fair value of
embedded derivatives - - - - 829
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Loss and comprehensive loss for the period (1,158) (2,586) (4,494)
(15,324) (394,908) Deficit, beginning of period (401,193) (394,521)
(397,857) (381,783) (1,510) Impact of change in accounting for
stock-based compensation - - - - (4,006) Impact of change in
accounting for financial instruments - - - - (1,632) Charge for
acceleration payments on equity component of senior convertible
notes payable - - - - (295)
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Deficit, end of period $(402,351) $(397,107) $(402,351) $(397,107)
$(402,351)
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Basic and diluted loss per common share $ (0.05) $ (0.12) $ (0.20)
$ (0.68)
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VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Interim Consolidated
Statements of Cash Flows (In thousands of Canadian dollars)
(Unaudited)
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Period from December 1, Three months ended Nine months ended 1987
to August 31, August 31, August 31, 2009 2008 2009 2008 2009
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Cash provided by (used in): Operating activities: Loss for the
period $ (1,158) $ (2,586) $ (4,494) $ (15,324) $(394,908) Items
not involving cash: Amortization 2 191 4 378 6,381 Loss on
disposition of property and equipment - - - - 125 Gain on sale of
patents - - (487) - (487) Accretion in carrying value of senior
convertible notes payable - - - - 10,294 Amortization of deferred
financing costs - - - - 3,057 Loss on extinguishment of senior
convertible notes payable - - - - 6,749 Change in fair value of
embedded derivatives - - - - (829) Stock-based compensation 51 141
617 692 11,007 Common shares issued for services - - - - 2,485
Unrealized foreign exchange gain (loss) 4 (98) 56 61 11,475 Other -
- - - (35) Change in non-cash operating working capital 114 (348)
156 493 594
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(987) (2,700) (4,148) (13,700) (344,092) Financing activities:
Shares and warrants issued for cash - - - - 326,358 Warrants
exercised for cash - - - - 16,941 Options exercised for cash - - -
- 7,669 Share issue costs - - - - (24,646) Repayment of senior
convertible notes payable, net - - - - 38,512 Paid to related
parties - - - - (234)
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- - - - 364,600 Investing activities: Purchases of property and
equipment - - - (6) (2,471) Purchases of acquired technology - - -
- (1,283) Proceeds on disposition of patents - - 487 - 487
Purchases of marketable securities - - - - (244,846) Proceeds on
disposition of property and equipment - - - - 62 Settlement of
forward foreign exchange contracts - - - - (4,824) Maturities of
marketable securities - - - - 240,677
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- - 487 (6) (12,198) Foreign exchange gain (loss) on cash held in
foreign currency (4) 99 (52) (51) (3,467)
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Increase (decrease) in cash and cash equivalents (991) (2,601)
(3,713) (13,757) 4,843 Cash and cash equivalents, beginning of
period 5,834 12,389 8,556 23,545 -
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Cash and cash equivalents, end of period $ 4,843 $ 9,788 $ 4,843 $
9,788 $ 4,843
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DATASOURCE: Vasogen Inc. CONTACT: Investor Relations, 4 Robert
Speck Parkway, 15th Floor, Mississauga, ON, L4Z 1S1, tel: (905)
817-2002, fax: (905) 847-6270, http://www.vasogen.com/,
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