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, 2008. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.
At August 31, 2008, our cash and cash equivalents totaled $9.8 million, compared with $12.4 million at May 31, 2008.
The net loss for the third quarter of 2008 was $2.6 million, or $0.12 per common share, compared with a net loss of $5.3 million, or $0.24 per common share for the same period in 2007. We incurred a net loss for the nine months ended August 31, 2008 of $15.3 million, or $0.68 per common share, compared with a net loss of $22.7 million, or $1.21 per common share for the same period in 2007. Our net loss included restructuring costs for the three months and nine months ended August 31, 2008 of $0.8 million and $3.1 million, respectively. In addition to the cost savings from the termination of our lease, as discussed below, we expect a further reduction of infrastructure and other support costs associated with the facility.
A key driver of our decreased loss in both these periods was lower salary and benefit costs, reduced stock compensation expense, lower infrastructure and other support costs driven by lower employee numbers in 2008, and a decrease in the foreign exchange loss that was incurred in the prior periods. In addition, during the nine months ended August 31, 2008, the decrease was impacted by a reduction in expenses resulting from the repayment of the senior convertible notes in April 2007.
Corporate Update - On July 3, 2008, we announced the implementation of additional restructuring plans to further reduce our cash burn rate while we continued to explore strategic corporate alternatives with the goal of enhancing shareholder value. As part of this restructuring, we reduced the number of full-time employees to six and materially reduced expenses associated with the VP series of drugs. - As at August 31, 2008, Vasogen had cash and cash equivalents of $9.8 million and had 22.4 million shares outstanding. Our net cash used in operating activities for the three months ended August 31, 2008, was $2.7 million, which included restructuring costs of $1.4 million. Other than our accounts payable and accrued liabilities we do not have any debt. - During the quarter, our Board of Directors reviewed a number of nonbinding proposals that were submitted to the Company as part of our ongoing strategic review process. We are undertaking a review and due diligence process to finalize which of these options, if any, to proceed with. Concurrent with this assessment, the Board is continuing to consider other strategic alternatives including the monetization of certain tangible and/or intangible assets of the Company, as well as the out-licensing of assets, potential asset divestiture, winding up, or liquidation of the Company. - During the quarter, we had further communications with the FDA regarding the use of a Bayesian approach for ACCLAIM II and while we feel that we have addressed the issues raised by the agency, they have given no indication that they are considering changing their view. As a result, pending the outcome of our current strategic review process we are not planning any additional communications with the FDA regarding the design of ACCLAIM II. - As part of our restructuring, a new tenant has been secured for our 37,111 sq. ft. leased facility located at 2505 Meadowvale Boulevard in Mississauga, Ontario, and we have completed a lease surrender agreement with our landlord. As a result, our lease for this facility terminated on September 30, 2008 and our new corporate address is 4 Robert Speck Parkway, 15th Floor, Mississauga, Ontario, L4Z 1S1.
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 may include, without limitation, plans to complete a sale, merger, acquisition, or other strategic alternative, statements regarding the status of development, or expenditures relating to the Celacade(TM) System or our VP series of drugs including VP015 and VP025, 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. 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, 2007, as well as in our later public filings, including our Management's Discussion and Analysis for the quarter ended August 31, 2008. 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, 2008, 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) ------------------------------------------------------------------------- August 31, November 30, 2008 2007 ------------------------------------------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 9,788 $ 23,545 Clinical supplies - 1,363 Tax credits recoverable 577 1,565 Prepaid expenses and deposits 261 787 Change in fair value of forward foreign exchange contracts - 376 ----------------------------------------------------------------------- 10,626 27,636 Property and equipment 42 414 ------------------------------------------------------------------------- $ 10,668 $ 28,050 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 617 $ 1,175 Accrued liabilities 1,327 3,519 ----------------------------------------------------------------------- 1,944 4,694 Shareholders' equity: Share capital: Authorized: Unlimited common shares, without par value Issued and outstanding: 22,391,386 common shares (November 30, 2007 - 22,391,386) 365,670 365,670 Warrants 16,725 16,725 Contributed surplus 23,436 22,744 Deficit (397,107) (381,783) ----------------------------------------------------------------------- 8,724 23,356 ------------------------------------------------------------------------- $ 10,668 $ 28,050 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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) ------------------------------------------------------------------------- Period from December 1, Three months ended Nine months ended 1987 to August 31, August 31, August 31, 2008 2007 2008 2007 2008 ------------------------------------------------------------------------- Expenses: Research and development $ 1,096 $ 2,588 $ 8,734 $ 9,347 $ 247,651 General and administration 1,627 2,887 7,237 11,363 124,465 Foreign exchange loss (gain) (59) 242 (194) 1,200 10,776 ------------------------------------------------------------------------- Loss before the undernoted (2,664) (5,717) (15,777) (21,910) (382,892) Interest expense on senior convertible notes payable - - - (5) (1,279) Accretion in carrying value of senior convertible notes payable - - - (728) (10,294) Amortization of deferred financing costs - - - (154) (3,057) Loss on extinguishment of senior convertible notes payable - - - (1,754) (6,749) Investment income 78 370 453 1,003 13,778 Change in fair value of embedded derivatives - - - 829 829 ------------------------------------------------------------------------- Loss and comprehensive loss for the period (2,586) (5,347) (15,324) (22,719) (389,664) Deficit, beginning of period: As originally reported (394,521) (370,378) (381,783) (351,374) (1,510) Impact of change in accounting for stock-based compensation - - - - (4,006) Impact of change in accounting for financial instruments on December 1, 2006 - - - (1,632) (1,632) ----------------------------------------------------------------------- As revised (394,521) (370,378) (381,783) (353,006) (7,148) Charge for acceleration payments on equity component of senior convertible notes payable - - - - (295) ------------------------------------------------------------------------- Deficit, end of period $(397,107) $(375,725) $(397,107) $(375,725) $(397,107) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per share $ (0.12) $ (0.24) $ (0.68) $ (1.21) $ - ------------------------------------------------------------------------- ------------------------------------------------------------------------- VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Interim Consolidated Statements of Cash Flows (In thousands of Canadian dollars) (Unaudited) ------------------------------------------------------------------------- Period from December 1, Three months ended Nine months ended 1987 to August 31, August 31, August 31, 2008 2007 2008 2007 2008 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities: Loss for the period $ (2,586) $ (5,347) $ (15,324) $ (22,719) $(389,664) Items not involving cash: Amortization 191 125 378 378 6,536 Accretion in carrying value of senior convertible notes payable - - - 728 10,294 Amortization of deferred financing costs - - - 154 3,057 Loss on extinguishment of senior convertible notes payable - - - 1,754 6,749 Change in fair value of embedded derivatives - - - (829) (829) Stock-based compensation 141 164 692 1,615 10,271 Common shares issued for services - - - - 2,485 Unrealized gain on forward foreign exchange contract - - - - (376) Unrealized foreign exchange loss (gain) (98) 227 61 1,454 11,604 Other - - - - (35) Change in non-cash operating working capital (348) 413 493 (3,890) 1,446 ----------------------------------------------------------------------- (2,700) (4,418) (13,700) (21,355) (338,462) Financing activities: Shares and warrants issued for cash - - - 17,345 326,358 Warrants exercised for cash - - - - 16,941 Options exercised for cash - - - - 7,669 Share issue costs - - - (1,440) (24,646) Issue (repayment) of senior convertible notes payable, - - - (924) 38,512 Cash released from restriction - 3,078 - 6,403 - Paid to related parties - - - - (234) ----------------------------------------------------------------------- - 3,078 - 21,384 364,600 Investing activities: Purchases of property and equipment - (8) (6) (49) (2,471) Purchases of acquired technology - - - - (1,283) Purchases of marketable securities - - - - (244,846) Settlement of forward foreign exchange contracts - - - 10 (4,824) Maturities of marketable securities - - - - 240,677 ----------------------------------------------------------------------- - (8) (6) (39) (12,747) Foreign exchange gain (loss) on cash held in foreign currency 99 (227) (51) (1,296) (3,603) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (2,601) (1,575) (13,757) (1,306) 9,788 Cash and cash equivalents, beginning of period 12,389 30,696 23,545 30,427 - ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 9,788 $ 29,121 $ 9,788 $ 29,121 $ 9,788 ------------------------------------------------------------------------- -------------------------------------------------------------------------
