5) Were prepared to cash out
stockholders if we cant find a better option.
We recognize that despite our best
intentions and efforts, it may not be possible to identify a favorable merger
transaction. Therefore, if at any point during this process, your Board of
Directors determines that a favorable transaction is unlikely, the Board will
continue to consider all other strategic options, including a partial or
complete distribution of Avigens cash. In any event, we intend to complete the
process, including monetizing our pain and addiction program, no later than the
end of 2009.
BVF DOES NOT REPRESENT YOUR
INTERESTS
BVF is trying to seize complete control of
your Board and has acted in ways that are not in the best interests of other
stockholders.
1) BVFs interests are different from
other stockholders interests
Why does BVF oppose the Boards
competitive process a process that aims to maximize value for all
stockholders? We believe its because BVFs interests are different from the
interests of all other stockholders.
BVF cannot easily sell its almost 9
million shares of Avigen without causing the stock price to fall. It could avoid
this risk, however, if it can force Avigen into any transaction that cashes BVF
out of the stock even if that means accepting a significant discount to our
book value and a significantly lower price for you.
In fact, BVF has opposed all plans that
dont fit its self-serving agenda even when this has meant destroying value
for other Avigen stockholders.
2) BVF favors immediate acceptance of
the initial acquisition proposal from MediciNova despite the low initial
proposed value per share apparently without negotiations to improve the
terms
BVF immediately supported the initial
acquisition proposal by MediciNova without encouraging negotiation to improve
the terms. That proposal is estimated to result in potential cash for Avigen
stockholders of approximately $0.91 per share
1
after being sequestered and
unavailable to Avigen stockholders until at least
June 2010
. The other components of the
transaction provide little value. Your Board believes it can deliver more value
for your investment through negotiations with MediciNova or through other
competitive proposals.
3) BVF has not been forthcoming with
stockholders
The CEO of MediciNova told Avigens
management that MediciNova was working with BVF in making its acquisition
proposal to Avigen. BVF has not disclosed this working relationship with
MediciNova to stockholders.
____________________
1
This estimate is based on our good
faith assumptions of Avigens cash at the close of the transaction and estimated
transaction costs.
4) BVF activities have hurt other
Avigen stockholders
In the face of BVFs public support for
the MediciNova acquisition and its attacks on Avigens Board, several potential
bidders who have not submitted a written proposal for Avigens assets have been
reluctant to negotiate with Avigen until BVFs threats are resolved. One
important would-be buyer said they dont want to spend the time and money in
making a proposal that BVF is going to reject out of hand.
Finally, we learned from three separate
parties that a BVF manager and one of BVFs nominees for the Avigen Board
tried to sabotage Avigens confidential discussions with a potential bidder. The
BVF nominee contacted Board members of a potential bidder and warned them that
BVF would withhold its support for their potential deal with Avigen. These
actions undermine the best interest of other stockholders.
In short,
BVFs actions have consistently harmed the interests of other Avigen
stockholders. The Board believes BVF would not be an appropriate steward
for all stockholders, and urges stockholders to reject the BVF proposal by
voting on the WHITE proxy card AGAINST the removal of your
Board.
|
YOUR BOARD IS COMMITTED TO
CREATING WEALTH FOR ALL STOCKHOLDERS AND
IS MAKING GOOD ON THIS
COMMITMENT
Your Board of Directors is committed to
pursuing the strategies that are in the best interest of the majority of our
stockholders and to protecting the rights of all stockholders. It is committed
to finding a way to work with BVF, our largest stockholder and has made
numerous attempts to reach out to BVF and to accommodate its
interests.
We believe that removing,
without cause
, all six of
your directors and replacing them with BVFs nominees who lack relevant
experience
2
and are not independent is not in the best interests of all of
Avigens stockholders.
Your vote in this proxy contest comes down
to one thing: Who can you expect to deliver, to you and all other Avigen
stockholders, the full value from Avigens assets? We urge you to reject the BVF
proposal and support your current Board of Directors, which has over the years
earned your trust.
Respectfully,
Signed for the Board of Directors
Zola Horovitz, Ph.D. as Chairman of the
Board
Kenneth G. Chahine, Ph.D., J.D. as Chief
Executive Officer
Your Vote Is Important, No Matter How
Many Or How Few Shares You Own.
If you have questions about how to vote
your shares, or need additional assistance,
please contact the firm assisting us
in the solicitation of proxies:
INNISFREE M&A INCORPORATED
____________________
2
Based on disclosure in BVFs proxy
statement.
Stockholders Call Toll-Free: (888)
750-5834
Banks and Brokers Call Collect: (212) 750-5833
IMPORTANT
We urge you NOT to sign any Gold proxy card sent to you by
Biotechnology Value Fund (BVF).
If you
have already done so, you have every legal right to change your vote by using
the
enclosed
WHITE
proxy card to vote
TODAY
by telephone,
by Internet,
or by signing, dating and returning the
WHITE
proxy card
in the postage-paid envelope
provided.
Forward Looking Statements
The statements in this letter regarding
Avigens cash at the end of 2008, Avigens potential to create shareholder
value, Avigens intentions with respect to the structure of a transaction and
component to return cash to Avigens stockholders, Avigens anticipated focus
for the next year, the actions that Avigen intends to take if a favorable
transaction is unlikely, and the other actions that Avigen intends to take over
the next year, are forward looking statements that are subject to risks and
uncertainties. Actual results may differ materially due to numerous risks,
including: potential partners or other entities may not value AV411 as much as
Avigen does; potential strategic transactions may not be available on terms
favorable to Avigen, or with terms Avigen desires to negotiate; Avigen cannot
guarantee that its remaining staff will remain with Avigen through 2009; and
other risks and uncertainties relating to Avigen detailed in reports filed by
Avigen with the Securities and Exchange Commission, including Avigen's Quarterly
Report on Form 10-Q for the period ended September 30, 2008, under the caption
"Risks Related to Our Business" in Item 2 of Part I of that report, which was
filed with the SEC on November 10, 2008.
Important Information
In connection with the solicitation of
proxies, Avigen filed with the Securities and Exchange Commission (the SEC)
and mailed to stockholders a definitive proxy statement dated March 9, 2009.
Avigens stockholders are urged to read the proxy statement and any other
relevant documents when they become available as they contain important
information. Stockholders may obtain additional free copies of the proxy
statement and other relevant documents filed with the SEC by Avigen through the
website maintained by the SEC at www.sec.gov. These documents can also be
obtained free of charge from Avigen at Avigens website at www.avigen.com under
the Investors tab. Stockholders may also contact Innisfree M&A
Incorporated with questions or requests for additional copies of the proxy
materials by calling toll free at (888) 750-5834. Detailed information regarding
the names, affiliations and interests of individuals who are participants in the
solicitation of proxies of Avigens stockholders is available in Avigens
definitive proxy statement filed with SEC on March 9, 2009.
CONTACT:
Michael Coffee, Chief Business Officer
Avigen, Inc., 1301 Harbor Bay Parkway, Alameda, CA 94502
510-748-7376
ir@avigen.com
www.avigen.com
On March 11, 2009, Avigen, Inc. posted the following strategic presentation on its website along with the addition of a slide depicting a timeline of significant events that was not in the initial posting.
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