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Vasogen Announces Third Quarter 2008 Results
Date:10/15/2008

MISSISSAUGA, ON, Oct. 15 /PRNewswire-FirstCall/ - Vasogen Inc. (NASDAQ:VSGN; TSX:VAS) today reported the results of operations for the three and nine months ended August 31, 2008. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.

At August 31, 2008, our cash and cash equivalents totaled $9.8 million, compared with $12.4 million at May 31, 2008.

The net loss for the third quarter of 2008 was $2.6 million, or $0.12 per common share, compared with a net loss of $5.3 million, or $0.24 per common share for the same period in 2007. We incurred a net loss for the nine months ended August 31, 2008 of $15.3 million, or $0.68 per common share, compared with a net loss of $22.7 million, or $1.21 per common share for the same period in 2007. Our net loss included restructuring costs for the three months and nine months ended August 31, 2008 of $0.8 million and $3.1 million, respectively. In addition to the cost savings from the termination of our lease, as discussed below, we expect a further reduction of infrastructure and other support costs associated with the facility.

A key driver of our decreased loss in both these periods was lower salary and benefit 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. In addition, during the nine months ended August 31, 2008, the decrease was impacted by a reduction in expenses resulting from the repayment of the senior convertible notes in April 2007.

Corporate Update

- On July 3, 2008, we announced the implementation of additional

restructuring plans to further - - 240,677

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- (8) (6) (39) (12,747)

Foreign exchange gain

(loss) on cash held

in foreign currency 99 (227) (51) (1,296) (3,603)

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

Increase (decrease)

in cash and cash

equivalents (2,601) (1,575) (13,757) (1,306) 9,788

Cash and cash

equivalents,

beginning of period 12,389 30,696 23,545 30,427 -

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Cash and cash

equivalents,

end of period $ 9,788 $ 29,121 $ 9,788 $ 29,121 $ 9,788

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

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

reduce our cash burn rate while we

continued to explore strategic corporate alternatives with the goal

of enhancing shareholder value. As part of this restructuring, we

reduced the number of full-time employees to six and materially

reduced expenses associated with the VP series of drugs.

- As at August 31, 2008, Vasogen had cash and cash equivalents of

$9.8 million and had 22.4 million shares outstanding. Our net cash

used in operating activities for the three months ended August 31,

2008, was $2.7 million, which included restructuring costs of

$1.4 million. Other than our accounts payable and accrued liabilities

we do not have any debt.

- During the quarter, our Board of Directors reviewed a number of

nonbinding proposals that were submitted to the Company as part of

our ongoing strategic review process. We are undertaking a review and

due diligence process to finalize which of these options, if any, to

proceed with. Concurrent with this assessment, the Board is

continuing to consider other strategic alternatives including the

monetization of certain tangible and/or intangible assets of the

Company, as well as the out-licensing of assets, potential asset

divestiture, winding up, or liquidation of the Company.

- During the quarter, we had further communications with the FDA

regarding the use of a Bayesian approach for ACCLAIM II and while we

feel that we have addressed the issues raised by the agency, they

have given no indication that they are considering changing their

view. As a result, pending the outcome of our current strategic

review process we are not planning any additional communications with

the FDA regarding the design of ACCLAIM II.

- 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 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.

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 complete a sale, merger, acquisition, or other strategic alternative, 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. 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, 2007, as well as in our later public filings, including our Management's Discussion and Analysis for the quarter ended August 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 nine months ended August 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)

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

August 31, November 30,

2008 2007

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

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 9,788 $ 23,545

Clinical supplies - 1,363

Tax credits recoverable 577 1,565

Prepaid expenses and deposits 261 787

Change in fair value of forward

foreign exchange contracts - 376

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

10,626 27,636

Property and equipment 42 414

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$ 10,668 $ 28,050

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Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 617 $ 1,175

Accrued liabilities 1,327 3,519

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

1,944 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 23,436 22,744

Deficit (397,107) (381,783)

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

8,724 23,356

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$ 10,668 $ 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 Nine months ended 1987 to

August 31, August 31, August 31,

2008 2007 2008 2007 2008

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

Expenses:

Research and

development $ 1,096 $ 2,588 $ 8,734 $ 9,347 $ 247,651

General and

administration 1,627 2,887 7,237 11,363 124,465

Foreign exchange

loss (gain) (59) 242 (194) 1,200 10,776

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

Loss before the

undernoted (2,664) (5,717) (15,777) (21,910) (382,892)

Interest expense on

senior convertible

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

Accretion in

carrying value of

senior convertible

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

Amortization of

deferred financing

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

Loss on extinguishment

of senior convertible

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

Investment income 78 370 453 1,003 13,778

Change in fair value

of embedded

derivatives - - - 829 829

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

Loss and

comprehensive loss

for the period (2,586) (5,347) (15,324) (22,719) (389,664)

Deficit, beginning of period:

As originally

reported (394,521) (370,378) (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 (394,521) (370,378) (381,783) (353,006) (7,148)

Charge for acceleration

payments on equity

component of senior

convertible notes

payable - - - - (295)

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

Deficit, end of

period $(397,107) $(375,725) $(397,107) $(375,725) $(397,107)

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

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

Basic and diluted

loss per share $ (0.12) $ (0.24) $ (0.68) $ (1.21) $ -

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

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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 Nine months ended 1987 to

August 31, August 31, August 31,

2008 2007 2008 2007 2008

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

Cash provided by

(used in):

Operating activities:

Loss for the

period $ (2,586) $ (5,347) $ (15,324) $ (22,719) $(389,664)

Items not

involving cash:

Amortization 191 125 378 378 6,536

Accretion in

carrying value

of senior

convertible

notes payable - - - 728 10,294

Amortization of

deferred

financing costs - - - 154 3,057

Loss on

extinguishment

of senior

convertible

notes payable - - - 1,754 6,749

Change in fair

value of

embedded

derivatives - - - (829) (829)

Stock-based

compensation 141 164 692 1,615 10,271

Common shares

issued for

services - - - - 2,485

Unrealized gain

on forward

foreign

exchange

contract - - - - (376)

Unrealized

foreign

exchange

loss (gain) (98) 227 61 1,454 11,604

Other - - - - (35)

Change in non-cash

operating working

capital (348) 413 493 (3,890) 1,446

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

(2,700) (4,418) (13,700) (21,355) (338,462)

Financing activities:

Shares and warrants

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

Warrants exercised

for cash - - - - 16,941

Options exercised

for cash - - - - 7,669

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

Issue (repayment) of

senior convertible

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

Cash released from

restriction - 3,078 - 6,403 -

Paid to related

parties - - - - (234)

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

- 3,078 - 21,384 364,600

Investing activities:

Purchases of property

and equipment - (8) (6) (49) (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 - -
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SOURCE Vasogen Inc.
Copyright©2008 PR Newswire.
All rights reserved

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