Press Release: FDA Maintains Clinical Hold on VaxGen's Anthrax Vaccine Trial

FDA Maintains Clinical Hold on VaxGen's Anthrax Vaccine Trial BRISBANE, California – December 18, 2006 – VaxGen, Inc. announced today that the Food and Drug Administration's Center for Biologics Evaluation and Research (CBER) has informed the company that it is maintaining its clinical hold on the company's second Phase II trial for its investigational anthrax vaccine. The hold is due to CBER's continued concerns about the vaccine candidate's stability. The Department of Health and Human Services (HHS), under its contract with VaxGen to purchase 75 million doses of its recombinant anthrax vaccine, rPA102, had imposed a deadline of today, December 18, for the company to initiate its next clinical trial for the vaccine candidate. The Office of Public Health Emergency Preparedness (OPHEP), the office within HHS that administers the contract, has yet to inform VaxGen what direction it intends to take with respect to the contract. At a recent meeting with CBER, which was also attended by OPHEP representatives, VaxGen presented its expanded number of methods for measuring the vaccine's potency and stability, and its progress toward further enhancing the stability of the vaccine's formulation. Based on that exchange, VaxGen believes that CBER wishes to engage the company in additional, more detailed technical discussions about the analytical methods and formulation development. However, the clinical hold will remain in place until sufficient vaccine stability has been demonstrated to resume clinical testing. 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, including anthrax and smallpox. VaxGen has been awarded an $877.5 million contract by HHS to provide 75 million doses of a modern anthrax vaccine for civilian biodefense. Based in Brisbane, Calif., VaxGen operates a wholly owned manufacturing facility in California and owns a minority interest in Celltrion, Inc., a company in the Republic of Korea established to provide contract manufacturing to the global pharmaceutical industry. 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, statements regarding VaxGen's ability to address FDA/CBER's concerns over vaccine stability, to resolve the clinical hold imposed by FDA/CBER and to perform under its contract with HHS. 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 February 16, 2006 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: Lance Ignon Vice President, Corporate Affairs (650) 624-1016 Kesinee Angkustsiri Yip Associate Director, Corporate Affairs (650) 624-1041

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