<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-72225
PROSPECTUS
AVIGEN, INC.
1,725,708 SHARES
COMMON STOCK
Selling stockholders identified in this prospectus are selling 1,725,708 shares
of common stock of Avigen, Inc. Of these shares 1,438,090 shares of common stock
were sold to the selling stockholders by Avigen in a private financing and
287,618 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 February 10, 1999, the
closing sale price of the common stock, as reported on the Nasdaq National
Market, was $5 7/8.
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 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 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 DATE OF THIS PROSPECTUS IS FEBRUARY 26, 1999.
1
<PAGE> 2
PROSPECTUS SUMMARY
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.
2
<PAGE> 3
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.
THE DEVELOPMENT OF OUR PRODUCTS WILL TAKE SEVERAL MORE YEARS, AND WE CANNOT BE
CERTAIN THESE PRODUCTS WILL SATISFY EXISTING CLINICAL AND REGULATORY APPROVAL
PROCEDURES.
We are at an early stage of development. Because all of our potential products
are in research or early preclinical development, revenues from the sale of any
such products are not expected for at least the next several years.
We are 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 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. 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. Even if successfully developed. We cannot
be certain that our 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.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND WE MAY NEVER ACHIEVE
PROFITABILITY.
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, 1998, we had an
accumulated deficit of $29.4 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 cannot assure you that we
will achieve revenues or profitability in the future.
WE MUST MAINTAIN OUR NASDAQ LISTING AND SECURE ADDITIONAL FINANCING TO MEET OUR
FUTURE NEEDS.
We will require substantial additional funding to complete the research
and development activities currently contemplated and to commercialize our
proposed products. We anticipate that our existing capital resources will be
3
<PAGE> 4
adequate to fund our needs for at least the next 12 months. Our future capital
requirements will depend on many factors, including:
o continued scientific progress in research and development programs,
o the scope and results of preclinical studies and clinical trials,
o the time and costs involved in obtaining regulatory approvals,
o the costs involved in filing, prosecuting and enforcing patent claims,
o competing technological developments,
o the cost of manufacturing scale-up,
o the cost of commercialization activities,
o 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 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.
WE DO NOT CURRENTLY HAVE A CORPORATE PARTNER, AND OUR BUSINESS DEPENDS ON
ATTRACTING AND RETAINING CORPORATE PARTNERS
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 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
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.
WE MUST ACHIEVE CERTAIN MILESTONES 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 at various times beginning in February 1997. 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.
4
<PAGE> 5
OUR PRODUCTS MAY NOT BE ACCEPTED BY PHYSICIANS AND INSURERS
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 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. 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 MAY BE UNABLE TO SATISFY GOVERNMENT REGULATIONS RELATING TO THE DEVELOPMENT,
MARKETING AND MANUFACTURING OF OUR PRODUCTS IN THE U.S.
We may not receive approval from regulatory authorities to market any of our
products. 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 by 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 the following:
o criminal prosecution,
o civil penalties,
o recall or seizure of products,
o total or partial suspension of production or injunction,
o other legal or regulatory actions.
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 be
certain 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 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 ("NIH")
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 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
5
<PAGE> 6
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 NOT BE SUCCESSFUL IN OBTAINING REQUIRED FOREIGN REGULATORY APPROVALS
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. These requirements govern the design
and conduct of human clinical trials and marketing approval. 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 MAY BE UNABLE TO EFFECTIVELY PRICE OUR PRODUCTS OR OBTAIN ADEQUATE
REIMBURSEMENT
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 our
company 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.
THE GENE-BASED THERAPEUTICS MARKET IS HIGHLY COMPETITIVE
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:
o research and development,
o preclinical studies and clinical trials,
o obtaining regulatory approvals,
o manufacturing,
o 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:
o product efficacy,
o safety,
o manufacturing capability,
o the timing and scope of regulatory approvals,
o the timing of market introduction,
o marketing and sales capability,
o reimbursement coverage,
o price and patent position.
Our competitors may develop more effective or more affordable products, or
achieve earlier product commercialization than we do.
WE MY BE UNABLE TO EFFECTIVELY PROTECT OUR PATENTS AND PROPRIETARY RIGHTS
Our success will depend to a significant degree on our ability to:
o obtain patents and licenses to patent rights
o preserve trade secrets
o operate without infringing on the proprietary rights 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.
6
<PAGE> 7
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.
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 HAVE NO EXPERIENCE IN MANUFACTURING, MARKETING OR SELLING OUR PRODUCTS
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. 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. We may not 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 may not be able to develop adequate
marketing capabilities either on our own or through third parties.
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
7
<PAGE> 8
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
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.
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. 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. 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.
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.
8
<PAGE> 9
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;
o Quarterly Report on Form 10-Q filed November 13, 1998;
o Current Report on Form 8-K filed January 29, 1999;
o Current Report on Form 10-Q filed February 16, 1999; and
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.
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.
9
<PAGE> 10
SELLING STOCKHOLDERS
In a private placement to the selling stockholders concluding at the end of
December 1998, we sold to the selling stockholders common stock and warrants to
purchase common stock 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 December 31, 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.
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 December 31, 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 10,253,121 shares
outstanding on December 31, 1998 adjusted as required by rules promulgated by
the SEC.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED PRIOR TO
OFFERING
----------------------------------
SELLING STOCKHOLDER NUMBER PERCENT SHARES BEING OFFERED
- ------------------------------------------ ----------- --------- --------------------
<S> <C> <C> <C>
Paluel Marmont Banque (1)............... 131,868 1.29% 131,868
Active Site Partners, L.P.(2)........... 15,630 * 15,630
Allan P. Fishbein, M.D.(3) ............. 31,266 * 31,266
Andrew Brinkman (Petros Capital)(4)..... 93,810 * 93,810
A. Salam Qureishi(5).................... 15,630 * 15,630
Bernard J. McDermott, Jr.(6)............ 93,810 * 93,810
Daniel Katz (IRA Chase Custodian)(7).... 31,266 * 31,266
Feinstein Drugs, Inc.(8) ............... 15,630 * 15,630
Herbert Charles Feinstein(9)............ 15,630 * 15,630
Hofung Holdings Limited(10)............. 62,538 * 62,538
John R. Hillsman(11).................... 15,630 * 15,630
J&L Katz Family Limited Partnership(12). 31,266 * 31,266
The John D. Leland and Sandra S. Leland 15,630 * 15,630
Trust(13)..............................
Kahan Family Trust(14).................. 62,538 * 62,538
Kenneth S. Yamamoto, M.D.(15)........... 15,630 * 15,630
Leonard A. & Dena G. Oppenheim(16)...... 15,630 * 15,630
Lubna F. Qureishi(17)................... 7,812 * 7,812
Leila F. Qureishi(18)................... 7,812 * 7,812
Marc & Ingrid Gelman(19)................ 15,630 * 15,630
Marksman Partners, L.P.(20)............. 31,266 * 31,266
Nai-Ping Leung(21)...................... 15,630 * 15,630
Prudent Bear Fund, Inc.(22)............. 312,702 3.05% 312,702
Richard F. Gaston(23)................... 31,266 * 31,266
Mr. Tan/Engsoon(24)..................... 62,532 * 62,532
Veron International Limited(25)......... 187,620 1.83% 187,620
Virginia Leung(26)...................... 15,630 * 15,630
Joseph DiBenedetto, Jr.(27)............. 12,240 * 12,240
LA Compagnie Financiere(28)............. 61,224 * 61,224
Lewis C. Pell(29) ...................... 48,978 * 48,978
Pequot Scout Fund, L.P.(30) ............ 240,000 2.34% 240,000
Toshiyuki Omori(31)..................... 11,964 * 11,964
--------- ------ ---------
Total................................... 1,725,708 16.83% 1,725,708
========= ====== =========
</TABLE>
* Less than 1% of the outstanding shares of common stock.
10
<PAGE> 11
(1) Includes 21,978 shares issuable upon exercise of warrants held by this
selling stockholder.
(2) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(3) Includes 5,211 shares issuable upon exercise of warrants held by this
selling stockholder.
(4) Includes 15,635 shares issuable upon exercise of warrants held by this
selling stockholder.
(5) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(6) Includes 15,635 shares issuable upon exercise of warrants held by this
selling stockholder.
(7) Includes 5,211 shares issuable upon exercise of warrants held by this
selling stockholder.
(8) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(9) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(10) Includes 10,423 shares issuable upon exercise of warrants held by this
selling stockholder.
(11) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(12) Includes 5,211 shares issuable upon exercise of warrants held by this
selling stockholder.
(13) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(14) Includes 10,423 shares issuable upon exercise of warrants held by this
selling stockholder.
(15) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(16) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(17) Includes 1,302 shares issuable upon exercise of warrants held by this
selling stockholder.
11
<PAGE> 12
(18) Includes 1,302 shares issuable upon exercise of warrants held by this
selling stockholder.
(19) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(20) Includes 5,211 shares issuable upon exercise of warrants held by this
selling stockholder.
(21) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(22) Includes 52,117 shares issuable upon exercise of warrants held by this
selling stockholder.
(23) Includes 5,211 shares issuable upon exercise of warrants held by this
selling stockholder.
(24) Includes 10,422 shares issuable upon exercise of warrants held by this
selling stockholder.
(25) Includes 31,270 shares issuable upon exercise of warrants held by this
selling stockholder.
(26) Includes 2,605 shares issuable upon exercise of warrants held by this
selling stockholder.
(27) Includes 2,040 shares issuable upon exercise of warrants held by this
selling stockholder.
(28) Includes 10,204 shares issuable upon exercise of warrants held by this
selling stockholder.
(29) Includes 8,163 shares issuable upon exercise of warrants held by this
selling stockholder.
(30) Includes 40,000 shares issuable upon exercise of warrants held by this
selling stockholder.
(31) Includes 1,994 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.
12
<PAGE> 13
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 $28,000, 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.
13
<PAGE> 14
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 included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
14
<PAGE> 15
================================================================================
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 February 26, 1999. You should not assume that this prospectus is accurate
as of any other date.
---------------------
TABLE OF CONTENTS PAGE
Prospectus Summary.......................................................... 2
Risk Factors................................................................ 3
Forward-Looking Statements.................................................. 8
Were You Can Find More Information.......................................... 9
Use of Proceeds............................................................. 9
Selling Stockholders........................................................ 10
Plan of Distribution........................................................ 12
Legal Matters............................................................... 14
Experts..................................................................... 14
---------------------
1,725,708 SHARES
COMMON STOCK
--------------
PROSPECTUS
--------------
AVIGEN, INC.
February 26, 1999
================================================================================
15
