MediciNova to acquire Avigen for around $37 million

Biopharmaceutical firm MediciNova says it has entered into a definitive merger agreement pursuant to which the firm's wholly-owned subsidiary will merge with and into fellow USA-based Avigen. Completion of the transaction will permit the combination of the companies' broad neurological clinical development programs based on ibudilast (Avigen's AV-411 and MediciNova's MN-166).

Under the terms of the merger agreement, which has been approved by both companies' boards of directors, Avigen shareholders will have the right to elect to receive an amount currently estimated at approximately $1.24 per share in either cash or secured convertible notes to be issued by MediciNova, valuing the deal at around $37 million.

Approximately $1.19 of this consideration will be paid at the closing, and some $0.05 on June 30, 2010. As set forth in the merger agreement, both payments are subject to certain potential adjustments. The first payment is dependent on adjustment based on activities related to the liquidation or sale of certain assets of Avigen in connection with the winding down of its operations prior to closing. The second payment is subject to upward adjustment based on savings in estimated expenses through closing and receipt of certain payments post-closing as well as downward adjustment in the event that closing liabilities exceed estimated liabilities through closing.

MediciNova, which is currently testing eight compounds in ten different indications, also has a multiple sclerosis drug called MN-166 in its pipeline, expects the deal ' subject to shareholders's approval - to close in the fourth quarter.