Full Press Release Details
SAN DIEGO, Calif., March 19, 2009 (GLOBE NEWSWIRE) -- MediciNova, Inc., a biopharmaceutical company that is publicly traded on the Nasdaq Global Market (Nasdaq:MNOV) and the Hercules Market of the Osaka Securities Exchange (Code Number: 4875), today sent the following letter to the Board of Directors of Avigen, Inc.:
4350 La Jolla Village Drive, Suite 950
1301 Harbor Bay Parkway
Dear Members of the Board:
We feel compelled to publicly express our extreme disappointment with
the process by which Avigen, to date, has reviewed our offer to
pursue a proposed merger with Avigen. Yesterday, members of senior
management of MediciNova, Inc. met with your management team and
financial advisor in San Francisco to formally present the case for
our proposal. As you are aware, this was our first face-to-face
meeting despite our repeated requests for such a meeting since we
first made public our proposal back in December 2008.
Unfortunately, as has been the case throughout this process, your
management team has so far refused to grant us access to the due
diligence materials and management guidance that we believe Avigen
has made available to the other three bidders. In our meeting
yesterday, your management team repeatedly stated that Avigen, "as a
small company," does not have the capacity to continue to evaluate
multiple offers. Frankly, we now believe that your management team
had no bona fide interest in evaluating our proposal from the outset,
and your management team's statements and actions so far confirm for
From time to time, management teams of public companies run sales
processes that, in retrospect, are ill-conceived and incapable of
obtaining the best value for shareholders. In our opinion, the
Avigen sales process is just such a situation. In case your
management team has not apprised you of their actions through March
18, we wish to make you and the Avigen shareholders aware of the
following matters that we believe you, on behalf of the Avigen
shareholders, should independently verify and, where appropriate,
1. Lack of a Fair Evaluation of the MediciNova Offer in an Honest
Over the past three months, we have repeatedly attempted to initiate
a dialogue with your management team about our merger proposal. We
have continually been met, in our opinion, with delays and
misrepresentations. For example:
* Your management team did not provide a draft confidentiality
agreement to us until six weeks after our initial offer letter of
* Your management team spent six additional weeks negotiating the
terms and conditions of the confidentiality agreement, which was
finally executed on March 4, 2009.
* Your financial advisor provided us with a due diligence request
list on February 27, 2009. We populated a data room for your
review over the weekend following execution of the confidentiality
agreement. However, as of the date of this letter, our data room
has not been accessed by any members of your management team or
your financial advisor.
* We provided our due diligence request to your management team on
March 6, 2009. On March 10, 2009, we were told by your financial
advisor that Avigen would not provide ANY information to us under
this due diligence request, a statement that was confirmed in a
March 10 letter from your CEO, Ken Chahine, to our Chairman.
Interestingly, we received an email from Avigen's financial
advisor (RBC Capital) earlier today which states: "We are
preparing some financial diligence. A more formal communication
on our thoughts to follow." We are hopeful that we will be given
access to the Avigen due diligence we need to increase the value
of our proposal. However, in light of all the past delays, we
expect to remain on standby.
* The efforts of your financial advisor in arranging yesterday's
meeting were indicative of how MediciNova believes it has been
treated throughout this process. Although we proposed an all-
hands meeting for March 18 in our letter to you last week, your
financial advisor gave us less than 24 hours advance notice of the
proposed meeting in San Francisco at 3:00 p.m. the next day. We
attempted to obtain clarification from Avigen's financial advisor
as to the urgency of the meeting (after a full six days following
our initial request) given that our CEO had only returned from
Japan that day but, when no clarification was given, we ultimately
decided that night to rearrange our schedules in order to attend
this first face-to-face meeting. Our team flew the next morning
from San Diego, Los Angeles and Flagstaff, Arizona to meet with
your management team and financial advisor; however, upon arriving
in San Francisco, your financial advisor advised us that the
meeting had been postponed until sometime later in the afternoon
so that your CEO, Ken Chahine, could participate in a call with an
investor. To put it mildly, we were shocked by such
unprofessional and discourteous behavior.
* Interestingly, when we made clear that we would not reschedule our
meeting, we were then told that Mr. Chahine's investor call was
postponed and the meeting eventually commenced at 3:30 p.m. We
ask that, for any future meetings, we please be provided with the
courtesy of more customary advance notice.
2. Public Misstatements with No Means of Rebuttal
Instead of an honest and open evaluation process, you and your
management team have chosen to criticize our proposal in your public
filings. Beyond the fact that we believe that your statements
contain material misrepresentations and misleading inaccuracies, it
is disappointing that your management team and financial advisor have
actively resisted any discussions regarding these inaccuracies. For
* Your public statements ignore the fact that the potential upside
of the MediciNova offer is an ownership position of up to
approximately 45% of the combined company.
* The valuation that you assign to our proposal lacks an important
valuation component (relating to the securities component of our
proposal), and does so in a way which makes our offer seem
meaningfully lower. In fact, we pointed out to your management
team that, by analyzing our offer only on a "cash" basis in your
proxy statement, this was potentially misleading because it
ignored the value assigned to securities which are necessarily
non-cash. Your management team stated that they were comfortable
with showing a "cash" valuation but omitting a "total" valuation,