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Exhibit 99.1
VaxGen to Receive $11M, Release From Potential Liabilities
Under Settlement Agreement with U.S. Government;
Conference Call Scheduled for Today
South San
Francisco, Calif. - April 5, 2007 - VaxGen Inc. (Pink Sheets:
VXGN.PK) announced today that it has signed a settlement agreement
with the U.S.
Department of Health and Human Services (HHS) that releases both
parties from
all liabilities associated with the company's government contracts
to develop
and deliver a next-generation anthrax vaccine. As part of the
settlement
agreement, the National Institute of Allergy and Infectious
Diseases (NIAID), an
HHS agency, has agreed to pay VaxGen $11 million under a
development contract
awarded to the company in September 2003.
The NIAID
payment would bring the company's cash, cash equivalents and
short-term investments to approximately $91 million based on the
company's
current cash balance. VaxGen expects to receive the NIAID payment
within 30
days.
The
company's current monthly cash used in operating activities is
below
$3 million. VaxGen expects its monthly cash used in operating
activities to
decline to less than $2.5 million by the end of the second
quarter.
The mutual
release of potential liabilities extinguishes the government's
right to hold VaxGen liable for the excess costs of procuring an
anthrax vaccine
that is the same or similar to the one VaxGen is developing. Excess
procurement
costs in this case would have been the difference between the price
of VaxGen's
vaccine candidate and one purchased at a higher cost from another
supplier, had
HHS been able to find another supplier with a qualified
vaccine.
"Although
we believed that the possibility of being charged for excess
procurement costs was hig
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