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MISSION VIEJO, CA -- (Marketwire) -- 02/19/13 -- Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS)

•Beginning Third Year of $118.4 Million BARDA Advance Research and Development Contract •Balance Sheet Strengthened With $3,225,000 Financing •Net Cash Used In Operations Reduced To Only $279,000 During the Quarter

Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS), a biotechnology company leveraging significant government funding to develop a platform of novel compounds to protect against radiological and chemical threats and for use in oncology, announced today financial results for the three months ended December 31, 2012.

The Company reported a net income of approximately $4,028,000, which includes a non-cash adjustment for decreases in valuation of warrants of approximately $4,510,000 related to decreases in the fair value of warrants that are included as a component of other income (expenses) in the statement of operations, for the three months ended December 31, 2012, compared to a net income of approximately $2,977,000, which includes a non-cash adjustment for decreases in valuation of warrants of approximately $3,688,000 related to decreases in the fair value of warrants that are included as a component of other income (expenses) in the statement of operations, for the three months ended December 31, 2011

"We've completed the second year of our contract with BARDA, which has allowed us to leverage our shareholder's investment with $19.5 million of funding for the advanced development of our lead drug AEOL 10150. Our team has delivered key development milestones, such as developing and validating murine and NHP models for lung acute radiation syndrome, improving our manufacturing processes, enhancing our understanding of the mechanism of action of our drug and initiating murine efficacy studies," stated John L. McManus, President and Chief Executive Officer. "With the closing of our recent financing, the Company now has adequate funding to operate through the end of 2014, by which time we hope to be generating revenue from procurement of AEOL 10150 as a medical countermeasure."

Revenue for the three months ended December 31, 2012 was approximately $1,342,000, which compares to approximately $2,215,000 for the three months ended December 31, 2011. The revenue is from the collaboration with BARDA announced on February 11, 2011, and the variance reflects the timing of work performed under the contract.

Research and development expenses decreased about $901,000 to approximately $1,169,000 for the three months ended December 31, 2012, from approximately $2,077,000 for the three months ended December 31, 2011. The decrease is primarily attributable to the timing of work related to the BARDA Contract.

General and administrative expenses decreased about $201,000 to approximately $655,000 for the three months ended December 31, 2012 from approximately $856,000 for the three months ended December 31, 2011. The increase is primarily attributable to the timing of work related to the BARDA Contract.