UPDATE 1-Oxigene to buy VaxGen for about $22 mln in stock

* To issue 15.6 mln shrs in exchange for all VaxGen shrs

* Sees to close the deal in Q1, 2010

* Oxigene shares up almost 9 pct

Oct 15 (Reuters) - Biopharmaceutical company Oxigene Inc (OXGN.O) said it agreed to buy VaxGen Inc (VXGN.OB) in an all-stock deal valued at about $22.2 million.

Oxigene said it will issue about 15.6 million common shares in exchange for all outstanding VaxGen common shares. The deal calls for a swap of 0.4719 Oxigene shares for every VaxGen share.

Shares of Oxigene were up at $1.54 in pre-market trade. They closed at $1.42 Wednesday on Nasdaq.

As of July 31, VaxGen had about 33.1 million shares outstanding, according to Reuters data.

Oxigene expects the acquisition to add about $33 million in cash to its balance sheet.

Oxigene said it would also place about 8.5 million common shares in escrow to be released to VaxGen shareholders contingent upon the occurrence of certain events over the two-year period following the closing.

Upon closing of the deal, VaxGen will become a wholly-owned unit of Oxigene, and VaxGen stockholders will become stockholders of Oxigene, Oxigene said.

The deal is expected to be completed in the first quarter of 2010, the company added.

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