Vasogen (NASDAQ:VSGN)
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MISSISSAUGA, ON, Feb. 27 /PRNewswire-FirstCall/ -- Vasogen Inc. (NASDAQ:VSGN; TSX:VAS) today reported the results of operations for the fiscal year ended November 30, 2008. All dollar amounts referenced herein are in Canadian dollars unless otherwise noted.
At November 30, 2008, our cash and cash equivalents totaled $8.6 million, compared with $23.5 million at November 30, 2007 and $9.8 million at August 31, 2008. As of January 31, 2009, our cash balance was $8.5 million.
The net loss for the fourth quarter of 2008 was $0.8 million, or $0.03 per common share. We incurred a net loss for the year ended November 30, 2008 of $16.1 million, or $0.72 per common share, compared with a net loss of $28.8 million, or $1.46 per common share for the same period in 2007. A key driver of this decrease was lower compensation 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 period. In addition, the decrease was impacted by a reduction in expenses resulting from the repayment of the senior convertible notes in April 2007.
Corporate Update
- During 2008, we implemented our restructuring plan to significantly
reduce the rate at which we use our cash and to focus our efforts on
opportunities that the Board and Management believe are most likely
to provide shareholder value. As a result, we discontinued
maintaining the necessary quality processes and personnel to support
European commercialization and any clinical development of our
Celacade technology, materially reduced expenses associated with the
VP series of drugs, and reduced the number of full-time employees
from 104 to six. We also retained JMP Securities LLC to assist in
exploring potential strategic alternatives. To further reduce the
rate at which we use our cash during our strategic review process, in
February 2009, we further reduced our number of full-time employees
to two. As part of this restructuring, Chris Waddick, our President
and CEO, will be terminated effective March 1, 2009. Mr. Waddick has
agreed to fulfill the role of CEO, in a consulting capacity at a
substantially reduced compensation, to assist the Board in bringing
closure to the ongoing strategic review process.
- Pursuant to our restructuring plan, our Board of Directors and
Management has been actively involved in a process of screening,
reviewing, and short-listing potential opportunities including the
sale of the Company, or a merger or acquisition, and exploring the
monetization of certain tangible and intangible assets. The process
has also included a review of the potential out-licensing of assets,
lapsing of patents and patent applications, asset divestiture, or
liquidation of the Company. At this time, we have significantly
narrowed down the number of third party proposals under
consideration. If a definitive agreement that the Board believes is
in the best interest of our shareholders cannot be reached in the
near future, the Board will consider the other alternatives that it
has been evaluating. These alternatives include the potential to
realize value from the monetization of certain intangible assets
either alone or potentially in combination with a strategic
transaction. The Board will continue to assess the merits of these
options relative to liquidating the Company and distributing the
remaining cash to the shareholders.
- As part of our restructuring, a new tenant was secured for our
37,111 sq. ft. leased facility located at 2505 Meadowvale Boulevard
in Mississauga, Ontario, and we 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.
- 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
US$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 were
provided a compliance period of 180 calendar days, or until
October 21, 2008, to regain compliance with this requirement. In
October 2008, the NASDAQ Stock Market had suspended the enforcement
of the rules requiring a minimum US$1.00 closing price until
January 20, 2009. Subsequently, on December 9, 2008, the NASDAQ
extended this suspension. Accordingly, the NASDAQ will not take
action to delist any security, including our shares, for a violation
of the minimum bid price rule during the suspension, which now has
been extended until April 20, 2009.
- As at November 30, 2008, we had cash and cash equivalents of
$8.6 million and had 22.4 million common shares issued and
outstanding. Other than our accounts payable and accrued liabilities
we do not have any debt. As of January 31, 2009, our cash balance was
$8.5 million.
- Subsequent to November 30, 2008 we entered into an agreement to sell
a United States patent application and its related foreign
counterparts for US$0.4 million. This device-based intellectual
property has not been used to date in the Celacade System; however,
we have retained rights to this technology for any potential use as
it relates to its Celacade System.
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 consider a sale, merger, acquisition, or other alternatives resulting from our strategic review, 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 in the forward-looking statements. 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, as well as in our other public filings, including our Management's Discussion and Analysis for the year ended November 30, 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 consolidated financial statements, accompanying notes to the consolidated financial statements, and Management's Discussion and Analysis for the year ended November 30, 2008, will be accessible on Vasogen's web site at http://www.vasogen.com/ and will be available on SEDAR and EDGAR.
Financial statements are provided below
Vasogen Inc.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Balance Sheets
(In thousands of Canadian dollars)
November 30, 2008 and 2007
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2008 2007
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Assets
Current assets:
Cash and cash equivalents $ 8,556 $ 23,545
Clinical supplies - 1,363
Tax credits recoverable 582 1,565
Prepaid expenses and deposits 188 787
Change in fair value of forward foreign
exchange contracts - 376
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9,326 27,636
Property and equipment 16 414
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$ 9,342 $ 28,050
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 101 $ 1,175
Accrued liabilities 1,141 3,519
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1,242 4,694
Shareholders' equity
Share capital:
Authorized:
Unlimited common shares, without par value
Issued and outstanding:
22,424,719 common shares (2007 - 22,391,386) 365,677 365,670
Warrants 16,725 16,725
Contributed surplus 23,555 22,744
Deficit (397,857) (381,783)
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8,100 23,356
$ 9,342 $ 28,050
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VASOGEN INC.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Operations, Deficit and Comprehensive Income
(In thousands of Canadian dollars, except per share amounts)
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Period from
December 1,
1987 to
Years ended November 30, November 30,
2008 2007 2006 2008
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Expenses:
Research and
development $ 8,794 $ 12,039 $ 32,732 $ 247,711
General and
administration 8,098 14,259 19,251 125,326
Foreign exchange
loss (gain) (305) 1,977 104 10,665
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Loss before the
undernoted (16,587) (28,275) (52,087) (383,702)
Interest expense on
senior convertible
notes payable - (5) (930) (1,279)
Accretion in carrying
value of senior
convertible notes
payable - (728) (7,824) (10,294)
Amortization of
deferred financing
costs - (154) (2,495) (3,057)
Loss on extinguishment
of senior convertible
notes payable - (1,754) (4,995) (6,749)
Investment income 513 1,310 1,971 13,838
Change in fair value
of embedded
derivatives - 829 - 829
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Loss and comprehensive
loss for the period (16,074) (28,777) (66,360) (390,414)
Deficit, beginning of
period:
As originally reported (381,783) (351,374) (284,719) (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)
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As revised (381,783) (353,006) (284,719)
Charge for acceleration
payments on equity
component of senior
convertible notes
payable - - (295) (295)
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Deficit, end of period $ (397,857) $ (381,783) $ (351,374) $ (397,857)
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Basic and diluted loss
per common share $ (0.72) $ (1.46) $ (7.05)
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VASOGEN INC.
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
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Period from
December 1,
1987 to
Years ended November 30, November 30,
2008 2007 2006 2008
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Cash provided by (used in):
Operating activities:
Loss for the period $ (16,074) $ (28,777) $ (66,360) $ (390,414)
Items not involving
cash:
Amortization 217 503 782 6,377
Loss on disposition
of property and
equipment 125 - - 125
Accretion in
carrying value
of senior
convertible notes
payable - 728 7,824 10,294
Amortization of
deferred financing
costs - 154 2,495 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 811 1,995 3,083 10,390
Common shares
issued for services - - 36 2,485
Unrealized gain on
forward foreign
exchange contract 376 (376) - -
Unrealized foreign
exchange loss (gain) (124) 2,566 (65) 11,419
Other - - - (35)
Change in non-cash
operating working
capital (513) (3,535) (17,158) 438
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(15,182) (25,817) (64,368) (339,944)
Financing activities:
Shares and warrants
issued for cash - 17,345 23,106 326,358
Warrants and options
exercised for cash - - - 24,610
Share issue costs - (1,440) (2,221) (24,646)
Issue (repayment) of
senior convertible
notes payable, net - (924) (3,976) 38,512
Cash released from
restriction - 6,403 5,298 -
Paid to related parties - - - (234)
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- 21,384 22,207 364,600
Investing activities:
Purchases of acquired
technology - - - (1,283)
Purchases of property and
equipment (6) (49) (23) (2,471)
Proceeds from disposition
of property and equipment 62 - - 62
Purchases of marketable
securities - - (80) (244,846)
Settlement of forward
foreign exchange
contracts - 10 (102) (4,824)
Maturities of marketable
securities - - 23,079 240,677
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56 (39) 22,874 (12,685)
Foreign exchange gain
(loss) on cash held
in foreign currency 137 (2,410) (807) (3,415)
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Increase (decrease) in
cash and cash
equivalents (14,989) (6,882) (20,094) 8,556
Cash and cash
equivalents, beginning
of period 23,545 30,427 50,521 -
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Cash and cash
equivalents, end of
period $ 8,556 $ 23,545 $ 30,427 $ 8,556
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DATASOURCE: Vasogen Inc.
CONTACT: Investor Relations, 4 Robert Speck Parkway, 15th Floor,
Mississauga, ON, L4Z 1S1, tel: (905) 817-2002, fax: (905) 847-6270,
http://www.vasogen.com/