VaxGen Inc. raised another $51.3 million in gross proceeds through the sale of Celltrion Inc. stock, but it has left the investment community guessing as to what it might do with the money.

Its anthrax vaccine, rPA102, was put on a clinical hold last year due to stability concerns. The hold delayed the start of a second Phase II trial, and ultimately caused the company to lose a $877.5 million contract with the Department of Health and Human Services a few weeks ago. (See BioWorld Today, Dec. 21, 2006.)

The $49 million in net proceeds gained from the sale of most of its stock in Celltrion, of Incheon, South Korea, is included in the $96.6 million in cash, cash equivalents and short-term investments reported by VaxGen as of Dec. 31.

But how far the money will take the Brisbane, Calif.-based company is anybody's guess.

"That's a good question. It depends on what it is they plan to do," said Sharon Seiler, an analyst with New York-based Punk Ziegel & Co. "I assume they're going to downsize. They really haven't told investors Plan D."

The company does have a manufacturing facility in South San Francisco - the one used to make the bulk protein of the anthrax vaccine. It also has a smallpox vaccine, as well as rPA102, that it could license out to another party.

Lance Ignon, VaxGen's vice president of corporate affairs, said the company knows what it will do with the Celltrion stock sale proceeds and its existing cash, but that it hasn't "made a public statement yet." The company's cash runway "depends on what sort of business plan unfolds."

He added that the manufacturing facility is capable of making microbial- or cell culture-based products, and that the anthrax vaccine might be attractive to another company.

"We made substantial progress on developing that vaccine," he told BioWorld Today.

Regardless of what the company decides, Seiler said it would not make sense for VaxGen to further pursue rPA102 "if the government's not going to buy it from them."

The sale of the Celltrion shares is somewhat unrelated to the terminated government contract, which was decided upon last June. That is when VaxGen sold its stake in the contract manufacturing firm, realizing $79 million in gross proceeds. The additional $51.3 million came in exchange for most of the remaining stock by the end of 2006. Before the sale, VaxGen was Celltrion's second largest shareholder, with a 21 percent stake. Shares not sold "are immaterial from a cash standpoint," Ignon said, but are "meaningful for other reasons." (See BioWorld Today, June 30, 2006.)

The Celltrion shares were purchased by Nexol Co. Ltd., Nexol Biotech Co. Ltd. and Nexol Venture Capital Co. Ltd., which together are the largest shareholder.

VaxGen's shares (Pink Sheets:VXGN) rose 22 cents on Wednesday, to close at $2.12.