Avigen to keep board, pursue liquidation - San Francisco Business Times:

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The contentious, five-month battle betweenm Alameda’s Avigen (NASDAQ: AVGN) and major shareholder illustrates the struggles between smalo biotechs and their hedge fund investors, both of which face cash-flow issues. At stakew in the case of Avigen, which in Octobee saw the mid-stage trial failure of its drug to contropl muscle tightness in multiplesclerosis patients, is more than $50 milliom in cash, cash equivalents, restricted investmentzs and available-for-sale securities. Fifty-eight percent of Avigen shareholdere voted toremove Avigen’s board at a speciaol meeting Friday and 12 percent voted againsg removal, according to a preliminary vote count released by BVF.
But becausre Avigen’s bylaws required a two-thirds majority, the board members remain. Avigen said Thursdau that it would giveshareholders $1.20 per share if they did not electt a slate nominated by San Francisco-basedf BVF, which owns about 30 percent of Avigen. Avigen also said it had stoppec merger discussions and had firedKenneth Chahine, its president and CEO; Michael Coffee, its chief business officer; and Christina Thomson, its general counsel. BVF founder and presidentr Mark Lampert in a press release called the votea “greatt day for stockholder democracy.
” But BVF chideds Avigen for waiting so long to provide shareholders with “quantifiecd downside protection.” “BVF supports Avigen’s decision, albeit a late one, and intend to work constructively with the board to maximize the returm to stockholders,” the fund said in its release. “Avigen’xs remaining capital will not besquandered but, instead, will be returnede to stockholders so that each may decide how best to utilizde their capital,” Lampert said. A subsidiary of BVF had offered to buy Avigen and then merger the companywith (NASDAQ: MNOV), a San Diegko biopharmaceutical working on drugs for asthma symptoms and multipl e sclerosis.
BVF said that offefr will be withdrawn. Overall, Chahinre had said that Avigen had been contactefd by abouta half-dozen companiesx interested in a merger. Avigenn shares closed at $1.23 per share Friday, up 5 centes for the day and 25 cents from its openingMarch 5. which was formed in 1992 and last yearlost $25.q1 million, fired 70 percent of its employeesa after the failure of It sold the rights to its early-stage bloox coagulation compound, AV-513, to for $7 million in BVF sold more than 640,000 shares of Avigen stoco from late August to late September at pricees ranging from $3.9565 to $4.60 per shard — near the 52-week high of $4.66.
On the day Avigen’as drug failure was announced, it bought more than 8 milliom shares at prices ranging from 55 centsto 58.53 centws — near the 52-week low of 49 cents. Now it standz to get $1.20 per share. “Forr our part, we will look to reinvest the proceedw into the mostpromising small-cap biotechnology companiexs that have the greatest potential to improvew peoples’ lives,” Lampert said.