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UNITED STATES FORM 10-K For the fiscal year ended December 31, 2003 For the transition period from to __________to __________. AVIGEN, INC. (Exact name of registrant as specified in its charter)
1301 Harbor Bay Parkway (Address of principal executive offices and zip code) (510) 748-7150 (Registrants telephone number, Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: (Title of class)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission
file number 0-28272
Delaware
13-3647113
incorporation or organization)
Identification No.)
Alameda, California 94502
including area
code)
Common Stock,
$.001 par value
DOCUMENTS INCORPORATED BY REFERENCE
(1) | Excludes approximately 3,900,000 shares of the registrants Common Stock held by directors and executive officers of the registrant, and by each person known by the registrant to own 5% or more of the registrants outstanding Common Stock at June 30, 2003. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, directly or indirectly, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant. |
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER
31, 2003
TABLE OF CONTENTS
Page |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
PART
I |
||||||||||
Item
1. |
Business |
2 | ||||||||
Item
2. |
Properties |
24 | ||||||||
Item
3. |
Legal Proceedings |
24 | ||||||||
Item
4. |
Submission of Matters to a Vote of Security Holders |
24 | ||||||||
PART
II |
||||||||||
Item
5. |
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
26 | ||||||||
Item
6. |
Selected Financial Data |
27 | ||||||||
Item
7. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
28 | ||||||||
Item
7A. |
Quantitative and Qualitative Disclosures About Market Risk |
37 | ||||||||
Item
8. |
Financial Statements and Supplementary Data |
38 | ||||||||
Item
9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
63 | ||||||||
Item
9A. |
Controls and Procedures |
63 | ||||||||
PART
III |
||||||||||
Item
10. |
Directors and Executive Officers of the Registrant |
64 | ||||||||
Item
11. |
Executive Compensation |
64 | ||||||||
Item
12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
64 | ||||||||
Item
13. |
Certain Relationships and Related Transactions |
64 | ||||||||
Item
14. |
Principal Accountant Fees and Services |
64 | ||||||||
PART
IV |
||||||||||
Item
15. |
Exhibits, Financial Statement Schedules, and Reports on Form 8-K |
65 | ||||||||
SIGNATURES |
69 |
Coagulin-B® is a registered trademark of Avigen, Inc.
Coagulin-A is a trademark of Avigen, Inc.
i
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
|
the potential of our product development programs, including Coagulin-B for hemophilia and AV201 for Parkinsons disease; |
|
our anticipation of receiving clearance to begin our AV201 trial; |
|
our intention to submit an IND to the FDA regarding our AV333 potential product; |
|
our expectations as to when we will file investigational new drug applications for our other product candidates currently in preclinical development; |
|
our expectations with respect to the clinical development of our product candidates, our clinical trials and the regulatory approval process; |
|
our expectations as to the various products that we are developing; |
|
our expectations relating to our selection of additional disease targets; |
|
our expectations with regard to our future operational and manufacturing capabilities; |
|
our estimates regarding our capital requirements, how long our current capital resources will last, and our needs for additional financing; and |
|
our expectations related to licensing opportunities for products and intellectual property. |
1
PART I
Item 1. Business
Overview
Company Strategy and Highlights
2
models, and simultaneously experienced a decrease in factor IX levels to below the expected beneficial threshold. During this time, all other liver function tests were normal and the subject reported no other symptoms and continued to feel healthy.
Product Development Programs
Program |
Disease |
Protein/Enzyme |
Target Cell |
Status |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Hematology |
Hemophilia
B |
Factor
IX |
Liver |
Phase
I |
||||||||||||||
Neurology |
Parkinsons
disease |
Aromatic amino
acid decarboxylase |
Brain |
IND
filed |
||||||||||||||
Neurology |
Neuropathic
pain |
Interleukin-10 |
Intrathecal
space surrounding the spinal cord |
Preclinical |
||||||||||||||
Hematology |
Hemophilia
A |
Factor
VIII |
Liver |
Preclinical |
Hemophilia
3
|
Protein injections do not provide a constant and sustained level of circulating protein; rather, they provide only temporary relief and when protein breaks down after a few days, the bleeding recurs. |
|
Administration requires two to three intravenous injections per week for patients on prophylactic treatment. |
|
Recurring internal bleeding episodes typically take place in the joints and soft tissue, frequently resulting in crippling muscle, bone, and joint problems. Patients also are at risk for permanent disability or death from brain hemorrhage or other catastrophic bleeding. |
|
When blood-derived replacement therapy is used there is a small risk of blood-transmitted viral infection. |
|
Deliver therapeutic levels of factor IX protein into the blood of treated patients over a prolonged period. |
|
Reduce or eliminate weekly injections. |
|
Produce stable levels of factor IX that are intended to reduce or eliminate bleeding in the joints and soft tissue. This would reduce the crippling effects of the disease and prevent the fatal bleeds that can occur in the central nervous system. |
|
Reduce the indirect costs associated with joint replacement and care. |
4
5
Parkinsons Disease
6
|
a dose dependent increase in AADC activity as measured by PET, |
|
a decrease in the requirement for oral L-dopa, and |
|
a significant improvement in motor skills and Parkinsons symptoms. |
Chronic Neuropathic Pain
7
|
pain in the absence of direct nerve injury such as a viral infection; |
|
extra-territorial pain or pain distant from any insult to a nerve; |
|
mirror-image pain or pain that is perceived not only in the affected tissue, but also in the corresponding part of the healthy side of the body; and |
|
phantom limb pain or pain located in an appendage that no longer exists due to amputation. |
8
Research Programs
DNA-Based Drugs
Adeno-Associated Virus Vectors
9
|
SafetyThe AAV virus has never been associated with any human disease. More than 80% of the population has been exposed to AAV. |
|
EfficiencyAAV is very efficient at getting into cells. |
|
Potential for prolonged, high-level gene expression Genes delivered in AAV vectors have demonstrated stable, high-level expression for months to years in many animal models. |
|
VersatilityAAV is designed to deliver many different genes (more than 30 to date in animal studies) to a wide range of cell types including muscle, liver, central nervous system, and skin. |
|
StabilityAAV vector is stable under a wide range of conditions which should simplify manufacturing, storage and handling of the final product. |
Non-Viral DNA
AAV Vector Manufacturing
|
Helper virus freeno live human pathogenic virus (e.g., adenovirus or herpes virus) is used in the manufacturing process. |
|
High-titermore vector production per cell than that of other manufacturing methods. |
|
Flexibilityalso allows us to develop new vectors quickly and easily. |
|
Scaleableother helper viruses need not be produced for large scale manufacturing. |
AAV Purification
10
development and initial phase I clinical testing, using chromatorgraphic techniques is preferred. Avigen has developed chromatographic purification methods which allow us to purify commercial quantities of AAV vector.
Collaboration Agreements
Patents and Intellectual Property
11
U.S. patent applications, as well as 13 issued non-U.S. patents and 70 pending non-U.S. patent applications. The patents in which we own or hold as licensees protect rights that relate to the formulation of specific AAV vectors, methods of vector production, methods of tissue administration, and treatment of specific disease indications using AAV vectors. All issued patents within our current portfolio are scheduled to expire in the U.S. between 2008 and 2020.
|
specific AAV vectors, including AAV vectors containing any type of cytokine, tumor suppressor or suicide gene, which may have important applications in cancer and neuropathic pain applications, as well as vectors containing enzymes associated with lysosomal storage diseases; |
|
high-yield methods of producing AAV vectors free from contamination from wild-type AAV or adenovirus, and large-scale manufacturing and purification processes; |
|
methods of administering AAV vectors, including to skeletal muscle, cardiac muscle, and smooth muscle, as well as delivery to the bloodstream, including intravenous (IV) and intra-arterial (IA) injection and delivery to the nervous system; and |
|
the use of AAV vectors for treating certain diseases such as hemophilia A, hemophilia B, Parkinsons disease, cancer, anemia, cardiomyopathies, and lysosomal storage diseases. |
12
|
we may be unable to develop additional proprietary technologies that are patentable; |
|
the claims of any patents that are issued may not provide meaningful protection; |
|
the pending patent applications that we have filed or to which we have exclusive rights may not result in issued patents or may take longer than we expect to result in issued patents; |
|
we cannot be certain that others have not filed applications for technology covered by our patent applications; |
|
we may not be able to negotiate exclusive rights to co-owned technology from our co-owners; |
|
the patents licensed or issued to us may not provide a competitive advantage; |
|
other companies may challenge patents licensed or issued to us; |
|
others may assert that our products and technologies infringe their patents; |
|
disputes may arise regarding the invention and corresponding ownership rights in inventions and know-how resulting from the joint creation or use of intellectual property by us, our licensors, corporate partners and other scientific collaborators; and |
|
other companies may design around our patented technologies. |
13
Competition
Government Regulation
14
|
preclinical laboratory testing and preclinical animal studies; |
|
the submission to the FDA of an investigational new drug application for review before the commencement of any human clinical trials; |
|
adequate and well-controlled human clinical trials to establish the safety and efficacy of the product; |
|
the submission to the FDA of a Biologics License Application (BLA), or New Drug Application (NDA), for a biological product; |
|
successful inspection of manufacturing facilities by the FDA as part of the BLA or NDA approval process; and |
|
FDA approval of the BLA or NDA prior to any commercial sale or shipment of the biological product. |
|
the results of previous testing; |
|
how, where and by whom the clinical studies will be conducted; |
|
the chemical structure of the product; |
|
the method by which the product is believed to work in the human body; |
|
any toxic effects of the product found in the animal studies; |
|
how the product is manufactured; and |
|
what patients will be notified of through the informed consent form. |
15
each respective institution participating in the study. The IBC will consider, among other things, safety risks to institutional personnel, community ethical issues, and potential liability of the institution. An IBC may require changes in a protocol, and we cannot assure you that any IBC will permit any given study to be initiated or completed.
16
Employees
Available Information and Website Address
RISK FACTORS
We expect to continue to operate at a loss and we may never achieve profitability
Our clinical trials to date for Coagulin-B for the treatment of hemophilia B have been conducted with a small number of patients over a short period of time, and the results reported may not be indicative of future results in a larger number of patients or have lasting effects
17
achieved will have a lasting effect. Further, we have experienced difficulties in obtaining positive results in humans reflective of the positive results we obtained in animal models. If a larger population of patients does not experience positive results, or any favorable results do not demonstrate a lasting effect, this product candidate may not receive approval from the FDA for further studies or commercialization. If we are not able to proceed with, or decide to abandon our Coagulin-B development program, our business prospects may be substantially impaired.
The success of our technology in animal models does not guarantee that the same results will be replicated in humans
Adverse events in the field of gene therapy may negatively impact regulatory approval or public perception of our potential products
AAV technology is new and developing rapidly; there is limited clinical data and new information may arise which may cause delays in designing our protocols, submitting applications that satisfy all necessary regulatory review requirements, and ultimately completing the clinical trials of our products
18
five weeks. Consequently, we may encounter deficiencies in the design or application stages while developing our clinical trial studies, or in the subsequent implementation stages of such studies, which could cause us or the FDA to delay, suspend or terminate our trials at any time.
Because our product candidates are in an early state of development, there is a high risk that they may never be commercialized
The testing of our potential products relies heavily on the voluntary participation of patients in our clinical trials, which is not within our control, and could substantially delay or prevent us from completing development of such products
Our potential products must undergo rigorous clinical testing and regulatory approvals, which could substantially delay or prevent us from marketing any products
We may not be successful in obtaining required foreign regulatory approvals, which would prevent us from marketing our products internationally
19
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 regulatory authorities of any other country.
Our success is dependent upon our ability to effectively protect our patents and proprietary rights, which we may not be able to do
Other persons may assert rights to our proprietary technology, which could be costly to contest or settle
20
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
If we do not achieve certain milestones, we may not be able to retain certain licenses to our intellectual property
If we are able to bring our potential products to market, we continue to face a number of risks including our inexperience in marketing or selling our potential products, the acceptance of our products by physicians and insurers, our ability to price our products effectively and to obtain adequate reimbursement for sales of our products.
We expect that we will face intense competition, which may limit our ability to become profitable
21
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 have limited experience in manufacturing our potential products at a commercial scale, which raises uncertainty about our ability to manufacture our potential products cost-effectively
We may lose access to critical materials from single source suppliers, which is not within our control and could delay us from manufacturing materials needed to support our clinical trials or future commercialization
We may be unable to attract and retain the qualified employees, consultants and advisors we need to be successful
We may need to secure additional financing to complete the development and commercialization of our products
|
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; |
22
|
the costs involved in obtaining licenses to patented technologies from third-parties that may be needed to commercialize our products; |
|
the cost of manufacturing scale-up; |
|
the cost of commercialization activities; and |
|
other factors which may not be within our control. |
We face the risk of liability claims which may exceed the scope or amount of our insurance coverage
Our use of hazardous materials exposes us to the risk of environmental liabilities, and we may incur substantial additional costs to comply with environmental laws in connection with the operation of our research and manufacturing facilities
Risks Related to Our Stock
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
23
Our stock price is volatile, and as a result investing in our common stock is very risky
|
technological innovations or regulatory approvals; |
|
results of clinical trials; |
|
new products by us or our competitors; |
|
developments or disputes concerning patents or proprietary rights; |
|
achieving or failing to achieve certain developmental milestones; |
|
public concern as to the safety of gene therapy, recombinant biotechnology or traditional pharmaceutical 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. |
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Executive Officers of the Registrant
Name |
Age |
Position |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Philip J.
Whitcome, Ph.D. |
55 |
Chairman of the Board |
||||||||
Kenneth G.
Chahine, Ph.D. |
39 |
President, Chief Executive Officer and Director |
||||||||
Thomas J.
Paulson |
57 |
Vice
President, Finance, Chief Financial Officer and Secretary |
||||||||
Glenn Pierce,
Ph.D., M.D. |
48 |
Vice
President, Research and Clinical Development |
||||||||
Dawn McGuire,
M.D. |
50 |
Chief
Medical Officer |
24
Corporation, a biopharmaceutical company. From 1981 to 1988, Dr. Whitcome was employed at Amgen Inc., a biopharmaceutical company, including service as Director of Strategic Planning. Prior to joining Amgen, he served as Manager of Corporate Development for Medical Products at Bristol-Myers Squibb Company, a pharmaceutical and healthcare products company, and held research and marketing management positions with the Diagnostics Division of Abbott Laboratories, a pharmaceutical and medical products company. Dr. Whitcome holds a Ph.D. in Molecular Biology from the University of California at Los Angeles, an M.B.A. from the Wharton School at the University of Pennsylvania and a B.S. in Physics from Providence College.
25
PART II
Item 5. | Market for Registrants Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities |
Year ended December 31, 2002 |
High |
Low |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Quarter End
3/31/02 |
$ | 11.90 | $ | 7.61 | ||||||
Quarter End
6/30/02 |
$ | 11.37 | $ | 6.95 | ||||||
Quarter End
9/30/02 |
$ | 9.54 | $ | 6.45 | ||||||
Quarter End
12/31/02 |
$ | 10.33 | $ | 5.22 |
Year ended December 31, 2003 |
High |
Low |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Quarter End
3/31/03 |
$ | 6.07 | $ | 2.92 | ||||||
Quarter End
6/30/03 |
$ | 4.70 | $ | 2.75 | ||||||
Quarter End
9/30/03 |
$ | 5.73 | $ | 3.33 | ||||||
Quarter End
12/31/03 |
$ | 7.40 | $ | 5.48 |
Purchaser |
Exercise Date |
Number of Shares |
Exercise Price |
Aggregate Purchase Price |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Joseph
DiBenedetto, Jr. |
11/6/03 | 2,040 | $ | 6.09 | $ | 12,424 | ||||||||||||
Allan
Fishbein, M.D. |
11/26/03 | 5,211 | 4.76 | 24,804 | ||||||||||||||
Richard
Gaston |
12/5/03 | 5,211 | 4.76 | 24,804 | ||||||||||||||
Marc &
Ingrid Gelman |
12/8/03 | 2,605 | 4.76 | 12,400 | ||||||||||||||
Union
detudes et dinvestissements |
12/8/03 | 5,120 | 5.36 | 27,443 | ||||||||||||||
Veron
International Ltd |
12/9/03 | 31,270 | 4.76 | 148,845 | ||||||||||||||
John &
Sandra Leland Trust |
12/11/03 | 2,605 | 4.76 | 12,400 | ||||||||||||||
Virginia
Leung |
12/11/03 | 2,605 | 4.76 | 12,400 | ||||||||||||||
Hofung
Holdings Ltd |
12/12/03 | 10,423 | 4.76 | 49,613 | ||||||||||||||
Nai-Ping
Leung |
12/12/03 | 2,605 | 4.76 | 12,400 | ||||||||||||||
Lewis
Pell |
12/17/03 | 8,163 | 6.09 | 49,713 | ||||||||||||||
77,858 | $ | 387,226 |
26
Item 6. Selected Financial Data
Year
Ended December 31, |
(1) Six Months Ended December 31, 2001 |
Fiscal
Years Ended June 30,
|
October
22, 1992 (Inception) to December 31, 2003 |
||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in
thousands, except per share data) |
2003
|
2002
|
2001
|
2001
|
2000
|
1999
|
|||||||||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||||||||||
Statement
of Operations Data: |
|||||||||||||||||||||||||||||||||||
Revenue |
$ | 463 | $ | 57 | $ | 94 | $ | 8 | $ | 116 | $ | 58 | $ | 185 | $ | 1,250 | |||||||||||||||||||
Expenses: |
|||||||||||||||||||||||||||||||||||
Research
and development |
21,805 | 24,809 | 22,333 | 11,465 | 17,041 | 7,953 | 6,490 | 108,161 | |||||||||||||||||||||||||||
General
and administrative |
7,399 | 8,146 | 7,559 | 3,957 | 6,761 | 4,516 | 3,445 | 43,823 | |||||||||||||||||||||||||||
In-license
fees |
| | | | | 5,034 | | 5,034 | |||||||||||||||||||||||||||
29,204 | 32,955 | 29,892 | 15,422 | 23,802 | 17,503 | 9,935 | 157,018 | ||||||||||||||||||||||||||||
Loss
from operations |
(28,741 | ) | (32,898 | ) | (29,798 | ) | (15,414 | ) | (23,686 | ) | (17,445 | ) | (9,750 | ) | (155,768 | ) | |||||||||||||||||||
Interest
expense |
(250 | ) | (278 | ) | (347 | ) | (204 | ) | (180 | ) | (129 | ) | (178 | ) | (2,171 | ) | |||||||||||||||||||
Interest
income |
3,282 | 5,569 | 9,364 | 4,316 | 7,907 | 2,548 | 326 | 25,405 | |||||||||||||||||||||||||||
Other
expense, net |
(65 | ) | (132 | ) | (68 | ) | (17 | ) | (55 | ) | (13 | ) | (9 | ) | (122 | ) | |||||||||||||||||||
Net
loss |
$ | (25,774 | ) | $ | (27,739 | ) | $ | (20,849 | ) | $ | (11,319 | ) | $ | (16,014 | ) | $ | (15,039 | ) | $ | (9,611 | ) | $ | (132,656 | ) | |||||||||||
Net
loss per share |
$ | (1.28 | ) | $ | (1.38 | ) | $ | (1.05 | ) | $ | (0.57 | ) | $ | (0.85 | ) | $ | (1.03 | ) | $ | (0.99 | ) |
December 31, |
June 30, |
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
2003 |
2002 |
2001 (1) |
2001 |
2000 |
1999 |
|||||||||||||||||||||
Balance
Sheet Data: |
|||||||||||||||||||||||||||
Cash, cash
equivalents, available-for-sale securities, and restricted investments |
$ | 98,878 | $ | 119,224 | $ | 148,254 | $ | 157,737 | $ | 77,953 | $ | 14,881 | |||||||||||||||
Working
capital |
86,051 | 107,398 | 137,486 | 151,341 | 72,732 | 13,471 | |||||||||||||||||||||
Total
assets |
116,595 | 140,686 | 168,409 | 174,946 | 85,287 | 16,183 | |||||||||||||||||||||
Long-term
obligations |
10,592 | 8,852 | 8,558 | 5,391 | 4,113 | 265 | |||||||||||||||||||||
Deficit
accumulated during development stage |
(132,656 | ) | (106,882 | ) | (79,143 | ) | (67,823 | ) | (51,810 | ) | (36,771 | ) | |||||||||||||||
Stockholders equity |
103,886 | 130,057 | 157,350 | 167,182 | 79,013 | 14,323 |
(1) |
We changed our fiscal year end from June 30 to December 31, effective December 31, 2001. |
27
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Overview
Critical Accounting Policies and Significant Judgments and Estimates
28
circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue recognition
Valuation of investments in financial instruments
Impairment of property and equipment
Research and development expenses
29
facilities and overhead costs. Research and development expenses consist of costs incurred for drug and product development, manufacturing, clinical activities, discovery research, screening and identification of drug candidates, and preclinical studies. All such costs are charged to research and development expenses as incurred, with the costs of materials and other supplies charged to research and development expense upon receipt.
Results of Operations
(In thousands, except percentages) |
2003 |
2002 |
2001 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenue |
$ | 463 | $ | 57 | $ | 94 | ||||||||
Percentage
increase over prior period |
712 | % | (39 | %) |
30
animal studies, production of vector for use by external collaborators in general research and exploration, and development of processes to translate research achievements into commercial scale capabilities. Clinical development costs include activities associated with preparing for regulatory approvals, maintaining regulated and controlled processes, manufacturing vector for use in human clinical trials, and supporting patient enrollment and patient administration within clinical trials.
Year Ended December 31, 2003 |
Year Ended December 31, 2002 |
(Unaudited) Twelve Months Ended December 31, 2001 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Research and
preclinical development |
$ | 13,614 | $ | 14,266 | $ | 12,050 | ||||||||
Clinical
development |
8,191 | 10,543 | 10,283 | |||||||||||
Total research
and development expenses |
$ | 21,805 | $ | 24,809 | $ | 22,333 |
|
lower materials expenses of $1.1 million, reflecting the impact of decreased consumption of materials to produce our AAV vectors and support our on-going research which resulted from our lower staff levels in 2003 when compared to the staff level for most of 2002 and the benefits of operating efficiencies we have implemented over the last two years, |
|
lower personnel-related expenses of $670,000, primarily reflecting the impact of our lower staff levels in 2003 after the workforce reduction that occurred in October 2002, and |
|
lower consulting expenses of $157,000, reflecting decreased involvement by third-party service providers to support our in-house research, |
31
· |
higher expenditures for services from third-party collaborators associated with our preclinical animal studies of $659,000, primarily related to our work with Parkinsons disease, |
· |
higher depreciation expenses of $253,000, reflecting the full-year impact of newly constructed facilities that were placed in service in the second half of 2002 for general and animal research, and |
· |
higher other facilities-related expenses of $211,000, related to the rise in costs under the new building lease that went into effect in 2003 and generally higher maintenance costs. |
· |
lower personnel-related expenses of $1.3 million, primarily reflecting the impact of our lower staff levels in 2003 after the workforce reduction in October 2002, |
· |
lower materials expenses of $986,000 reflecting lower levels of material consumed for the production of clinical grade material due to the delayed needs of our Coagulin-B clinical trial, as well as general benefits from manufacturing efficiencies adopted over the last two years for the production of our AAV vectors, |
· |
lower expenditures of $509,000 to third-party collaborators associated with treating and monitoring subjects in our clinical trial, reflecting the delay in treating Coagulin-B patients in 2003, and |
· |
lower consulting and validation services expenses of $716,000, primarily in connection with regulatory and quality assurance process improvements and validation of new cGMP facilities that were completed in 2002, |
· |
higher license origination fees of $578,000, |
· |
higher depreciation expenses of $307,000, reflecting the full-year impact of newly constructed facilities that were placed in service in the second half of 2002 for cGMP manufacturing, and |
· |
higher other facilities-related expenses of $254,000, related to the rise in costs under the new building lease that went into effect in 2003 and generally higher maintenance costs. |
· |
higher expenditures for services from third-party collaborators associated with our preclinical animal studies of $950,000, primarily related to our work with Parkinsons disease, |
· |
higher personnel-related expenses of $830,000, reflecting rising staff levels throughout most of 2002, and |
· |
higher depreciation and amortization expenses of $640,000, reflecting the impact of new facilities placed in service during the year, |
· |
lower other overall costs of $200,000. |
32
|
higher expenditures to third-party collaborators associated with treating and monitoring subjects in our Coagulin-B clinical trial of $520,000, reflecting the increase in the number of patients treated in 2002 compared to 2001, |
|
higher depreciation and other facilities-related expenses of $290,000, due to new facilities placed in service in 2002, |
|
higher validation services of $320,000, in connection with the validation of new cGMP facilities that were completed in 2002, and |
|
higher personnel-related expenses of $285,000, reflecting rising staff levels throughout most of 2002, |
|
lower materials expenses of $490,000, reflecting the benefit of manufacturing efficiencies adopted in 2002 for the production of our AAV vectors, |
|
lower recruiting and other related costs of $360,000, and |
|
lower license milestone payments of $320,000. |
(In thousands, except percentages) |
2003 |
2002 |
2001 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
General and
administrative expenses |
$ | 7,399 | $ | 8,146 | $ | 7,559 | ||||||||
Percentage
increase over prior period |
(9 | %) | 8 | % |
33
(In thousands, except percentages) |
2003 |
2002 |
2001 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest
income |
$ | 3,282 | $ | 5,569 | $ | 9,364 | ||||||||
Percentage
increase over prior period |
(41 | %) | (40 | %) |
Adoption of Recently Issued Accounting Standards
Deferred Income Tax Assets
Liquidity and Capital Resources
34
Payments Due by Period |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Contractual Commitment |
Total |
Less than 1 year |
1-3 years |
3-5 years |
After 5 years |
||||||||||||||||||
Revolving
line of credit |
$ | 8,000 | $ | | $ | 8,000 | $ | | $ | | |||||||||||||
Operating
leases |
15,045 | 2,503 | 5,241 | 4,550 | 2,751 | ||||||||||||||||||
Research
funding for third-parties |
1,089 | 1,089 | | | | ||||||||||||||||||
Total |
$ | 24,134 | $ | 3,592 | $ | 13,241 | $ | 4,550 | $ | 2,751 |
35
due to the reduction in our net loss due to the decrease in research and development costs, as a result of our adoption of operating efficiencies and the impact of our October 2002 workforce reduction discussed above, and the receipt of a $2.5 million payment from Bayer Corporation in March 2003, which was recorded as deferred revenue.
|
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 patents claims and other intellectual property rights; |
|
competing technological developments; |
36
|
the cost of manufacturing scale-up; |
|
the costs of commercialization activities; and |
|
other factors which may not be within our control. |
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
37
Item 8. Financial Statements and Supplementary Data
INDEX TO FINANCIAL STATEMENTS
Page |
||||||
---|---|---|---|---|---|---|
Report of
Ernst & Young LLP, Independent Auditors |
39 |
|||||
Balance
Sheets |
40 |
|||||
Statements of
Operations |
41 |
|||||
Statements of
Stockholders Equity |
42 |
|||||
Statements of
Cash Flows |
48 |
|||||
Notes to
Financial Statements |
50 |
38
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders of Avigen, Inc.
Palo Alto, California
January 30, 2004
39
AVIGEN, INC.
(a development stage company)
BALANCE
SHEETS
(in thousands, except share and per share information)
December
31,
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2003
|
2002
|
||||||||||
ASSETS |
|||||||||||
Current
assets: |
|||||||||||
Cash
and cash equivalents |
$ | 2,384 | $ | 7,879 | |||||||
Available-for-sale securities |
84,566 | 99,845 | |||||||||
Accrued
interest |
774 | 993 | |||||||||
Prepaid
expenses and other current assets |
444 | 458 | |||||||||
Total
current assets |
88,168 | 109,175 | |||||||||
Restricted
investments |
11,928 | 11,500 | |||||||||
Property
and equipment, net |
15,641 | 18,726 | |||||||||
Deposits
and other assets |
858 | 1,285 | |||||||||
Total
assets |
$ | 116,595 | $ | 140,686 | |||||||
LIABILITIES
AND STOCKHOLDERS EQUITY |
|||||||||||
Current
liabilities: |
|||||||||||
Accounts
payable and other accrued liabilities |
$ | 1,140 | $ | 1,156 | |||||||
Accrued
compensation and related expenses |
477 | 621 | |||||||||
Deferred
revenuecurrent |
500 | | |||||||||
Total
current liabilities |
2,117 | 1,777 | |||||||||
Long-term
loan payable |
8,000 | 8,000 | |||||||||
Deferred
rent |
967 | 852 | |||||||||
Deferred
revenue |
1,625 | | |||||||||
Stockholders equity |
|||||||||||
Preferred
stock, $0.001 par value, 5,000,000 shares authorized, none issued and
outstanding, in 2003 and 2002 |
| | |||||||||
Common
stock, $0.001 par value, 50,000,000 shares authorized at December 31,
2003 and 2002, and 20,276,394 and 20,100,546 shares issued and outstanding
at December 31, 2003 and 2002, respectively |
20 |
20 |
|||||||||
Additional
paid-in capital |
236,120 | 235,337 | |||||||||
Accumulated
other comprehensive income |
402 | 1,582 | |||||||||
Deficit
accumulated during development stage |
(132,656 | ) | (106,882 | ) | |||||||
Total
stockholders equity |
103,886 | 130,057 | |||||||||
Total
liabilities and stockholders equity |
$ | 116,595 | $ | 140,686 |
See accompanying notes.
40
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
OPERATIONS
(in thousands, except for share and per share information)
Year
Ended December 31, |
Six
Months Ended December 31, |
Year
Ended June 30, |
Period from October 22, 1992 (inception) Through December 31, 2003 |
||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003
|
2002
|
2001
|
2000
|
2001
|
|||||||||||||||||||||||
(unaudited) |
|||||||||||||||||||||||||||
Revenue |
$ | 463 | $ | 57 | $ | 8 | $ | 30 | $ | 116 | $ | 1,250 | |||||||||||||||
Operating
expenses: |
|||||||||||||||||||||||||||
Research
and development |
21,805 | 24,809 | 11,465 | 6,173 | 17,041 | 108,161 | |||||||||||||||||||||
General
and administrative |
7,399 | 8,146 | 3,957 | 3,159 | 6,761 | 43,823 | |||||||||||||||||||||
In-license
fees |
| | | | | 5,034 | |||||||||||||||||||||
Total
operating expenses |
29,204 | 32,955 | 15,422 | 9,332 | 23,802 | 157,018 | |||||||||||||||||||||
Loss
from operations |
(28,741 | ) | (32,898 | ) | (15,414 | ) | (9,302 | ) | (23,686 | ) | (155,768 | ) | |||||||||||||||
Interest
expense |
(250 | ) | (278 | ) | (204 | ) | (38 | ) | (180 | ) | (2,171 | ) | |||||||||||||||
Interest
income |
3,282 | 5,569 | 4,316 | 2,860 | 7,907 | 25,405 | |||||||||||||||||||||
Other
expense, net |
(65 | ) | (132 | ) | (17 | ) | (4 | ) | (55 | ) | (122 | ) | |||||||||||||||
Net
loss |
$ | (25,774 | ) | $ | (27,739 | ) | $ | (11,319 | ) | $ | (6,484 | ) | $ | (16,014 | ) | $ | (132,656 | ) | |||||||||
Basic
and diluted net loss per common share |
$ | (1.28 | ) | $ | (1.38 | ) | $ | (0.57 | ) | $ | (0.37 | ) | $ | (0.85 | ) | ||||||||||||
Shares
used in basic and diluted net loss per common share calculation |
20,149,214 | 20,080,998 | 19,959,941 | 17,745,484 | 18,730,437 |
See accompanying notes.
41
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
STOCKHOLDERS EQUITY
Period from October 22, 1992 (inception) through December 31, 2003
(in thousands, except for share
information)
Preferred
Stock
|
Common
Stock
|
Class
B Convertible Common Stock |
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Gain (Loss) |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
|||||||||||||||||||||||||||||||
Balance
at October 22, 1992 (inception) |
| $ | | | $ | | | $ | | $ | | $ | | $ | | $ | | |||||||||||||||||||||||
Issuance
of common stock at $.004 per share in November and December 1992 |
| | 896,062 | 1 | | | 4 | | | 5 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $.554 per share from January to June 1993 for services
rendered |
| | 20,316 | | | | 11 | | | 11 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $.004 to $.222 per share from November 1992 to March
1993 for cash |
| | 1,003,406 | 1 | | | 54 | | | 55 | ||||||||||||||||||||||||||||||
Issuance
of Class B common stock at $.004 per share in December 1992 for cash |
| | | | 90,293 | | 1 | | | 1 | ||||||||||||||||||||||||||||||
Issuance
of Series A preferred stock at $4.43 per share from March to June 1993
for cash (net of issuance costs of $410,900) |
678,865 | 1 | | | | | 2,595 | | | 2,596 | ||||||||||||||||||||||||||||||
Issuance
of Series A preferred stock at $3.85 per share in March 1993 for cancellation
of note payable and accrued interest |
68,991 | | | | | | 266 | | | 266 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $.004 per share in November 1993 pursuant to antidilution
rights |
| | 22,869 | | | | 1 | | | 1 | ||||||||||||||||||||||||||||||
Issuance
of Series A preferred stock at $4.43 per share from July to November 1993
for cash and receivable (net of issuance costs of $187,205) |
418,284 | | | | | | 1,665 | | | 1,665 | ||||||||||||||||||||||||||||||
Issuance
of Series B preferred stock at $5.54 per share in March 1994 for cash
(net of issuance costs of $34,968) |
128,031 | | | | | | 674 | | | 674 | ||||||||||||||||||||||||||||||
Issuance
of Series C preferred stock at $4.87 per share from July 1994 to June
1995 for cash and receivables (net of issuance costs of $259,620) |
739,655 | 1 | | | | | 3,344 | | | 3,345 | ||||||||||||||||||||||||||||||
Issuance
of Series C preferred stock at $4.87 per share in June 1995 for cancellation
of notes payable |
35,500 | | | | | | 173 | | | 173 | ||||||||||||||||||||||||||||||
Net
loss and comprehensive loss from inception to June 30, 1995 |
| | | | | | | | (8,608 | ) | (8,608 | ) | ||||||||||||||||||||||||||||
Balance
at June 30, 1995 |
2,069,326 | 2 | 1,942,653 | 2 | 90,293 | | 8,788 | | (8,608 | ) | 184 |
See accompanying notes.
42
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
STOCKHOLDERS EQUITY (Continued)
Period from October 22, 1992 (inception) through December 31, 2003
(in thousands, except for
share information)
Preferred
Stock
|
Common
Stock
|
Class
B Convertible Common Stock |
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Gain (Loss) |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
|||||||||||||||||||||||||||||||
Issuance
of Series C preferred stock at $4.87 per share in July 1995 for cash (net
of issuance costs of $26,000) |
41,042 | $ | | | $ | | | $ | | $ | 174 | $ | | $ | | $ | 174 | |||||||||||||||||||||||
Issuance
of Series D preferred stock at $7.09 per share from October 1995 to February
1996 for cash (net of issuance costs of $25,279) |
205,351 | | | | | | 1,430 | | | 1,430 | ||||||||||||||||||||||||||||||
Issuance
of Series D preferred stock at $7.09 per share in March 1996 in settlement
of accounts payable |
22,574 | | | | | | 160 | | | 160 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $.004 per share in March 1996 pursuant to antidilution
rights |
| | 17,630 | | | | 1 | | | 1 | ||||||||||||||||||||||||||||||
Issuance
of stock options in February 1996 in settlement of certain accrued liabilities |
| | | | | | 137 | | | 137 | ||||||||||||||||||||||||||||||
Conversion
of Class B common stock to common stock |
| | 231,304 | 1 | (90,293 | ) | | (1 | ) | | | | ||||||||||||||||||||||||||||
Issuance
of warrants to purchase common stock in connection with 1996 bridge financing
in March 1996 |
| | | | | | 300 | | | 300 | ||||||||||||||||||||||||||||||
Conversion
of preferred stock to common stock in May 1996 |
(2,338,293 | ) | (2 | ) | 2,355,753 | 2 | | | (1 | ) | | | (1 | ) | ||||||||||||||||||||||||||
Issuance
of common stock at $8.00 per share in connection with the May 1996 initial
public offering (net of issuance costs of $798,414 and underwriting discount
of $1,500,000) |
| | 2,500,000 | 2 | | | 17,699 | | | 17,701 | ||||||||||||||||||||||||||||||
Proceeds
from exercise of options at $0.44 per share in June 1996 |
| | 6,178 | | | | 3 | | | 3 | ||||||||||||||||||||||||||||||
Repurchase
of common stock |
| | (18,325 | ) | | | | (1 | ) | | | (1 | ) | |||||||||||||||||||||||||||
Deferred
compensation |
| | | | | | 164 | | | 164 | ||||||||||||||||||||||||||||||
Amortization
of deferred compensation |
| | | | | | (128 | ) | | | (128 | ) | ||||||||||||||||||||||||||||
Net
loss and comprehensive loss |
| | | | | | | | (4,097 | ) | (4,097 | ) | ||||||||||||||||||||||||||||
Balance
at June 30, 1996 |
| | 7,035,193 | 7 | | | 28,725 | | (12,705 | ) | 16,027 |
See accompanying notes.
43
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
STOCKHOLDERS EQUITY (Continued)
Period from October 22, 1992 (inception) through December 31, 2003
(in thousands, except for
share information)
Preferred
Stock
|
Common
Stock
|
Class
B Convertible Common Stock |
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Gain (Loss) |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
|||||||||||||||||||||||||||||||
Issuance
of common stock at $8.00 per share in July 1996 in connection with the
exercise of underwriters over-allotment option (net of underwriting
discount of $150,000) |
| $ | | 250,000 | $ | | | $ | | $ | 1,850 | $ | | $ | | $ | 1,850 | |||||||||||||||||||||||
Proceeds
from exercise of options at $0.44 to $0.71 per share |
| | 3,387 | | | | 1 | | | 1 | ||||||||||||||||||||||||||||||
Amortization
of deferred compensation |
| | | | | | 41 | | | 41 | ||||||||||||||||||||||||||||||
Net
loss and comprehensive loss |
| | | | | | | | (5,578 | ) | (5,578 | ) | ||||||||||||||||||||||||||||
Balance
at June 30, 1997 |
| | 7,288,580 | 7 | | | 30,617 | | (18,283 | ) | 12,341 | |||||||||||||||||||||||||||||
Proceeds
from exercise of options at $0.44 to $0.71 per share |
| | 17,278 | | | | 10 | | | 10 | ||||||||||||||||||||||||||||||
Amortization
of deferred compensation |
| | | | | | 41 | | | 41 | ||||||||||||||||||||||||||||||
Compensation
expense related to options granted for services |
| | | | | | 68 | | | 68 | ||||||||||||||||||||||||||||||
Net
loss and comprehensive loss |
| | | | | | | | (8,877 | ) | (8,877 | ) | ||||||||||||||||||||||||||||
Balance
at June 30, 1998 |
| | 7,305,858 | 7 | | | 30,736 | | (27,160 | ) | 3,583 | |||||||||||||||||||||||||||||
Proceeds
from exercise of options at $0.44 to $4.31 per share |
| | 181,045 | | | | 222 | | | 222 | ||||||||||||||||||||||||||||||
Amortization
of deferred compensation |
| | | | | | 41 | | | 41 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $2.25$2.94 per share and warrants in August to
September 1998 in connection with a Private Placement (net of issuance
cost of $233,584) |
| | 1,306,505 | 1 | | | 2,734 | | | 2,735 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $3.81$4.88 per share and warrants in December
1998 in connection with a Private Placement (net of issuance cost of $438,183) |
| | 1,367,280 | 2 | | | 5,195 | | | 5,197 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $5.50$6.00 per share and warrants in February
to April 1999 in connection with a Private Placement (net of issuance
cost of $1,033,225) |
| | 2,198,210 | 2 | | | 12,154 | | | 12,156 | ||||||||||||||||||||||||||||||
Net
loss and comprehensive loss |
| | | | | | | | (9,611 | ) | (9,611 | ) | ||||||||||||||||||||||||||||
Balance
at June 30, 1999 |
| | 12,358,898 | 12 | | | 51,082 | | (36,771 | ) | 14,323 |
See accompanying notes.
44
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
STOCKHOLDERS EQUITY (Continued)
Period from October 22, 1992 (inception) through December 31, 2003
(in thousands, except for
share information)
Preferred
Stock
|
Common
Stock
|
Class
B Convertible Common Stock |
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Gain (Loss) |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
|||||||||||||||||||||||||||||||
Proceeds
from exercise of options at $0.44 to $15.50 |
| $ | | 440,259 | $ | 1 | | $ | | $ | 1,533 | $ | | $ | | $ | 1,534 | |||||||||||||||||||||||
Proceeds
from exercise of warrants at $2.81 to $31.95 |
| | 1,017,215 | 1 | | | 8,427 | | | 8,428 | ||||||||||||||||||||||||||||||
Amortization
of deferred compensation |
| | | | | | 5 | | | 5 | ||||||||||||||||||||||||||||||
Compensation
expense related to options granted for services |
| | | | | | 89 | | | 89 | ||||||||||||||||||||||||||||||
Warrants
granted for patent licenses |
| | | | | | 3,182 | | | 3,182 | ||||||||||||||||||||||||||||||
Warrants
granted for building lease |
| | | | | | 1,738 | | | 1,738 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $16.19 to $25.56 per share and warrants in October
and November 1999 in connection with a Private Placement (net of issuance
cost of $2,804,255) |
| | 2,033,895 | 2 | | | 37,220 | | | 37,222 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $26 per share in April and May 2000 in connection with
a Public Offering (net of issuance cost of $2,288,966) |
| | 1,150,000 | 1 | | | 27,610 | | | 27,611 | ||||||||||||||||||||||||||||||
Comprehensive
loss: |
||||||||||||||||||||||||||||||||||||||||
Net
loss |
| | | | | | | | (15,039 | ) | (15,039 | ) | ||||||||||||||||||||||||||||
Net
unrealized loss on available-for-sale securities |
| | | | | | | (80 | ) | | (80 | ) | ||||||||||||||||||||||||||||
Comprehensive
loss |
(15,119 | ) | ||||||||||||||||||||||||||||||||||||||
Balance
at June 30, 2000 |
| | 17,000,267 | 17 | | | 130,886 | (80 | ) | (51,810 | ) | 79,013 |
See accompanying notes.
45
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
STOCKHOLDERS EQUITY (Continued)
Period from October 22, 1992 (inception) through December 31, 2003
(in thousands, except for
share information)
Preferred
Stock
|
Common
Stock
|
Class
B Convertible Common Stock |
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Gain (Loss) |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
|||||||||||||||||||||||||||||||
Proceeds
from exercise of options at $0.44 to $34.00 per share |
| $ | | 165,700 | $ | | | $ | | $ | 869 | $ | | $ | | $ | 869 | |||||||||||||||||||||||
Proceeds
from exercise of warrants at $2.18 to $23.43 |
| | 174,255 | 1 | | | 771 | | | 772 | ||||||||||||||||||||||||||||||
Compensation
expense related to options granted for services |
| | | | | | 336 | | | 336 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $37.50 to $45.06 per share in November 2000 Public
Offering (net of issuance cost of $4,622,188) |
| | 2,291,239 | 2 | | | 86,084 | | | 86,086 | ||||||||||||||||||||||||||||||
Issuance
of common stock at $47.82 per share in February 2001 pursuant to a collaboration
agreement |
| | 313,636 | | | | 15,000 | | | 15,000 | ||||||||||||||||||||||||||||||
Comprehensive
loss: |
||||||||||||||||||||||||||||||||||||||||
Net
loss |
| | | | | | | | (16,014 | ) | (16,014 | ) | ||||||||||||||||||||||||||||
Net
unrealized gain on available-for-sale securities |
| | | | | | | 1,120 | | 1,120 | ||||||||||||||||||||||||||||||
Comprehensive
loss |
(14,894 | ) | ||||||||||||||||||||||||||||||||||||||
Balance
at June 30, 2001 |
| | 19,945,097 | 20 | | | 233,946 | 1,040 | (67,824 | ) | 167,182 | |||||||||||||||||||||||||||||
Proceeds
from exercise of options at $2.13 to $6.75 per share |
| | 11,282 | | | | 60 | | | 60 | ||||||||||||||||||||||||||||||
Proceeds
from exercise of warrants $7.50 per share |
| | 9,955 | | | | 75 | | | 75 | ||||||||||||||||||||||||||||||
Compensation
expense related to options granted for services |
| | | | | | 179 | | | 179 | ||||||||||||||||||||||||||||||
Comprehensive
loss: |
||||||||||||||||||||||||||||||||||||||||
Net
loss |
| | | | | | | | (11,319 | ) | (11,319 | ) | ||||||||||||||||||||||||||||
Net
unrealized gain on available-for-sale securities |
| | | | | | | 1,173 | | 1,173 | ||||||||||||||||||||||||||||||
Comprehensive
loss |
(10,146 | ) | ||||||||||||||||||||||||||||||||||||||
Balance
at December 31, 2001 |
| | 19,966,334 | 20 | | | 234,260 | 2,213 | (79,143 | ) | 157,350 | |||||||||||||||||||||||||||||
Proceeds
from exercise of options at $1.875 to $8.525 per share |
| | 34,627 | | | | 113 | | | 113 | ||||||||||||||||||||||||||||||
Proceeds
from exercise of warrants at $7.50 per share |
| | 99,585 | | | | 747 | | | 747 | ||||||||||||||||||||||||||||||
Compensation
expense related to options granted for services |
| | | | | | 217 | | | 217 | ||||||||||||||||||||||||||||||
Comprehensive
loss: |
||||||||||||||||||||||||||||||||||||||||
Net
loss |
| | | | | | | | (27,739 | ) | (27,739 | ) | ||||||||||||||||||||||||||||
Net
unrealized loss on available-for-sale securities |
| | | | | | | (631 | ) | | (631 | ) | ||||||||||||||||||||||||||||
Comprehensive
loss |
(28,370 | ) | ||||||||||||||||||||||||||||||||||||||
Balance
at December 31, 2002 |
| | 20,100,546 | 20 | | | 235,337 | 1,582 | (106,882 | ) | 130,057 |
See accompanying notes.
46
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
STOCKHOLDERS EQUITY (Continued)
Period from October 22, 1992 (inception) through December 31, 2003
(in thousands, except for
share information)
Preferred
Stock
|
Common
Stock
|
Class
B Convertible Common Stock |
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional Paid-in Capital |
Accumulated Other Comprehensive Gain (Loss) |
Deficit Accumulated During the Development Stage |
Total Stockholders Equity |
|||||||||||||||||||||||||||||||
Proceeds
from exercise of options at $2.12 to $6.50 per share |
| | 63,746 | | | | 242 | | | 242 | ||||||||||||||||||||||||||||||
Proceeds
from exercise of warrants at $2.47 to $6.09 per share |
| | 112,102 | | | | 476 | | | 476 | ||||||||||||||||||||||||||||||
Compensation
expense related to options granted for services |
| | | | | | 65 | | | 65 | ||||||||||||||||||||||||||||||
Comprehensive
loss: |
||||||||||||||||||||||||||||||||||||||||
Net
loss |
| | | | | | | | (25,774 | ) | (25,774 | ) | ||||||||||||||||||||||||||||
Net
unrealized loss on available-for-sale securities |
| | | | | | | (1,180 | ) | | (1,180 | ) | ||||||||||||||||||||||||||||
Comprehensive
loss |
(26,954 | ) | ||||||||||||||||||||||||||||||||||||||
Balance
at December 31, 2003 |
| $ | | 20,276,394 | $ | 20 | | $ | | $ | 236,120 | $ | 402 | $ | (132,656 | ) | $ | 103,886 |
See accompanying notes.
47
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
CASH FLOWS
(in thousands)
Year Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 |
2002 |
2001 |
2000 |
Year Ended June 30, 2001 |
Period from October 22, 1992 (inception) Through December 31, 2003 |
|||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||
Operating
activities |
||||||||||||||||||||||||||
Net
loss |
$ | (25,774 | ) | $ | (27,739 | ) | $ | (11,319 | ) | $ | (6,484 | ) | $ | (16,014 | ) | $ | (132,656 | ) | ||||||||
Adjustments to
reconcile net loss to net cash used in operating activities: |
||||||||||||||||||||||||||
Depreciation
and amortization |
3,640 | 3,136 | 1,167 | 309 | 1,203 | 12,367 | ||||||||||||||||||||
Amortization
of deferred compensation |
| | | | | 164 | ||||||||||||||||||||
Non-cash rent
expense for warrants issued in connection with the extension of the building lease |
217 | 217 | 109 | 124 | 217 | 832 | ||||||||||||||||||||
Amortization
of deferred rent |
115 | 294 | 167 | | 278 | 854 | ||||||||||||||||||||
Non-cash
compensation expense for common stock, warrants, and stock options issued for services |
65 | 217 | 179 | 209 | 336 | 1,475 | ||||||||||||||||||||
Warrants
issued for patent license |
| | | | | 3,182 | ||||||||||||||||||||
Changes in
operating assets and liabilities: |
||||||||||||||||||||||||||
Accrued
interest |
219 | 342 | 1,066 | (1,104 | ) | (1,462 | ) | (590 | ) | |||||||||||||||||
Prepaid
expenses and other current assets |
14 | (60 | ) | 178 | | (575 | ) | (628 | ) | |||||||||||||||||
Deposits and
other assets |
210 | 107 | 26 | 60 | 408 | (26 | ) | |||||||||||||||||||
Accounts
payable, other accrued liabilities and accrued compensation and related expenses |
(160 | ) | (724 | ) | 128 | (468 | ) | 449 | 2,029 | |||||||||||||||||
Deferred
revenue |
2,125 | | | | | 2,125 | ||||||||||||||||||||
Net cash used
in operating activities |
(19,329 | ) | (24,210 | ) | (8,299 | ) | (7,354 | ) | (15,160 | ) | (110,872 | ) | ||||||||||||||
Investing
activities |
||||||||||||||||||||||||||
Purchases of
property and equipment |
(555 | ) | (5,049 | ) | (5,492 | ) | (4,540 | ) | (9,666 | ) | (27,711 | ) | ||||||||||||||
Increase in
restricted investments |
(428 | ) | (1,500 | ) | (3,000 | ) | (3,000 | ) | (3,000 | ) | (11,928 | ) | ||||||||||||||
Purchases of
available-for-sale securities |
(84,834 | ) | (82,242 | ) | (60,817 | ) | (64,704 | ) | (177,757 | ) | (625,415 | ) | ||||||||||||||
Maturities of
available-for-sale securities |
98,933 | 106,809 | 81,592 | 37,051 | 94,825 | 541,253 | ||||||||||||||||||||
Net cash
provided by (used in) investing activities |
13,116 | 18,018 | 12,283 | (35,193 | ) | (95,598 | ) | (123,801 | ) | |||||||||||||||||
Financing
activities |
||||||||||||||||||||||||||
Proceeds from
long-term obligations |
| | 3,000 | 1,000 | 1,000 | 10,133 | ||||||||||||||||||||
Repayment of
long-term obligations |
| | | | | (1,710 | ) | |||||||||||||||||||
Proceeds from
bridge financing |
| | | | | 1,937 | ||||||||||||||||||||
Repayment of
bridge financing |
| | | | | (2,131 | ) | |||||||||||||||||||
Payments on
capital lease obligations |
| | | (193 | ) | (237 | ) | (2,154 | ) | |||||||||||||||||
Proceeds from
sale-leaseback of equipment |
| | | | | 1,927 | ||||||||||||||||||||
Proceeds from
issuance of preferred stock, net of issuance costs |
| | | | | 9,885 | ||||||||||||||||||||
Proceeds from
warrants and options exercised |
718 | 860 | 135 | 859 | 1,640 | 13,551 | ||||||||||||||||||||
Proceeds from
issuance of common stock, net of issuance costs and repurchases |
| | | 86,099 | 101,086 | 205,619 | ||||||||||||||||||||
Net cash
provided by financing activities |
718 | 860 | 3,135 | 87,765 | 103,489 | 237,057 |
See accompanying notes.
48
AVIGEN, INC.
(a development stage company)
STATEMENTS OF
CASH FLOWS (Continued)
(in thousands)
Year Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 |
2002 |
2001 |
2000 |
Year Ended June 30, 2001 |
Period from October 22, 1992 (inception) Through December 31, 2003 |
|||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||
Net (decrease)
increase in cash and cash equivalents |
$ | (5,495 | ) | $ | (5,332 | ) | $ | 7,119 | $ | 45,218 | $ | (7,269 | ) | $ | 2,384 | |||||||||||
Cash and cash
equivalents, beginning of period |
7,879 | 13,211 | 6,092 | 13,361 | 13,361 | | ||||||||||||||||||||
Cash and cash
equivalents, end of period |
$ | 2,384 | $ | 7,879 | $ | 13,211 | $ | 58,579 | $ | 6,092 | $ | 2,384 | ||||||||||||||
Supplemental
disclosure |
||||||||||||||||||||||||||
Issuance of
preferred stock for cancellation of accounts payable, notes payable and accrued Interest |
$ | | $ | | $ | | $ | | $ | | $ | 499 | ||||||||||||||
Issuance of
stock options for repayment of certain accrued liabilities |
$ | | $ | | $ | | $ | | $ | | $ | 137 | ||||||||||||||
Issuance of
warrants in connection with bridge Financing |
$ | | $ | | $ | | $ | | $ | | $ | 300 | ||||||||||||||
Issuance of
warrants in connection with The extension of the building lease |
$ | | $ | | $ | | $ | | $ | | $ | 1,738 | ||||||||||||||
Deferred
compensation related to stock option Grants |
$ | | $ | | $ | | $ | | $ | | $ | 164 | ||||||||||||||
Purchase of
property and equipment under capital lease financing |
$ | | $ | | $ | | $ | | $ | | $ | 226 | ||||||||||||||
Cash paid for
interest |
$ | 250 | $ | 278 | $ | 204 | $ | 38 | $ | 180 | $ | 1,678 |
See accompanying notes.
49
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL
STATEMENTS
1. Summary of Significant Accounting Policies
50
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
51
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
52
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
excluded from the diluted net loss per common share computation because their inclusion would have been anti-dilutive, were as follows:
Year Ended December 31, |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 |
2002 |
Six Months Ended December 31, 2001 |
Year Ended June 30, 2001 |
|||||||||||||||
Potential
dilutive stock options outstanding |
554,852 | 796,010 | 949,077 | 1,351,018 | ||||||||||||||
Potential
dilutive warrants to purchase common stock outstanding |
| 242,086 | 456,599 | 772,866 | ||||||||||||||
Potential
dilutive common shares |
554,852 | 1,038,096 | 1,405,676 | 2,123,884 | ||||||||||||||
Outstanding
securities excluded from the potential dilutive common shares calculation (1) |
4,512,838 | 3,477,720 | 3,259,131 | 1,449,496 |
(1) |
For purposes of computing the potential dilutive common shares, we have excluded outstanding stock options and warrants to purchase common stock whose exercise prices exceed the average of the closing sale prices of our common stock as reported on the NASDAQ National Market for the period. |
Recently Issued Accounting Standards
53
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
Year Ended December 31, |
Six Months Ended December 31, |
Year Ended June 30, |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 |
2002 |
2001 |
2001 |
||||||||||||||||
Net
lossas reported |
$ | (25,774 | ) | $ | (27,739 | ) | $ | (11,319 | ) | $ | (16,014 | ) | |||||||
Add:
Stock-based employee compensation included in reported net loss |
28 | | | | |||||||||||||||
Less: Total
stock-based employee compensation expense determined under the fair-value-based method for all awards |
(9,941 | ) | (12,202 | ) | (7,282 | ) | (10,134 | ) | |||||||||||
Net
losspro forma |
$ | (35,687 | ) | $ | (49,941 | ) | $ | (18,601 | ) | $ | (26,148 | ) | |||||||
Net loss per
common share basic and dilutedas reported |
$ | (1.28 | ) | $ | (1.38 | ) | $ | (0.57 | ) | $ | (0.85 | ) | |||||||
Net loss per
common share basic and dilutedpro forma |
$ | (1.77 | ) | $ | (1.99 | ) | $ | (0.93 | ) | $ | (1.40 | ) |
54
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
Year Ended December 31, |
Six Months Ended December 31, |
Year Ended June 30, |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 |
2002 |
2001 |
2001 |
||||||||||||||||
Expected
volatility |
0.8343 | 1.0459 | 1.0616 | 1.0944 | |||||||||||||||
Risk free
interest rate |
2.97 | % | 4.00 | % | 4.50 | % | 5.50 | % | |||||||||||
Expected life
of options in years |
5 | 5 | 5 | 5 | |||||||||||||||
Expected
dividend yield |
| | | |
2. Available-for-Sale Securities
Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash |
$ | 2,384 | $ | | $ | | $ | 2,384 | ||||||||||
Corporate
debt securities |
45,474 | 232 | (25 | ) | 45,681 | |||||||||||||
Federal
agency obligations |
24,813 | 81 | (21 | ) | 24,873 | |||||||||||||
Asset-backed
and other securities |
17,048 | 134 | (3 | ) | 17,179 | |||||||||||||
Short-term
municipals |
2,000 | | | 2,000 | ||||||||||||||
Treasury
obligations |
6,757 | 9 | (5 | ) | 6,761 | |||||||||||||
Total |
98,476 | 456 | (54 | ) | 98,878 | |||||||||||||
Amounts
reported as: |
||||||||||||||||||
Cash and cash
equivalents |
2,384 | | | 2,384 | ||||||||||||||
Restricted
investments |
11,928 | | | 11,928 | ||||||||||||||
Available-for-sale securities |
$ | 84,164 | $ | 456 | $ | (54 | ) | $ | 84,566 |
55
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash |
$ | 3,578 | $ | | $ | | $ | 3,578 | ||||||||||
Corporate
debt securities |
47,780 | 437 | (11 | ) | 48,206 | |||||||||||||
Federal
agency obligations |
42,977 | 855 | | 43,832 | ||||||||||||||
Asset-backed
and other securities |
23,307 | 301 | | 23,608 | ||||||||||||||
Short-term
municipals |
| | | | ||||||||||||||
Treasury
obligations |
| | | | ||||||||||||||
Total |
117,642 | 1,593 | (11 | ) | 119,224 | |||||||||||||
Amounts
reported as: |
||||||||||||||||||
Cash and cash
equivalents |
7,879 | | | 7,879 | ||||||||||||||
Restricted
investments |
11,500 | | | 11,500 | ||||||||||||||
Available-for-sale securities |
$ | 98,263 | $ | 1,593 | $ | (11 | ) | $ | 99,845 |
3. Property and Equipment
December 31, |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2003 |
2002 |
||||||||||
Leasehold
improvements |
$ | 18,429 | $ | 18,450 | |||||||
Laboratory
equipment |
6,789 | 6,406 | |||||||||
Office furniture
and equipment |
2,140 | 2,011 | |||||||||
27,358 | 26,867 | ||||||||||
Less accumulated
depreciation and amortization |
(11,717 | ) | (8,141 | ) | |||||||
Property and
equipment, net |
$ | 15,641 | $ | 18,726 |
4. Deferred Revenue
5. Loan Payable
In June 2000, we entered into a financing arrangement for construction related activities. Under this arrangement, we had the right to borrow up to $10.0 million through June 1, 2003. This revolving line of credit
56
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
was amended in June 2002 to extend the expiration date to June 1, 2005, thereby deferring the timetable to repay the principal borrowed for two additional years. Amounts borrowed under this arrangement bear interest at the London Inter-Bank Offered Rate plus 1.5% on the date of each drawdown and this interest rate is subsequently reset every three months. The weighted average interest rate for all outstanding drawdowns on this long-term obligation was 2.75% at December 31, 2003 and 3.11% at December 31, 2002. We have pledged a portion of our portfolio of available-for-sale securities equal to the amount of outstanding borrowings to secure this long-term obligation, and have identified these pledged assets as restricted investments on our balance sheets. As of both December 31, 2003 and 2002, we had borrowed $8 million from the line of credit. Payments of interest only are due monthly through June 1, 2005, at which time a balloon payment of outstanding principal is due. In November 2000, we reserved $2 million in borrowing capacity from the line of credit to secure a letter of credit. The letter of credit was established pursuant to the terms required under a ten-year property lease entered into in November 2000, and was issued in favor of the property owner. As a result of the cash borrowings and the establishment of the letter of credit, we did not have any remaining borrowing capacity under the line of credit at December 31, 2003.
6. Stockholders Equity
on the corresponding closing day and the warrants carry a five-year term. After deducting commissions and fees from the gross proceeds of $2,969,000, net proceeds from this transaction approximated $2,735,000.
57
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
Number Of Shares |
Exercise
Price
|
Issue
Date
|
Expiration Date |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
13,324 | $ 5.36 |
1995 |
2005 |
|||||||||||
4,514 | $ 7.09 |
1995 |
2005 |
|||||||||||
483,794 | $ 6.05
$ 7.50 |
1999 |
2004 |
|||||||||||
244,932 | $17.81
$20.63 |
1999 |
2004 |
|||||||||||
157,540 | $23.43
$27.96 |
1999 |
2004 |
|||||||||||
18,561 | $28.12
$31.95 |
1999 |
2004 |
|||||||||||
40,000 | $56.00 |
2000 |
2005 |
|||||||||||
50,000 | $82.00 |
2000 |
2005 |
|||||||||||
1,012,665 | $ 5.36 $82.00 |
2004 2005 |
December 31, 2003 |
||||||
---|---|---|---|---|---|---|
Stock options
outstanding |
4,362,442 | |||||
Stock options
available for grant |
4,289,623 | |||||
Warrants to
purchase common stock |
1,012,665 | |||||
Shares
available for Employee Stock Purchase Plan |
360,000 | |||||
10,024,730 |
7. Stock Options and Stock Purchase Plan
Under the 1993 Stock Option Plan (the 1993 Plan), prior to March 1996, incentive and nonqualified stock options could be granted to our key employees, directors and consultants to purchase up to 1,500,000 shares of common stock. Under the 1993 Plan, options could be granted at a price per share not less than the fair market value at the date of grant. In March 1996, the Board determined to grant no further options under the 1993 Plan
58
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
and adopted the 1996 Equity Incentive Plan. At December 31, 2003, there were options to purchase approximately 36,000 shares outstanding under the 1993 Plan, with no further shares available for grant.
the 2000 Plan, options may be granted at a price per share not less than 85% of the fair market value at the date of grant. Options granted generally have a maximum term of 10 years from the grant date and become exercisable over four years. At December 31, 2003, there were options to purchase approximately 2,093,000 shares outstanding under the 2000 Plan and approximately 2,906,000 shares available for grant.
59
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
Outstanding Options |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Number of Shares |
Weighted-Average Exercise Price per Share |
||||||||||
Outstanding at
July 1, 2000 |
2,355,313 | $15.05 | |||||||||
Granted |
1,774,076 | 20.27 | |||||||||
Canceled |
(58,130 | ) | 23.54 | ||||||||
Exercised |
(165,700 | ) | 5.25 | ||||||||
Outstanding at
June 30, 2001 |
3,905,559 | 17.71 | |||||||||
Granted |
175,950 | 12.00 | |||||||||
Canceled |
(60,410 | ) | 16.71 | ||||||||
Exercised |
(11,282 | ) | 5.32 | ||||||||
Outstanding at
December 31, 2001 |
4,009,817 | 17.51 | |||||||||
Granted |
946,300 | 8.33 | |||||||||
Canceled |
(777,002 | ) | 24.01 | ||||||||
Exercised |
(34,627 | ) | 3.28 | ||||||||
Outstanding at
December 31, 2002 |
4,144,488 | 14.31 | |||||||||
Granted |
685,800 | 3.73 | |||||||||
Canceled |
(404,100 | ) | 16.21 | ||||||||
Exercised |
(63,746 | ) | 3.81 | ||||||||
Outstanding at
December 31, 2003 |
4,362,442 | 12.62 |
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Range of Exercise
Prices
|
Number of Shares |
Weighted- Average Remaining Contractual Life |
Weighted- Average Exercise Price |
Number of Shares |
Weighted- Average Exercise Price |
||||||||||||||||
$ 0.44
$ .49 |
525,406 | 1.56 | $ | 0.49 | 525,406 | $ | 0.49 | ||||||||||||||
0.71 3.53 |
736,115 | 8.21 | 3.35 | 200,250 | 2.87 | ||||||||||||||||
3.63 6.30 |
581,966 | 6.47 | 5.40 | 394,341 | 5.32 | ||||||||||||||||
6.31 8.53 |
550,931 | 8.23 | 8.15 | 228,853 | 7.93 | ||||||||||||||||
8.62 13.02 |
188,840 | 7.93 | 10.24 | 99,478 | 10.41 | ||||||||||||||||
13.65
14.63 |
844,937 | 7.20 | 14.60 | 541,820 | 14.60 | ||||||||||||||||
14.95
19.31 |
99,731 | 6.74 | 17.67 | 77,002 | 17.60 | ||||||||||||||||
21.47
28.00 |
92,500 | 6.47 | 25.61 | 80,250 | 25.53 | ||||||||||||||||
29.00
29.00 |
219,766 | 6.38 | 29.00 | 188,513 | 29.00 | ||||||||||||||||
31.00
38.19 |
466,250 | 6.45 | 37.43 | 398,434 | .3739 | ||||||||||||||||
38.88
56.00 |
56,000 | 6.47 | 44.33 | 53,343 | 44.29 | ||||||||||||||||
4,362,442 | 6.60 | $ | 12.62 | 2,787,690 | $ | 14.28 |
60
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
8. Employee Profit Sharing/401(k) Plan
9. Collaboration Agreement
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
10. Commitments
Operating Lease |
||||||
---|---|---|---|---|---|---|
Year ending
December 31: |
||||||
2004 |
$ | 2,503 | ||||
2005 |
2,586 | |||||
2006 |
2,654 | |||||
2007 |
2,544 | |||||
2008 |
2,007 | |||||
Thereafter |
2,751 | |||||
Total
non-cancelable lease payments |
$ | 15,045 |
61
11. Income Taxes
December 31, 2003 |
December 31, 2002 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Net operating
loss carryforward |
$ | 44,000 | $ | 36,700 | ||||||
Research and
development credit carryforwards |
6,900 | 5,300 | ||||||||
Capitalized
research and development |
6,300 | 5,200 | ||||||||
Capitalized
patents |
1,000 | 1,300 | ||||||||
Other |
1,400 | 600 | ||||||||
Gross deferred
tax assets |
59,600 | 49,100 | ||||||||
Unrealized gain
on investment |
(100 | ) | (600 | ) | ||||||
Valuation
allowance |
(59,500 | ) | (48,500 | ) | ||||||
Net deferred tax
assets |
$ | | $ | |
62
AVIGEN, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
12. Condensed Quarterly Financial Information (Unaudited)
Year ended December 31, 2003 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(amounts in thousands except per share data) |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||||
Total
revenue |
$ | 30 | $ | 128 | $ | 140 | $ | 165 | |||||||||||
Net
loss |
(5,977 | ) | (6,058 | ) | (6,909 | ) | (6,830 | ) | |||||||||||
Net loss per
share, basic and diluted |
(0.30 | ) | (0.30 | ) | (0.34 | ) | (0.34 | ) |
Year ended December 31, 2002 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(amounts in thousands except per share data) |
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||||
Total
revenue |
$ | | $ | 16 | $ | 13 | $ | 28 | |||||||||||
Net
loss |
(6,947 | ) | (7,164 | ) | (7,110 | ) | (6,518 | ) | |||||||||||
Net loss per
share, basic and diluted |
(0.35 | ) | (0.36 | ) | (0.35 | ) | (0.32 | ) |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
63
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accountant Fees and Services
64
Young LLP in connection with preparing and giving consents required to be given in connection with our filings with the Securities and Exchange Commission; and (4) advice in preparing for the internal control documentation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) |
The following documents are filed as part of this Annual Report on Form 10-K: |
(1) |
Financial Statements: |
Report of Ernst & Young LLP, Independent Auditors Balance Sheets Statements of Operations Statements of Stockholders Equity Statements of Cash Flows Notes to Financial Statements |
(2) |
Financial Statement Schedules |
65
(3) | Exhibits |
Exhibit Number |
Exhibits |
|||||
---|---|---|---|---|---|---|
3.1(1) |
Amended and Restated Certificate of Incorporation |
|||||
3.1.1(13) |
Certificate of Amendment to Certificate of Incorporation |
|||||
3.2
(1) |
Restated Bylaws of the Registrant |
|||||
4.1(1) |
Specimen Common Stock Certificate |
|||||
10.1(2, 7) |
Nonstatutory Stock Option Outside of Plans to Philip J. Whitcome. |
|||||
10.2(1,2) |
1993
Stock Option Plan |
|||||
10.3
(2 ,17) |
1996
Equity Incentive Plan, as amended |
|||||
10.4(1, 2) |
Form
of Incentive Stock Option Grant for 1996 Equity Incentive Plan |
|||||
10.5(1, 2) |
Form
of Nonstatutory Stock Option Grant for 1996 Equity Incentive Plan |
|||||
10.6(2, 14) |
1996
Non-Employee Directors Stock Option Plan, as amended |
|||||
10.7(2, 4) |
1997
Employee Stock Purchase Plan |
|||||
10.8(1, 2) |
Form
of Indemnification Agreement between Avigen and its directors and executive officers. |
|||||
10.9(1) |
Form
of Common Stock Warrant |
|||||
10.10(2, 5) |
2000
Equity Incentive Plan |
|||||
10.11(2, 12) |
Form
of Nonstatutory Stock Option Grant for 2000 Equity Incentive Plan |
|||||
10.12(1) |
Form
of Series C Preferred Stock Warrant |
|||||
10.13(3) |
Form
of Common Stock and Warrant Purchase Agreement, dated October 29, 1999 |
|||||
10.14(2, 15) |
Form
of Incentive Stock Option Grant for 1993 Stock Option Plan |
|||||
10.15(2, 15) |
Form
of Nonstatutory Stock Option Grant for 1993 Stock Option Plan |
|||||
10.27(1, 2) |
Employment Agreement dated August 10, 1992, between Avigen and John Monahan. |
|||||
10.29(2, 6) |
Employment Agreement dated August 14, 1996, between Avigen and Thomas J. Paulson. |
|||||
10.32(15) |
Revolving line of credit note signed November 2, 2000 with Wells Fargo Bank. |
|||||
10.33(15) |
Letter Agreement to the revolving line of credit note signed November 2, 2000 with Wells Fargo Bank. |
|||||
10.36(2, 8) |
Management Transition Plan |
|||||
10.37(15) |
Form
of Common Stock Warrant Issued in February 1999 Private Placement. |
|||||
10.38(4, 11) |
Factor IX patent and know-how exclusive license agreement between The Childrens Hospital of Philadelphia and Avigen, dated May 20,
1999. |
|||||
10.39(9, 11) |
License Agreement between Avigen and the University of Florida Research Foundation, Inc., dated November 13, 1992, and its First Amendment,
dated March 25, 1996. |
|||||
10.40(10, 11) |
License Agreement, dated March 3, 2000, by and between BTG International Ltd., a British corporation and Avigen |
|||||
10.41(10) |
Property Lease Agreement between ARE-1201 Harbor Bay, LLC and Avigen, dated February 29, 2000 |
|||||
10.43(11, 13) |
Agreement between Bayer Corporation and Avigen, dated November 17, 2000 |
66
Exhibit Number |
Exhibits | |||||
---|---|---|---|---|---|---|
10.44(13) |
Subscription and Registration Rights Agreement by and between Bayer AG and Avigen, Inc., dated November 17, 2000. |
|||||
10.45(13) |
Office Lease Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated November 2, 2000. |
|||||
10.46(13) |
First
Amendment to Lease Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated December 1, 2000. |
|||||
10.47(13) |
Second Amendment to Lease Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated February 12, 2001. |
|||||
10.48(15) |
Amendment to Agreement between Bayer Corporation and Avigen, dated June 30, 2001. |
|||||
10.49(16) |
Revolving line of credit note with Wells Fargo Bank, dated June 1, 2002. |
|||||
10.50(16) |
Letter of Agreement to the revolving line of credit note signed June 1, 2002 with Wells Fargo Bank. |
|||||
10.51(18) |
License Agreement, dated November 21, 2003, by and between University of Colorado and Avigen |
|||||
23.1 |
Consent of Ernst & Young LLP, Independent Auditors |
|||||
24.1 |
Power
of Attorney (included on the signature pages hereto) |
|||||
31.1 |
Certification required by Rule 13a-14(a) or Rule 15d-14(a) |
|||||
31.2 |
Certification required by Rule 13a-14(a) or Rule 15d-14(a) |
|||||
32.1(19) |
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.
§1350) |
Keys to Exhibits:
(1) | Filed as an exhibit to the Registrants Registration Statement on Form S-1 (No. 333-03220) and incorporated herein by reference. |
(2) | Management Contract or Compensation Plan. |
(3) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, as filed with the SEC. |
(4) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 1999, as filed with the SEC. |
(5) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-42210) filed with the SEC on July 25, 2000. |
(6) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 1997, as filed with the SEC. |
(7) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-12087) filed with the SEC on September 16, 1996. |
(8) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, as filed with the SEC. |
(9) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K/A for the year ended June 30, 1999, as filed with the SEC. |
(10) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, as filed with the SEC. |
(11) | Portions of this exhibit have been omitted pursuant to a grant of confidential treatment. |
67
(12) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 2000, as filed with the SEC on September 27, 2000. |
(13) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended December 31, 2000, as filed with the SEC. |
(14) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-56274) filed with the SEC on February 27, 2001. |
(15) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 2001, as filed with the SEC on September 27, 2001. |
(16) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, as filed with the SEC. |
(17) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-90504) filed with the SEC on June 14, 2002. |
(18) | Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. |
(19) | This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Avigen under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. |
(b) |
Reports on Form 8-K |
(c) |
Exhibits |
(d) |
Financial Statement Schedules |
68
SIGNATURES
AVIGEN,
INC. |
||
By: | /s/
KENNETH G. CHAHINE
Kenneth G. Chahine, Ph.D. President and Chief Executive Officer |
Dated: March 9, 2003
POWER OF ATTORNEY
Signature
|
Title
|
Date
|
||||||
---|---|---|---|---|---|---|---|---|
/s/
Kenneth G. Chahine Kenneth G. Chahine, Ph.D. |
President, Chief Executive Officer and Director (Principal Executive Officer) |
March
9, 2004 |
||||||
/s/
Thomas J. Paulson Thomas J. Paulson |
Chief Financial Officer (Principal Financial and Accounting Officer) |
March
9, 2004 |
||||||
/s/
Philip J. Whitcome Philip J. Whitcome, Ph.D. |
Chairman of the Board |
March
9, 2004 |
||||||
/s/
Zola Horovitz Zola Horovitz, Ph.D. |
Director |
March
9, 2004 |
||||||
/s/
Yuichi Iwaki Yuichi Iwaki, M.D., Ph.D. |
Director |
March
9, 2004 |
||||||
/s/
John K.A. Prendergast John K.A. Prendergast, Ph.D. |
Director |
March
9, 2004 |
||||||
/s/
Daniel Vapnek Daniel Vapnek, Ph.D. |
Director |
March
9, 2004 |
69
EXHIBIT INDEX
Exhibit Number |
Exhibits |
|||||
---|---|---|---|---|---|---|
3.1(1) |
Amended and Restated Certificate of Incorporation |
|||||
3.1.1(13) |
Certificate of Amendment to Certificate of Incorporation |
|||||
3.2
(1) |
Restated Bylaws of the Registrant |
|||||
4.1(1) |
Specimen Common Stock Certificate |
|||||
10.1(2, 7) |
Nonstatutory Stock Option Outside of Plans to Philip J. Whitcome. |
|||||
10.2(1, 2) |
1993
Stock Option Plan |
|||||
10.3
(2, 17) |
1996
Equity Incentive Plan, as amended |
|||||
10.4(1, 2) |
Form
of Incentive Stock Option Grant for 1996 Equity Incentive Plan |
|||||
10.5(1, 2) |
Form
of Nonstatutory Stock Option Grant for 1996 Equity Incentive Plan |
|||||
10.6(2, 14) |
1996
Non-Employee Directors Stock Option Plan, as amended |
|||||
10.7(2, 4) |
1997
Employee Stock Purchase Plan |
|||||
10.8(1, 2) |
Form
of Indemnification Agreement between Avigen and its directors and executive officers. |
|||||
10.9(1) |
Form
of Common Stock Warrant |
|||||
10.10(2, 5) |
2000
Equity Incentive Plan |
|||||
10.11(2, 12) |
Form
of Nonstatutory Stock Option Grant for 2000 Equity Incentive Plan |
|||||
10.12(1) |
Form
of Series C Preferred Stock Warrant |
|||||
10.13(3) |
Form
of Common Stock and Warrant Purchase Agreement, dated October 29, 1999 |
|||||
10.14(2, 15) |
Form
of Incentive Stock Option Grant for 1993 Stock Option Plan |
|||||
10.15(2, 15) |
Form
of Nonstatutory Stock Option Grant for 1993 Stock Option Plan |
|||||
10.27(1, 2) |
Employment Agreement dated August 10, 1992, between Avigen and John Monahan. |
|||||
10.29(2, 6) |
Employment Agreement dated August 14, 1996, between Avigen and Thomas J. Paulson. |
|||||
10.32(15) |
Revolving line of credit note signed November 2, 2000 with Wells Fargo Bank. |
|||||
10.33(15) |
Letter Agreement to the revolving line of credit note signed November 2, 2000 with Wells Fargo Bank. |
|||||
10.36(2, 8) |
Management Transition Plan |
|||||
10.37(15) |
Form
of Common Stock Warrant Issued in February 1999 Private Placement. |
|||||
10.38(4, 11) |
Factor IX patent and know-how exclusive license agreement between The Childrens Hospital of Philadelphia and Avigen, dated May 20,
1999. |
|||||
10.39(9, 11) |
License Agreement between Avigen and the University of Florida Research Foundation, Inc., dated November 13, 1992, and its First Amendment,
dated March 25, 1996. |
|||||
10.40(10, 11) |
License Agreement, dated March 3, 2000, by and between BTG International Ltd., a British corporation and Avigen |
|||||
10.41(10) |
Property Lease Agreement between ARE-1201 Harbor Bay, LLC and Avigen, dated February 29, 2000 |
|||||
10.43(11, 13) |
Agreement between Bayer Corporation and Avigen, dated November 17, 2000 |
70
Exhibit Number |
Exhibits | |||||
---|---|---|---|---|---|---|
10.44(13) |
Subscription and Registration Rights Agreement by and between Bayer AG and Avigen, Inc., dated November 17, 2000. |
|||||
10.45(13) |
Office Lease Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated November 2, 2000. |
|||||
10.46(13) |
First
Amendment to Lease Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated December 1, 2000. |
|||||
10.47(13) |
Second Amendment to Lease Agreement between Lincoln-RECP Empire OPCO, LLC and Avigen, Inc., dated February 12, 2001. |
|||||
10.48(15) |
Amendment to Agreement between Bayer Corporation and Avigen, dated June 30, 2001. |
|||||
10.49(16) |
Revolving line of credit note with Wells Fargo Bank, dated June 1, 2002. |
|||||
10.50(16) |
Letter of Agreement to the revolving line of credit note signed June 1, 2002 with Wells Fargo Bank. |
|||||
10.51(18) |
License Agreement, dated November 21, 2003, by and between University of Colorado and Avigen |
|||||
23.1 |
Consent of Ernst & Young LLP, Independent Auditors |
|||||
24.1 |
Power
of Attorney (included on the signature pages hereto) |
|||||
31.1 |
Certification required by Rule 13a-14(a) or Rule 15d-14(a) |
|||||
31.2 |
Certification required by Rule 13a-14(a) or Rule 15d-14(a) |
|||||
32.1(19) |
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.
§1350) |
Keys to Exhibits:
(1) | Filed as an exhibit to the Registrants Registration Statement on Form S-1 (No. 333-03220) and incorporated herein by reference. |
(2) | Management Contract or Compensation Plan. |
(3) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, as filed with the SEC. |
(4) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 1999, as filed with the SEC. |
(5) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-42210) filed with the SEC on July 25, 2000. |
(6) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 1997, as filed with the SEC. |
(7) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-12087) filed with the SEC on September 16, 1996. |
(8) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, as filed with the SEC. |
(9) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K/A for the year ended June 30, 1999, as filed with the SEC. |
(10) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, as filed with the SEC. |
(11) | Portions of this exhibit have been omitted pursuant to a grant of confidential treatment. |
71
(12) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 2000, as filed with the SEC on September 27, 2000. |
(13) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended December 31, 2000, as filed with the SEC. |
(14) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-56274) filed with the SEC on February 27, 2001. |
(15) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Annual Report on Form 10-K for the year ended June 30, 2001, as filed with the SEC on September 27, 2001. |
(16) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Quarterly Report on Form 10-Q for the quarter ended June 30, 2002, as filed with the SEC. |
(17) | Incorporated by reference from such document filed with the SEC as an exhibit to Avigens Registration Statement on Form S-8 (Registration No. 333-90504) filed with the SEC on June 14, 2002. |
(18) | Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. |
(19) | This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Avigen under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. |
72
EXHIBIT 10.51
This Agreement is made and entered into by and between THE REGENTS OF THE UNIVERSITY OF COLORADO, a body corporate, having its principal office at 201 Regent Hall, Regent Drive, Boulder, CO 80309 (hereinafter "University") and AVIGEN, INC., a Delaware corporation having its principal office at 1301 Harbor Bay Parkway, Alameda, CA 94502 (hereinafter "Licensee").
WHEREAS, University is the owner of certain Patent Rights (as later defined herein) relating to [ * ], identified as University Case # CU 1068B, developed by Professor Linda Watkins, and has the right to grant licenses under said Patent Rights, and;
WHEREAS, Licensee is interested in licensing and further developing the Patent Rights for commercial applications, and;
WHEREAS, University desires to have the Patent Rights developed and commercialized to benefit the public and is willing to grant a license hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:
For the purposes of this Agreement, the following words and phrases shall have the following meanings:
1.01 | Affiliate of a party shall mean any entity that is directly or indirectly controlling, controlled by or under common control with that party. Control for these purposes means the direct or indirect ownership of more than fifty percent (50%) of the capital stock of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, interests entitled to vote in the election of the corresponding managing authority); or actual, present capacity to elect a majority of the directors or other managing authority of such entity |
1 of 21
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.02 | Effective Date shall mean the date of the last signature on this Agreement. |
1.03 | Fields of Use shall mean the fields of use identified in Appendix B. |
1.04 | Licensed Process(es) shall mean any process, art, or method that is covered in whole or in part by an issued, unexpired claim or a pending claim that has been pending for no more than six (6) years contained in the Patent Rights. |
1.05 | Licensed Product(s) shall mean any: |
(a) | product or part thereof that is covered in whole or in part by an issued, unexpired claim or a pending claim that has been pending for no more than six (6) years contained in the Patent Rights; or |
(b) | product, chemical composition, apparatus, or part thereof that is manufactured using a Licensed Process(es) or is employed to practice a Licensed Process(es); or |
(c) | product produced or manufactured through the use of any Licensed Product defined in §1.05(a) or §1.05(b). |
1.06 | Net Sales shall mean the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee or its sublicensees to a third party in an arms-length transaction, and from leasing, renting, or otherwise making Licensed Products available to a third party in an arms-length transaction, whether invoiced or not, less returns and allowances, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced and paid), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted. No deductions shall be made for commissions, or for the costs of collections. Net sales shall also include the fair market value of any non-cash consideration received by Licensee or sublicensees for the sale, lease, or transfer of Licensed Products or Licensed Processes. In no case shall Licensed Products transferred to third parties for use in clinical trials or provided free of charge small quantities for compassionate use or other charitable purposes be deemed to be Net Sales. Transfers of Licensed Products between Licensee and its Affiliates and sublicensees shall not be treated as sales for purposes of calculating Net Sales, provided that such Affiliates and/or sublicensees are not the end-users of the Licensed Products. |
1.07 | Patent Rights shall mean all of the following University intellectual property: |
(a) | the United States and foreign patents and/or patent applications and/or provisional patent applications listed in Appendix A; and |
(b) | United States and foreign patents issued from the applications listed in Appendix A and from divisionals and continuations of these applications; and |
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(c) | claims of United States and foreign continuation-in-part applications, and of the resulting patents, which are directed to subject matter specifically described in the United States and foreign applications listed in Appendix A; and |
(d) | any reissues or reexaminations of United States and foreign patents described in (a), (b) or (c) above. |
1.08 | Royalty shall mean any consideration paid by Licensee to University pursuant to this Agreement. |
1.09 | Territory shall mean the geographical area identified in Appendix B. |
ARTICLE 2. GRANT OF RIGHTS AND ACCEPTANCE
2.01 | University hereby grants and Licensee accepts, during the term and subject to the terms and conditions of this Agreement, and further subject to any rights of the United States government, an exclusive license to all Universitys Patent Rights in the Territory, including the right to make, have made, use, sell, offer to sell, have sold, import, or distribute any Licensed Products in the Fields of Use and to practice any Licensed Processes in the Fields of Use. |
2.02 | This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of University other than licensed Patent Rights regardless of whether such patents are dominant or subordinate to licensed Patent Rights. |
2.03 | This Agreement shall be subject to the mandatory public laws in any country where this Agreement will produce an effect. |
3.01 | Upon prior notice to University, Licensee may sublicense to one or more third parties the rights granted in Article 2 subject to the following limitations: |
(a) | Licensee agrees that any sublicenses granted by it shall impose restrictions and conditions upon sublicensees that are consistent with those imposed upon Licensee; and |
(b) | Licensee agrees that, in the event this Agreement is terminated for any reason, any sublicenses granted, in Universitys sole discretion, shall be directly enforceable by University; and |
(c) | Licensee agrees that any sublicenses granted shall contain terms to protect Universitys security and property interest in Universitys Patent Rights to at least the extent that such interest is protected in this Agreement. |
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3.02 | Any payments made by Licensee to University based on revenues from sublicenses granted by Licensee shall be in the form of cash consideration unless University has expressly consented otherwise in writing in advance. |
3.03 | Licensee agrees to forward to University a copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of such agreement, provided however, that Licensee may redact confidential information which is not relevant to Licensees obligations to University under this agreement. |
ARTICLE 4. GOVERNMENT AND UNIVERSITY RIGHTS
4.01 | Notwithstanding any use of descriptive terms within this Agreement such as exclusive, this Agreement is subject to all of the terms and conditions of Title 35 U.S.C. §§ 200 et al (Bayh-Dole Act) and 37 C.F.R. 401, as such may be amended. Further, Licensee agrees to take all reasonable action necessary to enable University to satisfy its obligations hereunder upon receipt of written request for such action by University. |
4.02 | University shall have the transferable right to practice the Patent Rights for nonprofit research and education purposes, but excluding all human clinical trials. |
4.03 | University shall have the right to publish any information included in the Patent Rights and the know-how provided that University takes reasonable steps to avoid the loss of any patent rights as a result of University exercising its rights under this § 4.03. Such reasonable steps shall include notifying Licensee thirty (30) days in advance of any planned publication reasonably related to Patent Rights, so that Licensee may take steps to protect Patent Rights. |
As consideration for the disclosure of Universitys know-how as well as the licenses and rights under Universitys Patent Rights,
5.01 | Licensee agrees to pay a non-creditable, nonrefundable license issue royalty as set forth in Appendix C within thirty (30) days from the Effective Date of this Agreement; and |
5.02 | Licensee agrees to pay University earned royalties as set forth in Appendix C; and |
5.03 | Licensee agrees to pay University milestone royalties as set forth in Appendix C; and |
5.04 | Licensee agrees to pay University sublicensing royalties as set forth in Appendix C. |
5.05 | No multiple royalties shall be payable in the event that any Licensed Products or Licensed Processes are covered by more than one of the Patent Rights. |
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5.06 | Unless otherwise provided herein, all payments required under this Agreement shall be due within thirty (30) days of written notice from University. Payments past due shall bear interest at the rate of one and one-half percent (1 1/2%) per month compounded, or the maximum interest rate allowed by applicable law, whichever is less. |
6.01 | On or before the sixtieth (60th) day following the end of each calendar quarter during the term of this Agreement following the first commercial sale of a Licensed Product, Licensee shall provide to University written accounts for each calendar quarter of the Net Sales of Licensed Products and/or Licensed Processes subject to royalty hereunder made during the prior three (3) month period and shall simultaneously pay to University the royalties due on such Net Sales, if any, in United States Dollars. Notwithstanding the foregoing, reports shall be due semi-annually until sales of Licensed Products or Licensed Processes commence. The written report shall discuss the progress and results, as well as ongoing plans, with respect to the Licensed Products and/or Licensed Processes. University shall have the right to request one meeting per year to discuss such information. Net Sales shall be reported in the format of Appendix D. |
6.02 | Licensee shall keep accurate records in sufficient detail to reflect its operations under this Agreement and to enable the royalties accrued and payable under this Agreement to be determined. Such records shall be retained for at least three (3) years after the close of the period to which they pertain, or for such longer time as may be required to finally resolve any question or discrepancy raised by University provided that such University has provided notice of such question or discrepancy in writing prior to the end of the three year retention period. |
6.03 | Upon the request of University, with reasonable notice, but not more frequently than once a year, Licensee shall permit an independent public accountant selected and paid by University to have access during regular business hours to such records as may be necessary to verify the accuracy of royalty payments made or payable hereunder. Said accountant shall disclose information acquired to University only to the extent that it should properly have been contained in the royalty reports required under this Agreement. If an inspection shows an underreporting or underpayment in excess of [ * ] percent ([ * ]%) for any [ * ] period, then Licensee shall reimburse University for the cost of the inspection and pay the amount of the underpayment including any interest as required by this Agreement. |
6.04 | Licensee acknowledges that University is subject to the Colorado Public Records Act (C.R.S. §§ 24-72-201 et seq.). All plans and reports marked Confidential shall be treated by University as confidential to the extent permitted under §§ 24-72-204. |
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6.05 | Each Party shall vigilantly protect the confidential information of the other party according to any and all mutual nondisclosure agreement between Avigen and the Reagents of the University of Colorado. |
7.01 | Licensee shall use commercially reasonable efforts to bring Licensed Products and Licensed Processes to market through a [ * ] program for exploitation of the Patent Rights, to develop manufacturing capabilities, to continue [ * ] marketing efforts, and to satisfy the needs of such market with the Licensed Products and Licensed Processes throughout the life of this Agreement through its internal efforts and/or through sublicensing or other contractual arrangement. Licensee acknowledges and agrees to the performance milestones defined in Appendix E provided however that specific dates for such milestones may be adjusted if required due to developments including scientific and regulatory developments beyond the reasonable control of Licensee. No changes to the dates of such milestones will be made without the consent, which will not be unreasonably denied, of University. |
7.02 | Licensee agrees to use commercially reasonable efforts to develop a [ * ] sublicensing program to effect commercialization of Licensed Products and Licensed Processes in any Field of Use or Territory that Licensee decides not to exploit for itself. |
7.03 | University may terminate this Agreement or convert this Agreement to a non-exclusive Agreement if Licensee fails to meet any of the due diligence or performance requirements of this Article 7, subject to the notification and time to cure provisions of section 10.03(c). |
8.01 | (a) | Licensee shall retain primary responsibility for all patent activities, including all costs, associated with the perfection and maintenance of Patent Rights originally transferred from University according to the Exclusive Option Agreement between the parties and including ongoing disclosures of data and know-how during the period through filing of the utility application(s). Licensees patent counsel shall keep University advised as to the status of the Patent Rights by providing University, in a timely manner prior to their due date, with copies of all official documents and correspondence relating to the prosecution, maintenance, and validity of the Patent Rights. Licensee shall consult with University in such prosecution and maintenance, and University shall reasonably assist Licensee in every proper way to obtain United States and foreign patents, in any and all countries. To that end University shall execute, verify and deliver such documents and perform such other acts as Licensee may reasonably request for use in applying for, obtaining, and sustaining such patents. Licensee shall diligently seek Universitys advice on all matters pertaining to the Patent Rights, shall diligently seek strong and broad claims under the Patent Rights, and shall not finally abandon prosecution of any patent application without first notifying University sixty (60) days prior to any bar date, of Licensees intention and reason therefore, and providing University with reasonable opportunity to assume responsibility for prosecution, maintenance and associated costs of such patents and patent applications. If University pursues such patent protection, then from that time forward all such subject patent applications and any patents arising there from shall no longer be considered Patent Rights under this Agreement and Licensee shall forfeit all rights under this Agreement to such patent applications and any patents arising there from. |
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(b) | University acknowledges that claims may need to be modified during patent prosecution in order to obtain the most favorable overall patent protection. Whenever possible, Licensee shall notify University in advance of its intention to modify, delete, or abandon any claim of the Patent Rights and shall seek Universitys input into such decision. Licensees obligations under this § 8.01 shall include, without limitation, an obligation to inform University in a timely manner that Licensee will not pursue patents in any foreign countries where patent protection may be available, in order that University may prosecute patents in such countries if University so desires. If University pursues such foreign patent protection, then from that time forward all such subject patent applications and any patents arising there from in such countries shall no longer be considered Patent Rights under this Agreement and Licensee shall forfeit all rights under this Agreement to such patent applications and any patents arising there from in such countries. University shall be responsible for all costs associated with those patent applications and patents it decides to pursue and maintain. |
8.02 | If Licensee breaches any of its obligations in section 8.01 above, [ * ]. |
8.03 | University and Licensee agree to inform the other party promptly in writing of any suspected infringement of the Patent Rights by a third party. Licensee shall have, for a period of one year from the date of any notice of infringement of the Patent Rights, the first right to institute suit against such third party. During that period Licensee shall also have the right to pursue alternate remedies such as sublicensing. If Licensee institutes such a suit, it shall bear all costs of the litigation and shall be entitled to retain the entire amount of any recovery or settlement less earned royalties due to University, provided however that Licensee may name University as a party plaintiff at Licensees expense if required to maintain the suit. Thereafter, University and Licensee shall each have the right to institute an action for infringement of the Patent Rights against such third party in accordance with the following: |
(a) | If both University and Licensee agree to institute suit jointly, the suit shall be brought in both their names, and the out-of-pocket costs thereof shall be borne equally. Any recovery that is designated as lost profit shall be divided between the parties [ * ]. Any additional recovery or settlement shall be [ * ]. University and Licensee shall agree to the manner in which they shall exercise control over such suit. Each party, at its option, may be represented by separate counsel of its own selection, the fees for which shall be paid for by the respective parties. |
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(b) | In the absence of an agreement to institute a suit jointly, University may, but is not obligated to, institute suit, and at its option, join Licensee as a plaintiff. If University decides to institute suit, it shall notify Licensee in writing. Licensees failure to notify University in writing within thirty (30) days after the date of receipt of Universitys notice, that it will join in enforcing the Patent Rights pursuant to the terms hereof, shall be deemed a waiver of such rights. [ * ] |
(c) | In the absence of an agreement to institute a suit jointly, and if University does not notify Licensee of its intent to pursue legal action within ninety (90) days, as provided in (b) above, Licensee may institute suit and name University as a party plaintiff if required to maintain the suit. [ * ] |
(d) | If Licensee undertakes to defend the Patent Rights by litigation, Licensee may defer from its royalty payments to University with respect to the Patent Rights subject to suit an amount not exceeding [ * ] percent ([ * ]%) of Licensees expenses and costs of such action, including reasonable attorneys fees, provided however, that such deferral shall not exceed [ * ] percent ([ * ]%) of the total royalty due to University for each [ * ], and that such deferred payments shall be delivered to University upon settlement of the litigation. |
8.04 | In the event that a declaratory judgment action alleging invalidity or non-infringement of any of the Patent Rights shall be brought against Licensee or raised by way of counterclaim or affirmative defense in an infringement suit brought by Licensee under § 8.03, pursuant to this Agreement and the provisions of Chapter 29 of Title 35, U.S. Code or other statutes, Licensee may: |
(a) | defend the suit in its own name, at its own expense, and on its own behalf for presumably valid claims in the Patent Rights, in any such suit, ultimately to enjoin infringement and to collect for its use, damages, profits, and awards of whatever nature recoverable for such infringement consistent with § 8.03; and |
(b) | settle any claim or suit for declaratory judgment involving the Patent Rights, except that Licensee shall have no right to deny the validity of any patent, patent claim, or patent application included in the Patent Rights in any compromise or settlement of any claim or suit for declaratory judgment without the express prior written consent of University; provided however, that University shall have a continuing right to intervene in such actions described in (a) and (b). Licensee shall take no action to compel University either to initiate or to join in any such declaratory judgment action. If Licensee elects not to defend against such declaratory judgment action, University, at its option, may do so at its own expense and shall be entitled to retain the entire amount of any recovery or settlement. |
8.05 | In all cases, Licensee agrees to keep University reasonably apprised of the status and progress of any litigation. |
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ARTICLE 9. WARRANTIES, INDEMNIFICATIONS AND INSURANCE
9.01 | UNIVERSITY MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND ASSUMES NO RESPONSIBILITIES WHATSOEVER WITH RESPECT TO USE, SALE, OR OTHER DISPOSITION BY LICENSEE, SUBLICENSEE(S), OR THEIR VENDEES OR OTHER TRANSFEREES OF LICENSED PRODUCTS OR LICENSED PROCESSES INCORPORATING OR MADE BY USE OF THE PATENT RIGHTS. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OR SALE OF SUCH PRODUCTS OR PROCESSES WILL NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK, SERVICE MARK, OR OTHER RIGHTS. |
9.02 | Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be construed as: |
(a) | A warranty or representation by University as to rights in know-how or the validity or scope of any of the Patent Rights; |
(b) | A warranty or representation that the Patent Rights or anything made, used, sold or otherwise disposed of under the License will or will not infringe patents, copyrights or other rights of third parties; or |
(c) | An obligation to furnish any know-how or technology not agreed to in this Agreement, to bring or prosecute actions or suits against third parties for infringement (except to the extent described in §8.05) or to provide any services other than those specified in this Agreement. |
9.03 | Licensee shall indemnify, defend, and hold harmless University, its regents, employees, students, officers, agents, affiliates, and representatives from and against all liability, demands, damages, losses, and expenses (including attorney fees), for death, personal injury, illness, property damage, noncompliance with applicable laws and any other claim, proceeding, demand, expense and liability of any kind whatsoever in connection with or arising out of: |
(a) | the use by or on behalf of Licensee, its sublicensees, affiliates, directors, officers, employees, or third parties of any Patent Rights; or |
(b) | the design, manufacture, production, distribution, advertisement, consumption, sale, lease, sublicense or use of any Licensed Product(s), Licensed Process(es) or materials by Licensee, or other products or processes developed in connection with or arising out of the Patent Rights; or |
(c) | any right or obligation of Licensee under this Agreement, provided however that no part of this section 9.03 shall remain in effect in the case of negligence or willful |
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misconduct on the part of University, its regents, employees, students, officers, agents, affiliates, or representatives. |
9.04 | Within (30) thirty days of the Effective Date, Licensee shall provide to University certificates of insurance for comprehensive general liability insurance, including products liability insurance, from companies reasonably acceptable to University, which companies shall include St. Paul Fire & Marine Insurance Co. and General Star Indemnity Co. The certificates shall specify that This coverage is primary to other coverage in the event of a covered loss, and that University and its regents, trustees, directors, officers, employees, students, and agents are additional insureds. In addition, the certificates must evidence that the policy carries a minimum limit of one million dollars ($1,000,000) per specific occurrence and a minimum limit of five million dollars ($5,000,000) for aggregate liability insurance; provided, however, that not less than thirty (30) days before the earlier date upon which Licensee or its affiliates (i) initiates testing of Licensed Products or Licensed Processes in a clinical trial involving human subjects for purposes of diagnosis or treatment, or (ii) makes a First Commercial Sale of any Licensed Product or Licensed Processes, such coverage shall be increased to a minimum limit of five million dollars ($5,000,000) per specific occurrence and a minimum limit of ten million dollars ($10,000,000) for aggregate liability insurance. |
10.01 | The term of the License shall extend to the date of expiration of the last to expire of anypatents embodying the Licensed Products or Licensed Processes, including any renewals or extensions thereof or until such time any patents embodying the Licensed Products or Licensed Processes are held invalid or unenforceable by a court of competent jurisdiction. The obligation to pay the royalty set forth under Article 5 with respect to each Licensed Product or Licensed Process shall expire when the Licensed Product or Licensed Process patent expires on a country by country basis. |
10.02 | Licensee may terminate this Agreement at any time on sixty (60) days written notice to University if Licensee: |
(a) | pays all amounts due, including pro-rata minimum annual royalties, as well as all non-cancelable costs to University through the termination date; |
(b) | submits a final report of the type described in Article 6; |
(c) | returns any confidential materials provided to Licensee by University in connection with this Agreement; and |
(d) | suspends its use and sales of the Licensed Product(s) and Licensed Process(es); provided however, that subject to making the payments required by Article 5 and the reports required by Article 6, Licensee may, for a period of ninety (90) days after |
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the effective date of such termination, sell all Licensed Products which may be in inventory. |
10.03 | University may terminate this Agreement in the event that: |
(a) | Licensee fails to pay University any amounts when due to University hereunder and Licensee fails to make such payment within thirty (30) days of receipt of written notice of such failure; or |
(b) | Licensee becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a third partys intention to file an involuntary petition in bankruptcy; or |
(c) | Licensee is in material breach or default of this Agreement other than those occurrences listed in § 10.03 (a) or (b) and Licensee fails to cure the breach or default or to provide a mutually acceptable plan to cure the breach or default within sixty (60) days of receipt of written notice of the breach or default. Licensees ability to cure such breach shall be limited to the first two breaches properly noticed under the terms of this Agreement, regardless of the nature of those breaches. Any subsequent breach shall entitle University to terminate this Agreement immediately. |
11.01 | This Agreement shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. However, Licensee may not assign its rights in this Agreement without prior written approval by University, such approval not to be unreasonably withheld or delayed. |
11.02 | This section intentionally omitted. |
11.03 | Notice hereunder shall be deemed effective when given by registered mail or overnight carrier such as Federal Express, postage prepaid, and addressed to the party to receive such notice at the address given below, or such other address as may hereafter be designated by notice in writing. |
University: |
Licensee: | ||
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Technology Transfer Office | VP Business Development | ||
University of Colorado, 588 SYS | Avigen, Inc. | ||
Suite 390, 4001 Discovery Drive | 1301 Harbor Bay Pkwy | ||
Boulder, CO 80309-0588 | Alameda, CA 94502 | ||
License Administrator, Case # CU1068B |
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Electronic funds
transfer can be made to: Bank name: [ * ] ABA/Routing #: [ * ] (Domestic wires only) International bank code/SwiftID: [ * ] (Foreign wires only) Payee/beneficiary: CU Technology Transfer Account number: [ * ] Attention: License Administrator, [ * ] Please include sufficient information to identify payment. Licensee is responsible for electronic transfer expenses. |
11.04 | Licensee agrees not to identify University in any promotional advertising, press releases, sales literature or other promotional materials to be disseminated to the public or any portion thereof without Universitys prior written consent in each case, except that Licensee may state that it has a license for the Patent Rights from University. Licensee further agrees not to use the name of University or any University faculty member, inventor, employee or student or any trademark, service mark, trade name, copyright or symbol of University, without the prior written consent of the University, entity or person whose name is sought to be used. |
11.05 | Licensee agrees to: |
(a) | cause Licensed Products or the product of Licensed Processes sold under this license to be marked with the notice of the patent numbers or patent pending, as may be appropriate; |
(b) | comply with all laws and regulations of the United States and any other country as appropriate concerning or controlling the import or export of the Licensed Products, data, software, laboratory prototypes or other commodities under this Agreement. University makes no representation that a license or consent for export will not be required by applicable governmental agencies, or if required, that it will be issued; and |
(c) | comply with all applicable statutes, regulations, and guidelines, including applicable governmental regulations, policies and guidelines in its use of any University supplied materials (Materials). Licensee agrees not to use the Materials for research involving human subjects or clinical trials in the United States without complying with 21 C.F.R. Part 50 and 45 C.F.R. Part 46 (as those regulations may be amended from time to time). Licensee agrees not to use the Materials for research involving human subjects or clinical trials outside of the United States without notifying University in writing, of such research or trials and complying with the applicable regulations of the appropriate national control authorities. Written notification to University of research involving human subjects or clinical |
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trials outside of the United States shall be given no later than sixty (60) days prior to commencement of such research or trials. |
11.06 | In the event of any dispute arising out of or relating to this Agreement, the affected party shall promptly notify the other party (Notice Date), the parties shall attempt in good faith to resolve the matter. Any disputes not so resolved shall be referred to senior executives of the parties, who shall meet at a mutually acceptable time and location within thirty (30) days of the Notice Date and shall attempt to negotiate a settlement. Any obligation or action due under any section of this Agreement will be suspended during this period of good faith negotiations. |
11.07 | The terms and provisions contained in this Agreement constitute the entire Agreement between the parties and shall supersede all previous communications, representations, agreements or understandings, either oral or written, between the parties hereto with respect to the subject matter hereof, provided, however, that the mutual nondisclosure agreement between the parties dated January 6, 2003 shall remain in full force and effect. No agreement or understanding varying or extending this Agreement will be binding upon either party hereto, unless in writing which specifically refers to this Agreement, signed by duly authorized officers or representatives of the respective parties, and the provisions of this Agreement not specifically amended thereby shall remain in full force and effect according to their terms. |
11.08 | The provisions and clauses of this Agreement are severable, and in the event that any provision or clause is determined to be invalid or unenforceable under any controlling body of the law, such invalidity or unenforceability will not in any way affect the validity or enforceability of the remaining provisions and clauses hereof. |
11.09 | This Agreement does not establish a joint venture, agency or partnership between the parties, nor create an employer employee relationship. |
11.10 | The parties agree that nothing in this Agreement is intended or shall be construed as a waiver, either express or implied, of any of the immunities, rights, benefits, defenses or protections provided to University under governmental or sovereign immunity laws from time to time applicable to University, including, without limitation, the Colorado Governmental Immunity Act (C.R.S. §§ 24-10-101, et seq.) and the Eleventh Amendment to the United States Constitution. |
11.11 | If a partys performance required under this Agreement is rendered impossible or unfeasible due to any catastrophes or other major events beyond its reasonable control, including, without limitation, the following, the parties are excused from performance: war, riot, and insurrection; laws, proclamations, edicts, ordinances or regulations; strikes, lockouts or other serious labor disputes; and floods, fires, explosions, earthquakes or other natural disasters. When such events abate, the parties respective obligations under this Agreement shall resume. |
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11.12 | The provisions of Articles 1 and 8, and §§ 6.01, 6.02, 9.01-9.03, 11.02, 11.04, 11.06-11.08, and 11.10, and any other provision of this Agreement that by its nature is intended to survive, shall survive any termination or expiration of this Agreement. ***** |
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IN WITNESS WHEREOF the parties hereto have caused this Agreement, which is effective on the date of the last to sign below, to be executed in duplicate by their respective duly authorized officers.
University: |
Licensee:
|
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By: | /s/ David Allen | By: | /s/ Kenneth G. Chahine | |
Name: | David Allen | Name: | Kenneth G. Chahine | |
Title: | Assoc VP | Title: | Chief Operating Officer | |
Date: | 21 Nov 2003 | Date: | 21 Nov 2003 | |
Technology Transfer Office University of Colorado, 588 SYS Suite 390, 4001 Discovery Drive Boulder, CO 80309-0588 |
Avigen Inc. 1301 Harbor Bay Parkway Alameda, CA 94502 APPROVED Avigen, Inc. - Business Dvlp. Date: Nov 21, 2003 By: /s/ Amy Percy |
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[ * ]
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Fields of Use: ALL
Territory: WORLDWIDE
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In accordance with Articles 5 and 6, Licensee shall pay the following royalties to University:
License issue fee: [ * ] U.S. dollars ($[ * ]), plus a warrant for fifteen thousand (15,000) shares of Licensee common stock, $0.01 par value, with an exercise price of the closing price for such stock as of the close of market on the Effective Date of this Agreement. Such warrant shall be exercisable at any time on or after the first anniversary of the Effective Date and shall have an expiration date on the tenth anniversary of the Effective Date.
Earned royalty: Base rate of [ * ] percent ([ * ]%) of Net Sales, with adjustments upward for increasing sales and downward for third-party royalties according to the following [ * ]
Milestone royalties as follows:
[ * ]
Non-royalty sublicense payments:
In the event Licensee sublicenses Patent Rights to a third party under this agreement, Licensee shall pay University [ * ] percent ([ * ]%) of any cash receipts from sublicensee for any event for which a milestone royalty under this Appendix C is not already provided for in this Agreement. For the purposes of calculating amounts due to University under this Agreement, issuance of licensees stock for cash shall not be considered a cash receipt from sublicensee, provided however, that any premiums received on equity investments shall be considered to be cash receipts. Any payment reimbursing Licensee for work performed prior to the sublicense shall not be considered a milestone payment.
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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
ROYALTY REPORT
Licensee:
Inventor: Period Covered: From: / / Prepared By: Approved By: |
Case
No.: Patent No: Through: / / Date: Date: |
If
license covers several major product lines, please prepare a separate report
for each line. Then combine all product lines into a summary report.
Report Type: | ____
Single Product Line Report: ____ Multiproduct Summary Report. Page 1 of _____Pages ____ Product Line Detail. Line: __________ Trademark: __________ Pages: _____ |
Country | Gross Sales | *
Less: Allowances |
Net Sales |
Royalty Rate |
Period Royalty Amount | |
This Year | Last Year | |||||
U.S.A. | ||||||
Canada | ||||||
Europe | ||||||
Japan |
||||||
Other: | ||||||
TOTAL: |
Sublicense Fees this quarter: $________ (attach page showing names, addresses, and telephone numbers; and amount of fees received; territory; field of use)
Total Royalty: $ _____________
The following royalty forecast is non binding and for University internal planning purposes only:
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[ * ] = CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED
AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Royalty Forecast Under This Agreement:
Next Quarter:_________ Q2:__________ Q3: ________ Q4: _________
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Phase I initiation | [ * ] | ||
Phase III initiation | [ * ] | ||
BLA submission | [ * ] | ||
Market launch | [ * ] |
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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Palo Alto, California
March 11, 2004
Exhibit 31.1
CERTIFICATION
I, Kenneth G. Chahine, certify that:
1. |
I have reviewed this Annual Report on Form 10-K of Avigen, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 9, 2003
/s/ KENNETH G. CHAHINE
Kenneth G. Chahine
Chief Executive Officer and President
(Principal
Executive Officer)
Exhibit 31.2
CERTIFICATION
I, Thomas J. Paulson, certify that:
1. |
I have reviewed this Annual Report on Form 10-K of Avigen, Inc.; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) |
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) |
Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: March 9, 2003
/s/ THOMAS J. PAULSON
Thomas J. Paulson
Vice President, Finance,
Chief Financial and
Accounting Officer, and
Secretary
(Principal Financial Officer)
Exhibit 32.1
CERTIFICATION
1. |
The Companys Annual Report on Form 10-K for the period ended December 31, 2003, and to which this Certification is attached as Exhibit 32.1 (the Periodic Report) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and |
2. |
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ KENNETH G. CHAHINE Kenneth G. Chahine Chief Executive Officer /s/ THOMAS J. PAULSON Thomas J. Paulson Chief Financial Officer |