Aeolus' AEOl 10150 Significantly Improves Survival and Protects Lungs in Mice Exposed to Lethal Radiation

MISSION VIEJO, CA--(Marketwired - Oct 29, 2013) - Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS)

• Optimal dose of AEOL 10150 improved survival by four times over untreated animals
• Treatment with AEOL 10150 significantly reduced lung weights, a measure of inflammation
• AEOL 10150 treatment also improved respiratory function as measured by breathing frequency

Aeolus Pharmaceuticals, Inc., a biotechnology company developing compounds to protect against radiological and chemical threats with significant funding from the US Government, reported results of a study conducted in mice that shows that AEOL 10150 provides significant survival advantage and lung protection from the delayed effects of acute radiation exposure to the lungs. This study was funded by the Biomedical Advanced Research and Development Authority (BARDA) under contract HHSO100201100007C. Aeolus is presently in the third year of this five year contract from BARDA to develop AEOL 10150 as a medical countermeasure against the lung effects and delayed effects of radiation exposure.

A total of 120, CBA/J mice were exposed to 14.6 Gy of whole thorax lung irradiation (WTLI). Four cohorts of animals were treated with daily doses of 5mg, 10 mg, 25 mg or 40 mg/kg of AEOL 10150 beginning 24 hours after exposure for a total for 28 days. Survival in the optimal treatment group of 25mg/kg of AEOL 10150 improved to 40 percent, compared to 10 percent survival in the radiation only group. The Company and its research collaborators plan to publish the detailed results of the study.

"Injection of 25 mg/kg or AEOL10150 24 hours after whole thorax lung irradiation resulted in a four-fold improvement in survival in CBA mice and significant protection of the lungs as measured by differences in wet lung weights and breathing frequency", stated Brian Day, PhD, Chief Science Officer of Aeolus Pharmaceuticals, Inc. "This study confirms previous studies in animals that demonstrate AEOL 10150's protection of the lungs from both the type of radiation exposure one would experience from a nuclear blast or from radiation therapy for cancer."

This study is the first of 8 mouse efficacy and mechanism of damage/action studies for which Aeolus will report results over the next 12 months, all of which are fully funded under the Company's contract with BARDA, which is valued at up to $118 million. In addition to the mouse studies, Aeolus initiated a large study in non-human primates in June 2013, for which data is expected to be reported in mid-2014. These efficacy and mechanism studies will form the basis of a pre-Emergency Use Authorization filing that the Company anticipates to prepare for BARDA and the FDA during 2014.

Acute Radiation Syndrome ("ARS") is a serious illness that occurs in people exposed to high doses of radiation. The condition involves acute injuries the bone marrow and gastro-intestinal tract and longer-term damage to the lungs. On September 26, 2013, the US Department of Health and Human Services (HHS) awarded two contracts to purchase Leukocyte Growth Factors (LGF) for approximately $200 million to Sanofi-Aventis and Amgen. LGFs stimulate bone marrow to produce infection fighting white blood cells known as neutrophils, and have been shown to improve survival from bone marrow damage in ARS. LGFs, fluids and antibiotics have been used effectively to treat the acute bone marrow and acute GI effects of radiation, but there are no existing treatments for the lung and delayed effects. AEOL 10150 is the most advanced treatment to show efficacy against the delayed effects of radiation exposure, such as lung damage, and the only compound to demonstrate efficacy when administered after exposure.

Neupogen®, Amgen's LGF, has been shown to be an effective treatment for the acute bone marrow effects of ARS at radiation doses as low as 6.0 Gy, and is considered a standard therapy for radiation exposure. While Neupogen® significantly improves the response of the hematopoietic system after radiation exposure it also increases the neutrophil count in the lungs, which increases damage to lung tissue. In a study completed at the University of Indiana, lung tissue in animals treated with Neupogen® after total body irradiation was severely damaged 65 days after exposure. Treatment with Neupogen® plus AEOL 10150 significantly reduced the lung damage. At both 65 and 135 days post-exposure, treatment with AEOL 10150 also reduced fibrosis, alveolar and perivascular inflammation resulting from 7.0 Gy radiation and treatment with Neupogen ®.

"AEOL 10150 continues to demonstrate efficacy against a broad spectrum of radiological and chemical threats, and we are grateful to BARDA for their continued support of this critical program", stated John L. McManus, President and Chief Executive Officer of Aeolus Pharmaceuticals. "Last month's HHS acquisition of Neupogen® and Leukine® for the treatment of the bone marrow component of acute radiation syndrome addresses the acute effects of radiation, and this new promising data for AEOL 10150 highlights its potential as an effective lung radiation treatment that, when used in combination with an LGF, could enhance survival and quality of life after radiation exposure. We look forward to reporting additional animal efficacy data during fiscal 2014."

Potential for AEOL 10150 as a Countermeasure Against Radiological and Chemical Threats

AEOL 10150 has shown significant protective effects against radiation, mustard gas, chlorine gas, phosgene gas and nerve agents in animal models. A compound with the potential to protect against multiple threats would be of significant benefit in both the military and civilian efforts to protect citizens against potential threats. The United States Food and Drug Administration (FDA) has a special "Animal Rule" under which compounds may be approved for use against chemical and nuclear threats on the strength of animal efficacy studies, which allows the potential for an accelerated approval path versus conventional pharmaceutical applications. Additionally, the legislation that created Project Bioshield, provides BARDA with the authority to acquire drugs under development, but not yet approved, for use in an emergency with Emergency Use Authorization (EUA) from the FDA.

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, toxicology, and safety studies completed or planned 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. 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)

Acute Radiation Syndrome is a series of potentially lethal syndromes that develop after exposure to acute, high-dose radiation from nuclear detonations, "dirty" bombs or nuclear plant accidents. Two acute syndromes, the hematopoietic (bone marrow) and early-onset gastrointestinal (GI) syndromes, develop within the first 1-7 days following exposure. Depending on the level and location of radiation exposure, lethality from the hematopoietic and GI syndromes can be reduced or avoided with proper treatment, including supportive care (fluids and antibiotics) and G-CSF administration.

Experience with nuclear accident victims suggests that for patients who survive the gastrointestinal and bone marrow syndromes, the lung syndrome (Lung-ARS) and delayed effects of acute radiation exposure (DEARE) become the primary cause of death. There are no current treatments for Lung-ARS. AEOL-10150 is the only compound in advanced development for this syndrome.

About BARDA

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 are exposed to high-doses of radiation.

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 multiple Lung-ARS studies in animals. 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 platform of 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 oncology. For more information, please visit Aeolus's corporate website at www.aeoluspharma.com.

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 large efficacy studies in mice and NHPs, as well as a phase 1 study in healthy normal volunteers, the BARDA Contract, and the expected use of proceeds from the financing. 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, 2012. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.