DOW JONES NEWSWIRES
Avigen Inc. (AVGN) said it has stopped takeover talks and warned
the small biopharmaceutical concern would develop a liquidation
plan if a slate of candidates for the board from suitor
Biotechnology Value Fund LP aren't elected at Friday's special
shareholders meeting.
Avigen's board also declined to take a position on BVF's
sweetened $35.7 million takeover offer while saying several
executives, including President and Chief Executive Kenneth
Chahine, are no longer with the company. It said they left as part
of a headcount reduction, which follows a 27-position, or 70%,
slashing of its work force late last year.
Shares were flat at $1.16 in recent trading, slightly below
BVF's latest offer of $1.20. On Thursday, Avigen's board noted the
offer is roughly the same as the company's net cash value minus
wind-down costs but doesn't reflect the value of other assets,
including its nerve-pain and addiction drug under development and
$6 million in upcoming payments from Genzyme Corp. (GENZ).
Fellow biopharma concern MediciNova Inc. (MNOV) has been seeking
due-diligence access from Avigen, as it, too, is interested in
potentially buying the company. But so far the requests have been
blocked.
BVF, which owns nearly 30% of Avigen's stock, began agitating
for change in October after a trial of a drug to treat multiple
sclerosis failed to meet its objectives. In seeking to sack
Avigen's board, the investment fund said it has gotten management
and the board to cut costs and shed "programs that they do not have
the necessary expertise to develop."
Since the company has stopped takeover talks, Avigen said most
employees that were taking part in that effort, including former
CEO Chahine, were no longer needed. Chief Financial Officer Andrew
Sauter will take over from Chahine.
Many small biotech companies are gasping for cash as many can no
longer find investors to fund continued drug development. Nearly a
dozen have declared bankruptcy in the past four months, while
nearly one-third of publicly traded biotechs have less than six
months of cash left, according to Burrill & Co., a
venture-capital concern in San Francisco that follows the
industry.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com