Vaxgen Files 10-Q for First Quarter With SEC, Provides Future Burn Rate Guidance

    * Costs related to the Company's real estate and facility, estimated at
      32% of monthly expenditures.
    * Costs related to maintaining public company status, including
      professional fees, at approximately 32% of monthly expenditures.
    * Costs related to the company's six remaining permanent staff and
      temporary support, at approximately 21% of monthly expenditures.
    * Interest payments associated with the outstanding convertible debt at
      approximately 15% of monthly expenditures.

"With the completion of the most recent reduction in force, we have concluded those significant cost-reduction measures that are under the Company's sole control," said James P. Panek, VaxGen President and CEO. "While we continue to explore every avenue to reduce costs, a further significant reduction will be a function of the resolution of our efforts to sell the manufacturing plant and assign the associated lease. We are in discussions with parties interested in the plant, but cannot at this point provide assurance that a transaction will result."

VaxGen further announced today the filing of its financial results for the quarter ending March 31, 2008 on Form 10-Q with the Securities and Exchange Commission. These results reflect a number of significant impacts consequent to the termination of the proposed merger with Raven biotechnologies as follows:

    * Consistent with SFAS 144, "Accounting for the Impairment and Disposal of
      Long-Lived Assets" the property and equipment related to VaxGen's
      manufacturing facility have been reclassified as "assets held for sale".
      This reclassification shifts $10.3 million of assets on the balance
      sheet out of Property and Equipment and into Current Assets.  As it
      relates to the Statement of Operations depreciation is not charged
      against assets held for sale, and as a consequence there will be a
      significant reduction in the depreciation charge going forward.
    * VaxGen's net loss of $7.5 million for the first quarter of 2008 reflects
      $2.3 million of expenses associated with the terminated merger and also
      reflects a non-cash charge of $1.6 million related to the increase in
      value of the derivative liability associated with the Company's
      convertible notes.  The main reason for the increase in the derivative
      liability is management's assessment that there is an increased
      probability of a change of control event, as defined in the indenture
      related to the notes.
    * VaxGen's net cash used in operating activities of $4.9 million for the
      first quarter of 2008 reflects approximately $1.8 million of cash
      expended on costs related to the proposed Raven merger during the
      quarter.

About VaxGen

VaxGen is a biopharmaceutical company based inSouth San Francisco, California. The company owns a state-of-the-art biopharmaceutical manufacturing facility with a 1,000-liter bioreactor that can be used to make cell culture or microbial biologic products. For more information, please visit the company's web site at http://www.vaxgen.com.

Note: This press release contains "forward-looking statements" within the meaning of the federal securities laws, including statements regarding the VaxGen's anticipated cash expenditures and its potential sale of assets and assignment of lease. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those anticipated. Additional information concerning these and other risk factors is contained in VaxGen's Annual Report on Form 10-K for the year ended December 31, 2007. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this release. VaxGen undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date of this release except as required by law.

(Logo: http://www.newscom.com/cgi-bin/prnh/19991112/VAXGENLOGO)

SOURCE VaxGen, Inc.

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Tags: Healthcare, Pharmaceuticals, Biotechnology, Health, , california

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