VaxGen signed a settlement agreement with the HHS that releases both parties from all liabilities associated with the company's government contracts to develop and deliver a next-generation anthrax vaccine.
The agreement ends the government's right to hold VaxGen liable for the excess costs of procuring an anthrax vaccine that is the same or similar to the one the company is developing. Excess procurement costs in this case would have been the difference between the price of VaxGen's vaccine candidate and one purchased at a higher cost from another supplier, had HHS been able to find another supplier with a qualified vaccine.
"Although we believed that the possibility of being charged for excess procurement costs was highly unlikely, we are pleased to have removed this contingent liability and the potential for it interfering with our pursuit of a strategic transaction," says James P. Panek, president and CEO.
The settlement applies to all VaxGen's anthrax vaccine contracts, including two development contracts awarded by NIAID in September 2002 and September 2003 and to an $877.5-million vaccine stockpile contract awarded by HHS in November 2004.
As part of the settlement agreement, the NIAID will pay VaxGen $11 million under a development contract awarded to the company in September 2003. The company retains the right to access and use the research results, reports, and data it developed under the NIAID contracts and information developed by HHS and its contractors through animal studies involving VaxGen's anthrax vaccine. The company reports that it is seeking to sell or license its anthrax vaccine program to a third party.