Source: Aeolus Pharmaceuticals, Inc.

Aeolus Announces No-Cost Extension and Modification of Barda Contract Fully Valued at $118 Million to Develop Treatment for Lung Acute Radiation Syndrome

MISSION VIEJO, CA--(Marketwire - Feb 15, 2012) - Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS) (PINKSHEETS: AOLS)

  • Restructure driven by additional items added to base year contract resulting from Aeolus driven cost savings and to allow BARDA to better manage contract options to expedite development program -- still eligible for full $118 million;
  • Meeting to request exercise of additional contract options held on February 14, 2012

Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS) (PINKSHEETS: AOLS), a biotechnology company leveraging significant government funding to develop a platform of novel compounds in oncology and biodefense, today announced that the Company has entered into a contract modification and no-cost extension with the Biomedical Advanced Research and Development Authority (BARDA), part of the Department of Health and Human Services (HHS). The modification and extension will allow the Company to continue operating under the base period of the contract awarded last February, and restructures the timing and components of the options that can be awarded under the remaining four years of the agreement. The changes do not impact the total potential value of the contract, which remains at approximately $118 million. The Aeolus contract is for the advanced development of AEOL 10150 as a medical countermeasure (MCM) against the pulmonary sub-syndrome of acute radiation syndrome (ARS).

Through the end of January 2012, Aeolus had billed or completed approximately $7.9 million of programs under the contract, had committed work in progress totaling approximately $2.0 million and expected to bill for the full amount of $10.4 million in the base period Under terms of this cost plus, fixed fee development contract, Aeolus will receive $10.4 million in the base period of performance and up to an additional $107.5 million in options, if exercised by BARDA, for a total contract value of up to $118 million. In addition to accomplishing the major objectives during the base period of the agreement, Aeolus managed the contract so that 12 additional items could be added to create further value for the government during the base period. The modification reflects these additional items, as well as the additional time required to complete them.

Aeolus will be presenting the results and deliverables that have been produced during the first twelve months under the base period of the contract at an "In-Progress Review" meeting with BARDA on February 14, 2012, and will be requesting the exercise of additional contract options, which contain the key items required in the advanced development of AEOL 10150 from April 2012 through March 2013. Among, these key items are efficacy studies in murine and non-human primate models, a Phase 1 clinical study in healthy normal volunteers, mechanism of action research and manufacturing and process validation work. All of these items build off of work successfully completed during the first twelve months of the contract base period.

"We have delivered significant value to shareholders and the government during the first twelve months of the BARDA contract and look forward to presenting this progress to BARDA next week, and making our case for the exercise of additional options. The threat of radiation exposure from nuclear accidents and/or nuclear attacks is unfortunately a reality, and AEOL 10150 represents a promising technology to protect our citizens from this threat. With the contract modification and the continued support of BARDA, we will take additional major steps forward in the development of AEOL 10150 as a countermeasure to the pulmonary effects of ARS," said John L. McManus, Chief Executive Officer and President of Aeolus Pharmaceuticals, Inc. "We are grateful for both the economic and intellectual support we have received from BARDA to advance the development of our drug, and as a result have made significant progress toward our ultimate objectives of procurement and FDA approval, while creating jobs and supporting more than 35 full-time equivalent positions."

About the BARDA Contract

In addition to supporting the cost of development of AEOL 10150 as an MCM for Lung ARS, the Company believes that the preclinical, chemistry, manufacturing, and controls (CMC), toxicology, and safety studies expected to be performed under the BARDA contract will be supportive of the Company's oncology development program. A procurement of AEOL 10150 for the Strategic National Stockpile could occur after approval from the U.S. Food and Drug Administration, if obtained, or sooner under an Emergency Use Authorization (EUA). The value of a procurement, if any, is not included in the contract value announced herein.

AEOL 10150 is currently also being studied by the National Institutes of Health's (NIH) National Institute of Allergy and Infectious Diseases (NIAID) Radiation/Nuclear Medical Countermeasures development program as a countermeasure for radiation exposure to the gastrointestinal tract and by NIH CounterACT as countermeasure against chlorine gas and sulfur mustard gas exposure.

About Acute Radiation Syndromes (ARS)

Immediately after exposure, the most critical components of acute radiation syndrome are the hematopoietic (bone marrow) and early-onset gastrointestinal (GI) syndromes because symptoms begin very quickly and can be lethal. However, depending on the level and location of radiation exposure, much of the lethality of both hematopoietic and early-onset gastrointestinal syndromes are potentially avoidable with proper treatment, including supportive care (fluids and antibiotics) and Neupogen, leaving complications to later responding tissues subsequently becoming a major problem.

In situations of accidental exposure, it was initially assumed that a whole-body dose exceeding 10 Gy was inevitably fatal. However, experience with nuclear accident victims suggests that when patients survive gastrointestinal and bone marrow syndromes, respiratory failure become the major cause of death. This effect is known as a delayed effect of acute radiation exposure (DEARE).

About Cancer Radiation Therapy

According to the American Cancer Society, cancer is the second leading cause of death by disease representing one out of every four deaths in the United States. According to the Radiological Society of North America, about 50 to 60 percent of cancer patients are treated with radiation at some time during their disease. The NIH estimates overall costs of cancer in 2008 in the United States at $228.1 billion: $93.2 billion for direct medical costs, $18.8 billion for indirect morbidity costs (costs of lost productivity due to illness) and $116.1 billion for indirect mortality costs (cost of lost productivity due to premature death).


The Biomedical Advanced Research and Development Authority (BARDA), within the Office of the Assistant Secretary for Preparedness and Response in the U.S. Department of Health and Human Services, provides an integrated, systematic approach to the development and purchase of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies. BARDA was established to provide funding and coordination to address challenges in medical countermeasure development. BARDA was created to increase funding for advanced research and development and to better coordinate the U.S. government's medical countermeasure development and acquisition process. BARDA manages Project BioShield, which includes the procurement and advanced development of medical countermeasures for chemical, biological, radiological, and nuclear agents, as well as the advanced development and procurement of medical countermeasures for pandemic influenza and other emerging infectious diseases that fall outside the scope of Project BioShield.

About AEOL 10150

AEOL 10150 is a broad-spectrum catalytic antioxidant specifically designed to neutralize reactive oxygen and nitrogen species. The neutralization of these species reduces oxidative stress, inflammation, and subsequent tissue damage-signaling cascades resulting from radiation exposure. The Company believes that AEOL 10150 could have a profound beneficial impact on people who have been exposed, or are about to be exposed, to high-doses of radiation in the treatment of oncology.

AEOL 10150 has already performed well in animal safety studies, was well-tolerated in two human clinical trials, and has demonstrated statistically significant survival efficacy in an acute radiation-induced lung injury model. AEOL 10150 is also currently in development for use as both a therapeutic and prophylactic drug in cancer patients.

About Aeolus Pharmaceuticals

Aeolus Pharmaceuticals is developing a new class of catalytic antioxidant compounds that protects healthy tissue from the damaging effects of radiation. Its first compound, AEOL 10150, is being developed for oncology indications, where it is used in combination with radiation therapy. It is also being developed, with funding by the US Government, as a medical countermeasure against chemical and radiological weapons, where its initial target indications are as a protective agent against the effects of acute radiation syndrome and delayed effects of acute radiation exposure. Aeolus' strategy is to leverage the substantial investment in toxicology, manufacturing, and preclinical studies made by US Government agencies in AEOL 10150 to efficiently develop the compound for use in oncology. For more information, please visit Aeolus' corporate website at

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 and any potential future submissions or applications to the FDA. 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, receipt of funding under the contract with BARDA, 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.

Contact Information:

Russell Skibsted
Sr. Vice President and Chief Financial Officer
Aeolus Pharmaceuticals, Inc.
(949) 481-9825