Its a question of time, this stock rally`s above $1.. the reasen the menger situation..
29/12/08..
ITEM 4. Purpose of Transaction
Item 4 is hereby amended to add the following:
On December 22, 2008 MediciNova, Inc. (“MediciNova”) described details of a Proposed Merger between MediciNova and Avigen, Inc. ("Avigen") in a letter to Avigen's Chairman, Zola Horovitz. The Reporting Persons hereby express their full and enthusiastic support for this Proposed Merger and believe it is the best interest of all Avigen shareholders. The Reporting Persons presently have no economic interest in MediciNova. The Reporting Persons call on Avigen's Board of Directors to negotiate with MediciNova and work to consummate the Proposed Merger expeditiously.
The Reporting Persons support the Proposed Merger for the following reasons:
1. Downside Protection: The Proposed Merger provides for the same downside protection that the Reporting Persons encouraged Avigen to implement directly (which Avigen rejected). Subsequent to the Proposed Merger, if MediciNova is unsuccessful, Avigen shareholders will receive approximately the current liquidation value of Avigen (which the Reporting Persons estimate to be approximately $1.20/share, net of debt and expenses), as determined by an independent auditor. Incredibly, in a worst case scenario, the Proposed Merger would yield about a 60% premium to Avigen's current stock price.
2. Extraordinary Upside Potential: If MediciNova is successful post-merger, Avigen shareholders could own a substantial percentage of MediciNova (which the Reporting Persons estimate to be approximately 45% of the combined company). Thus, in a best case scenario, Avigen shareholders could enjoy an extraordinary, uncapped return. For this reason, the Proposed Merger is superior to an immediate liquidation of Avigen.
3. Free Option: Shareholders have at least one year after the merger is consummated to choose downside protection or upside potential, as described above. This decision can be based on information obtained over the course of the free option period, including the stock performance of MediciNova. This free option period offers shareholders tremendous upside potential with virtually no risk.
4. Change of Control: The Proposed Merger would result in new stewardship of Avigen's assets, curtailing current management's stated plan of seeking ways to utilize (and we fear waste) Avigen's cash in any way they wish. This is a particularly frightening prospect in light of CEO Ken Chahine's recent statements 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."
5. Unique Synergies: The Reporting Persons believe there are unique synergies between MediciNova and Avigen which likely would not exist with other potential acquirers of Avigen. These synergies give rise to the compelling nature of the Proposed Merger.
BVF wishes to see the Proposed Merger brought to a shareholder vote as soon as practical and urges other Avigen shareholders to support this offer.
