The USA’s VaxGen is looking for a buyer and has slashed its workforce by over 50% in the wake of the US government’s decision to terminate a multi-million dollar deal with the firm to provide doses of anthrax vaccine.

The California-based firm said that it has retained the services of investment bank Lazard after noting that it is “actively pursuing avenues to enhance shareholder value through a strategic transaction.” The firm’s chief executive Lance Gordon has resigned and will be replaced by James Panek, who was executive vice president.

VaxGen is cutting its staff by about 51% or over 110 jobs and these restructuring measures will halve its monthly cash expenditures to less than $3 million, though the company will take a one-time cash restructuring cost of $3 million related to the changes.

All of this has come about as a result of the US Department of Health and Human Services’ decision last month to cancel VaxGen's ‘strategic national stockpile’ contract for 75 million doses of its recombinant anthrax vaccine which would have been enough to inoculate 25 million Americans in the case of a biological attack. The deal, which would have been worth $877.5 million to the firm, was ended after the HHS refused to approve new studies of the experimental vaccine.

Mr Panek said that the company remains confident in the eventual success of the anthrax vaccine and believes “it has substantial value to companies with the resources and expertise to pursue its further development." VaxGen chairman Randall Caudill was also upbeat about the firm’s prospects and said that “we are already in early-stage discussions with several potential strategic partners and intend to aggressively pursue our opportunities to develop and realise the full value of all our capabilities and assets."

He went on to claim that in addition to having $96.6 million in cash and equivalents at the end of 2006, “the company has a number of significant assets of potential value to an acquirer or merger partner."