MediciNova Sends Letter to Avigen Board of Directors

SAN DIEGO, Calif., March 19, 2009 (GLOBE NEWSWIRE) -- MediciNova, Inc., a biopharmaceutical company that is publicly traded on the Nasdaq Global Market (NasdaqGM:MNOV - News) and the Hercules Market of the Osaka Securities Exchange (Code Number: 4875), today sent the following letter to the Board of Directors of Avigen, Inc.:

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                           MediciNova, Inc.
                4350 La Jolla Village Drive, Suite 950
                          San Diego, CA 92122


                                                       March 19, 2009

 Board of Directors
 Avigen, Inc.
 1301 Harbor Bay Parkway
 Alameda, CA 94502

 Dear Members of the Board:

 We feel compelled to publicly express our extreme disappointment with
 the process by which Avigen, to date, has reviewed our offer to
 pursue a proposed merger with Avigen.  Yesterday, members of senior
 management of MediciNova, Inc. met with your management team and
 financial advisor in San Francisco to formally present the case for
 our proposal.  As you are aware, this was our first face-to-face
 meeting despite our repeated requests for such a meeting since we
 first made public our proposal back in December 2008.

 Unfortunately, as has been the case throughout this process, your
 management team has so far refused to grant us access to the due
 diligence materials and management guidance that we believe Avigen
 has made available to the other three bidders.  In our meeting
 yesterday, your management team repeatedly stated that Avigen, "as a
 small company," does not have the capacity to continue to evaluate
 multiple offers.  Frankly, we now believe that your management team
 had no bona fide interest in evaluating our proposal from the outset,
 and your management team's statements and actions so far confirm for
 us this opinion.

 From time to time, management teams of public companies run sales
 processes that, in retrospect, are ill-conceived and incapable of
 obtaining the best value for shareholders.  In our opinion, the
 Avigen sales process is just such a situation.  In case your
 management team has not apprised you of their actions through March
 18, we wish to make you and the Avigen shareholders aware of the
 following matters that we believe you, on behalf of the Avigen
 shareholders, should independently verify and, where appropriate,
 rectify.

 1.  Lack of a Fair Evaluation of the MediciNova Offer in an Honest
 and Open Process

 Over the past three months, we have repeatedly attempted to initiate
 a dialogue with your management team about our merger proposal.  We
 have continually been met, in our opinion, with delays and
 misrepresentations.  For example:

  * Your management team did not provide a draft confidentiality
    agreement to us until six weeks after our initial offer letter of
    December 9, 2008.
  * Your management team spent six additional weeks negotiating the
    terms and conditions of the confidentiality agreement, which was
    finally executed on March 4, 2009.
  * Your financial advisor provided us with a due diligence request
    list on February 27, 2009.  We populated a data room for your
    review over the weekend following execution of the confidentiality
    agreement.  However, as of the date of this letter, our data room
    has not been accessed by any members of your management team or
    your financial advisor.
  * We provided our due diligence request to your management team on
    March 6, 2009.  On March 10, 2009, we were told by your financial
    advisor that Avigen would not provide ANY information to us under
    this due diligence request, a statement that was confirmed in a
    March 10 letter from your CEO, Ken Chahine, to our Chairman.
    Interestingly, we received an email from Avigen's financial
    advisor (RBC Capital) earlier today which states:  "We are
    preparing some financial diligence.  A more formal communication
    on our thoughts to follow."  We are hopeful that we will be given
    access to the Avigen due diligence we need to increase the value
    of our proposal.  However, in light of all the past delays, we
    expect to remain on standby.
  * The efforts of your financial advisor in arranging yesterday's
    meeting were indicative of how MediciNova believes it has been
    treated throughout this process.  Although we proposed an all-
    hands meeting for March 18 in our letter to you last week, your
    financial advisor gave us less than 24 hours advance notice of the
    proposed meeting in San Francisco at 3:00 p.m. the next day.  We
    attempted to obtain clarification from Avigen's financial advisor
    as to the urgency of the meeting (after a full six days following
    our initial request) given that our CEO had only returned from
    Japan that day but, when no clarification was given, we ultimately
    decided that night to rearrange our schedules in order to attend
    this first face-to-face meeting.  Our team flew the next morning
    from San Diego, Los Angeles and Flagstaff, Arizona to meet with
    your management team and financial advisor; however, upon arriving
    in San Francisco, your financial advisor advised us that the
    meeting had been postponed until sometime later in the afternoon
    so that your CEO, Ken Chahine, could participate in a call with an
    investor.  To put it mildly, we were shocked by such
    unprofessional and discourteous behavior.
  * Interestingly, when we made clear that we would not reschedule our
    meeting, we were then told that Mr. Chahine's investor call was
    postponed and the meeting eventually commenced at 3:30 p.m.  We
    ask that, for any future meetings, we please be provided with the
    courtesy of more customary advance notice.

 2.  Public Misstatements with No Means of Rebuttal

 Instead of an honest and open evaluation process, you and your
 management team have chosen to criticize our proposal in your public
 filings.  Beyond the fact that we believe that your statements
 contain material misrepresentations and misleading inaccuracies, it
 is disappointing that your management team and financial advisor have
 actively resisted any discussions regarding these inaccuracies.  For
 example:

  * Your public statements ignore the fact that the potential upside
    of the MediciNova offer is an ownership position of up to
    approximately 45% of the combined company.
  * The valuation that you assign to our proposal lacks an important
    valuation component (relating to the securities component of our
    proposal), and does so in a way which makes our offer seem
    meaningfully lower.  In fact, we pointed out to your management
    team that, by analyzing our offer only on a "cash" basis in your
    proxy statement, this was potentially misleading because it
    ignored the value assigned to securities which are necessarily
    non-cash.  Your management team stated that they were comfortable
    with showing a "cash" valuation but omitting a "total" valuation,
    a view which we disagree with on several levels.
  * The statements you make regarding the risk of bankruptcy impacting
    the escrowed funds are, on the level of the biotech industry,
    fear-mongering and grossly inaccurate.  This issue, which we
    believe is without merit due to the more than two-year cash
    position of MediciNova, can be easily addressed by the ultimate
    legal structure of a merger transaction.
  * The statements you make regarding the potential upside from the
    Genzyme agreement ignore the  size of the potential payment, the
    risk associated with product development, and the fact that you
    never provided us with information by which to evaluate how this
    asset might be incorporated into our proposal.

 3.  Failure to Provide Us Due Diligence Materials in Order to Improve
 Our Offer:

 At the meeting yesterday, we were told that we must improve our offer.
 In response, we indicated the following:

  * We were in a position to improve aspects of our offer immediately
    as described below; and

  * Upon receipt of the due diligence materials that we previously
    requested following our mutual agreement on a two-stage due
    diligence process, we would commit to complete our due diligence
    in a 10-day period and would submit our final improved proposal at
    that time.

 Unfortunately, as noted above, your management team and financial
 advisor advised us that they were unwilling to abide by our previous
 agreement regarding any staged due diligence.  In fact, we were told
 by your management team that certain other interested parties had
 improved their offers without access to such materials.  When we
 asked if any other bidder had been given access to Avigen due
 diligence materials, we were specifically told by your financial
 advisor that your team was "not at liberty to say" - the clear
 implication being that some bidders in fact had been given meaningful
 access to Avigen due diligence materials as we would have expected in
 a public company auction - and that your management team was, at this
 late stage in the auction process, "too busy" evaluating the other
 proposals to cooperate in a meaningful exchange of information at
 this time.

 We find this exclusionary behavior unsustainable.  Put simply, we
 believe that it is manifestly unreasonable for your management team
 and financial advisor to refuse to provide us with the requested due
 diligence materials in accordance with our previously-agreed staged
 due diligence process.   How can it be appropriate for Avigen,
 consistent with Delaware law, to arbitrarily and prematurely
 terminate an auction process that would in several weeks time
 generate a superior offer from MediciNova if run properly?
 Furthermore, we are very interested in learning how difficult it
 would be for Avigen:  (1) to allow us access to the Avigen electronic
 data room that we believe must already exist for other bidders or (2)
 to access our electronic data to which we provided access several
 weeks ago but which has not yet been accessed by any member of the
 Avigen team.

 4.  MediciNova's Improved Offer:

 At the meeting yesterday, and in our previous letters and
 communications, we stressed that we were prepared to meaningfully
 increase the value of our offer upon receipt of the requested due
 diligence materials.  However, in advance of receipt of any such
 materials, we did outline three immediate improvements to our offer:

  * Minimum Cash Distribution for Your Shareholders.  We stated to
    your management team and financial advisor that we are prepared to
    consider minimum cash distribution levels once we are provided
    access to your financial position and current and expected cash
    burns and projected positive cash streams (e.g., monthly lease
    payments, royalty streams, "golden parachutes", management bonuses
    and management severance arrangements, other post-termination
    employee benefits and ongoing operating costs).   We believe that
    if we are able to quickly consummate our proposed merger, your
    stockholders will benefit from the reduction of legal, banker and
    other fees you are incurring in your fight with Biotechnology
    Value Fund, and your shareholders will also benefit by directly
    receiving funds that will otherwise be spent on your underlying
    cash burn rate while you are evaluating offers.

  * No Break Fee.  In order to maximize the potential cash
    distribution for Avigen shareholders, we are prepared to enter
    into a mutually-satisfactory merger agreement which will not
    contain a "break fee" provision (which under Delaware law may be
    as high as 3-5% of the aggregate purchase price) in the event that
    your shareholders voted down our deal or otherwise approved
    another transaction post-signing.  We believe such a "break fee"-
    free offer, if part of a mutually-agreed merger agreement, will
    provide your shareholders with the freedom to reject our offer on
    a cost-free basis and also avoid a situation where a portion of
    the topping bid is diverted to us as the initial merger party who
    is terminated for any superior bid.  We believe that this "break
    fee"-free offer of ours is extremely unusual in the context of a
    public M&A transaction and that you should impose this highly-
    valuable feature for Avigen's shareholders on any third-party
    merger candidate.  To our surprise, your management team and
    financial advisor dismissed this proposal from MediciNova as
    fundamentally valueless, calling it "just another negotiated deal
    term."

  * Committed Funds.  We are prepared to commit that any Avigen net
    cash proceeds (after payment of the $7.0 million from Avigen to
    MediciNova in consideration for the issuance of 1.75 million
    MediciNova shares to be distributed to Avigen's shareholders on a
    pro rata basis) are deposited in an independently monitored escrow
    fund for the sole benefit of your shareholders who elect to
    receive the "downside protection" cash feature of our proposal.
    Once you commit to negotiate the terms and conditions of a merger
    agreement in good faith with us, we will direct our legal counsel
    to work with your legal counsel in investigating any other
    reasonable assurances in this regard.  As we previously explained
    to you, we have in excess of two years of cash and liquidity;
    therefore, we do not understand why you believe, and continue to
    state publicly, that there are any solvency risks associated with
    our proposal.

 5.  Next Steps:

 Notwithstanding the disappointing absence of progress to date, we
 believe it is time to move forward on a more positive note.  Given
 that your largest shareholder, Biotechnology Value Fund, continues to
 support our initial proposal even before today's improvements, we ask
 that you direct your management team to provide us with the requested
 due diligence materials and that you avoid ending this sales process
 prematurely.  In particular, we are committed to completing our due
 diligence review within 10 days following receipt of these materials,
 and we asked your management team to refrain from entering into any
 third party merger agreement during this period of our diligence
 review while we developed an improved bid.    As you are aware, your
 fiduciary duties require you to run a sales process that is designed
 to solicit the highest price reasonably attainable, and we continue
 to believe that we can offer a superior offer for your shareholders
 given the appropriate opportunity.   We strongly believe that
 requiring your management team to allow us 10 days of due diligence
 as described above is eminently reasonable.  We hope that you agree.

 Sincerely,


 Yuichi Iwaki, M.D., Ph.D.
 President and Chief Executive Officer


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About MediciNova

MediciNova, Inc. is a publicly-traded biopharmaceutical company focused on acquiring and developing novel, small-molecule therapeutics for the treatment of diseases with unmet need with a specific focus on the U.S. market. Through strategic alliances primarily with Japanese pharmaceutical companies, MediciNova holds rights to a diversified portfolio of clinical and preclinical product candidates, each of which MediciNova believes has a well-characterized and differentiated therapeutic profile, attractive commercial potential and patent assets having claims of commercially adequate scope. MediciNova's pipeline includes six clinical-stage compounds for the treatment of acute exacerbations of asthma, multiple sclerosis, asthma, interstitial cystitis, solid tumor cancers, Generalized Anxiety Disorder, preterm labor and urinary incontinence and two preclinical-stage compounds for the treatment of thrombotic disorders. MediciNova's current strategy is to focus its resources on its two prioritized product candidates, MN-221 for the treatment of acute exacerbations of asthma and MN-166 for the treatment of multiple sclerosis, and either pursue development independently, in the case of MN-221, or establish a strategic collaboration to support further development, in the case of MN-166. MediciNova will seek to monetize its other product candidates at key value inflection points. For more information on MediciNova, Inc., please visit http://www.medicinova.com.

The MediciNova, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3135

Statements in this press release that are not historical in nature constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially because of risks and uncertainties associated with MediciNova's business and the proposed transaction, the timing to consummate the proposed transaction and any necessary actions to obtain required regulatory approvals, and the diversion of management time on transaction-related issues. For further information regarding risks and uncertainties associated with MediciNova's business, please refer to the ``Management's Discussion and Analysis of Financial Condition and Results of Operations'' and ``Risk Factors'' sections of MediciNova's SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2007 and its subsequent periodic reports on Forms 10-Q and 8-K, copies of which may be obtained by contacting MediciNova's Investor Relations department at (858) 373-1500 or at MediciNova's website at http://www.medicinova.com. These forward-looking statements involve a number of risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such forward-looking statements. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof.

MediciNova disclaims any intent or obligation to revise or update these forward-looking statements.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This material is not a substitute for the prospectus/proxy statement MediciNova, Inc. would file with the SEC if an agreement between MediciNova, Inc. and Avigen, Inc. is reached or any other documents which MediciNova, Inc. may file with the SEC and send to Avigen, Inc. shareholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF AVIGEN, INC. ARE URGED TO READ ANY SUCH DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders will be able to obtain free copies of any documents filed with the SEC by MediciNova, Inc. through the website maintained by the SEC at http://www.sec.gov. Free copies of any such documents can also be obtained by directing a request to Investor Relations Department, MediciNova, Inc., 4350 La Jolla Village Drive, Suite 950, San Diego, CA 92122, USA.

MediciNova, Inc. and its directors and executive officers and other persons may be deemed to be participants in any solicitation of proxies in respect of the proposed transaction. Information regarding MediciNova, Inc.'s directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2007, which was filed with the SEC on March 17, 2008, and its proxy statement for its 2008 annual meeting of stockholders, which was filed with the SEC on April 29, 2008. Other information regarding the participants in any proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in any proxy statement filed in connection with the proposed transaction.

          MediciNova, Inc.
          Shintaro Asako, Chief Financial Officer
          858-373-1500
          info@medicinova.com