By Karen Pihl-Carey

Avigen Inc. filed to offer 4 million shares of its common stock in hopes of raising $292.7 million in gross proceeds to fund the company's research and development activities and clinical trials.

The public offering includes an overallotment option on an additional 600,000 shares that would raise the Alameda, Calif.-based company another $38.2 million.

Managing underwriters include Salomon Smith Barney Inc., CIBC World Markets Corp. and ING Barings LLC, all of New York.

Avigen's closing stock price (NASDAQ:AVGN) was $66.81 on Thursday, but the company said in its prospectus the offering price per share was expected at $63.625. The stock closed Friday at $66.50, down $2.687.

Avigen said it intends to use net proceeds, expected to be about $250.6 million not including the overallotment option, to fund research and development, preclinical studies and clinical trials, as well as to cover working capital and general corporate purposes. The company believes the proceeds in addition to existing capital will carry it through at least 2001.

The company was in an SEC-imposed quiet period Friday and could not comment.

As of Dec. 31, Avigen had cash, cash equivalents and marketable securities of $48.9 million. In its SEC filing, it said it expects to have $299.44 million after the public offering.

For 1999, the company posted grant revenues of $39,000, and a net loss of $4.85 million, or 37 cents per share. Common stock outstanding after the offering would be almost 19 million shares.

Avigen develops gene therapy products to treat inherited diseases. Each product is based on its adeno-associated virus (AAV) vector technology to deliver DNA to patients with genetic diseases. The company believes its AAV vectors can be used to deliver genes for the treatment of hemophilia A and B, Gaucher disease, hereditary emphysema and beta-thalassemia.

The company's initial product candidate, Coagulin-B to treat hemophilia B, moved into a Phase I/II trial in June. Following the delivery of the drug into the thigh muscle, factor IX protein activity was detected in the blood of the first two of three hemophilia patients treated at the lowest of three dosage levels. The patients began to make factor IX within eight weeks of being treated with Coagulin-B and still expressed the factor after six months. The third patient showed no increase in his factor IX protein levels, the company said. Hemophilia B is a blood clotting disorder characterized by the reduction or absence of the factor IX protein. It affects one in every 30,000 males.

Avigen raised $40 million in a private placement of 2 million shares in November. (See BioWorld Today, Nov. 17, 1999, p. 1.)

At that time, the company expected to file an investigational new drug application for a hemophilia A treatment in the second half of this year.