Vaxgen cancels anthrax vaccine program

Back in December, we noted that “it is all over for Brisbane, California-based Vaxgen,” reporting that HHS has decided to cancel the company’s $877.5 million anthrax vaccine contract under the much-troubled BioShield program. At the time, we noted that the company had spent more than $175 million of its own money on the project, and that the failure to produce was just the latest in a string of similar disappointments that included a failed AIDS vaccine and various legal troubles that caused it to be delisted from the Nasdaq. “It is hard to see how the company can continue,” we explained. “In fact, because the anthrax contract was cancelled for default, the government could even hold the company liable if there are extra costs from buying the product from another source.” The only positive thing, it seemed at the time, was that the company appeared to be well capitalized.

Now we can reiterate our previous position: it is all over for VaxGen. The company announced this week that it has discontinued further development of its anthrax vaccine and is laying off twenty employees, or 25% of its workforce, directly and indirectly associated with the vaccine program. This is the second reduction in force that the company has undertaken since January, when it laid off more than half of its workforce following the HHS cancellation. “From the outset of the first lay off, we have promised our shareholders that we would retain only those capabilities that we believed could create value,” said president James Panek.

Investors take note: The company now hopes to sell or license its vaccine to another company, one presumably with better relations with the federal government.