surf1944
16 years ago
Avigen Could Yield Considerably More than Its Net Cash Value
Avigen Inc (AVGN) has been granted a United States Patent for the treatment of neuropathic pain with its AV411 (ibudilast) compound.
We started following AVGN in December last year (see archived posts here) because it was a net cash stock (i.e. it was trading at less than the value of its cash after deducting all liabilities), albeit a cash burning net cash stock, and specialist biotechnology investor Biotechnology Value Fund (BVF) was pushing it to liquidate and return its cash to shareholders. Despite BVF’s failure to remove the board, we continued to maintain our position in AVGN because BVF won a number of important concessions from the board that made AVGN a much more attractive stock than it was when we started following it.
The stock price reflects this: AVGN is up 94% from $0.65 when we initiated the position to close yesterday at $1.26. We’ve reduced our estimate of the net cash slightly to $34M or $1.14 per share. We believe that the there is a good chance that AVGN will yield considerably more than its net cash value. The net cash estimate does not take into account AVGN’s AV411 assets and program or near term payments from Genzyme (GENZ), which could be worth as much as $6M to $25M or between $0.18 or $0.75 per share more.
The announcement from the company is as follows:
Avigen Granted AV411 Patent for Neuropathic Pain
ALAMEDA, Calif., May 20, 2009 (GLOBE NEWSWIRE) — Avigen, Inc. (Nasdaq:AVGN) a biopharmaceutical company, announced today that it has been granted United States Patent No. 7,534,806, entitled “Method for Treating Neuropathic Pain and Associated Syndromes.” The patent covers the treatment of neuropathic pain with therapeutic doses of AV411 (ibudilast), including syndromes like diabetic neuropathy, post-herpetic neuralgia, and fibromyalgia, and neuropathic pain associated with stroke or accompanying cancer chemotherapy. Avigen anticipates additional patents will be issued covering indications that include addiction, delirium, and psychotic disorders, as well as composition of matter claims on AV411 analogs. AV411 is marketed in Japan but not approved for any indication in the United States.
“This patent is a critical first step to securing broad exclusivity for AV411 and analogs in the key markets of neuropathic pain and addiction,” commented Andrew Sauter, Avigen’s Chief Executive Officer, President and Chief Financial Officer. “We are currently seeking to monetize our AV411 drug development portfolio and believe the issuance of this patent, along with our active U.S. IND and Phase 2-staged data package, enhances the value proposition to potential buyers.”
“This is a significant accomplishment that reflects Avigen’s strategic efforts to identify novel mechanisms to treat neurologic disorders and to protect the know-how and intellectual property of our scientific discoveries,” stated Kirk Johnson, Ph.D., Vice President of Research and Development at Avigen. “Our intellectual property portfolio is advancing in parallel with our AV411 development efforts for pain states and certain drug addiction conditions, thus creating a cohesive program.”
Avigen discovered the utility of AV411 through its internal program to develop innovative and targeted approaches to reducing nervous system dysfunction caused by glial cell activation. Avigen was issued the new patent after demonstrating that AV411 effectively and safely treated neuropathic pain in well-recognized, standard preclinical animal models. The claims broadly cover the treatment of neuropathic pain, and make specific reference to using AV411 to treat many forms of neuropathic pain including diabetic neuropathy, postherpetic neuralgia, trigeminal neuralgia, HIV, stroke, fibromyalgia, reflex sympathetic dystrophy, complex regional pain syndrome, spinal cord injury, sciatica, phantom limb pain, and cancer chemotherapeutic-induced neuropathic pain.
AVGN’s board is developing a plan of liquidation, which should put a floor on AVGN’s stock at around its net cash value of $34M or $1.14 per share less wind down costs. There exists a good chance that AVGN will yield considerably more than its net cash value. The net cash estimate does not take into account AVGN’s AV411 technology or near term payments from Genzyme, which could be worth as much as $6M to $25M or between $0.18 or $0.75 per share more. With the downside protected, and a good chance at a substantial $0.75 per share upside from here, we think AVGN still represents good value, and we’re going to maintain our position accordingly.
Full Disclosure: We have a holding in AVGN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing
http://seekingalpha.com/article/139163-avigen-could-yield-considerably-more-than-its-net-cash-value?source=yahoo
~BC~
16 years ago
Biotechnology Value Fund, L.P. To Make Tender Offer For Any And All Outstanding Shares Of Avigen At $1.00 Per Share
Date : 01/15/2009 @ 11:53AM
Source : PR Newswire
Stock : Avigen (MM) (AVGN)
Quote : 0.8715 0.0015 (0.17%) @ 11:30AM
Biotechnology Value Fund, L.P. To Make Tender Offer For Any And All Outstanding Shares Of Avigen At $1.00 Per Share Tender Offer provides stockholders with a near-term cash alternative if BVF nominees are elected
NEW YORK, Jan. 15 /PRNewswire/ -- Biotechnology Value Fund, L.P. ("BVF") announced today that it intends to make a cash tender offer to purchase any and all of the outstanding common stock of Avigen, Inc. (NASDAQ:AVGN) ("Avigen") that BVF does not own at a price of $1.00 per share under the conditions described below. The offer price represents a 35% premium over Avigen's closing stock price of $0.74 on January 8, 2009, the day prior to BVF's announcement that it was seeking to remove all incumbent Avigen directors and to elect its own slate of stockholder focused nominees. BVF Partners L.P., the general partner of BVF, beneficially owns an aggregate of 8,819,600 shares of Avigen, or approximately 29.63% of the outstanding shares.
On January 9, 2009, BVF announced that it had delivered a notice to Avigen to call a special meeting of stockholders (the "Special Meeting") to remove all incumbent directors and elect its own slate of stockholder-focused nominees
The tender offer will be conditioned on the following: (i) BVF's nominees being elected to the board of directors of Avigen (the "Board") at the Special Meeting (or otherwise appointed) and constituting a majority of directors on the Board, (ii) the Board redeeming rights issued under Avigen's poison pill, (iii) Avigen not committing to any strategic transactions or capital-depleting actions, pursuant to the process described by Avigen on January 14, 2009 (or otherwise), and (iv) other customary conditions such as the absence of a suspension in trading or any material adverse change at Avigen. BVF may increase the tender price if Avigen's unrestricted cash balance increases (for example, as the result of the sale of assets.) The tender offer is not conditioned on the availability of financing.
Mark Lampert, the general partner of BVF, stated, "The tender offer provides stockholders with a choice if BVF's nominees are elected to the Board: they can either tender their shares for near-term cash at a premium to the market price or they can retain their shares and participate with BVF in the future of Avigen, whether through a merger with MediciNova, as hoped, or otherwise. This tender is the outgrowth of Avigen's earlier rejection of our request that the Company provide downside protection for all shareholders. If elected to the Board, BVF's nominees intend to pursue the downside-protected transaction proposed by MediciNova, or, if not possible, to consider other alternatives including a complete return of capital."
Mr. Lampert continued, "Yesterday Avigen announced that it will spend stockholder money on not one, but two financial advisors. Why? We believe that Avigen could retain ten financial advisors and it won't change the fact that the risk-reward profile of the proposed merger with MediciNova is extraordinary. We are concerned that this is just another example of the Board wasting stockholders' assets; we question the Board's underlying motivation for these actions and whether they are simply trying to remain in office at stockholders' expense. In order to ensure no further deterioration of Avigen's value, we urge stockholders to vote to remove all incumbent directors and elect the BVF nominees."
BVF expects to file offering materials with the Securities and Exchange Commission and commence the tender offer within a reasonable time. Once the tender offer is commenced, offering materials will be mailed to Avigen stockholders and filed with the Securities and Exchange Commission. Avigen stockholders are urged to read the offering materials when they become available because they will contain important information.
Questions should be directed to the information agent, MacKenzie Partners, Inc., at (800) 322-2885.
THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL ANY SHARES. BVF HAS NOT YET COMMENCED THE OFFER REFERRED TO IN THIS PRESS RELEASE. THE SOLICITATION AND THE OFFER TO BUY AVIGEN'S COMMON STOCK WILL BE MADE PURSUANT TO AN OFFER TO PURCHASE AND RELATED MATERIALS THAT BVF WILL FILE WITH THE SECURITIES AND EXCHANGE COMMISSION UPON THE COMMENCEMENT OF THE OFFER. STOCKHOLDERS SHOULD READ THESE MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. STOCKHOLDERS WILL BE ABLE TO OBTAIN THE OFFER TO PURCHASE AND RELATED MATERIALS WITH RESPECT TO THE TENDER OFFER WHEN THEY BECOME AVAILABLE FOR FREE AT THE SEC'S WEBSITE AT WWW.SEC.GOV OR FROM BVF BY CONTACTING MACKENZIE PARTNERS, INC. TOLL-FREE AT (800) 322-2885 OR COLLECT AT (212) 929-5500 OR VIA EMAIL AT .
Any forward-looking statements contained in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, among others: whether the conditions to the offer will be satisfied; the receipt of third party consents to the extent required for the acquisition, general economic factors, business and capital market conditions, general industry trends, changes in tax law requirements and government regulation. There can be no assurances that any transaction will be consummated. Other important factors that could cause actual results to differ materially are included but are not limited to those listed in Avigen's periodic reports and registration statements filed with the Securities and Exchange Commission. BVF undertakes no obligation to update information contained in this release.
DATASOURCE: Biotechnology Value Fund, L.P.
CONTACT: Mark H. Harnett, MacKenzie Partners, Inc. for Biotechnology
Value Fund, L.P., +1-212-929-5877
monkeyfrog
16 years ago
Wow, things are heating up-- check the news!
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Press Release Source: Biotechnology Value Fund, L.P.
Biotechnology Value Fund, L.P. Calls Special Meeting of Avigen Stockholders To Remove Incumbent Directors and Elect Slate of Stockholder-Focused Nominees
Friday January 9, 1:21 pm ET
Calls Special Meeting to Enable Stockholders to Determine Fate of Company's Remaining Cash
Believes Transaction Proposed by MediciNova, Inc. Offers Avigen Stockholders Extraordinary Risk/Reward Opportunity
ADVERTISEMENT
SAN FRANCISCO, Jan. 9 /PRNewswire/ -- Biotechnology Value Fund, L.P. together with its affiliates ("BVF") today announced that it has requested that the Board of Directors of Avigen, Inc. ("Avigen") (Nasdaq: AVGN - News) call a Special Meeting of the stockholders for the purpose of replacing the Board with BVF's slate of stockholder focused nominees. BVF is the beneficial owner of approximately 29.6% of Avigen's outstanding common stock.
BVF proposes to remove the members of the Board and replace them with directors who will work to ensure Avigen's stockholders receive the maximum value for their investment in Avigen, while minimizing both downside risk and corporate waste. If elected, BVF's nominees intend to take steps that would benefit all stockholders, including redeeming Avigen's stockholder rights plan, working to consummate the proposed transaction with MediciNova, Inc. ("MediciNova") and/or working to complete a distribution of Avigen's assets to all stockholders.
BVF has nominated four highly qualified nominees, Mark N. Lampert, Oleg Nodelman, Matthew D. Perry and Robert M. Coppedge, as its slate of director nominees to be elected at the Special Meeting to replace Avigen's entire existing Board. Messrs. Lampert, Perry, and Nodelman are currently employed by the General Partner of BVF. Mr. Coppedge is an independent nominee, with no economic interest in BVF, Avigen, or MediciNova. Avigen's bylaws provide that the Board shall set the date of the Special Meeting, which shall be held not less than thirty-five (35) nor more than one hundred twenty (120) days after the date of receipt of BVF's request. The bylaws further provide that if the Board does not provide notice of the Special Meeting within sixty (60) days following receipt of the request, BVF may set the time and place of the meeting and give the notice.
"We are deeply concerned with recent corporate actions at Avigen that are indicative of a Board that seems far more interested in remaining in place to do whatever it pleases with corporate assets than in returning value and protecting downside risk for all stockholders," stated Mark N. Lampert, the General Partner of BVF. "Given that Avigen's stock trades at a fraction of its tangible assets, it appears the marketplace shares our concerns. Accordingly, by calling the Special Meeting, we are providing stockholders with the opportunity to elect new directors who are committed to ensuring that Avigen stockholders, not an entrenched and unsuccessful management team and Board, determine the fate of the substantial remaining value."
Mr. Lampert continued, "In addition to the Board's unilateral expansion of 'golden parachute' payments for management and its unilateral adoption of the 'poison pill,' we are also concerned with the Board's apparent dismissal of the compelling transaction proposed by MediciNova. Based on our analysis, we believe the transaction, as proposed, provides benefits to stockholders that the Board and management could not match on its own. In particular, we believe this deal would provide Avigen stockholders with:
Downside Protection: Based on our analysis, subsequent to the transaction, if MediciNova is unsuccessful Avigen stockholders will receive a modest discount to the current liquidation value of Avigen (which we estimate to be approximately $1.20/Share, net of debt and expenses), as determined by an independent auditor. This means that, even in the worst-case scenario, this transaction would yield an approximate 40% premium to Avigen's current stock price.
Tremendous Upside Potential: Based on our analysis, if MediciNova is successful post-transaction, Avigen stockholders could own a substantial percentage of MediciNova - approximately 45% of the combined company. Under the best-case scenario, this could lead to an extraordinary, uncapped return for Avigen stockholders.
Free Option: Additionally, stockholders would have at least one year following consummation of the transaction to choose whether they want the downside protection or upside potential, as described above. We believe this free option period offers stockholders tremendous upside potential with low risk.
New Stewardship of Avigen's Assets: If successfully completed, the transaction would also result in new stewardship of Avigen's assets, curtailing this Board's and management's stated plan of seeking ways to utilize and, we fear, waste Avigen's remaining assets. We believe stockholder focused management, with a substantial personal stake in the company, is key to protecting Avigen's assets, particularly in light of Chief Executive Officer Ken Chahine's recent statements regarding the future of Avigen, including that "it's hard to put a finger on exactly what we would do," that he "intends to build" over the next year and that he "thinks that there are opportunities outside of therapeutics."
Unique Synergies: We also strongly believe there are unique synergies between MediciNova and Avigen that likely would not exist with other potential acquirers of Avigen. These synergies, we believe, give rise to the compelling nature of the transaction."
Mr. Lampert added, "For these reasons, we believe Avigen should seriously pursue the transaction with MediciNova, a company in which we have no economic stake. We are extremely concerned that this Board and management, who collectively own less than 6% of Avigen, do not share our views. It is our hope that stockholders who share our concerns will be empowered to voice these concerns by removing the current Board and replacing them with directors who are serious about maximizing value and minimizing risk for all stockholders."
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Biotechnology Value Fund, L.P. ("BVF"), together with the other participants named herein, intends to make a preliminary filing with the Securities and Exchange Commission ("SEC") of a proxy statement and accompanying proxy card to be used to solicit proxies for the removal of the members of the Board of Directors of Avigen, Inc. ("Avigen"), without cause, and for the election of BVF's slate of director nominees to replace the removed directors at a special meeting of stockholders, to be called by Avigen at the request of BVF and Biotechnology Value Fund II, L.P. ("BVF2").
BVF STRONGLY ADVISES ALL STOCKHOLDERS OF AVIGEN TO READ THE PROXY STATEMENT WHEN IT IS AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. SUCH PROXY STATEMENT WILL BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE UPON REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are BVF, BVF2, BVF Investments, L.L.C. ("BVLLC"), Investment 10, L.L.C. ("ILL10"), BVF Partners L.P. ("Partners"), BVF Inc. ("BVF Inc."), Mark N. Lampert, Oleg Nodelman, Matthew D. Perry and Robert M. Coppedge.
As of the date of this filing, BVF beneficially owned 1,975,340 shares of Common Stock of Avigen, BVF2 beneficially owned 1,364,911 shares of Common Stock of Avigen, BVLLC beneficially owned 4,969,764 shares of Common Stock of Avigen and ILL10 beneficially owned 509,585 shares of Common Stock of Avigen.
As the general partner of BVF and BVF2, the manager of BVLLC and the investment adviser of ILL10, Partners may be deemed to beneficially own the 8,819,600 shares of Common Stock of Avigen beneficially owned in the aggregate by BVF, BVF2, BVLLC and ILL10. As the investment adviser and general partner of Partners, BVF Inc. may be deemed to beneficially own the 8,819,600 shares of Common Stock of Avigen beneficially owned by Partners. Mr. Lampert, as a director and officer of BVF Inc. may be deemed to beneficially own the 8,819,600 shares of Common Stock of Avigen beneficially owned by BFV Inc.
None of Messrs. Nodelman, Perry or Coppedge directly owns any shares of Common Stock of Avigen. As a members of a "group" for the purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, each of Messrs. Nodelman, Perry and Coppedge may be deemed to beneficially own the 8,819,600 shares of Common Stock of Avigen beneficially owned in the aggregate by the other participants named herein. Each of Messrs. Nodelman, Perry and Coppedge disclaims beneficial ownership of such shares of Common Stock.
leoncio1
16 years ago
Its a question of time, this stock rally`s above $1.. the reasen the menger situation..
29/12/08..
ITEM 4. Purpose of Transaction
Item 4 is hereby amended to add the following:
On December 22, 2008 MediciNova, Inc. (“MediciNova”) described details of a Proposed Merger between MediciNova and Avigen, Inc. ("Avigen") in a letter to Avigen's Chairman, Zola Horovitz. The Reporting Persons hereby express their full and enthusiastic support for this Proposed Merger and believe it is the best interest of all Avigen shareholders. The Reporting Persons presently have no economic interest in MediciNova. The Reporting Persons call on Avigen's Board of Directors to negotiate with MediciNova and work to consummate the Proposed Merger expeditiously.
The Reporting Persons support the Proposed Merger for the following reasons:
1. Downside Protection: The Proposed Merger provides for the same downside protection that the Reporting Persons encouraged Avigen to implement directly (which Avigen rejected). Subsequent to the Proposed Merger, if MediciNova is unsuccessful, Avigen shareholders will receive approximately the current liquidation value of Avigen (which the Reporting Persons estimate to be approximately $1.20/share, net of debt and expenses), as determined by an independent auditor. Incredibly, in a worst case scenario, the Proposed Merger would yield about a 60% premium to Avigen's current stock price.
2. Extraordinary Upside Potential: If MediciNova is successful post-merger, Avigen shareholders could own a substantial percentage of MediciNova (which the Reporting Persons estimate to be approximately 45% of the combined company). Thus, in a best case scenario, Avigen shareholders could enjoy an extraordinary, uncapped return. For this reason, the Proposed Merger is superior to an immediate liquidation of Avigen.
3. Free Option: Shareholders have at least one year after the merger is consummated to choose downside protection or upside potential, as described above. This decision can be based on information obtained over the course of the free option period, including the stock performance of MediciNova. This free option period offers shareholders tremendous upside potential with virtually no risk.
4. Change of Control: The Proposed Merger would result in new stewardship of Avigen's assets, curtailing current management's stated plan of seeking ways to utilize (and we fear waste) Avigen's cash in any way they wish. This is a particularly frightening prospect in light of CEO Ken Chahine's recent statements that "it’s hard to put a finger on exactly what we would do", that he "intends to build" and that he "thinks that there are opportunities outside of therapeutics."
5. Unique Synergies: The Reporting Persons believe there are unique synergies between MediciNova and Avigen which likely would not exist with other potential acquirers of Avigen. These synergies give rise to the compelling nature of the Proposed Merger.
BVF wishes to see the Proposed Merger brought to a shareholder vote as soon as practical and urges other Avigen shareholders to support this offer.
leoncio1
16 years ago
8K filling out.. 3.36 PM
Item 1.01. Entry into a Material Definitive Agreement.
The disclosure under Item 2.01 hereof is incorporated by reference here.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On December 17, 2008, Avigen, Inc. entered into an Asset Purchase Agreement with Baxter Healthcare Corporation, Baxter International Inc., and Baxter Healthcare S.A.
(collectively “Baxter”), providing for the sale of the rights to Avigen’s early stage blood coagulation compound, AV513, to Baxter. Pursuant to the Asset Purchase Agreement, Avigen sold the rights to AV513 to Baxter for $7 million. In addition, pursuant to the Asset Purchase Agreement, Avigen agreed not to compete with Baxter with certain compounds to treat certain disorders, both relating to AV513, and to indemnify Baxter for losses incurred by Baxter for breaches of representations, warranties covenants and certain other losses relating to the transaction.
AV513 is a compound poised for clinical research that has been shown to improve blood coagulation in preclinical models for hemophilia. Avigen has been developing AV513 as an oral therapy to treat patients with bleeding disorders, including hemophilia A.
Item 9.01. Financial Statements and Exhibits.
(b) Pro Forma Financial Information .
On December 17, 2008, Avigen, Inc. entered into an Asset Purchase Agreement with Baxter Healthcare Corporation, Baxter International Inc., and Baxter Healthcare S.A.
(collectively “Baxter”), providing for the sale of the rights to Avigen’s early stage blood coagulation compound, AV513, to Baxter.
Avigen received a cash payment of $7.0 million from Baxter as proceeds from the sale of AV513. At September 30, 2008, Avigen reported cash, cash-equivalents, and available for sale securities and restricted investments of $56.4 million and an accumulated deficit of $244.9 million. Avigen reported no revenue for the first nine-months of 2008 and a net loss of $24.2 million. The Company is in the process of evaluating the terms of the transaction, but believe that if the transaction had been completed at the beginning of the 2008 fiscal year, the cash received would have been recorded as revenue and would have increased the amount of financial assets and decreased each of the net loss and the accumulated deficit reported at September 30, 2008 by $7.0 million. Avigen is unable to estimate the amount of any expenses that would have been avoided, if any, if the sale of AV513 had been completed at the beginning of the 2008 fiscal year. Other than these items, the transaction would not have had any other impact on Avigen’s financial statements.
monkeyfrog
16 years ago
ALAMEDA, Calif., Dec. 22, 2008 (GLOBE NEWSWIRE) -- Avigen, Inc. (NasdaqGM:AVGN - News), a biopharmaceutical company, today announced that its Board of Directors and Management issued the following comments in a letter to shareholders regarding the company's strategic plans and posted it on its website.
ADVERTISEMENT
December 22, 2008
Dear Avigen Shareholders:
As Avigen stands at a crossroads, we are writing to provide you with an overview of the steps we took prior to the disappointing outcome of our recent clinical trial of AV650, our progress since then, and our strategies to create value for shareholders in 2009.
A Conservative Approach
Avigen will begin 2009 with top-line cash of more than $56 million. This is largely the result of our fiscally conservative actions prior to October -- and before we completed our AV650 Phase 2b trial. The data, as we now know, was disappointing, despite the early promise of AV650.
We have a strong cash position today, in part because our trial was well executed and completed in a timely and cost-effective manner. In addition to conserving our cash, the current management was careful to maintain a small infrastructure, avoid long-term liabilities and debt, and rejected the use of financing instruments that might have put Avigen's capital at risk or dilute its shareholders. We believe this responsible approach has positioned us to take orderly and careful steps to create value, despite the trial results.
Executing a Plan to Preserve Cash
Following the release of the AV650 data in October, Avigen's Management and Board took decisive steps to protect the company's assets.
We quickly articulated a plan to significantly reduce costs, monetize current assets, and assess our strategic options. As part of this strategic restructuring, we:
-- Immediately terminated all contracts with our partner Sanochemia
to avoid future financial obligations;
-- Immediately, and in compliance with applicable laws and
regulations, terminated all AV650 clinical trials;
-- Expanded our efforts to partner AV411 and deferred Phase 2
development in neuropathic pain;
-- Reduced headcount by 70% and shut down non-core lab and animal
facilities, retaining only the staff we believe we need to execute
our plan to deliver value to shareholders; and,
-- Monetized an early stage asset, AV513, adding $7 million to our
cash reserves.
While we are fortunate to maintain a strong balance sheet, we also recognize that our low stock price relative to our cash position made us potentially vulnerable to hostile offers that may not fairly value the company. As a precaution, Avigen instituted a shareholder rights plan intended to discourage abusive and coercive takeover tactics that could result in a rapid, forced sale of the company for an unfairly low price. This plan is designed to increase the likelihood that, in the event of a sale of the company, the Board would have the opportunity and time to negotiate on behalf of all shareholders to help ensure that the true value of the company's assets accrues to its shareholders.
Opportunities for Shareholders
We believe our strong balance sheet provides shareholders with an opportunity for an attractive return on their investment. We recognize that the distribution of cash is one option. Any decision, however, must responsibly weigh this choice against the value that Management's unique know-how and proven track record could garner from monetizing the remaining company assets, selling the company, or pursuing acquisition opportunities -- any one of which could result in returns that exceed the current liquidation value.
To that end, over the next year, Avigen's Board intends to focus on two key objectives -- monetizing the AV411 asset and assessing merger and acquisition opportunities.
-- Monetizing the AV411 Asset. AV411 and its analogs are novel,
first-in-class, non-opioid drugs for the treatment of several
large disease indications including pain and drug addiction.
AV411 is currently in a National Institute on Drug Abuse-funded
Phase 1b/2a trial, and the program is fully enabled under current
U.S. Food and Drug Administration standards to enter Phase 2
development in pain.
-- Assessing Potential M&A Opportunities. We believe current
economic conditions may create strategic opportunities for Avigen
shareholders to realize attractive returns. We have assessed the
recent transactions proposed by our peers and believe our
criteria fundamentally differ. If, at any point during the
review, it becomes evident to our Board of Directors that a
favorable M&A transaction meeting our strict standards is
unlikely, we intend to reconsider all other strategic options.
Our Pledge to Shareholders
Avigen's Board and Management intend to continue to be good stewards of shareholder assets. Since the announcement of our AV650 trial results on October 21, 2008, Avigen's Board of Directors and Management have acted swiftly and decisively to preserve cash. We believe the value of Avigen's remaining assets is significant and the potential for a strategic merger worthy of consideration. Whatever the outcome, we intend to apply the same financial judgment used in the past to decisions going forward. In the meantime, Avigen intends to provide its shareholders with regular updates and to continue to work with all its shareholders in a thoughtful, collaborative and respectful manner.
Respectfully,
Signed for the Board of Directors:
Zola Horovitz, Ph.D. as Chairman of the Board
Kenneth G. Chahine, Ph.D., J.D. as Chief Executive Officer
The Avigen, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2981
The statements in this letter regarding Avigen's cash at the end of 2008, Avigen's potential to create shareholder value, Avigen's staff is sufficient to execute on Avigen's plan to deliver shareholder value, the benefits that may result from a potential merger or acquisition transaction, Avigen's anticipated focus for the next year, the actions that Avigen intends to take if a favorable transaction is unlikely, and the other actions that Avigen intends to take over the next year, are forward looking statements that are subject to risks and uncertainties. Actual results may differ materially due to numerous risks, including: potential partners or other entities may not value AV411 as much as Avigen does; potential strategic transactions may not be available on terms favorable to Avigen; Avigen cannot guarantee that its remaining staff will remain with Avigen through 2009; and other risks and uncertainties relating to Avigen detailed in reports filed by Avigen with the Securities and Exchange Commission, including Avigen's Quarterly Report on Form 10-Q for the period ended September 30, 2008, under the caption ``Risks Related to Our Business'' in Item 2 of Part I of that report, which was filed with the SEC on November 10, 2008.
Contact:
Avigen, Inc.
Michael Coffee, Chief Business Officer
510-748-7376
ir@avigen.com
www.avigen.com
1301 Harbor Bay Parkway, Alameda, CA 94502
--------------------------------------------------------------------------------
monkeyfrog
16 years ago
Board of Directors of Avigen, Inc.
Thursday December 11, 7:00 am ET
Urges Board to Take Immediate Action to Protect and Maximize Shareholder Value
CHICAGO, Dec. 11 /PRNewswire/ -- Biotechnology Value Fund, L.P., the owner, together with its affiliates, of nearly 29% of the outstanding shares of common stock of Avigen, Inc. (Nasdaq: AVGN - News) announced today that it had delivered a letter to Avigen's Board of Directors expressing its displeasure with Avigen's recent performance and continued destruction of shareholder value.
ADVERTISEMENT
The text of the letter from Biotechnology Value Fund to the Board of Directors of Avigen follows:
December 11, 2008
Board of Directors
Avigen, Inc.
1301 Harbor Bay Parkway
Alameda, California 94502
Members of the Board:
As you know, Biotechnology Value Fund, L.P., together with its affiliates, is the largest shareholder of Avigen, Inc. ("Avigen" or the "Company"), holding an ownership stake of approximately 29% of Avigen's outstanding common stock. We first became investors in Avigen in 2004 and have provided capital directly to the Company. We are writing to express our frustration with recent developments at Avigen, particularly with what we perceive to be this Board's self-serving actions and disregard of shareholder interests.
Since January 1, 2004, Avigen's stock price has fallen more than 90% and the Company has accumulated a deficit of more than $110 million. Presently, Avigen's stock trades at less than 1/3 of its net per share cash value, indicative of the investment community's conviction that Avigen's Board will destroy its remaining value. We have repeatedly reached out to the Company and have offered to work collaboratively to maximize shareholder value. The Company responded to our offers by unilaterally increasing and broadening management's "golden parachute" severance agreements and by unilaterally adopting a "poison pill."
The Board's increase and broadening of its "golden parachute" severance agreements with management, under the ridiculous justification that such payouts are necessary to "attract and retain key employees," is particularly outrageous given Avigen's current circumstances. Our analysis indicates that these payouts, which we believe would be triggered by most "change in control" scenarios, including a liquidation, total at least $3 million, an incredible 20% of the Company's entire market value. The recipients of these golden parachute arrangements include Avigen's CEO, Ken Chahine, who resides in Park City, Utah, while the Company is based in California. How can the Company justify such actions as necessary to "attract and retain key employees" when Avigen has no real business at this time and has abandoned the development of all its products? These hastily adopted severance arrangements need to be revoked.
In addition, we believe the Board's implementation of the "poison pill" serves no purpose other than to keep BVF from purchasing additional stock in the Company. We are concerned that management and Board members are more concerned with retaining their jobs and compensation than with maximizing shareholder value. As evidence, Avigen's stock price has fallen more than 20% since the adoption of the poison pill. We find the poison pill to be disrespectful and offensive, given our substantial ownership position and our long history with the Company. Nevertheless, our response was to offer a compromise proposal: modify the poison pill to allow anyone to acquire as much stock as they like, however, neutralize the voting power on all shares of Avigen stock above a specified threshold. We specifically offered to have any additional shares that we acquire to abstain from voting or to vote in proportion to all other outstanding shares. This offer was not accepted. The pill should be redeemed altogether.
The Board's recent actions reveal its true self-interest and leave us concerned that Avigen will indeed destroy and/or take all remaining value. Consequently, our primary issue has been and remains that Avigen immediately guarantee the worst case outcome for all shareholders. This guarantee could be accomplished in several ways, including by dividending or otherwise distributing all excess cash to shareholders now, or by offering to buy back any and all shares from holders that wish to sell at a specific price at a specific future date (i.e., $1.25 per share in December, 2009). In both cases, shareholders could stand to reap potentially substantial upside derived from the monetization of Avigen's remaining assets and could finally stop worrying about whether the Company will destroy its substantial cash value. To the extent the Board believes it can generate value in excess of its cash in the bank today, offering downside protection ultimately costs the Company nothing. However, by rejecting our proposal to provide a downside guarantee, the Board has indicated its willingness to place its remaining cash at continued risk, without shareholder consent.
As the Company's largest shareholder, we are fighting to return value to all shareholders, not just ourselves, and we feel a responsibility to do so. To be clear, we do not seek to impose our own agenda on Avigen, we only ask that shareholders be empowered to decide the fate of the Company's residual cash, rather than the management and Board of a company which has repeatedly tried and failed to create any shareholder value whatsoever. Shareholders have good reason to worry that Avigen's management fully intends to put its remaining cash at risk. Yesterday, at the RBC Capital Markets Healthcare Conference, CEO Ken Chahine said, "We are going to be looking at building...How do we do that?...There are some opportunities as well that have emerged from the credit crisis. There are some commercialization, or near-commercialization, type companies that could use an infusion of cash...those are some of the things we are looking at. Now, will that be in the therapeutic space? It could be...We're opening it up because I think that there are opportunities outside of therapeutics...We will spend the balance of 2009 trying to look for opportunities." Mr. Chahine, shareholders do not need or want you to invest their money.
If recent empirical evidence with respect to numerous other failed biotech companies is any guide (e.g., Corgentech, Renovis, Novacea, Nitromed, Nuvelo and others), the future does not bode well for Avigen shareholders if left to its own devices. In one similar situation, the company could have returned in excess of $10/share in cash to shareholders had it been liquidated in 2005. Instead, after opting for a value-destroying merger, that company today trades at a mere 0.09 cents per share - a 99% decline! Avigen's golden parachutes have incentivized management to merge with any company that will take it. Management would walk away with its $3 million cash windfall; shareholders would get stuck with potentially worthless stock in a merged company. In the current fiscal environment, shareholders will no longer tolerate such self-interested behavior on the part of failed biotechnology companies.
We believe the Avigen Board is not only willing to sacrifice and squander shareholder money but, in the process, its members are making a mockery of their obligations to fulfill their fiduciary duties as directors of the Company. To that end, please be advised that we intend to hold each member of the Board and management fully accountable for any continued erosion of value from the current liquidation value of the Company.
Sincerely,
Mark Lampert
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Source: Biotechnology Value Fund, L.P.
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