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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-92355
PROSPECTUS
AVIGEN, INC.
2,962,047
COMMON STOCK
THE SELLING STOCKHOLDERS: The selling stockholders identified in this
prospectus are selling 2,962,047 shares of our
common stock. Of these shares 2,033,895 shares were
sold to the selling stockholders by us in a recent
private financing and 928,152 shares are issuable
upon the exercise of warrants sold to the selling
stockholders in private financings.
We are not selling any shares of our common stock
under this prospectus and will not receive any of
the proceeds from the sale of shares by the selling
stockholders.
OFFERING PRICE: The selling stockholders may sell the shares
of common stock described in this prospectus in a
number of different ways and at varying prices. We
provide more information about how they may sell
their shares in the section titled "Plan of
Distribution" on page 15.
TRADING MARKET: Our common stock is listed on the Nasdaq
National Market under the symbol "AVGN." On
December 15, 1999, the closing sale price of our
common stock, as reported on the Nasdaq National
Market, was $30.00.
RISKS: INVESTING IN OUR COMMON STOCK INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 3.
The shares offered or sold under this prospectus have not been approved
by the Securities and Exchange Commission 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 DATE OF THIS PROSPECTUS IS DECEMBER 15, 1999
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PROSPECTUS SUMMARY
Avigen is a leader in the development of gene therapy products derived from
adeno-associated virus, which we refer to as "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 have honed our strategic focus on developing a broad-based
proprietary gene delivery technology, the AAV vector. We believe AAV vectors can
be used to deliver genes for the treatment of hemophilia, Gaucher's disease,
hereditary emphysema, and thalassemia.
The mailing address and telephone number of our principal executive office
is 1201 Harbor Bay Parkway, #1000, Alameda, California 94502, (510) 748-7150.
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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,
before investing in our stock.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND WE MAY
NEVER ACHIEVE PROFITABLILITY
We cannot be certain that we will ever achieve and sustain
profitability. To date, we have been engaged in research and development
activities and have not generated any revenues from product sales. As of
September 30, 1999, we had an accumulated deficit of $39.138 million. The
process of developing our products will require significant research and
development, preclinical testing and clinical trials, as well as regulatory
approval. We expect these activities, together with our general and
administrative expenses, 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 MUST SECURE ADDITIONAL FINANCING, OTHERWISE WE WILL NOT BE ABLE TO DEVELOP
OUR PRODUCTS AND MAINTAIN OUR NASDAQ LISTING
We will require substantial additional funding to complete the research
and development activities currently contemplated, to commercialize our proposed
products and to maintain minimum Nasdaq continued listing requirements. If we do
not obtain such funds, we will not be able to develop our products or maintain
our Nasdaq listing.
Our future capital requirements. 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 will be able to enter into such
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.
Our need to maintain our Nasdaq listing. 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 subsequent 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 in the
future.
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OUR PRODUCTS MUST UNDERGO RIGOROUS CLINICAL TESTING AND REGULATORY APPROVALS,
WHICH COULD SUBSTANTIALLY DELAY OR PREVENT US FROM MARKETING OUR PRODUCTS
We are engaged in the development of gene therapy products derived from
adeno-associated virus, which we refer to as "AAV", for the treatment of
inherited and acquired diseases. 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. If we do not
receive these necessary approvals, we will not be able to generate substantial
revenues and will not become profitable. At the present time, we believe that
our products will be regulated as biologics by the FDA. We cannot be certain
that our products will be cleared for marketing by the FDA or that any approved
products can be successfully marketed. 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. Factors that raise uncertainty in obtaining such
regulatory approvals include:
- 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;
- 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;
- the regulatory requirements governing gene therapy products are
uncertain and are subject to change;
- none of our proposed products have been tested in humans for
efficacy; and
- data obtained from preclinical and clinical activities are
susceptible to varying interpretations which could delay, limit or
prevent regulatory approvals.
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, or "IND." We cannot be certain that submission of an IND would
result in FDA authorization to begin clinical trials.
Limitations once regulatory approval has been obtained. 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. We may 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. 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.
Consequences of failure to comply with applicable FDA or other
regulatory requirements. Failure to comply with applicable FDA or other
regulatory requirements may result in the following:
- criminal prosecution;
- civil penalties;
- recall or seizure of products;
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- total or partial suspension of production or injunction; and
- other legal or regulatory actions.
Any such action would have a material adverse effect on our business.
WE MAY NOT BE SUCCESSFUL IN OBTAINING REQUIRED FOREIGN REGULATORY APPROVALS,
WHICH WOULD PREVENT US FROM MARKETING OUR PRODUCTS INTERNATIONALLY
We cannot be certain that we will obtain any regulatory approvals in
other countries. 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. The approval procedure varies among
countries and can involve additional testing. 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.
WE DO NOT HAVE EXPERIENCE IN CONDUCTING CLINICAL TRIALS, WHICH MAY CAUSE DELAYS
IN COMMENCING AND COMPLETING CLINICAL TRIALS OF OUR PRODUCTS
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 may not be able to conduct those clinical trials at preferred
sites, obtain sufficient test subjects or begin or successfully complete
clinical trials 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 use in our research. These guidelines apply to recombinant DNA research
which is conducted at or supported by the National Institutes of Health. Under
current guidelines, proposals to conduct clinical research involving gene
therapy at institutions supported by the National Institutes of Health must be
approved by the National Institutes of Health's Recombinant DNA Advisory
Committee.
WE HAVE NO EXPERIENCE IN MANUFACTURING, MARKETING OR SELLING OUR PRODUCTS, WHICH
RAISES UNCERTAINTY IN OUR ABILITY TO COST-EFFECTIVELY MANUFACTURE OUR PRODUCTS
Even if we are able to develop our products and obtain necessary
regulatory approvals, 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, while we have implemented the FDA's regulations
concerning current Good Manufacturing Practices on a limited basis, we may fail
to do so as required in the future. We may not be able to develop adequate
commercial manufacturing capabilities either on our own or through third
parties. If we are unable to manufacture our products in a cost-effective
manner, we will not become profitable. Initially, we anticipate that we will be
dependent to a significant extent on collaborative partners or other entities
for commercial scale manufacturing of our products. If we decide to establish a
commercial scale manufacturing facility, we will need substantial additional
funds and personnel and will be required to comply with extensive regulations
applicable to such facility. In addition, we do not anticipate establishing our
own sales and marketing capabilities in the foreseeable future. We may not be
able to develop adequate marketing capabilities either on our own or through
third parties.
WE NEED TO ATTRACT AND RETAIN A CORPORATE PARTNER, OTHERWISE WE MAY NOT BE ABLE
TO DEVELOP OUR PRODUCTS
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
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such relationships. We may not be able to 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.
WE MAY BE REQUIRED TO OBTAIN RIGHTS TO PROPRIETARY GENES AND OTHER TECHNOLOGIES
TO FURTHER DEVELOP OUR BUSINESS, WHICH MAY NOT BE AVAILABLE OR MAY BE COSTLY
We currently investigate and use certain gene sequences or proteins
encoded by those sequences that 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 may not 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. 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 may not be able to successfully negotiate
such royalty adjustments.
IF WE DO NOT ACHIEVE CERTAIN MILESTONES WE MAY NOT BE ABLE TO RETAIN CERTAIN
LICENSES TO OUR INTELLECTUAL PROPERTY
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. All developmental milestones to date have been met with the next
milestone due August 2001. If we fail to achieve such milestones or to obtain
extensions, the licensor may terminate certain of the license agreements with
relatively short notice to us. Termination of any of our license agreements
could have a material adverse effect on our business.
IF OUR PRODUCTS ARE NOT ACCEPTED BY PHYSICIANS AND INSURERS, WE WILL NOT BE
SUCCESSFUL
Our success is dependent on acceptance of our gene therapy products. We
cannot assure you that our products will achieve significant market acceptance
among patients, physicians or third party payors, even if we obtain necessary
regulatory and reimbursement approvals. Failure to achieve significant market
acceptance will have a material adverse effect on our business, financial
condition and results of operations. 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 be
certain 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.
EVEN IF WE BRING OUR PRODUCTS TO MARKET, WE MAY BE UNABLE TO EFFECTIVELY PRICE
OUR PRODUCTS OR OBTAIN ADEQUATE REIMBURSEMENT FOR SALES OF OUR PRODUCTS, WHICH
WOULD PREVENT OUR PRODUCTS FROM BECOMING PROFITABLE
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. The business and financial
condition of Avigen is 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.
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WE EXPECT THAT WE WILL FACE INTENSE COMPETITION, WHICH MAY LIMIT OUR ABILITY TO
BECOME PROFITABLE
The field of gene therapy is new and rapidly evolving and is expected to
undergo significant technological change in the future. We expect increased
competition from fully integrated pharmaceutical companies and more established
biotechnology companies. Most of these companies have significantly greater
financial resources and expertise than we do in the following:
- research and development;
- preclinical studies and clinical trials;
- obtaining regulatory approvals;
- manufacturing; and
- marketing and distribution.
Smaller 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; and
- price and patent position.
Our competitors may develop more effective or more affordable products,
or achieve earlier product commercialization than we do.
OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO EFFECTIVELY PROTECT OUR PATENTS AND
PROPRIETARY RIGHTS, WHICH WE MAY NOT BE ABLE TO DO
Our success will depend to a significant degree on our ability to obtain
patents and licenses to patent rights, preserve trade secrets, and to operate
without infringing on the proprietary rights of others. If we are not successful
in these endeavors, our business will be substantially impaired.
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
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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, at least 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. To date, we have negotiated exclusive licenses for two of
the more significant co-invented technologies, including worldwide rights to the
treatment of Hemophilia B using AAV technology and the administration of AAV
into muscle tissue. If we cannot negotiate exclusive rights to other 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.
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 be certain 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.
OTHER PERSONS MAY ASSERT RIGHTS IN OUR PROPRIETARY TECHNOLOGY, WHICH WOULD BE
COSTLY TO CONTEST OR SETTLE
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. We have not
been accused of infringing any third party's patent rights or other intellectual
property, but 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 MAY BE UNABLE TO ATTRACT AND RETAIN THE QUALIFIED EMPLOYEES WE NEED TO BE
SUCCESSFUL
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.
WE FACE THE RISK OF PRODUCT LIABILITY CLAIMS WHICH MAY EXCEED THE SCOPE OR
AMOUNT OF OUR INSURANCE COVERAGE
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The manufacture and sale of medical products entail significant risk of
product liability claims. We currently carry product liability insurance,
however, we cannot assure you that such coverage will remain in place or that
such coverage will be adequate to protect us from all liabilities which 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.
WE FACE RISKS FROM USING HAZARDOUS AND RADIOACTIVE MATERIALS AND MAY INCUR
ADDITIONAL COSTS TO COMPLY WITH ENVIRONMENTAL REGULATIONS
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.
OUR BUSINESS MAY BE NEGATIVELY IMPACTED BY COMPUTER FAILURES IN THE YEAR 2000
We are aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. Any year 2000 compliance
problems of either Avigen, our customers or vendors could have a material
adverse effect on our business, results of operations and financial condition.
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. We
are in the process of working with our software vendors to ensure that the
software that we have licensed from third parties will operate properly in the
year 2000 and beyond. In addition, we are working with our external suppliers
and service providers to ensure that they and their systems will be able to
support our needs and, where necessary, interoperate with our server and
networking hardware and software infrastructure in preparation for the year
2000. We do not anticipate that we 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.
CONTROL BY EXISTING STOCKHOLDERS, AND THE ANTI-TAKEOVER EFFECTS OF CERTAIN
CHARTER PROVISIONS AND THE DELAWARE LAW MAY NEGATIVELY AFFECT THE ABILITY OF A
POTENTIAL BUYER TO PURCHASE SOME OR ALL OF OUR STOCK AT AN OTHERWISE
ADVANTAGEOUS PRICE
Avigen's officers, directors and principal stockholders beneficially own
approximately 9.62% of our common stock. As a result, such persons may have the
ability to effectively control and direct the affairs and business of Avigen.
Such concentration of ownership may also have the effect of delaying, deferring
or preventing a change in control. In addition, our board of directors has the
authority to issue up to 5,000,000 shares of preferred stock and to determine
the price, rights, preferences and privileges of those shares without any
further vote or action by the stockholders. The rights of the holders of common
stock will be subject to, and may be materially adversely affected by, the
rights of the holders of any preferred stock that may be issued in the future.
The issuance of preferred stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of Avigen. We have no present plans to issue shares of preferred stock.
Furthermore, certain provisions of our restated certificate of incorporation may
have the effect of delaying or preventing changes in control or management,
which could adversely affect the market price of the our common stock. In
addition, we are subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law.
OUR STOCK PRICE IS VOLATILE AND, AS A RESULT, YOU COULD LOSE SOME OR ALL OF YOUR
MONEY
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We believe that various factors, including announcements of
technological innovations or regulatory approvals, results of clinical trials,
announcements of new products by us or our competitors, healthcare or
reimbursement policy changes by governments or insurance companies, developments
in relationships with corporate partners or a change in securities analysts'
recommendations, may cause the market price of the common stock to fluctuate,
perhaps substantially. In addition, in recent years the stock market in general,
and the shares of biotechnology and healthcare companies in particular, have
experienced extreme price fluctuations. These broad market and industry
fluctuations may materially adversely affect the market price of the our common
stock.
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. The words "believe,"
"anticipate," "expect," "intend," and words of similar import are intended to
identify these statements as forward-looking statements. Such forward-looking
statements include the following:
- our belief that AAV vectors can be used to deliver genes for the
treatment of hemophilia, Gaucher's disease, hereditary emphysema and
thalassemia;
- our expectation that our existing capital resources will be adequate
to fund our needs for at least the next 12 months.
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 under "Risk Factors"
and elsewhere in this prospectus. The factors set forth 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.
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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:
- - Quarterly Report on Form 10-Q for the quarter ended September 30, 1999;
- - Annual Report on Form 10-K for the year ended June 30, 1999; and
- - 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.
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.
11
<PAGE> 12
SELLING STOCKHOLDERS
In private placements concluded in December 1993, March 1994, June 1995,
November 1995 and March 1996 we sold to the selling stockholders warrants to
purchase shares of various series of our preferred stock and common stock. As a
result of our initial public offering in 1996, all of these warrants now
represent warrants to purchase shares of our common stock. We are now
registering the shares of common stock issuable to these stockholders upon
exercise of these warrants for resale. In addition, we have recently completed a
private placement in which we issued shares of our common stock, together with
warrants to purchase one share of common stock for every five shares of common
stock purchased in the private placement at an exercise price equal to 125% of
the purchase price paid for the common stock. We are also registering for
resale, the shares of common stock issued in this private placement as well as
the shares of common stock issuable upon the exercise of the warrants issued in
this private placement financing. 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 by each selling stockholder, as of
November 30, 1999, and the number of shares over which each of the selling
stockholders is entitled to acquire on or before January 29, 2000.
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.
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 November 30, 1999, 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 14,736,400 shares
outstanding on November 30, 1999 adjusted as required by rules promulgated by
the SEC.
SHARES BENEFICIALLY OWNED PRIOR TO OFFERING
<TABLE>
<CAPTION>
TOTAL NUMBER OF
SHARES OF NUMBER OF
COMMON STOCK SHARES ISSUABLE PERCENT OF TOTAL NUMBER OF
BENEFICIALLY UPON EXERCISE COMMON STOCK SHARES BEING
SELLING STOCKHOLDER HELD OF WARRANTS OUTSTANDING OFFERED
------------------- ---------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Mark Abeshouse .................................. 250 250 * 250
Ross D. Ain ..................................... 2,500 2,500 * 2,500
Amerique 2000 ................................... 37,008 6,168 * 37,008
Aries Domestic Fund, L.P.(1)..................... 99,578 4,724 * 12,239
Aries Domestic Fund II, L.P. .................... 702 117 * 702
The Aries Master Fund(2) ........................ 218,126 6,024 1.52 24,549
Armen Partners, L.P. ............................ 20,000 20,000 * 20,000
Amnon and Caren Barness ......................... 5,000 5,000 * 5,000
Ronald S. Baruch ................................ 5,000 5,000 * 5,000
Arie Belldegrun ................................. 2,500 2,500 * 2,500
Mark Berg ....................................... 5,000 5,000 * 5,000
</TABLE>
12
<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C>
Bernische Lehrerversicherungskasse ..................... 63,912 10,652 * 63,912
Bordier & Cie .......................................... 12,780 2,130 * 12,780
Castle Rock Partners, LP. .............................. 63,912 10,652 * 63,912
Woon Ik Chung .......................................... 5,643 5,643 * 5,643
James Cicciarelli ...................................... 50,226 226 * 226
Clarion Capital Corporation ............................ 32,910 5,485 * 32,910
Clarion Offshore Fund .................................. 2,892 482 * 2,892
Clarion Partners, L.P. ................................. 7,818 1,303 * 7,818
Robert J. Conrads ...................................... 5,000 5,000 * 5,000
Credit Agricole Inosuez, Luxembourg .................... 40,704 6,784 * 40,704
Rosalind Davidowitz .................................... 6,899 6,899 * 6,899
Domaco Venture Capital ................................. 5,500 2,500 * 2,500
M. Robert Dussler ...................................... 1,250 1,250 * 1,250
Joseph Edelman ......................................... 242 242 * 242
Malcolm S. Fairbairn ................................... 2,500 2,500 * 2,500
S. Edmond Farber "S" ................................... 3,000 3,000 * 3,000
Roger A. Gerber ........................................ 2,500 2,500 * 2,500
Leven Gestion .......................................... 30,894 5,149 * 30,894
Pierre Charron Gestion ................................. 69,090 11,515 * 69,090
Michael J. Gordon and Diane M. Gordon
JTWROS ................................................. 2,500 2,500 * 2,500
Robert P. Gordon ....................................... 5,000 5,000 * 5,000
Stuart Gruber .......................................... 5,000 5,000 * 5,000
Harvard Management Company ............................. 535,710 89,285 4.21 535,710
Toshihiko Hiraoka ...................................... 2,257 2,257 * 2,257
The Holding Company .................................... 2,500 2,500 * 2,500
Noriyuki Inoue ......................................... 1,129 1,129 * 1,129
Iwaki Family Limited Partnership(1)..................... 288,781 88,374 2.54 88,374
J.F. Shea Co., Inc. .................................... 10,000 10,000 * 10,000
Peter M. Kash .......................................... 17,439 17,439 * 17,439
Scott Katzman .......................................... 6,139 2,426 * 2,426
Edward Justin Kelly .................................... 5,000 5,000 * 5,000
Donald R. Kendall, Jr. ................................. 10,000 10,000 * 10,000
Robert Klein, M.D. ..................................... 10,000 10,000 * 10,000
Martin Kratchman ....................................... 63 63 * 63
Nicole and Michael Kubin ............................... 2,500 2,500 * 2,500
Larich Associates ...................................... 2,500 2,500 * 2,500
Marcuard Cook & Cie S.A. ............................... 44,406 7,401 * 44,406
Bernard J. McDermott, Jr. .............................. 18,504 3,084 * 18,504
Joyce McDermott IRA .................................... 13,392 2,232 * 13,392
Timothy McInerney ...................................... 4,504 4,504 * 4,504
Alexander Mitchell ..................................... 2,500 2,500 * 2,500
MVI Medical Venture Investments Ltd. ................... 250,040 30,840 1.90 185,040
Toshihikoo Nakai ....................................... 5,643 5,643 * 5,643
Narragansett I, LP. .................................... 59,352 9,892 * 59,352
Narragansett Offshore Ltd. ............................. 15,774 2,629 * 15,774
Renato Negrin .......................................... 2,500 2,500 * 2,500
Palmetto Partners, Ltd. ................................ 10,000 10,000 * 10,000
Pequot Scout Fund, L.P. ................................ 46,896 7,816 * 46,896
Petros Capital ......................................... 401,784 66,964 3.16 401,784
Pictet & Cie ........................................... 207,246 34,541 1.64 207,246
Anthony G. Polack "S" .................................. 2,500 2,500 * 2,500
Anthony G. Polack ...................................... 2,500 2,500 * 2,500
Bruce Pomper ........................................... 5,000 5,000 * 5,000
Prism Partners I ....................................... 37,500 6,250 * 37,500
Prism Partners I Offshore Fund ......................... 5,352 892 * 5,352
Prism Partners II Offshore Fund ........................ 10,710 1,785 * 10,710
Prudent Bear Fund, Inc. ................................ 273,195 1,785 1.86 10,710
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C>
Quantum Partners LDC ............................... 370,080 61,680 2.92 370,080
Reliance Insurance Co. ............................. 10,000 10,000 * 10,000
RL Capital Partners ................................ 7,000 7,000 * 7,000
RHL Associates LP. ................................. 5,000 5,000 * 5,000
Marc Roberts ....................................... 2,500 2,500 * 2,500
Lindsey A. Rosenwald, M.D.(2) ...................... 178,997 17,313 1.33 17,313
Johnathan Rothschild ............................... 3,000 2,500 * 2,500
Wayne L. Rubin ..................................... 7,093 3,086 * 3,086
Eric Y. Sato ....................................... 12,800 1,761 * 1,761
Richard J. Segal and Judith A. Segal ............... 5,000 5,000 * 5,000
Masaaki Sekino ..................................... 226 226 * 226
Richard S. Serbin & Kathe R. Serbin
JTWROS ............................................. 2,500 2,500 * 2,500
Leonard P. Shaykin(3) .............................. 22,618 2,500 * 2,500
Catherine L. Steinmann ............................. 2,500 2,500 * 2,500
Swiss American Securities, Inc. .................... 7,986 1,331 * 7,986
Tetsuro Tokudome ................................... 226 226 * 226
Tocqueville Finance SA ............................. 31,956 5,326 * 31,956
Victor Breeze Ltd. ................................. 44,406 7,401 * 44,406
Wedbush Morgan Securities, Inc. .................... 125,000 125,000 1.68 125,000
Alan & Terri Wise .................................. 2,500 2,500 * 2,500
Fred and Barbara Wise .............................. 2,500 2,500 * 2,500
Yoshiaki Yamamoto .................................. 49,376 49,376 * 49,376
Zapco Holdings, Inc. Deferred
Compensation Plan Trust c/o Nancy S.
Heinrich, Trustee .................................. 2,500 2,500 * 2,500
Uzi Zucker ......................................... 13,786 2,500 * 2,500
</TABLE>
* Less than 1% of the outstanding shares of common stock.
(1) Dr.Yuichi Iwaki is a general partner of the Iwaki Family Limited
Partnership, and is a director of the Aries Domestic Fund. Dr. Iwaki
currently is a member of Avigen's Board of Directors.
(2) Lindsay A. Rosenwald, M.D. is Chairman of Paramount Capital Asset
Management, Inc., which is the investment manager for the Aries Master
Fund. Dr. Rosenwald served as a member of Avigen's Board of Directors
until December 1998.
(3) Leonard P. Shaykin served as a member of Avigen's Board of Directors
until November 1998.
14
<PAGE> 15
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:
- - 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,
- - in the over-the-counter market,
- - in private transactions,
- - through options,
- - by pledge to secure debts and other obligations, or
- - 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. One of the selling stockholders, Wedbush Morgan
Securities, Inc. is a broker/dealer and is deemed to be an "underwriter" 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.
We are registering the shares of common stock on behalf of the selling
stockholders. From time to time one or more of the selling stockholders may
transfer, pledge, donate or assign such selling stockholders' shares of common
stock to lenders or others and each of such persons will be deemed to be a
"selling stockholder" for purposes of this Prospectus. The number of selling
stockholders' shares of common stock beneficially owned by those selling
stockholders who so transfer, pledge, donate or assign shares of common stock
will decrease as and when they take such actions. The plan of distribution for
selling stockholders' shares of common stock sold hereunder will otherwise
remain unchanged, except that the transferees, pledgees, donees or other
successors will be selling stockholders hereunder.
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.
15
<PAGE> 16
All expenses of this registration, estimated at approximately $65,000,
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.
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
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on form 10-K for the year ended June
30, 1999, as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. Our financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
16
<PAGE> 17
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 December 15, 1999. You should not assume that this prospectus is accurate
as of any other date.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
Prospectus Summary.......................... 2
Risk Factors................................ 3
Forward-Looking Statements.................. 10
Were You Can Find More Information.......... 11
Use of Proceeds............................. 11
Selling Stockholders........................ 12
Plan of Distribution........................ 15
Legal Matters............................... 16
Experts..................................... 16
</TABLE>
2,962,047 SHARES
COMMON STOCK
PROSPECTUS
AVIGEN, INC.
DECEMBER 15, 1999
17
