ALAMEDA, Calif., Nov 3, 2008 (GlobeNewswire via COMTEX News Network) -- Avigen, Inc. (Nasdaq:AVGN), a biopharmaceutical company innovating therapeutics for neurological care, today announced a significant restructuring of the company aimed at preserving cash and reassessing its strategic opportunities. As a result of the restructuring, which will involve staff reductions of over 70 percent of the company's total workforce, Avigen expects to have sufficient cash to fund operations for over four years.
"Our deepest gratitude goes out to all the talented and dedicated employees who have worked so hard to complete a timely and well executed AV650 clinical program, as well as enhance the value of our other clinical-stage drug candidates from our internal research and development," said Kenneth Chahine, Ph.D., J.D., Avigen's President and Chief Executive Officer. "By reducing to only a core team, however, we can significantly lower our infrastructure costs, while retaining the know-how and expertise necessary to monetize our current assets and identify opportunities to acquire new assets. We believe our strong cash position and management team will make Avigen an attractive partner in this challenging financial climate."
Highlights:
-- Avigen expects to end 2008 with top-line cash and securities of
approximately $49 million and believes this restructuring
will extend its resources to support at least four years of
operations, including providing funds to develop one asset to a
meaningful value inflection point without additional equity
financings.
-- Avigen's contract with Sanochemia Pharmaceutica AG regarding
AV650 has been terminated to avoid further payment obligations
on the part of Avigen.
-- Avigen believes the breadth and value of AV411 can be best
realized with the support of a partner; therefore, Avigen
intends to seek a partner and does not currently plan to
initiate the Phase 2b development program for neuropathic
pain. Current and future National Institute on Drug Abuse-funded
Phase 2a trials in opioid withdrawal and methamphetamine relapse
will continue.
-- Proceeds from the sale or partnering of Avigen's current assets
(AV411 and AV513) could significantly increase its cash position
and its ability to develop additional assets to meaningful value
inflection points without additional equity financings.
"Our experienced team has faced similar challenges, and has demonstrated the ability to take decisive action to create valuable opportunities," said Dr. Chahine. "Given the current economic environment, we believe this strategy represents a sound plan that will not only withstand, but capitalize on, the current market conditions."
About AV411
AV411 is a first-in-class orally bioavailable small molecule, a glial attenuator that suppresses pro-inflammatory cytokines IL-1 beta, TNF alpha, and IL-6, and may upregulate the anti-inflammatory cytokine IL-10. While considered a New Molecular Entity (NME) in the United States and Europe, the drug was first approved in Japan more than 15 years ago. The drug has been prescribed to over one million patients for a different indication and has a good post-marketing safety profile in nearly 15,000 patients studied at the prescribed doses.
Glial activation in the brain and spinal cord contribute to the establishment and amplification of the chronic pain state. As part of its program investigating glial attenuation as a novel approach to the treatment of neuropathic pain, Avigen discovered that AV411 (ibudilast) was efficacious in standard preclinical models of opioid withdrawal. While ibudilast was initially developed as a non-selective phosphodiesterase (PDE) inhibitor for the treatment of bronchial asthma, its efficacy in neuropathic pain models appears to be independent of this activity. AV411 has advanced through Phase 1 and 2a clinical trials for neuropathic pain and is currently in a NIDA-funded trial with Columbia University addiction research specialists for opioid withdrawal. Additional preclinical research has revealed that AV411 can attenuate opioid-induced glial activation and both behavioral and neurochemical markers of opioid-induced reward and withdrawal. Moreover, collaborative studies with NIDA have revealed utility in methamphetamine relapse in animals which is being translated to a NIDA-funded exploratory clinical trial with UCLA investigators in 2009. Based on its research, Avigen has filed for patents protecting the use of AV411, as well as for patents on AV411 analogs which the company believes have the potential to be effective second generation molecules. Additional information on AV411 can be found on Avigen's website at www.avigen.com.
About Avigen
Avigen is a biopharmaceutical company focused on developing and commercializing unique small molecule therapeutics to treat serious neurological disorders, including neuropathic pain and opioid addiction and withdrawal. Avigen's strategy is to complete the requirements of clinical development for each of the candidates in its product pipeline, and continue to look for opportunities to expand its pipeline through a combination of internal research, acquisitions and in-licensing, with the goal of becoming a fully integrated commercial biopharmaceutical company that remains committed to its neurology products. Avigen is currently developing AV411 for neuropathic pain, as well as opioid withdrawal and addiction in collaboration with NIDA. Additionally, the company is advancing AV513, a novel therapy for the treatment of multiple bleeding disorders, including hemophilia A and B, toward clinical trials. For more information about Avigen, consult the company's website at www.avigen.com.
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Statement under the Private Securities Litigation Reform Act
This press release contains forward-looking statements, which include, among others, statements relating to Avigen's expectations that the current restructuring and staff reduction will reduce its infrastructure costs and extend its financial resources to support at least four years of operations without additional equity financings; that it will retain the know-how and expertise necessary to monetize its current assets; that it will be able to identify and acquire new assets; that it will be able to secure a partner to initiate the AV411 Phase 2b development program for neuropathic pain; that current and future National Institute on Drug Abuse-funded trials in opioid withdrawal or methamphetamine relapse will continue; that Avigen can avoid further payment obligations to Sanochemia beyond those already paid; that it will be able to take any asset to a meaningful value inflection point with or without additional equity financings; that it can generate any proceeds from the sale or partnering of current assets; and that the Company's current strategy will allow it to withstand or capitalize on the current market conditions. These risks and uncertainties include: unexpected expenses incurred with respect to the restructuring may occur; savings from the restructuring may not be as much as Avigen expects due to unexpected impediments to reducing expenses; in this economic environment, Avigen may not be able to find a partner for AV411 on terms favorable to Avigen; that costs necessary to bring products to a meaningful inflection point may be more than Avigen expects; and those detailed in reports filed by Avigen with the Securities and Exchange Commission, including Avigen's quarterly report on Form 10-Q for the period ended June 30, 2008, under the caption "Risks Related to Our Business" in Item 2 of Part I of that report, which was filed with the SEC on August 11, 2008.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Avigen, Inc.
Avigen, Inc.
Michael Coffee, Chief Business Officer
510-748-7372
IR@avigen.com
1301 Harbor Bay Parkway
Alameda, CA 94502
