SAN DIEGO, July 12, 2010 (GLOBE NEWSWIRE) -- MediciNova, Inc., a biopharmaceutical company that is publicly traded on the Nasdaq Global Market (Nasdaq:MNOV) and the Hercules Market of the Osaka Securities Exchange (Code Number: 4875), today announced that it expects to make an initial payment from the escrow account to the former stockholders of Avigen, Inc. by July 29, 2010.
Under the terms of the definitive Merger Agreement, former Avigen stockholders are due to receive as part of the second payment consideration, a pro rata portion of $1.5 million, to be paid on or around June 30, 2010 subject to adjustment based on additional assets and liabilities of Avigen. MediciNova and the Avigen representative also agreed that payment of up to an aggregate of $500,000 from the second payment consideration amount will be deferred and paid to the former Avigen stockholders on a pro rata basis upon expiry of a letter of credit issued by Wells Fargo Bank, N.A. in connection with expenses under Avigen's building lease, expected to expire November 30, 2010. The distributable amount will be offset by any amounts drawn by the beneficiary under the letter of credit and will be paid to former Avigen stockholders on the earlier of December 31, 2010 and the date on which the entire amount of restricted cash becomes unrestricted.
MediciNova and the Avigen representative have agreed that as a matter of administrative convenience they will attempt to reconcile by July 15, 2010 amounts owing to MediciNova in satisfaction of certain liabilities exceeding amounts estimated at the time of signing of the merger agreement. Following such reconciliation, payment of amounts remaining in the escrow account will be made to the former Avigen stockholders on a pro rata basis. In the event that MediciNova and the Avigen representative are unable to reach agreement by July 15, 2010, an independent accounting firm will be retained to resolve the dispute prior to July 29, 2010. Following resolution of the dispute regarding the amounts demanded by MediciNova, the amounts remaining in the escrow account then would be released to Avigen's former stockholders on a pro rata basis.