MISSISSAUGA, ON, July 14 /PRNewswire-FirstCall/ -- Vasogen Inc. (NASDAQ:VSGN; TSX:VAS) today reported the results of operations for the three and six months ended May 31, 2009. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.
At May 31, 2009, our cash and cash equivalents totaled $5.8 million, compared with $7.3 million at February 28, 2009. Our net cash used in operating activities for the three and six months ended May 31, 2009, was $1.4 million and $3.2 million, respectively, compared with $7.6 million and $11.0 million for the same periods in 2008. The $1.4 million of net cash used in operating activities for the three months ended May 31, 2009 included the payment of $0.6 million in accounts payable and accrued liabilities that were outstanding as at February 28, 2009 and $0.4 million in one-time payments for our insurance programs which should provide the necessary coverage in the event that our strategic review process results in our Company being sold, merged, acquired, dissolved, or liquidated.
The net loss for the second quarter of 2009 was $1.4 million, or $0.06 per common share, compared with a net loss of $7.4 million, or $0.33 per common share for the same period in 2008. The $1.4 million loss for the three months ended May 31, 2009 included a charge for restructuring costs of $0.5 million, professional fees, mainly related to our ongoing strategic review, of $0.3 million, the amortization of insurance that has been previously paid in the amount of $0.1 million, and a non-cash stock compensation expense of $0.1 million during the second quarter of 2009.
We incurred a net loss for the six months ended May 31, 2009 of $3.3 million, or $0.15 per common share, compared with a net loss of $12.7 million, or $0.57 per common share for the same period in 2008. The loss for the three and six months ended May 31, 2009 has decreased when compared with the same periods in 2008 due to the significant expenditures that were incurred during the 2008 periods to implement the restructuring that was announced on April 14, 2008. A portion of this decrease also relates to a $1.2 million non-cash provision taken against our clinical supplies during the three and six months ended May 31, 2008. This decrease is also the result of a significant reduction in the number of employees and a decision not to incur material expenditures to advance our products during the Company's ongoing strategic review process.
Corporate Update - 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 in bringing closure to the ongoing strategic review process. As a result of this termination the number of full-time employees has been reduced to one. - On April 24, 2009, we announced that Dr. Eldon R. Smith would succeed Terrance H. Gregg as Chairman of our Board of Directors due to the retirement of Mr. Gregg. Mr. Gregg's resignation from our Board is due to the requirements of his role as President and CEO of DexCom, Inc. In connection with his appointment, Dr. Smith's position as our Senior Vice President, Scientific Affairs and Chief Medical Officer was terminated. - Pursuant to our restructuring plan, our Board of Directors and Management had 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. The process involved narrowing down the number of third-party proposals. At this time, we are in the process of negotiating agreements that may result in one or more transactions with regard to the foregoing. There can be no assurances that we will be able to finalize any such agreements. The Board will also consider alternatives to these that it has also been evaluating. The Board will continue to assess the merits of these options relative to liquidating the Company and distributing the remaining cash to the shareholders.
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 six months ended May 31, 2009, will be accessible on Vasogen's website at http://www.vasogen.com/ and will be available on SEDAR and EDGAR.
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 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 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 May 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.
Summary financial tables are provided below. VASOGEN INC. (A DEVELOPMENT STAGE COMPANY) Interim Consolidated Balance Sheets (In thousands of Canadian dollars) May November 31, 30, 2009 2008 ------------------------------------------------------------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 5,834 $ 8,556 Tax credits recoverable 427 582 Prepaid expenses and deposits 396 188 ----------------------------------------------------------------------- 6,657 9,326 Property and equipment 14 16 ------------------------------------------------------------------------- $ 6,671 $ 9,342 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 303 $ 101 Accrued liabilities 985 1,141 ----------------------------------------------------------------------- 1,288 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 24,121 23,555 Deficit (401,193) (397,857) ----------------------------------------------------------------------- 5,383 8,100 ------------------------------------------------------------------------- $ 6,671 $ 9,342 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 Six months ended 1987 to May 31, May 31, May 31, 2009 2008 2009 2008 2009 ------------------------------------------------------------------------- Expenses: Research and development $ 320 $ 4,860 $ 356 $ 7,638 $ 248,067 General and administration 998 2,929 3,444 5,610 128,770 Foreign exchange loss (gain) 84 (338) 54 (135) 10,719 ------------------------------------------------------------------------- Loss before the undernoted (1,402) (7,451) (3,854) (13,113) (387,556) 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 7 33 31 375 13,869 Change in fair value of embedded derivatives - - - - 829 ------------------------------------------------------------------------- Loss and comprehensive loss for the period (1,395) (7,418) (3,336) (12,738) (393,750) Deficit, beginning of period (399,798) (387,103) (397,857) (381,783) (1,510) Impact of change in accounting for stock-based compensation - - - - (1,632) Impact of change in accounting for financial instruments - - - - (4,006) Charge for acceleration payments on equity component of senior convertible notes payable - - - - (295) ------------------------------------------------------------------------- Deficit, end of period $(401,193) $(394,521) $(401,193) $(394,521) $(401,193) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic and diluted loss per common share $ (0.06) $ (0.33) $ (0.15) $ (0.57) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 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 Six months ended 1987 to May 31, May 31, May 31, 2009 2008 2009 2008 2009 ------------------------------------------------------------------------- Cash provided by (used in): Operating activities: Loss for the period $ (1,395) $ (7,418) $ (3,336) $ (12,738) $(393,750) Items not involving cash: Amortization - 125 2 187 6,379 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 150 316 566 551 10,956 Common shares issued for services - - - - 2,485 Unrealized foreign exchange gain (loss) 90 (33) 52 159 11,471 Other - - - - (35) Change in non-cash operating working capital (257) (557) 42 841 480 ----------------------------------------------------------------------- (1,412) (7,567) (3,161) (11,000) (343,105) 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) ----------------------------------------------------------------------- - - - - 364,600 Investing activities: Purchases of property and equipment - (6) - (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 ----------------------------------------------------------------------- - (6) 487 (6) (12,198) Foreign exchange gain (loss) on cash held in foreign currency (87) 32 (48) (150) (3,463) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (1,499) (7,541) (2,722) (11,156) 5,834 Cash and cash equivalents, beginning of period 7,333 19,930 8,556 23,545 - ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 5,834 $ 12,389 $ 5,834 $ 12,389 $ 5,834 ------------------------------------------------------------------------- -------------------------------------------------------------------------
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/, investor@vasogen.com
