BARDA Exercises $6.0MM in Additional Contract Funding for Development of AEOL-10150 as Treatment for Acute Radiation Syndrome

MISSION VIEJO, CA--(Marketwired - Sep 17, 2013) - Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS)

• BARDA exercise options valued at $6.0 million effective September 16, 2013 under Aeolus' advanced development contract worth up to $118 million over five years
• Options will fund additional efficacy, manufacturing and regulatory work for AEOL-10150
• Conference Call: Thursday, September 19, 2013 @ 10 AM Pacific/1 PM Eastern

Aeolus Pharmaceuticals, Inc., a biotechnology company developing compounds to protect against radiological and chemical threats, announced today that the Biomedical Advanced Research and Development Authority (BARDA) exercised $6.0 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 five year contract with BARDA worth up to $118MM. The contract was awarded on February 11, 2011. 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:

• Investigational New Drug (IND) filing with the FDA for AEOL-10150 in Lung-ARS and DEARE
• Preparatory work for additional human clinical studies, including PK/PD ADME and toxicity studies
• Additional murine efficacy trials, including duration of treatment and delayed treatment studies
• Continued development of large-scale, GMP manufacturing capability for AEOL-10150
• Project management costs

As a result of the exercise of the new options, the Company expects revenue for fiscal year 2014 to exceed $9 million.

"BARDA's exercise of additional options reflects the significant progress our team has made during the first two years of the Lung-ARS development contract," said John L. McManus, Chief Executive Officer and President of Aeolus Pharmaceuticals, Inc. "During this period, we delivered valuable animal models for Lung-ARS and made important progress in the manufacturing of AEOL 10150. The options that BARDA exercised will fund our IND filing for AEOL-10150 as a treatment for Lung-ARS, additional animal efficacy studies designed to optimize timing and duration of dosing and the continued development of large-scale GMP manufacturing capability to meet potential future demand. When combined with our ongoing studies in non-human primates and our completed work in GMP manufacturing development, these options will help Aeolus meet the requirements for a pre-EUA filing for AEOL-10150. We remain grateful to BARDA for the financial support and program input that we receive."

In February 2011, BARDA awarded Aeolus a five-year Advanced Research and Development Contract to support the development of AEOL 10150 as a medical countermeasure against the pulmonary effects of acute radiation syndrome (ARS) and delayed effects of acute radiation exposure (DEARE), valued up to $118 million. Through the end of August 2013, Aeolus had billed or completed approximately $16.1 million of programs under the contract and had committed work in progress totaling approximately $3.4 million. Under terms of the contract, Aeolus may receive up to an additional $88.5 million in options, if exercised by BARDA, for a total contract value of up to $118 million.

On July 29, 2013, Aeolus presented the results and deliverables that had been produced during the first 28 months of the contract at an "In-Progress Review" meeting with BARDA, and requested the exercise of additional contract options. BARDA's exercise of the options is in response to the presentation of the deliverables and progress made under the contract at this meeting.

Conference Call

Aeolus will host a conference call provide investors with an update on the progress of the BARDA program.

Date: Thursday, September 19, 2013
Time: 10 AM Pacific/1 PM Eastern
Dial-in Number: 855-803-7921
Conference ID: 65093103

The conference call will be available on the same number for telephone replay through September 26th or at www.aeoluspharma.com

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 existing 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.