SEC Info℠  
    Home      Search      My Interests      Help      Sign In      Please Sign In

Biotechnology Value Fund LP – ‘DEFC14A’ on 3/10/09 re: Avigen Inc/DE

On:  Tuesday, 3/10/09, at 5:54pm ET   ·   Effective:  3/10/09   ·   Accession #:  921895-9-700   ·   File #:  0-28272

Find Words in Filings emoji
 		  in    Show  and   ↓Hints

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/10/09  Biotechnology Value Fund LP       DEFC14A     3/10/09    1:524K Avigen Inc/DE                     Olshan Frome Wolosky LLP

Definitive Proxy Solicitation Material – Contested Solicitation   —   Sch. 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEFC14A     Definitive Proxy Solicitation Material - Contested  HTML    313K 
                          Solicitation

This is an HTML Document rendered as filed.  [ Alternative Formats ]

 C:   C:   C: 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
 
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No.  )

Filed by the Registrant   ¨

Filed by a Party other than the Registrant   x

Check the appropriate box:

o           Preliminary Proxy Statement

¨           Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2))

x          Definitive Proxy Statement

o          Definitive Additional Materials

o           Soliciting Material Under Rule 14a-12

AVIGEN, INC.
(Name of Registrant as Specified in Its Charter)
 
BIOTECHNOLOGY VALUE FUND, L.P.
BIOTECHNOLOGY VALUE FUND II, L.P.
BVF INVESTMENTS, L.L.C.
INVESTMENT 10, L.L.C.
BVF PARTNERS L.P.
BVF INC.
BVF ACQUISITION LLC
MARK N. LAMPERT
OLEG NODELMAN
MATTHEW D. PERRY
ROBERT M. COPPEDGE
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x           No fee required.

¨           Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 


(1)           Title of each class of securities to which transaction applies:
 

(2)           Aggregate number of securities to which transaction applies:
 

 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 

(4)           Proposed maximum aggregate value of transaction:
 

(5)           Total fee paid:
 

¨           Fee paid previously with preliminary materials:
 

¨           Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.  Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
 
 
(1)           Amount previously paid:
 

(2)           Form, Schedule or Registration Statement No.:
 

(3)           Filing Party:
 

(4)           Date Filed:
 
 
 
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.
 
 




 
 
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
 
 
 
 

 

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:
 
1.
To remove all of the existing directors serving on the Board without cause,
 
2.
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,
 
3.
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
 
4.
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”).
 
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.
 
 
●
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.
 
 
●
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:
 
Name
Current Position
Zola Horovitz, Ph.D.
Chairman of the Board, Director
Kenneth G. Chahine, J.D., Ph.D.
President, Chief Executive Officer, Director
John K. A. Prendergast, Ph.D.
Director
Richard J. Wallace
Director
Stephen Dilly, M.B.B.S., Ph.D.
Director
Jan K. Öhrström, M.D.
Director

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:
 
·  
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.
 
·  
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).
 
·  
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.

1 This value is based on the following:
 
·  
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.
 
·  
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.
 
·  
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.
 
·  
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.
 
·  
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.
 
·  
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.
 
10
 
·  
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.”
 
·  
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.
 
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 NO. 2
 
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.
 

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘DEFC14A’ Filing    Date    Other Filings
6/18/09
4/19/09
4/3/09
3/27/098-K,  SC TO-T/A
3/20/09DEFA14A,  DFAN14A,  SC TO-T/A
Filed on / Effective on:3/10/09DEFA14A,  DFAN14A
3/9/09DEFC14A,  SC TO-T/A
3/6/09
3/5/09CORRESP
2/20/09PREC14A
2/18/09SC 13G/A
2/17/09PRE 14A,  SC 13G/A
1/31/09
1/23/093,  4,  SC TO-T
1/12/09SC 13D/A
1/9/093,  DFAN14A,  SC 13G/A
1/8/09SC 13G/A
12/31/0810-K,  10-K/A
12/23/088-K
12/22/08
12/9/084
12/1/084,  SC 13G
11/24/084,  8-A12G,  8-K,  8-K/A,  SC 13D/A
11/5/084,  8-K
11/3/088-K
10/30/088-K
10/21/083,  SC 13G/A
9/30/0810-Q
1/1/04
 List all Filings 
↑Top
Filing Submission 0000921895-09-000700   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help — Sun., Apr. 28, 7:48:58.1am ET