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Vasogen Announces First Quarter 2009 Results

MISSISSAUGA, ON, April 13 /PRNewswire-FirstCall/ - Vasogen Inc. (NASDAQ: VSGN; TSX:VAS) today reported the results of operations for the three months ended February 28, 2009. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.

At February 28, 2009, our cash and cash equivalents totaled $7.3 million, compared with $8.6 million at November 30, 2008.

We incurred a net loss for the three months ended February 28, 2009 of $1.9 million, or $0.09 per common share, compared with a net loss of $5.3 million, or $0.24 per common share for the same period in 2008. This decrease is 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. Restructuring costs of $1.1 million were included in our net loss for the three months ended February 28, 2009.

    Corporate Update

    -   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,
        the employment of Chris Waddick, our President and CEO, was
        terminated effective February 28, 2009. Mr. Waddick has agreed to
        fulfill the role of CEO, in a consulting capacity at 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 also 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 at February 28, 2009, we had cash and cash equivalents of $7.3
        million and had 22.5 million common shares issued and outstanding.
        Other than our accounts payable and accrued liabilities, we do not
        have any debt.

    -   We sold 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 our Celacade System.

    -   Subsequent to quarter end, on March 25, 2009, the NASDAQ Stock Market
        further suspended the enforcement of the Minimum Bid Price Rule
        requiring a minimum US$1.00 closing price until July 20, 2009.
        Accordingly, the NASDAQ indicated that it will not take action to
        delist any security, including our common shares, for a violation of
        the minimum bid price rule during the suspension.

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 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 February 28, 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 months ended February 28, 2009, will be accessible on Vasogen's Website at and will be available on SEDAR and EDGAR.

                 Summary financial tables are provided below.


    Interim Consolidated Balance Sheets
    (In thousands of Canadian dollars)

                                                  February 28,   November 30,
                                                         2009           2008
    Current assets:
      Cash and cash equivalents                  $      7,333   $      8,556
      Tax credits recoverable                             383            582
      Prepaid expenses and deposits                        64            188
                                                        7,780          9,326

    Property and equipment                                 14             16

                                                 $      7,794   $      9,342

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable                           $        414   $        101
      Accrued liabilities                                 781          1,141
                                                        1,195          1,242

    Shareholders' equity
      Share capital:
          Unlimited common shares, without par
        Issued and outstanding:
          22,519,737 common shares
            (November 30, 2008 - 22,424,719)          365,701        365,677
      Warrants                                         16,725         16,725
      Contributed surplus                              23,971         23,555
      Deficit                                        (399,798)      (397,857)
                                                        6,599          8,100

                                                 $      7,794   $      9,342

    Interim Consolidated Statements of Operations, Deficit and Comprehensive
    (In thousands of Canadian dollars, except per share amounts)

                                                                 Period from
                                                                  December 1,
                                       Three months ended            1987 to
                                   February 28,   February 29,   February 28,
                                          2009           2008           2009
      Research and development    $         36   $      2,778   $    247,747
      General and administration         2,446          2,681        127,772
      Foreign exchange loss (gain)         (30)           203         10,635
    Loss before the undernoted          (2,452)        (5,662)      (386,154)
    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                       24            342         13,862
    Change in fair value of
     embedded derivatives                    -              -            829
    Loss and comprehensive loss
     for the period                     (1,941)        (5,320)      (392,355)
    Deficit, beginning of period      (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)

    Deficit, end of period        $   (399,798)  $   (387,103)  $   (399,798)

    Basic and diluted loss per
     common share                 $      (0.09)  $      (0.24)

    Interim Consolidated Statements of Cash Flows
    (In thousands of Canadian dollars)

                                                                 Period from
                                                                  December 1,
                                       Three months ended            1987 to
                                   February 28,   February 29,   February 28,
                                          2009           2008           2009
    Cash provided by (used in):
    Operating activities:
      Loss for the period         $     (1,941)  $     (5,320)  $   (392,355)
      Items not involving cash:
        Amortization                         2             62          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           416            235         10,806
        Common shares issued for
         services                            -              -          2,485
        Unrealized foreign
         exchange gain                     (38)           192         11,381
        Other                                -              -            (35)
      Change in non-cash operating
       working capital                     299          1,398            737
                                        (1,749)        (3,433)      (341,693)
    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                             -              -         (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
                                           487              -        (12,198)
    Foreign exchange gain (loss)
     on cash held in foreign
     currency                               39           (182)        (3,376)
    Increase (decrease) in cash
     and cash equivalents               (1,223)        (3,615)         7,333
    Cash and cash equivalents,
     beginning of period                 8,556         23,545              -
    Cash and cash equivalents,
     end of period                $      7,333   $     19,930   $      7,333

SOURCE Vasogen Inc.
Copyright©2009 PR Newswire.
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