Proposal dependent on BVF nominees replacing current Avigen board and supports eventual takeover by MediciNova.
Biotechnology Value Fund (BVF) intends to purchase Avigen for $1.00 per share, or roughly $20.5 million. On January 9 BVF, which already owns about 29.63% of Avigen’s outstanding shares, reported that it was seeking to remove all incumbent Avigen directors and to elect its own slate of nominees.
The tender offer will be conditioned on, among other things, the following: (i) BVF’s nominees being elected to the board of directors of Avigen and constituting a majority of directors on the board, (ii) the board redeeming rights issued under Avigen’s poison pill, and (iii) Avigen not committing to any strategic transactions or capital-depleting actions.
Avigen has been trading below $1 since October 2008, when it reported negative results from a mid-stage trial investigating its lead drug candidate, Tolperisone, in the treatment of spasticity in patients with multiple sclerosis.
In November it was forced to restructure the company, cutting 70% of its workforce. And by December, it decided to terminate all trials with Tolperisone and sold its early-stage hemophilia program to Baxter for $7 million.
Also in December, MediciNova proposed to acquire Avigen. Commenting on BVF’s tender offer, Mark Lampert, general partner of BVF, states, “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.”
“Yesterday Avigen announced that it will spend stockholder money on not one but two financial advisors,” Lampert continues. “Why? We believe that Avigen could retain 10 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.”
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