VaxGen has reviewed the ISS report carefully, and finds it in general
to be balanced and factually accurate. It is, however, very limited in
scope and we believe does not fully consider certain unique aspects of the
biotechnology sector. VaxGen therefore respectfully disagrees with ISS'
recommendation on the merger proposal. Specifically, VaxGen has the
1. The report contains no analysis of the terms of the transaction.
Although the report acknowledges that VaxGen was willing to
terminate discussions with Raven over the economic terms, it is
disappointing that ISS made no effort to establish any kind of
valuation for Raven, notwithstanding ISS' statement that this is one
of the six criteria it uses to assess mergers.
2. It appears that the single factor that most heavily influenced ISS'
recommendation was the drop in VaxGen stock price following the
merger announcement. This drop was and remains very disappointing.
VaxGen believes it is largely attributable to a mismatch between the
expectations of certain stockholders related to asset value and
transaction type, and transactions that were actually available to
the Company. ISS acknowledges this point in its report: "While the
company's arguments regarding share price reaction seems plausible,
it is very difficult for ISS to ascertain the impact of a change in
shareholder base on the stock price." Based on the stock price
reaction, ISS notes that the market does not seem to be supportive
of the proposed merger. A further significant factor in explaining
the current stock price, in the opinion of the Company, is that the
vocal opposition of certain stockholders to the transaction has
deterred share purchases b
|SOURCE VaxGen Inc.|
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