After battling a tender offer from a major shareholder, Avigen announced today that it will liquidate the company barring a shareholder vote to dump its board and replace it with a slate of directors nominated by the Biotechnology Value Fund. And it announced a new round of job cuts that includes the company's CEO Kenneth Chahine and other executives.
BVF, which owns 30 percent of Avigen's shares, has been avidly attempting to wrest away control of Avigen, claiming that the current board is destroying the company's stock value, "recklessly" wasting money and failed to guarantee a "worst-case" outcome to shareholders.
This morning Avigen announced that it had discontinued its "strategic merger discussions and intends to develop a plan of liquidation following the special meeting of stockholders on March 27, 2009 if the BVF nominees are not elected to the board." The best value for shareholders, says Avigen, can be achieved through liquidation.
"Based on the actions taken by BVF, Avigen's board believes its ability to pursue the strategic alternatives that the Board believes will increase stockholder value is all but foreclosed," said Zola Horovitz, Ph.D., Avigen's chairman of the board. "Our board has established a responsible pattern for dealing decisively with strategic issues, as demonstrated following the negative data from the company's AV650 clinical trial in October 2008. While our board considers the inability to continue its strategic process unfortunate, it has abandoned discussions for a strategic transaction and intends to develop a plan that will maximize liquidation value. As such, the board determined that the company no longer needs to retain the services of the majority of its employees that were supporting strategic discussions and has reduced its headcount accordingly."
- read the press release