At December
31, 2008, approximately $580,000 was unpaid and included on our balance sheet
under accrued compensation and related expenses. These accrued amounts primarily
represent deferred severance payments and extended health care benefits for
certain impacted employees and are expected to be paid in the first half of
2009. We do not expect to incur any additional costs associated with the
workforce reduction.
Effective October 31, 2008 we notified the landlord of our building lease
for approximately 4,800 square feet of lab space at 1201 Harbor Bay Parkway, of
our intent to exercise our termination rights and accelerate the expiration date
on the remaining lease term to 240 days. Costs associated with the termination
of this contract totaling $96,000 were accrued as of December 31, 2008 and will
be paid over the remaining period of the lease agreement until June 30, 2009.
Based on
market conditions for rental property in the area and preliminary negotiations
with a potential subtenant, we determined that our expected sublease income for
approximately 12,000 square feet of our laboratory facilities under lease
through November 2010 would be less than our scheduled lease liability. As a
result, for the period ended December 31, 2008, we recorded exit costs
associated with the abandonment of these facilities of approximately $50,000.
10. Asset Purchase Agreement
Baxter Healthcare Corporation
In
December 2008, we entered into an asset purchase agreement with Baxter
Healthcare Corporation, or Baxter, whereby we sold to Baxter the rights to our
early stage blood coagulation compound, AV513.
We
received a cash payment of $7.0 million from Baxter as proceeds of the sale of
AV513 and transferred the technology to Baxter in December 2008. The $7.0
million was non-refundable and we did not have any significant additional
performance obligations associated with the agreement as of December 31, 2008.
We also agreed to provide technology transfer support for approximately three
months to allow Baxter a reasonable period of time to identify all intangible
items of interest and know-how. We received a cash payment of $100,000 in
December and are scheduled to receive $100,000 at the completion of the agreed
upon technology transfer support period in 2009. Because these technology
transfer support activities are considered perfunctory, in that they are not
essential to the know-how transferred but represent a convenience for Baxter,
there are no specific performance criteria that, if not completed, would result
in a partial refund of the sale price to Baxter, we have demonstrated a
history of completing similar activities in past transactions, and these
activities are not costly or lengthy to perform, we recorded the payment
received as revenue in 2008 and expect to record the remaining scheduled payment
as revenue upon receipt.
11. AAV Gene Therapy Assignment
Agreement - Genzyme Corporation.
In December 2005, we entered into an
agreement with Genzyme Corporation, or Genzyme, whereby we assigned to Genzyme
our rights to certain gene therapy-related intellectual property, our gene
therapy clinical trial programs for Parkinsons disease and hemophilia, gene
therapy-related contracts, and the use of previously manufactured clinical-grade
vector materials. Under the terms of the agreement, we received a $12.0
million payment and could receive significant additional development milestones,
sublicensing fees and royalty payments based on the successful development of
products by Genzyme utilizing technologies previously developed by us. The
$12.0 million payment was non-refundable and we did not have any significant
additional performance obligations associated with the agreement as of December
31, 2005. Because we could receive significant future cash flows in
connection with this agreement, we have not accounted for this transaction as
discontinued operations. As such, we recognized the entire payment
received as revenue in 2005 and expect that any future payments we receive under
the terms of the agreement will also be recorded as revenue. We did not
receive any payments from Genzyme for the periods ended December 31, 2008, 2007
and 2006.
12. Long Term Loan Payable
In June
2000, we entered into a financing arrangement with Wells Fargo Bank, National
Association (the Bank) to support construction-related activities. Under this
arrangement, we had the right to borrow up to $10.0 million through June 1,
2003. This revolving line of credit was amended several times to extend the
expiration date. This loan commitment is currently scheduled to expire on
November 30, 2009, or less than one year from the date of these financial
statements. Accordingly, as of December 31, 2008, the loan was classified as a
current liability. Under the terms of the credit facility, as renewed, we may
from time to time during the term of the Loan Commitment partially or wholly
repay any outstanding borrowings, provided that amounts repaid may not be
re-borrowed, and that the outstanding principal balance of the loan commitment
shall be due and payable in full on November 30, 2009. In addition, the Bank
will separately maintain our currently outstanding standby letter of credit in
the amounts of $2.0 million pursuant to the terms required under our building
operating lease that expires in November 2010 and is issued in favor of the
property owner.
Amounts
borrowed under this credit facility, as renewed, bear interest based on either
a) a floating rate between 0.25 to 0.75 percentage points below the Banks
established Prime Rate, or b) at a fixed rate determined by the Bank that is the
London Inter-Bank Offered Rate plus a margin adjustment that varies between
0.50% and 1.0% on the date of each drawdown which is dependent on the
level of the market value of our investment portfolio held with a subsidiary of
Wells Fargo on that date. This interest rate, if based on the Prime Rate, is
adjusted periodically, and if based on LIBOR, is subsequently reset every three
or six months. The weighted average interest rate for all outstanding drawdowns
on this obligation was 2.50% and 5.81% at December 31, 2008 and 2007,
respectively. We have pledged a portion of our portfolio of available-for-sale
securities equal to the amount of outstanding borrowings to secure this
obligation, and have identified these pledged assets as restricted investments
on our balance sheets. As of December 31, 2008 and 2007, we had borrowed $7.0
million from the line of credit. Payments of interest only are due monthly
through November 30, 2009, at which time a balloon payment of outstanding
principal is due.
58
13. Stockholders Equity
Common Stock
In August
and September 1998, we issued an aggregate of 1,306,505 shares of our common
stock at $2.25 to $2.94 per share to selected institutional investors. The
offering was completed through a private placement. As part of the transaction,
we issued warrants to purchase 261,301 shares of our common stock with an
exercise price of $2.18 to $3.67 per share. The exercise price was 125% of the
fair market value per share of our underlying stock on the corresponding closing
day and the warrants carried a five-year term. All of these warrants not
exercised have expired. After deducting commissions and fees from the gross
proceeds of $3.0 million, net proceeds from this transaction approximated $2.7
million.
In
December 1998, we issued 1,367,280 shares of our common stock at $3.81 to $4.88
per share to selected institutional investors. The offering was completed
through a private placement. As part of this transaction, we issued warrants to
purchase 273,456 shares of our common stock with an exercise price ranging from
$4.76 to $6.09 per share. The exercise price was 125% of the fair market value
per share of our underlying stock on the corresponding closing day and the
warrants carried a five-year term. All of these warrants not exercised have
expired. After deducting commissions and fees from the gross proceeds of $5.6
million, net proceeds from this transaction approximated $5.2 million.
In
February and April 1999, we issued an aggregate of 2,198,210 shares of our
common stock at $5.50 to $6.00 per share to selected institutional investors.
The offering was completed through a private placement. As part of this
transaction, we issued warrants to purchase 439,642 shares of our common stock
with an exercise price of $6.87 to $7.50 per share. The exercise price was 125%
of the fair market value per share of the underlying stock on the corresponding
closing day and the warrants carried a five-year term. All of these warrants not
exercised have expired. After deducting commissions and fees from the gross
proceeds of $13.2 million, net proceeds from this transaction approximated $12.2
million.
In
October and November 1999, we issued an aggregate of 2,033,895 shares of our
common stock at $16.19 to $25.56 per share to selected institutional investors.
The offering was completed through a private placement. As part of this
transaction, we issued warrants to purchase 406,779 shares of our common stock
with an exercise price of $20.25 to $31.95 per share. The exercise price was
125% of the fair market value per share of our underlying stock on the
corresponding closing day and the warrants carried a five-year term. All of
these warrants not exercised have expired. After deducting commissions and fees
from the gross proceeds of $40.0 million, net proceeds from this transaction
approximated $37.2 million.
In March
2000, we issued a warrant to purchase 40,000 shares of our common stock as
partial consideration for the extension of our building lease. The fair value of
this warrant at the date of issuance was approximately $1.7 million. This fair
value is being amortized over the life of the lease extension, or May 2008. This
warrant was issued with an exercise price equal to the fair market value per
share of our underlying stock at the time of issuance, or $56.00, and carried a
five-year term. In March 2005, this warrant expired unexercised.
Also, in
March 2000, we issued a warrant to purchase 50,000 shares of our common stock as
partial consideration for the acquisition of certain patent licenses previously
used in our gene therapy-related research and development activities. The fair
value of this warrant at the date of issuance was approximately $3.2 million and
was fully expensed in the year ended June 30, 2000. This warrant was issued with
an exercise price equal to the fair market value per share of our underlying
stock at the time of issuance, or $82.00, and carried a five-year term. In March
2005, this warrant expired unexercised.
In April
and May 2000, we issued an aggregate of 1,150,000 shares of our common stock at
$26.00 per share through a public offering. After deducting commissions and fees
from the gross proceeds of $29.9 million, net proceeds from this transaction
totaled $27.6 million.
59
In
November 2000, we issued an aggregate of 2,291,239 shares of our common stock
between $37.50 and $45.06 per share through a public offering. After deducting
combined commissions and fees from the gross proceeds of $90.7 million, net
proceeds from this transaction totaled $86.1 million.
In
February 2001, we issued 313,636 shares of common stock at $47.82 per share to
Bayer AG, in connection with a collaboration agreement entered into with Bayer
Corporation dated November 17, 2000. Net proceeds from this transaction totaled
$15.0 million.
In March
2004, we issued a warrant to purchase 15,000 shares of our common stock as
partial consideration for the acquisition of certain intellectual property
rights used in our research and development activities. The fair value of this
warrant was approximately $97,000 when we entered into the corresponding license
agreement in October 2003. The fair value of the warrant was fully expensed and
recorded in accounts payable and other accrued liabilities as of December 31,
2003. Upon issuance, the fair value of the warrant was reclassified to
additional paid in capital for the year ended December 31, 2004. This warrant
was issued with an exercise price equal to the fair market value per share of
our underlying stock at the time of issuance, or $6.50, and carries a ten-year
term. At December 31, 2008, this was the only issued warrant Avigen had that was
outstanding.
In May
2006, we issued an aggregate of 3,939,760 shares of our common stock at $5.37
per share to selected institutional investors. The offering was completed
through a private placement. After deducting combined commissions and fees from
the gross proceeds of $21.2 million, net proceeds from this transaction totaled
$19.4 million. The resales of these shares were registered pursuant to a
registration statement that was declared effective on June 30, 2006.
In April
and May 2007, we issued an aggregate of 4,413,191 shares of our common stock at
$6.94 per share through a public offering. After deducting combined commissions
and fees from the gross proceeds of $30.6 million, net proceeds from this
transaction totaled $28.5 million.
Stockholders Rights Plan
On
November 21, 2008, our Board of Directors adopted a preferred stock rights plan
and declared a dividend of one preferred share purchase right (a Right) for
each outstanding share of Common Stock, par value $0.001 per share (the Common
Shares), of the Company. The dividend was payable on December 1, 2008 (the
Record Date) to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-hundredth of a share
of Series A Junior Participating Preferred Stock, par value $0.001 per share
(the Preferred Shares), and will become exercisable only if a person or group
acquires beneficial ownership of 20% or more of the Companys common stock
(Acquiring Person). If such Acquiring Person acquires beneficial ownership of
20% or more of the Companys common stock, all Rights holders, except the
Acquiring Person, will be entitled to purchase one one-hundredth of a Preferred
Share at a price of $8.00 per one one-hundredth of a Preferred Share (the
Purchase Price), subject to adjustment. The rights plan has been designed to
discourage acquisitions of more than 20% of the Companys common stock without
negotiations with the board of directors. The rights expire on December 1, 2018.
The rights will trade with the Companys common stock, unless and until they are
separated upon the occurrence of certain future events. The board of directors
may terminate the rights plan at any time or redeem the rights prior to the time
the rights are triggered.
60
Shares
Reserved for Future Issuance
We have reserved shares of our common stock for future issuance as
follows:
|
Year
Ended
|
|
December
31,
|
|
2008
|
Stock options outstanding
|
4,142,324
|
Stock options
available for grant
|
2,167,247
|
Warrants to purchase common stock
|
15,000
|
Shares available
for Employee Stock Purchase Plan
|
360,000
|
|
6,684,571
|
14. Share-based Compensation
During
the years ended December 31, 2008, 2007 and 2006, share-based compensation
expense has been recognized for all our share-based compensation plans as
follows (in thousands, except per share data):
|
|
Year Ended December 31,
|
|
|
2008
|
|
2007
|
|
2006
|
Research and development
|
|
$
|
(597
|
)
|
|
$
|
(600
|
)
|
|
$
|
(437
|
)
|
General and
administrative
|
|
|
(1,577
|
)
|
|
|
(1,234
|
)
|
|
|
(944
|
)
|
Share-based compensation expense before taxes
|
|
|
(2,174
|
)
|
|
|
(1,834
|
)
|
|
|
(1,381
|
)
|
Related income
tax benefits
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
share-based compensation expense
|
|
$
|
(2,174
|
)
|
|
$
|
(1,834
|
)
|
|
$
|
(1,381
|
)
|
Net share-based
compensation expenses per basic and diluted
common
share
|
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.06
|
)
|
Since we
have cumulative operating losses as of December 31, 2008 for which a valuation
allowance has been established, we recorded no income tax benefits for
share-based compensation arrangements during the years ended December 31, 2008,
2007 and 2006, respectively.
As of
December 31, 2008, we had stock options outstanding to employees, non-employee
directors, and consultants under three share-based compensation plans; however,
only the 2006 Incentive Stock Option Plan (2006 Plan) was available for future
grants. The 1996 Equity Incentive Plan (1996 Plan) and the 1996 Non-Employee
Directors Stock Option Plan (Directors Plan) were both approved by our
stockholders, had a ten-year duration and were terminated on March 29, 2006. The
2006 Plan was approved by our stockholders in May 2006 and is an amendment and
restatement of the 2000 Equity Incentive Plan (2000 Plan) which was adopted by
our Board of Directors in June 2000. The adoption of the 2006 Plan did not
increase the number of shares available for grant under the 2000
Plan.
In
general, the outstanding options under these plans were granted at a price equal
to the fair market value of our stock on the date of grant with a term of 10
years. Grants under the 2006 Plan and 1996 Plan generally become exercisable on
a quarterly basis over a vesting period of either three or four years. Grants
under the Directors Plan become exercisable in three annual installments. As of
December 31, 2008, we had an aggregate of 4,142,324 shares of our common stock
reserved for issuance under these plans subject to outstanding awards and
2,167,247 shares available for future grants of share-based awards under the
2006 Plan.
61
The following
table summarizes option activity with regard to all stock options:
|
Outstanding Options
|
|
|
|
|
|
Weighted-
|
|
Number of
|
|
Average Exercise
|
|
Shares
|
|
Price per Share
|
Outstanding at December 31, 2005
|
|
3,487,254
|
|
|
$
|
10.87
|
Granted
|
|
1,605,500
|
|
|
|
5.16
|
Canceled
|
|
(732,982
|
)
|
|
|
9.45
|
Exercised
|
|
(269,098
|
)
|
|
|
3.76
|
Outstanding at December 31, 2006
|
|
4,090,674
|
|
|
$
|
9.36
|
Granted
|
|
1,296,692
|
|
|
|
4.96
|
Canceled
|
|
(748,752
|
)
|
|
|
14.26
|
Exercised
|
|
(163,387
|
)
|
|
|
3.63
|
Outstanding at December 31, 2007
|
|
4,475,227
|
|
|
$
|
7.47
|
Granted
|
|
465,700
|
|
|
|
2.73
|
Canceled
|
|
(722,197
|
)
|
|
|
10.50
|
Exercised
|
|
(76,406
|
)
|
|
|
3.41
|
Outstanding at December 31, 2008
|
|
4,142,324
|
|
|
$
|
6.48
|
The fair
value of our employee stock options granted during 2008, 2007 and 2006 were
estimated under the Black-Scholes option valuation model with the weighted
average assumptions shown in the table below. Expected volatilities are based on
the historical volatility of our common stock. The expected term of options
granted is based primarily on analyses of historical employee termination and
option exercise behavior; separate groups of employees that have similar
historical exercise behavior are considered separately for valuation purposes.
The risk-free interest rates are based on the U.S. Treasury yield for a period
consistent with the expected term of the option in effect at the time of the
grant. Share-based compensation expense recognized during the period is based on
the value of the portion of share-based payment awards that is ultimately
expected to vest during the period. The estimated forfeiture rates are based on
analyses of historical data, taking into account patterns of involuntary
termination and other factors.
|
|
Year Ended December 31,
|
|
|
2008
|
|
2007
|
|
2006
|
Expected volatility
|
|
0.6945
|
|
0.5421
|
|
0.6006
|
Risk free
interest rate
|
|
2.69%
|
|
4.16%
|
|
4.60%
|
Expected life of options in years
|
|
4.59
|
|
4.30
|
|
3.68
|
Expected
dividend yield
|
|
0%
|
|
0%
|
|
0%
|
The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options and warrants that have no vesting restrictions and
are fully transferable. In addition, option valuation models, including
Black-Scholes, require the input of highly subjective assumptions, including the
expected stock price volatility. Because our stock options and warrants are not
traded, they have characteristics significantly different from those of traded
options and warrants, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in our opinion, the existing
option valuation models, including Black-Scholes, do not necessarily provide a
reliable single measure of the fair value of our stock options and
warrants.
62
The
following table summarizes information with regard to total stock options
outstanding under all stock option plans at December 31, 2008:
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
Average
|
|
|
|
|
Weighted-
|
Range of Exercise
|
|
|
Number
|
|
Contractual
|
|
Exercise
|
|
Number
|
|
Average Exercise
|
Prices
|
|
|
Of Shares
|
|
Life
|
|
Price
|
|
Of Shares
|
|
Price
|
$
|
0.61 - $ 2.96
|
|
|
437,400
|
|
7.97
|
|
|
$
|
2.47
|
|
|
190,025
|
|
|
|
$
|
2.86
|
|
|
2.97 -
3.38
|
|
|
546,450
|
|
5.72
|
|
|
|
3.26
|
|
|
448,523
|
|
|
|
|
3.29
|
|
|
3.45 - 3.99
|
|
|
432,073
|
|
3.86
|
|
|
|
3.63
|
|
|
341,046
|
|
|
|
|
3.63
|
|
|
4.06 -
4.22
|
|
|
15,993
|
|
0.34
|
|
|
|
4.18
|
|
|
6,993
|
|
|
|
|
4.13
|
|
|
4.42 - 4.42
|
|
|
434,058
|
|
8.93
|
|
|
|
4.42
|
|
|
144,688
|
|
|
|
|
4.42
|
|
|
4.85 -
5.06
|
|
|
23,750
|
|
6.82
|
|
|
|
4.88
|
|
|
23,750
|
|
|
|
|
4.88
|
|
|
5.06 - 5.06
|
|
|
647,584
|
|
6.35
|
|
|
|
5.06
|
|
|
596,330
|
|
|
|
|
5.06
|
|
|
5.20 -
5.50
|
|
|
662,702
|
|
6.56
|
|
|
|
5.42
|
|
|
452,400
|
|
|
|
|
5.41
|
|
|
5.51 - 8.53
|
|
|
465,577
|
|
4.94
|
|
|
|
6.64
|
|
|
344,192
|
|
|
|
|
6.75
|
|
|
8.88 - 47.63
|
|
|
476,737
|
|
1.60
|
|
|
|
21.72
|
|
|
476,737
|
|
|
|
|
21.72
|
|
$
|
0.61 - $47.63
|
|
|
4,142,324
|
|
5.75
|
|
|
$
|
6.48
|
|
|
3,024,684
|
|
|
|
$
|
7.33
|
|
Our
employee stock options are granted at a price equal to the fair market value of
our stock on the date of the grant. The weighted average grant-date fair value
of options granted during 2008, 2007 and 2006 was $1.42, $2.40 and $2.48,
respectively. The total intrinsic value of options exercised during 2008, 2007
and 2006 was approximately $91,000, $321,000 and $514,000, respectively. The
total intrinsic value of options outstanding at December 31, 2008 was $12,000.
All options exercisable at December 31, 2008 do not have
any intrinsic value. The weighted average remaining contractual life of options
exercisable at December 31, 2008 was 4.9 years.
As of
December 31, 2008, there was approximately $2.1 million of total unrecognized
compensation expense related to non-vested share-based compensation
arrangements, which is expected to be recognized over a weighted average period
of 1.7 years.
As of
December 31, 2008, we had 3.9 million outstanding stock options that had vested
or are expected to vest with a weighted average exercise price of $6.62, a
weighted average remaining contractual term of 5.6 years and an aggregate
intrinsic value of $10,000.
In May
2008, our board of directors modified the terms of certain stock options
previously granted to a member of our board of directors who did not stand for
re-election at our 2008 Annual Meeting of Stockholders. Our board of directors
decided to modify the options in recognition of the directors twelve years of
service to Avigen. Our board of directors modified stock options exercisable for
115,000 shares of common stock such that (1) unvested options exercisable for
36,700 shares of common stock became immediately vested, and (2) each option
remained exercisable until the end of its original contract life. The maximum
contractual term was not extended for any options. At the time of this
modification, we recognized a share-based compensation charge of approximately
$47,400.
In
January 2006, in connection with the resignation of an executive, we modified
the expiration terms for options representing 386,475 shares of common stock to
allow for six months of additional vesting and an extended period to exercise
all vested stock options for up to two years. The maximum contractual term was
not extended for any options. At the time of this modification, we recognized a
share-based compensation charge of approximately $108,000.
63
For
equity awards to non-employees, including lenders, lessors, and consultants, we
also apply the Black-Scholes method to determine the fair value of such
investments in accordance with Statement of Financial
Accounting Standards No. 123(R) (SFAS 123(R)),
Share-Based Payment
, and
Emerging Issues Task Force Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees
for Acquiring, or in Conjunction with Selling, Goods, or Services.
The options and warrants granted to
non-employees are re-measured as they vest and the resulting value is recognized
as an expense against our net loss over the period during which the services are
received or the term of the related financing. During the years ended December
31, 2008, 2007 and 2006, respectively, we granted 40,000, 20,000, and 60,000
stock options to non-employees.
Employee Stock Purchase Plan
In
September 1997, we adopted the 1997 Employee Stock Purchase Plan (Purchase
Plan). A total of 360,000 shares of our common stock have been reserved for
issuance under the Purchase Plan. As of December 31, 2008, there have been no
employee stock purchases under the Purchase Plan.
15. Employee Profit Sharing/401(k)
Plan
In
January 1996, we adopted a Tax Deferred Savings Plan under Section 401(k) of the
Internal Revenue Code (the Plan) for all full-time employees. Under the Plan,
our eligible employees can contribute amounts to the Plan via payroll
withholding, subject to certain limitations. Our matching contributions to the
Plan are discretionary and can only be made in cash. Effective July 1, 2001, we
began matching 25% of an employees contributions up to $2,500 per Plan year.
These matching contributions vest ratably over a five-year period based on the
employees initial hire date. Our matching contributions for all employees for
the years ended December 31, 2008, 2007 and 2006 were approximately $55,000,
$58,000 and $51,000, respectively.
16. Commitments and Contingencies
Leases
We lease
67,000 square feet of laboratory, manufacturing, and office facilities in
Alameda, California under a non-cancelable operating lease agreement that
expires in November 2010. As security for performance of our future obligations
under this lease, we have pledged $2.0 million of our available-for-sale
securities to secure a letter of credit that serves as our deposit. This amount
is classified as restricted investments in our balance sheets.
Effective October 31, 2008 we
notified the landlord of our building lease for 4,800 square feet of lab space
in an adjacent building in Alameda, California of our intent to exercise our
termination rights and accelerate the expiration date on the remaining lease to
June 30, 2009. As of December 31, 2008, we have vacated the facility and accrued
exit costs associated with the early termination of the lease. We maintain a
letter of credit of approximately $36,000 as our security deposit that will be
held by the landlord until approximately June 30, 2009, the amount of which is
classified as restricted investments under current assets in our balance sheet
as of December 31, 2008.
As of
December 31, 2008, approximately 14,400 square feet of our facilities that are
leased through November 2010, are subleased to corporate tenants not affiliated
with Avigen. The sublease agreements run concurrent with the respective duration
of our underlying lease term.
At
December 31, 2008, our future minimum commitments under non-cancelable
facilities operating leases, net of sublease income, are a follows (in
thousands):
|
|
Minimum Lease
|
|
Sublease Income
|
|
|
Net Lease
|
|
|
Commitments
|
|
(1)
|
|
|
Commitments
|
Year ending
December 31:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
$
|
1,697
|
|
$
|
(383
|
)
|
|
$
|
1,314
|
2010
|
|
|
1,543
|
|
|
(360
|
)
|
|
|
1,183
|
2011
|
|
|
-
|
|
|
-
|
|
|
|
-
|
2012
|
|
|
-
|
|
|
-
|
|
|
|
-
|
2013
and thereafter
|
|
|
-
|
|
|
-
|
|
|
|
-
|
Total
|
|
$
|
3,240
|
|
$
|
(743
|
)
|
|
$
|
2,497
|
64
|
(1)
|
|
Excludes sublease
income under a sublease agreement for approximately 16,500 square feet
entered into in February 2009, commencing March 1, 2009 through November
30, 2010. Under the terms of the February 2009 sublease, we expect to
receive approximately $905,000 in additional sublease income with
approximately $425,000 expected to be recognized in 2009 and approximately
$480,000 to be recognized in 2010.
|
Prior to May 31, 2008, we had leased
an additional 40,000 square feet of laboratory, manufacturing and office
facilities adjacent to our current leased space. For the first five months of
2008, approximately 5,000 square feet was subleased to an independent tenant. As
a result of the expiration of this lease and sublease, rent expense and net
sublease income decreased in 2008 from the 2007 levels.
Expenses and income associated with
operating leases and subleases were as follows (in millions):
|
|
Year Ended December 31,
|
|
|
2008
|
|
2007
|
|
2006
|
Rent expense
|
|
$
|
1.9
|
|
|
$
|
2.6
|
|
|
$
|
2.6
|
|
Sublease income,
net
|
|
|
(0.4
|
)
|
|
|
(0.7
|
)
|
|
|
(0.6
|
)
|
Subleases
We have
entered into sublease agreements for portions of our leased laboratory and
office facilities. In February 2009, we entered into a sublease agreement
commencing March 1, 2009 through November 30, 2010 for approximately 16,500
square feet of laboratory and office facilities that will expire November 2010.
Under the terms of this sublease, we expect to receive approximately $905,000 in
sublease income and recovery of operating costs over the future lease
period.
Based on market conditions for
rental property in the area at the time we listed portions of our leased
laboratory and office facilities for sublease, we determined that our expected
sublease income would be less than our scheduled lease liability. As a result,
for the period ended December 31, 2008, we recorded exit costs associated with
the abandonment of these facilities of approximately $50,000.
Other Commitments
In the
ordinary course of business, we enter into commitments to fund collaborative
research and clinical work performed by third parties. While these contracts are
cancelable, we expect the research studies and clinical work to be completed as
defined in the terms of the agreements, and all amounts paid when due. At
December 31, 2008, the estimated costs related to these commitments totaled
approximately $1.8 million, all of which is expected to be paid within the next
twelve months.
As
permitted under Delaware law and in accordance with our bylaws, we indemnify our
officers and directors for certain events or occurrences while the officer or
director is or was serving at Avigens request in such capacity. The term of the
indemnification period is for the officer's or director's lifetime. The maximum
amount of the potential future indemnification is unlimited. However, we have a
director and officer insurance policy that limits our exposure and may enable us
to recover a portion of any future amounts paid. We believe the fair value of
these indemnification agreements in excess of the applicable insurance coverage, is minimal. Accordingly, we have not recorded
any liabilities for these agreements as of December 31, 2008.
In the
normal course of business, we provide indemnifications of varying scope under
our agreements with other companies, typically our clinical research
organizations, investigators, clinical sites, and suppliers. Pursuant to these
agreements, we generally indemnify, hold harmless, and agree to reimburse the
indemnified parties for losses suffered or incurred by the indemnified parties
in connection with use or testing of our products or product candidates or with
any U.S. patent or any copyright or other intellectual property infringement
claims by any third
party with respect to our
products. The term of these indemnification agreements is generally perpetual.
The potential future payments we could be required to make under these
indemnification agreements is unlimited. Historically, costs related to these
indemnification provisions have been immaterial. We also maintain various
liability insurance policies that limit our exposure. As a result, we believe
the fair value of these indemnification agreements, in excess of applicable
insurance coverage, is minimal. Accordingly, we have not recorded any
liabilities for these agreements as of December 31, 2008.
65
17. Income Taxes
Significant
components of our deferred tax assets are as follows (in thousands):
|
|
December 31,
|
|
|
2008
|
|
2007
|
Net operating loss carryforwards
|
|
$
|
1,600
|
|
|
$
|
51,800
|
|
Research and
development credits
|
|
|
100
|
|
|
|
2,600
|
|
Capitalized research and development
|
|
|
100
|
|
|
|
3,900
|
|
Depreciation
|
|
|
3,400
|
|
|
|
3,100
|
|
Other
|
|
|
4,500
|
|
|
|
3,800
|
|
Gross deferred
tax assets
|
|
|
9,700
|
|
|
|
65,200
|
|
Valuation allowance
|
|
|
(9,700
|
)
|
|
|
(65,200
|
)
|
Net deferred tax
assets
|
|
$
|
|
|
|
$
|
|
|
No
provision has been made for income taxes because we have incurred losses since
our inception. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying value of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Realization of deferred tax assets is dependent on future taxable income,
if any, the timing and the amount of which are uncertain. Accordingly, our
deferred tax assets have been fully offset by a valuation allowance. Our
valuation allowance decreased by $55.5 million for the year ended December 31,
2008, increased by $9.1 million for the year ended December 31, 2007, and
decreased by $21.6 million for the year ended December 31, 2006. The
decrease in the valuation allowance in 2008 and 2006 results from the loss of
net operating loss carryforwards, research and development tax credit
carryforwards, and capitalized research and development due to federal and state
ownership change limitations.
As of
December 31, 2008, we had federal net operating loss carryforwards of $4.4
million and federal research and development tax credit carryforwards of $0.1
million, which will expire in 2028. We also had state net operating loss
carryforwards of $2.5 million which will expire in 2018 and state research tax
credits of $0.1 million, which carry forward indefinitely.
Federal
and state laws limit the use of net operating loss and tax credit carryforwards
in certain situations where changes occur in the stock ownership of a company.
In 2008 and 2007, we conducted an Internal Revenue Code (IRC) Section 382 study
and have reported our deferred tax assets related to net operating loss and
research credit carryforwards after recognizing change of control limitations in
2008 and 2006. The limitation of our federal and state carryforwards associated
with previous net operating losses and research credits and the associated
reduction in our deferred tax assets, was offset by a reduction in our valuation
allowance. Utilization of our net operating loss and research and development
credit carryforwards may still be subject to substantial annual
limitations due to ownership change limitations after December 31,
2008.
Such annual limitations could
result in the expiration of our net operating loss and research and development
credit carryforwards available as of December 31, 2008 before utilization.
66
We
adopted the provisions of FIN 48 effective January 1, 2007 (see Note 1). Upon
adoption of FIN 48, we determined that we did not have any unrecognized tax
benefits and there was no effect on our financial condition or results of
operations as a result of implementing FIN 48. In addition, we had no
unrecognized tax benefits at December 31, 2008, nor do we expect any changes in
our unrecognized tax benefits during 2009.
Our
policy is to recognize interest and penalties related to income tax matters in
income tax expense. We had no accrual for interest or penalties on our balance
sheets at December 31, 2008, 2007 and 2006, and have not recognized interest or
penalties in our statements of operations for the years ended December 31, 2008,
2007 and 2006.
We are
subject to taxation in the United States and various state jurisdictions. Our
tax years from 1994 through 2008 remain subject to examination by the United
States and California tax authorities due to the loss carryforwards from those
years.
67
18. Condensed Quarterly Financial
Information (Unaudited)
|
|
Year Ended
|
|
|
December 31, 2008
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
(amounts in
thousands except per share data)
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Total revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
7,100
|
|
Net loss
|
|
|
(7,411
|
)
|
|
|
(7,341
|
)
|
|
|
(9,403
|
)
|
|
|
(944
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.25
|
)
|
|
|
(0.25
|
)
|
|
|
(0.32
|
)
|
|
|
(0.03
|
)
|
|
|
|
Year Ended
|
|
|
December 31, 2007
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
(amounts in
thousands except per share data)
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
Total revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net loss
|
|
|
(5,764
|
)
|
|
|
(5,829
|
)
|
|
|
(6,840
|
)
|
|
|
(6,731
|
)
|
Net loss per share, basic and diluted
|
|
|
(0.23
|
)
|
|
|
(0.21
|
)
|
|
|
(0.23
|
)
|
|
|
(0.23
|
)
|
19. Subsequent Event - Costs
incurred in connection with Stockholder Actions
In response to the
request by one of our stockholders to call a Special Meeting of Stockholders, we
have incurred significant incremental costs associated with legal fees and other
advisory expenses. We estimate the costs of responding to these
stockholder actions in 2009 to exceed $600,000.
68
Item 9.
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not Applicable.
Item 9A.
Controls and Procedures
Evaluation of disclosure controls and procedures
. With the supervision and with the participation of our
management, including our principal executive officer and principal financial
officer, we have evaluated the effectiveness of our disclosure controls and
procedures, as defined in the Securities Exchange Act of 1934, Rules 13a-15(e)
and 15(d)-15(e), as of December 31, 2008. Based on that evaluation, the
principal executive officer and principal financial officer have concluded that
these disclosure controls and procedures were effective to ensure, at a
reasonable assurance level, that the information required to be disclosed by us
in reports we file with the SEC is recorded, processed, summarized and reported
within the time periods specified in the SECs rules and instructions for such
reports.
Managements Annual Report on Internal Control over Financial
Reporting
. Our management is responsible
for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f). Under the supervision and with the participation of our management,
including our principal executive officer and our principal financial officer,
we conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2008. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in
Internal Control
Integrated Framework.
Our
management has concluded that, as of December 31, 2008, our internal control
over financial reporting was effective based on these criteria.
Odenberg, Ullakko,
Muranishi & Co. LLP, the independent registered public accounting firm that
audited our financial statements, included in this Annual Report on Form 10-K,
has issued an attestation report on our internal control over financial
reporting, as set forth below.
Changes in Internal Control over Financial Reporting
. There were no changes in our internal control over financial
reporting during the quarter ended December 31, 2008 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item 9A(T).
Controls and Procedures
Not applicable.
69
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors and
Stockholders of Avigen, Inc.
We have
audited Avigen, Inc.s internal control over financial reporting as of December
31, 2008, based on criteria established in
Internal Control Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO criteria). Avigen Inc.s management is responsible for
maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting
included in Managements Annual Report on Internal Control over Financial
Reporting included in Item 9A. Our responsibility is to express an opinion on
the companys internal control over financial reporting based on our
audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
A
companys internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A companys internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our
opinion, Avigen, Inc. maintained effective internal control over financial
reporting as of December 31, 2008, based on the COSO criteria.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the balance sheets of Avigen, Inc. as of
December 31, 2008 and 2007, and the related statements of operations,
stockholders equity, and cash flows for each of the three years in the period
ended December 31, 2008 and for the period from inception (October 22, 1992)
through December 31, 2008, and our report dated March 13, 2009
expressed an unqualified opinion thereon. Our report, insofar as it relates to
the amounts included for the period from October 22, 1992 to December 31, 2005,
is based solely on the report of the other auditors.
|
/s/ ODENBERG,
ULLAKKO, MURANISHI & CO. LLP
|
San Francisco, California
March 13,
2009
70
Item 9B.
Other Information
During
the fourth quarter ended December 31, 2008, we had no events that were required
to be reported on Form 8-K but that were not filed to date.
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
The
information required by this Item with respect to Executive Officers may be
found under the caption, Executive Officers of the Registrant at the end of
Part I of this Annual Report on Form 10-K. The information required by this Item
with respect to Directors, including information with respect to our audit
committee, audit committee financial experts and procedures for Board
nominations, is incorporated herein by reference from the information under the
caption, Proposal 1 Election of Directors appearing in the definitive Proxy
Statement to be delivered to Avigens stockholders in connection with the
solicitation of proxies for Avigens 2009 Annual Meeting of Stockholders (the
Proxy Statement).
Section 16(a) Beneficial
Ownership Reporting Compliance
The
information required by this Item with respect to compliance with Section 16(a)
of the Exchange Act is incorporated herein by reference from the section
captioned Section 16(a) Beneficial Ownership Reporting Compliance contained in
the Proxy Statement.
Code of Business Conduct and
Ethics
The
information required by this Item with respect to our code of ethics is
incorporated herein by reference from the section captioned Proposal 1
Election of Directors Code of Business Conduct and Ethics contained in the
Proxy Statement.
Item 11.
Executive Compensation
The
information required by this Item is set forth in the Proxy Statement under the
captions, Executive Compensation, Compensation Committee Interlocks and
Insider Participation and Compensation Committee Report. Such information is
incorporated herein by reference.
71
Item 12.
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The
information required by this Item with respect to security ownership of certain
beneficial owners and management is set forth in the Proxy Statement under the
caption, Security Ownership of Certain Beneficial Owners and Management. Such
information is incorporated herein by reference.
In
November 2008, Biotechnology Fund, L.P. and certain of its affiliates
(collectively, BVF), purchased approximately 29% of our outstanding shares of
common stock. In January 2009, BVF gave notice to Avigen that it is calling a
special meeting of our stockholders for the purpose of removing our entire Board
of Directors, without cause, and replacing it with four nominees selected by
BVF. Also in January 2009, BVF launched a tender offer to acquire the remaining
outstanding shares of our common stock for $1.00 per share, contingent on BVF
being successful in removing our entire Board of Directors, without cause, and
replacing it with their four nominees, and the redemption of the preferred stock
purchase rights under our shareholder rights agreement.
E
QUITY
C
OMPENSATION
P
LAN
I
NFORMATION
The
following table provides certain information with respect to all of Avigens
equity compensation plans in effect as of December 31, 2008:
|
|
|
Number of
securities
|
|
|
|
remaining
available
|
|
Number of securities
|
|
for future
issuance
|
|
to be issued upon
|
|
under
equity
|
|
exercise of
|
Weighted-average
|
compensation
plans
|
|
outstanding options,
|
exercise price of
|
(excluding
securities
|
|
warrants and rights
|
outstanding options,
|
reflected in
column
|
|
(1)
|
warrants and rights
|
(a))(2)
|
Plan
Category
|
(a)
|
(b)
|
(c)
|
Equity compensation plans
|
|
|
|
approved by security
holders
|
3,165,283
|
$
5.80
|
2,167,247
|
Equity compensation plans not
approved
|
|
|
|
by security
holders
|
977,041
|
$
8.68
|
0
|
Total
|
4,142,324
|
$
6.48
|
2,167,247
|
(1) Our
2000 Equity Incentive Plan (the
2000
Plan
) was adopted in 2000 without
stockholder approval. The 2000 Plan was amended and restated as our 2006 Equity
Incentive Plan (the
2006
Plan
), which amendment and restatement
was approved by our stockholders on May 31, 2006. The number of shares subject
to options outstanding under plans not approved by our stockholders reflects
options granted pursuant to the 2000 Plan prior to May 31, 2006, which number of
shares is not reflected as outstanding under compensation plans approved by our
stockholders.
(2) Reflects shares available for
grant under our 2006 Plan.
2000 Equity Incentive
Plan
Prior to
the amendment and restatement of Avigens 2000 Equity Incentive Plan (the
2000 Plan
) as the 2006 Equity Incentive Plan, the 2000 Plan provided for the
grant of nonqualified stock options, stock bonuses and restricted stock purchase
awards (collectively, stock awards). An aggregate of 5,000,000 shares of
common stock had been reserved for issuance under the 2000 Plan. Stock awards
could be granted under the 2000 Plan to employees (including officers),
directors and consultants of Avigen and its affiliates; provided, however, that
the aggregate number of shares issued pursuant to stock awards granted to
officers and directors under the 2000 Plan could not exceed 40% of the number of
shares reserved for issuance under the 2000 Plan, except that stock awards
granted to officers prior to their employment by Avigen as an inducement to
entering into employment contracts with Avigen were not included in the 40%
limitation. The exercise price of options and restricted stock purchase awards
could not be less than 85% of the fair market value of the stock on the date of
grant. Stock bonuses could be awarded in consideration for past services
actually rendered to Avigen or its affiliates.
72
Vesting.
Stock awards granted under
the 2000 Plan may become exercisable (in the case of options) or released from a
repurchase option in favor of Avigen (in the case of stock bonuses and
restricted stock purchase awards) in cumulative increments (vest) as
determined by the Board. The Board has the power to accelerate the time during
which stock awards may vest or be exercised. In addition, options granted under
the 2000 Plan may permit exercise prior to vesting, but in such event the
participant may be required to enter into an early exercise stock purchase
agreement that allows Avigen to repurchase unvested shares, generally at their
exercise price, should the participants service terminate before
vesting.
Term
. The term of options granted
under the 2000 Plan was determined by the Board in its discretion. Options under
the 2000 Plan generally terminate three months after termination of the
participants service, subject to extension in certain circumstances.
Effect
of Certain Corporate Events.
The 2000 Plan
provides that, in the event of a dissolution, liquidation or sale of
substantially all of the assets of Avigen, specified type of merger, or other
corporate reorganization (a change in control), any surviving corporation must
either assume any stock awards outstanding under the 2000 Plan or substitute
similar stock awards for those outstanding under the 2000 Plan, or else the
outstanding stock awards will continue in full force and effect. In the event
that any surviving corporation declines to assume or continue the stock awards
outstanding under the 2000 Plan, or to substitute similar stock awards, then,
with respect to stock awards held by persons then performing services as
employees, directors, or consultants of Avigen, the vesting and the time during
which these stock awards may be exercised will be accelerated in
full.
Item 13.
Certain Relationships and Related Transactions, and Director
Independence
The
information required by this Item is set forth in the Proxy Statement under the
headings Proposal 1 Election of Directors and Transactions with Related
Persons. Such information is incorporated herein by reference.
Item 14.
Principal Accounting Fees and Services
The
information required by this Item is set forth in the Proxy Statement under the
heading Proposal 2 - Ratification of Selection of Independent Registered Public
Accounting Firm. Such information is incorporated herein by
reference.
Consistent with Section 10A(i)(2) of the Securities Exchange Act of 1934,
as added by Section 202 of the Sarbanes-Oxley Act of 2002, we are responsible
for listing the non-audit services approved by our Audit Committee to be
performed by Odenberg, Ullakko, Muranishi & Co. LLP, our external auditor.
Non-audit services are defined as services other than those provided in
connection with an audit or a review of our financial statements. Our Audit
Committee has approved our recurring engagements of non-audit services of
Odenberg, Ullakko, Muranishi & Co. LLP for the preparation of tax returns,
and tax advice in preparing for and in connection with such filings.
73
PART IV
Item 15.
Exhibits, Financial Statement Schedules
(a)
|
|
The following documents are filed
as part of this Annual Report on Form 10-K:
|
|
|
|
(1)
|
|
Financial
Statements:
|
|
|
|
|
|
Report of Independent Registered
Public Accounting Firm
Balance Sheets
Statements of
Operations
Statements of Stockholders Equity
Statements of Cash
Flows
Notes to Financial Statements
|
|
|
|
|
|
|
|
(2)
|
|
Financial Statement
Schedules
|
|
|
|
|
|
|
|
Financial statement schedules have been omitted from this Annual
Report on Form 10-K because they are either not applicable or the required
information is provided in the financial statements or the notes
thereto.
|
|
|
|
|
|
(3)
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|
Exhibits
|
|
|
|
|
|
|
|
See the Exhibit Index which
follows the signature page of this Annual Report on Form 10-K, which is
incorporated herein by reference.
|
|
74
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
AVIGEN, INC.
|
|
|
|
|
|
By:
|
|
/s/ K
ENNETH
G. C
HAHINE
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|
|
|
Kenneth G.
Chahine, J.D., Ph.D.
|
|
|
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President and
Chief Executive Officer
|
Dated: March 13, 2009
POWER OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Kenneth Chahine and Andrew A. Sauter, and each or any
one of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature
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Title
|
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Date
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/s/ K
ENNETH
G. C
HAHINE
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President, Chief
Executive Officer and Director
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March 13,
2009
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Kenneth G.
Chahine, J.D., Ph.D.
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(Principal
Executive Officer)
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/s/ A
NDREW
A. S
AUTER
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Chief Financial
Officer
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March 13,
2009
|
Andrew A.
Sauter
|
|
(Principal
Financial and Accounting Officer)
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|
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/s/ Z
OLA
H
OROVITZ
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Chairman of the
Board
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March 13,
2009
|
Zola Horovitz,
Ph.D.
|
|
|
|
|
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/s/ J
OHN
K.A. P
RENDERGAST
|
|
Director
|
|
March 13,
2009
|
John K.A.
Prendergast, Ph.D.
|
|
|
|
|
|
/s/ R
ICHARD
W
ALLACE
|
|
Director
|
|
March 13,
2009
|
Richard
Wallace
|
|
|
|
|
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/s/ S
TEPHEN
D
ILLY
|
|
Director
|
|
March 13,
2009
|
Stephen Dilly,
M.B.B.S., Ph.D.
|
|
|
|
|
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/s/ J
AN
O
HRSTROM
|
|
Director
|
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March 13,
2009
|
Jan Ohrstrom,
M.D.
|
|
|
|
|
75
|
|
EXHIBIT
INDEX
|
Exhibit
Number
|
|
Exhibits
|
2.1
|
|
|
See Exhibit 10.58
|
2.2
|
(32)
|
|
Asset Purchase Agreement, dated
December 17, 2008, by and between Baxter Healthcare Corporation, Baxter
International Inc., and Baxter Healthcare S.A. (collectively Baxter) and
Avigen
|
3.1
|
(33)
|
|
Amended and Restated Certificate
of Incorporation
|
3.2
|
(13)
|
|
Certificate
of Amendment to Certificate of Incorporation
|
3.3
|
(29)
|
|
Certificate of Amendment to Certificate of
Incorporation
|
3.4
|
(34)
|
|
Certificate
of Designation
|
3.5
|
(30)
|
|
Restated Bylaws of the Registrant
|
4.1
|
(1)
|
|
Specimen
Common Stock Certificate
|
4.2
|
(34)
|
|
Rights Agreement dated as of
November 21, 2008, by and between the Company and American Stock Transfer
& Trust Co. LLC
|
4.3
|
(33)
|
|
Form of
Right Certificate
|
10.3
|
(2, 17)
|
|
1996 Equity Incentive Plan, as amended
|
10.4
|
(1,
2)
|
|
Form of Incentive Stock Option
Grant for 1996 Equity Incentive Plan
|
10.5
|
(1, 2)
|
|
Form of Nonstatutory Stock Option
Grant for 1996 Equity Incentive Plan
|
10.6
|
(2,
14)
|
|
1996 Non-Employee Directors
Stock Option Plan, as amended
|
10.7
|
(2, 4)
|
|
1997 Employee Stock Purchase
Plan
|
10.8
|
(1,
2)
|
|
Form of Indemnification Agreement
between Avigen and its directors and executive officers.
|
10.10
|
(2, 5)
|
|
2000 Equity Incentive Plan
|
10.11
|
(2,
12)
|
|
Form of Nonstatutory Stock Option
Grant for 2000 Equity Incentive Plan
|
10.12
|
(2, 7)
|
|
2006 Equity Incentive Plan
|
10.16
|
(2,
24)
|
|
Form of Nonstatutory Stock Option
Grant for 1996 Non-Employee Directors Stock Option Plan, as
amended
|
10.17
|
(2)
|
|
Compensation Agreements with
Named Executive Officers
|
10.32
|
(15)
|
|
Revolving line of credit note
signed November 2, 2000 with Wells Fargo Bank.
|
10.33
|
(15)
|
|
Letter Agreement to the revolving
line of credit note signed November 2, 2000 with Wells Fargo
Bank.
|
10.36
|
(2,
8)
|
|
Management
Transition Plan
|
10.41
|
(10)
|
|
Property Lease Agreement between
ARE-1201 Harbor Bay, LLC and Avigen, dated February 29,
2000
|
10.45
|
(13)
|
|
Office Lease Agreement between
Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated November 2,
2000.
|
10.46
|
(13)
|
|
First Amendment to Lease
Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated
December 1, 2000.
|
10.47
|
(13)
|
|
Second Amendment to Lease
Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated
February 12, 2001.
|
10.49
|
(16)
|
|
Revolving line of credit note
with Wells Fargo Bank, dated June 1, 2002.
|
10.50
|
(16)
|
|
Letter of Agreement to the
revolving line of credit note signed June 1, 2002 with Wells Fargo
Bank.
|
10.53
|
(20)
|
|
Revolving line of credit note
with Wells Fargo Bank, dated June 1, 2004
|
10.54
|
(20)
|
|
Amendment to Letter of Agreement
to the revolving line of credit note signed June 1, 2004 with Wells Fargo
Bank
|
10.55
|
(2, 21)
|
|
Arrangement Regarding
Non-Employee Director Compensation
|
76
|
|
|
EXHIBIT
INDEX
|
Exhibit Number
|
|
Exhibits
|
10.58
|
(9, 11)
|
|
Assignment Agreement, dated
December 19, 2005, by and between Genzyme Corporation and
Avigen
|
10.59
|
(32)
|
|
Amendment Agreement,
effective July 22, 2008 between SDI Diagnostics International Ltd., and
Avigen
|
10.61
|
(18)
|
|
Common Stock Purchase Agreement,
dated as of May 10, 2006, among Avigen and the
purchasers.
|
10.62
|
(28)
|
|
Offer Letter with Mr. Richard
Wallace to become an Avigen Director
|
10.63
|
(26)
|
|
Offer Letter with Dr. Stephen Dilly to become an Avigen
Director
|
10.64
|
(26)
|
|
Offer Letter with Dr. Jan
Ohrstrom to become an Avigen Director
|
10.65
|
(31)
|
|
Letter Agreement dated June 1,
2007 between Avigen, Inc. and Wells Fargo Bank, National
Association
|
10.66
|
(31)
|
|
Promissory Note dated June 1,
2007, issued by Avigen, Inc. in favor of Wells Fargo Bank, National
Association
|
10.67
|
(30)
|
|
First Amendment to Property Lease
Agreement between ARE-1201 Harbor Bay, LLC and Avigen, dated August 30,
2007
|
10.68
|
(35)
|
|
Second Amendment to Property
Lease Agreement between ARE-1201 Harbor Bay, LLC and Avigen, dated March
6, 2008
|
23.1
|
|
|
Consent of Odenberg, Ullakko, Muranishi & Co. LLP, Independent
Registered Public Accounting Firm
|
23.2
|
|
|
Consent of Ernst & Young LLP,
Independent Registered Public Accounting Firm
|
24.1
|
|
|
Power of Attorney (included on
the signature pages hereto)
|
31.1
|
|
|
CEO Certification required by
Rule 13a-14(a) or Rule 15d-14(a)
|
31.2
|
|
|
CFO Certification required by
Rule 13a-14(a) or Rule 15d-14(a)
|
32.1
|
(19)
|
|
Certification required by Rule
13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C.
§1350)
|
Keys to Exhibits:
(1)
|
|
Filed as an exhibit to the
Registrants Registration Statement on Form S-1 (No. 333-03220) and
incorporated herein by reference.
|
|
(2)
|
|
Management Contract or
Compensation Plan.
|
|
(4)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended June 30, 1999, as filed with the SEC
(Commission File No. 000-28272).
|
|
(5)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Registration
Statement on Form S-8 (Registration No. 333-42210) filed with the SEC on
July 25, 2000.
|
|
(6)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended June 30, 1997, as filed with the SEC
(Commission File No. 000-28272).
|
|
(7)
|
|
Incorporated by reference from
such document filed with the SEC as Appendix A to Avigens Proxy Statement
filed with the SEC on April 20, 2006 (Commission File No.
000-28272).
|
|
(8)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Schedule 14D-9
filed with the SEC on February 6, 2009 (Commission File No. 000-28272) and
participants are set forth in Item 5.02 of Avigens Current Report on Form
8-K filed with the SEC on November 5, 2008 (Commission File No.
000-28272).
|
|
77
(9)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended December 31, 2005, as filed with the SEC
on March 16, 2006 (Commission File No. 000-28272).
|
|
(10)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000, as filed with
the SEC (Commission File No. 000-28272).
|
|
(11)
|
|
Portions of this exhibit have
been omitted pursuant to a grant of confidential
treatment.
|
|
(12)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended June 30, 2000, as filed with the SEC on
September 27, 2000 (Commission File No. 000-28272).
|
|
(13)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended December 31, 2000, as filed with
the SEC (Commission File No. 000- 28272).
|
|
(14)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Registration
Statement on Form S-8 (Registration No. 333-56274) filed with the SEC on
June 22, 2004.
|
|
(15)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended June 30, 2001, as filed with the SEC on
September 27, 2001 (Commission File No. 000-28272).
|
|
(16)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended June 30, 2002, as filed with the
SEC (Commission File No. 000-28272).
|
|
(17)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Registration
Statement on Form S-8 (Registration No. 333-90504) filed with the SEC on
June 14, 2002.
|
|
(18)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended June 30, 2006, as filed with the
SEC (Commission File No. 000-28272).
|
|
(19)
|
|
This certification accompanies
the Form 10-K to which it relates, is not deemed filed with the Securities
and Exchange Commission and is not to be incorporated by reference into
any filing of Avigen under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended (whether made before or after
the date of the Form 10-K), irrespective of any general incorporation
language contained in such filing.
|
|
(20)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended June 30, 2004, as filed with the
SEC (Commission File No. 000-28272).
|
|
(21)
|
|
Incorporated by reference from
the disclosure contained in Item 1.01 of Avigens Current Report on Form
8-K filed with the SEC on February 21, 2006 discussing such compensation
(Commission File No. 000-28272).
|
|
(22)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004, as filed with
the SEC (Commission File No. 000-28272).
|
|
(24)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended December 31, 2004, as filed with the SEC
on March 16, 2005 (Commission File No. 000-28272).
|
|
78
(25)
|
|
Incorporated by reference from
the description of such arrangements in Items 5.02 of Avigens Current
Report on Form 8-K filed with the SEC on December 7, 2007 (Commission File
No. 000-28272).
|
|
(26)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Annual Report
on Form 10-K for the year ended December 31, 2006, as filed with the SEC
on March 16, 2007 (Commission File No. 000-28272).
|
|
(27)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Current Report
on Form 8-K filed with the SEC on December 16, 2005 (Commission File No.
000-28272).
|
|
(28)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Current Report
on Form 8-K filed with the SEC on March 22, 2006 (Commission File No.
000-28272).
|
|
(29)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Current Report
on Form 8-K filed with the SEC on June 26, 2007 (Commission File No.
000-28272).
|
|
(30)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended September 30, 2007, as filed
with the SEC (Commission File No. 000- 28272).
|
|
(31)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Current Report
on Form 8-K filed with the SEC on June 6, 2007 (Commission File No.
000-28272).
|
|
(32)
|
|
Confidential treatment has been
requested for portions of this agreement.
|
|
(33)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Current Report
on Form 8-K filed with the SEC on November 24, 2008 (Commission File No.
000-28272).
|
|
(34)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Current Report
on Form 8-K/A filed with the SEC on November 24, 2008 (Commission File No.
000-28272).
|
|
(35)
|
|
Incorporated by reference from
such document filed with the SEC as an exhibit to Avigens Quarterly
Report on Form 10-Q for the quarter ended March 31, 2008, as filed with
the SEC (Commission File No. 000-28272).
|
|
79
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