* Offer of $1.24/shr in cash or secured convertible notes
* Price represents 7 pct discount to Avigen's Thurs close
* Sees deal closing in Q4
* Avigen shares fall 8 pct, MediciNova falls 4 pct
(Recasts; adds details, share movement)
Aug 21 Biopharmaceutical company MediciNova Inc
(MNOV.O) said it would buy embattled rival Avigen Inc AVGN.O,
whose lead drug failed in a mid-stage trial last year, in a
deal valued at about $37 million.
The offer of $1.24 a share, in either cash or secured
convertible notes, represents a 7 percent discount to Avigen's
Avigen shares hit a low of $1.23 before recouping some
losses to trade down 4 percent at $1.28 Friday morning on
Nasdaq, while MediciNova shares were trading down 4 percent at
According to the terms, about $1.19 of the consideration
will be paid to Avigen shareholders at the closing of the deal
and about 5 cents will be paid on June 30, 2010, subject to
The secured convertible notes will be convertible on the
final business day of each month into MediciNova common stock
at $6.80 per share.
In addition, Avigen stockholders will be entitled to one
contingent payment right that will give them the right to
receive certain other payments.
Avigen, which fell into tough times after its experimental
drug for the treatment of spasticity associated with multiple
sclerosis failed in a mid-stage trial last October, received an
offer from MediciNova in December and the two companies reached
an understanding in June on some key terms of the deal.
MediciNova, which is currently testing eight compounds in
ten different indications, also has a multiple sclerosis drug
called MN-166 in its pipeline.
The deal is expected to close in the fourth quarter,
pending stockholder approvals.
RBC Capital Markets is acting as a financial advisor to
Avigen, while Ladenburg Thalmann & Co is advising MediciNova,
the companies said in a statement.
(Reporting by Esha Dey in Bangalore; Editing by Anne