VXGN - VaxGen, Raven to merge: ANTHRAX FAILURE HURT [San Jose Mercury News

VaxGen, Raven to merge: ANTHRAX FAILURE HURT [San Jose Mercury News, Calif.]Knight Ridder/Tribune "Business News "
Nov. 14--VaxGen, which forfeited an $877.5 million federal contract in December when the anthrax vaccine it was developing for the government failed a key test, will be merged with Raven biotechnologies, the two South San Francisco companies have announced.
Under the proposed deal, which both companies' boards have approved, VaxGen has agreed to give Raven's shareholders 32 million shares of VaxGen's common stock and VaxGen would own 51 percent of the yet-to-be-named combined company.
Several VaxGen executives also would hold key positions in the merged firm, including VaxGen Chief Executive James Panek, who would be the new company's president and chief operating officer.
Raven Chief Executive Dr. George Schreiner would be the new company's chief executive and the merged business would focus on Raven's treatments for cancer, which use monoclonal antibodies to help the immune system fight off the disease.
VaxGen executives said they have had discussions with more than 100 companies, including a dozen major drug firms, about possible business deals since the anthrax contract was canceled.
When it was awarded in November 2004, the contract was the biggest issued under President Bush's Project BioShield anti-terror effort. But federal officials canceled the contract after VaxGen's vaccine proved unstable and the company missed a crucial deadline for testing it in people.
Since then, VaxGen's workforce -- which numbered more than 200 last year
- has been reduced by about 90 percent.
Contact Steve Johnson at sjohnson@mercurynews.com or (408) 920-5043.
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