Aeolus Announces Process Improvements and Positive 18 Month Stability Results for AEOL 10150 in New Formulation

MISSION VIEJO, CA--(Marketwired - Feb 13, 2014) - Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS)

• 90% reduction in manufacturing cost of drug substance achieved; further improvements expected upon scale up of production
• 15,000 vials of final product produced for human safety studies to support pre-Emergency Use Authorization filing
• 18 months stability demonstrated for final drug product in new formulation at room temperature; testing will continue to five years
• Recent patent filing covers synthesis, formulation and pharmaceutical composition
• Process and formulation improvement work funded through BARDA contract, valued at up to $118 million with options

Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS), a biotechnology company developing compounds to protect against radiological and chemical threats with significant funding from the US Government, announced today that it has released its first lot of final drug product manufactured under new processes and with a new formulation. The manufacturing and formulation work was funded through its advanced research and development contract from the Biomedical Advanced Research and Development Authority ("BARDA"). The BARDA contract supports the development of AEOL 10150 as a medical countermeasure (MCM) for the lung sub-syndrome of Acute Radiation Syndrome (Lung ARS). The five-year, cost-plus contract, valued with options at up to $118 million, includes funding for the development of large-scale, Good Manufacturing Practice production capacity for AEOL 10150.

The new manufacturing process resulted in a 90 percent reduction in the production cost of the drug substance. Final refinement of the manufacturing processes and validation of methods will begin in February and is expected to be complete by the end of July 2014. At that time, the Company expects to be in a position to produce the bulk drug substance and final drug product lots required for the filing of a New Drug Application ("NDA") with the U.S. Food and Drug Administration ("FDA") for Lung ARS and, ultimately, for treatment of patients undergoing radiation therapy. 

Stability on the new formulation of final drug product has been performed under refrigerated, room temperature and accelerated conditions out to 18 months and will continue out to five years. This data builds on 50 months stability data under refrigerated conditions for the previous formulation. Stability on the new bulk drug substance has been performed under refrigerated, room temperature and accelerated conditions out to 6 months. This data builds on 24 month stability data for the bulk drug substance manufactured under the prior processes. Under the contract with BARDA, stability testing will be performed under refrigerated, room temperature and accelerated conditions on all bulk drug substance lots out to 36 months and on all final drug product lots out to 60 months. 

"The progress made by our manufacturing team and our partners at Johnson Matthey Pharma Services and BARDA has been remarkable," stated John McManus, Chief Executive Officer of Aeolus Pharmaceuticals, Inc. "The success of our manufacturing program under the BARDA contract is a testimony to the leadership of Chris Stanley, Vice President of Operations at Aeolus, and the valuable input from BARDA's subject matter experts and Johnson Matthey's chemists. The reduction in the cost of goods could save the US Government millions of dollars under a potential procurement and it positions AEOL 10150 to be an extremely attractive potential therapy for cancer patients suffering from the side effects of radiation therapy. This success is an excellent example of the value that BARDA brings as a partner in advanced drug development."

In late 2013, the Company filed a provisional application covering new inventions resulting from this research and development with the United States Patent and Trademark Office. Patents resulting from this provisional application, if granted, would cover novel synthesis routes, crystal forms and pharmaceutical compositions of AEOL-10150 and related porphyrin compounds. Aeolus plans to preserve international patent rights to these new inventions by filing a subsequent PCT application in 2014 claiming priority to the already-filed provisional application. Resulting international protection for these inventions covering AEOL 10150 would be expected to extend to at least 2034 in many jurisdictions. The intellectual property underlying this new patent filing is a direct result of work performed under Aeolus' contract with the Biomedical Advanced Research and Development Authority ("BARDA").

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, 2013. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.