Company crows about government backing for VaxGen's AidsVax clinical trial

The failure of AidsVax to prevent infection with HIV - in clinical trial results published in 2003 - triggered an intense debate about the controversial product and its manufacturer, VaxGen Inc of Brisbane, California. Mail to this website, maintained by Brian Deer, shows that existing material on a VaxGen-AidsVax index is read by significant numbers. This page seeks to further inform the discussion

VaxGen's stock price soared in the quarter following the press release below, which many investors took to imply government endorsement of the company's product. Also on this page is an extract from a May 2001 SEC filing, indicating that although the $8m was not paid directly to the company, it covered clinical trial costs that would otherwise have been incurred by VaxGen. On February 24 2003, it was announced that the trial had failed to show efficacy for AidsVax.

In VaxGen's initial public offering prospectus, dated June 1999, the company tells investors (page 20): "We anticipate receiving an aggregate of approximately $12,600,000 from the Centers for Disease Control and Prevention and the National Institutes for Allergy and Infectious Diseases commencing in September 1999. We believe these funds will enable us to meet anticipated operating expenditures for an additional year." By October 1999, following the publication of Deer's report, the story had changed somewhat, as the press release below suggests.

Centers for Disease Control Joins VaxGen Study; Awards $8 Million Contract to Supplement HIV Vaccine Research

PRNewswire - October 29, 1999

BRISBANE, Calif., Oct. 29 /PRNewswire/ VaxGen Inc. (Nasdaq: VXGN) today announced that the federal Centers for Disease Control and Prevention (CDC) will contribute funds to support additional research at five of the 56 clinics in the United States currently conducting Phase III clinical trials of VaxGen's AIDSVAX vaccine.

The CDC will contribute $2 million annually, for four years, to the selected clinics. The focus of the additional research supported by the contract is "to answer critical questions about how this and future vaccine trials may impact the attitudes and behaviors of both trial participants and the communities involved," according to the CDC.

"The CDC's support of our trial opens key avenues towards achieving our goals of ending the AIDS epidemic," said Dr. Donald P. Francis, president of VaxGen. "VaxGen will benefit from the vast experience of CDC, the U.S. government's premier HIV prevention organization. In turn, we will be sharing data and data analysis with the CDC."

The five clinical sites that will receive the CDC funds are San Francisco Department of Public Health, Fenway Community Health Center in Boston, Ohio State University, Howard Brown Health Center in Chicago, and the University of Washington in Seattle. The contract calls for CDC to assume clinical expenses for trial volunteers at these sites. Each participating site will continue to implement VaxGen's Phase III protocol, as well as conduct the additional research.

May 03, 2001

VAXGEN INC (VXGN)

Quarterly Report (SEC form 10-Q)

Excerpt:

"In October 1999, we entered into a collaboration with the federal Centers for Disease Control and Prevention ("CDC") to support research at six of the 56 clinics in the United States currently conducting Phase III clinical trials of our AIDSVAX(R) vaccine. The CDC selected the six sites in the fourth quarter of 1999. Contractual arrangements between the CDC and the clinics were completed in the second quarter of 2000. The participating sites will continue to implement our Phase III protocol, as well as conduct epidemiological, social and behavioral research, which will be shared by the Company and the CDC. The sites will be compensated directly by the CDC for the clinical costs, which would have been incurred by the Company, and for conducting the additional research. The CDC has agreed to contribute approximately $8,000,000 to the participating sites over a four-year period."