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UPDATE 1-Avigen stops development of lead drug

Mon Dec 22, 2008 9:12am EST

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Dec 22 (Reuters) - Biopharmaceutical company Avigen Inc (AVGN.O) said it would stop all clinical trials of its experimental treatment for spasticity related to multiple sclerosis, which failed a mid-stage trial in October.

Avigen, which cut 70 percent of its workforce last month, also terminated all contracts with its partner Sanochemia Pharmazeutika AG (SCPH.DE) to avoid future financial obligations.

The company, which closed its non-core lab and animal facilities, will begin 2009 with more than $56 million of cash.

Avigen also said it established a shareholder rights plan, a provision that makes hostile takeovers difficult.

Shares of the company, which have lost about 85 percent of their value over the last three months, closed at 65 cents Friday on Nasdaq. (Reporting by Anand Basu in Bangalore; Editing by Pratish Narayanan)



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