Exhibit 99.1

               VaxGen and Kaketsuken Finalize Commercial Terms for
                          Smallpox Vaccine Development

      BRISBANE, Calif., and KUMAMOTO, Japan - December 2, 2003 - VaxGen, Inc.
(Nasdaq: VXGN) and the Chemo-Sero-Therapeutic Research Institute (Kaketsuken)
announced today that they have finalized the commercial terms of their
collaboration to develop a safer smallpox vaccine for use in the United States
and potentially elsewhere. The immediate goal of the collaboration is to be able
to respond, beginning next year, to potential U.S. government contracts for the
purchase of attenuated smallpox vaccine. According to estimates by the
Congressional Budget Office, the U.S. government expects to spend approximately
$1.9 billion for the purchase of such a vaccine during the next 10 years.

      Under the terms of the agreement, VaxGen will purchase vaccine in bulk
from Kaketsuken and complete all secondary manufacture, including filling and
packaging, necessary to sell finished product in the U.S. Each party is
responsible for their respective development expenses prior to sales of the
vaccine. There are no milestone or up-front payments required of VaxGen. The
agreement covers sales to markets in the U.S., but it contains provisions to
expand the scope to other international markets, if appropriate. Additional
terms of the agreement are not being disclosed.

      "Concluding this agreement is a major step in our developing relationship
with Kaketsuken and paves the way for further progress in what already has been
a very productive working partnership," said Lance K. Gordon, Ph.D., VaxGen's
chief executive officer.

      Under a development agreement announced last year, Kaketsuken has already
manufactured 1 million bulk doses of the vaccine for VaxGen's proposed clinical
trials and has provided initial doses for animal studies. VaxGen, in turn, has
worked with Kaketsuken to ensure that its manufacturing facility in Kumamo will
meet current Good Manufacturing Practices according to U.S. Food and Drug
Administration standards.

      VaxGen is testing the vaccine in one animal study at a U.S. university and
is consulting with the FDA and other experts to design and carry out further
animal studies to demonstrate the vaccine's efficacy. VaxGen also intends to
launch human clinical studies next year, subject to FDA consent.

      The vaccine, LC16m8, is the only attenuated smallpox vaccine to have been
licensed for use in humans. Licensed in Japan in 1980, the vaccine was designed
to have a better safety profile, yet be equally effective, compared to
conventional smallpox vaccines. LC16m8 has been administered to over 50,000
Japanese children. The vaccine gives a pock, or "take", at the site of injection
at a rate similar to conventional live smallpox vaccines currently stockpiled in



the U.S. This "take" has long been accepted by public health authorities as
evidence of successful immunization against smallpox. The vaccine is based on
the LC16m8 clone of the internationally accepted Lister strain of vaccinia
virus. The Department of Homeland Security Appropriations Act enacted October 1,
2003 includes an appropriation of $5.6 billion for the purchase of biodefense
vaccines and related products over the coming 10 years. Of the total, the
Congressional Budget Office estimates that $1.9 billion will be used for the
purchase of an attenuated smallpox vaccine.

      About VaxGen

      VaxGen, Inc. is a biopharmaceutical company engaged in the development,
manufacture and commercialization of biologic products for the prevention and
treatment of serious human infectious diseases. Based in Brisbane, Calif., the
company is developing preventive vaccines against anthrax and smallpox and is
the largest shareholder in Celltrion, Inc., a joint venture formed to build
operations for the manufacture of biopharmaceutical products, including VaxGen's
vaccine candidates. For more information, please visit the company's web site
at: www.vaxgen.com

      About Kaketsuken

      Kaketsuken is a Juridical Foundation which researches, develops,
manufactures and supplies biological products such as vaccines for humans and
animals, and blood plasma derivatives. Based in Kumamoto, Japan, the foundation
has pursued the preventive medicine fields of microbiology, immunology and
serology, towards the improvement of health and hygiene, and is a leading
company in the fields of human vaccines, animal vaccines, and blood plasma
derivatives respectively in Japan. In the field of human vaccines, Kaketsuken is
currently manufacturing more than 10 kinds of vaccines for humans, such as
Influenza vaccine, DTaP vaccine, recombinant Hepatitis B vaccine and Hepatitis A
vaccine. Kaketsuken is also developing a therapeutic monoclonal antibody for
HIV, a cell-cultured Japanese encephalitis vaccine and Influenza vaccine. For
further information about Kaketsuken, please visit the company's web site at:
www.kaketsuken.or.jp.



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 the timing, progress and results of
VaxGen's clinical development of LC16m8, the ultimate safety and efficacy of
LC16m8 and VaxGen's ability or intentions to sell the vaccine to the U.S.
government or in international markets. 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
Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission
on November 19, 2003, under the heading "Risk Factors", and the company's Annual
Report on Form 10-K/A, filed with the Securities and Exchange Commission on
November 19, 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