AVIGEN REPORTS FIRST QTR 2007 NET LOSS OF $5.8 MILLION.

Avigen, Inc. (Nasdaq:AVGN), Alameda, Calif., a biopharmaceutical company developing innovative therapies for the treatment of chronic neurological conditions, today reported financial results for its first quarter ended March 31, 2007. At March 31, 2007, Avigen had approximately $66 million in financial assets, including cash, cash equivalents, and available-for-sale securities and restricted investments, compared with approximately $71 million at December 31, 2006. More complete financial results are detailed in the financial tables below.

"We are pleased with our progress during the quarter on the execution of our clinical development plans for each of the lead compounds in our pipeline," said Kenneth G. Chahine, Ph.D., J.D., Avigen's president and chief executive officer. "We continue to follow our business plan and have kept our internal staff levels and overhead costs under control, while beginning to increase our spending on clinical trials and support for regulatory filings."

RECENT AVIGEN HIGHLIGHTS

* Received FDA approval to initiate Phase II clinical trial for AV650 in spinal cord injury patients suffering from spasticity (as reported March 15, 2007)

* Data from AV411, Avigen's drug candidate for the management of chronic neuropathic pain, was highlighted in an article published online by the Cambridge University Press journal "Neuron Glia Biology" (as reported February 26, 2007)

* Completed a normal volunteer study of AV411 which found the drug to be favorably tolerated at doses above the levels currently approved for use outside the U.S. for other indications (as reported February 6, 2007)

* Continue to enroll patients in a Phase IIa exploratory therapeutic clinical trial with AV411 at the Royal Adelaide Hospital in Adelaide, Australia for neuropathic pain, with plans to complete the trial by year-end

Financial Results

Avigen reported a net loss of $5.8 million, or $0.23 per share, for the quarter ended March 31, 2007, compared to a net loss of $8.0 million, or $0.38 per share, for the quarter ended March 31, 2006. The 2006 period included $3.0 million of in-license fees related to the acquisition of North American rights to AV650.

Avigen reported no revenues for the first quarter of 2007 compared to revenues of $103,000 for the first quarter of 2006. 2006 revenue represented income from Avigen's participation with the University of Colorado on a grant that was funded by the National Institutes of Health.

Research and development expenses for the quarters ended March 31, 2007 and 2006 were $4.4 million and $3.0 million, respectively. This increase primarily reflects higher expenses of approximately $1.3 million for external research and development services associated with Avigen's current clinical trials and preparation of IND filings for AV650 and AV411.

General and administrative expenses for the quarters ended March 31, 2007 and 2006 were $2.3 million and $2.8 million, respectively. These higher expenses in the 2006 period were primarily due to nonrecurring severance charges of approximately $0.3 million.

In-license fees of $3.0 million for the first quarter of 2006 represented a payment in connection with Avigen's in-license of the North American development and commercial rights to AV650. There were no in-license fees for the first quarter of 2007.

Net interest income and other expenses were $703,000 for the three months ended March 31, 2007 compared to $550,000 for the same period in 2006. Sublease income during the quarter ended March 31, 2007 and 2006 were $149,000 and $141,000, respectively, which further offsets Avigen's ongoing operating expenses for leased facilities.

Avigen's operating expenses for the first quarter of 2007 are in line with management's expectations. Full year 2007 operating expenses are expected to increase over 2006 levels in connection with the initiation of additional clinical trials and other product development activities. The company believes its financial resources will be able to fund its planned operating expenses for approximately two years.

About Avigen

Avigen is a biopharmaceutical company focused on developing and commercializing small molecule therapeutics to treat serious neurological disorders, including neuropathic pain and neuromuscular spasm and spasticity. Avigen's strategy is to complete the requirements of clinical development for each of the candidates in its product pipeline, and continue to look for opportunities to expand its pipeline through a combination of internal research, acquisitions, and in-licensing, with the goal of becoming a fully integrated commercial biopharmaceutical company that remains committed to its neurology products. Avigen is currently developing AV650 for spasticity and neuromuscular spasm and AV411 for neuropathic pain. Additionally, the company is advancing toward clinical trials, a novel therapy for the treatment of multiple bleeding disorders, including hemophilia A and B, AV513.

For more information, visit http://www.avigen.com or call 510/748-7372.