Exhibit 99.1
VaxGen Releases First-Quarter Financial Results;
Revenues Rise and Losses Decline
Brisbane, Calif. - May 13, 2003 - VaxGen, Inc. (Nasdaq: VXGN) today
announced financial results for the first quarter ended March 31, 2003. The
company reported an increase in revenue due primarily to its anthrax vaccine
development contract and a decrease in losses stemming from lowered clinical
trial costs.
Revenue for the most recent quarter totaled $1,200,000, compared to
$18,000 in the quarter ended March 31, 2002. The company reported a net loss
applicable to common stockholders of $6.8 million, or 43 cents per share, for
the most recent quarter, compared to net loss applicable to common stockholders
of $7.7 million, or 54 cents per share, in the quarter ended March 31, 2002.
These financial results are presented according to GAAP.
VaxGen provides financial results in GAAP and pro forma formats in order
to more clearly present the company's financial performance. GAAP presentations
include certain non-cash charges, whereas our pro forma presentations exclude
them.
On a pro forma basis, which excludes charges related to VaxGen's
convertible preferred stock, the company reported a net loss of $6.6 million, or
42 cents per share, for the quarter ended March 31, 2003, compared with a net
loss of $7.0 million, or 49 cents per share, in the comparable quarter of 2002.
The company has implemented a series of cost-savings measures which,
combined with its existing financial resources, including government contracts
and grants, will enable the company to meet its forecasted expenditures through
approximately November 2003, as previously reported in the company's Form 10-K
filed with the Securities and Exchange Commission on March 31, 2003. VaxGen
ended the first quarter with $10.1 million in cash and investment securities,
compared with $18.0 million at the end of the previous quarter. For the
remainder of the year, the company expects cash receipts of approximately $16.5
million from existing contracts, grants and other sources. The company intends
to raise additional funding as necessary to support its operations beyond
November.
"VaxGen is taking aggressive measures to control its costs while focusing
on near-term business opportunities to strengthen its balance sheet," said Lance
K. Gordon, Ph.D., VaxGen's CEO. "Given the progress we've made on our current
initiatives and the inherent opportunities in them, we believe we will be able
to raise additional funds through a combination of revenue-generating sources
and equity capital."
Since the beginning of the first quarter, VaxGen has:
o Met the early milestones associated with its anthrax vaccine
development contract with the U.S. National Institutes of
Health. This included completing preclinical product
development, cGMP production of vaccine for animal efficacy
and
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clinical studies, and preparing for a Phase I clinical trial
scheduled to begin in the second quarter of 2003. This trial
will compare the safety and immunogenicity of VaxGen's
candidate with the currently licensed anthrax vaccine. The
contract, which was awarded last fall, also requires VaxGen to
provide a plan for how it could manufacture an emergency
stockpile of at least 25 million doses of the vaccine;
o Completed construction of its cGMP manufacturing facility in
South San Francisco. The facility will be used to manufacture
anthrax vaccine if VaxGen is awarded U.S. government contracts
for this purpose, and AIDSVAX if the company receives
government funding for additional Phase III trials;
o Began construction of a large-scale biologics manufacturing
facility in South Korea, through its joint venture, Celltrion;
and
o Announced preliminary results of its Phase III clinical trial
of AIDSVAX B/B. VaxGen is in discussion with the NIH and
Centers for Disease Control and Prevention, which supported a
portion of the recently completed trial, regarding the
possibility of those organizations and others providing
funding for ongoing analysis and new clinical trials.
"VaxGen would welcome the opportunity to continue developing AIDSVAX, but
only if government agencies and philanthropic organizations provide the
necessary funding," said Lance K. Gordon, Ph.D., VaxGen's CEO. "Regardless of
the next steps for AIDSVAX, we intend to continue focusing on our current
programs in biodefense vaccines while exploring new opportunities. The U.S.
government recently announced its intent to award a new contract for the
advanced development of a recombinant anthrax vaccine later this year. The U.S.
government earlier announced its intent to contract for the manufacture of an
emergency stockpile of at least 25 million doses. Having met the milestones so
far associated with our existing anthrax vaccine contract, we think VaxGen is a
front-runner to win both of these forthcoming contracts."
VaxGen expects to conclude an agreement by the end of June with
Chemo-Sero-Therapeutic Research Institute (Kaketsuken) of Kumamoto, Japan, which
would finalize the business terms associated with a previously announced
partnership to develop a safer smallpox vaccine. Kaketsuken's smallpox vaccine,
LC16m8, was developed to have an improved safety profile while retaining the
potency to meet Japanese and World Health Organization requirements for
licensure. The vaccine was licensed in Japan in 1980 and was safely administered
to 50,000 children there. VaxGen intends to conduct clinical trials for the
purpose of licensing the vaccine in the United States.
"Well over 50% of Americans indicate that they want to be immunized
against smallpox, but as we have seen from recent events, existing smallpox
vaccines are associated with serious side effects that the public appears
unwilling to accept," Gordon said. "Other smallpox vaccines in development have
not been specifically developed to avoid these safety concerns and/or have
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yet to show that they are efficacious. We believe that leaves LC16m8 as the
logical alternative with which to immunize the population against the threat of
smallpox."
During the call, VaxGen will be discussing additional financial and
statistical information. That information can be found on the Company's website
at www.vaxgen.com through the instructions below. Participants are asked to dial
in to the live call five minutes before the start of the presentation. The
following phone numbers will provide access to the call or a taped version,
which will be available until the company's next quarterly conference call.
Live Call: Domestic: (800) 915-4836
International: (973) 317-5319
No passcode required
Replay: Domestic: (800) 428-6051
International: (973) 709-2089
Passcode: 290398
The webcast can be found by clicking on "First Quarter Conference Call and
Webcast" under "Company Presentations" in the Investor Relations section of
VaxGen's web site at www.vaxgen.com/invest. This will bring up a window from
CCBN. Then, click on the webcast link to view the accompanying slide
presentation.
About VaxGen
VaxGen, Inc. is a biopharmaceutical company engaged in the development,
manufacture and commercialization of biologic products for the prevention and
treatment of human infectious disease. Based in Brisbane, Calif., the company is
developing preventive vaccines against anthrax, smallpox and HIV/AIDS and is the
largest shareholder in Celltrion, Inc., a joint venture formed to build
biopharmaceutical manufacturing operations for the manufacture of
biopharmaceutical products, including VaxGen's vaccine candidates, should they
be licensed. For more information, please visit the company's web site at:
www.vaxgen.com
AIDSVAX(R) is a registered trademark of VaxGen.
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Note: This press release contains "forward-looking statements" within the
meaning of the federal securities laws. These forward-looking statements include
without limitation, statements regarding VaxGen's expected cash and revenue, the
timing and progress of completion of development efforts for VaxGen's anthrax,
smallpox or HIV/AIDS vaccine candidates; the need for clinical trials to support
licensure of any of the vaccine candidates; and the timing and progress of the
company's Phase III clinical trial of AIDSVAX in Thailand. These statements are
subject to risks and uncertainties that could cause actual results and events to
differ materially from those anticipated. Reference should be made to VaxGen's
Annual Report on Form 10-K, filed with the Securities and Exchange Commission on
March 31, 2003, under the heading "Business" for a more detailed description of
such factors. 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.
Contact: Lance Ignon
Vice President, Corporate Communications
(650) 624-1041
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VaxGen, Inc.
Condensed Statements of Operations (unaudited)
(In thousands, except for per share data)
Quarter Quarter
Ended Ended
March 31, 2003 March 31, 2002
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Revenues:
Research grant and contract revenue $ 1,112 $ 18
Related party services revenue 101 --
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Total revenue 1,213 18
Operating Expenses:
Research and development (4,025) (4,657)
General and administrative (3,909) (2,928)
-------- --------
Loss from operations (6,721) (7,567)
Other income, net 73 602
-------- --------
Net loss (6,648) (6,965)
-------- --------
Charges related to convertible preferred stock (137) (734)
-------- --------
Net loss applicable to common shareholders $ (6,785) $ (7,699)
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Net loss per share, basic and diluted $ (0.42) $ (0.49)
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Net loss per share applicable to common shareholders, basic and diluted $ (0.43) $ (0.54)
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Weighted average shares used in computing basic and diluted loss per share 15,846 14,318
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VaxGen, Inc
Condensed Balance Sheets (unaudited)
(In thousands)
March 31, December 31,
2003 2002
--------- ------------
Assets:
Cash and investment securities $ 10,144 $ 18,021
Accounts receivable (contracts and related party) 4,002 1,742
Deferred costs 1,385 1,379
Property and equipment, net 3,326 3,309
Other assets 4,547 3,586
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Total Assets $ 23,404 $ 28,037
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Liabilities and Stockholders' Equity:
Current liabilities $ 7,631 $ 8,670
Deferred revenues 3,304 917
Other liabilities 567 606
Redeemable convertible preferred stock 3,429 3,349
Stockholders' equity 8,473 14,495
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Total Liabilities and Stockholders' Equity $ 23,404 $ 28,037
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