VaxGen Issues Rebuttal to MedCap Letter(y new institutional investors who would ...)

otherwise be attracted by Raven's technology.

VaxGen would note that, in arriving at the terms offered to Raven

stockholders in the proposed merger, it, together with its advisors

at Lazard, used a number of methodologies to value Raven, all of

which showed the proposed transaction to be fair to VaxGen

stockholders based on VaxGen's stock price at the time. Given the

fall in VaxGen's stock price since then, the valuation placed on

Raven's assets is even less demanding, especially in light of recent

transactions in the oncology monoclonal antibody (MAb) arena.

3. ISS' finding that the transaction lacks strategic rationale is, in

the company's view, flawed. It appears to be based on the limited

perspective that VaxGen is a vaccine company whereas Raven is an

antibody company. In fact, most of VaxGen's vaccine programs were

based on recombinant proteins of which monoclonal antibodies are a

subset. As evidence of this, it is noteworthy that VaxGen was the

technology partner and largest founding shareholder of Celltrion,

one of the largest independent manufacturers of mammalian cell

recombinant proteins, including monoclonal antibodies. Further, as

previously disclosed, a number of VaxGen scientists are already

engaged on Raven programs under arms-length contractual

arrangements, suggesting that synergies between the two merged

companies indeed do exist. In reality, VaxGen's later-stage drug

development expertise is highly complementary to Raven's discovery

and early stage capabilities.

4. ISS' has estimated that liquidation of VaxGen would result in

proceeds with a present value of only $0.49 per share. We do not

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