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Vasogen Announces the Early Close Out of the SIMPADICO Peripheral Arterial Disease Trial

Toronto, Ontario - August 30, 2005

Vasogen Inc. (NASDAQ:VSGN; TSX:VAS), focused on the development of immune modulation therapies for the treatment of cardiovascular disease, today announced the early close out of the 550-patient, double-blind, placebo-controlled phase III SIMPADICO trial of its Celacade™ technology for the treatment of symptomatic peripheral arterial disease (PAD). The decision to close out the trial at this time is based on a recommendation received from the SIMPADICO Steering Committee.

The Steering Committee’s recommendation was based on a recommendation by the trial’s External Safety and Efficacy Monitoring Committee (ESEMC). The ESEMC recommended the early close out of the study based on the absence of a sufficiently strong efficacy signal and their observation of a modest imbalance in the distribution of a small number of malignancy cases. Based on the Steering Committee’s own review, and the findings of an independent expert in medical oncology, the Steering Committee concluded that no safety concern existed. However, given that the ESEMC’s analysis also incorporated efficacy information and all patients have completed the assessments necessary for the analysis of the primary endpoint, the Steering Committee recommended the early close out of the trial.

“While the Steering Committee does not agree that a safety concern existed, our knowledge that the ESEMC’s analysis also considered efficacy led to our decision to recommend stopping the study at this time,” stated Dr. Jeffrey Olin, Professor of Medicine at the Mount Sinai School of Medicine, Director of Vascular Medicine at The Zena and Michael A. Wiener Cardiovascular Institute in New York, Principal Investigator and Chairman of the Steering Committee for the SIMPADICO trial. “We are now proceeding to lock the data base, fully analyze the data, and report the final results of the trial.”

The SIMPADICO trial enrolled 553 patients with moderate to severe PAD at 50 centers throughout North America. The study population was predominantly male (72%), Caucasian (89%), current or ex-smokers (91%), with a mean age of 67 years. The primary endpoint in SIMPADICO is the change in maximal walking distance after six months’ treatment; a primary efficacy endpoint recognized by the FDA and other regulatory authorities for approving new treatments for symptomatic PAD. Clinical assessments of the six-month primary endpoint were completed in July of this year and the majority of patients in the study have completed an additional six months of therapy as outlined in the study protocol.

“I would sincerely like to thank patients, the Steering Committee, the ESEMC, the Endpoints Committee, clinical investigators, and study coordinators for their efforts and participation in SIMPADICO,” commented Dr. Jay Kleiman, Chief Medical Officer and Head of Cardiovascular Development at Vasogen. “We now look forward to the Steering Committee’s analysis of the SIMPADICO data and to reporting the full results of this study during the fourth quarter. We also look forward to completing our 2,400-patient ACCLAIM trial later this year. ACCLAIM is designed to investigate the impact of our Celacade technology on reducing the risk of death and cardiovascular hospitalization in patients with advanced chronic heart failure.”

A conference call and audio web cast was conducted on Tuesday, August 30, 2005, at 8:30 a.m. Eastern Time. A copy of the transcript follows.

CORPORATE PARTICIPANTS

David Elsley
President & Chief Executive Officer, Vasogen Inc.

Dr. Jay Kleiman
Chief Medical Officer & Head of Cardiovascular Development, Vasogen Inc.

PRESENTATION

Operator

Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Vasogen conference call. At this time, all participants are in a listen only mode. If anyone has any difficulties hearing the conference call, please press *0 for operator assistance. Following the presentation, we will conduct a question and answer session.

The company will be making forward-looking statements during this call. These involve risks and uncertainties such that actual results may be different. The company assumes no obligation to update any forward-looking statements. The disclaimer on forward-looking statements set out under legal notice at Vasogen's website at www.vasogen.com also applies to forward-looking statements made during this call.

I would like to advise everyone that this conference call is being recorded and will now turn the conference over to Mr. David Elsley, President and Chief Executive Officer, and Dr. Jay Kleiman, Chief Medical Officer and Head of Cardiovascular Development. Please go ahead Mr. Elsley.

David Elsley, President & Chief Executive Officer, Vasogen Inc.

Thank you, operator, and good morning everyone.

In a press release issued earlier today we announced the early close out of the double-blind, placebo-controlled phase III SIMPADICO trial of our Celacade™ technology for the treatment of symptomatic peripheral arterial disease. The purpose of the call today is to briefly review the reasons for the early close out of SIMPADICO and to answer any questions that you may have.

The SIMPADICO trial enrolled 553 patients with moderate to severe peripheral arterial disease at 50 centers throughout North America. The enrolled study population is 72 percent male, 91 percent of whom are current or ex-smokers. Their average age is 67. The primary endpoint in SIMPADICO is the change in maximal walking distance after six months of treatment; a primary efficacy endpoint recognized by the FDA and other regulatory authorities for approving new treatments for symptomatic peripheral arterial disease. Clinical assessments of the six-month primary endpoint were completed on all patients in SIMPADICO in July of this year and the majority of patients in the study have completed an additional six months of therapy as outlined in the study protocol.

Our decision to close out the SIMPADICO trial was based on a recommendation received from the SIMPADICO Steering Committee yesterday. This recommendation followed a recommendation to the Steering Committee by the trial’s External Safety and Efficacy Monitoring Committee, or the ESEMC. The ESEMC’s recommendation to close out the SIMPADICO trial at this time was based on their view that the available study data indicated the absence of a sufficiently strong efficacy signal and their observation of a modest imbalance in the distribution of a small number of malignancy cases. Based on the Steering Committee’s own review, and the findings of an independent expert in medical oncology retained by the Steering Committee to review these cases, the Steering Committee concluded that no safety concern existed, as did the external expert. However, given that the ESEMC’s analysis incorporated efficacy information and all patients had completed the assessments necessary for the analysis of the primary endpoint of the study, the Steering Committee recommended the early close out of the trial late yesterday.

While we are obviously disappointed in these developments in our SIMPADICO trial, we are now looking forward to the Steering Committee’s complete analysis of the data and to reporting the full results of this trial during the fourth quarter as scheduled.

At this time we would also like to take this opportunity to sincerely thank the patients, the Steering Committee, the members of the ESEMC, the End Points Committee, clinical investigators, and study coordinators for their tireless efforts and participation in SIMPADICO.

And with that I will now turn the call back to the operator to initiate a question period.

QUESTION AND ANSWER SESSION

Operator

Thank you. Ladies and gentleman, we will now conduct the question and answer session.

If you have a question, please press *1 on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. Your question will be polled in the order they are received. If you would like to withdraw your request, please press *2. Please ensure you lift your handset if you are using a speakerphone before pressing any keys. At this time we would ask you to please limit your question to one. Please stand by for your first question.

Your first question comes from Mark Monane of Needham. Please go ahead.

Mark Monane, Needham & Company

Thank you and good morning. David, thanks for the top-line information.

In every trial there’s efficacy considerations and safety concerns; could you help us understand how to balance these two from what you know from the Data Safety Monitoring Board, the ESEMC, as well as anything you’ve heard from the Steering Committee as how the company is positioning those two relevant concerns?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

Certainly, Mark, and that’s a great question. I’ll start out with the efficacy side of the equation. I must emphasize that the Steering Committee and Vasogen have not reviewed any efficacy information, are blind to study data, and will remain blind to the study data until the database is locked at some point over the next six to eight weeks and a full analysis is completed. Only then will analysis of the trial data by the Steering Committee be completed. So we, along with you, are left to speculate on what the worrying absence of a sufficiently strong efficacy signal actually means.

With respect to the safety profile of Celacade™, it remains unchanged, and we have observed no evidence of any safety issue with respect to Celacade™ across all our trials to date. We are also pleased that the Steering Committee retained a recognized expert in medical oncology to review carefully the data in the SIMPADICO study. The expert retained by the Steering Committee was Dr. Richard Gralla, who is the President of the New York Lung Cancer Alliance and formerly Professor of Medicine at Columbia University and Chief of Thoracic Oncology at New York’s Memorial Sloan-Kettering Center in New York. Dr. Gralla performed a thorough review of the small number of malignancy cases that had been identified in the SIMPADICO trial, which only totalled 14 cases.

It is important to note and to keep in mind that this is a two-year study involving patients who have an average age of 67 years. 90 percent of the 550 patients in the trial were current or previous smokers, putting them at increased risk for cancer in general and lung cancer in particular. Dr. Gralla’s review of the 14 cases concluded that 9 of the 14 cases were either non-malignant, pre-existed enrolment in the study, or were detected too soon after randomization to be considered causally related to either treatment arm of the study. A second and separate independent review conducted by Vasogen reached a similar conclusion.

Of equal importance, Dr. Gralla’s findings showed that the number types and distribution of the cases identified in the SIMPADICO study were entirely consistent with what would be expected on an epidemiologic basis in the SIMPADICO patient population. It was on this basis of the independent reviews and the Steering Committee’s own analysis that the Steering Committee concluded that no safety concern existed; however, given that the ESEMC’s recommendation incorporated the findings or a preliminary efficacy analysis and given that the ESEMC indicated that there was an absence of a sufficiently strong efficacy signal to justify the study’s continuance on the basis of this analysis, the Steering Committee concluded that the trial should be stopped at this time to allow data to be cleaned, locked, and fully analyzed. Another major contributing factor to the Steering Committee’s decision was the fact that all patients had completed the assessments necessary to allow the full analysis of the primary endpoint of the study.

So with respect to that, this process will be finalized. We expect to complete the locking of the database over the next eight weeks and then following data analysis we expect full results to be announced on schedule in the fourth quarter.

Operator

Your next question comes from Joe Pantginis from Adams Harkness. Please go ahead.

Joe Pantginis, Adams Harkness

Hi guys. Thanks for taking the question.

David, there is obviously an added negative perception on the street today with regard to perceived safety issues; however, given the long standing excellent safety profile of Celacade™ to date and the fact that safety does not seem to be an issue in the SIMPADICO trial, I was just wondering, you know, are there any safety concerns that we would look towards with regard to ACCLAIM?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

The answer to that is categorically no and you’ll obviously recall that the ACCLAIM trial has five times as many patients as the SIMPADICO trial, with over 2,400 patients enrolled and four times the patient years exposure to the same treatment and the same treatment regimen. The ACCLAIM DSMB has met routinely on a quarterly basis since the commencement of this trial and as you are aware, there have been no issues raised by the ACCLAIM DSMB. The ACCLAIM DSMB has also met as recently as August 23rd and have found no safety concerns whatsoever within this study and have given a clear signal to the Steering Committee of the ACCLAIM trial to continue the study per protocol.

Operator

Your next question comes from Robert Titleman of CIBC World Markets. Please go ahead.

Robert Titleman, CIBC World Markets

Hi, David. Given that the efficacy at least appears not to be strong in the SIMPADICO trial, pending further review obviously, the obvious question is how will this result impact possible efficacy in the ACCLAIM heart failure trial?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

That’s an excellent question, Robert, and I think it’s most appropriately addressed by Dr. Kleiman, and I’ll just turn the call over to Dr. Kleiman at this point.

Dr. Jay Kleiman, Chief Medical Officer & Head of Cardiovascular Development, Vasogen Inc.

Thank you, Robert.

We remain optimistic that the ACCLAIM trial will be positive. First, we do not know any further details regarding the efficacy data in SIMPADICO and, as David has said, speculation on the efficacy data in ACCLAIM is pure speculation, as is speculation on efficacy in SIMPADICO. We will not know until the database from SIMPADICO is cleaned and locked and the full detailed analysis performed, which we expect will take approximately eight weeks. There could be many important findings in SIMPADICO, which would indicate a beneficial effect that occurred in the population with peripheral arterial disease.

Secondly, the populations randomized in the two studies are quite different, as are the endpoints. As you recall, SIMPADICO has studied patients with diffuse atherosclerosis of the blood vessels in their legs and claudication, which is leg pain on walking. SIMPADICO’s primary endpoint is maximized walking distance. ACCLAIM is studying a totally different population of patients with heart failure due to both ischemic heart disease and/or cardiomyopathy, and the endpoint in ACCLAIM is the composite of both mortality and cardiovascular hospitalizations.

Additionally, there are examples of drugs providing benefit in one population but not another, as for example the mortality benefit of aldosterone-blocking agents in patients with left ventricular dysfunction and heart failure, while similar benefits have not been documented in patients with hypertension.

So in summary, we remain optimistic and expect to have a full analysis and answers later this year.

Operator

Your next question comes from Clay Wilson of Needham & Company. Please go ahead.

Clay Wilson, Needham & Company

Thank you for taking the call. I was wondering if you could comment on the phase II trials for both ACCLAIM and SIMPADICO and how you interpret those trials in light of this new information? And also if you might comment briefly on the burn rate.

David Elsley, President & Chief Executive Officer, Vasogen Inc.

Certainly. With respect to the phase II trials, just as a lead in to that question, again I will emphasize that the analysis of the efficacy in the SIMPADICO trial has not been performed by the Steering Committee and the Company and the Steering Committee remain blind to that data.

With respect to the findings of the phase II trials, my only comment on that is we achieved success in two endpoints in those different trials. We had a strong signal for improved absolute claudication distance and a significant impact on initial claudication distance in our phase II peripheral arterial disease trial, and based on those results we designed a properly-powered SIMPADICO trial to endeavour to confirm those findings, and that is the analysis process that the Steering Committee will now undertake once the database is claimed and locked.

With respect to the phase II heart failure trial, the observation made in that study was the significant impact on reduction in mortality and morbidity risk, and based on that being the key finding from that trial, we designed a properly-powered mortality and morbidity study, which is the ACCLAIM trial, which has enrolled 2,400 patients in 7 countries, which is on track to be completed later this year. And as Dr. Kleiman has mentioned, we remain very optimistic that that trial has been properly designed and will ultimately demonstrate the efficacy of Celacade™ in that indication.

We believe that there will be an impact on burn rate as a result of the decision that has been undertaken today, but it is premature to quantify that impact, and that will be discussed in detail on our next quarterly conference call.

Operator

Your next question comes from Laurie Goldstein, Guilford Securities. Please go ahead.

Laurie Goldstein, Guilford Securities

Hi. Our question was answered. Thank you.

Operator

Your next question comes from Philippa Flint of RBC Capital. One moment please.

Philippa Flint, RBC Capital Markets

Thank you very much. Just to clarify a little bit more detail on those malignant cases you observed, of the 14 that you mentioned, were they all in the Celacade™ group and none in placebo? And can you comment if they were all lung related?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

With respect to the distribution of the cases: upon the completion of the expert review there were five cases remaining for consideration and the statistical distribution of those cases did not even remotely approach any level of statistical significance and raise no concern at all with all of those that had reviewed the data in detail.

With respect to lung cancer, there were lung cancer cases. They did not make up all of the cases. I believe there were six cases of lung cancer, but I believe two of those cases were clearly found to be pre-existing and the balance were evenly distributed between the group groups.

Operator

Your next question comes from Geoff Houlton of Octagon Capital. Please go ahead.

Geoff Houlton, Octagon Capital

Good morning, gentlemen. Could you possible describe the significant differences in the mechanism of action that you’re expecting to see in the ACCLAIM trial versus what you’ve observed in the SIMPADICO trial?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

It’s premature to speculate on that because the Company and the Steering Committee do not have the data from SIMPADICO as of yet. We remained blinded to the data. Until the data is fully analyzed, it would be premature to speculate on this data any further. We know exactly and only what has been disclosed today in the press release.

Dr. Jay Kleiman, Chief Medical Officer & Head of Cardiovascular Development, Vasogen Inc.

And I would only hasten to add, as I said earlier, that these are very different populations with different diseases and that the endpoints that are being studied are also quite different.

Operator

Your next question comes from Nikej Shah of HBK Investments. Please go ahead.

Nikej Shah, HBK Investments

Hi. I was just wondering can you give me your updated net cash balance as well as your diluted share count?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

I’d just defer to the last quarterly conference call where that was provided in detail.

Nikej Shah, HBK Investments

Okay. And what about the diluted share count?

David Elsley, President & Chief Executive Officer, Vasogen Inc.

87 million shares on a fully diluted basis.

Operator

Mr. Elsley, there are no further questions at this time. Please continue.

David Elsley, President & Chief Executive Officer, Vasogen Inc.

Well with that, I would like to thank everyone for their attention today and we look forward to updating you on our progress in the coming months. Thank you very much.

Operator

Ladies and gentlemen, this concludes the conference call for today. Thank you for your participating. Please disconnect your lines.