Exhibit 99.1

                                 [VAXGEN LOGO]

      VaxGen Provides Update on Financial Reaudit; Company Believes Process
                         Will Include Audit of Celltrion

      BRISBANE, Calif. - December 14, 2004 - VaxGen, Inc. (VXGN.PK) provided an
update today regarding the reaudit and restatement of its financial statements.
As previously announced, VaxGen and its independent auditors have been
reauditing the company's recent financial statements in order to apply a more
appropriate policy for recognizing revenue from certain existing government
contracts. The restatement is expected to increase revenues by approximately $16
million for the two-year period ended December 31, 2003.

      The reaudit does not apply to the $877.5 million fixed-price contract
recently awarded to VaxGen for the purchase of 75 million doses of anthrax
vaccine.

      VaxGen and its independent auditors now believe the company's reaudited
financial statements also will have to reflect Celltrion, Inc.'s financial
results. This will require the audit of Celltrion's South Korean financial
statements prepared in conformity with Generally Accepted Accounting Principles
in the United States (U.S. GAAP). VaxGen is a minority shareholder in Celltrion,
a South Korean corporation developing a contract manufacturing business in
Incheon.

      VaxGen does not expect the audit of Celltrion or the reaudit of VaxGen to
have any effect on previously reported cash balances.

      The process of preparing and auditing Celltrion's financial statements
will delay VaxGen's planned filing of an amended annual report on Form 10-K/A
and outstanding quarterly reports on Form 10-Q with the U.S. Securities and
Exchange Commission (SEC) and the company's planned application for relisting on
the Nasdaq National Market System.

      "We have already initiated the Celltrion audit process and expect to
provide additional guidance regarding the estimated timing for completing this
task as soon as we have finished our evaluation of the scope of work, although
at this point we know that we will not file our financial statements before the
end of this year" said James M. Cunha, VaxGen's Chief Financial Officer. "We
remain confident that we will complete the reaudit, file our financial
statements and be relisted on the Nasdaq National Market System."

      The application of the change in revenue recognition policy, which VaxGen
has been working on since July 2004, will result in a restatement of VaxGen's
financial statements for the fiscal years 2001, 2002 and 2003. VaxGen also
believes that its restated financial statements will reflect its investment in
Celltrion, effective as of the first quarter of 2002. The investment in
Celltrion initially will add about $30 million, the value of the company's
investment in Celltrion,



to total assets and stockholders' equity. VaxGen's investment in Celltrion was
composed of technology and know-how but no cash or other financial
consideration.

      Additionally, the restated financial statements will reflect VaxGen's
pro-rata share of Celltrion's financial results. As of December 31, 2003, VaxGen
owned 48% of Celltrion.

      The company expects to apply for a relisting of its common stock on the
Nasdaq National Market System (NMS) at the same time that it files its updated
financial statements. The Nasdaq has informed VaxGen that it typically takes six
to eight weeks to review such applications before it decides whether to list a
security on the NMS. VaxGen believes that it currently meets the listing
qualifications for the NMS.

      As a result of the planned restatement of financial statements for fiscal
years 2001, 2002, and 2003, the annual and quarterly reports previously filed
with the SEC for these periods should not be relied upon.

      The change in VaxGen's revenue recognition policy is not associated with
any impropriety and is driven solely by the company's desire to ensure that
VaxGen uses the most appropriate revenue recognition policy in conformity with
U.S. GAAP.

      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 diseases. For more information, please visit the
company's web site at: www.vaxgen.com. NOTE: This press release contains
"forward-looking statements" within the meaning of the federal securities laws.
These forward-looking statements include without limitation, the timing of the
filing and the content of the company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30 and September 30, 2004, and the timing and
outcome of any restatement of financial results for the years ended December 31,
2001, 2002 and 2003; the timing or outcome of any reaudit of financial
statements, the ability of the company to be relisted on the Nasdaq National
Market System and the timing of any application for relisting or any decision
from the Nasdaq Stock Market. 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 Item 8.01 of the company's
Current Report on Form 8-K filed by VaxGen on November 22, 2004, under the
heading "Risk Factors" for a more detailed description of such risks. 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.

Contacts:

Media Relations:

Kesinee Angkustsiri Yip
Associate Director, Corporate Affairs
650-624-2304

Investor Relations:

Lance Ignon
Vice President, Corporate Affairs
650-624-1041