VaxGen CFO Resigns

Shares of VaxGen VXGN dropped Monday after the company said its chief financial officer of about 14 months had resigned from his post.

The company also said it continues trying to untangle the financial issues that led to its delisting from Nasdaq last August.

VaxGen is in the process of restating financial results for 2001, 2002 and 2003. It hasn't filed formal financial statements with the Securities and Exchange Commission for any quarter in 2004 or 2005 or for full-year 2004.

"VaxGen's goal is to file all of its amended outstanding financial statements with the SEC by the end of the third quarter of 2005, although the timing could slip into the fourth quarter," the company said in a prepared statement.

VaxGen, which is developing an anthrax vaccine under contract with the U.S. government, said it intends to seek readmission to Nasdaq once the filings have been made.

Shares of the company fell $1.23, or 11.5%, to $9.43. The stock is traded on the pink sheets, a stock quotation system that usually provides a trading forum for thinly traded issues. But by noon, nearly 620,000 shares had been traded, or more than double the average daily trade.

VaxGen, based in Brisbane, Calif., said James M. Cunha, the chief financial officer, had resigned and would be replaced on an acting basis by Kevin C. Lee, VaxGen's senior director of finance. The company didn't comment on Cunha's future plans. Cunha joined VaxGen on April 1, 2004, after having been a management consultant and, previously, having spent 27 years at Arthur Andersen before departing in 2002.

"We are very aware of the hardship this process has placed on our shareholders and employees, so I want to emphasize that this project is job number one for us and will remain so until it is completed," Lee said in a prepared statement.

VaxGen is restating its financial results to reflect certain contracts with the government. The company said Monday it has made "substantial progress" in this matter, adding that it has commissioned an audit of a Korean subsidiary.

"The change in VaxGen's revenue recognition policy is not associated with any impropriety and is driven solely by the company's desire to ensure that VaxGen uses the most appropriate revenue recognition policy in conformity with [GAAP standards]," the company said.

VaxGen said the restatements won't affect cash balances. The company has $41.2 million in cash, cash equivalents and investment securities. In November, the company signed a contract with the federal government worth $877.5 million over five years to provide the anthrax vaccine.