MISSISSAUGA, ON, Feb. 27 /PRNewswire-FirstCall/ -- Vasogen Inc. (NASDAQ:VSGN; TSX:VAS) today reported the results of operations for the fiscal year ended November 30, 2008. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.
At November 30, 2008, our cash and cash equivalents totaled $8.6 million, compared with $23.5 million at November 30, 2007 and $9.8 million at August 31, 2008. As of January 31, 2009, our cash balance was $8.5 million.
The net loss for the fourth quarter of 2008 was $0.8 million, or $0.03 per common share. We incurred a net loss for the year ended November 30, 2008 of $16.1 million, or $0.72 per common share, compared with a net loss of $28.8 million, or $1.46 per common share for the same period in 2007. A key driver of this decrease was lower compensation 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 period. In addition, the decrease was impacted by a reduction in expenses resulting from the repayment of the senior convertible notes in April 2007.
Corporate Update - During 2008, we implemented our restructuring plan to significantly reduce the rate at which we use our cash and to focus our efforts on opportunities that the Board and Management believe are most likely to provide shareholder value. As a result, we discontinued maintaining the necessary quality processes and personnel to support European commercialization and any clinical development of our Celacade technology, materially reduced expenses associated with the VP series of drugs, and reduced the number of full-time employees from 104 to six. We also retained JMP Securities LLC to assist in exploring potential strategic alternatives. To further reduce the rate at which we use our cash during our strategic review process, in February 2009, we further reduced our number of full-time employees to two. As part of this restructuring, Chris Waddick, our President and CEO, will be terminated effective March 1, 2009. Mr. Waddick has agreed to fulfill the role of CEO, in a consulting capacity at a substantially reduced compensation, to assist the Board in bringing closure to the ongoing strategic review process. - Pursuant to our restructuring plan, our Board of Directors and Management has been actively involved in a process of screening, reviewing, and short-listing potential opportunities including the sale of the Company, or a merger or acquisition, and exploring the monetization of certain tangible and intangible assets. The process has also included a review of the potential out-licensing of assets, lapsing of patents and patent applications, asset divestiture, or liquidation of the Company. At this time, we have significantly narrowed down the number of third party proposals under consideration. If a definitive agreement that the Board believes is in the best interest of our shareholders cannot be reached in the near future, the Board will consider the other alternatives that it has been evaluating. These alternatives include the potential to realize value from the monetization of certain intangible assets either alone or potentially in combination with a strategic transaction. The Board will continue to assess the merits of these options relative to liquidating the Company and distributing the remaining cash to the shareholders. - As part of our restructuring, a new tenant was secured for our 37,111 sq. ft. leased facility located at 2505 Meadowvale Boulevard in Mississauga, Ontario, and we 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. - On April 24, 2008, we received a letter from the Listing Qualifications Department of The NASDAQ Stock Market indicating that the minimum closing bid price of our common stock had fallen below US$1.00 for 30 consecutive trading days, and therefore, we were not in compliance with Marketplace Rule 4310(c)(4) (the "Rule"). In accordance with the NASDAQ Marketplace Rule 4310(c)(8)(D), we were provided a compliance period of 180 calendar days, or until October 21, 2008, to regain compliance with this requirement. In October 2008, the NASDAQ Stock Market had suspended the enforcement of the rules requiring a minimum US$1.00 closing price until January 20, 2009. Subsequently, on December 9, 2008, the NASDAQ extended this suspension. Accordingly, the NASDAQ will not take action to delist any security, including our shares, for a violation of the minimum bid price rule during the suspension, which now has been extended until April 20, 2009. - As at November 30, 2008, we had cash and cash equivalents of $8.6 million and had 22.4 million common shares issued and outstanding. Other than our accounts payable and accrued liabilities we do not have any debt. As of January 31, 2009, our cash balance was $8.5 million. - Subsequent to November 30, 2008 we entered into an agreement to sell a United States patent application and its related foreign counterparts for US$0.4 million. This device-based intellectual property has not been used to date in the Celacade System; however, we have retained rights to this technology for any potential use as it relates to its Celacade System.
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 consider a sale, merger, acquisition, or other alternatives resulting from our strategic review, 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 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, as well as in our other public filings, including our Management's Discussion and Analysis for the year ended November 30, 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 consolidated financial statements, accompanying notes to the consolidated financial statements, and Management's Discussion and Analysis for the year ended November 30, 2008, will be accessible on Vasogen's web site at http://www.vasogen.com/ and will be available on SEDAR and EDGAR.
Financial statements are provided below Vasogen Inc. (A DEVELOPMENT STAGE COMPANY) Consolidated Balance Sheets (In thousands of Canadian dollars) November 30, 2008 and 2007 ------------------------------------------------------------------------- 2008 2007 ------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 8,556 $ 23,545 Clinical supplies - 1,363 Tax credits recoverable 582 1,565 Prepaid expenses and deposits 188 787 Change in fair value of forward foreign exchange contracts - 376 ----------------------------------------------------------------------- 9,326 27,636 Property and equipment 16 414 ------------------------------------------------------------------------- $ 9,342 $ 28,050 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 101 $ 1,175 Accrued liabilities 1,141 3,519 ----------------------------------------------------------------------- 1,242 4,694 Shareholders' equity Share capital: Authorized: Unlimited common shares, without par value Issued and outstanding: 22,424,719 common shares (2007 - 22,391,386) 365,677 365,670 Warrants 16,725 16,725 Contributed surplus 23,555 22,744 Deficit (397,857) (381,783) ------------------------------------------------------------------------- 8,100 23,356 $ 9,342 $ 28,050 ------------------------------------------------------------------------- ------------------------------------------------------------------------- VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Consolidated Statements of Operations, Deficit and Comprehensive Income (In thousands of Canadian dollars, except per share amounts) ------------------------------------------------------------------------- Period from December 1, 1987 to Years ended November 30, November 30, 2008 2007 2006 2008 ------------------------------------------------------------------------- Expenses: Research and development $ 8,794 $ 12,039 $ 32,732 $ 247,711 General and administration 8,098 14,259 19,251 125,326 Foreign exchange loss (gain) (305) 1,977 104 10,665 ------------------------------------------------------------------------- Loss before the undernoted (16,587) (28,275) (52,087) (383,702) Interest expense on senior convertible notes payable - (5) (930) (1,279) Accretion in carrying value of senior convertible notes payable - (728) (7,824) (10,294) Amortization of deferred financing costs - (154) (2,495) (3,057) Loss on extinguishment of senior convertible notes payable - (1,754) (4,995) (6,749) Investment income 513 1,310 1,971 13,838 Change in fair value of embedded derivatives - 829 - 829 ------------------------------------------------------------------------- Loss and comprehensive loss for the period (16,074) (28,777) (66,360) (390,414) Deficit, beginning of period: As originally reported (381,783) (351,374) (284,719) (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 (381,783) (353,006) (284,719) Charge for acceleration payments on equity component of senior convertible notes payable - - (295) (295) ------------------------------------------------------------------------- Deficit, end of period $ (397,857) $ (381,783) $ (351,374) $ (397,857) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per common share $ (0.72) $ (1.46) $ (7.05) ------------------------------------------------------------------------- ------------------------------------------------------------------------- VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Consolidated Statements of Cash Flows (In thousands of Canadian dollars) ------------------------------------------------------------------------- Period from December 1, 1987 to Years ended November 30, November 30, 2008 2007 2006 2008 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities: Loss for the period $ (16,074) $ (28,777) $ (66,360) $ (390,414) Items not involving cash: Amortization 217 503 782 6,377 Loss on disposition of property and equipment 125 - - 125 Accretion in carrying value of senior convertible notes payable - 728 7,824 10,294 Amortization of deferred financing costs - 154 2,495 3,057 Loss on extinguishment of senior convertible notes payable - 1,754 4,995 6,749 Change in fair value of embedded derivatives - (829) - (829) Stock-based compensation 811 1,995 3,083 10,390 Common shares issued for services - - 36 2,485 Unrealized gain on forward foreign exchange contract 376 (376) - - Unrealized foreign exchange loss (gain) (124) 2,566 (65) 11,419 Other - - - (35) Change in non-cash operating working capital (513) (3,535) (17,158) 438 ------------------------------------------------------------------------- (15,182) (25,817) (64,368) (339,944) Financing activities: Shares and warrants issued for cash - 17,345 23,106 326,358 Warrants and options exercised for cash - - - 24,610 Share issue costs - (1,440) (2,221) (24,646) Issue (repayment) of senior convertible notes payable, net - (924) (3,976) 38,512 Cash released from restriction - 6,403 5,298 - Paid to related parties - - - (234) ------------------------------------------------------------------------- - 21,384 22,207 364,600 Investing activities: Purchases of acquired technology - - - (1,283) Purchases of property and equipment (6) (49) (23) (2,471) Proceeds from disposition of property and equipment 62 - - 62 Purchases of marketable securities - - (80) (244,846) Settlement of forward foreign exchange contracts - 10 (102) (4,824) Maturities of marketable securities - - 23,079 240,677 ------------------------------------------------------------------------- 56 (39) 22,874 (12,685) Foreign exchange gain (loss) on cash held in foreign currency 137 (2,410) (807) (3,415) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (14,989) (6,882) (20,094) 8,556 Cash and cash equivalents, beginning of period 23,545 30,427 50,521 - ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 8,556 $ 23,545 $ 30,427 $ 8,556 ------------------------------------------------------------------------- -------------------------------------------------------------------------
