Vasogen Announces 2007 Year-End Results

    MISSISSAUGA, ON, Jan. 16 /CNW/ - 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 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
       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

    %SEDAR: 00001047E          %CIK: 0001042018

For further information:

For further information: Glenn Neumann, Investor Relations, 2505
Meadowvale Blvd., Mississauga, ON, Canada, L5N 5S2, tel: (905) 817-2004, fax:
(905) 569-9231,,

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