Business Wire - March 24, 2003

The complaint charges VaxGen and certain of its officers and directors with violations of the Securities Exchange Act of 1934. VaxGen is engaged in the development and commercialization of AIDSVAX, a vaccine designed to prevent infection or disease caused by HIV (Human Immunodeficiency Virus), the virus that causes AIDS. Throughout the Class Period, defendants caused VaxGen to make a number of positive statements about the status of its clinical trials required to obtain FDA approval to market AIDSVAX as an AIDS vaccine, causing VaxGen's stock to trade at artificially inflated prices.

On February 23, 2003, VaxGen shocked the market by reporting the long-anticipated results of the U.S. trials, disclosing that the "study did not show a statistically significant reduction of HIV infection within the study population as a whole, which was the primary endpoint of the trial." The partial disclosure of the overall failure of the U.S. clinical trial caused VaxGen's shares to plummet, declining over 50% to approximately $3 per share on February 24, 2003.

However, even when defendants released the results on February 24, 2003, they claimed that while the vaccine failed to demonstrate efficacy on U.S. caucasians, the trials had demonstrated 30%- 84% efficacy rates in U.S. blacks and Asians. That analysis, the Company said, had less than a 1% chance of being due to random chance, making it highly statistically significant. VaxGen President Donald P. Francis touted the results as evidence that AIDSVAX could protect against HIV infection. As reported by The Wall Street Journal on February 24, 2003, the "results overall won't lead the Food and Drug Administration to approve the vaccine for use in the wider public, but the company hopes that further analysis, as well as results from another trial being conducted in Thailand on injection drug users, may prompt the agency to approve the vaccine for some ethnic minorities." These corrective statements had their intended effect and VaxGen's stock closed at close to $7 per share on February 24, 2003.

On February 26, 2003, defendants were forced to admit that the reliability of their earlier reports of higher efficacy rates for non-caucasians were impaired because they had not taken the requisite "penalties" to account for the fact that less than 500 of the 5000 clinical trial participants were non-caucasians, resulting in an extremely small subset of data being analyzed for non-caucasions. As the news that earlier promises that AIDSVAX could prove useful for non-caucasions fell apart, the stock declined further, resulting in a total loss in market cap since November 18, 2002 of approximately 85%.

The plaintiff is represented by J&P, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. J&P is a litigation boutique dedicated to maximizing shareholders' returns and keeping the lead plaintiffs involved in the litigation. Attorneys Johnson and Perkinson are both former employees of the Securities and Exchange Commission. In particular, Mr. Johnson was an attorney with the enforcement division of the SEC from 1980-1985. Members of the firm have prosecuted complex class actions on behalf of plaintiffs in the areas of securities and consumer fraud since 1985. Based in South Burlington, Vermont, the firm has prosecuted leading actions on behalf of defrauded investors against numerous public companies resulting in the recovery of many millions of dollars and has been singled out for its excellence by various courts. The firm is currently lead or co-lead counsel in securities class actions pending against Xerox, Priceline, i2, Nortel, Allaire, and Exchange Applications and serves on the Executive Committee in the Global Crossing case.

Plaintiff seeks to recover damages on behalf of all purchasers of VaxGen securities during the Class Period (the "Class"). If you bought VXGN securities between August 6, 2002 and February 26, 2003 you may, no later than May 16, 2003, move the Court to serve as lead plaintiff of the Class. In order to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this Notice or rights or interests with respect to these matters, please contact: Robin Freeman, Esquire or James Conway, Esquire at Johnson & Perkinson, 1690 Williston Road, South Burlington, Vermont 05403, toll free at 1-877-266-2133 or via e-mail at email@jpclasslaw.com.

CONTACT: Johnson & Perkinson Robin Freeman or James Conway, 877/266-2133 email@jpclasslaw.com

SOURCE: Johnson & Perkinson

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