Aeolus Pharmaceuticals Receives $175,000 Milestone Payment From Cardiovascular Company.

New Drug Application (NDA) for Bucindolol in the Treatment of Chronic Heart Failure Accepted by the U.S. Food and Drug Administration

Bucindolol Has Been Shown to Significantly Reduce Hospitalizations and Deaths in Heart Failure Patients with a Specific, Common Genetic Variation in a Phase III Clinical Study

LAGUNA NIGUEL, Calif. -- Aeolus Pharmaceuticals, Inc. (OTCBB: AOLS) announced today that it has received a milestone payment from ARCA Biopharma, Inc., a privately held cardiovascular-focused company ("ARCA"). In 2003, CPEC, LLC ("CPEC"), a limited liability company owned by Aeolus (35%) and Indevus Pharmaceuticals, Inc. (65%), out-licensed all rights to a potential therapeutic compound referred to as "bucindolol" to ARCA. The cash payment received by Aeolus is based upon Aeolus' ownership interest in CPEC.

The $175,000 payment received by Aeolus was triggered by the acceptance by the U.S. Food and Drug Administration (FDA) of a New Drug Application (NDA) for ARCA's lead product candidate, bucindolol, an investigational and pharmacologically unique beta-blocker and mild vasodilator developed for the treatment of chronic heart failure. If approved by the FDA, bucindolol could become the first genetically targeted cardiovascular therapy. Future milestone payments and royalty payments to CPEC and Aeolus, if any, while provided for under the agreement between CPEC and ARCA, can not be assured nor guaranteed.

"ARCA's success in demonstrating the potential benefits of bucindolol in treating heart failure patients is encouraging," stated John L. McManus, President and Chief Executive Officer of Aeolus Pharmaceuticals, Inc. "We look forward to an expeditious review and hope for a positive outcome, which could provide an important new treatment option to patients and a significant financial contribution to Aeolus and its shareholders."

Bucindolol significantly reduces both hospitalizations and deaths in heart failure patients with a specific, common genetic variation compared to placebo, according to results from a prospectively defined genetic sub-study of the Beta Blocker Evaluation of Survival Trial ("BEST"), a large Phase III clinical trial funded and conducted by the National Institutes of Health and the Veterans Affairs Cooperative. ARCA conducted genetic research to identify heart failure patients who are most likely to respond to bucindolol therapy. This genetic subgroup constitutes approximately 50 percent of the U.S. heart failure population.

In the genetic sub-study of the BEST trial, researchers categorized patients into three groups based on receptor genotype: very favorable, favorable and unfavorable. Patients with the very favorable genotype experienced significant improvements in clinical endpoints compared to placebo, including reductions in all cause mortality, all cause mortality or transplant, cardiovascular mortality, heart failure hospitalization, and cardiovascular hospitalization. While the most robust clinical effects occurred in the very favorable genotype group, patients with the favorable genotype also benefited from treatment with bucindolol. Bucindolol also demonstrated clinically significant improvements in ischemic endpoints including reducing the risk of myocardial infarction. Patients with the unfavorable genotype, approximately 10 percent of the study population, did not respond to bucindolol therapy.

About Beta Blockers

The use of beta blockers is the standard of care in patients with heart failure and left ventricular dysfunction, according to clinical practice guidelines of the Heart Failure Society of America (HFSA), the American Heart Association, and the American College of Cardiology. HFSA guidelines state: "Beta-blocker therapy remains a major advance in the treatment of patients with LV systolic dysfunction. Along with ACE inhibitors, this class of drug is now established as routine therapy in patients with LV systolic dysfunction."

About Heart Failure

Heart failure is a chronic and progressive condition in which the heart cannot efficiently pump blood to meet the body's oxygen demands. The American Heart Association estimates that about six million Americans are living with heart failure, with 550,000 new cases diagnosed annually. Heart failure accounts directly for 55,000 deaths and indirectly for an additional 230,000 deaths in the United States each year. Heart failure is the underlying reason for approximately 12 to 15 million annual visits to physicians and 6.5 million annual hospital days.

About Aeolus Pharmaceuticals

Aeolus is developing a variety of therapeutic agents based on its proprietary small molecule catalytic antioxidants, with AEOL 10150 being the first to enter human clinical evaluation. AEOL 10150 is a patented, small molecule catalytic antioxidant that mimics and thereby amplifies the body's natural enzymatic systems for eliminating reactive oxygen species, or free radicals. Studies funded by the National Institutes for Health are currently underway evaluating AEOL 10150 as a treatment for exposure to mustard gas. Additionally, the Company has plans to initiate animal studies necessary to seek approval of the compound as a treatment to protect the lungs from exposure to radiation.

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. 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. 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, 2007. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.