Vasogen Announces Second Quarter 2007 Results
MISSISSAUGA, ON, July 10 /PRNewswire-FirstCall/ - Vasogen Inc. (NASDAQ:VSGN; TSX:VAS), today reported the results of operations for the second quarter of 2007. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.
At May 31, 2007, our cash and cash equivalents and restricted cash totaled $33.8 million, compared with $36.8 million at November 30, 2006, and $27.4 million at February 28, 2007. The change in our cash position resulted from net proceeds of $15.4 million from our May 2007 financing, partially offset by cash used for operations. Our net cash used in operations for the three months and six months ended May 31, 2007, was $7.9 million and $16.9 million, respectively. The net cash used in operations includes restructuring costs for the three months and six months ended May 31, 2007 of $2.5 million and $2.9 million, respectively.
As of April 1, 2007, the outstanding principal balance of our senior convertible notes was fully repaid. From September 1, 2006, we were required, under the terms of the convertible notes, to maintain a balance of cash, including restricted cash and marketable securities, equal to 110% of the convertible notes outstanding. We satisfied this cash test at all times. With the repayment of our convertible notes during this quarter, the remaining balance of our restricted cash will become unrestricted during the third quarter.
The net loss for the second quarter of 2007 was $9.7 million, or $0.54 per common share, compared with a net loss of $22.4 million, or $2.59 per common share for the same period in 2006. We incurred a net loss for the six months ended May 31, 2007 of $17.4 million, or $1.02 per common share, compared with a net loss of $41.8 million, or $4.93 per common share for the same period in 2006. The key drivers of our reduced losses in 2007 are lower costs associated with the completion of our phase III clinical programs, the corporate costs associated with supporting these programs, and a reduction in expenses associated with our senior convertible notes. The difference between cash used in operations and our accounting loss is driven by non-cash items, such as certain expenses related to our senior convertible notes, stock option expense, and unrealized foreign exchange gains and losses.
Vasogen is also today announcing the appointment of Graham D. Neil, CA, to the position of Chief Financial Officer. Mr. Neil has served with Vasogen for over seven years and has played a progressive and integral role in Vasogen's internal control, financial management and reporting. He joined the Company as Controller in 1999 and most recently served as Director of Finance. Mr. Neil holds a Chartered Accountant designation and prior to joining Vasogen, he was with KPMG, LLP.
Highlights
- On June 27, 2007, we announced the outcome of a meeting with the Food
and Drug Administration (FDA) regarding the next steps in the
development of our Celacade technology for the treatment of chronic
heart failure in the United States. During the meeting, we discussed
with the FDA the results of the ACCLAIM study, with a particular
focus on the 689-patient subgroup with NYHA Class II heart failure.
As a result of this meeting, the FDA has strongly recommended that we
conduct a confirmatory study to support a Pre-market Approval (PMA)
filing and also recommended that we consider utilizing a Bayesian
statistical approach to designing the confirmatory trial. The
Bayesian approach involves a specific trial methodology that allows
utilization of prior trial results with a confirmatory study to
obtain additional information regarding efficacy and safety and has
the potential to substantially reduce the number of patients required
for a confirmatory study, as well as the cost and duration. Having
received the FDA's input, we are now in a position to fully evaluate
our options with respect to a confirmatory trial that could
potentially be smaller than the 689-patient NYHA Class II subgroup of
patients in ACCLAIM if we elected a Bayesian approach. We are
continuing our ongoing dialogue with the FDA, as well as consulting
our statistical experts and other advisors to review trial design
options.
- On June 20, 2007, we announced that Chris Waddick, MBA, CMA,
succeeded Terrance H. Gregg as President and CEO of our Company.
Mr. Waddick, who previously served as Chief Operating Officer and
Chief Financial Officer, has held a series of progressive senior
management positions at Vasogen over the past twelve years. During
his tenure, he has played a key role in our development and strategic
direction and has been responsible for operations since 2005. Mr.
Waddick was also appointed to Vasogen's Board of Directors. In March
2007, Mr. Gregg succeeded David G. Elsley as President and Chief
Executive Officer of Vasogen. Mr. Gregg, who has served on our Board
of Directors since 1999, and who was appointed Chairman in March
2006, remains Chairman of Vasogen's Board of Directors.
- On May 24, 2007, we announced the closing of a financing for net
proceeds of $15.4 million through the sale of our common shares to
institutional investors at a price of US$3.25. Under the terms of the
purchase agreements, we also issued 5-year warrants to purchase an
additional 3.7 million common shares at an exercise price of US$3.16
per share.
- On April 18, 2007 we announced a collaboration with Grupo Ferrer
Internacional, S.A., a leading European pharmaceutical and medical
devices company, to commercialize Vasogen's Celacade technology for
the treatment of chronic heart failure in specified countries of the
European Union and in certain Latin American countries.
As previously announced, a conference call will be conducted on July 10, 2007, at 4:30 p.m. Eastern time. The conference call may be accessed by calling 416-695-6623 or 1-877-461-2814 ten minutes prior to the call. An audio web cast of the event will also be available at www.vasogen.com. A re-broadcast of the conference call may be accessed by calling 416-641-2130 or 1-888-330-1923, PIN code 6543 followed by the number sign, and will also be available at www.vasogen.com
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) technology, is designed to activate the immune response to apoptosis - an important physiological process that regulates inflammation. Celacade(TM) is in late-stage development for the treatment of chronic heart failure and has received European regulatory approval under the CE Mark for this indication. Vasogen is also developing a new class of drugs for the treatment of certain neuro-inflammatory disorders and is preparing to advance VP025, the lead drug candidate from this new class, into phase II development.
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, summary statements relating to results of the ACCLAIM trial in patients with chronic heart failure, plans to advance the development of Celacade(TM), plans to fund our current activities, statements concerning our partnering activities and health regulatory submissions, strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management. 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 in the forward-looking statements. 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 trails, 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. Unless otherwise indicated, numerical values indicating the statistical significance ('p-values') of results included in this document are based on analyses that do not account for endpoint multiplicity.
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 and six months ended May 31, 2007, will be accessible on Vasogen's Website at 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,
2007 2006
-------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 30,696 $ 30,427
Restricted cash 3,078 6,403
Clinical supplies 1,248 1,211
Tax credits recoverable 1,330 1,327
Prepaid expenses and deposits 779 1,384
-----------------------------------------------------------------------
37,131 40,752
Property and equipment 529 615
Acquired technology 127 253
Deferred financing costs - 150
-------------------------------------------------------------------------
$ 37,787 $ 41,770
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 896 $ 3,369
Accrued liabilities 2,672 5,067
Senior convertible notes payable - 8,754
-----------------------------------------------------------------------
3,568 17,190
Shareholders' equity
Share capital:
Authorized:
Unlimited common shares, without par value
Issued and outstanding:
22,391,402 common shares
(November 30, 2006 - 15,665,134) 365,670 344,217
Stock-based compensation 10,950 10,713
Equity component of senior convertible
notes payable - 1,639
Warrants 16,725 11,390
Contributed surplus 11,252 7,995
Deficit (370,378) (351,374)
-----------------------------------------------------------------------
34,219 24,580
-------------------------------------------------------------------------
$ 37,787 $ 41,770
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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,
2007 2006 2007 2006 2007
-------------------------------------------------------------------------
Expenses:
Research and
development $ 3,736 $ 11,029 $ 6,759 $ 22,413 $ 235,440
General and
administration 4,888 5,598 8,476 10,490 113,648
Foreign exchange
loss, net 1,092 169 958 172 9,951
-------------------------------------------------------------------------
Loss before the
undernoted (9,716) (16,796) (16,193) (33,075) (359,039)
Interest expense on
senior convertible
notes payable - (304) (5) (787) (1,279)
Accretion in
carrying value of
senior convertible
notes payable (36) (2,280) (728) (4,906) (10,294)
Amortization of
deferred financing
costs (9) (950) (154) (1,580) (3,057)
Loss on
extinguishment of
senior convertible
notes payable (470) (2,701) (1,754) (2,694) (6,749)
Investment income 281 593 633 1,272 12,648
Change in fair value
of embedded
derivatives 256 - 829 - 829
-------------------------------------------------------------------------
Loss for the period
and comprehensive
loss (9,694) (22,438) (17,372) (41,770) (366,941)
Deficit, beginning
of period:
As previously
reported (360,684) (304,051) (351,374) (284,719) (1,510)
Impact of change
in accounting
policy for
financial
instruments on
December 1, 2006 - - (1,632) - -
-----------------------------------------------------------------------
As restated (360,684) (304,051) (353,006) (284,719) (1,510)
Charge for
acceleration
payments on equity
component of senior
convertible notes
payable - (295) - (295) (295)
Impact of change in
accounting policy
for financial
instruments on
December 1, 2006 - - - - (1,632)
-------------------------------------------------------------------------
Deficit, end of
period $(370,378) $(326,784) $(370,378) $(326,784) $(370,378)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic and diluted
loss per share $ (0.54) $ (2.59) $ (1.02) $ (4.93) $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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,
2007 2006 2007 2006 2007
-------------------------------------------------------------------------
Cash provided by
(used in):
Operations:
Loss for the
period $ (9,694) $ (22,438) $ (17,372) $ (41,770) $(366,941)
Items not
involving cash:
Amortization 127 149 253 298 5,911
Accretion in
carrying value
of senior
convertible
notes payable 36 2,280 728 4,906 10,294
Amortization
of deferred
financing costs 9 950 154 1,580 3,057
Loss on
extinguishment
of senior
convertible
notes payable 470 2,701 1,754 2,694 6,749
Change in fair
value of
embedded
derivatives (256) - (829) - (829)
Stock-based
compensation 890 918 1,453 1,682 13,043
Common shares
issued for
services - - - - 2,485
Unrealized
foreign
exchange loss 1,326 676 1,226 706 10,202
Other - - - - (35)
Change in non-cash
operating working
capital (829) (2,504) (4,304) (8,648) 182
-------------------------------------------------------------------------
(7,921) (17,268) (16,937) (38,552) (315,882)
Financing:
Shares and warrants
issued for cash 17,345 - 17,345 - 326,359
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) (2,115) 38,512
Restricted cash 289 382 3,325 686 (3,078)
Cash payment on
acceleration
warrants exercise
price - (49) - (49) -
Paid to related
parties - - - - (234)
-----------------------------------------------------------------------
15,902 333 18,306 (1,478) 361,523
Investments:
Purchase of
property and
equipment (11) (14) (41) (14) (2,457)
Purchase of
acquired
technology - - - - (1,283)
Purchases of
marketable
securities - - - (80) (244,846)
Settlement of
forward exchange
contracts - - 10 (259) (4,824)
Maturities of
marketable
securities - 7,653 - 22,877 240,677
-----------------------------------------------------------------------
(11) 7,639 (31) 22,524 (12,733)
Foreign exchange
loss on cash held
in foreign currency (1,349) (1,221) (1,069) (1,539) (2,212)
-------------------------------------------------------------------------
Increase (decrease)
in cash and cash
equivalents 6,621 (10,517) 269 (19,045) 30,696
Cash and cash
equivalents,
beginning of
period 24,075 41,993 30,427 50,521 -
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 30,696 $ 31,476 $ 30,696 $ 31,476 $ 30,696
-------------------------------------------------------------------------
-------------------------------------------------------------------------
SOURCE Vasogen Inc.
News 
Market Data 
Discover 
) 
