Supply Agreement - VaxGen inc. and Celltrion Inc.





                                SUPPLY AGREEMENT

This Supply Agreement (the "Agreement") is made and entered into as of this 25th
day of March, 2002 (the "Effective Date") by and between:

VAXGEN, INC. a corporation organized and existing under the laws of the State of
Delaware  having  its  registered   office  at  1000  Marino  Blvd.,   Brisbane,
California, USA, 94005-1841 (hereinafter referred to as "VaxGen"), and

CELLTRION,  INC., a  corporation  organized  and existing  under the laws of the
Republic of Korea having its registered office at Hanmi Bank Building, 13 Floor,
1127, Guwol-Dong, Namdong-Gu, Incheon City, 405-220, Korea (hereinafter referred
to as "Celltrion").

(VaxGen and  Celltrion are each referred to herein as a "Party" and are referred
to collectively as the "Parties".)

                                   WITNESSETH:

WHEREAS,  Celltrion  is a  company,  established  pursuant  to a  Joint  Venture
Agreement dated as of February 25, 2002 (the "JVA"),  engaged in the business of
manufacturing pharmaceutical products including, without limitation, Product, as
hereinafter defined;

WHEREAS,  in  accordance  with the terms of the JVA,  during a five-year  period
commencing  on the date of  first  commercial  production  of  Product  from the
Facility (as  hereinafter  defined)  VaxGen wishes to purchase from Celltrion 87
million Units of Product (as  hereinafter  defined) per year from  Celltrion for
incorporation into Vaccine (as hereinafter defined) and commercial distribution,
and  Celltrion  wishes to supply  such Units of Product  to VaxGen  during  such
five-year period, all on the terms and conditions set forth herein.

NOW,  THEREFORE,  in  consideration of the foregoing and of the mutual covenants
contained herein, the parties hereto agree as follows:

ARTICLE 1 DEFINITIONS AND INTERPRETATION

1.1. Definitions.  For the purposes of this  Agreement the  following  words and
     phrases shall have the following meanings:

     (a)  "Acceptance  Criteria" shall have the meaning set forth in Section 3.2
          below.

     (b)  "Affiliate"   means,   with  respect  to  a  Party,  any  corporation,
          association,  or other entity which, directly or indirectly,  controls
          the Party or is  controlled  by the Party or is under  common  control
          with such Party,  where "control"  means the  possession,  directly or
          indirectly,  of the  power to direct  or cause  the  direction  of the
          affairs or  management  of an entity  through the  ownership of voting
          securities or otherwise,  including,  without  limitation,  having the
          power to elect a majority of the board of directors or other governing
          body of such entity.

     (c)  "Allocable  Overhead"  shall mean costs incurred by a Party or for its
          account (and not  reimbursed by a third party) which are  attributable
          to its  supervisory  services,  occupancy  costs  which  includes  the
          depreciation of capital  construction  costs,  corporate bonus (to the
          extent not charged  directly to a  department),  payroll,  information
          systems,  human  relations  or  purchasing  functions  and  which  are
          allocated to company  departments based on space occupied,  headcount,
          full-time  equivalents or another  activity-based  method.  "Allocable
          Overhead"  shall  not  include  any  costs   attributable  to  general
          corporate  activities  including,  by way of example  only,  executive
          management,  investor relations,  business development,  and legal and
          government  affairs,  costs which are not related to the production of
          the  Product,  and shall not include  any costs or expenses  which are
          reimbursed by the other Party or any third party.

     (d)  "Confidential  Information"  shall have the meaning  ascribed to it in
          Article 16 of this Agreement.

     (e)  "Facility" shall mean the manufacturing  facility of Celltrion located
          at Incheon, Korea.
<PAGE>

     (f)  "Fully Burdened  Manufacturing Cost" shall mean the cost of production
          of a Product  except for corporate  tax,  comprised of the sum of: (i)
          the  manufacturing  cost of goods produced as determined in accordance
          with  United  States  generally  accepted  accounting   principles  as
          consistently  applied  by  Celltrion  including,  without  limitation,
          direct  labor,   material  and  product   testing  costs  incurred  in
          connection  with the  manufacture or quality  control  testing of such
          Product,  as well as Allocable  Overhead,  (ii) Celltrion's  allocable
          intellectual  property  licensing and acquisition  costs paid to third
          parties which are necessary for the manufacture of such product, (iii)
          any  general  administrative   expenses  equitably  allocated  to  the
          production of a Product, such as indirect labor costs, management cost
          and insurance payments,  as well as related Allocable  Overhead,  (iv)
          any  other  costs  borne  by  Celltrion  for  the  transport,  customs
          clearance  or storage of Product at VaxGen's  request,  and (v) direct
          costs of training  related to the  operation  of the  Facility for the
          production  of Product,  as well as related  Allocable  Overhead.  The
          Parties  shall  hereafter  in good faith  consider  inclusion  in this
          definition  of the deficit  accumulated  with  respect to the Facility
          during a to-be-defined  "start-up and validation period",  which would
          include  costs such as those related to  technology  transfer,  office
          rental fees,  and direct labor,  travel  expenses,  and training costs
          related to the operation,  validation, and construction of the Incheon
          facility;  and such costs would be  amortized  over a five year period
          from the start of  production.  In the event that the JV  manufactures
          other  products  in  addition  to  AIDSVAX,  indirect  costs  shall be
          allocated to each product produced based on an equitable allocation of
          space  occupied,   headcount   full-time   equivalents  or  a  similar
          activity-based methodology.

     (g)  "Gross  Profits"  shall mean  aggregate  gross  invoiced  sales prices
          charged  for a  product  produced  at  the  Facility  shipped  to  all
          purchasers of such product, less Celltrion's cost of sales,  marketing
          costs,  distribution  costs and development  costs directly related to
          such  products,   all   calculated  in  accordance   with  U.S.  GAAP,
          consistently  applied.  "Average  Gross  Profits" shall mean the Gross
          Profits  on a batch  of  Product  divided  by the  number  of Units of
          Product in such batch.

     (h)  "Launch" shall mean the date of first commercial production of Product
          at the Facility.

     (i)  "Product" shall mean AIDSVAX in bulk active form, as more particularly
          described in Exhibit "A" attached  hereto,  manufactured in accordance
          with the Product Specifications.

     (j)  "Product Specifications" shall mean the specifications relating to the
          manufacturing  of the Product in bulk form  reasonably  established by
          VaxGen,  as modified  from time to time by agreement of Celltrion  and
          VaxGen.  "Product  Specifications"  shall  include  manufacturing  and
          analytical  procedures  relating to the manufacture and testing of the
          Product.  Product  Specifications  shall be consistent  with U.S. cGMP
          regulations and the FDA-approved U.S. license for the Product.

     (k)  "Release  Certificate"  shall  mean the  certificate  to be  issued by
          Celltrion upon delivery of the Product to VaxGen, in a form reasonably
          established by VaxGen.

     (l)  "Regulatory  Authority"  shall  mean (i) with  respect  to the  United
          States, the U.S. Food and Drug  Administration  ("FDA"), or such other
          agency  or   instrumentality   of  the  United   State  to  which  the
          responsibilities  and authority of the FDA are given or delegated from
          time to time,  (ii) with respect to the European  Union,  the European
          Medicines  Evaluation Agency ("EMEA"),  and (iii) with respect to each
          other  jurisdiction,   the  agencies  or   instrumentalities  of  such
          jurisdiction  having  substantially  the  same   responsibilities  and
          authority of the FDA or EMEA.

     (m)  "Rejected Products" shall have the meaning set forth in Section 5.2.

     (n)  "Storage Specifications" shall mean the specifications relating to the
          storage of the Product by Celltrion reasonably  established by VaxGen,
          as amended from time to time by agreement of Celltrion and VaxGen.

     (o)  "Supply  Order"  shall  mean an order  for  Product  placed  by VaxGen
          hereunder.

     (p)  "Unit of Product" shall mean the amount of the AIDSVAX  Vaccine active
          ingredient equal to that contained in one human dose of Vaccine as set
          forth  from  time to time in the FDA  license  for the  Vaccine.  This
          definition  of "Unit of Product"  shall apply to the annual supply and
          purchase  obligations of the Parties and shall be adjusted annually to
          reflect the FDA license  specifications  for one human dose current in
          each year.

<PAGE>

     (q)  "Vaccine"  shall mean a vaccine for human use and  developed by VaxGen
          or a licensee of VaxGen that  includes  Product  (alone or with one or
          more other active ingredients or adjuvants)  manufactured by Celltrion
          pursuant to this Agreement.

1.2 Certain Rules for Interpretation of this Agreement

     (a)  The descriptive headings of Articles and Sections of the Agreement are
          inserted  solely for  convenience of reference and are not intended as
          complete or accurate  descriptions  of the content of such Articles or
          Sections.

     (b)  The use of words  in the  singular  or  plural,  or with a  particular
          gender,  shall not limit the scope or exclude the  application  of any
          provision of the Agreement to such person or persons or  circumstances
          as the context otherwise permits.

     (c)  Whenever a provision of the Agreement  requires an approval or consent
          by a Party to the  Agreement  and  notification  of such  approval  or
          consent is not  delivered  within the  prescribed  time  limit,  then,
          unless  otherwise  specified,  the Party whose  approval or consent is
          required shall be conclusively deemed to have withheld its approval or
          consent.

     (d)  Whenever  any  payment  is to be made or action to be taken  under the
          Agreement  is  required  to be made or  taken  on a day  other  than a
          business day in the  jurisdiction of the relevant Party,  such payment
          shall be made or action taken on the next business day following  such
          day in the  jurisdiction  of the Party to make such payment or do such
          act.

ARTICLE 2 PURPOSE OF THE AGREEMENT

During the term of the Agreement, Celltrion shall sell the Product to VaxGen and
VaxGen  shall  purchase  Product  from  Celltrion  according  to the  terms  and
conditions of the Agreement.

ARTICLE 3 SUPPLY OF PRODUCT

3.1  General.  Subject to the terms and conditions of the  Agreement,  Celltrion
     shall  manufacture  and supply to VaxGen (for VaxGen's  benefit and for the
     benefit of its Affiliates and  designated  licensees),  and VaxGen (for its
     own benefit and for the benefit of its Affiliates and designated licensees)
     shall  purchase from  Celltrion,  87 million Units of Product each calendar
     year.

3.2  Manufacturing of Product. All Product supplied by Celltrion hereunder shall
     have been  manufactured  in  compliance  with the  Product  Specifications.
     Celltrion  shall maintain the Facility in which the Product is manufactured
     in compliance with  requirements of all applicable  Regulatory  Authorities
     including,  without limitation,  then-current Good Manufacturing  Practices
     ("cGMP") established by the FDA. Product Specifications,  manufacturing and
     testing  procedures and equipment may not be modified by Celltrion  without
     VaxGen's written approval;  provided, however, that if such modification is
     mandated by a Regulatory  Authority,  Celltrion shall inform VaxGen as soon
     as possible and the parties  shall work in good faith to affect such change
     in a manner that least disrupts production or distribution of the Product.

     Unless and until otherwise expressly agreed by the Parties, compliance with
     the Product Specifications,  Storage Specifications and all applicable cGMP
     requirements as certified in a "Certificate of Compliance"  shall be deemed
     to constitute the "Acceptance Criteria" for the Product.

ARTICLE 4 FORECASTS AND SUPPLY ORDERS

4.1  Forecasts.  No less  than 12  months  preceding  its  expected  launch of a
     Vaccine,  VaxGen shall provide to Celltrion a  non-binding  forecast of the
     quantities  of Product to be  manufactured  during the  following  two-year
     period. This forecast shall be updated by VaxGen on or before December 1 of
     each calendar year for the  following  two calendar  years.  Within 45 days
     after receipt of each such  forecast,  Celltrion  shall provide to VaxGen a
     good faith non-binding forecast of the Fully Burdened Manufacturing Cost of
     the supply forecast by VaxGen.

<PAGE>

4.2  Supply  Orders.  On or before  December 1 of each  calendar year during the
     term of the  Agreement,  the Parties shall meet to discuss  pending  Supply
     Orders and non-binding,  good faith forecast modification for the following
     two calendar  years. At least 90 days before the date upon which it desires
     that any  shipment  of Product be  delivered  to it,  VaxGen  shall place a
     Supply  Orders  in  writing  with  respect  to such  shipment.  Subject  to
     Celltrion's  maximum  annual supply  obligations  set forth in Section 4.3,
     below, and the other terms and conditions of the Agreement, all such Supply
     Orders shall be binding on the Parties when received by Celltrion.  Monthly
     shipments  made to VaxGen  hereunder  may not  exceed  Celltrion's  maximum
     monthly  capacity  limit,  except  to  the  extent  that  adequate  Product
     inventory otherwise exists to satisfy such orders.

     Without  limiting  the  foregoing,  VaxGen  shall use its best  efforts  to
     provide Celltrion with Supply Orders for the delivery of Product within the
     following dates:

     (i)  In January of each year,  VaxGen shall  provide its Supply  Orders for
          delivery of Product during the second calendar quarter of such year;

     (ii) In April of each year,  VaxGen  shall  provide  its Supply  Orders for
          delivery of Product during the third calendar quarter of such year,

     (iii)In July of each year,  VaxGen  shall  provide  its  Supply  Orders for
          delivery of Product during the fourth  calendar  quarter of such year;
          and

     (iv) In October of each year,  VaxGen shall  provide its Supply  Orders for
          delivery  of  Product  during the first  calendar  quarter of the next
          year.

4.3  Maximum Supply and Purchase  Obligations.  During the period  commencing on
     the date of first  commercial  production  of Product from the Facility and
     ending on the fifth  anniversary  of such  date  (the  "Initial  Production
     Period"), Celltrion shall have no obligation to produce or supply to VaxGen
     more than 87 million  Units of Product in any calendar year during the term
     of the  Agreement  and VaxGen has no  obligation  to purchase  more than 87
     million  units of Product in any calendar  year. In each case the number of
     Units of Product  shall be pro rated for partial  calendar  years.  No less
     than 24 months prior to the  expiration of the Initial  Production  Period,
     the Parties shall in good faith  discuss the terms and  conditions on which
     VaxGen would be willing to contract with  Celltrion to serve as the primary
     source of supply for Product for  VaxGen's  worldwide  markets for the five
     year  period   following  the  Initial   Production   Period,   giving  due
     consideration  to the  quality  and  reliability  of the  Facility  and the
     transfer   price  of  Product   available  to  VaxGen  from  other  sources
     (including,  without  limitation,  its own production  facilities).  If the
     Parties fail to extend (with mutually agreed  modifications)  their respect
     supply and purchase  obligations  hereunder,  the Agreement shall terminate
     180 days after the last day of the Initial Production Period.

4.4  Forecasts and Supply Orders in excess of Maximum Supply Obligations. In the
     event that VaxGen  forecasts  project a need for production of more than 87
     million Units of Product in any calendar  year,  the Parties shall meet and
     confer  in good  faith in order to  discuss  an  increase  capacity  at the
     Facility.

4.5  Timely  Manufacturing  of the  Product.  Celltrion  shall use  commercially
     reasonable  efforts to  manufacture  and supply  VaxGen  with  Product in a
     timely manner, in accordance with the Supply Orders and the Agreement.  The
     Parties understand that commercial  production from the Facility ("Launch")
     is anticipated to commence on or before December 31, 2005.  Notwithstanding
     anything in this  Agreement to the contrary,  in the event that: (i) Launch
     is delayed by more than 12 months other than by virtue of the negligence or
     intentional   misconduct  of  VaxGen,  (ii)  having  completed   sufficient
     technology transfer and performed successful  qualification runs, licensure
     of the  Product is delayed by more than six months  other than by virtue of
     the negligence or intentional  misconduct of VaxGen, (iii) licensure of the
     Product having occurred, continuous commercial production of Product at the
     Facility is interrupted  by more than 60 consecutive  days or for more than
     90 days in any 12 month  period other than by virtue of the  negligence  or
     intentional  misconduct of VaxGen, VaxGen shall have the right to commit to
     the  production  of  Product  at  a  different  site  and  the  rights  and
     obligations of the Parties hereunder (including,  without limitation, those
     under Sections 3.1 and 4.3) shall be equitably adjusted accordingly.

<PAGE>

ARTICLE 5 SHIPPING, DELIVERY AND ACCEPTANCE OF THE PRODUCT

5.1  Shipping and delivery.  Celltrion  shall deliver  Product ordered by VaxGen
     FOB at the  Facility.  VaxGen shall have an  authorized  person  certify in
     writing the condition of the delivered  Product promptly  following receipt
     and shall  thereafter  store all received  Product in  accordance  with the
     Storage Specifications. Title and risk of loss of the Product shall pass to
     VaxGen  upon   delivery   from  the   Facility   to   VaxGen's   designated
     representative.

5.2  Evaluation and Rejection.  Within 60 days after receipt of each shipment of
     Product from  Celltrion,  VaxGen shall  perform the agreed upon  Acceptance
     Criteria tests to determine acceptability of such shipment and shall notify
     Celltrion  in  writing  of  any  claim  relating  to any  specific  alleged
     non-conformity with the Acceptance Criteria.  VaxGen may reject any Product
     that fails to meet the Acceptance  Criteria ("Rejected  Material").  In the
     event Celltrion does not receive any such notice within such 60-day period,
     the  Product  received  shall  conclusively  be  deemed  to  have  met  the
     Acceptance Criteria. If, due to circumstances beyond its control, VaxGen is
     unable to  complete  its  evaluation  of Product for  acceptance  with such
     60-day  period,  VaxGen will  immediately  provide  Celltrion  with written
     notification  of  this  fact  and  provide  a  reasonably  revised  date of
     notification, which shall thereafter be binding on the Parties.

5.3  Defective Shipments.  If any Product supplied by Celltrion materially fails
     to meet the  Acceptance  Criteria  or  fails  to have at  least  2/3 of the
     established shelf life remaining at the time of delivery, the Parties shall
     meet and  Celltrion  shall,  at VaxGen's  option,  either use  commercially
     reasonable  efforts  to  replace,  at no cost for  VaxGen,  such  defective
     Product as promptly as practical,  or issue a refund therefor. In the event
     that the parties cannot  mutually agree as to whether Product fails to meet
     the Acceptance  Criteria,  then the Parties shall refer the matter,  to the
     extent of their disagreement, to the dispute resolution procedure described
     below.

5.4  Release  Certificate.  Celltrion shall provide to VaxGen with each delivery
     of  Product  a  Release  Certificate,  a  Certificate  of  Analysis  and  a
     Certificate of Compliance (all as more particularly  specified in a Quality
     Assurance  Agreement to be entered into between VaxGen and Celltrion within
     a  reasonable  time prior to Launch)  signed by a  responsible  person duly
     authorized  by Celltrion  to certify the quality of the Product  delivered.
     Such Release  Certificate  shall, inter alia, state that the results of the
     agreed  upon  testing   procedures  are  in  compliance  with  the  Product
     Specifications  as  well  as  any  additional  applicable  requirements  of
     Regulatory  Authorities.  Without limiting the foregoing,  unless expressly
     agreed by the Parties all Product  supplied by  Celltrion  hereunder  shall
     meet all release  criteria  established  by the FDA or EMEA with respect to
     such Product.

5.5  Production  Records.  Celltrion  shall  maintain  records  related  to  its
     manufacture and handling of Product in accordance with the applicable rules
     and  regulations  applicable to the Product and conditions of its licensure
     (including  applicable  rules of the FDA, EMEA ICH and any other applicable
     regulatory  requirements for record retention),  for the longer of (i) five
     years after the date of manufacture of each batch of Product,  and (ii) the
     period  required by applicable  law.  Celltrion  shall notify VaxGen of any
     intent to  destroy or dispose  of  records  related to the  manufacture  or
     handling of Product and allow VaxGen an  opportunity to secure said records
     for additional storage periods in accordance with the written procedures of
     VaxGen or its designee. Upon VaxGen's request with no fewer than five days'
     prior notice, and at VaxGen's sole expense,  Celltrion shell send to VaxGen
     copies of the relevant documents and/or permit VaxGen and/or an independent
     auditor selected by VaxGen to have access to such records from time to time
     during ordinary  business hours to verify compliance by Celltrion with such
     rules and  regulations;  provided,  however,  that  VaxGen's  inspection or
     access shall not unreasonably  interfere with Celltrion's  operations.  The
     provisions  set forth in this  section  shall  survive  termination  of the
     Agreement for the longer of (i) five years after the date of manufacture of
     each batch of Product, and (ii) the period required by applicable law.

ARTICLE 6 PRODUCT SHORTAGE

Celltrion shall use commercially  reasonable  efforts to satisfy VaxGen's orders
for Product in a timely  fashion.  However,  Celltrion shall not be liable for a
failure  to supply  Product  in the event of (but only to the  extent)  of Force
Majeure as provided  hereinbelow.  Celltrion shall immediately  notify VaxGen of
any potential or anticipated  shortfall in the manufacturing of the Product that
may  adversely  affect  the  delivery  of Product in  accordance  with  VaxGen's
forecast  requirements  and pending Supply  Orders.  Without  limiting  VaxGen's
rights under  Section 4.5,  above,  if Celltrion is unable,  for any reason,  to
supply  VaxGen the full amount of Product to which VaxGen is entitled  hereunder
in  accordance  with  the  delivery  schedule  established  in a  Supply  Order,
Celltrion  shall notify VaxGen of such  situation as soon as practical and shall
allocate to VaxGen all available  capacity at the Facility available in order to
minimize the shortfall in production of the Product.

<PAGE>

ARTICLE 7 PAYMENTS

7.1  Transfer  Price.  VaxGen shall pay to Celltrion,  for all Product  supplied
     hereunder,  a transfer price (the "Purchase Price") equal to the lesser of:
     (i) [*](1) percent of Celltrion's  Fully  Burdened  Manufacturing  Cost, or
     (ii)  the  "prevailing  market  rate"  for  the  contract   manufacture  of
     recombinant  products comparable in complexity to AIDSVAX,  manufactured in
     comparable  quantities  and on a  delivery  schedule  and  other  terms and
     conditions  comparable to those set forth herein,  calculated as a function
     of the Fully Burdened Manufacturing Cost of such comparable products. On or
     before  November 1 of each  calendar  year during the term of the Agreement
     following  the date of Launch,  the Parties  shall in good  faith,  for the
     purposes of deciding the "prevailing  market rate",  approach no fewer than
     three pharmaceutical  contract  manufacturers  throughout the world who are
     not  Affiliates of Genentech or VaxGen and who are qualified to manufacture
     AIDSVAX and who have available capacity  sufficient to supply the projected
     requirements  of  VaxGen  hereunder  for  the  forthcoming  calendar  year.
     Notwithstanding  anything to the contrary,  prices  charged by Celltrion to
     its customers for products other than AIDSVAX or any  introductory  product
     can be used as one of the aforementioned  three prices. As a result of such
     survey,  or an equivalent  survey  conducted by a third party acceptable to
     the Parties,  the Parties shall agree upon the then-prevailing  market rate
     for such  manufacture  which,  if less than [*](1)  percent of  Celltrion's
     Fully Burdened Manufacturing Cost, shall be deemed to be the Purchase Price
     for the forthcoming  calendar year. If the Parties are unable to agree upon
     such  prevailing  rate on or before  December 15 of an annual review cycle,
     the matter shall be referred to  resolution by  arbitration  as provided in
     Section  18.4,  below.  In such case,  the  transfer  price shall be [*](1)
     percent of  Celltrion's  Fully  Burdened  Manufacturing  Cost  until  final
     resolution  by  arbitration,  which shall be adjusted  after  resolution by
     arbitration.

7.2  Payment.  Celltrion  shall  invoice  VaxGen for the Purchase  Price of each
     shipment of Product upon  delivery of the same as specified  herein,  which
     invoice  shall  include   information   sufficient  to  verify  Celltrion's
     calculation of the Fully Burdened Cost of Manufacture on which such invoice
     is based.  VaxGen shall pay to  Celltrion  the amount due within 45 days of
     the date of the corresponding  invoice.  Payments shall be remitted by wire
     transfer in the  invoiced  currency to a bank account to be  designated  in
     writing from time to time by Celltrion.  The currency of such invoice shall
     be Korean Won. At an appropriate time, the board of directors of Celltrion,
     in  consultation  with  VaxGen,  shall  establish  appropriate   accounting
     procedures to track and document the Fully  Burdened Cost of Manufacture on
     a batch-by-batch  or  shipment-by-shipment  basis. In calculating the Fully
     Burdened  Manufacturing  Cost on a batch-by-batch  or  shipment-by-shipment
     basis,  up to and  including ten percent (10%) of the failure rate shall be
     taken into account so that the costs of such  failure  shall be included in
     the Fully Burdened Manufacturing Cost. Any failure rate up to and including
     ten percent (10%) shall be treated as ten percent (10%) for the purposes of
     the Fully Burdened  Manufacturing  Cost. In the event that the failure rate
     exceeds ten percent (10%) but is less than  twenty-five  percent (25%), the
     costs associated with failed  production in excess of ten percent 10% shall
     be  borne by  Celltrion  and  VaxGen.  In the  event  the  failure  rate is
     twenty-five  percent (25%) or more, the Parties shall consult in good faith
     as to how the failure rate can be lowered.

7.3  Take or Pay. On or before  January 30 of each calendar  year  commencing in
     the calendar year following the year in which Launch occurred, VaxGen shall
     notify  Celltrion of the total number of Units of Product ordered by VaxGen
     during the preceding  calendar year (the "Total Annual Orders" for the year
     in  question).  Such total shall not be reduced by the  amount,  if any, of
     defective  Product supplied by Celltrion or other Product ordered by VaxGen
     but not delivered for any reason other than fault on the part of VaxGen. If
     Celltrion  does not object to the Total Annual Orders  calculated by VaxGen
     within 15 days after  receipt  thereof  from  VaxGen,  such number shall be
     conclusively  deemed  to be  correct.  If  Celltrion  does so  object,  the
     objection shall be subject to dispute  resolution as provided  hereinbelow;
     provided,  however,  that the figure provided by VaxGen shall be binding on
     the Parties  absent mutual  agreement or a contrary  finding as a result of
     resort to the dispute resolution  procedures  provided  hereinbelow.  Until
     such time as the exact Total Annual Orders is resolved by arbitration,  the
     figure provided by VaxGen shall be considered as the tentative Total Annual
     Orders for calculation of payment by VaxGen to Celltrion.

     If the Total Annual Orders for any calendar year total less than 87 million
     Units of Product  (pro rated for partial  calendar  years),  then within 15
     days after  notification of Celltrion  pursuant to this Section 7.3, VaxGen
     shall pay to Celltrion an amount calculated according to the formula:

                              X = ((A-B) x (Q)) + Z

     wherein X is the amount due to Celltrion denominated in Korean Won, A is 87
     million  Units of Product,  B is

(1) [*] denotes confidential treatment requested. A complete version of this
exhibit has been filed separately with the Securities and Exchange Commission.

<PAGE>

     the Total Annual Orders for the calendar year at issue denominated in Units
     of Product,  Q is the Average Gross Profit for Product during the preceding
     calendar year and Z represents  the total  unreimbursed  fixed costs of the
     Facility directly  attributable to the amount of Product  calculated by the
     formula  (A-B)x(Q).  If no production  of Product  occurred at the Facility
     during the preceding calendar year, then Q shall be deemed to be 30 percent
     of the Purchase Price of the most recent batch of Product supplied from the
     Facility as provided hereinabove.

ARTICLE 8 IMPROVEMENTS

8.1  Product  Improvements.  All improvements or modifications made by Celltrion
     to the Product or to the process used by Celltrion for the  manufacture  of
     the  Product in  accordance  with the  Product  Specifications  (including,
     without  limitation,  all intellectual  property reflecting or claiming any
     such  improvements  or  modifications)   shall  be  promptly  disclosed  by
     Celltrion to VaxGen.  All such  improvements and  modifications and related
     intellectual property shall be sole property of Celltrion,  subject only to
     the  royalty-free  right of VaxGen to practice  such  improvements  for the
     manufacture of the Product as contemplated herein.

8.2  Incentive  Sharing.  Any savings in the Fully Burdened  Manufacturing  Cost
     achieved as a result of process  improvements or modifications  made solely
     by Celltrion  shall be shared by Celltrion and VaxGen at the rate of 80:20,
     respectively,  during the first full year after the improvement is realized
     and 50:50 thereafter.

ARTICLE 9 CHANGES TO THE PRODUCT

9.1  Required by Celltrion for Regulatory Purposes.  VaxGen will promptly notify
     Celltrion  of any  modifications  to the Product  Specifications  or to the
     Product  required  for  regulatory  compliance,  including  any  changes to
     regulations  that could affect the  production of the Product by Celltrion.
     Such  notice  shall  be  accompanied  with  a  brief   description  of  the
     corresponding regulation.  Celltrion shall use its best efforts, subject to
     the terms and conditions of this Section 9.1 to timely and efficiently make
     such modifications as may be required by such changes, in consultation with
     VaxGen and upon receipt of VaxGen's written approval.

9.2  Modification for Non-Regulatory Purposes. Any discretionary modification to
     the Product Specifications,  products, facilities,  equipment or process at
     the Facility  requested  by VaxGen or Celltrion  shall be discussed in good
     faith between the Parties.  The Parties  shall  negotiate in good faith the
     consequences  and  implementation  of  any  such  modifications  including,
     without limitation, the regulatory strategies, financial conditions and the
     time schedule for the work to be performed.

ARTICLE 10 COORDINATION

Each Party  shall  appoint an employee  in charge of  day-to-day  communications
between the parties  regarding the subject matter of the Agreement (the "Liaison
Person").  Either Party may change its Liaison  Person at any time and from time
to time on notice to the other Party.  Each Liaison  Person will be  responsible
for,  among other things,  receiving and  submitting  forecasts and  adjustments
thereto and receiving and submitting  requests for information or assistance and
addressing complaints relating to the quality of the Product; provided, however,
that neither  Liaison  Person is  authorized to amend or modify the Agreement in
any manner or to waive any rights contained herein.

ART1CLE 11 QUALITY DISPUTES

11.1 Product Quality Disputes.  If VaxGen rejects any Product and if the Parties
     have not agreed  mutually on a remedy as per Section 5.3 of the  Agreement,
     the Parties,  through a Coordinating  Committee to be formed by the Parties
     (the  "Coordinating  Committee")  shall timely  consult with each other and
     attempt to resolve the discrepancies in good faith.

     If the Parties cannot resolve the  discrepancies in a timely manner through
     the Coordinating  Committee after notification  thereof to Celltrion,  they
     shall  promptly  nominate an  independent  expert or  laboratory,  mutually
     agreed upon by the  Parties,  which shall carry out an  investigation  with
     respect  to such  Product  as may be  jointly  agreed  upon by  VaxGen  and
     Celltrion and at the Parties' joint expense.  The results  obtained by said
     laboratory  or expert  shall be binding on the Parties for  purposes of the
     Agreement.

<PAGE>

     If the  results  conclude  that the  Product  conformed  to the  Acceptance
     Criteria, VaxGen will reimburse Celltrion for its share of the amounts paid
     to the expert  laboratory for such  investigation.  If the results conclude
     that the Product  does not conform to the  Acceptance  Criteria,  Celltrion
     shall  reimburse  VaxGen  for its share of  amounts  paid to the  expert or
     laboratory.

     Until such time as the expert or laboratory  determines whether the Product
     conforms  to the  Acceptance  Criteria,  VaxGen  may  withhold  payment  to
     Celltrion of any amounts due in respect of the subject  Supply  Orders.  In
     the  event  that  the  subject  Product  is  determined  to be  conforming,
     Celltrion  shall be entitled to prompt  payment of all  amounts  due,  plus
     interest thereon accrued at a rate of LIBOR plus two percent.

11.2 Remedy for Non-Conforming  Product. If VaxGen rejects any Product and if it
     is determined by the expert or  laboratory  identified  pursuant to Section
     11.1,  above,  that  such  Product  did not or  would  not  conform  to the
     Acceptance Criteria,  Celltrion shall, at VaxGen's option, reimburse VaxGen
     the amount paid by VaxGen for the rejected  Product plus  interest  thereon
     accrued at a rate of LIBOR plus two percent or produced replacement Product
     on a mutually agreed schedule.

ARTICLE 12 DECLARATION

12.1 Regulatory Assistance.  The Parties shall use their respective commercially
     reasonable efforts to address and resolve regulatory issues relating to the
     Product and to the manufacturing  processes,  facilities and equipment used
     at  the  Facility  with  respect  to  the  Product.  Without  limiting  the
     foregoing,  Celltrion shall provide VaxGen,  upon reasonable notice, and at
     no cost,  all necessary and available data relating to the Product in order
     to obtain  regulatory  approvals  to  develop  and  commercialize  Vaccine.
     Celltrion  agrees  that:  (a) it may be  required  to  pass a  pre-approval
     inspection by one or more Regulatory  Authorities prior to VaxGen obtaining
     Marketing License for the Product by such authorities, (b) it has reviewed,
     understands  and shall comply with all  applicable  laws,  regulations  and
     other   requirements  of  the  Regulatory   Authorities  in  manufacturing,
     processing  and packaging  Product,  and (c) it shall  provide  VaxGen with
     copies of all notices it receives from  Regulatory  Authorities  that could
     affect the Vaccine or Celltrion's ability to manufacture the Product in the
     Facility.  Celltrion  shall provide any  manufacturing,  quality control or
     quality  assurance  data and other  information  relating to obtaining  all
     approvals from all Regulatory  Authorities to commercially  market and sell
     Vaccine  (including  without  limitation,  any other  information as may be
     useful or  required  in VaxGen's  reasonable  opinion or upon  request of a
     Regulatory Authority) for regulatory approval of Vaccine to the public.

12.2 Regulatory Files. Genentech or VaxGen or its licensee will be the holder of
     the AIDSVAX product License in the United States and other  countries.  The
     submission and amendment of the License Application(s) in each jurisdiction
     is the sole  responsibility  of the holder.  Celltrion shall be responsible
     for  providing  to  VaxGen  all  relevant   documentation  and  information
     pertaining  to the Product  produced at the Facility  and to the  Facility,
     processes  and equipment  used,  so as to enable  VaxGen to submit  License
     Applications  or  amendments  thereto.  In  addition,  Celltrion  shall  be
     responsible  for  providing  ongoing  support by providing  any  additional
     information and documentation  related to the Product or Facility requested
     by the FDA or other regulatory authorities, all at VaxGen's expense.

12.3 Survival.   The  provisions  set  forth  in  this  article  shall  survival
     termination of the Agreement for a period of five years.

ARTICLE 13 INSPECTION

From time to time,  upon at least  seven days'  prior  notice and during  normal
business  hours,  VaxGen  may  inspect  the  Celltrion  Facilities  used  in the
manufacture and storage of the Product supplied  hereunder;  provided,  however,
that such inspection or access shall not unreasonably interfere with Celltrion's
operations.  In the  event  of an  inspection  by a  Regulatory  Authority  of a
jurisdiction  in which  VaxGen  or its  licensee  has  filed a  Product  License
Application,  up  to  two  VaxGen  representatives  shall  be  allowed  to be in
attendance at all aspects of such inspection. In the event of an inspection by a
Regulatory  Authority,  the Regulatory  Authority's  representative(s)  shall be
permitted to enter the Facility  under the same  conditions as described  above.
However,  the notice period in such case shall be reduced to such time as may be
requested by Regulatory Authorities.

<PAGE>

Celltrion   undertakes  to  adopt  and  enforce   safety   procedures   for  the
manufacturing  of the Product by  Celltrion  and  handling and disposal of waste
relating  to the  Product  that  comply  with  environmental.  safety and health
requirements.  Such responsibilities  shall include the proper disposal of waste
in an  appropriate  manner  consistent  with the  nature  of the  waste and at a
permitted waste disposal facility.

ARTICLE 14 WARRANTIES AND INDEMNITIES

14.1 Celltrion  Warranties.  Celltrion  warrants  that all Product  delivered to
     VaxGen shall have been  manufactured in compliance with Good  Manufacturing
     Practices,  in a  cGMP-compliant  facility and in compliance any applicable
     regulations  relating to the  manufacturing  and supply of the Product as a
     bulk drug substance for producing Vaccine according to applicable rules and
     regulations  and  regulatory  guideline for each stage of  production.  All
     Product  supplied  to  VaxGen  hereunder  shall  have  been   manufactured,
     packaged,  labeled,  stored and  shipped  in  compliance  with the  Product
     Specifications and Shipping Specifications.

14.2 Indemnification  by Celltrion.  Celltrion shall indemnify,  defend and hold
     harmless  VaxGen and its  Affiliates,  as well as the officers,  directors,
     employees,   agents  and  representatives  of  VaxGen  and  its  respective
     Affiliates,  from  and  against  any and all  losses,  damages,  costs  and
     expenses,  including  reasonable  attorneys' fees (collectively,  "Losses")
     arising out of or in connection with the manufacture of Product  hereunder,
     except to the  extent of Losses  caused by the  negligence  or  intentional
     misconduct of VaxGen.

14.3 Indemnification by VaxGen. VaxGen shall indemnify, defend and hold harmless
     Celltrion  and  its  Affiliates,  as  well  as  the  officers,   directors,
     employees,  agents and  representatives  of  Celltrion  and its  respective
     Affiliates,  from  and  against  any and all  losses,  damages,  costs  and
     expenses,  including  reasonable  attorneys' fees (collectively,  "Losses")
     arising out of or in  connection  with the  Agreement or the use or sale of
     Product hereunder,  except to the extent of Losses caused by the negligence
     or intentional misconduct of Celltrion.

14.4 Indemnification  Procedures. In the event of any claim being made against a
     Party  for  which  the  other  Party  has  agreed  to  indemnify  under the
     Agreement, the indemnified Party shall be promptly notified thereof and may
     at its own expense conduct all  negotiations for the settlement of the same
     and any  litigation  that may arise  therefrom.  If the right to assume and
     control  the defense is  exercised,  the  indemnified  Party shall have the
     right to participate  in, but not control,  such defense at its own expense
     and the indemnifying  Party's indemnity  obligations shall be deemed not to
     include attorneys' fees and litigation expenses incurred by the indemnified
     Party after the assumption of the defense by the indemnifying Party. If the
     indemnifying   Party  does  not  assume  the  defense  of  the  Claim,  the
     indemnified  Party may defend the Claim;  provided,  that, the  indemnified
     Party  will not  settle or  compromise  the Claim  without  consent  of the
     indemnifying  Party, which consent will not be unreasonably  withheld.  The
     Parties  shall  cooperate  with respect to any claim  subject to a claim of
     indemnification  and the  indemnified  Party  will  make  available  to the
     indemnifying  Party all  pertinent  information  under the  control  of the
     former for use in the defense against any such claim.

14.5 Consequential Damages and Lost Profits Excluded.  Notwithstanding  anything
     to the  contrary  contained  herein,  neither  Party  shall be  required to
     indemnity  the  other  Party for lost  profits  or  consequential  damages.
     Celltrion   and  VaxGen   each  hereby   expressly   waive  any  claim  for
     consequential damages or lost profits.

14.6 Disclaimer of Warranties.  Except as expressly provided herein,  each Party
     disclaims any  warranties,  express or implied,  with respect to AIDSVAX or
     Product  including,  without  limitation,  any  warranty  that  AIDSVAX  is
     approvable   or  will  be  approved  by  Regulatory   Authorities   in  any
     jurisdiction.

ARTICLE 15 SUPERIORITY

No provision on VaxGen purchase order form or on Celltrion general conditions of
sale or invoice which may purport to impose different  conditions upon VaxGen or
Celltrion shall modify or otherwise alter the terms of the Agreement.

ARTICLE 16 CONFIDENTIALITY

16.1 Confidentiality.  In the course of performance of the Agreement,  one Party
     may disclose to the other Party or receive from the other Party information
     which is confidential  information of the disclosing  Party. In order to be
     considered   confidential   information  of  the  disclosing   Party,  such
     information  must be in  writing  and  designated  as  confidential,  or if
     disclosed  orally  must be  confirmed  in  writing  to the  other  Party as

<PAGE>

     confidential  within  30 days  after  such oral  disclosure  ("Confidential
     Information"). In addition, for the purposes of the Agreement, Confidential
     Information  shall not include  information that (in each case as evidenced
     by written records or other competent evidence):

     (a)  was known to the receiving  Party at the time of disclosure  hereunder
          by the disclosing Party;

     (b)  was  generally  available to the public or was  otherwise  part of the
          public domain at the time of disclosure hereunder, or became generally
          available to the public or otherwise  part of the public  domain after
          disclosure  hereunder  other than  through  any act or omission of the
          receiving Party in breach of the Agreement;

     (c)  became known to the  receiving  Party after  disclosure  from a source
          that had a lawful right to disclose such information to others; or

     (d)  was independently  developed by the receiving Party without the use of
          any Confidential Information of the disclosing Party.

     Each Party shall protect and keep  confidential  and shall not use, publish
     or  otherwise  disclose to any third party the other  Party's  Confidential
     Information  for a  period  of five  years  from  the  date  of  disclosure
     hereunder, except as otherwise permitted by the Agreement or with the other
     Party's prior consent.

16.2 Disclosures.   Notwithstanding   Section  16.1,  each  Party  may  disclose
     Confidential  Information of the other Party during any official proceeding
     before a court or governmental  agency,  as a part of a patent  application
     filed on  inventions  made under the  Agreement,  or as  necessary in order
     lawfully to manufacture Licensed Products as contemplated herein,  provided
     that  the  Party  whose  Confidential   Information  is  included  in  such
     application  shall have the opportunity to review such proposed  disclosure
     at least 30 days  prior to the date of such  filing  and does not object in
     writing to such proposed disclosure.

ARTICLE 17 TERM AND TERMINATION

17.1 Term. The Agreement  shall take effect as of the Effective Date and, unless
     sooner  terminated  as  provided  herein,  shall  terminate  as provided in
     Section 4.3, above.

<PAGE>

17.2 Termination.

     (a)  Either party hereto may terminate  the Agreement by written  notice to
          the other party upon a material  breach of the Agreement by such other
          Party;   provided  that  such  other  Party  has  failed  to  cure  or
          demonstrate the  nonexistence of such breach within 60 days of receipt
          of a written notice and demand to cure such breach.

     (b)  VaxGen,  in its sole  discretion,  may terminate the Agreement upon no
          less than 30 days'  prior  written  notice in the  event  that  VaxGen
          decides  to  indefinitely  discontinue  the  Commercialization  of the
          Vaccine;  provided that VaxGen shall remain  obligated to make payment
          for all supplies for which it has previously  submitted a Supply Order
          at  the  time  of  termination   and  which  are  in  the  process  of
          manufacturing furnished in accordance with the Agreement.

17.3 Effect of Expiration or Early Termination.

     (a)  In General.  Upon expiration or early termination of the Agreement for
          any  reason:  (i) neither  Party  shall be relieved of any  obligation
          which accrued prior to the effective date of such  expiration or early
          termination,  including,  without  limitation,  VaxGen's obligation to
          make payments as described herein; (ii) each Party shall return to the
          other Party any and all confidential  information originally disclosed
          by the other Party,  provided that the  receiving  Party may retain an
          archival  copy  of  such   confidential   information   in  its  legal
          department,  and (iii) in the case of early  termination,  each  Party
          shall retain any and all rights or remedies such Party may have in law
          or in equity,  provided that neither Party may claim  compensation for
          lost opportunity or  consequential  damages arising out of the fact of
          such early termination

     (b)  Survival. Without in any way limiting the generality of the foregoing,
          the  following  provisions  shall  survive  the  expiration  or  early
          termination of the Agreement:  Sections 5.3, 5.5, 7.2, 11.1, 11.2, 13,
          14.2, 14.3, 14.4, 14.5, 16.1, 16.2, 18.3 and 18.4.

ARTICLE 18 MISCELLANEOUS

18.1 Provisions  Contrary to Law. Nothing in the Agreement shall be construed so
     as to require the violation of any  applicable  law, and wherever  there is
     any conflict  between any provision of the Agreement and any applicable law
     the law shall  prevail,  but in such event the  affected  provision  of the
     Agreement shall be affected only to the extent necessary to bring it within
     the applicable  law. In the event the terms of the Agreement are materially
     altered as a result of the foregoing  provisions of this Section 18.1,  the
     Parties  shall  renegotiate  in good  faith the terms of the  Agreement  to
     resolve any inequities.

18.2 Force Majeure.  Neither party to the Agreement shall be liable for delay or
     failure in the  performance  of any of its  obligations  hereunder  if such
     delay or failure is due to causes beyond its reasonable control, including,
     without limitation, acts of gods, acts of war, civil unrest or intervention
     of any governmental  authority,  or inability to obtain raw materials,  but
     any such delay or  failure  shall be  remedied  by such Party as soon as is
     reasonably  possible.  The Party to which an event of Force Majeure  occurs
     shall  inform  the other  Party  promptly  thereof  and shall give its best
     estimate as to the expected  time period  during  which such Force  Majeure
     will prevail and to resume  performance  hereunder with all possible speed.
     To the extent  that an event of Force  Majeure  continues  for a period in.
     excess of six months,  the Parties  agree to negotiate in good faith either
     (i) to resolve the event of Force Majeure, if possible,  (ii) to extend the
     time  period to  resolve,  eliminate  or  overcome  such  event or (iii) to
     terminate the Agreement.

18.3 Notices.  Any notice  required or  permitted  to be given by the  Agreement
     shall be in writing and shah be delivered  by hand or overnight  courier or
     mailed  postage  prepaid  by first  class,  registered  or  certified  mall
     addressed as set forth below unless changed by notice so given:

         if to VaxGen:              VaxGen, Inc.
                                    1000 Marina Boulevard
                                    Brisbane, CA 94005-1841
                                    Attn: Dr. Lance K. Gordon, CEO

         if to Celltrion:           Celltrion, Inc..
                                    Hanmi Bank Building, 13th Floor
                                    1127, Guwol-Dong, Namdong-Gu
                                    Incheon City, 405-220, Korea
                                    Attn: Mr. James P. Panek

<PAGE>


     Any such notice shall be deemed delivered on the date received.

18.4 Governing Law and Dispute Resolution.  The Agreement is construed and shall
     be governed by, interpreted and enforced in accordance with the laws of the
     State of California,  without regard to conflicts of laws  principles.  Any
     dispute  arising  out of or in  connection  with  the  Agreement  shall  be
     resolved by the parties in the following manner:

     (a)  Either Party may initiate  resolution of such controversy by providing
          to the other parties a brief and concise  statement of the  initiating
          Party's  claims,  together with relevant  facts  supporting  them, and
          referring to this Section 18.4,  for a period of 30 days from the date
          of such  statement,  or such longer period as the parties may agree in
          writing,  the  Parties  shall  make good  faith  efforts to settle the
          dispute.  Such  efforts  shall  include,   without  limitation,   full
          presentation  of  the  Parties'   respective   positions   before  the
          respective  Presidents  (or equivalent  position) of their  respective
          companies.  Any Party may in its sole discretion  elect to be assisted
          by counsel in such presentation.

     (b)  In the  event  the  Parties  are  unable  to reach  accord  using  the
          procedures specified in paragraph (a) above, then any and all disputes
          shall  be  finally   settled  by   arbitration   under  the  Rules  of
          Conciliation and Arbitration of the International Chamber of Commerce,
          in English.  The  arbitration  shall be conducted in English by one or
          more  arbitrators   appointed  in  accordance  with  the  said  rules.
          Arbitration  proceedings  shall  be in San  Francisco,  California  if
          initiated by Celltrion and in Seoul, Korea if initiated by VaxGen. The
          arbitration shall be final and binding upon the parties.

18.5 Assignment.  Neither Party may assign its rights or  obligations  under the
     Agreement to any  unaffiliated  entity without the prior written consent of
     the  other  Party,  which  consent  shall  not  be  unreasonably  withheld;
     provided,  that either  Party may assign all or a portion of its rights and
     obligations  hereunder  to an  Affiliate  or in  connection  with merger or
     acquisition or the sale of all or substantially  all of the assets to which
     the Agreement relates.  Subject to the foregoing, the Agreement shall inure
     to the benefit of and be binding on the Parties'  permitted  successors and
     assigns.

18.6 Entire  Agreement;  Modification.  The  Agreement  constitutes  the  entire
     agreement  between  the Parties as to the subject  matter  hereof,  and all
     prior  negotiations,  representations,  agreements and  understandings  are
     merged into,  extinguished by and completely expressed by the Agreement. No
     patent or other licenses, express or implied, are granted. Any modification
     to the Agreement  must be in writing signed by both Parties and approved by
     the board of directors of Celltrion.

18.7 Counterparts. The Agreement may be executed in counterparts.

18.8 No Joint  Venture  or  Partnership.  The  parties  hereto  are  independent
     contractors and not joint venturers or partners with respect to the subject
     matter  herein.  Neither Party shall have the right to bind the other Party
     to any obligation.

IN WITNESS WHEREOF,  the Parties have duly executed the Agreement as of the date
set forth above.

VAXGEN, INC.                         CELLTRION, INC.


By:______________________________    By:_________________________________
Name: Dr. Lance K. Gordon            Name: Mr. Jung-Jin Seo
Title: Chief Executive Officer       Title: Co-Representative Director
                                     CELLTRION, INC.


                                     By: ________________________________
                                     Name: Mr. James P. Panek
                                     Title: Co-Representative Director

<PAGE>

                                    Exhibit A

Technical Description of AIDSVAX(TM) "Product"

Recombinant  gp120 (rgp120) is the recombinant form of an envelope  glycoprotein
of human  immunodeficiency  virus 1  (HIV-1).  The  rgp120  glycoprotein  has an
apparent molecular mass of approximately  120,000 daltons.  Approximately 50% of
the molecular mass is accounted for by extensive  glycosylation  of the protein.
The  rgp120  glycoproteins  used in the  production  of  AIDSVAX(TM)  are highly
purified mixtures produced by recombinant DNA technology using a Chinese Hamster
Ovary (CHO) cell line. The CHO cell-secreted rgp120 sequences are recovered from
the harvested cell culture fluid and purified according to standard  techniques,
including immunoaffinity chromatography.

The CHO cells express the sequences of MN rgp120, GNE8 rgp120 or A244 rgp120. MN
rgp120 is a 502 amino acid derivative of the envelope  glycoprotein  gp120 found
in the MN  (Subtype  B)  isolate  of HIV-1.  GNE8  rgp120  is a 485  amino  acid
derivative  of the gp120 found in the GNE8  (Subtype  B) isolate of HIV-1.  A244
rgp120 is a 503 amino acid derivative of the gp120 found in the A244 (Subtype E)
isolate of HIV-1.  The molecules  bind to CD4 with high affinity and are heavily
glycosylated.  Analysis of the sequence data  demonstrated  the predicted  amino
acid  sequence of GNE8 differed by 15% from MN and A244 differed by 30% from MN.
Each  lot of  product  must  comply  with  FDA  and  VaxGen  specifications  for
sterility, identity, purity, potency and safety.

Source: OneCLE Business Contracts.