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Vasogen Announces 2007 Year-End Results

MISSISSAUGA, ON, Jan. 16 /PRNewswire-FirstCall/ - Vasogen Inc. (NASDAQ:VSGN; TSX:VAS), today reported the results of operations for the fiscal year ended November 30, 2007. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.

At November 30, 2007, our cash and cash equivalents totaled $23.5 million, compared with $30.4 million at November 30, 2006. The change in our cash position resulted mainly from cash used for operations partially offset by cash provided by financing activities. Our net cash used for operations for the three months ended November 30, 2007, was $4.5 million.

The net loss for the fourth quarter of 2007 was $6.1 million, or $0.27 per common share. We incurred a net loss for the year ended November 30, 2007 of $28.8 million, or $1.46 per common share, compared with a net loss of $66.4 million, or $7.05 per common share for the same period in 2006. The key drivers of our reduced losses in 2007 are lower research and development expenses as a result of the completion of our phase III clinical programs in 2006, the corporate costs associated with supporting these programs, and a reduction in expenses associated with our senior convertible notes. These reductions in expenses were partially offset by restructuring costs. The difference between cash used in operations and our accounting loss is driven by non-cash items, such as expenses related to our senior convertible notes and stock options, as well as unrealized foreign exchange gains and losses.


- The results from the phase III ACCLAIM trial of our Celacade(TM)

System in patients with chronic heart failure were accepted for

publication in The Lancet, a world-leading medical p> capital (3,535) (17,158) 12,634 951


(25,817) (64,368) (74,602) (324,762)

Financing activities:

Shares and warrants

issued for cash 17,345 23,106 52,502 326,358

Warrants exercised

for cash - - - 16,941

Options exercised for cash - - 627 7,669

Share issue costs (1,440) (2,221) (3,720) (24,646)

Issue (repayment) of

senior convertible

notes payable, net (924) (3,976) 42,790 38,512

Cash released from

(placed under)

restriction 6,403 5,298 (11,701) -

Paid to related parties - - - (234)


21,384 22,207 80,498 364,600

Investing activities:

Purchases of property and

equipment (49) (23) (490) (2,465)

Purchases of acquired

technology - - - (1,283)

Purchases of marketable

securities - (80) (22,999) (244,846)

Settlement of forward

exchange contracts 10 (102) (4,732) (4,824)

Maturities of marketable

securities - 23,079 67,651 240,677


(39) 22,874 39,430 (12,741)

Foreign exchange loss on

cash held in foreign

currency (2,410) (807) (141) (3,552)


Increase (decrease) in cash

and cash equivalents (6,882) (20,094) 45,185 23,545

Cash and cash equivalents,

beginning of period 30,427 50,521 5,336 -


Cash and cash equivalents,

end of period $ 23,545 $ 30,427 $ 50,521 $ 23,545



journal. As

previously reported by Vasogen, while the trial did not meet its

primary endpoint, a key finding from the ACCLAIM trial was a

39% reduction in the risk of death or cardiovascular hospitalizations

for a large pre-specified subgroup of patients with NYHA Class II

heart failure who received Celacade therapy, compared to patients

receiving placebo.

- We entered into a collaboration with Grupo Ferrer Internacional,

S.A., a leading European pharmaceutical and medical devices company,

to commercialize Celacade for the treatment of chronic heart failure

in specified countries of the European Union and in certain Latin

American countries. In December 2007, Ferrer received initial orders

for Celacade in Germany.

- The Food and Drug Administration strongly recommended that we conduct

a confirmatory study (ACCLAIM-II) in NYHA Class II heart failure

patients to support a Pre-market Approval filing for Celacade in the

United States. The FDA also recommended that we utilize a Bayesian

statistical approach for designing the confirmatory trial as it would

allow for the borrowing of statistical power from the ACCLAIM study.

This approach has the potential to substantially reduce the number of

patients required for a confirmatory study, as well as the cost and


- James B. Young, MD, Chairman, Division of Medicine at the Cleveland

Clinic Foundation and Medical Director, Kaufman Center for Heart

Failure, was appointed the Global Principal Investigator and Chairman

of the Steering Committee for ACCLAIM-II.

- Chris Waddick, MBA, CMA, was appointed President, CEO, and a Member

of the Board of Directors of our Company. Mr. Waddick has held a

series of progressive senior management positions at Vasogen over the

past twelve years, most recently as Chief Operating Officer and Chief

Financial Officer.

As previously announced, a conference call will be conducted on January 16, 2008, at 4:30 p.m. Eastern Time. The conference call may be accessed by calling 416-641-6142 or 1-866-542-4241 ten minutes prior to the call. An audio web cast of the event will also be available at A re-broadcast of the conference call may be accessed by calling 416-695-5800 or 1-800-408-3053, pass code 3248350 followed by the number sign, and will also be available at

About Vasogen:

Vasogen is a biotechnology company engaged in the research and commercial development of therapies designed to target the destructive inflammatory process associated with the development and progression of cardiovascular and neurodegenerative disorders. The Company's lead product, the Celacade(TM) System, is designed to activate the immune response to apoptosis - an important physiological process that regulates inflammation. Celacade has received European regulatory approval under the CE Mark for chronic heart failure and is being marketed in the EU by Grupo Ferrer Internacional, S.A. Celacade is also in late-stage clinical development for the treatment of chronic heart failure in the United States. Vasogen is also developing a new class of drugs for the treatment of certain neuro-inflammatory disorders. VP025 is the lead candidate from this new class of drugs.

Certain statements contained in this press release, the upcoming conference call and webcast, or elsewhere in our public documents 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 advance the development of Celacade(TM) or 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, including assumptions about the nature, size, and accessibility of the market for Celacade in the treatment of chronic heart failure, particularly in Europe, the regulatory approval process leading to commercialization and the availability of capital on acceptable terms to pursue the development of Celacade, and the feasibility of additional trials. 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 further ongoing analysis of the ACCLAIM trial results, the requirement or election to conduct additional clinical trials and the size and design of any such trials, delays or setbacks in the regulatory approval process, difficulties in the maintenance of existing regulatory approvals, securing and maintaining corporate alliances, the need for additional capital and the effect of capital market conditions and other factors on capital availability, the potential dilutive effects of any financing, risks associated with the outcomes of our preclinical and clinical research and development programs, the adequacy, timing, and results of our clinical trials, competition, market acceptance of our products, the availability of government and insurance reimbursements for our products, the strength of intellectual property, reliance on partners, subcontractors, and key personnel, losses due to fluctuations in the U.S.-Canadian exchange rate, 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, 2006, as well as in our later public filings. 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, 2007, will be accessible on Vasogen's web site at and will be available on SEDAR and EDGAR.

Financial statements are provided below.



Consolidated Balance Sheets

(In thousands of Canadian dollars)

November 30, 2007 and 2006


2007 2006



Current assets:

Cash and cash equivalents $ 23,545 $ 30,427

Restricted cash - 6,403

Clinical supplies 1,363 1,211

Tax credits recoverable 1,565 1,327

Prepaid expenses and deposits 787 1,384

Change in fair value of forward foreign exchange

contracts 376 -


27,636 40,752

Property and equipment 414 615

Acquired technology - 253

Deferred financing costs - 150


$ 28,050 $ 41,770



Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 1,175 $ 3,369

Accrued liabilities 3,519 5,067

Current portion of senior convertible notes

payable - 8,754


4,694 17,190

Shareholders' equity:

Share capital:


Unlimited common shares, without par value

Issued and outstanding:

22,391,386 common shares (2006 - 15,665,134) 365,670 344,217

Warrants 16,725 11,390

Contributed surplus 22,744 20,347

Deficit (381,783) (351,374)


23,356 24,580

$ 28,050 $ 41,770





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,

2007 2006 2005 2007



Research and development $ 12,039 $ 32,732 $ 71,421 $ 238,917

General and

administration 14,259 19,251 22,126 117,228

Foreign exchange loss

(gain) 1,977 104 (719) 10,970


Loss before the undernoted (28,275) (52,087) (92,828) (367,115)

Interest expense on senior

convertible notes payable (5) (930) (344) (1,279)

Accretion in carrying value

of senior convertible

notes payable (728) (7,824) (1,742) (10,294)

Amortization of deferred

financing costs (154) (2,495) (408) (3,057)

Loss on extinguishment of

senior convertible notes

payable (1,754) (4,995) - (6,749)

Investment income 1,310 1,971 2,274 13,325

Change in fair value of

embedded derivatives 829 - - 829


Loss and comprehensive loss

for the period (28,777) (66,360) (93,048) (374,340)

Deficit, beginning

of period:

As originally reported (351,374) (284,719) (187,665) (1,510)

Impact of change in

accounting for stock-

based compensation - - (4,006) (4,006)

Impact of change in

accounting for financial

instruments on

December 1, 2006 (1,632) - - (1,632)


As revised (353,006) (284,719) (191,671)

Charge for acceleration

payments on equity

component of senior

convertible notes payable - (295) - (295)


Deficit, end of period $(381,783) $(351,374) $(284,719) $(381,783)



Basic and diluted loss per

common share $ (1.46) $ (7.05) $ (11.65)





Consolidated Statements of Cash Flows

(In thousands of Canadian dollars)


Period from

December 1,

1987 to

Years ended November 30, November 30,

2007 2006 2005 2007


Cash provided by (used in):

Operating activities:

Loss for the period $ (28,777) $ (66,360) $ (93,048) $(378,346)

Items not involving cash:

Amortization 503 782 589 6,160

Accretion in carrying

value of senior

convertible notes

payable 728 7,824 1,742 10,294

Amortization of

deferred financing

costs 154 2,495 408 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 1,995 3,083 3,615 13,585

Common shares issued

for services - 36 - 2,485

Unrealized gain on

forward foreign

exchange contract (376) - - (376)

Unrealized foreign

exchange loss (gain) 2,566 (65) (542) 11,543

Other - - - (35)

Change in non-cash

operating working

SOURCE Vasogen Inc.
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