BIOTECHNOLOGY
VALUE FUND, L.P.
March 10,
2009
Fellow
Stockholders:
Biotechnology
Value Fund, L.P. (“BVF”) and the other participants in this solicitation
(collectively, the “BVF Group”) are significant stockholders of Avigen, Inc., a
Delaware corporation (“Avigen” or the “Company”). For the reasons set
forth in the attached Proxy Statement, the BVF Group does not believe that the
Board of Directors of the Company (the “Board”) is acting in the best interests
of its stockholders. The BVF Group is therefore seeking your support
at the special meeting of stockholders called by the Company at the request of
BVF, to be held at Avigen’s offices at 1301 Harbor Bay Parkway, Alameda,
California at 9:00 a.m. (local time) on Friday, March 27, 2009, for the purpose
of removing all of the existing directors serving on the Board at the time of
the special meeting, without cause, amending the Company’s Amended and Restated
Bylaws to permit stockholders to elect directors to the Board when the entire
Board is vacant and electing the BVF Group’s slate of director nominees to
replace the removed directors.
The BVF
Group urges you to carefully consider the information contained in the attached
Proxy Statement and then support its efforts by signing, dating and returning
the enclosed GOLD proxy
card today. The attached Proxy Statement and the enclosed GOLD proxy card are first
being furnished to the stockholders on or about March 10, 2009. If
you have already voted against the proposals described in the Proxy Statement,
you have every right to change your votes by signing, dating and returning a
later dated proxy.
If you
have any questions or require any assistance with your vote, please contact
MacKenzie Partners, Inc., which is assisting us, at their address and toll-free
numbers listed on the following page.
Thank you
for your support,
Mark N.
Lampert
Biotechnology
Value Fund, L.P.
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If
you have any questions, require assistance in voting your GOLD proxy
card,
or
need additional copies of the BVF Group’s proxy materials, please
call
MacKenzie
Partners at the phone numbers listed below.
 105
Madison Avenue
New
York, NY 10016
proxy@mackenziepartners.com
(212)
929-5500 (Call Collect)
or
TOLL-FREE
(800) 322-2885
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SPECIAL
MEETING OF STOCKHOLDERS
OF
AVIGEN,
INC.
_________________________
PROXY
STATEMENT
OF
BIOTECHNOLOGY
VALUE FUND, L.P.
_________________________
PLEASE
SIGN, DATE AND MAIL THE ENCLOSED GOLD PROXY CARD TODAY
Biotechnology
Value Fund, L.P. (“BVF”), Biotechnology Value Fund II, L.P. (“BVF2”), BVF
Investments, L.L.C. (“BVLLC”), Investment 10, L.L.C. (“ILL10”), BVF Partners
L.P. (“Partners”), BVF Inc. (“BVF Inc.”), BVF Acquisition LLC, (“BVFAcq”), Mark
N. Lampert, Matthew D. Perry, Oleg Nodelman and Robert M. Coppedge
(collectively, the “BVF Group”) are significant stockholders of Avigen, Inc., a
Delaware corporation (“Avigen” or the “Company”). Each member of the
BVF Group is a participant in this solicitation. The BVF Group does
not believe that the Board of Directors of the Company (the “Board”) is acting
in the best interests of its stockholders. The BVF Group is therefore
seeking your support at the special meeting of stockholders (the “Special
Meeting”), to be held at Avigen’s offices at 1301 Harbor Bay Parkway, Alameda,
California at 9:00 a.m. (local time) on Friday, March 27, 2009, for the
following:
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1.
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To
remove all of the existing directors serving on the Board without
cause,
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2.
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To
amend the Company’s Amended and Restated Bylaws (the “Bylaws”) to permit
stockholders to elect directors to the Board in cases when the entire
Board is vacant,
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3.
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To
elect the BVF Group’s slate of director nominees, Mark N. Lampert, Matthew
D. Perry, Oleg Nodelman and Robert M. Coppedge (the “Nominees”),
and
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4.
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To
repeal any provision of the Company’s Bylaws effected between January 8,
2009, the date prior to the date we submitted our request to the Company
to call the Special Meeting, and the time this proposal becomes effective
(the “Bylaw Restoration Proposal”).
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THIS
SPECIAL MEETING MAY BE THE ONLY OPPORTUNITY FOR STOCKHOLDERS TO DETERMINE THE
FATE OF AVIGEN’S REMAINING CASH – ACT NOW BEFORE IT IS TOO LATE.
ALL
OF THE ABOVE PROPOSALS ARE DESIGNED TO ENSURE THAT STOCKHOLDERS RECEIVE THE FULL
VALUE OF THEIR INVESTMENT IN THE COMPANY AS DESCRIBED BELOW. NEITHER
PROPOSAL NO. 1 NOR PROPOSAL NO. 4 IS SUBJECT TO, OR CONDITIONED UPON, THE
EFFECTIVENESS OF THE OTHER PROPOSALS. PROPOSAL NO. 3 IS SUBJECT TO
THE EFFECTIVENESS OF PROPOSAL NO. 1.
3
As of
March 10, 2009, the approximate date on which this Proxy Statement is being
mailed to stockholders, the BVF Group was the beneficial owner of an aggregate
of 8,819,600 shares of common stock of the Company, which currently represents
approximately 29.63% of the issued and outstanding common stock of the Company,
all of which are entitled to be voted at the Special Meeting. This
Proxy Statement and the GOLD proxy card are first
being furnished to Avigen’s stockholders on or about March 10,
2009.
Avigen
has set the record date for determining stockholders entitled to notice of and
to vote at the Special Meeting as March 6, 2009 (the “Record
Date”). The mailing address of the principal executive offices of
Avigen is 1301 Harbor Bay Parkway, Alameda, California
94502. Stockholders of record at the close of business on the Record
Date will be entitled to vote at the Special Meeting. According to
Avigen, as of the Record Date there were 29,769,115 shares of common stock,
$0.001 par value per share (the “Shares”), outstanding and entitled to vote at
the Special Meeting. The participants in this solicitation intend to
vote all of their Shares FOR the proposals described
herein.
THE BVF
GROUP URGES YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF
THE REMOVAL AND REPLACEMENT OF THE DIRECTORS SERVING ON THE BOARD AT THE TIME OF
THE SPECIAL MEETING, THE PROPOSAL TO AMEND THE BYLAWS TO PERMIT STOCKHOLDERS TO
FILL VACANCIES IN INSTANCES WHERE THE ENTIRE BOARD IS VACANT AND FOR THE BYLAW
RESTORATION PROPOSAL, AS DESCRIBED IN THIS PROXY STATEMENT.
IF YOU
HAVE ALREADY SENT A PROXY CARD FURNISHED BY AVIGEN MANAGEMENT TO THE COMPANY,
YOU MAY REVOKE THAT PROXY AND VOTE FOR THE REMOVAL AND
REPLACEMENT OF THE DIRECTORS SERVING ON THE BOARD AT THE TIME OF THE SPECIAL
MEETING AS DESCRIBED IN THIS PROXY STATEMENT BY SIGNING, DATING AND RETURNING
THE ENCLOSED GOLD PROXY
CARD. THE LATEST DATED PROXY IS THE ONLY ONE THAT
COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE SPECIAL
MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR
THE SPECIAL MEETING TO THE BVF GROUP, C/O MACKENZIE PARTNERS, INC., WHO IS
ASSISTING IN THIS SOLICITATION, OR TO THE SECRETARY OF AVIGEN, OR BY VOTING IN
PERSON AT THE SPECIAL MEETING.
4
IMPORTANT
Your
vote is important, no matter how few Shares you own. The BVF Group
urges you to sign, date, and return the enclosed GOLD proxy card today to vote
FOR the removal and replacement of the directors serving on the Board at the
time of the Special Meeting.
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●
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If
your Shares are registered in your own name, please sign and date the
enclosed GOLD
proxy card and return it to the BVF Group, c/o MacKenzie Partners,
Inc., in the enclosed envelope
today.
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●
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If
any of your Shares are held in the name of a brokerage firm, bank, bank
nominee or other institution on the Record Date, only it can vote such
Shares and only upon receipt of your specific
instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute on your
behalf the GOLD
proxy card. The BVF Group urges you to confirm your
instructions in writing to the person responsible for your account and to
provide a copy of such instructions to the BVF Group, c/o MacKenzie
Partners, Inc., who is assisting in this solicitation, at the address and
telephone numbers set forth below and on the back cover of this Proxy
Statement, so that we may be aware of all instructions and can attempt to
ensure that such instructions are
followed.
|
If you
have any questions regarding your proxy,
or need
assistance in voting your Shares, please call:
105
Madison Avenue
New York,
New York 10016
(212)
929-5500 (Call Collect)
proxy@mackenziepartners.com
or
CALL TOLL FREE (800)
322-2885
5
BACKGROUND
TO SOLICITATION
The
members of the BVF Group are currently the beneficial owners of an aggregate of
8,819,600 Shares, representing approximately 29.63% of the issued and
outstanding common stock. As significant stockholders of Avigen, we
have one goal: to maximize the value and minimize the risk on behalf
of all stockholders. A brief synopsis of Avigen corporate history as
well as our recent efforts to maximize stockholder value is summarized in the
following chronology of events leading up to this proxy
solicitation:
We first
became a shareholder of Avigen in 2005, the year Avigen sold, for $12 million,
its unsuccessful gene therapy business in which the Company had invested over
$150 million. The Company, led by its current CEO, Ken Chahine, spent nearly two
years running a “process” with the mandate to re-invent the Company by investing
in whatever the current management team deemed compelling. In January
2006, this management team chose to acquire its lead development candidate,
AV650, because, in their own words, “we believe it is a low risk.” In
fact the Company’s entire strategy, then and now, is supposedly “designed to
mitigate the risk of bringing innovative therapies to U.S.
patients.” $100 million later, on October 21, 2008, Avigen announced
the outright failure of its “low risk” bet on AV650, resulting in a collapse in
the Company’s stock price. This same management team and Board, which
has failed previously, now wishes to bet the substantial remaining stockholder
capital on whatever it deems appropriate.
We
recently acquired a significant number of Shares and became the largest
stockholder of Avigen. We increased our investment in October 2008
based upon our belief that Avigen’s shares were significantly
undervalued. In fact, Avigen reported $56 million, or $1.88 per
Share, of financial assets as of September 30, 2008, consisting of cash, cash
equivalents, available-for-sale securities and restricted investments, while
trading at a price well below $1.00 during the two months prior to filing this
proxy statement. We believe this depressed trading price,
substantially below Avigen’s cash liquidation value, is based upon the market’s
concern that management and the existing Board will pursue ill-advised or other
value destroying ventures, at stockholders’ expense, while compensating
themselves in the process.
Since
this time, we have reached out to the Board numerous times, each time raising
our concern that Avigen’s existing liquid assets not be wasted or otherwise
committed to value destroying ventures.
We have
specifically suggested that the Board “guaranty” the worst case outcome for all
stockholders. This guaranty could be accomplished in several ways,
including by dividending or distributing all excess cash to stockholders at the
present time, or by offering to buy back any and all Shares from stockholders
that wish to sell at a specific price at a specific future date. At
no time have we asked for – nor would we accept – any consideration or benefit
for ourselves that would not be offered to all stockholders.
The Board
has ignored our attempts to work constructively for the benefit of all
stockholders. Avigen responded to our offers by unilaterally
increasing and broadening management’s “golden parachute” severance agreements
and unilaterally adopting a “poison pill,” raising our concerns about this
Board’s and management’s true intentions.
6
The
Board’s “golden parachute” severance agreements with management, approved under
the ridiculous justification that such payouts are necessary to “attract and
retain key employees,” are 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 $2 million, a significant amount of the Company’s
entire market value at the time of adoption. The recipients of these
golden parachute arrangements include Avigen’s CEO, Ken Chahine, who resides in
Park City, Utah, even though the Company is based in California. We
question how the Company can justify such actions as necessary to “attract and
retain key employees” when Avigen has no real business at this
time. These hastily adopted severance arrangements need to be
challenged and, if possible, revoked.
In
addition, we believe the Board’s implementation of the stockholder rights plan,
or “poison pill,” serves no purpose other than to entrench the Board and keep
the BVF Group from purchasing additional stock in the Company. We are concerned
that management and the Board are more concerned with retaining their jobs and
compensation than with maximizing stockholder value. As evidence,
Avigen’s stock price fell more than 20% after the adoption of the poison pill.
The pill should be redeemed. The Board’s recent actions reveal its
true self-interest and leave us concerned that the Board will indeed destroy
and/or take all remaining value. Please see “Proposal No. 1 – Reasons for
Removing Existing Directors – We believe the unilateral action by the Board to
adopt a “poison pill” is an attempt by the Board and management to ensure the
retention of their jobs and their compensation” for further discussion of
Avigen’s recently adopted stockholder rights plan.
On
December 22, 2008, MediciNova, Inc. (“MediciNova”), a company in which we have
no economic interest, proposed to merge with Avigen with an innovative and, we
believe, compelling downside-protected structure. We believe the
proposed merger is uncontrovertibly in the best interest of all stockholders and
we had grave concerns that the Board may not negotiate in good faith with
MediciNova, if at all. Avigen’s statements apparently rejecting this
proposal confirmed our worst fears. We are concerned that the Board’s
and management’s self-interest will prevent them from acting in what we believe
to clearly be the best interests of all stockholders.
Accordingly,
after much consideration we felt compelled to call the Special Meeting to remove
the existing directors and to elect new, truly independent directors who, if
elected, plan to take actions to benefit all stockholders, including redeeming
Avigen’s stockholder rights plan, working to consummate the proposed transaction
with MediciNova and/or working to complete a distribution of Avigen’s assets to
all stockholders.
Additionally,
on January 23, 2009, we commenced a cash tender offer to purchase any and all of
the outstanding Shares that we do not own at a price of $1.00 per Share (the
“Offer”). The offer price represents a 35% premium over Avigen’s
closing stock price of $0.74 on January 8, 2009, the date prior to the date of
our announcement that we were seeking to remove all incumbent members of the
Board. The Offer was extended on February 20, 2009 and on March 5,
2009 and is currently scheduled to expire at 6:00 p.m., New York City time, on
Friday, April 3, 2009, unless it is further extended.
7
The Offer
is conditioned upon, among other things, (i) the Nominees being elected to the
Board at the Special Meeting or otherwise being appointed to, and constituting a
majority of, the members of the Board, (ii) the Board redeeming the “poison
pill,” or our being satisfied in our reasonable discretion that the “poison
pill” is otherwise inapplicable to the Offer, the BVF Group or any affiliates or
associates of the BVF Group, and (iii) Avigen not having authorized,
recommended, proposed, announced its intent to enter into or entered into an
agreement with respect to or effected any merger, consolidation, liquidation,
dissolution, business combination, acquisition of assets, disposition of assets,
alternative strategy or relinquishment of any material contract or other right
of Avigen or any comparable event or capital depleting transaction not in the
ordinary course of business. The Offer is not subject to any
financing condition.
Assuming
the conditions to this Offer are satisfied, stockholders would have the choice
of (i) tendering their Shares and receiving a fixed cash payment upon the
closing of the Offer at a premium to the market price on the day prior to both
the announcement of the Offer and the announcement we were seeking to remove the
incumbent members of the Board and to elect the Nominees, or (ii) maintaining
their investment in the Company and participating in the proposed merger with
MediciNova, if it occurs. Regardless of whether or not a stockholder
intends to tender their Shares in the Offer, we strongly recommend that all
stockholders vote to elect each of the Nominees and in favor of the other
proposals set forth in this Proxy Statement.
We
encourage you to review the remainder of this Proxy Statement, which describes
in greater detail our concerns and the proposals contained herein.
8
PROPOSAL
NO. 1
REMOVAL
OF EXISTING DIRECTORS SERVING ON
AVIGEN’S
BOARD
Pursuant
to the Amended and Restated Certificate of Incorporation of Avigen (the
“Charter”), stockholders may remove any director with cause by a majority vote
of all outstanding Shares or without cause by a sixty-six and two-thirds percent
(66-2/3%) vote of all outstanding Shares. We are seeking to remove
all of the existing directors serving on the Board at the time of the Special
Meeting without cause.
We
believe the Board is currently composed of six directors as set forth below,
each of whom will be removed if Proposal No. 1 is approved:
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Name
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Current
Position
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Zola
Horovitz, Ph.D.
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Chairman
of the Board, Director
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Kenneth
G. Chahine, J.D., Ph.D.
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President,
Chief Executive Officer, Director
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John
K. A. Prendergast, Ph.D.
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Director
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Richard
J. Wallace
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Director
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Stephen
Dilly, M.B.B.S., Ph.D.
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Director
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Jan
K. Öhrström, M.D.
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Director
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REASONS
FOR REMOVING EXISTING DIRECTORS
We do not
believe the current directors serving on the Board are acting in the best
interests of stockholders. We are concerned that this Board will fail
to take the steps we believe are necessary to preserve stockholder
value. We believe recent actions taken by the Board indicate they are
more interested in acting in their own self-interest rather than in the best
interests of stockholders.
This
Special Meeting may be the only opportunity for stockholders to determine the
fate of Avigen’s substantial remaining cash
Recent
actions and statements by the Company indicate that the existing management and
Board are prepared to ignore the best interests of the Company’s
stockholders. They may believe they are entitled to control Avigen,
rather than to serve the Company’s true owners – stockholders. If
this Board and management are not replaced at this Special Meeting, stockholders
may lose any hope of determining the fate of Avigen’s remaining
cash. Members of the BVF Group have no economic interest in
MediciNova, neither presently nor historically. If elected to the
Board, none of Messrs. Lampert, Perry or Nodelman intends to accept any director
fees from the Company. The BVF Group’s only interest is as a
stockholder.
9
We
question the Board’s commitment to maximizing stockholder value in light of its
apparent rejection of the recent merger proposal by MediciNova
On
December 22, 2008, MediciNova, in a letter to Avigen’s Chairman, described the
details of a proposed merger between MediciNova and Avigen (the “Proposed
Merger”), which it had submitted to the Company on December 9,
2008. The Board, in its letter to stockholders dated December 22,
2008 (the “December 22 Letter”), noted that it had rejected the transaction
because the Board’s “criteria fundamentally differ.” Presumably,
based on this “criteria,” the Board found the merger offer by MediciNova
unworthy of consideration. We find this conclusion troubling,
especially in light of the extraordinary benefits we believe the proposed merger
would provide Avigen stockholders, including:
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·
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Downside
Protection: Based on our analysis, subsequent to the
Proposed Merger, if MediciNova is unsuccessful Avigen stockholders will
still receive the approximate current liquidation value of Avigen (which
we estimate to be approximately $1.22/Share, net of debt and
expenses).1 This means that, even in the
worst-case scenario, the Proposed Merger would yield an approximate 65%
premium to Avigen’s stock price as of January 8, 2009, the date prior to
the date we submitted our request to the Company to call the Special
Meeting.
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·
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Tremendous Upside
Potential: Based on our analysis, if MediciNova is
successful post-merger, Avigen stockholders could own a substantial
percentage of MediciNova (approximately 45% of the combined
company).
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·
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Free
Option: Under the terms of the Proposed Merger,
stockholders would have at least one year after the merger is consummated
to choose whether they want downside protection or upside potential, as
described above. We believe this free option period offers
stockholders tremendous upside potential with low
risk.
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1 This value is based
on the following:
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·
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The
Company’s most recent quarterly report for the period ended September 30,
2008, disclosed a total cash value of $57.33 million and approximately $7
million in debt.
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·
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In
a conference call with investors on October 21, 2008, CEO Ken Chahine
suggested the Company expected to utilize $7 million of its assets by
December 31, 2008.
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·
|
In
a news release dated November 3, 2008, the Company made disclosure
suggesting it expects to burn through $5 million in the first half of
2009, the time-frame estimate for the completion of a
liquidation.
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|
·
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In
a Form 8-K filed on December 23, 2008, the Company disclosed that it sold
the rights to its AV513 asset to Baxter Healthcare Corporation, Baxter
International Inc., and Baxter Healthcare S.A. for $7
million.
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·
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Based
on publicly available information, we estimate the cost for the pay-down
of current and deferred liabilities and the transaction costs associated
with a liquidation, including severance payments for management and
employees of the Company, to be approximately $8
million.
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·
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Using
the above, we estimate the Company’s net cash, if a liquidation were to
occur by mid-2009, to be approximately $36.33 million, or $1.22 per
share. This represents an approximately a 65% premium based on
$0.74 per share, the price of the Company’s stock on January 8,
2009.
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10
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·
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New Stewardship of the
Company’s Assets: If successfully completed, the
Proposed Merger would result in new stewardship of Avigen’s assets,
curtailing the Board’s and management’s stated plan of seeking ways to
utilize and, we fear, waste the Company’s remaining assets. We
believe new management is key to protecting the Company’s assets,
particularly in light of Chief Executive Officer Ken Chahine’s recent
statements regarding the future of the Company, including 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.”
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·
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Unique
Synergies: We strongly believe there are unique
synergies between MediciNova and Avigen that likely would not exist with
other potential acquirers of Avigen. These synergies involve
the overlapping drug development of the Company’s final remaining drug
asset, AV411, by MediciNova and Avigen. We believe combining
these separate programs could potentially lead to a significantly higher
value partner collaboration. We believe such synergies give
rise to the compelling nature of the Proposed
Merger.
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We
believe the benefits of the Proposed Merger provide the best opportunity for
stockholders to receive the maximum value for their investment and feel this
Board and management should be doing everything in their power to ensure the
merger is consummated. That this Board has not only come out against
the Proposed Merger, but also stated that they plan to move forward assessing
potential M&A opportunities, is just further example of this Board’s
willingness to act in its own interests, rather than that of
stockholders.
We
believe the unilateral action by the Board to increase and broaden management’s
“golden parachute” severance agreements serves no purpose other than the Board’s
and management’s entrenchment
Our
belief the Board will destroy the Company’s remaining value is further bolstered
by recent actions taken by the Board to increase and broaden management’s
“golden parachute” severance agreements. According to an 8-K filed by
the Company on November 5, 2008, in a supposed effort to “attract and retain”
key executive talent, the Board broadened the Company’s “golden parachute”
severance agreements to be effective regardless of whether an executive’s
employment terminates as part of a “change in control.”
The Board
also increased the benefits received under the agreements by between 16% and
25%, even though the Company’s stock price had dropped by 87.8% from the
previous year. According to the Company, the payouts under these
agreements would total more than $2 million, an incredible 12% of the Company’s
market value at the time of adoption. We question how the Board can
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 of its products. We believe the agreements in no way benefit
stockholders and need to be revoked immediately. If the Nominees are
elected, subject to their fiduciary obligations, they will review if these
hastily adopted severance agreement are legal under state law, and take all
appropriate actions. For further discussion of the payouts to the
Company’s executives in the case of a change in control, see “Proposal No. 3 – Proposal to Elect
the Nominees – Change of Control Provisions.”
11
We
believe the unilateral action by the Board to adopt a “poison pill” is an
attempt by the Board and management to ensure the retention of their jobs and
their compensation
On
November 24, 2008, the Board disclosed that it had unilaterally adopted a
stockholder rights plan, or “poison pill,” intended to prevent the ownership by
any stockholder of in excess of 20% of the Company’s outstanding Shares.2 Although the BVF Group owns
approximately 29.6% of the outstanding Shares, the “poison pill” contains an
exception to permit us to continue owning the number of Shares we owned
immediately prior to the pill’s implementation without
penalty. However, if we were to acquire even a single additional
share, the provisions of the “poison pill” would be triggered and our ownership
in the Company would be significantly diluted pursuant to the provisions of the
rights plan.
We
believe the Board adopted the “poison pill” to limit our ownership in the
Company and that its institution is another example of the Board acting in an
effort to ensure the retention of their jobs and compensation instead of acting
to maximize stockholder value. We are aware that “poison pills” have
been defended by some as having potential advantages in connection with takeover
terms and share values, although we disagree. The institution of a
poison pill runs contrary to the guidelines for corporate governance best
practices issued by leading advocates of stockholder democracy, such as
RiskMetrics Group Institutional Stockholder Services and Glass, Lewis &
Co. We question exactly whom the pill is meant to benefit, especially
in light of our proposal to permit the acquisition of Shares in excess of the
pill threshold, but to neutralize the voting power of those Shares in excess of
the threshold. It should come as no surprise that the Board rejected
our offer. In our opinion, the pill serves no reasonable purpose
other than for the entrenchment of directors and demonstrates a disregard for
the interests of stockholders and needs to be redeemed
immediately. If our nominees are elected, subject to their fiduciary
obligations, they will take such actions as are necessary to redeem the “poison
pill.”
We
believe this Board continues to act in its own self-interest at the expense of
stockholders
In the
December 22 Letter, the Board also outlined its plan to create value for
stockholders in 2009. According to the December 22 Letter, the Board
has unilaterally decided to search for “strategic opportunities” because of its
belief that “the potential for a strategic merger [is] worthy of consideration”
with no mention of downside protection for current stockholders. We
remind the Board that Avigen was a “biopharmaceutical company focused on
developing and commercializing small molecule therapeutics to treat serious
neurological and neuromuscular disorders.” To our knowledge, Avigen
is not an investment or business development company and we believe the
suggestion that this Board and management contains some sort of “unique know-how
and proven track record” with respect to selling Avigen or pursuing acquisition
opportunities is far-fetched and dangerous.
2 Pursuant to the stockholder rights
plan, the Company declared a dividend of one preferred share purchase “right”
for each outstanding Share to be payable to stockholders of record as of
December 1, 2008. Each “right” may be used to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $0.001 per share, at a price of $8.00 per one one-hundredth of
a Preferred Share, subject to adjustment. Each one one-hundredth of a
Preferred Share has designations and powers, preferences and rights, and the
qualifications, limitations and restrictions designed to make it the economic
equivalent of a Share. Pursuant to the stockholder rights plan, if
any person or group (subject to certain exceptions) becomes a 20% stockholder of
the Company without the prior approval of the Board, such person or group shall
become an “acquiring person.” In the event that any person or group
becomes an “acquiring person,” the “rights,” other than the “rights” owned by
the “acquiring person,” become exercisable, causing significant dilution in the
voting power and economic ownership of the “acquiring
person.” Existing stockholders who are currently 20% stockholders,
such as the BVF Group, will only become an “acquiring person” if they acquire
additional Shares without prior approval from the Board.
12
We also
note that in the December 22 Letter, the Board and management claim to have
“acted swiftly and decisively to preserve cash.” We question the
benefit of such action since no effort was made to guaranty the worst-case
outcome for all stockholders. We believe the Board, if it were truly
interested in protecting stockholder assets, could have accomplished such a
guaranty in several ways, including by dividending or otherwise distributing all
excess cash to stockholders 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. In both cases, stockholders could stand to reap potentially
substantial upside derived from the monetization of Avigen’s remaining assets
and could finally stop worrying about whether this Board and management will
destroy the Company’s substantial cash value.
Dismal
Share Price Performance
Last, but
certainly not least, is Avigen’s ever-worsening stock price. Between
January 1, 2004 and January 8, 2009, the date prior to the date we requested the
Special Meeting, Avigen’s stock price has fallen by more than
90%. During that time the Company has accumulated a deficit of more
than $110 million. Additionally, the Company’s stock presently trades
at a deep discount to its net per share cash value. We believe this
is due to the perception of the investment community that this Board will
destroy the Company’s remaining value.
The
BVF Group urges you to vote FOR its proposal to remove all of the existing
directors serving on the Board on the enclosed GOLD proxy card. End
the disregard for stockholder value. Vote to remove the existing
directors and elect a new slate of directors who will truly represent
stockholders and work to maximize stockholder value.
13
PROPOSAL
TO AMEND THE BYLAWS TO PERMIT STOCKHOLDERS TO ELECT DIRECTORS TO THE BOARD IN
CASES WHEN THE ENTIRE BOARD IS VACANT
The
Charter states that any vacancies on the Board resulting from removal shall,
unless the Board determines by resolution that any such vacancies shall be
filled by the stockholders, be filled only by the affirmative vote of a majority
of the directors then in office and not by the stockholders. We believe the
Board should adopt this resolution prior to the Special Meeting permitting
stockholders to elect replacement directors, as required by their fiduciary
obligations to stockholders. The adoption of such a resolution would
permit the election of new directors by stockholders following the removal of
the incumbent directors. However, in the event it does not do so, we
have proposed a bylaw amendment to permit stockholders to elect directors to
fill the vacancies created by the removal of the directors upon the approval of
Proposal No. 1.
We
believe the Charter provision does not contemplate situations in which the
entire Board is vacant, and there is no remaining director to appoint
replacement directors. Accordingly, we have proposed a bylaw
amendment that would allow stockholders to fill vacancies on the Board in
instances where the entire Board is vacant. We believe that even
without the approval of this bylaw amendment, if all directors are removed, then
stockholders have the right to elect replacement directors since there would be
no director remaining to appoint replacements to the vacancies created by the
removal. To avoid any uncertainty, however, we have proposed this
bylaw amendment and recommend that it be approved. The form of
amendment is below.
If a
legitimate challenge is raised as to the election of our nominees following the
removal of all existing directors, we intend to file a complaint in the Delaware
Court of Chancery seeking relief pursuant to Section 225 of the Delaware General
Corporation Law (“DGCL”) for, among other things, a declaration that the
Nominees have been duly elected to the Board. Should the Court
determine that no valid election has been held and order an election of
directors to be held in accordance with Section 211 of the DGCL, we intend to
use validly executed GOLD proxies at such
election.
Accordingly,
you are being asked to amend the Bylaws in order to expressly allow stockholders
to fill vacancies on the Board in instances where no directors currently serve
on the Board and the entire Board is vacant, by amending Section 18 of Article
IV of the Bylaws by replacing the second sentence of such section with the
following:
“In cases
where the entire Board of Directors is vacant and no directors then remain in
office, vacancies on the Board of Directors shall be filled by
stockholders. Any director elected in accordance with this section
shall hold office for the remainder of the full term of the director for which
the vacancy was created or occurred and until such director’s successor shall
have been elected and qualified.”
The
BVF Group urges you to vote FOR its proposal to amend the Bylaws to permit
stockholders to elect directors to the Board in cases when the entire Board is
vacant on the enclosed GOLD proxy card.
14
PROPOSAL
NO. 3
PROPOSAL
TO ELECT THE NOMINEES
The Board
is currently composed of six directors divided into three classes, Class I,
Class II and Class III. Subject to the removal of such directors
pursuant to Proposal No. 1, the BVF Group has nominated four highly qualified
Nominees who, if elected, could constitute the entire board of directors and
will hold office until the expiration of their respective terms and until their
successors have been elected and qualify.
If the
Nominees are elected, they intend to, subject to their fiduciary duties as
directors, take the necessary steps to remove any obstacles to consummating the
Proposed Merger, including the redemption of the “poison pill” and exempting
prospective merger partners from the application of Section 203 of the
DGCL. Because the Nominees believe that any action taken regarding
the Company’s assets should be done as effectively and inexpensively as
possible, the Nominees do not intend to submit any potential transaction with
MediciNova to stockholders for approval, unless such approval is required by
law.
The
Nominees
The
following information sets forth the name, age, business address, present
principal occupation, and employment and material occupations, positions,
offices, or employments for the past five years of each of the
Nominees. Mr. Lampert is being nominated as a Class I director, for a
three-year term expiring at the 2011 annual meeting of
stockholders. Mr. Coppedge is being nominated as a Class II director
for a one-year term expiring at the 2009 annual meeting of
stockholders. Messrs. Perry and Nodelman are each being nominated as
Class III directors for two-year terms expiring at the 2010 annual meeting of
stockholders. If elected as the sole directors, the Nominees intend
to reduce the size of the Board to four (4) directors.
Mark Lampert (Age 48) is the
Founder and General Partner of Biotechnology Value Fund, L.P., a San
Francisco-based, private investment partnership focused on the biotechnology
industry, which he founded in 1993. Mr. Lampert also serves as an
officer and director of BVF Inc. Mr. Lampert currently serves as a
director of Acumen Pharmaceuticals, a private biotechnology company developing
medicines and diagnostics for Alzheimer’s disease and memory loss, Biotica
Technology Ltd, a private company focused on development stage drug discovery,
and Mendel Biotechnology, Inc., a private plant biotechnology company that
develops products with enhanced yield and quality focused on row crops and
cellulosic biofeedstocks. Mr. Lampert earned his Masters of Business
Administration from Harvard Business School and an A.B. in chemistry from
Harvard College. The principal business address of Mr. Lampert is One
Sansome Street, 31st Floor, San Francisco, California 94104. By
virtue of his positions with BVF Inc., Mr. Lampert shares the power to vote and
dispose of the Shares beneficially owned by BVF Inc. Accordingly, Mr.
Lampert may be deemed to be the beneficial owner of the Shares owned by BVF
Inc. For information regarding purchases and sales during the past
two years by BVF Inc. and its affiliates of securities of Avigen that are deemed
to be beneficially owned by Mr. Lampert, see Schedule
I.
15
Matthew D. Perry (Age 36) has
served as a Portfolio Manager of BVF Partners, L.P., since
1999. Prior to becoming Portfolio Manager, Mr. Perry served as an
analyst from 1996 to 1999. Prior to joining BVF Partners, L.P. in
1996, Mr. Perry was an account executive with Feinstein Partners (“FPI”), a
consulting firm with an emphasis on investor relations for emerging health care
companies focused on the discovery, development and commercialization of
therapeutics. He was simultaneously an account executive with FPI’s
affiliate, Kendall Strategies, a business development and strategy consulting
firm assisting start-ups through large, public biotechnology
companies. Mr. Perry is also a co-founder and director of Nordic
Biotech, a European-based venture capital fund. Mr. Perry holds a
B.S. degree from the Biology Department of the College of William and
Mary. The principal business address of Mr. Perry is One Sansome
Street, 31st Floor, San Francisco, California 94104. Mr. Perry does
not directly own any securities of Avigen nor has he made any purchases or sales
of any securities of Avigen during the past two years. Mr. Perry, as
a member of the BVF Group, may be deemed to be the beneficial owner of the
shares of Common Stock owned by the members of the BVF Group. For
information regarding purchases and sales during the past two years by the
members of the BVF Group of securities of Avigen that may be deemed to be
beneficially owned by Mr. Perry, see Schedule
I.
Oleg Nodelman (Age 32) has
served as a Portfolio Manager of BVF Partners, L.P., since 2005. Mr.
Nodelman joined BVF Partners, L.P. as an analyst in 2001. Before
joining BVF Partners, L.P., Mr. Nodelman was a consultant with Mercer Management
Consulting (“Mercer”), now Oliver Wyman, a strategy firm. At Mercer,
he worked with senior management from companies in a variety of industries to
develop and implement long-term strategy and build shareholder
value. From November 2003 until September 2007, Mr. Nodelman served
on the Board of Directors of Toccata Therapeutics, an early stage start-up
focused on protein theraputics. Mr. Nodelman also served on the Board
of Directors of Empire Pharmaceuticals, Inc., an early stage start-up focused on
stroke treatment, from August 2003 until its sale to Neurobiological
Technologies Inc. in 2004. Mr. Nodelman holds a Bachelor of
Science degree, with a focus on Science and Technology, from the School of
Foreign Service at Georgetown University. The principal business
address of Mr. Nodelman is One Sansome Street, 31st Floor, San Francisco,
California 94104. Mr. Nodelman does not directly own any securities
of Avigen nor has he made any purchases or sales of any securities of Avigen
during the past two years. Mr. Nodelman, as a member of the BVF
Group, may be deemed to be the beneficial owner of the shares of Common Stock
owned by the members of the BVF Group. For information regarding
purchases and sales during the past two years by the members of the BVF Group of
securities of Avigen that may be deemed to be beneficially owned by Mr.
Nodelman, see Schedule
I.
Robert M. Coppedge (Age 34) is
a founding Partner of Seattle-based Faultline Ventures (“Faultline”), a firm
focused on supporting disruptive innovations in health care, which he founded in
2008. Prior to founding Faultline, Mr. Coppedge served as senior vice
president and principal at Capitol Health, a venture capital firm specializing
in early-state health services, from 1997 until 2008. In 2004, Mr.
Coppedge served on a special panel of the Centers for Medicare and Medicaid
Services that reviewed applications for the Chronic Care Improvement Program,
now called Medicare Health Support. Mr. Coppedge is also a founder
and director of Nashville, Tennessee based Leadership Health Care, an
organization formed in partnership with the Nashville Health Care Council to
foster the next generation of health care leaders by creating educational,
mentoring and networking opportunities for members. Mr. Coppedge was
a member of the development committee of the Phillips Collection’s Board of
Trust and the Phillips Collection Contemporaries Steering Committee from 1999 to
2004 and served as its chair from 2001–2003. Mr. Coppedge is also a
former member of the Board of Advisors to National Foundation of Teaching
Entrepreneurship. Mr. Coppedge earned his Bachelors degree in history
from Georgetown University and is a Chartered Financial Analyst. The
principal business address of Mr. Coppedge is 600 Stewart Street, Suite 1400,
Seattle, Washington 98101. Mr. Coppedge does not directly own any securities of
Avigen nor has he made any purchases or sales of any securities of Avigen during
the past two years. Mr. Coppedge, as a member of the BVF Group, may
be deemed to be the beneficial owner of the shares of Common Stock owned by the
members of the BVF Group. For information regarding purchases and
sales during the past two years by the members of the BVF Group of securities of
Avigen that may deemed to be beneficially owned by Mr. Coppedge, see Schedule
I.
16
There can
be no assurance that the actions our Nominees intend to take as described above
will be implemented if they are elected or that the election of our Nominees
will improve Avigen’s business or otherwise enhance stockholder value. Your vote
to elect the Nominees does not constitute a vote in favor of our value enhancing
plans for the Company. Your vote to elect the Nominees will have the
legal effect of filling four (4) of the vacancies on the Board at the time of
the Special Meeting with our Nominees. There can be no assurance that
stockholder value will be maximized as a result of this solicitation or the
election of the Nominees.
The
Nominees will not receive any compensation from the BVF Group for their services
as directors of Avigen. In addition, Messrs. Lampert, Perry and
Nodelman have agreed to not accept any director fees from Avigen in the event
they are elected to the Board. BVF has signed a letter agreement
pursuant to which it agrees to indemnify Mr. Coppedge against claims arising
from the solicitation of proxies from Avigen’s stockholders in connection with
the Special Meeting and any related transactions. Other than as
stated herein, there are no arrangements or understandings between the BVF Group
and any of the Nominees or any other person or persons pursuant to which the
nomination described herein is to be made, other than the consent by each of the
Nominees to be named in this Proxy Statement and to serve as a director of
Avigen if elected as such at the Special Meeting. Except as otherwise
set forth herein, none of the Nominees is a party adverse to Avigen or any of
its subsidiaries or has a material interest adverse to the Company or any of its
subsidiaries in any material pending legal proceedings.
The BVF
Group does not expect that the Nominees will be unable to stand for election. In
the event that any Nominee is unable to serve or for good cause will not serve,
the BVF Group may seek to replace such Nominee with a substitute nominee to the
extent substitution is permissible under the Company’s advance notice provision
in the Bylaws. In such case that the BVF Group is permitted to substitute a
nominee, the BVF Group will file and deliver supplemental proxy materials,
including a revised proxy card, disclosing the information relating to any
substitute nominee that is required to be disclosed in solicitations for proxies
for election of directors pursuant to Section 14 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Only in such case will
the Shares represented by the enclosed GOLD proxy card be voted for
substitute nominees.
The
Nominees are independent of the Company in accordance with Securities and
Exchange Commission and Nasdaq Stock Market rules on board independence and are
citizens of the United States of America. One Nominee, Robert M.
Coppedge, owns no Shares and may be deemed to own the Shares owned by the other
members of the BVF Group solely as a result of his being a member of a “group”
with the other members of the BVF Group in connection with this solicitation for
the purposes of Rule 13d-5(b)(1) of the Exchange Act. Following the
conclusion of the Special Meeting, Mr. Coppedge will no longer be a member of
the “group” with the other members of the BVF Group and will therefore no longer
be deemed to beneficially own the Shares owned by the other members of the BVF
Group. Accordingly, we believe that Mr. Coppedge will clearly satisfy
the SEC and Nasdaq Stock Market rules on board independence following his
election to the Board.
17
With
respect to the remaining three nominees, who are either officers or employees of
certain members of the BVF Group, we believe they would also be independent
under the Securities and Exchange Commission and Nasdaq Stock Market rules on
board independence following their election to the Board. Item 7(c)
of Schedule 14A and corresponding Item 407(a)(1) of Regulation S-K specify that
in cases where a company is listed on a national securities exchange, the
company’s definition of independence that it uses for determining if a director
is independent shall be the definition provided by the exchange on which its
securities are listed. Avigen is a Nasdaq listed
company. An “Independent director,” as defined by Rule 4200(a)(15) of
the Nasdaq Stock Market rules is “a person other than an executive officer or
employee of the company or any other individual having a relationship which, in
the opinion of the issuer’s board of directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director.” Additionally:
|
(i)
|
The
Nominees are not, and have not been at any time during the past three
years, employed by the Company.
|
|
(ii)
|
None
of the Nominees or their Family Members (as such term is defined by Nasdaq
Stock Market Rule 4200(a)(14)) has accepted any payments from the Company
in excess of $120,000 during any period of twelve consecutive months
within the past three years.
|
|
(iii)
|
None
of the Nominees or their Family Members is, or has been, at any time in
the past three years, employed by the Company as an executive
officer.
|
|
(iv)
|
None
of the Nominees or their Family Members is or has been a partner in, or a
controlling stockholder or an executive officer of, any organization to
which the Company made, or from which the Company received, payments for
property or services in the current or any of the past three fiscal years
that exceed 5% of the recipient’s consolidated gross revenues for that
year, or $200,000, whichever is
more.
|
|
(v)
|
None
of the Nominees or their Family Members is, or has been, employed as
executive officers of any entity where at any time during the past three
years any of the executive officers of the Company have served on the
compensation committee of such
entity.
|
|
(vi)
|
None
of the Nominees or their Family Members is, or has been, partners or
employees of the Company’s outside auditor who worked on the Company’s
audit at any time during the past three
years.
|
18
With
respect to the eligibility of the Nominees to serve as members of the audit
committee of the Board, Section 10A of the Exchange Act specifies that each
member of the audit committee shall be a member of the Board and shall otherwise
be independent. In order to be considered independent for serving on
the audit committee of the Board for purposes of Section 10A, the members of the
audit committee may not, other than in their capacity as a member of the audit
committee, the Board or any other committee of the Board, (i) accept any
consulting, advisory, or other compensatory fee from the Company or (ii) be an
affiliated person of the Company or any subsidiary
thereof. Accordingly, for the reasons stated above, we believe that
Mr. Coppedge will clearly satisfy the audit committee independence standards
under Section 10A of the Exchange Act following his election to the
Board. With respect to the remaining Nominees, we have not yet made a
determination as to whether they will satisfy the audit committee independence
standards under Section 10A of the Exchange Act following their election to the
Board. If a determination is made that the Nominees, other than Mr.
Coppedge, do not satisfy such independence standards following their election to
the Board, the Nominees will work with Nasdaq to address this matter and will
take actions required thereto including, but not limited to, potentially
expanding the Board and appointing directors to the audit committee who satisfy
the audit committee independence standards under Section 10A of the Exchange
Act.
Change
of Control Provisions
According
to the Company’s Definitive Proxy Statement filed with the Securities and
Exchange Commission on March 9, 2009, and Current Report on Form 8-K dated
October 30, 2008 and filed by the Company with the Securities and Exchange
Commission on November 5, 2008 (the “Form 8-K”), in the event the BVF Group’s
proposals are approved and the Nominees are elected, the following change of
control obligations under a Transition Plan adopted by the Company, as amended
(the “Transition Plan”), could be triggered if the employment of certain
employees of the Company is terminated following the election.
A
Participant in the Transition Plan will receive, if the Participant’s employment
with Avigen terminates due to an “involuntary termination” or a “constructive
termination,” as those terms are defined in the Transition Plan, the following
benefits:
|
|
(a)
|
salary
continuation for the number of months designated in the Transition Plan
Eligibility Notice given to the
Participant;
|
|
|
(b)
|
accelerated
stock option vesting and extended exercisability as provided in the
Transition Plan Eligibility Notice given to the Participant;
and
|
|
|
(c)
|
Avigen
will pay the COBRA premiums for the Participant for the number of months
designated in the Transition Plan Eligibility Notice given to the
Participant, up to 18 months, or until such earlier date as the
Participant becomes covered by a health plan of a subsequent
employer.
|
19
The
current named executive officers of the Company who are participants in the
Transition Plan, as amended, and the terms of their participation,
are:
|
Option
|
||||
|
Salary
|
Option
|
Extended
|
COBRA
|
|
|
Name/Position
|
Continuation
|
Acceleration
|
Exercisability
|
Payments
|
|
Kenneth
G. Chahine, J.D., Ph.D.
|
21
months
|
Full
|
2
years
|
18
months
|
|
Andrew
A. Sauter
|
15
months
|
Full
|
2
years
|
15
months
|
|
Michael
D. Coffee
|
15
months
|
Full
|
2
years
|
15
months
|
|
Kirk
Johnson, Ph.D.
|
15
months
|
Full
|
2
years
|
15
months
|
|
M.
Christina Thomson, J.D.
|
15
months
|
Full
|
2
years
|
15
months
|
If an
“involuntary termination” or a “constructive termination” of a Participant
occurred on December 31, 2008, that Participant would have received the
following benefits:
|
Salary
|
COBRA
|
|||||||
|
Name
|
Continuation
|
Payments
|
||||||
|
Kenneth
Chahine
|
$ | 775,689 | $ | 28,881 | ||||
|
Andrew
Sauter
|
$ | 334,914 | $ | 24,464 | ||||
|
Michael
Coffee
|
$ | 392,379 | $ | 26,752 | ||||
|
Kirk
Johnson
|
$ | 348,160 | $ | 26,752 | ||||
|
M.
Christina Thomson
|
$ | 334,914 | $ | 18,295 | ||||
An
“involuntary termination” is the dismissal or discharge by Avigen other than for
“cause”, where cause is defined to include: commission of an intentional act to
materially injure Avigen; intentional refusal or failure to follow lawful and
reasonable directions of the Board or the appropriate individual to whom the
participant reports; willfully and habitually neglected duties for Avigen; or
conviction of a felony involving moral turpitude that is likely to inflict or
has inflicted material injury on Avigen. The termination of a Participant’s
employment will not be deemed to be an “involuntary termination” if the
termination occurs as a result of that Participant’s death or
disability.
A
“constructive termination” occurs when a Participant voluntarily terminates
employment with Avigen in the event that, without the participant’s consent, any
of specified events occur, including: the assignment of duties or
responsibilities which result in a diminution in position or function; a
reduction by Avigen in annual base salary; failure by Avigen to continue in
effect any benefit plan or program or the taking of any action by Avigen that
would adversely affect participation in or reduce benefits under the benefit
plans or deprive the participant of any fringe benefit enjoyed at the time of a
change in control; relocation by Avigen, or the relocation of Avigen’s principal
executive offices if the participant’s principal office is at such offices, to a
location more than thirty (30) miles from the location at which the participant
was performing duties prior to the change in control; a material breach of the
Transition Plan or a material breach of a written agreement with the participant
regarding the terms and conditions of employment; or any failure by Avigen to
obtain the assumption of the Transition Plan or any material agreement with the
participant regarding the terms and conditions of employment by any successor or
assign of Avigen.
20
No
amounts are attributable to vesting of stock options, as the exercise price of
all stock options was in excess of the closing price of our Common Stock on
December 31, 2008.
In
addition, five additional employees of the Company participate in the Transition
Plan, as amended.
The above
disclosure has been extracted from Avigen’s Definitive Proxy Statement and the
Form 8-K. The BVF Group does not take responsibility for the accuracy and
completeness of this information. If the Nominees are elected, they intend to
review the Transition Plan discussed above, review all the terms thereof and
evaluate whether the change of control provisions contained therein have been
triggered. If the Nominees are elected, subject to their fiduciary obligations,
they will review if these hastily adopted severance agreements, as disclosed in
the Form 8-K, are legal under state law, and take all appropriate
actions.
The
BVF Group urges you to vote FOR the election of the Nominees on the enclosed
GOLD proxy card.
21
PROPOSAL
NO. 4
THE
BYLAW RESTORATION PROPOSAL
Pursuant
to the Bylaws, following any request for a special meeting, the Board shall
determine the time and place of such special meeting, which shall be held not
less than thirty-five (35) nor more than one-hundred twenty (120) days after the
date of the receipt of the request. Due to the delay between the time
we submitted our request and the date of the Special Meeting, the Board could
potentially amend the Bylaws to inhibit the action of the Nominees following
their election to the Board through changes to the Bylaws that were not in
effect on January 8, 2009, the date prior to the date we submitted our request
to hold the special meeting to the Company (the “Restoration
Date”). In order to reverse any such action by the Board, we are
asking stockholders to approve the following proposal to restore the Bylaws to
the version in effect as of the Restoration Date (the “Bylaw Restoration
Proposal”).
“RESOLVED,
that any amendments to the amended and restated bylaws of Avigen, Inc. effected
between January 8, 2009 and the effectiveness of this provision be and are
hereby repealed.”
If the
Board does not effect any change to the version of the Bylaws in effect as of
the Restoration Date, the Bylaw Restoration Proposal will have no
effect. However, if the Board has made changes since that time, the
Bylaw Restoration Proposal, if adopted, will restore the Bylaws to the version
that was in effect as of the Restoration Date, without considering the nature of
any changes the Board may have adopted. As a result, the Bylaw
Restoration Proposal could have the effect of repealing bylaw amendments that
one or more stockholders may consider to be beneficial to them or to the
Company. However, the Bylaw Restoration Proposal will not preclude the Nominees,
if elected, from reconsidering any repealed bylaw changes following the Special
Meeting. We are not currently aware of any specific bylaw provisions
that would be repealed by the adoption of the Bylaw Restoration
Proposal.
The
BVF Group urges you to vote FOR the Bylaw Restoration Proposal on the enclosed
GOLD proxy card.
22
VOTING
AND PROXY PROCEDURES
Only
stockholders of record on the Record Date will be entitled to notice of and to
vote at the Special Meeting. Each Share is entitled to one
vote. Stockholders who sell Shares before the Record Date (or acquire
them without voting rights after the Record Date) may not vote such
Shares. Stockholders of record on the Record Date will retain their
voting rights in connection with the Special Meeting even if they sell such
Shares after the Record Date. Based on publicly available
information, the BVF Group believes that the only outstanding class of
securities of Avigen entitled to vote at the Special Meeting is the
Shares.
Shares
represented by properly executed GOLD proxy cards will be voted
at the Special Meeting as marked and, in the absence of specific instructions,
will be voted FOR the
proposal to remove the existing directors serving on the Board, FOR the proposal to amend the
Bylaws to permit stockholders to elect directors to the Board in cases when the
entire Board is vacant, FOR
the proposal to elect the Nominees to the Board, FOR the Bylaw Restoration
Proposal and in the discretion of the persons named as proxies, on all other
matters as may properly come before the Special Meeting.
We are
asking you to remove the existing directors serving on the Board and replace
them with our Nominees. The participants in this solicitation intend
to vote all of their Shares in favor of the removal of current members of the
Board, the election of the Nominees and the other proposals described in this
Proxy Statement.
QUORUM
A quorum
of stockholders is necessary to hold a valid meeting. A quorum will
be present if at least a majority of the outstanding Shares entitled to vote are
represented by votes at the meeting or by proxy.
Your
Shares will be counted towards the quorum only if you submit a valid proxy (or
one is submitted on your behalf by your broker, bank or other nominee) or if you
vote in person at the meeting. Abstentions and broker non-votes will
be counted towards the quorum requirement. If there is no quorum, the chairman
of the Special Meeting or a majority of the votes present at the Special Meeting
may adjourn the Special Meeting to another date.
VOTES
REQUIRED FOR APPROVAL
Vote Required for Proposals Nos. 1,
2 and 4. Approval of the proposal to remove the existing
directors serving on the Board, the proposal to amend the Bylaws to permit
stockholders to elect directors to the Board in cases when the entire Board is
vacant and the Bylaw Restoration Proposal each require the affirmative vote of
at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the
Shares outstanding as of the Record Date. Abstentions and broker
non-votes will act as a vote against each of these proposals.
Vote Required for Proposal No.
3. For the election of the directors, the nominees receiving
the most “For” votes (among votes properly cast in person or by proxy) will be
elected. Abstentions and broker non-votes will have no effect on this
proposal.
23
Stockholders
may cast their votes by marking the ballot at the meeting or by specific voting
instructions sent with a signed proxy to either the BVF Group, in care of
MacKenzie Partners, Inc. at 105 Madison Avenue, New York, New York
10016.
ABSTENTIONS;
BROKER NON-VOTES
Abstentions
and broker non-votes will be counted towards the quorum requirement. Abstentions
and broker non-votes will have the effect of a vote against Proposals Nos. 1, 2
and 4. Abstentions and broker non-votes will have no effect on
Proposal No. 3.
DISCRETIONARY
VOTING
Shares
held in “street name” and held of record by banks, brokers or nominees may not
be voted by such banks, brokers or nominees unless the beneficial owners of such
Shares provide them with instructions on how to vote.
REVOCATION
OF PROXIES
Stockholders
of Avigen may revoke their proxies at any time prior to exercise by attending
the Special Meeting and voting in person (although attendance at the Special
Meeting will not in and of itself constitute revocation of a proxy) or by
delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered
either to the BVF Group in care of MacKenzie Partners, Inc. at the address set
forth on the back cover of this Proxy Statement or to 1301 Harbor Bay Parkway,
Alameda, California 94502 or any other address provided by
Avigen. Although a revocation is effective if delivered to Avigen, we
request that either the original or photostatic copies of all revocations be
mailed to the BVF Group in care of MacKenzie Partners, Inc. at the address set
forth on the back cover of this Proxy Statement so that the BVF Group will be
aware of all revocations and can more accurately determine if and when proxies
have been received from the holders of record on the Record Date of a majority
of the outstanding Shares. Additionally, MacKenzie Partners, Inc. may
use this information to contact stockholders who have revoked their proxies in
order to solicit later dated proxies for the proposals described
herein.
IF
YOU WISH TO VOTE FOR THE PROPOSAL TO REMOVE THE DIRECTORS SERVING ON THE BOARD
AT THE TIME OF THE SPECIAL MEETING, FOR THE PROPOSAL TO AMEND THE BYLAWS TO
PERMIT STOCKHOLDERS TO ELECT DIRECTORS TO THE BOARD IN CASES WHEN THE ENTIRE
BOARD IS VACANT, FOR THE PROPOSAL TO ELECT THE NOMINEES TO THE BOARD AND FOR THE
BYLAW RESTORATION PROPOSAL, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED
GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
24
SOLICITATION
OF PROXIES
The
solicitation of proxies pursuant to this Proxy Statement is being made by the
BVF Group. Proxies may be solicited by mail, facsimile, telephone,
telegraph, in person and by advertisements. The BVF Group will not
solicit proxies via the Internet.
The BVF
Group has entered into an agreement with MacKenzie Partners, Inc. for
solicitation and advisory services in connection with this solicitation, for
which MacKenzie Partners, Inc. will receive a fee not to exceed $50,000.00,
together with reimbursement for its reasonable out-of-pocket expenses. MacKenzie
Partners, Inc. will solicit proxies from individuals, brokers, banks, bank
nominees and other institutional holders. The BVF Group has requested
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward all solicitation materials to the beneficial owners of the Shares they
hold of record. The BVF Group will reimburse these record holders for
their reasonable out-of-pocket expenses in so doing. It is
anticipated that MacKenzie Partners, Inc. will employ approximately 40 persons
to solicit stockholders for the Special Meeting.
The
entire expense of soliciting proxies is being borne by the BVF Group pursuant to
the terms of the Joint Filing and Solicitation Agreement (as described
below). Costs of this solicitation of proxies are currently estimated
to be approximately $150,000. The BVF Group estimates that through
the date hereof, its expenses in connection with this solicitation are
approximately $100,000.
25
OTHER
PARTICIPANT INFORMATION
Each
member of the BVF Group is a participant in this solicitation. The
principal business of BVF, BVF2, BVLLC, ILL10, Partners and BVF Inc. is holding
biotechnology stocks for investment purposes. BVFAcq was formed in
connection with the Offer and is a wholly owned subsidiary of
BVF. Partners serves as the general partner of BVF and BVF2, the
manager of BVLLC and the investment adviser of ILL10. BVF Inc. serves
as the investment adviser and general partner of Partners. Mr.
Lampert serves as a director and officer of BVF Inc.
The
principal business address of BVF, BVF2, BVLLC, ILL10 and Partners is 900 North
Michigan Avenue, Suite 1100, Chicago, Illinois 60611. The principal
business address of BVF Inc. and Messrs. Lampert, Perry and Nodelman is One
Sansome Street, 31st Floor, San Francisco, California 94104. The
principal business address of Mr. Coppedge is 600 Stewart Street, Suite 1400,
Seattle, Washington 98101.
As of the
date of this filing, BVF beneficially owned 1,975,340 Shares, BVF2 beneficially
owned 1,364,911 Shares, BVLLC beneficially owned 4,969,764 Shares and ILL10
beneficially owned 509,585 Shares.
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
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 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 beneficially owned by BFV
Inc.
None of
Messrs. Perry, Nodelman or Coppedge or BVFAcq directly owns any
Shares. As a members of a “group” for the purposes of Rule
13d-5(b)(1) of the Exchange Act each of Messrs. Perry, Nodelman and Coppedge and
BVFAcq may be deemed to beneficially own the 8,819,600 Shares beneficially owned
in the aggregate by the other members of the BVF Group. Each of
Messrs. Perry, Nodelman and Coppedge and BVFAcq disclaims beneficial ownership
of such Shares.
For
information regarding purchases and sales of securities of Avigen during the
past two years by members of the BVF Group, including the Nominees, see Schedule
I.
On
January 9, 2009, the members of the BVF Group entered into a Joint Filing and
Solicitation Agreement in which each member of the BVF Group agreed to the joint
filing on behalf of each of them of Statements on Schedule 13D with respect to
the securities of Avigen to the extent required under applicable securities laws
and to form a group for the purpose of soliciting proxies or written consents in
support of the election of the Nominees and certain other proposals at the
Special Meeting and for the purpose of taking all other actions incidental to
the foregoing. BVFAcq joined the BVF Group on January 23, 2009 and
agreed to be bound by the terms of the Joint Filing and Solicitation
Agreement. The BVF Group intends to seek reimbursement from Avigen of
all expenses it incurs in connection with this solicitation, to the extent
permitted by law. The BVF Group does not intend to submit the
question of such reimbursement to a vote of security holders of
Avigen.
26
Except as
set forth in this Proxy Statement (including the Schedules hereto), (i) during
the past 10 years, no participant in this solicitation has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors); (ii)
no participant in this solicitation directly or indirectly beneficially owns any
securities of the Company; (iii) no participant in this solicitation owns any
securities of the Company which are owned of record but not beneficially; (iv)
no participant in this solicitation has purchased or sold any securities of the
Company during the past two years; (v) no part of the purchase price or market
value of the securities of the Company owned by any participant in this
solicitation is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities; (vi) no participant in this
solicitation is, or within the past year was, a party to any contract,
arrangements or understandings with any person with respect to any securities of
the Company, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies; (vii) no
associate of any participant in this solicitation owns beneficially, directly or
indirectly, any securities of the Company; (viii) no participant in this
solicitation owns beneficially, directly or indirectly, any securities of any
parent or subsidiary of the Company; (ix) no participant in this solicitation or
any of his or its associates was a party to any transaction, or series of
similar transactions, since the beginning of the Company’s last fiscal year, or
is a party to any currently proposed transaction, or series of similar
transactions, to which the Company or any of its subsidiaries was or is to be a
party, in which the amount involved exceeds $120,000; (x) no participant in this
solicitation or any of his or its associates has any arrangement or
understanding with any person with respect to any future employment by the
Company or its affiliates, or with respect to any future transactions to which
the Company or any of its affiliates will or may be a party; and (xi) no
participant in this solicitation has a substantial interest, direct or indirect,
by securities holdings or otherwise in any matter to be acted on at the Special
Meeting. There are no material proceedings to which any participant
in this solicitation or any of his or its associates is a party adverse to the
Company or any of its subsidiaries or has a material interest adverse to the
Company or any of its subsidiaries. With respect to each of the
participant in this solicitation, none of the events enumerated in Item
401(f)(1)-(6) of Regulation S-K of the Exchange Act occurred during the past
five years.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires persons who beneficially own more
than 10% of the Shares to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the SEC. Based solely on its review of the
Nominees’ transaction history and ownership information with respect to the
Shares, the BVF Group believes that all of the Section 16(a) filing requirements
were satisfied by the members of the BVF Group, other than the Forms 3 filed by
the Nominees, which were filed one day late.
OTHER
MATTERS AND ADDITIONAL INFORMATION
The BVF
Group is unaware of any other matters to be considered at the Special
Meeting. However, should other matters, which the BVF Group is not
aware of a reasonable time before this solicitation, be brought before the
Special Meeting, the persons named as proxies on the enclosed GOLD proxy card will vote on
such matters in their discretion.
27
STOCKHOLDER
PROPOSALS
To be
considered for inclusion in the 2009 Annual Meeting proxy materials, stockholder
proposals must have been submitted in writing by December 23, 2008, to Avigen’s
Secretary at 1301 Harbor Bay Parkway, Alameda, California
94502. However, if Avigen’s 2009 Annual Meeting of Stockholders is
held before April 19, 2009 or after June 18, 2009, then the deadline will be a
reasonable time prior to the time the Company begins to print and mail its proxy
materials. If you wish to bring a proposal before the stockholders at next
year’s annual meeting that is not included in the Company’s proxy materials, you
must notify Avigen’s Secretary, in writing, not later than the close of business
on March 20, 2009 nor earlier than the close of business on February 18, 2009.
However, if Avigen’s 2009 Annual Meeting of Stockholders is held before April
19, 2009 or after June 18, 2009, stockholders must notify Avigen’s Secretary, in
writing, not earlier than 90 days and not later than the later of 60 days prior
to Avigen’s 2009 Annual Meeting of Stockholders or, if Avigen makes a public
announcement of the date of Avigen’s 2009 Annual Meeting of Stockholders fewer
than 70 days prior to the date of Avigen’s 2009 Annual Meeting of Stockholders,
then the close of business on the 10th day following the day on which the
Company makes such public announcement. We advise you to review the
Bylaws, which contain additional requirements about advance notice of
stockholder proposals and director nominations. If stockholders do
not comply with these requirements, they will not be able to make a stockholder
proposal or director nomination at the 2009 Annual Meeting.
The
information set forth above regarding the procedures for submitting stockholder
proposals for consideration at the 2009 Annual Meeting is based on information
contained in the Company’s proxy statement. The incorporation of this
information in this proxy statement should not be construed as an admission by
the BVF Group that such procedures are legal, valid or binding.
INCORPORATION
BY REFERENCE
THE BVF
GROUP HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE REQUIRED BY
APPLICABLE LAW THAT IS EXPECTED TO BE INCLUDED IN AVIGEN’S PROXY STATEMENT
RELATING TO THE SPECIAL MEETING. THIS DISCLOSURE IS EXPECTED TO
INCLUDE, AMONG OTHER THINGS, CURRENT BIOGRAPHICAL INFORMATION ON AVIGEN’S
CURRENT DIRECTORS, INFORMATION CONCERNING EXECUTIVE COMPENSATION AND OTHER
IMPORTANT INFORMATION. PLEASE NOTE THAT THE BVF GROUP WAS NOT
INVOLVED IN THE PREPARATION OF AVIGEN’S PROXY STATEMENT. SEE SCHEDULE II FOR
INFORMATION REGARDING PERSONS WHO BENEFICIALLY OWN MORE THAN 5% OF THE SHARES
AND THE OWNERSHIP OF THE SHARES BY THE DIRECTORS AND MANAGEMENT OF
AVIGEN.
The
information concerning Avigen contained in this Proxy Statement and the
Schedules attached hereto has been taken from, or is based upon, publicly
available information.
BIOTECHNOLOGY
VALUE FUND, L.P.
March
10, 2009
28
SCHEDULE
I
TRANSACTIONS
IN SECURITIES OF AVIGEN, INC.
DURING
THE PAST TWO YEARS
|
Transaction
|
Quantity
|
Date
|
Price
($)
|
|
Biotechnology Value Fund,
L.P.
|
|
Sell
|
22,300
|
06/07/07
|
6.7507
|
|
|
Sell
|
600
|
06/08/07
|
6.8000
|
|
|
Sell
|
1,200
|
07/25/07
|
6.0002
|
|
|
Sell
|
20,700
|
08/07/07
|
5.9199
|
|
|
Sell
|
8,100
|
08/08/07
|
5.9055
|
|
|
Sell
|
1,400
|
08/09/07
|
5.9000
|
|
|
Sell
|
2,300
|
08/13/07
|
5.9173
|
|
|
Sell
|
2,600
|
08/27/07
|
5.7500
|
|
|
Sell
|
1,600
|
10/11/07
|
5.4167
|
|
|
Sell
|
400
|
10/12/07
|
5.3932
|
|
|
Sell
|
11,000
|
10/23/07
|
5.4395
|
|
|
Sell
|
58,400
|
10/24/07
|
5.4001
|
|
|
Sell
|
200
|
03/10/08
|
3.3370
|
|
|
Sell
|
1,000
|
04/07/08
|
2.5137
|
|
|
Sell
|
125,387
|
04/10/08
|
2.5000
|
|
|
Sell
|
10,000
|
05/05/08
|
3.4201
|
|
|
Sell
|
400
|
05/06/08
|
3.2660
|
|
|
Sell
|
700
|
07/31/08
|
3.5500
|
|
|
Sell
|
5,900
|
08/01/08
|
3.3568
|
|
|
Sell
|
1,800
|
08/04/08
|
3.3151
|
|
|
Sell
|
600
|
08/05/08
|
3.2500
|
|
|
Sell
|
2,100
|
08/06/08
|
3.3230
|
|
|
Sell
|
32,000
|
08/07/08
|
3.2501
|
|
|
Sell
|
100
|
08/08/08
|
3.4000
|
|
|
Sell
|
29,000
|
08/11/08
|
3.4807
|
|
|
Sell
|
8,400
|
08/13/08
|
3.4607
|
|
|
Sell
|
22,500
|
08/14/08
|
3.4923
|
|
|
Sell
|
600
|
08/15/08
|
3.6106
|
|
|
Sell
|
2,900
|
08/19/08
|
3.5023
|
|
|
Sell
|
1,500
|
08/20/08
|
3.5000
|
|
|
Sell
|
1,500
|
08/21/08
|
3.5501
|
|
|
Sell
|
75,600
|
08/28/08
|
3.9565
|
|
|
Sell
|
12,200
|
08/29/08
|
4.2484
|
|
|
Sell
|
23,000
|
09/04/08
|
4.3576
|
|
|
Sell
|
23,000
|
09/04/08
|
4.5195
|
|
|
Sell
|
3,600
|
09/05/08
|
4.5968
|
|
|
Sell
|
8,400
|
09/08/08
|
4.6000
|
I-1
|
Transaction
|
Quantity
|
Date
|
Price
($)
|
|
Sell
|
1,600
|
09/19/08
|
4.4000
|
|
|
Sell
|
900
|
09/22/08
|
4.2500
|
|
|
Buy
|
226,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
24,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
1,583,000
|
10/21/08
|
0.5853
|
|
|
Buy
|
12,300
|
11/04/08
|
0.7365
|
|
|
Buy
|
21,100
|
11/06/08
|
0.7091
|
|
|
Buy
|
9,400
|
11/07/08
|
0.7245
|
|
|
Buy
|
34,400
|
11/10/08
|
0.7329
|
|
|
Buy
|
18,200
|
11/11/08
|
0.7365
|
|
|
Buy
|
19,000
|
11/12/08
|
0.7456
|
|
|
Buy
|
6,500
|
11/13/08
|
0.7478
|
|
|
Buy
|
9,700
|
11/18/08
|
0.7355
|
|
|
Buy
|
7,300
|
11/19/08
|
0.7494
|
|
Biotechnology Value Fund II,
L.P.
|
|
Sell
|
15,000
|
06/07/07
|
6.7507
|
|
|
Sell
|
1,000
|
07/25/07
|
6.0002
|
|
|
Sell
|
14,000
|
08/07/07
|
5.9199
|
|
|
Sell
|
5,000
|
08/08/07
|
5.9055
|
|
|
Sell
|
2,000
|
08/09/07
|
5.9000
|
|
|
Sell
|
1,000
|
08/13/07
|
5.9173
|
|
|
Sell
|
1,000
|
08/27/07
|
5.7500
|
|
|
Sell
|
1,000
|
10/11/07
|
5.4167
|
|
|
Sell
|
1,000
|
10/12/07
|
5.3932
|
|
|
Sell
|
8,000
|
10/23/07
|
5.4395
|
|
|
Sell
|
39,000
|
10/24/07
|
5.4001
|
|
|
Sell
|
71,900
|
04/10/08
|
2.5000
|
|
|
Sell
|
7,000
|
05/05/08
|
3.4201
|
|
|
Sell
|
3,000
|
08/01/08
|
3.3568
|
|
|
Sell
|
2,000
|
08/04/08
|
3.3151
|
|
|
Sell
|
1,000
|
08/05/08
|
3.2500
|
|
|
Sell
|
1,000
|
08/06/08
|
3.3230
|
|
|
Sell
|
22,000
|
08/07/08
|
3.2501
|
|
|
Sell
|
19,000
|
08/11/08
|
3.4807
|
|
|
Sell
|
6,000
|
08/13/08
|
3.4607
|
|
|
Sell
|
16,000
|
08/14/08
|
3.4923
|
|
|
Sell
|
2,000
|
08/19/08
|
3.5023
|
|
|
Sell
|
1,000
|
08/20/08
|
3.5000
|
|
|
Sell
|
1,000
|
08/21/08
|
3.5501
|
|
|
Sell
|
52,000
|
08/28/08
|
3.9565
|
I-2
|
Transaction
|
Quantity
|
Date
|
Price
($)
|
|
Sell
|
9,000
|
08/29/08
|
4.2484
|
|
|
Sell
|
16,000
|
09/04/08
|
4.3576
|
|
|
Sell
|
16,000
|
09/04/08
|
4.5195
|
|
|
Sell
|
3,000
|
09/05/08
|
4.5968
|
|
|
Sell
|
5,000
|
09/08/08
|
4.6000
|
|
|
Sell
|
1,000
|
09/19/08
|
4.4000
|
|
|
Buy
|
156,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
17,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
1,092,000
|
10/21/08
|
0.5853
|
|
|
Buy
|
9,000
|
11/04/08
|
0.7365
|
|
|
Buy
|
14,000
|
11/06/08
|
0.7091
|
|
|
Buy
|
7,000
|
11/07/08
|
0.7245
|
|
|
Buy
|
24,000
|
11/10/08
|
0.7329
|
|
|
Buy
|
12,000
|
11/11/08
|
0.7365
|
|
|
Buy
|
14,000
|
11/12/08
|
0.7456
|
|
|
Buy
|
4,000
|
11/13/08
|
0.7478
|
|
|
Buy
|
7,000
|
11/18/08
|
0.7355
|
|
|
Buy
|
5,000
|
11/19/08
|
0.7494
|
|
BVF
Inc.
|
|
Sell
|
58,000
|
06/07/07
|
6.7507
|
|
|
Sell
|
4,000
|
07/25/07
|
6.0002
|
|
|
Sell
|
56,000
|
08/07/07
|
5.9199
|
|
|
Sell
|
21,000
|
08/08/07
|
5.9055
|
|
|
Sell
|
6,000
|
08/09/07
|
5.9000
|
|
|
Sell
|
5,000
|
08/13/07
|
5.9173
|
|
|
Sell
|
4,000
|
08/27/07
|
5.7500
|
|
|
Sell
|
4,000
|
10/11/07
|
5.4167
|
|
|
Sell
|
3,000
|
10/12/07
|
5.3932
|
|
|
Sell
|
29,000
|
10/23/07
|
5.4395
|
|
|
Sell
|
152,000
|
10/24/07
|
5.4001
|
|
|
Sell
|
1,000
|
03/10/08
|
3.3370
|
|
|
Sell
|
2,000
|
04/07/08
|
2.5137
|
|
|
Sell
|
128,720
|
04/10/08
|
2.5000
|
|
|
Sell
|
24,000
|
05/05/08
|
3.4201
|
|
|
Sell
|
1,000
|
05/06/08
|
3.2660
|
|
|
Sell
|
12,000
|
08/01/08
|
3.3568
|
|
|
Sell
|
5,000
|
08/04/08
|
3.3151
|
|
|
Sell
|
2,000
|
08/05/08
|
3.2500
|
|
|
Sell
|
4,000
|
08/06/08
|
3.3230
|
|
|
Sell
|
76,000
|
08/07/08
|
3.2501
|
I-3
|
Transaction
|
Quantity
|
Date
|
Price
($)
|
|
Sell
|
66,000
|
08/11/08
|
3.4807
|
|
|
Sell
|
1,000
|
08/12/08
|
3.4870
|
|
|
Sell
|
19,000
|
08/13/08
|
3.4607
|
|
|
Sell
|
55,000
|
08/14/08
|
3.4923
|
|
|
Sell
|
1,000
|
08/15/08
|
3.6106
|
|
|
Sell
|
7,000
|
08/19/08
|
3.5023
|
|
|
Sell
|
3,000
|
08/20/08
|
3.5000
|
|
|
Sell
|
3,000
|
08/21/08
|
3.5501
|
|
|
Sell
|
178,000
|
08/28/08
|
3.9565
|
|
|
Sell
|
30,000
|
08/29/08
|
4.2484
|
|
|
Sell
|
54,000
|
09/04/08
|
4.3576
|
|
|
Sell
|
54,000
|
09/04/08
|
4.5195
|
|
|
Sell
|
10,000
|
09/05/08
|
4.5968
|
|
|
Sell
|
19,000
|
09/08/08
|
4.6000
|
|
|
Sell
|
3,000
|
09/19/08
|
4.4000
|
|
|
Buy
|
560,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
3,919,000
|
10/21/08
|
0.5853
|
|
|
Buy
|
59,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
32,000
|
11/04/08
|
0.7365
|
|
|
Buy
|
52,000
|
11/06/08
|
0.7091
|
|
|
Buy
|
24,000
|
11/07/08
|
0.7245
|
|
|
Buy
|
87,000
|
11/10/08
|
0.7329
|
|
|
Buy
|
45,000
|
11/11/08
|
0.7365
|
|
|
Buy
|
49,000
|
11/12/08
|
0.7456
|
|
|
Buy
|
16,000
|
11/13/08
|
0.7478
|
|
|
Buy
|
24,000
|
11/18/08
|
0.7355
|
|
|
Buy
|
18,000
|
11/19/08
|
0.7494
|
|
Investment 10,
L.L.C.
|
|
Sell
|
6,000
|
06/07/07
|
6.7507
|
|
|
Sell
|
6,000
|
08/07/07
|
5.9200
|
|
|
Sell
|
2,000
|
08/08/07
|
5.9055
|
|
|
Sell
|
1,000
|
08/09/07
|
5.9000
|
|
|
Sell
|
1,000
|
08/13/07
|
5.9173
|
|
|
Sell
|
3,000
|
10/23/07
|
5.4395
|
|
|
Sell
|
17,000
|
10/24/07
|
5.4001
|
|
|
Sell
|
16,630
|
04/10/08
|
2.5000
|
|
|
Sell
|
3,000
|
05/05/08
|
3.4201
|
|
|
Sell
|
1,000
|
08/01/08
|
3.3568
|
|
|
Sell
|
1,000
|
08/04/08
|
3.3151
|
|
|
Sell
|
10,000
|
08/07/08
|
3.2501
|
I-4
|
Transaction
|
Quantity
|
Date
|
Price
($)
|
|
Sell
|
8,000
|
08/11/08
|
3.4807
|
|
|
Sell
|
2,000
|
08/13/08
|
3.4607
|
|
|
Sell
|
7,000
|
08/14/08
|
3.4923
|
|
|
Sell
|
1,000
|
08/19/08
|
3.5023
|
|
|
Sell
|
22,000
|
08/28/08
|
3.9565
|
|
|
Sell
|
4,000
|
08/29/08
|
4.2484
|
|
|
Sell
|
7,000
|
09/04/08
|
4.3576
|
|
|
Sell
|
7,000
|
09/04/08
|
4.5195
|
|
|
Sell
|
1,000
|
09/05/08
|
4.5968
|
|
|
Sell
|
2,000
|
09/08/08
|
4.6000
|
|
|
Buy
|
58,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
406,000
|
10/21/08
|
0.5853
|
|
|
Buy
|
6,000
|
10/21/08
|
0.5500
|
|
|
Buy
|
3,000
|
11/04/08
|
0.7365
|
|
|
Buy
|
5,000
|
11/06/08
|
0.7091
|
|
|
Buy
|
3,000
|
11/07/08
|
0.7245
|
|
|
Buy
|
9,000
|
11/10/08
|
0.7329
|
|
|
Buy
|
5,000
|
11/11/08
|
0.7365
|
|
|
Buy
|
5,000
|
11/12/08
|
0.7456
|
|
|
Buy
|
2,000
|
11/13/08
|
0.7478
|
|
|
Buy
|
3,000
|
11/18/08
|
0.7355
|
|
|
Buy
|
2,000
|
11/19/08
|
0.7494
|
|
|
BVF Acquisition LLC
|
||||||
|
None
|
||||||
|
BVF Partners L.P.
|
||||||
|
None
|
||||||
|
BVF Inc.
|
||||||
|
None
|
||||||
|
Mark N. Lampert
|
||||||
|
None
|
||||||
|
Matthew D. Perry
|
||||||
|
None
|
||||||
I-5
|
Transaction
|
Quantity
|
Date
|
Price
($)
|
|
Oleg Nodelman
|
||||||
|
None
|
||||||
|
Robert M. Coppedge
|
||||||
|
None
|
||||||
I-6
SCHEDULE
II
The
following table is reprinted from the Company’s Definitive Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission on March 9, 2009,
except as otherwise indicated.
The
following table sets forth certain information regarding the ownership of
Avigen’s Common Stock as of January 31, 2009 by: (1) each director and nominee
for director; (2) each of the executive officers named in the Summary
Compensation Table; (3) all executive officers and directors of Avigen as a
group; and (4) all those known by Avigen to be beneficial owners of more than
five percent of its Common Stock. Percentage ownership amounts are based on
29,769,115 outstanding shares as of January 31, 2009.
|
Beneficial
Ownership (1)
|
||||||||
|
Beneficial
Owner
|
Number
of
Shares
|
Percent
of
Total
|
||||||
|
Kenneth
Chahine, J.D., Ph.D. (2)
|
743,155 | 2.44 | % | |||||
|
Andrew
Sauter (3)
|
277,955 | * | ||||||
|
Michael
Coffee (2)
|
348,997 | 1.16 | % | |||||
|
Kirk
Johnson, Ph.D. (2)
|
333,859 | 1.11 | % | |||||
|
M.
Christina Thomson, J.D. (2)
|
350,344 | 1.16 | % | |||||
|
Stephen
Dilly, M.B.B.S., Ph.D. (2)
|
22,300 | * | ||||||
|
Zola
Horovitz, Ph.D. (4)
|
147,500 | * | ||||||
|
Jan
Öhrström, M.D. (2)
|
22,300 | * | ||||||
|
John
Prendergast, Ph.D. (5)
|
141,608 | * | ||||||
|
Richard
Wallace (2)
|
39,950 | * | ||||||
|
All
executive officers and directors as a group (11 persons)
(6)
|
2,427,968 | 7.55 | % | |||||
|
5%
Stockholders
|
||||||||
|
BVF
Inc. (7)
|
8,819,600 | 29.63 | % | |||||
|
900
North Michigan Avenue, Suite 1100
|
||||||||
|
Chicago,
IL 60611
|
||||||||
|
HealthCor
Management, L.P. (9)
|
2,258,500 | 7.59 | % | |||||
|
Carnegie
Hall Tower, 152 West 57th Street, 47th Floor
|
||||||||
|
New
York, NY 10019
|
||||||||
____________________
|
*
|
Less
than one percent.
|
|
(1)
|
This
table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13G and 13D filed with the SEC.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, Avigen believes that each of the
stockholders named in this table has sole voting and investment power with
respect to the shares indicated as beneficially owned. Applicable
percentages are based on 29,769,115 shares outstanding on January 31,
2009, adjusted as required by rules promulgated by the SEC. Unless
otherwise indicated, the address of each of the individuals and entities
listed in this table is c/o Avigen at the address on the first page of
this proxy statement.
|
|
(2)
|
Consists
solely of shares issuable upon the exercise of options that are
exercisable within 60 days of the date of this
table.
|
II-1
|
(3)
|
Includes
273,830 shares issuable upon the exercise of options held by Mr. Sauter
that are exercisable within 60 days of the date of this
table.
|
|
(4)
|
Includes
142,500 shares issuable upon the exercise of options held by Dr. Horovitz
that are exercisable within 60 days of the date of this
table.
|
|
(5)
|
Includes
102,500 shares issuable upon the exercise of options held by Dr.
Prendergast that are exercisable within 60 days of the date of this
table.
|
|
(6)
|
Includes
an aggregate of 2,379,735 shares issuable upon exercise of options which
executive officers and directors of Avigen have the right to acquire
within 60 days of the date of this table.
|
|
(7)
|
Based
upon a Schedule 13D/A filed with the SEC on January 12, 2009 by
Biotechnology Value Fund, L.P. and includes shares owned by the following
affiliated entities: (a) Biotechnology Value Fund, L.P. (“Fund I”)
1,975,340 shares; (b) Biotechnology Value Fund II, L.P. (“Fund II”)
1,364,911 shares; (c) BVF Investments, L.L.C. (“Investments”) 4,969,764
shares; and (d) Investment 10, L.L.C. (“Investment 10”) 509,585 shares.
BVF, Inc. (“BVF”) and BVF Partners (“Partners” and, together with Fund I,
Fund II, Investments and BVF, the “BVF Entities”) beneficially own
8,819,600 aggregate shares.
|
|
(8)
|
Based
upon a Schedule 13G filed with the SEC on February 17, 2009. Collectively,
HealthCor, L.P., Healthcor Offshore Master Fund, L.P. and HealthCor Hybrid
Offshore Master Fund, L.P. (each a “Fund” and together, the “Funds”) are
the beneficial owners of a total of 2,258,500 shares of the Common Stock
of the Issuer. By virtue of their position as feeder funds, HealthCor
Offshore, Ltd. and HealthCor Hybrid Offshore, Ltd. may be deemed
beneficial owners of the shares of Common Stock owned by HealthCor
Offshore Master Fund, L.P., and HealthCor Hybrid Offshore Master Fund,
L.P., respectively. HealthCor Offshore GP, LLC is the general partner of
HealthCor Offshore Master Fund, L.P. Accordingly, HealthCor Offshore GP,
LLC may be deemed to beneficially own the shares of Common Stock that are
beneficially owned by HealthCor Offshore Master Fund, L.P. HealthCor
Group, LLC is the general partner of HealthCor Offshore GP, LLC and,
therefore, may be deemed to beneficially own the shares of Common Stock
that are beneficially owned by HealthCor Offshore Master Fund, L.P.
HealthCor Hybrid Offshore GP, LLC is the general partner of HealthCor
Hybrid Offshore Master Fund, L.P. Accordingly, HealthCor Hybrid Offshore
GP, LLC may be deemed to beneficially own the shares of Common Stock that
are beneficially owned by HealthCor Hybrid Offshore Master Fund, L.P.
HealthCor Group, LLC is the general partner of HealthCor Hybrid Offshore
GP, LLC and, therefore, may be deemed to beneficially own the shares of
Common Stock that are beneficially owned by HealthCor Hybrid Offshore
Master Fund, L.P. By virtue of its position as the investment manager of
the Funds, HealthCor Management, L.P. may be deemed a beneficial owner of
all the shares of Common Stock owned by the Funds. HealthCor Associates,
LLC is the general partner of HealthCor Management, L.P. and thus may also
be deemed to beneficially own the shares of Common Stock that are
beneficially owned by the Funds. HealthCor Group LLC is the general
partner of HealthCor Capital, L.P., which is in turn the general partner
of HealthCor, L.P. Accordingly, each of HealthCor Capital L.P. and
HealthCor Group, LLC may be deemed to beneficially own the shares of
Common Stock that are beneficially owned by HealthCor, L.P. As the
Managers of HealthCor Associates, LLC, Arthur Cohen and Joseph Healey
exercise both voting and investment power with respect to the shares of
Common Stock reported herein, and therefore each may be deemed a
beneficial owner of such Common Stock. Each of the Reporting Persons
hereby disclaims any beneficial ownership of any such Shares in excess of
their actual pecuniary interest therein. The address for all entities
other than Arthur Cohen is set forth in the table, and the address of
Arthur Cohen is 12 South Main Street, #203 Norwalk, CT
06854.
|
II-2
IMPORTANT
Tell your
Board what you think! Your vote is important. No matter how many
Shares you own, please give the Committee your proxy FOR the proposal to remove all
of the existing directors serving on the Board, FOR the proposal to amend the
Bylaws to permit stockholders to elect directors to the Board in cases when the
entire Board is vacant, FOR the proposal to elect the
Nominees and FOR the
Bylaw Restoration Proposal by taking three steps:
|
·
|
SIGNING the enclosed
GOLD proxy
card,
|
|
·
|
DATING the enclosed
GOLD proxy card,
and
|
|
·
|
MAILING the enclosed
GOLD proxy card
TODAY in the
envelope provided (no postage is required if mailed in the United
States).
|
If any of
your Shares are held in the name of a brokerage firm, bank, bank nominee or
other institution, only it can vote such Shares and only upon receipt of your
specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute the GOLD proxy card representing
your Shares. The BVF Group urges you to confirm in writing your
instructions to the BVF Group in care of MacKenzie Partners, Inc. at the address
provided below so that the BVF Group will be aware of all instructions given and
can attempt to ensure that such instructions are followed.
If you
have any questions or require any additional information concerning this Proxy
Statement, please contact MacKenzie Partners, Inc. at the address set forth
below.
105
Madison Avenue
New York,
New York 10016
(212)
929-5500 (Call Collect)
proxy@mackenziepartners.com
or
CALL
TOLL FREE (800) 322-2885
GOLD
PROXY CARD
AVIGEN,
INC.
SPECIAL
MEETING OF STOCKHOLDERS
THIS
PROXY IS SOLICITED ON BEHALF OF
THE
BVF GROUP
THE
BOARD OF DIRECTORS OF AVIGEN, INC.
IS
NOT SOLICITING THIS PROXY
P R O X Y
The
undersigned appoints Mark N. Lampert and Oleg Nodelman, and each of them,
attorneys and agents with full power of substitution to vote all shares of
common stock of Avigen, Inc. (the “Company”) which the undersigned owned and
would be entitled to vote if personally present at the Special Meeting of the
stockholders of the Company to be called by the Company at the request of the
BVF Group (as defined below), to be held at Avigen’s offices at 1301 Harbor Bay
Parkway, Alameda, California at 9:00 a.m. (local time) on Friday, March 27,
2009, and including at any adjournments or postponements thereof and at any
meeting called in lieu thereof (the “Special Meeting”), or any meeting of
stockholders that may be ordered by the Delaware Court of Chancery or a court of
comparable jurisdiction at which the directors nominated by Biotechnology Value
Fund, L.P. (“BVF”) and set forth on the reverse will be nominated for election
to the Board of Directors, including the proposals set forth on the reverse, as
set forth in the Notice of Special Meeting of Stockholders and Proxy Statement
filed by BVF and certain of its affiliates (the “BVF Group”) with the Securities
and Exchange Commission with respect to the Special Meeting.
The
undersigned hereby revokes any other proxy or proxies heretofore given to vote
or act with respect to the shares of common stock of the Company held by the
undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof.
IF
NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSALS ON THE REVERSE, THIS
PROXY WILL BE VOTED “FOR” ALL PROPOSALS.
IMPORTANT:
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
GOLD
PROXY CARD
BVF
RECOMMENDS A VOTE “FOR” THE PROPOSALS LISTED BELOW
[X]
Please mark vote as in this example
The BVF
Group’s proposal to remove all of the existing directors serving on the
Company’s Board of Directors without cause.
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
[ ]
|
[ ]
|
[ ]
|
The BVF
Group’s proposal to amend the Company’s Amended and Restated Bylaws (the
“Bylaws”) to permit stockholders to elect directors to the Board in cases when
the entire Board is vacant.
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
[ ]
|
[ ]
|
[ ]
|
The BVF
Group’s proposal to elect its slate of director nominees to the Company’s Board
of Directors.
|
NOMINEE
|
FOR
NOMINEE
|
WITHHOLD
AUTHORITY
TO
VOTE FOR NOMINEE
|
|
Class
I Director:
(a)
Mark N. Lampert
|
[ ]
|
[ ]
|
|
Class
II Director:
(b)
Robert M. Coppedge
|
[ ]
|
[ ]
|
|
Class
III Director:
(c)
Matthew D. Perry
|
[ ]
|
[ ]
|
|
Class
III Director:
(d)
Oleg Nodelman
|
[ ]
|
[ ]
|
The BVF
Group’s proposal to repeal any provision to the Bylaws that were effected
between January 8, 2009, the date prior to the date the BVF Group submitted its
request to the Company to call the Special Meeting, and the time this proposal
becomes effective.
|
FOR
|
AGAINST
|
ABSTAIN
|
|
|
[ ]
|
[ ]
|
[ ]
|
Proposal
No. 3 is subject to the effectiveness of Proposal No. 1.
DATED: ____________________________
____________________________________
(Signature)
____________________________________
(Signature,
if held jointly)
____________________________________
(Title)
WHEN SHARES
ARE
HELD JOINTLY, JOINT OWNERS SHOULD EACH
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC.,
SHOULD INDICATE THE CAPACITY IN WHICH SIGNING. PLEASE SIGN EXACTLY AS
NAME APPEARS ON THIS PROXY.