VaxGen announced the termination of its merger agreement with Raven in a press release issued last Friday.  As a result, liquidation may be in the company’s future, reported Steve Johnson for the San Jose Mercury News. 

According to Johnson, VaxGen had planned to have its shareholders vote on the merger Monday morning, but it became clear that the deal was not going to be approved by VaxGen’s investors.

Johnson reported on the "troubled" history of VaxGen as follows:

Founded in 1995, it labored for years to develop a vaccine for the AIDS virus, HIV, but was forced to give up that quest in 2003 after its vaccine proved ineffective. In subsequent years, the company disclosed that its financial records were in disorder, resulting in it being delisted from the Nasdaq Stock Market in 2004.

The government provided a brief salvation. Following the Sept. 11, 2001, terrorist attacks, federal officials in 2002 and 2003 gave VaxGen $101.2 million to begin developing a new anthrax vaccine. The government followed that up in 2004 with $877.5 million more to provide 75 million doses of the vaccine.  It was the biggest contract ever awarded under President Bush’s anti-terror program, Project BioShield, but it was short-lived. The government revoked the contract in December 2006 when the vaccine failed a key test. .  . .

In the interest of full disclosure, VaxGen was a client of my previous employer, Pennie & Edmonds, LLP and I did some work for the company during the term of my employment at the firm.  It has been sad to see the company fall on hard times, and I am sorry now to see this report of the company moving toward liquidation.  I remember a time when VaxGen’s future seemed very full of promise, and when the management team’s enthusiasm for its work was quite infectious (no pun intended).  While the nature of the biotech business model is inherently risky and some companies will inevitably fail while others will be wildly successful, it is still sad to see VaxGen come to the end of its road under these circumstances.   I had hoped that the company would enjoy a very different fate: that its AIDs vaccine would prove to be the answer to preventing AIDS that we hoped it to be.  Hopefully the work of VaxGen–despite all of its "troubles"–has nevertheless brought us one step closer to finding that answer.