<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-47680
PROSPECTUS SUPPLEMENT
NO. 1
(TO PROSPECTUS DATED OCTOBER 30, 2000)
AVIGEN, INC.
1,658,329 SHARES
COMMON STOCK
The 1,658,329 shares of common stock being offered are all being offered by
Avigen. On November 1, 2000, the last reported sale price of the shares of
common stock on the Nasdaq National Market was $37.50 per share. The common
stock is listed on the Nasdaq National Market under the symbol "AVGN."
INVESTING IN AVIGEN COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE S-4.
We are offering 1,658,329 shares of our common stock to selected
institutional investors pursuant to this prospectus supplement and the
accompanying prospectus. The common stock will be purchased at the negotiated
purchase price of $37.50 per share. The purchase price reflects the closing sale
price of our common stock on November 1, 2000.
<TABLE>
<CAPTION>
PER
SHARE TOTAL
<S> <C> <C>
Public offering price............................. $ 37.50 $62,187,338
Placement agent fees.............................. $ 1.875 $ 3,109,367
Proceeds, before expenses, to Avigen.............. $ 35.625 $59,077,971
</TABLE>
We expect the total offering expenses to be $100,000 for all sales pursuant
to the prospectus supplemented by this prospectus supplement.
The shares are being offered by us principally to selected institutional
investors. AmeriCal Securities has been retained to act, on a best efforts
basis, as agent for us in connection with the arrangement of this transaction.
We have agreed to pay AmeriCal Securities the placement agent fees set forth in
the table above. See "Plan of Distribution" in this prospectus supplement.
THE SHARES OF AVIGEN COMMON STOCK OFFERED OR SOLD UNDER THIS PROSPECTUS
SUPPLEMENT AND PROSPECTUS HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus supplement is November 1, 2000.
<PAGE> 2
NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AVIGEN. THIS
PROSPECTUS SUPPLEMENT OR PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE NOTES OR CONVERSION
SHARES OFFERED BY THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
NOTES OR CONVERSION SHARES TO ANYONE IN ANY JURISDICTION WHERE, OR TO ANY PERSON
TO WHOM, IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS NOR ANY SALE MADE UNDER
THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS SHALL UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AVIGEN SINCE THE
DATE OF THIS PROSPECTUS SUPPLEMENT OR IMPLY THAT INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Supplement Summary..................................................S-3
Risk Factors...................................................................S-4
Disclosure Regarding Forward-Looking Statements...............................S-14
Dividend Policy...............................................................S-14
Use of Proceeds...............................................................S-14
Price Range of Common Stock...................................................S-15
Dilution......................................................................S-15
Plan of Distribution..........................................................S-16
Legal Matters.................................................................S-16
</TABLE>
S-2.
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
Avigen, Inc. was incorporated in October 1992. Our principal executive
offices are located at 1201 Harbor Bay Parkway, Suite 1000, Alameda, California
94502, and our telephone number is (510) 748-7150. Our Web site is located on
the world wide web at "avigen.com." We do not incorporate by reference into this
prospectus the information on our Web site, and you should not consider it as
part of this prospectus.
THE OFFERING
<TABLE>
<S> <C>
Shares offered.......... We are offering all of the 1,658,329 shares being
offered hereby.
Shares outstanding
after this offering..... Following this offering, there will be 18,722,425
shares of our common stock outstanding based upon the
number of shares outstanding on September 30, 2000.
This number does not include shares that may be issued
pursuant to the exercise of stock options and warrants
currently outstanding or which may be granted under our
stock option plans, or upon the conversion of preferred
stock outstanding.
Use of proceeds......... For general corporate purposes, including:
- to fund research and development;
- to fund preclinical studies and clinical trials of
our drug candidates;
- to fund completion of our manufacturing
facilities;
- for working capital; and
- for general corporate purposes.
</TABLE>
S-3.
<PAGE> 4
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should not make such an investment if you cannot afford the loss of your entire
investment. In addition to the other information in this prospectus supplement
or prospectus, you should consider carefully the following factors in evaluating
Avigen and its business before purchasing any shares of our common stock.
WE EXPECT TO CONTINUE TO OPERATE AT A LOSS, AND WE MAY NEVER ACHIEVE
PROFITABILITY.
Since our inception in 1992, we have not been profitable, and 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, 2000, we had an accumulated
deficit of $54.9 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 will depend, 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.
THE RESULTS OF OUR CLINICAL TRIALS FOR COAGULIN-B FOR THE TREATMENT OF
HEMOPHILIA B ARE BASED ON A SMALL NUMBER OF PATIENTS OVER A SHORT PERIOD OF
TIME, AND THE SUCCESSES REPORTED MAY NOT BE INDICATIVE OF RESULTS IN A LARGE
NUMBER OF PATIENTS OR HAVE LASTING EFFECTS.
Six patients have received intramuscular injections at low and medium doses
according to the approved protocol for the phase I clinical trial of Coagulin-B
with dose escalations. Through this point in the study, these patients have
demonstrated successful gene expression of factor IX in muscle tissue, and the
treatments have been well tolerated. These results, however, are extremely
preliminary and are based upon the evaluations of only a small group of
patients. Actual results with more data points may show less favorable
measurements. In addition, we do not yet know if these results will have a
lasting effect. If a larger population of patients does not experience similar
results, or these results do not have a lasting effect, this product candidate
may not receive approval from the Food and Drug Administration, commonly
referred to as the "FDA." In addition, any report of clinical trial results that
are below the expectations of financial analysts or investors would most likely
cause our stock price to drop dramatically.
THE SUCCESS OF OUR TECHNOLOGY IN ANIMAL MODELS DOES NOT GUARANTEE THAT THESE
RESULTS WILL BE REPLICATED IN HUMANS.
Even though our product candidates have shown successful results in animal
models, animals are different than humans and these results may not be
replicated in our clinical trials with humans. For example, the results of our
gene therapy treatment for Hemophilia B in dogs were different from the results
of our studies with mice. In addition, the results we have seen to date in
humans in our clinical trials for Coagulin-B are different from the results of
our studies with dogs. Consequently, you should not rely on the results in our
animal models as being predictive of the results that we will see in our
clinical trials with humans.
BECAUSE OUR PRODUCT CANDIDATES ARE IN AN EARLY STATE OF DEVELOPMENT, THERE IS A
HIGH RISK THAT THEY MAY NEVER BE COMMERCIALIZED.
None of our product candidates have received regulatory approval for commercial
sale, and we face the risk that none of our product candidates will ever receive
regulatory approval. All of our product candidates are in early stages of
development. We have only one product candidate,
S-4.
<PAGE> 5
Coagulin-B for the treatment of Hemophilia B, in clinical trials, and this
product candidate is only in phase I of a clinical trial with dose escalations.
We are not aware of any gene therapy products that have received regulatory
approval. None of our prospective products, including Coagulin-B for the
treatment of Hemophilia B, is expected to be commercially available for at least
several years. Based on results at any stage of clinical trials, we may decide
to discontinue development of one or more of our potential products.
TECHNOLOGICAL CHANGE MAY MAKE OUR POTENTIAL PRODUCTS AND TECHNOLOGIES LESS
ATTRACTIVE OR OBSOLETE.
Gene therapy is new and rapidly evolving and is expected to continue to undergo
significant and rapid technological change. Rapid technological development
could result in our actual and proposed technologies, products or processes
becoming less attractive or obsolete.
ADVERSE EVENTS IN THE FIELD OF GENE THERAPY MAY NEGATIVELY IMPACT REGULATORY
APPROVAL OR PUBLIC PERCEPTION OF OUR POTENTIAL PRODUCTS.
In November 1999, the death of a patient involved in an unrelated clinical trial
that was undergoing a viral-based gene therapy treatment was widely publicized.
This death and other adverse events in the field of gene therapy that may occur
in the future could result in greater governmental regulation of our potential
products and potential regulatory delays relating to the testing or approval of
our potential products. For example, as a result of this death, the Recombinant
DNA Advisory Committee of the National Institutes of Health may become more
active in reviewing the clinical trials or proposed clinical trials of all
companies involved in gene therapy. It is uncertain what effect this increased
scrutiny will have on our product development efforts or clinical trials.
The commercial success of our potential products will depend in part on public
acceptance of the use of gene therapy for the prevention or treatment of human
diseases. Public attitudes may be influenced by claims that gene therapy is
unsafe, and consequently our products may not gain the acceptance of the public
or the medical community. Negative public reaction to gene therapy in general
could result in greater government regulation and stricter labeling requirements
of gene therapy products, including any of our products, and could cause a
decrease in the demand for any products we may develop.
OUR POTENTIAL PRODUCTS MUST UNDERGO RIGOROUS CLINICAL TESTING AND REGULATORY
APPROVALS, WHICH COULD SUBSTANTIALLY DELAY OR PREVENT US FROM MARKETING ANY
PRODUCTS.
The clinical trial process is complex, uncertain and expensive. Positive results
from preclinical studies and early clinical trials do not ensure positive
results in clinical trials designed to permit application for regulatory
approval. Prior to marketing in the United States, any product developed by us
must undergo rigorous preclinical testing and clinical trials as well as an
extensive regulatory approval process implemented by the FDA. The FDA approval
process is typically lengthy and expensive, and approval is never certain.
Because of the risks and uncertainties in biopharmaceutical development, our
gene therapy products could take a significantly longer time to gain regulatory
approval than we expect or may never gain FDA approval. If we do not receive
these necessary approvals from the FDA, we will not be able to generate
substantial revenues and will not become profitable. We may encounter
significant delays or excessive costs in our efforts to secure regulatory
approvals.
S-5.
<PAGE> 6
Factors that raise uncertainty in obtaining these 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, which we believe will cause clinical trials
to proceed more slowly than clinical trials involving traditional
drugs;
- we must obtain FDA approval to begin clinical trials of our potential
products, which we may not be able to obtain;
- we must demonstrate through clinical trials that the proposed product
is safe and effective for its intended use;
- we are not aware of any gene therapy products that have obtained
marketing approval from the FDA;
- whether or not our product candidates cause patients to develop
antibodies to these potential products or the proteins produced by
these potential products;
- the regulatory requirements governing gene therapy products are
uncertain and are subject to change;
- none of our proposed products has been tested in humans for their
effectiveness; and
- data obtained from preclinical and clinical activities are susceptible
to varying interpretations which could delay, limit or prevent
regulatory approvals.
Failure to comply with applicable FDA or other regulatory requirements may
result in criminal prosecution, civil penalties and other actions that would
seriously impair our ability to conduct our business. Even if regulatory
approval is granted for a product, this approval will be limited to those
disease states and conditions for which the product is useful, as demonstrated
through clinical trials.
WE HAVE LIMITED 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. We have limited
experience in conducting the preclinical studies and clinical trials necessary
to obtain FDA regulatory approval. Consequently, we may encounter problems in
clinical trials which cause us or the FDA to delay, suspend or terminate these
trials. Problems we may encounter include the chance that we may not be able to
conduct 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 trials are being exposed to unacceptable health risks
or if it finds deficiencies in the clinical trial process or conduct of the
investigation.
S-6.
<PAGE> 7
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 regulatory 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 HAVE LIMITED EXPERIENCE IN MANUFACTURING, AND NO EXPERIENCE IN MARKETING OR
SELLING OUR POTENTIAL PRODUCTS, WHICH RAISES UNCERTAINTY IN OUR ABILITY TO
COST-EFFECTIVELY COMMERCIALIZE OUR POTENTIAL PRODUCTS.
Even if we are able to develop our potential products and obtain necessary
regulatory approvals, we have limited experience in manufacturing and no
experience in marketing or selling, any of our proposed products on a commercial
basis. Although we believe our recently completed construction of a second
manufacturing facility will be capable of producing commercial-scale quantities
of our proprietary adeno-associated virus vectors, if we are unable to
manufacture our products in a cost- effective manner, we will not become
profitable. While the facility is designed to meet the FDA's regulations
concerning current good manufacturing practices we have not yet received final
validation, and may fail to maintain adequate compliance with these requirements
in the future. 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 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, including the factor VIII gene, and manufacturing processes
that are or may become patented by others. As a result, we may be required to
obtain licenses to these gene sequences or proteins or other technology in order
to test, use or market products. We may not be able to obtain these licenses on
terms favorable to us. In connection with our efforts to obtain rights to these
gene sequences or proteins or other technology, 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. These
cumulative royalties could be commercially prohibitive. We may not be able to
successfully negotiate these royalty adjustments.
IF WE DO NOT ACHIEVE CERTAIN MILESTONES, WE MAY NOT BE ABLE TO RETAIN LICENSES
TO OUR INTELLECTUAL PROPERTY.
We have entered into license agreements with third parties for technologies
related to our gene therapy product development programs. Some of these license
agreements provide for the achievement of development milestones. If we fail to
achieve these milestones or to obtain extensions, the licensor may terminate
these license agreements with relatively short notice to us. Termination of any
of our license agreements could harm our business.
S-7.
<PAGE> 8
WE EXPECT THAT WE WILL FACE INTENSE COMPETITION, WHICH MAY LIMIT OUR ABILITY TO
BECOME PROFITABLE.
Our competitors may develop more effective or more affordable products, or
commercialize products earlier than we do, which would limit the prices that we
could charge for the products that we are able to market, and prevent us from
becoming profitable. 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.
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.
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
applications. We cannot be assured 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
S-8.
<PAGE> 9
protection for biotechnology products, and we expect that administrative
proceedings, litigation or both may be necessary to determine the validity and
scope of our and others' biotechnology patents. These 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 of these 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, several of our patents and patent
applications are co-owned with co-inventors or institutions. Under the terms of
the agreements with the co-inventors, we have obtained or have an option to
obtain an exclusive, worldwide, transferable, royalty-bearing license for the
technology. To date, we have negotiated exclusive licenses for two of the more
significant co-invented technologies. 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 the technology by a co-inventor could harm our
business.
We also rely on a combination of trade secret and copyright laws, 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 our 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.
Any 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. 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 claims will not be initiated, that we would prevail in any litigation,
or that we would be able to obtain any necessary licenses on reasonable terms,
if at all. 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 these
technologies.
S-9.
<PAGE> 10
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 harm our business. 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.
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. 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. Our business and financial condition 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 controls 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 these proposals or managed
care efforts may have on our business.
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, or our inability to recruit
additional personnel necessary to our business, could substantially impair our
research and development efforts and impede our ability to develop and
commercialize any of our products. Recruiting and retaining qualified technical
and managerial personnel will also be critical to our success. Our business is
located in the San Francisco Bay Area in California, where demand for personnel
with these skills is extremely high and is likely to remain high. As a result,
competition for and retention of personnel, particularly for employees with
technical expertise, is intense and the turnover rate for these people is high.
In addition, we rely on consultants and advisors to assist us in formulating our
research and development strategy. A majority of our scientific advisors are
engaged by us on a consulting basis and are employed on a
S-10.
<PAGE> 11
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 MUST SECURE ADDITIONAL FINANCING, OTHERWISE WE WILL NOT BE ABLE TO DEVELOP
OUR PRODUCTS.
We will require substantial additional funding to complete the research and
development activities currently contemplated and to commercialize our products.
If we do not obtain these funds, we will not be able to develop our products. We
anticipate that our existing capital resources as of September 30, 2000, will be
adequate to fund our needs for at least two years. 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 financing arrangements on
acceptable terms, if at all. Without additional funding, we may be required to
delay, reduce the scope of or eliminate one or more of our research or
development programs.
S-11.
<PAGE> 12
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 carry product liability insurance; however, we
cannot assure you that this coverage will remain in place or that this 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.
This 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 harm our business.
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.
OUR USE OF RADIOACTIVE AND OTHER HAZARDOUS MATERIALS EXPOSES US TO THE RISK OF
MATERIAL ENVIRONMENTAL LIABILITIES, AND WE MAY INCUR SUBSTANTIAL ADDITIONAL
COSTS TO COMPLY WITH ENVIRONMENTAL LAWS IN THE EVENT THAT WE DEVELOP OUR OWN
MANUFACTURING FACILITY.
Because we use radioactive materials and other hazardous substances in our
research and development operations, we are potentially subject to material
liabilities related to personal injuries or property damages that may be caused
by the spread of radioactive contamination or by other hazardous substance
releases or exposures at, or from, our research facility. Decontamination costs
associated with radioactivity releases, other clean-up costs, and related
damages or liabilities could harm our business.
We are required to comply with increasingly stringent laws and regulations
governing environmental protection and workplace safety, including requirements
governing the handling, storage and disposal of radioactive and other hazardous
substances and wastes, and laboratory operating and safety procedures. These
laws and regulations can impose substantial fines and criminal sanctions for
violations. Maintaining in compliance with these laws and regulations with
regard to the operation of our own commercial manufacturing facility could
require substantial additional capital. These costs could decrease our ability
to conduct manufacturing operations in a cost-effective manner.
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS AND DELAWARE LAW MAY
NEGATIVELY AFFECT THE ABILITY OF A POTENTIAL BUYER TO PURCHASE SOME OR ALL OF
OUR STOCK AT AN OTHERWISE ADVANTAGEOUS PRICE, WHICH MAY LIMIT THE PRICE
INVESTORS ARE WILLING TO PAY FOR OUR COMMON STOCK.
Certain provisions of our charter and the Delaware Law may negatively affect the
ability of a potential buyer to attempt a takeover of Avigen, which may have a
negative effect on the price investors are willing to pay for our common stock.
For example, 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. In addition, our board of directors is
divided into three classes, and each year on a rotating basis the directors of
one class are elected for a three-year term. This provision could have the
effect of making it less likely that a third party would
S-12.
<PAGE> 13
attempt to obtain control of Avigen. Furthermore, certain other 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, INVESTING IN OUR COMMON STOCK IS
VERY RISKY.
We believe that various factors may cause the market price of our common stock
to continue to fluctuate, perhaps substantially, including announcements of:
- technological innovations or regulatory approvals;
- results of clinical trials;
- new products by us or our competitors;
- developments or disputes concerning patents or proprietary rights;
- our failing to achieve certain developmental milestones;
- public concern as to the safety of gene therapy products;
- health care or reimbursement policy changes by governments or
insurance companies;
- developments in relationships with corporate partners; or
- a change in financial estimates or securities analysts'
recommendations
In addition, in recent years the stock market in general, and the shares of
biotechnology and health care companies in particular, have experienced extreme
price fluctuations. These broad market and industry fluctuations may cause the
market price of our common stock to decline dramatically.
S-13.
<PAGE> 14
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The discussion in this prospectus supplement and in the prospectus contains
forward-looking statements that involve risks and uncertainties. Those
statements include words such as "anticipate," "estimate," "project," "intend,"
and similar expressions which we have used to identify these statements as
forward-looking statements. These statements appear throughout this prospectus
supplement and prospectus and are statements regarding our intent, belief, or
current expectations, primarily with respect to the operations of Avigen or
related industry developments. These forward-looking statements do not guarantee
future performance and involve risks and uncertainties, and that actual results
could differ materially from those discussed here, including under "Risk
Factors," and in the documents incorporated by reference in this prospectus
supplement and in the prospectus.
DIVIDEND POLICY
Avigen has not paid any cash dividends since its inception and does not
anticipate paying cash dividends in the foreseeable future.
USE OF PROCEEDS
We estimate that the net proceeds we will receive from the sale of the
1,658,329 shares of our common stock being offered by the prospectus supplement
will be approximately $59.0 million, after deducting the placement agent fees
and estimated offering expenses. We expect to use the net proceeds of this
offering as follows:
- to fund research and development;
- to fund preclinical studies and clinical trials of our drug
candidates;
- to fund completion of our manufacturing facilities;
- for working capital; and
- for general corporate purposes.
We have not determined the amount of net proceeds to be used for each of
the specific purposes listed. Accordingly, we will have broad discretion to use
the proceeds as we see fit.
Based upon the current status of our product development programs, we
believe that the net proceeds from this offering, together with interest on
those net proceeds and our existing capital resources, will satisfy our capital
requirements through at least 2001.
Pending these uses, we intend to invest the net proceeds of this offering
in short-term, interest-bearing, investment-grade instruments, certificates of
deposit or direct or guaranteed obligations of the United States or its
agencies.
S-14.
<PAGE> 15
PRICE RANGE OF COMMON STOCK
Since May 22, 1996, our common stock has been traded on the Nasdaq National
Market under the symbol "AVGN." A summary of the high and low sale prices during
the periods indicated for our common stock on the Nasdaq National Market
follows:
<TABLE>
<CAPTION>
FISCAL 1999 HIGH LOW
-------------------------------------------------- ------ ------
<S> <C> <C>
Quarter ended 9/30/98 $3.56 $1.50
Quarter ended 12/31/98 $7.81 $2.00
Quarter ended 3/31/99 $8.00 $4.63
Quarter ended 6/30/99 $6.63 $4.69
FISCAL 2000
Quarter ended 9/30/99 $13.25 $5.63
Quarter ended 12/31/99 $37.00 $12.25
Quarter ended 3/31/00 $89.00 $28.00
Quarter ended 6/30/00 $46.75 $25.00
FISCAL 2001
Quarter ending 9/30/00 $47.87 $29.63
Quarter ending 12/31/00 (through November 1, 2000) $46.00 $34.50
</TABLE>
On November 1, 2000, the last sale price of our common stock reported by
the Nasdaq National Market was $37.50 per share. As of November 1, 2000, there
were 193 stockholders of record of our common stock.
DILUTION
Our net tangible book value as of September 30, 2000 was approximately
$76.5 million, or $4.48 per share. Net tangible book value per share represents
the amount of our total tangible assets less total liabilities divided by the
total number of shares of common stock outstanding. After giving effect to the
sale by us of 1,658,329 shares of common stock offered by us by this prospectus
supplement at the offering price of $37.50 per share and after deducting the
placement agent fees and estimated offering expenses, our net tangible book
value at September 30, 2000 would have been approximately $135.5 million, or
$7.24 per share. This represents an immediate increase in net tangible book
value of $2.76 per share to existing stockholders and an immediate dilution of
$30.26 per share to new investors in the offering by this prospectus supplement,
as illustrated by the following table:
<TABLE>
<S> <C> <C>
Assumed public offering price per share..................... $ 37.50
Net tangible book value per share before this offering.... $ 4.48
Increase per share attributable to this offering.......... 2.76
Net tangible book value per share after this offering....... 7.24
Dilution per share to new investors......................... $ 30.26
</TABLE>
In addition, the above computations assume no exercise of options to
purchase 2,420,634 shares of common stock outstanding at September 30, 2000 at a
weighted average exercise price of $16.69 per share and no exercise of warrants
to purchase 1,598,730 shares of common stock at a weighted average exercise
price of $13.77 per share outstanding on this date. To the extent these options
and warrants are exercised, there will be further dilution to investors.
S-15.
<PAGE> 16
PLAN OF DISTRIBUTION
We are selling the shares being offered hereby directly to selected
institutional investors. The shares are being offered through AmeriCal
Securities on a best efforts basis. AmeriCal Securities is not obligated to, and
does not intend to, take or purchase any of the shares being offered by this
prospectus supplement and related prospectus. In connection with this sale, we
have agreed to pay AmeriCal Securities a placement agent fee to of 5% of the
gross proceeds to us, prior to the deduction of any expenses payable by us. The
following table shows the placement agent fees to be paid to AmeriCal Securities
by us in connection with the sale of the shares of our common stock being sold
pursuant to this prospectus supplement:
<TABLE>
<S> <C>
Per Share............................ $ 1.875
Total................................ $ 3,109,367
</TABLE>
We estimate that the total expenses of the offering, including all
offerings under the prospectus but excluding placement agent fees or
underwriting discounts and commissions, including those specified in the table
immediately above, will be approximately $100,000. Proportionally, the amount of
these expenses relates to approximately $52,000 for the shares offered by this
prospectus supplement.
AmeriCal Securities previously acted as our placement agent in connection
with private placements of our common stock in 1999 and 1998, and received in
connection with these private placements $2,146,702 in cash and warrants to
purchase up to 137,140 shares of our common stock at a weighted average purchase
price of $22.75 per share in 1999, and $335,300 in cash and warrants to purchase
up to 120,628 shares of our common stock at a weighted average purchase price of
$4.34 per share in 1998. In addition, in 1998 an affiliate of AmeriCal
Securities purchased for $100,000 in cash 26,055 shares of our common stock,
together with warrants to purchase 5,211 shares of our common stock at an
exercise price of $4.76 per share, which warrants were subsequently exercised.
LEGAL MATTERS
The validity of the 1,658,329 shares offered by this prospectus supplement
has been passed upon for Avigen by Cooley Godward LLP, Palo Alto, California.
S-16.
<PAGE> 17
PROSPECTUS
AVIGEN, INC.
BY THIS PROSPECTUS, WE MAY OFFER UP TO $120,000,000 OF OUR
COMMON STOCK
PREFERRED STOCK
WARRANTS
Our common stock is listed on the Nasdaq National Market under the symbol
"AVGN." On October 30, 2000 the closing sale price of a share of our common
stock, as reported on the Nasdaq National Market, was $37.38.
THE SECURITIES OFFERED OR SOLD UNDER THIS PROSPECTUS HAVE NOT BEEN APPROVED BY
THE SEC OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS
DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
We will provide the specific terms of the securities offered in a supplement to
this Prospectus. You should read this Prospectus and the supplements carefully
before you invest.
This investment involves a high degree of risk. See "Risk Factors" in the
supplement to this prospectus.
We may offer the securities directly or through underwriters, agents or dealers.
The supplement will describe the terms of that plan of distribution. "Plan of
Distribution" below also provides more information on this topic.
The date of this prospectus is October 30, 2000.
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
About this Prospectus................................................. 2
About Avigen.......................................................... 3
Risk Factors.......................................................... 5
Use of Proceeds....................................................... 5
General Description of Securities..................................... 5
Plan of Distribution.................................................. 7
Legal Matters......................................................... 8
Experts............................................................... 8
Where You Can Get More Information.................................... 8
Incorporation By Reference............................................ 9
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may
from time to time offer up to $120,000,000 in the aggregate of (a) shares of
common stock, $0.001 par value per share, of Avigen, (b) shares of preferred
stock, $0.001 par value per share, of Avigen, in one or more series, (c)
warrants to purchase shares of common stock or preferred stock or (d) any
combination of the foregoing, either individually or as units consisting of one
or more of the foregoing, each at prices and on terms to be determined at the
time of sale. The common stock, preferred stock and warrants are collectively
referred to herein as "securities." The securities offered pursuant to this
prospectus may be issued in one or more series of issuances and the aggregate
offering price of the securities will not exceed $120,000,000 (or its equivalent
(based on the applicable exchange rate at the time of the sale) in one or more
foreign currencies, currency units or composite currencies as shall be
designated by Avigen).
Each time we offer these securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering.
The registration statement that contains this prospectus (including
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. The registration
statement can be read at the SEC web site or at the SEC offices mentioned under
the heading "Where You Can Get More Information." This prospectus may not be
used to consummate sales of Securities unless accompanied by a prospectus
supplement.
2.
<PAGE> 19
ABOUT AVIGEN
This summary highlights information contained elsewhere in this prospectus.
You should read this entire prospectus carefully, including the "Risk Factors"
section. In addition, we incorporate by reference important business and
financial information in this prospectus.
OVERVIEW
We are a leader in the development of gene therapy products for the
treatment of inherited diseases. We are developing our proprietary
adeno-associated virus vector technology, known as "AAV vectors," to deliver DNA
to patients that are suffering from genetic diseases. AAV vectors are a
relatively new system for gene therapy. We believe our AAV vectors can be used
to deliver genes for the treatment of hemophilia, Gaucher disease, Parkinson's
disease and b-thalassemia.
All of our products in development are based on our proprietary gene
delivery technology in AAV vectors. Adeno-associated virus, or "AAV," is a
common, harmless human virus present in over 90% of the human population. AAV
vectors take advantage of the natural efficiency with which viruses deliver
genes to cells without the safety concerns of disease-related viruses.
We believe our AAV vector gene therapy approach offers novel treatment
alternatives for diseases that are currently poorly addressed. We believe
benefits of our AAV vector gene therapy technology include:
- Safety. Our AAV vectors are based on a virus that has never been
associated with a human disease of any kind. Over the past eight
years, both our internal work and that of others in the scientific
community have confirmed in animals that AAV vectors are safe for gene
therapy applications.
- Efficient delivery of genes to cells. AAV by nature is very efficient
at getting into cells. Consequently, our AAV vectors are very
effective at delivering genes to cells. Once in the cell, genes
delivered by AAV vectors in animal models have produced large amounts
of protein on a continuous basis, often for months or even years from
a single administration.
- AAV vectors can deliver many different genes. The vast majority of
genes fit into AAV vectors and have been successfully delivered to a
wide range of cell types. Consequently, AAV vectors have the potential
to treat many diseases including hemophilia, Gaucher disease,
inherited emphysema, beta-Thalassemia, Parkinson's and other
neurological diseases, cardiovascular disease and cancer.
- Simple to administer. We intend to administer our AAV vector-based
products on an outpatient basis. For example, our Coagulin-B product
for the treatment of hemophilia is being delivered to patients in the
ongoing Phase I clinical trial with dose escalations by injection in
the thigh muscle of the patient.
- Stability. Unlike other viruses, AAV is stable under a wide range of
conditions. This allows our AAV vectors to be handled like normal
pharmaceutical products, lending themselves to traditional shipping
and storing procedures.
OUR PRODUCTS
We are applying our AAV vector gene therapy technology initially to develop
products to address the following five genetic diseases: Hemophilia A,
Hemophilia B, Gaucher disease, Parkinson's disease and b-thalassemia. Industry
analysts estimate that current sales of protein therapeutics to treat these
diseases exceed $2 billion annually in the United States alone.
Our initial product candidate is Coagulin-B for the treatment of Hemophilia
B. Hemophilia B is a blood clotting disorder characterized by the reduction or
absence of a protein called factor IX. Hemophilia B is a genetic disease that
primarily affects males. Hemophilia B affects approximately one in every 30,000
males, afflicting an estimated 10,000 - 15,000 individuals in developed
countries worldwide. We believe the cost of treating Hemophilia B patients in
the United States is over $400 million per year.
In our preclinical studies, we treated five dogs suffering from Hemophilia
B. Following a single administration into the muscle, our AAV vector containing
the gene for factor IX demonstrated that it could produce sustained levels of
factor IX protein in the dogs for over a year with a corresponding improvement
in blood clotting. In the dogs receiving the greatest quantities of our AAV
vector, the levels were above 1% of normal level, a level that is known to be
beneficial to humans. These data provided strong support for the feasibility of
using the same approach to treat hemophilia patients and formed the basis for
FDA approval to begin clinical trials in humans.
3.
<PAGE> 20
On June 2, 1999, we began treating human subjects with this first product
candidate, Coagulin-B, in a Phase I clinical trial with dose escalations. The
design and goal of this initial trial is primarily to address the safety of the
product in humans. To assess the safety of the product, a total of nine patients
will have Coagulin-B injected into their thigh muscles. The clinical trials are
being carried out at The Children's Hospital of Philadelphia and Stanford
University Medical Center. The nine patients are divided into three groups. The
trial design provides that the first three patients receive the lowest dose of
AAV vector, the next three patients receive an intermediate dose and the final
three patients receive the highest dose. The dose range was selected based on
the preclinical studies with the objective of reaching factor IX levels above 1%
at the highest dose.
OUR BUSINESS STRATEGY
We are committed to being a leader in the development of gene-based
products through the application of our proprietary AAV vector gene delivery
technology. To achieve this goal, we are pursuing a focused strategy that
includes:
- Reducing Drug Development Risk By Pursuing Genetic Diseases With
Well-Defined Gene Function. We focus our drug discovery activities and
expenditures on applications of our AAV vector technology to develop
drug candidates that address genetic diseases that are well
understood.
- Retaining Development And Commercialization Rights For Our Products In
The United States. Our strategy is to retain all rights to our
products and directly market them to patients and physicians in the
United States with a small, specialized sales force.
- Ensuring That We Have The Intellectual Property Needed To Freely
Develop Our Products And Protect Our Market. We aggressively pursue
patents and licenses to cover all of the technology we develop or use.
Avigen was incorporated in October 1992. Our principal executive offices
are located at 1201 Harbor Bay Parkway, Suite 1000, Alameda, California 94502,
and our telephone number is (510) 748-7150. Our Web site address is on the world
wide web at "Avigen.com." We do not incorporate by reference into this
prospectus the information on our Web site, and you should not consider it as
part of this prospectus.
4.
<PAGE> 21
RISK FACTORS
An investment in our securities involves a high degree of risk. You should
carefully consider the information contained under the heading "Risk Factors" in
the applicable supplement to this prospectus before investing in our securities.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, the net
proceeds from the sale of securities offered hereby will be used for general
corporate purposes. We expect from time to time to evaluate the acquisition of
products, businesses and technologies for which a portion of the net proceeds
may be used. Currently, however, we do not have any understandings, commitments
or agreements with respect to any material acquisitions for which a portion of
the net proceeds may be used.
GENERAL DESCRIPTION OF SECURITIES
We may offer under this prospectus shares of common stock, shares of
preferred stock, warrants to purchase common stock or preferred stock or any
combination of the foregoing, either individually or as units consisting of one
or more securities. The aggregate offering price of securities offered by us
under this prospectus will not exceed $120,000,000. If securities are offered as
units, the terms of the units will be set forth in a prospectus supplement.
Certain of the securities to be offered hereby involve a high degree of risk.
Such risks will be set forth in the prospectus supplement relating to such
security.
DESCRIPTION OF PREFERRED STOCK
GENERAL
Our Amended and Restated Certificate of Incorporation authorizes the board
of directors of Avigen, without further stockholder action, to provide for the
issuance of up to 5,000,000 shares of preferred stock, in one or more series,
and to fix the designations, terms, and relative rights and preferences,
including the dividend rate, voting rights, conversion rights, redemption and
sinking fund provisions and liquidation values of each of these series. We may
amend from time to time our restated certificate to increase the number of
authorized shares of preferred stock. Any amendment like this would require the
approval of the holders of a majority of the common stock, without a vote of the
holders of preferred stock or any series thereof unless a vote of any such
holder is required pursuant to the restated certificate or certificates of
designations establishing a series of preferred stock. As of the date of this
prospectus, we have no shares of preferred stock outstanding.
The particular terms of any series of preferred stock being offered by us
under this shelf registration will be described in the prospectus supplement
relating to that series of preferred stock. Those terms may include:
- the title and liquidation preference per share of the preferred stock
and the number of shares offered;
- the purchase price of the preferred stock;
- the dividend rate (or method of calculation), the dates on which
dividends will be paid and the date from which dividends will begin to
accumulate;
- any redemption or sinking fund provisions of the preferred stock;
- any conversion provisions of the preferred stock;
- the voting rights, if any, of the preferred stock; and
- any additional dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and restrictions of
the preferred stock.
If the terms of any series of preferred stock being offered differ from the
terms set forth in this prospectus, those terms will also be disclosed in the
prospectus supplement relating to that series of preferred stock. The summary in
this prospectus is not complete. You should refer to our restated certificate
establishing a particular series of preferred stock, which will be filed with
the Secretary of State of Delaware and the SEC in connection with the offering
of the preferred stock.
The preferred stock will, when issued, be fully paid and nonassessable.
5.
<PAGE> 22
DIVIDEND RIGHTS
The preferred stock will be preferred over the common stock as to payment
of dividends. Before any dividends or distributions (other than dividends or
distributions payable in common stock) on the common stock shall be declared and
set apart for payment or paid, the holders of shares of each series of preferred
stock will be entitled to receive dividends when, as and if declared by the
board of directors of Avigen. We will pay those dividends either in cash, shares
of common stock or preferred stock or otherwise, at the rate and on the date or
dates set forth in the prospectus supplement. With respect to each series of
preferred stock, the dividends on each share of the series will be cumulative
from the date of issue of the share unless some other date is set forth in the
prospectus supplement relating to the series. Accruals of dividends will not
bear interest.
RIGHTS UPON LIQUIDATION
The preferred stock will be preferred over the common stock as to assets so
that the holders of each series of preferred stock will be entitled to be paid,
upon our voluntary or involuntary liquidation, dissolution or winding up and
before any distribution is made to the holders of common stock, the amount set
forth in the applicable prospectus supplement. However, in this case the holders
of preferred stock will not be entitled to any other or further payment unless
otherwise specified in the applicable prospectus supplement. If upon any
liquidation, dissolution or winding up our net assets are insufficient to permit
the payment in full of the respective amounts to which the holders of all
outstanding preferred stock are entitled, our entire remaining net assets and
funds legally available for distribution to the preferred stock shall be
distributed ratably among such shares in proportion to the ratio that the
liquidation preference payable on each such share bears to the aggregate
liquidation preference payable on all such shares.
REDEMPTION
All shares of any series of preferred stock will be redeemable only to the
extent set forth in the prospectus supplement relating to the series. All shares
of any series of preferred stock will be convertible into shares of common stock
or into shares of any other series of preferred stock to the extent set forth in
the applicable prospectus supplement.
VOTING RIGHTS
Except as indicated in the prospectus supplement, the holders of preferred
stock shall have no voting power whatsoever except as provided by law.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
30,000,000 shares of common stock of which 5,000,000 shares are reserved solely
for the purpose of effecting the conversion of the preferred stock. As of
September 22, 2000, there were 17,058,296 shares of the Company's Common Stock
outstanding. In addition, at the same date, 2,400,134 shares were issuable upon
exercise of options and rights outstanding under the Company's stock option and
stock purchase plans and 5,838,093 shares remained available for future grants
under these plans (assuming proposals we have submitted to our stockholders are
approved), and 1,598,730 shares of the Company's Common Stock were reserved for
issuance upon exercise of outstanding warrants.
DIVIDENDS
The holders of common stock are entitled to receive dividends when, as and
if declared by the board of directors of Avigen, out of funds legally available
for their payment.
VOTING RIGHTS
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders.
RIGHTS UPON LIQUIDATION
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of common stock will be entitled to share equally in any
of our assets available for distribution after the payment in full of all debts
and distributions and after the holders of all series of outstanding preferred
stock have received their liquidation preferences in full.
6.
<PAGE> 23
MISCELLANEOUS
The outstanding shares of common stock are fully paid and nonassessable.
The holders of common stock are not entitled to preemptive or redemption rights.
Shares of common stock are not convertible into shares of any other class of
capital stock. American Stock Transfer & Trust Company is the transfer agent and
registrar for our common stock.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of preferred stock or common stock.
Warrants may be issued independently or together with preferred stock or common
stock and may be attached to or separate from any offered securities. Each
series of warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with the warrants and
will not assume any obligation or relationship of agency or trust for or with
any registered holders of warrants or beneficial owners of warrants. This
summary of some provisions of the warrants is not complete. You should refer to
the warrant agreement, including the forms of warrant certificate representing
the warrants, relating to the specific warrants being offered for the complete
terms of the warrant agreement and the warrants. That warrant agreement,
together with the terms of warrant certificate and warrants, will be filed with
the SEC in connection with the offering of the specific warrants.
The particular terms of any issue of warrants will be described in the
prospectus supplement relating to the issue. Those terms may include:
- the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting
rights) of the series of preferred stock purchasable upon exercise of
warrants to purchase shares of preferred stock and the price at which
such number of shares of preferred stock of such series may be
purchased upon such exercise;
- the number of shares of common stock purchasable upon the exercise of
warrants to purchase shares of common stock and the price at which
such number of shares of common stock may be purchased upon such
exercise;
- the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
- United States Federal income tax consequences applicable to the
warrants; and
- any other terms of the warrants.
Warrants for the purchase of preferred stock and common stock will be
offered and exercisable for U.S. dollars only. Warrants will be issued in
registered form only. The exercise price for warrants will be subject to
adjustment in accordance with the applicable prospectus supplement.
Each warrant will entitle its holder to purchase the number of shares of
preferred stock or common stock at the exercise price set forth in, or
calculable as set forth in, the applicable prospectus supplement. The exercise
price may be adjusted upon the occurrence of certain events as set forth in the
prospectus supplement. After the close of business on the expiration date,
unexercised warrants will become void. We will specify the place or places
where, and the manner in which, warrants may be exercised in the applicable
prospectus supplement.
Prior to the exercise of any warrants to purchase preferred stock or common
stock, holders of the warrants will not have any of the rights of holders of the
preferred stock or common stock purchasable upon exercise, including the right
to vote or to receive any payments of dividends on the preferred stock or common
stock purchasable upon exercise.
PLAN OF DISTRIBUTION
We may sell the securities through underwriters, agents or dealers or
directly to purchasers. A prospectus supplement will set forth the terms of each
specific offering, including the name or names of any underwriters or agents,
the purchase price of the securities and the proceeds to us from such sales, any
delayed delivery arrangements, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in the sale, the securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying
7.
<PAGE> 24
prices determined at the time of sale. The securities may be offered to the
public either through underwriting syndicates represented by one or more
managing underwriters or directly by one or more firms acting as underwriters.
The underwriter or underwriters with respect to a particular underwritten
offering and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover of such prospectus supplement.
Unless otherwise set forth in the prospectus supplement, the underwriters will
be obligated to purchase all the securities if any are purchased.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters also may impose a penalty bid, under which selling concessions
allowed to syndicate members or other broker-dealers for the securities they
sell for their account may be reclaimed by the syndicate if the syndicate
repurchases the securities in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
securities then offered, which may be higher than the price that might otherwise
prevail in the open market, and, if commenced, may be discontinued at any time.
We may sell the securities directly or through agents we designate from
time to time. Any agent involved in the offer or sale of the securities covered
by this prospectus will be named, and any commissions payable by us to an agent
will be set forth, in a prospectus supplement relating thereto. Unless otherwise
indicated in a prospectus supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If dealers are used in any of the sales of securities covered by this
prospectus, we will sell those securities to dealers as principals. The dealers
may then resell the securities to the public at varying prices the dealers
determine at the time of resale. The names of the dealers and the terms of the
transactions will be set forth in a prospectus supplement.
We may sell the securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to any sale thereof. The terms of any such sales will be described
in a prospectus supplement.
If so indicated in a prospectus supplement, we will authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities from us at the public offering price set forth in the
prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. These contracts will be
subject only to those conditions set forth in the prospectus supplement, and the
prospectus supplement will set forth the commission payable for solicitation of
such contracts.
Agents, dealers and underwriters may be entitled under agreements entered
into with us to indemnification by us against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such agents, dealers or underwriters may be required to make
in respect thereof. Agents, dealers and underwriters may be customers of, engage
in transactions with, or perform services on our behalf.
LEGAL MATTERS
The validity of any securities offered by this prospectus or any supplement
will be passed upon for Avigen by Cooley Godward LLP, Palo Alto, California.
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, 2000, 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.
WHERE YOU CAN GET MORE INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act
of 1934 and in accordance with its requirements file annual and quarterly
reports, proxy statements and other information with the Securities and Exchange
Commission, or the "Commission." These reports, proxy statements and other
information may be inspected, and copies of these materials may be obtained upon
payment of the prescribed fees, at the Commission's Public Reference Section,
Room 1024, 450 Fifth Street, Suite 1300, N.W., Washington D.C. 20549, as well as
at the Commission's Regional Offices at Seven World Trade Center, New York, New
York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You may obtain more
8.
<PAGE> 25
information on the operation of the Commission's Public Reference Section by
calling the Commission at (800) SEC-0330. 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.
We are also required to file electronic versions of these materials with
the Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
We have filed with the Commission a Registration Statement on Form S-3
under the Securities Act of 1933 with respect to the securities offered by this
prospectus. This prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and the schedules thereto. For
further information with respect to us and our securities, you should read the
Registration Statement, including its exhibits and schedules, and any related
prospectus supplement to this prospectus filed with the Commission regarding
those securities. Statements contained in this prospectus and any related
prospectus supplement, including documents incorporated by reference, as to the
contents of any contract or other document referred to are not necessarily
complete, and, with respect to any contract or other document filed as an
exhibit to the Registration Statement, each statement is qualified in all
respects by reference to the corresponding exhibit. Copies of the Registration
Statement and its exhibits are on file at the offices of the Commission and may
be obtained upon payment of the prescribed fee or may be examined without charge
at the Commission's Public Reference Section, as well as at the Commission's
Regional Offices in New York 10048 and Chicago, at the addresses listed above.
Copies of these materials can be obtained from the Public Reference Section of
the Commission, upon payment of the prescribed fees or via the EDGAR database.
INCORPORATION BY REFERENCE
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:
- Annual Report on Form 10-K for the year ended June 30, 2000, filed
September 27, 2000,
- Current Report on Form 8-K, filed October 11, 2000; and
- The description of the common stock contained in our Registration
Statement on Form 8-A filed with the SEC on April 22, 1996 under the
Securities Exchange Act of 1934.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
1201 Harbor Bay Parkway, Suite 1000
Alameda, CA 94502
(510) 748-7150
or e-mailing us on the world wide web at "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. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
9.
