Greenbackd

Biotechnology Value Fund (BVF) has filed the slides to its presentation to the stockholders of Avigen Inc (Nasdaq: AVGN) to remove the existing directors at the special meeting to be held March 27, 2009.

The slides can be viewed here.

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 we think 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. The stock is up 68% from $0.65 to close at $1.09 on Friday. We are maintaining our position because we estimate AVGN’s liquidation value to be around 12% higher at $1.22 per share (BVF estimates $1.20 per share).

BVF has also issued the following press release:

BIOTECHNOLOGY VALUE FUND CONFIRMS NOMINEES’ PLANS IF ELECTED TO THE AVIGEN BOARD AT SPECIAL MEETING

Urges Stockholders to Vote to Remove Current Board and Elect its Slate of Four Stockholder-Oriented Independent Nominees

Biotechnology Value Fund, L.P. (“BVF”), today confirmed its plans for the future of Avigen, Inc. (Nasdaq: AVGN) if stockholders remove the current members of the Avigen Board and replace them with BVF’s four new, stockholder-oriented, independent director nominees at the Special Meeting of stockholders to be held on March 27, 2009. BVF, the beneficial owner of approximately 30% of the Company’s outstanding common stock, has called the Special Meeting to give stockholders the opportunity to protect what remains of Avigen’s assets, which it believes are in danger of being completely wasted by the Board. Upon the removal of the current Board and election of BVF’s nominees, subject to the nominees’ fiduciary duties, BVF pledges the following:

· First, all stockholders who desire liquidity will have the immediate ability to cash out of their investment in Avigen and receive a payment of $1.00 per share by tendering their shares into the BVF tender. Stockholders who do not wish to sell their shares will have the opportunity to participate with BVF in the future of Avigen;

· Next, the nominees will immediately announce that Avigen will only consider and proceed with strategic transactions that guarantee a quantified worst-case outcome of approximately Avigen’s liquidation value;

· Next, the nominees will then commence negotiations with MediciNova, with the goal of reaching an agreement on the best terms possible for all Avigen stockholders;

· Next, the nominees will consider any other transactions that satisfied the downside protection requirements described above; and

· Ultimately, the nominees will present any transaction that satisfies the downside protection requirements described above and that the nominees believe is in the best interests of stockholders to stockholders for their approval.

Should the nominees be unable to negotiate final terms with a third party that satisfies the requirements described above, or should such transaction not be approved by stockholders, the nominees intend to promptly return the Company’s remaining cash to stockholders.

Mark N. Lampert BVF Partner stated, “In addition to confirming our plan for the future of the Company, we also wanted to clarify a few remaining issues for stockholders. Specifically, neither BVF nor its nominees have any financial interest or other stake in MediciNova or its proposed transaction. Our only concern is for the fair valuation and prevention of lost value of Avigen. Our interest in Avigen is solely as stockholders – we have never sought, nor would we accept, any benefit solely for ourselves. In addition, in the event they are elected to the Board, our nominees will not receive any compensation for their services as directors of Avigen, other than Mr. Coppedge who stands to receive only nominal director fees. We encourage stockholders to act now to protect their investment by voting the GOLD proxy card today.”

[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.]