Barda Exercises $3 MM in Additional Contract Funding for Development of AEOL 10150 as Treatment for Acute Radiation Syndrome

MISSION VIEJO, CA--(Marketwired - June 26, 2015) - Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS), a biotechnology company developing compounds to protect against radiological and chemical threats in partnership with the US Government, announced today that the Biomedical Advanced Research and Development Authority (BARDA) exercised $3 million in additional contract options under its advanced research and development contract for AEOL 10150. BARDA is a division of the U.S. Department of Health and Human Services that manages the advanced development and purchase of medical countermeasures for public health threats.

Aeolus is developing its lead compound, AEOL 10150, as a treatment for the pulmonary syndrome of Acute Radiation Syndrome (Lung-ARS) and delayed effects of acute radiation exposure (DEARE) under a contract with BARDA worth up to $118MM. The contract is designed to produce the data necessary for an approval under the FDA "Animal Rule" and for a pre-Emergency Use Authorization (EUA) filing. An approval or pre-EUA would allow the federal government to buy AEOL 10150 for the Strategic National Stockpile under the Pandemic All-Hazards Preparedness Reauthorization Act (PAHPRA). PAHPRA is designed to accelerate the research, development, purchase and availability of effective medical countermeasures for the Strategic National Stockpile.
The options include funding for the following development items:

• Laboratory work suggested by the FDA as a pathway to removing the clinical hold on the IND for AEOL 10150 in Lung-ARS
• Ongoing animal studies to optimize the administration of AEOL 10150 for Lung-ARS, including duration of treatment and delayed treatment studies
• Project management costs

On March 12, 2015, Aeolus met with the Division of Medical Imaging Products at the FDA to discuss the Company's action plan for a complete response to the clinical hold on the IND for AEOL 10150 in Lung-ARS. The discussion at the meeting focused on the path forward to a Phase 1 study in healthy normal volunteers. The FDA asked the Company to perform laboratory studies designed to confirm the non-mutagenic mechanism of action (MOA) by which AEOL 10150 has created "false" positives in "in-vitro" (test-tube) studies for mutagenicity. "In-vivo" (animal studies) have been negative -- indicating that AEOL 10150 is not mutagenic. If these studies confirm the MOA, the clinical hold may be lifted. The FDA indicated that if the studies do not confirm the MOA, the hold may be lifted upon completion of a transgenic mouse carcinogenicity study, which will be initiated immediately and run concurrent to the MOA studies. In addition, the Company asked the FDA for guidance on which cancer indication would be more appropriate for creating data to support the Lung-ARS indication in an approval under the Animal Rule. The FDA recommended studies in lung cancer patients.

"We appreciate the FDA's helpful guidance on a clear, expeditious path forward to a Phase 1 study in healthy normal volunteers for AEOL 10150," commented John McManus, President and CEO of Aeolus. "The specific recommendations for laboratory work provide us with a well-defined route to lifting the clinical hold. We believe that this work can be completed in a very short period of time and we look forward to presenting our results to the FDA."

About Aeolus Pharmaceuticals

Aeolus Pharmaceuticals is developing a new class of broad-spectrum, catalytic-antioxidant compounds that protect healthy tissue from the damaging effects of radiation. Its first compound, AEOL 10150, is being developed, with funding by the US Department of Health and Human Services, 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 and clinical studies made by US Government agencies in AEOL 10150, including the contract with BARDA valued, with options, at up to $118.4 million, to efficiently develop the compound for use in idiopathic pulmonary fibrosis and oncology. For more information, please visit Aeolus's corporate website at www.aolsrx.com.

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. AEOL 10150 has performed well in preclinical and non-clinical studies, demonstrating statistically significant survival benefit in acute radiation-induced lung injury models, and was well-tolerated in two human clinical trials. The Company believes it could have a profound beneficial impact on people exposed to high-doses of radiation from a nuclear event or in the course of treatment for cancer. AEOL 10150 has been awarded Orphan Drug status by the US FDA for the treatment of Lung-ARS and for Idiopathic Pulmonary Fibrosis.

Forward-Looking Statements

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, the Company's potential initiation of a phase 1 study in healthy normal volunteers and the BARDA Contract. 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, and whether BARDA exercises one or more additional options under the BARDA Contract. 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, 2014. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.