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As Filed With the Securities And Exchange Commission On November 30, 1998
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AVIGEN, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 8731 13-3647113
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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1201 HARBOR BAY PARKWAY, #1000
ALAMEDA, CA 94502
(510) 748-7150
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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JOHN MONAHAN, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AVIGEN, INC.
1201 HARBOR BAY PARKWAY, #1000
ALAMEDA, CA 94502
(510) 748-7150
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
ALAN C. MENDELSON, ESQ.
BRETT D. WHITE, ESQ.
COOLEY GODWARD LLP
FIVE PALO ALTO SQUARE
3000 EL CAMINO REAL
PALO ALTO, CALIFORNIA 94306
(415) 843-5000
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE(1)
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Common Stock, $.01 par value.......... 1,435,938 Shares $2 7/16 $3,500,099 $974
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(1) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of the
high and low prices of the Company's Common Stock as reported on the Nasdaq
National Market on November 24, 1998. It is not known how many shares will
be purchased under this Registration Statement or at what price such shares
will be purchased.
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment that specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
securities act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
(November 30, 1998)
PROSPECTUS
AVIGEN, INC.
1,435,938 SHARES
COMMON STOCK
Selling stockholders identified in this prospectus are selling 1,435,938
shares of common stock of Avigen, Inc. Of these shares 1,196,615 shares of
common stock were sold to the selling stockholders by Avigen in a private
financing and 239,323 are issuable upon the exercise of warrants sold to the
selling stockholders in the financing. Avigen will not receive any of the
proceeds from the sale of shares by the selling stockholders. Avigen's common
stock is listed on the Nasdaq national market under the symbol "AVGN." On
November 13, 1998, the closing sale price of the common stock, as reported on
the Nasdaq National Market, was $2.25.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 3.
The Avigen shares offered or sold under this prospectus have not been
approved by the SEC or any state securities commission, nor have these
organizations determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
The selling stockholders may sell the shares of common stock described in
this prospectus in public or private transactions, on or off the Nasdaq National
Market, at prevailing market prices, or at privately negotiated prices. The
selling stockholders may sell shares directly to purchasers or through brokers
or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders. More
information is provided in the section titled "Plan of Distribution" on page 10.
The Company's address and telephone number is: Avigen, Inc., 1201 Harbor
Bay Parkway, Suite 1000, Alameda, CA 94502 (510) 748-7150.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 30, 1998.
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WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
rooms in Washington, DC, New York, NY and Chicago, IL. You can request copies of
these documents by writing to the SEC and paying a fee for the copying cost.
Please call the SEC at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. Our SEC filings are also available at the SEC's
web site at "http://www.sec.gov." In addition, you can read and copy our SEC
filings at the office of the National Association of Securities Dealers, Inc. at
1735 "K" Street, Washington, DC 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
o Annual Report on Form 10-K for the year ended June 30, 1998;
o Current Report on Form 8-K filed October 9, 1998; and
o Quarterly Report on Form 10-Q filed November 13, 1998
o The description of the common stock contained in Avigen's Registration
Statement on Form 8-A, as filed on April 22, 1996 with the SEC under
the Securities Exchange Act of 1934.
You may request a copy of these filings at no cost, by writing, telephoning
or e-mailing us at the following address:
Avigen, Inc.
1201 Harbor Bay Parkway
Suite 1000
Alameda, CA 94502
(510) 748-7150
http://www.Avigen.com
This prospectus is part of a Registration Statement we filed with the SEC.
You should rely only on the information incorporated by reference or provided in
this prospectus and the Registration Statement.
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements regarding Avigen's drug development
programs, clinical trials, receipt of regulatory approval, capital needs,
intellectual property, expectations and intentions. Forward-looking statements
necessarily involve risks and uncertainties, and Avigen's actual results could
differ materially from those anticipated in the forward-looking statements,
including those set forth below under "Risk Factors" and elsewhere in this
prospectus. The factors set forth below under "Risk Factors" and other
cautionary statements made in this prospectus should be read and understood as
being applicable to all related forward-looking statements wherever they appear
in this prospectus.
RISK FACTORS
Investing in Avigen's common stock is very risky. You should be able to
bear a complete loss of your investment. You should carefully consider the
following factors, in addition to the other information in this prospectus.
EARLY STAGE OF DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY
Avigen is engaged in the development of gene therapy products derived from
adeno-associate virus ("AAV") for the treatment of inherited and acquired
diseases. Gene therapy is a new and rapidly evolving technology. To date, there
has been only limited research and development in gene therapy using AAV
vectors. We are not aware of any gene therapy products that have obtained
marketing approval from the United States Food and Drug Administration. Because
there is only limited research regarding the safety and efficacy of AAV vectors,
we believe that clinical trials will proceed more slowly than clinical trials
involving traditional drugs and biologics.
We are at an early stage of development. All of our potential products are
in research or early preclinical development. We cannot assure you that our
research and development activities will be completed successfully or will
support the initiation of clinical trials or that any proposed products will
prove to be efficacious or safe. Before obtaining regulatory approval for the
commercial sale of any of our products under development, we must demonstrate
through preclinical studies and clinical trials that the proposed product is
safe and efficacious for its intended use. None of our proposed products has
been tested in humans. There can be no assurance that we will not encounter
problems with the clinical trials which will require us to delay, suspend or
terminate these trials. All of our products in research and development may
prove to have undesirable and unintended side effects or other characteristics
that may prevent or limit their commercial use. Even if successfully developed,
we cannot assure you that any potential products will be cleared for marketing
by United States or foreign regulatory authorities or that such products can be
manufactured at acceptable cost or that any approved products can be
successfully marketed. Products resulting from our research and development
efforts, if any, are not expected to be commercially available, and revenues
from the sale of any such products are not expected, for at least the next
several years.
HISTORY OF LOSSES; ACCUMULATED DEFICIT
To date, we have been engaged in research and development activities and
have not generated any revenues from product sales. As of June 30, 1998, we had
an accumulated deficit of $27.2 million. The process of developing our products
will require significant research and development, preclinical testing and
clinical trials, as well as regulatory approval. These activities, together with
our general and administrative expenses, are expected to result in operating
losses for the foreseeable future. Our ability to achieve profitability is
dependent, in part, on our ability to successfully complete development of our
proposed products, obtain required regulatory approvals and manufacture and
market our products directly or through partners. We cannot assure you that we
will achieve revenues or profitability in the future.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING; MAINTENANCE OF NASDAQ
LISTING
We will require substantial additional funding in order to complete the
research and development activities currently contemplated and to commercialize
our proposed products. We anticipate that our existing capital resources will be
adequate to fund our needs for at least the next 12 months. Our future capital
requirements will depend on many factors, including continued scientific
progress in research and development programs, the scope and results of
preclinical studies and clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patent claims, competing technological developments, the cost of
manufacturing scale-up, the cost of commercialization activities and other
factors which may not be within our control.
We intend to seek additional funding through public or private equity or
debt financing, when market conditions allow. If we raise additional funds by
issuing equity securities, there may be further dilution to existing
stockholders. We cannot assure you that we
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will be able to enter into such collaborative or financing arrangements on
acceptable terms or at all. Without such additional funding, we may be required
to delay, reduce the scope of or eliminate one or more of our research or
development programs.
We believe that maintaining our listing on the Nasdaq National Market is
central to our ability to raise additional funds as well as to provide liquidity
to investors. We failed temporarily to meet the Nasdaq net tangible asset
listing requirement at June 30, 1998. However, the proceeds from a recent
financing allowed us to meet the Nasdaq net tangible asset listing requirement,
on a proforma basis, for the first quarter of fiscal 1999. We may be required to
generate sufficient revenue or raise additional capital to maintain Nasdaq
listing requirements through fiscal year end 1999.
NEED FOR ESTABLISHMENT OF CORPORATE PARTNER RELATIONSHIPS
We do not currently have a corporate partner relationship with respect to
any of our technologies or potential products. Given the very high cost of
funding clinical trials and bringing a proposed product through the governmental
approval process to the commercial market, we believe that successful
development and commercialization of our technologies and products will depend
in large part on our ability to establish one or more such relationships. We
cannot assure you that we can establish relationships on favorable terms, if at
all. In addition, if we fail to raise needed future capital we could be at a
disadvantage in negotiating favorable terms with potential corporate partners.
NEED TO OBTAIN RIGHTS TO PROPRIETARY GENES AND TECHNOLOGY
A number of the gene sequences or proteins encoded by certain of those
sequences that we are investigating or may use in our products are or may become
patented by others. As a result, we may be required to obtain licenses to such
gene sequences or proteins or other technology in order to test, use or market
such products. For example, in connection with our anemia program, we may need
to obtain a license to a gene for erythropoietin. We cannot assure you that we
will be able to obtain such a license on terms favorable to us, if at all. In
connection with our efforts to obtain rights to such gene sequences or proteins,
we may find it necessary to convey rights to our technology to others.
We have entered into agreements for the license from third parties of
certain technologies related to our gene therapy product development programs.
Certain of these license agreements provide for the achievement of development
milestones at various times beginning in February 1997. In the event we fail to
achieve such milestones or to obtain extensions, certain of the license
agreements may be terminated by the licensor with relatively short notice to us.
Termination of any of our license agreements could have a material adverse
effect on our business.
Some of our gene therapy products may require the use of multiple
proprietary technologies. Consequently, we may be required to make cumulative
royalty payments to several third parties. Such cumulative royalties could be
commercially prohibitive. We cannot assure you that we will be able to
successfully negotiate such royalty adjustments.
UNCERTAINTY OF MARKET ACCEPTANCE
Our success is dependent on acceptance of our gene therapy products. We
believe that recommendations by physicians and health care payors will be
essential for market acceptance of our gene therapy products. In the past, there
has been concern regarding the potential safety and efficacy of gene therapy
products derived from pathogenic viruses such as retroviruses and adenoviruses.
While our proposed gene therapy products are derived from AAV which is a
non-pathogenic virus, we cannot assure you that physicians and health care
payors will conclude that the technology is safe. In addition, health care
payors can indirectly affect the attractiveness of our proposed products by
regulating the maximum amount of reimbursement they will provide for such
proposed products. We cannot assure you that our products will achieve
significant market acceptance among patients, physicians or third party payors,
even if necessary regulatory and reimbursement approvals are obtained. Failure
to achieve significant market acceptance will have a material adverse effect on
our business, financial condition and results of operations.
GOVERNMENT REGULATION
The production and marketing of our proposed products and ongoing research
and development activities are subject to extensive regulation by governmental
authorities in the United States and foreign countries. At the present time, we
believe that our products will be regulated as biologics by the FDA and
comparable foreign regulatory bodies. Gene therapy is, however, a relatively new
technology and has not been extensively tested in humans. The regulatory
requirements governing gene therapy products are uncertain and are subject to
change. No gene therapy products have been approved to date in the United States
or any foreign country. Failure to comply with applicable FDA or other
regulatory requirements may result in criminal prosecution, civil penalties,
recall or seizure of products, total or partial suspension of production or
injunction, as well as other regulatory action against us.
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We are currently conducting preclinical studies and planning clinical
trials of our AAV vectors. Prior to marketing in the United States, any drug
developed by us must undergo rigorous preclinical and clinical testing and an
extensive regulatory approval process implemented by the FDA under the federal
Food, Drug and Cosmetic Act. Satisfaction of such regulatory requirements, which
includes satisfying the FDA that the product is both safe and efficacious,
typically takes several years or more depending on the type, complexity and
novelty of the product, and requires a substantial commitment of resources. We
may encounter significant delays or excessive costs in our efforts to secure
regulatory approvals, particularly because gene therapy is a novel method of
treatment and regulatory requirements are evolving and uncertain. Preclinical
studies must be conducted in conformance with the FDA's Good Laboratory
Practices regulations. Before commencing clinical trials, we must submit to and
receive FDA authorization of an investigational new drug application ("IND"). We
cannot assure you that submission of an IND would result in FDA authorization to
begin clinical trials.
Clinical trials must meet FDA regulatory requirements for Institutional
Review Board oversight and informed consent and good clinical practice
regulations. We have limited experience in conducting preclinical studies and no
experience in conducting clinical trials necessary to obtain regulatory
approval. We cannot assure you that those clinical trials can be conducted at
preferred sites, sufficient test subjects can be recruited or clinical trials
will be started or completed successfully in a timely fashion, if at all.
Furthermore, the FDA may suspend clinical trials at any time if it believes the
subjects participating in such trials are being exposed to unacceptable health
risks or if it finds deficiencies in the IND or conduct of the investigation. We
may encounter problems in clinical trials which cause us or the FDA to delay,
suspend or terminate such trials.
In addition to the FDA requirements, the National Institutes of Health has
established guidelines for research involving recombinant DNA molecules, which
we utilize in our research. These guidelines apply to recombinant DNA research
which is conducted at or supported by the NIH. Under current guidelines,
proposals to conduct clinical research involving gene therapy at institutions
supported by the NIH must be approved by the NIH's Recombinant DNA Advisory
Committee.
We cannot assure you that any product developed by us will prove to be safe
and efficacious in clinical trials or will meet all of the applicable regulatory
requirements necessary to receive marketing approval. Data obtained from
preclinical and clinical activities are susceptible to varying interpretations
which could delay, limit or prevent regulatory approvals. If regulatory approval
is granted for a product, such approval will be limited to those disease states
and conditions for which the product is useful, as demonstrated through clinical
trials. Furthermore, approval may require ongoing requirements for postmarketing
studies. Even if a product is approved for marketing, the product, its
manufacturer and its manufacturing facilities are continuously subject to review
and periodic inspections. Discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on such product or
manufacturer, including withdrawal of the product from the market.
In order to market our products outside of the United States, we also must
comply with numerous and varying foreign regulatory requirements, implemented by
foreign health authorities, governing the design and conduct of human clinical
trials and marketing approval. The approval procedure varies among countries and
can involve additional testing, and the time required to obtain approval may
differ from that required to obtain FDA approval. The foreign regulatory
approval process includes all of the risks associated with obtaining FDA
approval set forth above, and approval by the FDA does not ensure approval by
the health authorities of any other country.
UNCERTAINTY OF PRODUCT PRICING AND THIRD PARTY REIMBURSEMENT
The business and financial condition of biotechnology companies such as
ours are affected by the efforts of government and third party payors to contain
or reduce the cost of health care through various means. In the United States,
there have been and will continue to be a number of federal and state proposals
to implement government control on pricing. In addition, the emphasis on managed
care in the United States has increased and will continue to increase the
pressure on the pricing of pharmaceutical products. We cannot predict whether
any legislative or regulatory proposals will be adopted or the effect such
proposals or managed care efforts may have on our business. In addition, in both
the United States and elsewhere, sales of medical products and treatments are
dependent, in part, on the availability of reimbursement to the consumer from
third-party payors, such as government and private insurance plans. Third-party
payors are increasingly challenging the prices charged for medical products and
services. If we succeed in bringing our proposed products to the market, we
cannot assure you that these products will be considered cost-effective and that
reimbursement to the consumer will be available or will be sufficient to allow
us to sell our products on a competitive basis.
COMPETITION
The field of gene therapy is new and rapidly evolving and is expected to
undergo significant technological change in the future. We expect competition
from fully integrated pharmaceutical companies and more established
biotechnology companies to increase. Most of these companies have significantly
greater financial resources and expertise than we do in research and
development, preclinical studies and clinical trials, obtaining regulatory
approvals, manufacturing, marketing and distribution. Smaller
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companies may also prove to be significant competitors, particularly through
collaborative arrangements with large pharmaceutical companies. Academic
institutions, government agencies and other public and private research
organizations also conduct research, seek patent protection and establish
collaborative arrangements for product development and marketing. In addition,
these companies and institutions compete with us in recruiting and retaining
highly qualified scientific and management personnel. Our competitors may
develop more effective or more affordable products, or achieve earlier product
commercialization than we do.
We are aware that other companies are conducting preclinical studies and
clinical trials for viral and non-viral gene therapy products. One of these
companies is supporting clinical studies for use of AAV vectors in the treatment
of cystic fibrosis.
We believe the primary competitive factors for success in the gene therapy
field will be product efficacy, safety, manufacturing capability, the timing and
scope of regulatory approvals, the timing of market introduction, marketing and
sales capability, reimbursement coverage, price and patent position. Our
competitors may develop more effective or more affordable products, or achieve
earlier product commercialization than we do.
UNCERTAIN PROTECTION OF INTELLECTUAL PROPERTY; POSSIBLE CLAIMS OF OTHERS
To date, we have filed a number of patent applications in the United States
relating to our technologies. In addition, we have acquired exclusive and
non-exclusive licenses to certain issued patents and pending patent
applications. We cannot assure you that patents will issue from these
applications or that any patent will issue on technology arising from additional
research or, if patents do issue, that claims allowed will be sufficient to
protect our technologies.
The patent application process takes several years and entails considerable
expense. The failure to obtain patent protection on the technologies underlying
our proposed products may have a material adverse effect on our competitive
position and business prospects. Important legal issues remain to be resolved as
to the scope of patent protection for biotechnology products, and we expect that
administrative proceedings, litigation or both will be necessary to determine
the validity and scope of our and others' biotechnology products. Such
proceedings or litigation may require a significant commitment of our resources
in the future. If patents can be obtained, we cannot assure you that any such
patents will provide us with any competitive advantage. For example, others may
independently develop similar technologies or duplicate any technology developed
by us, and patents may be invalidated in litigation. In addition, two of our
patent applications are co-owned with co-inventors. Under the terms of
agreements with the co-inventors, we have an option to obtain an exclusive,
worldwide, transferable, royalty-bearing license for such technology, and are
currently in discussions with one of the co-inventors to obtain such a license.
If we cannot negotiate exclusive rights to such co-owned technology, each
co-inventor may have rights to independently make, use, offer to sell or sell
the patented technology. Commercialization, assignment or licensing of such
technology by a co-inventor could have a material adverse effect on our
business, financial condition and results of operations.
Third parties may assert patent or other intellectual property infringement
claims against us with respect to our products or technology or other matters.
There may be third-party patents and other intellectual property relevant to our
products and technology which are not known to us. Although no third party has
asserted that we are infringing their patent rights or other intellectual
property, we cannot assure you that litigation asserting such claims will not be
initiated, that we would prevail in any such litigation, or that we would be
able to obtain any necessary licenses on reasonable terms, if at all. Any such
claims against us, with or without merit, as well as claims initiated by us
against third parties, can be time-consuming and expensive to defend or
prosecute and to resolve. If our competitors prepare and file patent
applications in the United States that claim technology also claimed by us, we
may have to participate in interference proceedings declared by the Patent and
Trademark Office to determine priority of invention, which could result in
substantial cost to us, even if the outcome is favorable to us. In addition, to
the extent outside collaborators apply technological information developed
independently by them or by others to our product development programs or apply
our technologies to other projects, disputes may arise as to the ownership of
proprietary rights to such technologies.
We also rely on a combination of trade secret and copyright law, employee
and third-party nondisclosure agreements and other protective measures to
protect intellectual property rights pertaining to our products and
technologies. We cannot assure you that these measures will provide meaningful
protection of our trade secrets, know-how or other proprietary information in
the event of any unauthorized use, misappropriation or disclosure of such trade
secrets, know-how or other proprietary information. In addition, the laws of
certain foreign countries do not protect our intellectual property rights to the
same extent as do the laws of the United States. We cannot assure you that we
will be able to protect our intellectual property successfully.
LACK OF MANUFACTURING AND SALES AND MARKETING EXPERIENCE
We have no experience in, and currently lack the resources and capability
to, manufacture or market any of our proposed products on a commercial basis. In
addition, we have not yet implemented the FDA's regulations concerning Current
Good Manufacturing Practices ("cGMP"). Initially, we anticipate that we will be
dependent to a significant extent on collaborative partners
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or other entities for commercial scale manufacturing of our products. In the
event we decide to establish a commercial scale manufacturing facility, we will
require substantial additional funds and personnel and will be required to
comply with extensive regulations applicable to such facility. We cannot assure
you that we will be able to develop adequate commercial manufacturing
capabilities either on our own or through third parties. In addition, we do not
anticipate establishing our own sales and marketing capabilities in the
foreseeable future. We cannot assure you that we will be able to develop
adequate marketing capabilities either on our own or through third parties.
DEPENDENCE ON KEY PERSONNEL
We are highly dependent on certain members of our management and research
and development staff. The loss of any of these persons could have a material
adverse effect on our business. In addition, we rely on consultants and advisors
to assist us in formulating our research and development strategy. Recruiting
and retaining qualified technical and managerial personnel will also be critical
to our success. We cannot assure you that we will be successful in attracting
and retaining skilled personnel who generally are in high demand in the
pharmaceutical and biotechnology industries. The loss of certain key employees
or our inability to attract and retain other qualified employees could have a
material adverse effect on our business. A majority of our scientific advisors
are engaged by us on a consulting basis and are employed on a full-time basis by
employers other than us and some have consulting or other advisory arrangements
with other entities that may conflict or compete with their obligations to us.
SIGNIFICANT PRODUCT LIABILITY RISK; LIMITED INSURANCE COVERAGE
The manufacture and sale of medical products entail significant risk of
product liability claims. We currently do not carry product liability insurance
although we intend to obtain such coverage prior to commencing clinical trials.
We cannot assure you that such coverage will be adequate to protect us from any
liabilities we might incur in connection with the use or sale of our products.
In addition, we may require increased product liability coverage as additional
products are commercialized. Such insurance is expensive and in the future may
not be available on acceptable terms, if at all. A successful product liability
claim or series of claims brought against us in excess of our insurance coverage
could have a material adverse effect on our business and results of operations.
We must indemnify certain of our licensors against any product liability claims
brought against them arising out of products developed by us under these
licenses.
HAZARDOUS MATERIALS
Our research and development efforts involve the use of hazardous
materials, chemicals and various radioactive compounds. We are subject to
federal, state and local laws and regulations governing the storage, use, and
disposal of such materials and certain waste products. Although we believe that
our safety procedures for handling and disposing of such materials comply with
the standards prescribed by federal, state and local regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. In the event of an accident, we could be held liable for any damages
that result and any such liability could exceed our resources. We may incur
substantial costs to comply with environmental regulations if we develop our own
commercial manufacturing facility.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "year 2000 problem"
is pervasive and complex as virtually every computer operation will be affected
in some way by the rollover of the two digit year value to 00. The issue is
whether computer systems will properly recognize date-sensitive information
when the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or fail. The Company is in the
process of working with its software vendors to ensure that the software that
the Company has licensed from third parties will operate properly in the year
2000 and beyond. In addition, the Company is working with its external
suppliers and service providers to ensure that they and their systems will be
able to support the Company's needs and, where necessary, interoperate with the
Company's server and networking hardware and software infrastructure in
preparation for the year 2000. Management does not anticipate that the Company
will incur significant operating expenses or be required to invest heavily in
computer systems improvements to be year 2000 compliant. However, significant
uncertainty exists concerning the potential costs and effects associated with
any year 2000 compliance. Any year 2000 compliance problems of either the
Company, its customers or vendors could have a material adverse effect on the
Company's business, results of operations and financial condition.
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THE COMPANY
Avigen is a leader in the development of gene therapy products derived
from AAV for the treatment of inherited and acquired diseases. Our proposed gene
therapy products are designed for in vivo administration to achieve the
production of therapeutic proteins within the body. We are developing two
broad-based proprietary gene delivery technologies: AAV vectors and the Targeted
Vector Integration (TVI") system. We believe AAV vectors can be used to deliver
genes for the treatment of brain, liver and prostate cancer, anemia, hemophilia,
hyperlipidemia and metabolic storage diseases. We also believe our TVI system
will allow us to pursue more effective treatments for blood cell-related
diseases, including sick cell anemia, beta-thalassemia and human
immunodeficiency virus infection.
The mailing address and telephone number of our principal executive office
is 1201 Harbor Bay Parkway, #1000, Alameda, California 94502, (510) 748-7150.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock offered by the selling stockholders.
8
<PAGE> 10
SELLING STOCKHOLDERS
Under a Common Stock and Warrant Purchase Agreement dated as of August 7,
1998 among Avigen and certain selling stockholders, we sold to the selling
stockholders common stock and warrants to purchase common stock in a private
placement and agreed to register the common stock and the shares of common stock
issuable upon the exercise of warrants sold to those selling stockholders for
resale. We also agreed to use our best efforts to keep the Registration
Statement effective for two years, or until all of the shares are sold under the
Registration Statement, whichever comes first. Our registration of the shares of
common stock does not necessarily mean that the selling stockholders will sell
all or any of the shares.
The following table sets forth certain information regarding the beneficial
ownership of the common stock, as of October 30, 1998, by each of the selling
stockholders.
The information provided in the table below with respect to each selling
stockholder has been obtained from such selling stockholder. Except as otherwise
disclosed below, none of the selling stockholders has, or within the past three
years has had, any position, office or other material relationship with Avigen.
Because the selling stockholders may sell all or some portion of the shares of
common stock beneficially owned by them, we cannot estimate the number of shares
of common stock that will be beneficially owned by the selling stockholders
after this offering. In addition, the selling stockholders may have sold,
transferred or otherwise disposed of, or may sell, transfer or otherwise dispose
of, at any time or from time to time since the date on which they provided the
information regarding the shares of common stock beneficially owned by them, all
or a portion of the shares of common stock beneficially owned by them in
transactions exempt from the registration requirements of the Securities Act of
1933.
<TABLE>
<CAPTION>
Shares Beneficially Owned Prior to Offering(1)
Selling Stockholder Number Percent Shares being Offered
- --------------------------------------- ---------------------- ---------------------- --------------------
<S> <C> <C> <C>
Multiscor Dolshares(2) 202,530 2.75% 202,530
Leven SA(3) 202,530 2.75% 202,530
CNCA SCT Brunoy/account BGP(4) 101,262 1.38% 101,262
Allison Gushee Molkerthin(5) 6,072 * 6,072
Prigest-Royale US(6) 139,530 1.89% 139,530
Edward J. Sappin(7) 2,232 * 2,232
Credit Agricole Vacari(8) 139,530 1.89% 139,530
St. Honore Vie et Sante (Rothschild)(9) 473,238 6.43% 473,238
Hygiene Diffusion(10) 169,014 2.30% 169,014
--------- ------ ---------
Total 1,435,938 19.39% 1,435,938
- --------------------------------------- ---------------------- ---------------------- -------------------
</TABLE>
* Less than 1% of the outstanding shares of common stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the Commission under the Securities Exchange Act of 1934, as
amended. Shares of common stock issuable pursuant to options, warrants and
convertible securities, to the extent such securities are currently
exercisable or convertible within 60 days of October 30, 1998, are treated
as outstanding for computing the percentage of the person holding such
securities but are not treated as outstanding for computing the percentage
of any other person. Unless otherwise noted, each person or group
identified possesses sole voting and investment power with respect to
shares, subject to community property laws where applicable. Shares not
outstanding but deemed beneficially owned by virtue of the right of a
person or group to acquire them within 60 days are treated as outstanding
only for purposes of determining the number of and percent owned by such
person or group. Applicable percentages are based on 7,364,406 shares
outstanding on October 30, 1998 adjusted as required by rules promulgated
by the SEC.
(2) Includes 33,755 shares issuable upon exercise of warrants held by this
selling stockholder.
(3) Includes 33,755 shares issuable upon exercise of warrants held by this
selling stockholder.
(4) Includes 16,877 shares issuable upon exercise of warrants held by this
selling stockholder.
(5) Includes 1,012 shares issuable upon exercise of warrants held by this
selling stockholder.
(6) Includes 23,255 shares issuable upon exercise of warrants held by this
selling stockholder.
9
<PAGE> 11
(7) Includes 372 shares issuable upon exercise of warrants held by this selling
stockholder.
(8) Includes 23,255 shares issuable upon exercise of warrants held by this
selling stockholder.
(9) Includes 78,873 shares issuable upon exercise of warrants held by this
selling stockholder.
(10) Includes 28,169 shares issuable upon exercise of warrants held by this
selling stockholder.
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
stockholders in one or more transactions at fixed prices, at market prices at
the time of sale, at varying prices determined at the time of sale or at
negotiated prices. The selling stockholders may offer their shares of common
stock in one or more of the following transactions:
o on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including the
Nasdaq National Market,
o in the over-the-counter market,
o in private transactions,
o through options,
o by pledge to secure debts and other obligations, or
o a combination of any of the above transactions.
If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering.
The shares of common stock described in this prospectus may be sold from
time to time directly by the selling stockholders. Alternatively, the selling
stockholders may from time to time offer shares of common stock to or through
underwriters, broker/dealers or agents. The selling stockholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933. Any profits on the resale of shares of common
stock and any compensation received by any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather than
pursuant to this prospectus. The selling stockholders may not sell all of the
shares they hold or may acquire upon exercise of the warrants. The selling
stockholders may transfer, devise or gift such shares by other means not
described in this prospectus.
To comply with the securities laws of certain jurisdictions the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock may not simultaneously engage in market-making
activities with respect to the common stock for five business days prior to the
start of the distribution. In addition, each selling stockholder and any other
person participating in a distribution will be subject to the Securities
Exchange Act of 1934 which may limit the timing of purchases and sales of common
stock by the selling stockholders or any such other person. These factors may
affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
All expenses of this registration, estimated at approximately $26,100, will
be paid by Avigen. These expenses include the SEC's filing fees and fees under
state securities or "blue sky" laws. The selling stockholders will pay all
underwriting discounts and selling commissions, if any.
10
<PAGE> 12
LEGAL MATTERS
Cooley Godward LLP, Palo Alto, California will give its opinion that the
shares offered in this prospectus have been, or will be upon exercise of the
warrants, validly issued and are, or will be upon exercise of the warrants,
fully paid and non-assessable.
EXPERTS
The financial statements of Avigen appearing in Avigen's Annual Report on
Form 10-K for the year ended June 30, 1998 have been audited by Ernst & Young,
LLP independent auditors, as set forth in their report thereon. Such financial
statements are, and audited financial statements to be included in subsequently
filed documents will be, incorporated herein in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.
11
<PAGE> 13
================================================================================
We have not authorized any dealer, sales person or other person to give any
information or to make any representations other than those contained in this
prospectus or any prospectus supplement. You must not rely on any unauthorized
information. This prospectus is not an offer of these securities in any state
where an offer is not permitted. The information in this prospectus is current
as of November 30, 1998. You should not assume that this prospectus is accurate
as of any other date.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Were You Can Find More Information....................... 2
Forward-Looking Statements............................... 3
Risk Factors............................................. 3
The Company.............................................. 8
Use of Proceeds.......................................... 8
Selling Stockholders..................................... 9
Plan of Distribution..................................... 10
Legal Matters............................................ 11
Experts.................................................. 11
</TABLE>
---------------------
1,435,938 SHARES
COMMON STOCK
----------
PROSPECTUS
----------
AVIGEN, INC.
November 30, 1998
================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, if any, all of which will be paid by the
registrant, in connection with the distribution of the Common Stock being
registered. All amounts are estimated, except the SEC Registration Fee, the NASD
Filing Fee and the Nasdaq National Market Filing Fee:
<TABLE>
<S> <C>
SEC Registration Fee................................................... $974
Accounting Fees........................................................ 5,000
Legal Fees and Expenses................................................ 15,000
Miscellaneous.......................................................... 126
Printing and Engraving................................................. 5,000
Total............................................................ 26,100
=====
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation provides that
directors of the Registrant shall not be personally liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, to the fullest extent permitted by the General Corporation Law of the
State of Delaware. The Registrant's Restated Bylaws provide for indemnification
of officers and directors to the full extent and in the manner permitted by
Delaware law. Section 145 of the Delaware General corporation Law makes
provision for such indemnification in terms sufficiently broad to cover officers
and directors under certain circumstances for liabilities arising under the
Securities Act of 1933.
The Registrant has entered into indemnification agreements with each
director which provide indemnification under certain circumstances for acts and
omissions which may not be covered by any directors' and officers' liability
insurance.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- ------- --------
<S> <C>
4.1* Specimen Common Stock Certificate
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1
24.1 Power of Attorney (Reference to the signature page herein)
</TABLE>
* Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(No. 333-3220) and incorporated herein by reference.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions described in Item 14 or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by its against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information the registration statement;
II-1
<PAGE> 15
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to the
initial bona fide offering thereof.
II-2
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Alameda, County of Alameda, State of California, on
November 18, 1998.
AVIGEN, INC.
By: /s/ John Monahan
----------------------------------
John Monahan, Ph.D.
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John Monahan, Ph.D. and Thomas J.
Paulson, or either of them, each with the power of substitution, his or her
attorney-in-fact, to sign any amendments to this Registration Statement
(including post-effective amendments), with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John Monahan President, Chief Executive Officer November 18, 1998
- ---------------------------- and Director (Principal Executive
John Monahan, Ph.D. Officer)
/s/ Thomas J. Paulson Vice President Finance, Chief November 18, 1998
- ---------------------------- Financial Officer and Secretary
Thomas J. Paulson (Principal Accounting Officer)
/s/ Philip J. Whitcome Chairman of the Board November 18, 1998
- ----------------------------
Philip J. Whitcome, Ph.D.
/s/ Zola Horovitz Director November 18, 1998
- ----------------------------
Zola Horovitz, Ph.D.
/s/ Yuichi Iwaki Director November 18, 1998
- ----------------------------
Yuichi Iwaki, M.D., Ph.D.
/s/ John K.A. Prendergast Director November 18, 1998
- ----------------------------
John K.A. Prendergast, Ph.D.
/s/ Lindsay A. Rosenwald Director November 18, 1998
- ----------------------------
Lindsay A. Rosenwald, M.D.
/s/ Leonard P. Shaykin Director November 18, 1998
- ----------------------------
Leonard P. Shaykin
</TABLE>
II-3
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- ------- --------
<S> <C>
4.1* Specimen Common Stock Certificate
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit
5.1
24.1 Power of Attorney (Reference to the signature page herein)
</TABLE>
* Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(No. 333-3220) and incorporated herein by reference.
II-4
<PAGE> 1
EXHIBIT 5.1
OPINION OF COOLEY GODWARD LLP
November 18, 1998
AVIGEN, INC.
1201 Harbor Bay Parkway, #1000
Alameda, California 94502
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Avigen, Inc. (the "Company") of a Registration Statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering of up to 1,196,615 shares of the Company's
Common Stock, $.001 par value (the "Common Shares") and 239,323 shares of the
Company's Common Stock issuable upon the exercise of warrants (the "Warrant
Shares") sold pursuant to the Common Stock and Warrant Purchase Agreement dated
August 7, 1998, as amended (the "Agreement"), and the warrants issued thereunder
(the "Warrants") by and among the Company and each of those persons and entities
listed as a Purchaser on the Schedule of Purchasers attached as Exhibit A to the
Agreement.
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation and By-laws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Common Shares and Warrant Shares, when sold and issued in accordance
with the Agreement, the Warrants (in the case of the Warrant Shares), the
Registration Statement and related Prospectus, will be validly issued, fully
paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ Alan C. Mendelson
---------------------------
Alan C. Mendelson, Esq.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated August 13, 1998, with respect to the
financial statements of Avigen, Inc. included in the Annual Report on Form 10-K
for the year ended June 30, 1998.
/s/ Ernst & Young LLP
