CEO Interview: Aeolus Pharmaceuticals, Inc. - John L. McManus

• On 2:24 pm EST, Monday November 2, 2009

67 WALL STREET, New York - November 2, 2009 - The Wall Street Transcript has just published its Pharmaceuticals Report offering a timely review of the sector to serious investors and industry executives. This 76-page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Small-Cap Specialty Pharma - Patent Expiration - Pending Health Care Reform - Cultivating And Expanding R&D Pipelines - Chinese Drug Manufacturers - Brisk M&A Activity - Indian Pharma VS. U.S. Pharma - Competition From Generics - FDA Approval Process - Clinical Research Outsourcing Market - Stem Cell-Based Technology - Cancer Radiation Therapy - Expansion Into Asian Markets - Traditional Chinese Medicine VS. Western Medicine In Chinese Pharma

Companies include: Aeolus Pharmaceuticals (AOLS.OB); Nutra Pharma (NPHC.OB); Quick-Med Technologies (QMDT.OB); Abbott Labs (ABT); Alexza Pharmaceuticals (ALXA); AmexDrug Corporation (AXRX.OB); Aurobindo Pharma (AUROBINDOP.BO); BioClinica (BIOC); BioPharm Asia (BFAR.OB); Biocon (BIOCON.BO); Cephalon (CEPH); China Sky One Medical, Inc. (CSKI); Claris Lifesciences (CLARICH.BO); Cortex Pharmaceuticals (COR); Daiichi Sankyo (DSKYF.PK); Dr.Reddy's (RDY); Elan (Elan); Eli Lilly (LLY); Forest (FRX); GeoPharma (GORX); Glaxo (GSK); Glenmark (GLENMARK.BO); Johnson & Johnson (JNJ); Lupin (LUPINSL.BO); Mannatech (MTEX); Matrix Laboratories (ATRIXLAB.BO); Medical Nutrition (MDNU); Merck KGaA (MKGAY.PK); Mylan (MYL); NeoStem (NBS); Novartis (NVS); Pfizer (PFE); Piramal Healthcare (PIRAMALHE.BO); Provectus Pharmaceuticals (PVCT.OB); Ranbaxy (RANBAXY.BO); Salix Pharmaceuticals (SLXP); Shire (SHPGY); Telik (TELK); Winston Pharmaceuticals (WPHM.OB).

In the following brief excerpt from the 76-page report, John L. McManus, CEO of Aeolus Pharmaceuticals, Inc., discusses the outlook for the sector and for investors.

JOHN L. MCMANUS joined the Aeolus Pharmaceuticals in June 2005 as President; he serves in this role in a greater than 50% employment capacity. Mr. McManus, who received his degree in business administration from the University of Southern California in 1986, is the Founder and President of McManus Financial Consultants, Inc., which provides strategic, financial and investor relations advice to senior managements and boards of directors of public companies, including advice on mergers and acquisitions. These companies have a combined value of over $25 billion. In addition, Mr. McManus previously served as Vice President, Finance and Strategic Planning, to Spectrum Pharmaceuticals, Inc., where he had primary responsibility for restructuring Spectrum's operations and finances, including the design and implementation of strategic and financial plans to enhance Spectrum's corporate focus. The implementation of these plans led to an increase in Spectrum's market value from $1 million to more than $125 million at the time of Mr. McManus' departure.

TWST: What is Aeolus Pharmaceuticals, Inc.?

Mr. McManus: Aeolus Pharmaceuticals (AOLS.OB) is a biotechnology company that's focused on the development of a portfolio of catalytic antioxidants. Our lead drug, AEOL 10150, has been tested extensively as a treatment for radiation exposure, both in the context of cancer radiation therapy and in radiation exposure from a nuclear event. We're a company with a platform of 199 compounds, but the bulk of our work is on this lead drug in the area of radiation.

TWST: What is the science background on the application of antioxidants to oxidative stress? How does this particular focus of Aeolus fit into what we already know and may hope to find?

Mr. McManus: The technology that we are developing was created at Duke University by a team of scientists led by Dr. Irwin Fridovich. Dr. Fridovich is credited with the discovery of the superoxide dismutase (SOD) function for SOD proteins, and these SOD proteins are the body's natural defense against reactive oxygen and reactive nitrogen species, otherwise known as free radicals. So they did this work on the discovery of protective mechanisms within the body and then went about creating or trying to develop a technology that would offset levels that were out of balance - either when there were extremely high levels of free radicals or oxidative stress in the body because of injury or disease, or when the body's natural mechanisms were either shut down or underperforming. And that's where the idea behind the technology came from. They created this platform that we're developing, which basically has a manganese metal surrounded by a synthetic porphyrin. The library of compounds has different pendents that hang off the porphyrin that changes the activity and stability of the compound. The manganese center inside the porphyrin is the catalyst where electrons are exchanged with the free radicals, which basically neutralizes them by converting them to less-reactive species, such as oxygen and water. So as an example, if you have overproduction of superoxide, which is a reactive oxygen species and is damaging to the body, and you give AEOL10150, the manganese exchanges electrons with the superoxide and, essentially through a series of reactions, changes superoxide to oxygen and water. AEOL10150 treatments can dramatically lower the levels of oxidative stress in the body. We've collected a lot of animal data that demonstrates that AEOL10150 treatment lowers the measurements of oxidative changes to proteins, lipids and DNA. We also see a significant impact on markers of inflammation and, ultimately, we're seeing protection of lung cells, GI cells, and other systems and organs in the body from the damaging effects of things like radiation, sulphur mustard gas exposure and smoke inhalation.

TWST: What is the financial status of the company at this point? How is the balance sheet and do you have enough cash to meet any requirements?

Mr. McManus: We've been very fortunate to have supportive institutional investors. Aeolus is a very unusual company in that there are four institutional investors who own approximately 90% of the stock. And those four investors have been our primary sources of funding for the past four or five years. They've been very supportive, very loyal. I think they all believe in the company and what we're accomplishing. They are all sophisticated biotechnology and pharmaceutical industry investors, and they've both been financially supportive but also very helpful to us in planning and networking, and providing other resources. We announced at the beginning of this week an additional financing agreement with the largest institutional investor, under which we raised $1.65 million immediately and have an option to put another $1.65 million in equity to them next year. Between the money that we have and the money we just raised, plus that option later next year, we believe we have enough money to run the company through the end of 2011. When we take that and leverage it on top of the funding from the NIH programs, we can accomplish an incredible amount with this technology over the next couple of years. Our objective is to be in a position to get an approval for 10150 in one of these indications as a countermeasure. And we feel like with this financing that we just completed, we have enough capital to get there. We operate in a very lean fashion, that's another thing that's unusual about this company. Our burn rate is incredibly low. And with the progress and success we've had in partnering with both the federal government and also with our academic partners, we've been able to get our research work done for very reasonable prices or paid for by other parties.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 76-page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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