The board of Avigen Inc (NASDAQ: AVGN) has announced that it will review BVF’s tender offer and advise AVGN’s stockholders of the board’s position by February 6.
We’ve been following AVGN (see archived posts here) because it’s a net cash stock (i.e. it’s trading at less than the value of its cash after deducting all liabilities) and specialist biotechnology activist fund BVF has been pushing it to liquidate and return its cash to shareholders. MediciNova Inc (NASDAQ:MNOV) has made an offer for AVGN that represents a clever way for AVGN’s stockholders to receive cash equivalent to that which they would receive in a liquidation (less $7M to be paid to MNOV) with the possibility for “an extraordinary, uncapped return” if MNOV is successful post-merger. We estimate AVGN’s net cash at around $1.22 per share (BVF estimates $1.20 per share), which is 30% higher than AVGN’s $0.94 close yesterday.
AVGN’s press release is as follows:
Avigen, Inc. (Nasdaq: AVGN), a biopharmaceutical company, today confirmed that BVF Acquisition LLC, a wholly owned subsidiary of Biotechnology Value Fund, L.P. (collectively, “BVF”), had commenced an unsolicited tender offer to purchase all of the outstanding shares of Avigen’s common stock that BVF does not already own for $1.00 per share in cash.
Avigen’s Board of Directors, consistent with its fiduciary duties, and in consultation with its financial and legal advisors, will carefully review and consider BVF’s unsolicited tender offer and will, on or before February 6, 2009, advise Avigen’s stockholders of the position of the Board of Directors regarding the offer as well as the reasons for the position taken.
Accordingly, Avigen’s Board of Directors urges Avigen’s stockholders to defer making a determination whether to accept or reject BVF’s unsolicited tender offer until they have been advised of the position of the Board of Directors.
[Full Disclosure: We have a holding in AVGN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.]
Greenbackd 
I recommend any holders of AVGN give Mike Coffee a call at 510-748-7372. My guess is BVF has forced the issue with the MNOV deal so AVGN will be compelled to act before May 9. So far, so good: they have hired bankers and are on their way to finding the best deal for AVGN.
Here are some tidbits that many do not realize:
1. they hired 2 investment bankers who are competing to find the best deal–only one is getting paid and they are only getting paid if a deal gets done. BVF, if I remembered correctly, pointed out that they were ‘wasting’ assets by hiring 2 bankers, but the reality is the economics are in our favor.
2. Mgmt at AVGN is in CYA (cover your ass) mode and needs to perform the proper due diligence and dot their “i’s and cross their “t”s so shareholders can’t sue them later down the road for agreeing to the MNOV deal without regard for alternatives.
3. My guess is AVGN will find a deal that trumps the MNOV deal and the need for the special meeting of shareholders to vote on the MNOV deal will be unnecessary.
4. whisper numbers on the value of AV411 are 10mm-25mm, which would add .2-.5 in additional liquidation value to AVGN if it were sold.
AVGN is very interesting at these prices for a patient investor.
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