April 16, 2010 (FinancialWire) — VaxGen, Inc. (OTCBB: VXGN), a biopharmaceutical firm, and diaDexus, Inc., a privately held diagnostics company said they have entered into a non-binding summary of terms under which it is contemplated that VaxGen would acquire diaDexus in exchange for VaxGen common shares.

If the merger is consummated, upon the closing of the transaction, diaDexus will become a wholly-owned subsidiary of VaxGen, diaDexus stockholders will become stockholders of VaxGen, the officers of the combined company will be the current officers of diaDexus, and the combined company will be re-named diaDexus.

James Panek, president of VaxGen, said, "We believe that this potential transaction with diaDexus represents an excellent strategy to maximize the value of VaxGen's remaining tangible and intangible assets and to provide our stockholders with the opportunity to participate in diaDexus' potential success as a leader in the development and commercialization of novel diagnostic products."

He said that VaxGen's cash would provide capital for diaDexus to grow its product revenue and achieve profitability.

Panked added that the potential future value of the company’s anthrax vaccine candidate, which was the subject of an asset sale agreement with Emergent BioSolutions (NYSE: EBS), and VaxGen's HIV/AIDS vaccine candidates, licensed to Global Solutions for Infectious Disease, would be retained and preserved within the combined company.

The non-binding summary of terms has been approved unanimously by the boards of directors of both VaxGen and diaDexus, according to VaxGen. The companies said they expect to negotiate and execute a definitive merger agreement consistent with the summary of terms within the next 30 to 60 days, assuming they are able to reach agreement on definitive terms.

As of December 31, 2009, VaxGen posted audited cash, cash equivalents and marketable securities balance of around $32.3 million. Its liabilities and contractual obligations consisted primarily of costs and expenses of its outstanding leases related to its former biopharmaceutical manufacturing operations located in South San Francisco, California.

VaxGen's South San Francisco facility lease expires in December 2016 and diaDexus' South San Francisco facility lease expires in June 2011. The combined company will make a decision as to which facility best suits its needs.

California-based VaxGen is a biopharmaceutical company that owns a biopharmaceutical manufacturing facility with a 1,000-liter bioreactor that can be used to make cell culture or microbial biologic products. The facility is contained within leased premises.

California-based diaDexus is a privately held diagnostics company that is focused on the development and commercialization of patent-protected in vitro diagnostic products addressing unmet needs in cardiovascular disease.

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