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Vasogen Announces Second Quarter 2008 Results
Date:7/9/2008

MISSISSAUGA, ON, July 9 /PRNewswire-FirstCall/ - Vasogen Inc. (NASDAQ:VSGN; TSX:VAS) today reported the results of operations for the three and six months ended May 31, 2008. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.

At May 31, 2008, our cash and cash equivalents totaled $12.4 million, compared with $19.9 million at February 29, 2008.

The net loss for the second quarter of 2008 was $7.4 million, or $0.33 per common share, compared with a net loss of $9.7 million, or $0.54 per common share for the same period in 2007. We incurred a net loss for the six months ended May 31, 2008 of $12.7 million, or $0.57 per common share, compared with a net loss of $17.4 million, or $1.02 per common share for the same period in 2007. A key driver of this decrease was a reduction in expenses resulting from the repayment of the senior convertible notes in April 2007, lower restructuring 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.

Corporate Update

- On April 14, 2008, we announced the implementation of a strategic

restructuring plan to significantly reduce our cash burn rate and

focus our efforts on opportunities that the Board and Management

believe are most likely to provide shareholder value. As a result

of this restructuring, our work force was reduced by approximately

85% during the quarter. As a result, we are no longer maintaining

the necessary quality processes or personnel to support European

commercialization o>

Cash and cash

equivalents,

end of period $ 12,389 $ 30,696 $ 12,389 $ 30,696 $ 12,389

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r clinical development of Celacade. We also

retained JMP Securities to assist in exploring potential strategic

alternatives with the goal of enhancing shareholder value.

- Subsequent to the end of our second quarter and following an

extensive review of our VP series of drugs program, we announced a

halt to the expenses associated with the VP program, including an

additional reduction in our work force, to further reduce our cash

burn rate as we continue to explore strategic alternatives.

- 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 negotiated a lease

surrender agreement with our landlord. As a result, our lease for

this facility will terminate on September 30, 2008.

- 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 $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 are provided a compliance period of

180 calendar days, or until October 21, 2008, to regain compliance

with this requirement.

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 resume operations, to advance the development of 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 halting development of the Celacade System and VP series of drugs, 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 May 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 six months ended May 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)

-------------------------------------------------------------------------

May 31, November 30,

2008 2007

-------------------------------------------------------------------------

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 12,389 $ 23,545

Clinical supplies - 1,363

Tax credits recoverable 580 1,565

Prepaid expenses and deposits 500 787

Change in fair value of forward foreign

exchange contracts - 376

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13,469 27,636

Property and equipment 234 414

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$ 13,703 $ 28,050

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Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 349 $ 1,175

Accrued liabilities 2,185 3,519

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2,534 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 23,295 22,744

Deficit (394,521) (381,783)

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11,169 23,356

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$ 13,703 $ 28,050

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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,

2008 2007 2008 2007 2008

-------------------------------------------------------------------------

Expenses:

Research and

development $ 4,860 $ 3,736 $ 7,638 $ 6,759 $ 246,555

General and

administration 2,929 4,888 5,610 8,476 122,838

Foreign exchange

loss (gain) (338) 1,092 (135) 958 10,835

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Loss before the

undernoted (7,451) (9,716) (13,113) (16,193) (380,228)

Interest expense on

senior convertible

notes payable - - - (5) (1,279)

Accretion in carrying

value of senior

convertible notes

payable - (36) - (728) (10,294)

Amortization of

deferred financing

costs - (9) - (154) (3,057)

Loss on extinguishment

of senior

convertible notes

payable - (470) - (1,754) (6,749)

Investment income 33 281 375 633 13,700

Change in fair

value of embedded

derivatives - 256 - 829 829

-------------------------------------------------------------------------

Loss and comprehensive

loss for the period (7,418) (9,694) (12,738) (17,372) (387,078)

Deficit, beginning of

period:

As originally

reported (387,103) (360,684) (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 (387,103) (360,684) (381,783) (353,006)

Charge for

acceleration

payments on

equity component

of senior

convertible

notes payable - - - - (295)

-------------------------------------------------------------------------

Deficit, end of

period $(394,521) $(370,378) $(394,521) $(370,378) $(394,521)

-------------------------------------------------------------------------

Basic and diluted

loss per common

share $ (0.33) $ (0.54) $ (0.57) $ (1.02) $ -

-------------------------------------------------------------------------

-------------------------------------------------------------------------

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,

2008 2007 2008 2007 2008

-------------------------------------------------------------------------

Cash provided by

(used in):

Operating

activities:

Loss for the

period $ (7,418) $ (9,694) $ (12,738) $ (17,372) $(387,078)

Items not

involving

cash:

Amortization 125 127 187 253 6,347

Accretion in

carrying value

of senior

convertible

notes payable - 36 - 728 10,294

Amortization of

deferred

financing costs - 9 - 154 3,057

Loss on

extinguishment

of senior

convertible notes

payable - 470 - 1,754 6,749

Change in fair

value of embedded

derivatives - (256) - (829) (829)

Stock-based

compensation 316 890 551 1,453 10,130

Common shares

issued for

services - - - - 2,485

Unrealized gain

on forward

foreign exchange

contract - - - - (376)

Unrealized foreign

exchange loss

(gain) (33) 1,326 159 1,226 11,702

Other - - - - (35)

Change in non-cash

operating working

capital (557) (829) 841 (4,304) 1,792

-------------------------------------------------------------------------

(7,567) (7,921) (11,000) (16,937) (335,762)

Financing activities:

Shares and warrants

issued for cash - 17,345 - 17,345 326,358

Warrants exercised

for cash - - - - 16,941

Options exercised

for cash - - - - 7,669

Share issue costs - (1,443) - (1,440) (24,646)

Issue (repayment)

of senior

convertible

notes payable, net - (289) - (924) 38,512

Cash released

from restriction - 289 - 3,325 -

Paid to related

parties - - - - (234)

-------------------------------------------------------------------------

- 15,902 - 18,306 364,600

Investing activities:

Purchases of property

and equipment (6) (11) (6) (41) (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

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(6) (11) (6) (31) (12,747)

Foreign exchange gain

(loss) on cash

held in foreign

currency 32 (1,349) (150) (1,069) (3,702)

-------------------------------------------------------------------------

Increase (decrease)

in cash and cash

equivalents (7,541) 6,621 (11,156) 269 12,389

Cash and cash

equivalents,

beginning of

period 19,930 24,075 23,545 30,427 -

-------------------------------------------------------------------------'/>"/>

SOURCE Vasogen Inc.
Copyright©2008 PR Newswire.
All rights reserved

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