SOUTH SAN FRANCISCO, Calif., May 14 /PRNewswire-FirstCall/ -- VaxGen,
Inc. (OTC Bulletin Board: VXGN), a biopharmaceutical company, today
provided guidance on its expected monthly cash expenditures following the
most recent restructuring undertaken on April 9, 2008. VaxGen expects that
its average monthly cash expenditures going forward are unlikely to exceed
$1 million, made up of the following categories:
* Costs related to the Company's real estate and facility, estimated at
32% of monthly expenditures.
* Costs related to maintaining public company status, including
professional fees, at approximately 32% of monthly expenditures.
* Costs related to the company's six remaining permanent staff and
temporary support, at approximately 21% of monthly expenditures.
* Interest payments associated with the outstanding convertible debt at
approximately 15% of monthly expenditures.
"With the completion of the most recent reduction in force, we have concluded those significant cost-reduction measures that are under the Company's sole control," said James P. Panek, VaxGen President and CEO. "While we continue to explore every avenue to reduce costs, a further significant reduction will be a function of the resolution of our efforts to sell the manufacturing plant and assign the associated lease. We are in discussions with parties interested in the plant, but cannot at this point provide assurance that a transaction will result."
VaxGen further announced today the filing of its financial results for
the quarter ending March 31, 2008 on Form 10-Q with the Securities and
Exchange Commission. These results reflect a number of significant impacts
consequent to the termination of the proposed merger with Raven
biotechnologies as follows:
* Consistent with SFAS 144, "Accounting for the Impairment and Disposal of
Long-Lived Assets" the property and equipment related to VaxGen's
manufacturing facility have been reclassified as "assets held for sale".
This reclassification shifts $10.3 million of assets on the balance
sheet out of Property and Equipment and into Current Assets. As it
relates to the Statement of Operations depreciation is not charged
against assets held for sale, and as a consequence there will be a
significant reduction in the depreciation charge going forward.
* VaxGen's net loss of $7.5 million for the first quarter of 2008 reflects
$2.3 million of expenses associated with the terminated merger and also
reflects a non-cash charge of $1.6 million related to the increase in
value of the derivative liability associated with the Company's
convertible notes. The main reason for the increase in the derivative
liability is management's assessment that there is an increased
probability of a change of control event, as defined in the indenture
related to the notes.
* VaxGen's net cash used in operating activities of $4.9 million for the
first quarter of 2008 reflects approximately $1.8 million of cash
expended on costs related to the proposed Raven merger during the
VaxGen is a biopharmaceutical company based in South San Francisco, California. The company owns a state-of-the-art biopharmaceutical manufacturing facility with a 1,000-liter bioreactor that can be used to make cell culture or microbial biologic products. For more information, please visit the company's web site at http://www.vaxgen.com.
Note: This press release contains "forward-looking statements" within the meaning of the federal securities laws, including statements regarding the VaxGen's anticipated cash expenditures and its potential sale of assets and assignment of lease. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those anticipated. Additional information concerning these and other risk factors is contained in VaxGen's Annual Report on Form 10-K for the year ended December 31, 2007. 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.
|SOURCE VaxGen, Inc.|
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