VaxGen's AidsVax: no answer from company on inside knowledge and chimpanzee tests

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

On March 16 2003, four weeks after VaxGen revealed results of the US AidsVax trial, London's Sunday Times newspaper revealed plans for the first lawsuit against the company, alleging securities fraud. While preparing his report, Brian Deer contacted the company and, at its request, emailed his questions.

Date: Thu, 13 Mar 2003 23:03:24 +0000
From: Brian Deer
To: pbeaupre@vaxgen.com
Subject: Story for Sunday

To Pat Beaupre, VaxGen Inc

Dear Pat,

Thanks for your call. As I said in my message for Jim, I am a journalist with The Sunday Times of London and have been directed to file a story on VaxGen by 10AM GMT, 2AM Pacific. Friday 14 March.

It has been put to us that there is evidence that the directors of VaxGen were aware for some significant period prior to the announcement on February 24 that AidsVax had not protected volunteers in the phase III trial. As a matter of fact, the company was notified of seroconversions among volunteers by a weekly, or perhaps even daily, arrangement with trial centres and could compare the data coming in with background rates for HIV among the at-risk group. Information given during company presentations surrounding the announcement in February indicated that the company had performed significant tests on blood drawn from volunteers, such that the company felt entitled to claim that a correlation had been found between apparent protection and neutralizing antibodies. Those tests would have taken some time to carry out and, again, indicate that the announcement of no significant effect in the cohort was not news to the company.

Secondly, it has been put to us that certain institutional and insider interests had prior knowledge that the trial had shown no noteworthy protection for the cohort, and were able to divest themselves of stock ahead of February 24. Among these, Vulcan Ventures has been specifically cited, and I have written to them on this point. Meanwhile, certain statements from the company and those with whom the company co-operated, including Mr Porter Stansberry, gave small investors the impression that success was at hand. It has been suggested to us that the advantage to insiders was improper and may be found to be unlawful.

Thirdly, it has been put to us that on critical matters investors were misled. For instance, on page 29 of the IPO prospectus of 1999 and subsequently there is a discussion of chimpanzees. The first paragraph is taken to refer to homologous testing of two chimpanzees. Although such homologous tests are regarded as of no consequence by the scientific community, it appears that the persons drafting this document gave several points of detail, but did not feel impelled to share with investors the number of chimps involved. More importantly, the second paragraph refers to very controversial tests involving alleged heterological challenge in which the relevant scientific paper, not included with the prospectus, reveals only three chimpanzees are claimed to have been protected. I understand that following these tests, their sponsor, Genentech Inc, abandoned work on the rgp120 technology. Given the detail in these paragraphs, I wish to ask for the company's explanation for the absence of the number of animals involved, to squarely put to you that the number must have been omitted by intention, and that the aim was to deprive investors of a reasonable opportunity to assess the appropriate weight to give to these alleged experiments. I note frequent later references to chimpanzees in company pronouncements, including an investors' conference call last June, during which Dr Francis said: "Chimpanzees, since they're almost identical to humans except for hair and intelligence and maybe long arms, they are remarkable mirrors of what happens in humans."

I note from a schedule 14A report last year that Dr Francis is recorded as having personally grossed $7m from VaxGen in the first three years. Dr Berman is recorded as having grossed $5m. Is there anything VaxGen wishes to say about the appropriateness of such receipts?

I look forward to hearing from you.

With best wishes,


Brian Deer

VaxGen did not answer any of these questions.