Aeolus Pharmaceuticals Announces First Quarter Fiscal Year 2010 Financial Results

MISSION VIEJO, Calif.--(EON: Enhanced Online News)--Aeolus Pharmaceuticals, Inc. (OTCBB: AOLS) announced today financial results for the three months ended December 31, 2009. The Company reported a net loss of $15,276,000, or $0.33 per basic share, compared to a loss of $459,000, or $0.01 per basic share, for the three months ended December 31, 2008. The first quarter 2009 results include non-cash financing and change in valuation charges of $13,860,000. During the three months ended December 31, 2009, the Company’s net cash used in operating activities was $389,000 compared to $606,000 for the three months ended December 31, 2008. Management believes that cash flow from operations is a better indication of the financial performance of the Company during the quarter.

“The first quarter fiscal 2010 results continue to demonstrate our commitment to operate efficiently. On the development side, we reported positive efficacy results in studies of AEOL 10150 as a potential countermeasure against exposure from radiation, mustard gas and chlorine gas, and the Biomedical Advanced Research and Development Authority Division of Chemical, Radiological and Nuclear Countermeasures invited Aeolus to submit a full proposal for a contract to develop AEOL 10150 from its current development status to FDA approval,” stated John L. McManus, President and Chief Executive Officer.

Research and development expenses increased in the first quarter of fiscal year 2010 when compared to the first quarter of fiscal 2009 due to an increase in research activities. During the quarter, the Company initiated an additional study of AEOL 10150 as a protectant against the effects of radiation on the lungs in non-human primates. The Company currently has eight studies in progress including studies of AEOL 10150 as a potential countermeasure against the effects of: radiation on the lungs in mice and non-human primates and the gastro-intestinal tract in mice, chlorine gas on the lungs and sulfur mustard gas on the lung and skin, and studies of AEOL 11207 as a potential treatment for epilepsy and for Parkinson’s disease.

General and administrative expenses increased due to an increase in stock based compensation expense. Stock compensation expense increased as a result of a higher level of grant activity and an increase in the valuation assigned to such grants in the current quarter when compared to the prior year quarter.

As of December 31, 2009, the Company had $1,870,000 in cash and cash equivalents and 48,224,320 common shares outstanding.

About Aeolus Pharmaceuticals

Aeolus is developing a variety of therapeutic agents based on its proprietary small molecule catalytic antioxidants, with AEOL 10150 being the first to enter human clinical evaluation. AEOL 10150 is a patented, small molecule catalytic antioxidant that mimics and thereby amplifies the body’s natural enzymatic systems for eliminating reactive oxygen species, or free radicals. Studies funded by the National Institutes for Health are currently underway evaluating AEOL 10150 as a treatment for exposure to radiation, mustard gas and chlorine gas.

The statements in this press release that are not purely statements of historical fact are forward-looking statements. Such statements include, but are not limited to, those relating to Aeolus’ product candidates, as well as its proprietary technologies and research programs. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Aeolus’ actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. Important factors that could cause results to differ include risks associated with uncertainties of progress and timing of clinical trials, scientific research and product development activities, difficulties or delays in development, testing, obtaining regulatory approval, the need to obtain funding for pre-clinical and clinical trials and operations, the scope and validity of intellectual property protection for Aeolus’ product candidates, proprietary technologies and their uses, and competition from other biopharmaceutical companies. Certain of these factors and others are more fully described in Aeolus’ filings with the Securities and Exchange Commission, including, but not limited to, Aeolus’ Annual Report on Form 10-K for the year ended September 30, 2009. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

AEOLUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
	Three Months Ended
	December 31,
	2009			2008
Revenue
Grant income	$	-		$	-
Costs and expenses:
Research and development		184			125
General and administrative		406			283
Total costs and expenses		590			408
Loss from operations		(590	)		(408	)
Non-cash financing charges and change in fair value of warrants		(13,860	)		-
Change in fair value of trading securities, net		-			49
Interest income (expense), net		(826	)		(100	)
Net loss	$	(15,276	)	$	(459	)
Net loss per weighted share attributable to common stockholders:
Basic	$	(0.33	)	$	(0.01	)
Diluted	$	(0.33	)	$	(0.02	)
Weighted average common shares outstanding:
Basic		46,527			31,988
Diluted		46,527			34,472

Selected Balance Items:
(in thousands)
	December 31, 2009		September 30, 2009
Cash and cash equivalents	$1,870		$646
Total assets	$1,930		$811
Stockholders’ equity	$(17,656	)	$(1,157	)