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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
        ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                            ------------------------
(MARK ONE)
     [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED JUNE 30, 2001.

                                       OR

     [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

         FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .

                         COMMISSION FILE NUMBER 0-28272

                                  AVIGEN, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
<S>                                                 <C>
                     DELAWARE                                           13-3647113
          (STATE OR OTHER JURISDICTION OF                            (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)
</Table>

                            1301 HARBOR BAY PARKWAY
                           ALAMEDA, CALIFORNIA 94502
             (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

                                 (510) 748-7150
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<Table>
<S>                                                 <C>
                TITLE OF EACH CLASS                      NAME OF EACH EXCHANGE ON WHICH REGISTERED
--------------------------------------------------- ---------------------------------------------------
                       NONE
</Table>

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         COMMON STOCK, $.001 PAR VALUE
                                (TITLE OF CLASS)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K.  [ ]

     The aggregate market value of the voting stock held by non-affiliates of
the registrant as of September 6, 2001, was approximately $214,558,000 based
upon the closing sale price of the registrant's Common Stock as reported on the
Nasdaq National Market System on such date*. The number of outstanding shares of
the Registrant's Common Stock as of September 6, 2001 was 19,959,959.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Parts of the following documents are incorporated by reference into Part
III of this Form 10-K Report: The definitive Proxy Statement for the
Registrant's Annual Meeting of Stockholders scheduled to be held on November 16,
2001.
---------------
* Excludes approximately 4,401,000 shares of common stock held by Directors,
  Officers and holders of 5% or more of the registrant's outstanding Common
  Stock at September 6, 2001. Exclusion of shares held by any person should not
  be construed to indicate that such person possesses the power, direct or
  indirect, to direct or cause the direction of the management or policies of
  the registrant, or that such person is controlled by or under common control
  with the registrant.

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<PAGE>   2

                           ANNUAL REPORT ON FORM 10-K

                    FOR THE FISCAL YEAR ENDED JUNE 30, 2001

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
                                   PART I
Item 1.   Business....................................................    1
Item 2.   Properties..................................................   21
Item 3.   Legal Proceedings...........................................   21
Item 4.   Submission of Matters to a Vote of Security Holders.........   21

                                  PART II
Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters.........................................   22
Item 6.   Selected Financial Data.....................................   23
Item 7.   Management's Discussion and Analysis of Financial Condition
          and
          Results of Operations.......................................   24
Item 7A.  Quantitative and Qualitative Disclosures About Market
          Risk........................................................   26
Item 8.   Financial Statements and Supplementary Data.................   26
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and
          Financial Disclosure........................................   27

                                  PART III
Item 10.  Directors and Executive Officers of the Registrant..........   27
Item 11.  Executive Compensation......................................   27
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   27
Item 13.  Certain Relationships and Related Transactions..............   27

                                  PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.........................................................   27
</Table>

Coagulin-B(TM) is a trademark of Avigen, Inc.

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<PAGE>   3

                INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future results,
performances or achievements expressed or implied by the forward-looking
statements. Forward-looking statements include, but are not limited to:

     - the progress of our product development programs, including Coagulin-B;

     - developments with respect to clinical development of drug candidates,
       clinical trials and the regulatory approval process;

     - our expectations as to the various products that we are developing;

     - our estimates regarding our capital requirements and our needs for
       additional financing; and

     - developments relating to our selection and licensing of targets.

     In some cases, you can identify forward-looking statements by terms such as
"may", "will," "should," "could," "would," "expects," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "potential" and similar
expressions which imply that the statements relate to future events or
expectations. These statements reflect our current views with respect to future
events and are based on assumptions and subject to risks and uncertainties.
Given these uncertainties, you should not place undue reliance on these forward-
looking statements. We discuss many of these risks in greater detail under the
heading "Risk Factors" at the end of "Item 1 Business" beginning immediately
below. Also, these forward-looking statements represent our estimates and
assumptions only as of the date of this Annual Report on Form 10-K.

     You should read this Annual Report on Form 10-K and the documents that we
incorporate by reference completely and with the understanding that our actual
future results may be materially different from what we expect. We may not
update these forward-looking statements, even though our situation may change in
the future. We qualify all of our forward-looking statements by these cautionary
statements.

                                     PART I

ITEM 1. BUSINESS

THE COMPANY

     Avigen is a leader in the development of gene therapy products for the
treatment of inherited and acquired diseases. We are developing our proprietary
adeno-associated virus vector technology, known as "AAV vectors," to deliver DNA
to patients that are suffering from genetic and various non-genetic diseases.
AAV vectors are a relatively new system for gene therapy. We believe our AAV
vectors can be used to deliver genes for many inherited genetic diseases,
including hemophilia and certain metabolic diseases such as Gaucher disease, as
well as for many acquired diseases, including Parkinson's disease, and certain
types of cardiovascular disease.

TRADITIONAL APPROACHES TO GENE DELIVERY

     All living organisms are made up of cells that contain thousands of
different proteins essential for cell structure, growth and function. Proteins
are made of building blocks called amino acids that together define the
structure and function of the protein. The specific order of these amino acids
in the protein is determined by a set of genetic instructions encoded by DNA, a
commonly used acronym for a chemical that contains all the information necessary
to control a cell's biological processes.

     DNA is organized into segments called genes with each gene containing the
information required to produce a specific protein. There are over one hundred
thousand genes in each human cell. Gene expression is

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the production of proteins using the DNA as a blueprint. Occasionally, the DNA
for one or more genes can be defective, resulting in the absence or improper
production of a functioning protein in the cell. This improper expression can
alter a cell's normal function and can frequently result in a disease. The goal
of gene therapy is to treat these diseases by delivering DNA containing the
corrected gene into cells. This is intended to result in the normal protein
being produced in that cell.

     There are several different ways of delivering genes to cells. Each of the
methods of delivery uses carriers, called "vectors," to transport the genes into
cells. These carriers can be either man-made components or modified viruses. The
use of viruses takes advantage of their natural ability to introduce DNA into
cells. Gene therapy takes advantage of this property by replacing viral DNA with
a specific gene. Once the gene is in the cell, it acts as a blueprint directing
the cell to produce the therapeutic protein.

     Within the field, there are four major approaches under investigation
utilizing different vectors for human gene therapy:

     - Retroviral vectors. These were the first vectors used in human gene
       therapy trials. The advantage of retroviral vectors is that the virus is
       well understood and is quite efficient at getting genes into cells.
       However, their limitation is that the cells must be actively growing for
       the vector to work effectively. This typically requires that the cells be
       removed from the patient, grown outside the body, exposed to the
       retroviral vector and later re-implanted back into the patient. This
       process limits the commercial viability of these vectors as a generalized
       approach to gene therapy.

     - Adenoviral vectors. These vectors are also currently being evaluated in
       human gene therapy trials. They have the advantage that the cells do not
       have to be removed from the patient in order for the gene transfer
       process to take place. Adenovirus can cause disease in humans, creating
       safety concerns about the use of adenovirus vectors. Although gene
       transfer using adenovirus can be efficient, typically the production of
       the protein is short-lived.

     - Non-viral vectors. These also are currently being evaluated in human
       clinical trials. They consist of either DNA or DNA mixed with other
       chemical compounds. These vectors are much less efficient than viral
       vectors at getting DNA into the cells and are generally not capable of
       delivering large amounts of the intended protein for extended periods of
       time.

     - Adeno-associated virus vectors. AAV vectors are a relatively new system
       for gene therapy. AAV is a common human virus present in over 90% of the
       human population that has not been associated with a human disease or
       illness of any kind. AAV has also proven to be very efficient in
       transferring genes to target cells.

AVIGEN'S AAV VECTOR TECHNOLOGY

     All of our products in development are based on our proprietary gene
delivery technology in AAV vectors, which takes advantage of the natural
efficiency with which viruses deliver genes to cells, without the safety
concerns of disease related viruses. While the production of AAV vectors
normally require the use of a potentially threatening helper virus, usually
adenovirus, which may contaminate the final product, Avigen has developed a
proprietary method that does not require such a helper virus, which we believe
results in a safer product.

  Favorable Characteristics of Avigen's AAV Vector Technology

     We believe our AAV vector gene therapy approach offers novel treatment
alternatives for diseases that are currently poorly addressed. We believe our
AAV vector gene therapy technology includes favorable characteristics such as:

     - Safety. Our AAV vectors are based on a virus that has never been
       associated with a human disease of any kind.

     - Efficient delivery of genes to cells. AAV by nature is very efficient at
       getting into cells. Consequently, our AAV vectors are very effective at
       delivering genes to cells. Once in the cell, genes delivered by
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       AAV vectors in animal models have produced large amounts of protein on a
       continuous basis, often for months or even years from a single
       administration.

     - Effective delivery to a wide range of types of cell targets. AAV does not
       appear to have many limitations on the types of cells that can be
       targeted for gene transfer. Research has shown that AAV can be used to
       transfer genes to both dividing cells, such that are found in muscle
       tissue, as well as non-dividing cells, such that are found in organs like
       the liver. This versatility could allow us to target a wider variety of
       treatments targeted at a wider variety of cell types.

     - AAV vectors can deliver many different genes. Many genes fit into AAV
       vectors and have been successfully delivered to a wide range of cell
       types. Consequently, AAV vectors have the potential to treat many
       diseases.

     - Stability. AAV appears to be stable under a wide range of conditions. We
       currently take extra precautions to store and ship all manufactured
       products in a frozen state; however, we believe that due to their proven
       stability under other conditions, our AAV vectors may be able to be
       handled with minimal refrigeration like many other pharmaceutical
       products, thereby lending themselves to more traditional shipping and
       storing procedures.

PRODUCT DEVELOPMENT PROGRAMS

     We are applying our AAV vector gene therapy technology initially to the
development of products to address the following four genetic and neurological
diseases: hemophilia B, hemophilia A, Parkinson's disease, and Gaucher disease.
The following table summarizes our current product development programs:

                     AAV VECTOR-BASED GENE THERAPY PROGRAMS

<Table>
<Caption>
     DISEASE          PROTEIN/ENZYME     TARGET CELL    STATUS(1)
     -------          --------------     -----------    ---------
<S>                 <C>                  <C>           <C>
Hemophilia B        Factor IX            Muscle        Phase I
Hemophilia B        Factor IX            Liver         Phase I
Hemophilia A        Factor VIII          Liver         Preclinical
Parkinsons Disease  Aromatic amino acid  Brain         Preclinical
                    decarboxylase
Gaucher Disease     Glucocerebrosidase   Muscle/Liver  Research
</Table>

---------------
(1) "Research" indicates activities related to designing, constructing and
    testing vectors in specific target cell types in order to evaluate gene
    expression. "Preclinical" indicates in vitro and animal studies to evaluate
    efficacy, pharmacology, and toxicology. "Phase I" indicates the stage within
    a clinical trial with dose escalations to evaluate pharmacokinetics and
    pharmacological actions in humans.

     We have developed two different constructs for our Coagulin-B product. The
first construct was developed to be administered by injection into the muscle.
The second construct has been developed to be administered to the liver via
infusion into the hepatic (liver) artery. Both constructs contain the same
factor IX gene.

HEMOPHILIA B

     Our initial product candidate is Coagulin-B for the treatment of hemophilia
B. Hemophilia B is a blood clotting disorder characterized by the reduction or
absence of a protein called factor IX, and primarily affects males. Due to the
lack of sustained levels of factor IX protein, patients with hemophilia B can
experience frequent internal bleeding during the course of normal daily
activities. Currently, patients with a severe form of the disease inject
themselves with factor IX protein several times a week to stop these bleeding
episodes. These factor IX protein injections provide temporary relief, but the
protein breaks down after a few days and the bleeding recurs. Since the bleeding
typically takes place in the joints and soft tissue, these patients frequently
suffer crippling bone and joint problems. A small percentage of patients can
also suffer permanent disability or even die from bleeding into the central
nervous system.

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<PAGE>   6

     Hemophilia B affects approximately one in every 30,000 males, afflicting an
estimated 10,000 - 15,000 individuals in developed countries worldwide. The cost
of currently available protein factor IX can exceed $100,000 per year per
patient. Because protein therapy cannot prevent bone and joint damage, each
patient may require an additional $100,000 - $150,000 annually in other medical
treatment costs on average. We believe the aggregate cost of treating hemophilia
B patients with replacement protein factor IX and other collateral disease
treatments to be over $450 million per year worldwide.

     Extensive experience with factor IX over the last 25 years has established
that factor IX protein levels equivalent to only 1% of the normal level found in
humans can often reduce the frequency of spontaneous bleeding episodes
experienced by patients with a severe form of the disease, and factor IX protein
levels equivalent to 3% to 5% of the normal level found in humans can often
significantly reduce the patient's reliance on replacement injections of factor
IX protein and greatly improve the patient's condition. To maintain either of
these levels using conventional injections of replacement factor IX protein is
costly and impractical. Avigen's approach is designed to continuously deliver
therapeutic levels of factor IX protein into the blood of treated patients, in
order to improve the patient's quality of life. We believe Coagulin-B has the
potential to substantially reduce the need for daily or weekly injections of
factor IX protein and meet this objective.

  Preclinical Studies

     In our preclinical studies to evaluate gene delivery to the muscle, we
treated eight dogs suffering from hemophilia B. Following a single
administration into the muscle, Avigen's AAV vector containing the gene for
factor IX demonstrated that it could produce sustained levels of factor IX
protein in the dogs for over three years with a corresponding improvement in
blood clotting. In the dogs receiving the greatest quantities of our AAV vector,
the levels were above 1% of the normal level, a level that is known to be
beneficial to humans. These data provided strong support for the feasibility of
using the same approach to treat human hemophilia patients and formed the basis
for our clinical trials in humans.

     In our preclinical studies to evaluate gene delivery to the liver, we
treated several species of animals to assess the safety and efficacy of a single
administration of an AAV vector containing the gene for factor IX. Safety
studies were conducted in rats and normal dogs, and efficacy studies were
carried out in rats, mice and hemophilia B dogs. The studies showed that liver
delivery of AAV vector is safe at doses significantly higher than planned for
clinical studies in humans, and that the levels of factor IX protein expression
that can be achieved by this vector and route of administration in these species
of animals are significantly higher than could be achieved by the intramuscular
route. For example, the efficacy studies demonstrated that when delivered to the
liver, the vector produced sustained levels of factor IX protein expression in
hemophilia B dogs for approximately 1 year, and that the levels of expression in
the best responders ranged between 7% and 18% of factor IX levels commonly found
in non-hemophilia dogs. These studies formed the basis of an investigational new
drug, or "IND," application, which was submitted to the U.S. Food and Drug
Administration, commonly referred to as the FDA.

  Clinical Trials

     On June 2, 1999, we began treating human subjects with our product
candidate, Coagulin-B, in a phase I clinical trial with dose escalations. The
design and goal of this initial trial was primarily to address the safety of the
product in humans. To accomplish this, patients in three different dosage groups
were scheduled to receive a single treatment of Coagulin-B injected into their
muscle tissue. This clinical trial was performed and patients were treated at
The Children's Hospital of Philadelphia and Stanford University Medical Center.

     Through August 31, 2001, eight subjects had been treated in the study. Data
from all patients have shown the therapy to be safe and well tolerated with no
serious adverse events being noted. Although the study was designed primarily to
evaluate the safety of the product in humans, additional data with regard to
measuring levels of factor IX produced in the bodies of the treated patients, if
any was also documented. There was a diverse range of factor IX protein levels
measured in this small trial population, with at least two of these patients
exhibiting a significant reduction in factor usage for over one and one-half
years. Taking into account

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the success of the safety measurements of this study in humans, and the stronger
results observed in the preclinical study that treated a small group of dogs
with a liver construct of an AAV vector containing the gene for factor IX, we
plan to focus our resources and qualified trial patients into a second clinical
trial using the liver as the target for gene delivery.

     This second phase I clinical trial is designed to test the safety of
treating patients with a single administration of the liver construct of
Coagulin-B via infusion into the hepatic (liver) artery. The liver is the normal
site of clotting factor production. This trial is scheduled to treat nine
patients, three in each of three dosage groups. On August 13, 2001, the first
patient in this second phase I clinical trial was treated and reported no
immediate adverse reaction. We currently do not intend to report on the
evaluation of gene expression until the end of the trial. All progress and
results reported in this document or otherwise regarding our Coagulin-B clinical
trials prior to the conclusion of those trials are preliminary and should not be
considered a guarantee that subsequent patients in these or other studies will
demonstrate the same results or that these treated patients will continue to
exhibit beneficial results over a longer period of time.

HEMOPHILIA A

     Avigen is also developing Coagulin-A for the treatment of hemophilia A.
Like hemophilia B, hemophilia A is a genetic disorder found almost exclusively
in males that is characterized by a protein deficiency in the blood, causing
patients to have a reduced ability to form blood clots. Instead of lacking the
protein factor IX, patients with hemophilia A lack the protein factor VIII.

     Hemophilia A affects approximately one in every 10,000 males, afflicting an
estimated 40,000 - 50,000 individuals in developed countries worldwide. The cost
of currently available protein factor VIII can exceed $100,000 per year per
patient. Because protein therapy has not proven effective at preventing bone and
joint damage that is common among hemophilia patients, each patient may require
$100,000 - $150,000 in additional medical treatment costs annually. In total, we
believe the cost of treating hemophilia A patients worldwide to be over $3
billion per year.

  Preclinical Studies

     The factor VIII gene is much larger than the factor IX gene, and therefore
poses an additional challenge for using AAV vectors as a delivery mechanism. Our
preclinical studies have investigated two different approaches for delivering
this large gene to the liver. One approach utilizes a single vector to deliver
the factor VIII gene, while the second approach uses two separate vectors to
deliver the factor VIII gene in two parts. Our tests using a hemophilia A mouse
model have demonstrated that biologically active factor VIII can be expressed at
therapeutic levels in treated animals using both approaches, with no adverse
side effects being observed. In addition, these levels of factor VIII expression
have corrected the bleeding condition in these animals.

     Recently, we initiated additional preclinical studies to further test the
effectiveness of both approaches in dogs with hemophilia A. We expect the data
from our preclinical studies to provide support for the feasibility of using at
least one of these approaches for using AAV vectors containing the factor VIII
gene to treat human subjects.

PARKINSON'S DISEASE

     Parkinson's disease is a common neurological disorder which affects 600,000
to one million people in the United States. This disease is commonly
characterized by an increase in spontaneous movements, gait difficulty, postural
instability, rigidity and tremor. These symptoms result from a decrease in the
availability of dopamine, a chemical which is essential to the transmission of
nerve impulses, in certain parts of the brain that are critical to movement and
motor control. Currently, the primary treatment for Parkinson's disease is the
compound L-dopa, which is converted to dopamine in the brain. After a few years
of treatment, however, L-dopa tends to lose its effectiveness, requiring higher
doses to effectively manage the symptoms and producing increased side effects.
We believe the current amounts spent on all Parkinson's disease treatments in
the United States and Europe to be $800 million to $1 billion per year.
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     One theory for the declining effectiveness of L-dopa is that the level of
an enzyme in the patient's brain that converts L-dopa to dopamine drops below a
critical threshold. Avigen's strategy is to use AAV vectors to deliver the gene
for AADC, or aromatic-amino-acid-decarboxylase, the enzyme that converts L-dopa
to dopamine.

     We have conducted preclinical studies using a primate model in
collaboration with Krys Bankiewicz, MD, PhD, Associate Professor in the
Department of Neurosugery at the University of California, San Francisco. In
June 2001, Dr. Bankiewicz presented data at the American Society for Gene
Therapy meeting in Seattle which demonstrated that the animals have improved
clinical results. We expect that data from our continued collaboration in
preclinical studies with Dr. Bankiewicz will eventually provide support for
treating human patients and form the basis for a human clinical trial.

GAUCHER DISEASE

     Gaucher disease is a potentially fatal inherited disorder caused by a
defect in the gene for a protein called glucocerebrosidase which results in
abnormalities in blood cells and bone marrow cells. The 10,000 - 20,000 patients
with the disease worldwide frequently suffer from anemia, bone damage, and
enlarged livers and spleens. The disease is currently treated by protein
replacement therapy, of which worldwide annual sales approach $500 million.

     Building on the same technology platform and principles used in the
hemophilia programs, Avigen is performing research to evaluate whether it is
feasible to develop a product to treat Gaucher disease. AAV vectors containing
the gene for glucocerebrosidase have been delivered to the livers of mice and
biologically active glucocerebrosidase protein has been detected in both the
liver and plasma of these treated mice for over eight months.

PATENTS AND INTELLECTUAL PROPERTY

     Patents and other proprietary rights are important to our business. Our
policy is to file patent applications and protect technology, inventions and
improvements to inventions that are commercially important to the development of
our business. With respect to products, we seek patent protection on:

     - the product itself;

     - methods of using the product;

     - methods of manufacturing the product; and

     - methods of administering the product to certain tissues.

     We also rely on trade secrets, know-how, continuing technology innovations
and licensing opportunities to develop and maintain our competitive position.

     As of August 31, 2001, we had 24 issued or licensed U.S. patents and 40
pending U.S. patent applications, most of which have been filed internationally.
Some of the patent applications are co-owned with co-inventors or institutions.
Avigen has exclusive worldwide licenses to seven patents, three of which are
co-owned with others, and non-exclusive licenses to four U.S. patents. The
patents we hold or license are set to expire in the U.S. between 2008 and 2019.
Under the terms of some of these licenses, we must pay royalties on the sales of
products using the licensed technology, and in some cases are required to make
payments upon the attainment of developmental milestones.

     We currently investigate and use certain gene sequences or proteins encoded
by those sequences, including the factor VIII gene, and manufacturing processes
that are or may become patented by others. As a result, we may be required to
obtain licenses to these gene sequences or proteins or other technology in order
to test, use or market products. However, we may not be able to obtain these
licenses on terms favorable to us.

     We cannot be assured that other patents will issue from any of the
applications by or licensed to Avigen, or that any patent will issue on
technology arising from additional research or, if patents do issue, that claims
allowed will be sufficient to protect our technology. The patent application
process takes several years and
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entails considerable expense. In addition, with respect to each of our co-owned
patent applications, we have executed or are in discussions with the
co-inventors to execute an option to obtain an exclusive, worldwide,
transferable, royalty-bearing license for the technology. In the event we are
unable to negotiate exclusive rights to the co-owned technology, each
co-inventor may have rights to independently make, use, offer to sell or sell
the patented technology. Commercialization, assignment or licensing of the
technology by a co-inventor could harm our business. The failure to obtain
patent protection on these technologies or proposed products may harm our
competitive position and business prospects.

     The patent positions of pharmaceutical and biotechnology firms are
generally uncertain and involve complex legal and factual questions. To date,
there has emerged no consistent policy regarding the breadth of claim allowed in
biotechnology patents. Patent applications in the United States are maintained
in secrecy until a patent issues, and we cannot be certain that others have not
filed applications for technology covered by its patent applications or that we
were first to file patent applications for the technology. Competitors may have
filed applications for, or may have received, patents and may obtain additional
patents and proprietary rights relating to compounds or processes that block or
compete with our patents.

     We cannot ensure that third parties will not assert patent or other
intellectual property infringement claims against us with respect to our
products or technology or other matters. There may be third-party patents and
other intellectual property relevant to our products and technology that are not
known to us. A number of the gene sequences or proteins encoded by certain of
those sequences that we are investigating or may use in our products are or may
become patented by others. As a result, we may be required to obtain licenses to
the gene sequences or other technology in order to test, use or market products
that contain proprietary gene sequences or encode proprietary proteins. For
example, in connection with our hemophilia B program, we obtained a license to
the gene for factor IX. We cannot ensure that we will be able to obtain any
other licenses on terms favorable to us, if at all.

     Patent litigation is becoming more widespread in the biotechnology
industry. Litigation may be necessary to defend against or assert claims of
infringement, to enforce patents issued to us, to protect trade secrets owned by
us, or to determine the scope and validity of proprietary rights of third
parties. Although no third party has asserted that we are infringing the third
party's patent rights or other intellectual property, we cannot ensure that
litigation asserting these claims will not be initiated, that we would prevail
in any litigation, or that we would be able to obtain any necessary licenses on
reasonable terms, if at all. Any claims against us, with or without merit, as
well as claims initiated by us against third parties, can be time-consuming and
expensive to defend or prosecute and to resolve. If our competitors prepare and
file patent applications in the United States that claim technology also claimed
by us, we may have to participate in interference proceedings declared by the
Patent and Trademark Office to determine priority of invention, which could
result in substantial cost to us, even if the outcome is favorable to us. In
addition, to the extent outside collaborators apply technological information
developed independently by them or by others to our product development programs
or apply our technologies to other projects, disputes may arise as to the
ownership of proprietary rights to the technologies.

     We also rely on a combination of trade secret and copyright law, employee
and third-party nondisclosure agreements, and other protective measures to
protect intellectual property rights pertaining to our products and technology.
We cannot ensure that these agreements will provide meaningful protection of its
trade secrets, know-how or other proprietary information in the event of any
unauthorized use, misappropriation or disclosure of its trade secrets, know-how
or other proprietary information. In addition, the laws of certain foreign
countries do not protect intellectual property rights to the same extent as do
the laws of the United States. We cannot ensure that we will be able to protect
our intellectual property successfully.

LICENSING AND RESEARCH AGREEMENTS

     Research Corporation Technologies. In May 1992, we entered into a license
agreement with Research Corporation Technologies, Inc. ("RCT") for rights to a
patent and patent application relating to a cell-specific promoter in AAV
vectors. The license is exclusive and worldwide. In consideration for the
license, we paid an initial license fee and issued 247,949 shares of our common
stock. In addition, under the agreement, we are required to pay RCT royalties
based on net sales of products which utilize the licensed technology.

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     The Children's Hospital of Philadelphia. In May 1999, we entered into an
agreement with The Children's Hospital of Philadelphia ("CHOP") for rights to
certain patents related to vectors and methods for treating hemophilia B using
recombinant AAV vectors. The license is exclusive and worldwide for the duration
of the patent, or approximately 2017. Under the license, we must exercise our
best efforts to achieve certain research, clinical, and commercial milestones.
In consideration for the license, we paid an initial license fee and are
required to pay CHOP royalties based on net sales of products which utilize the
licensed technology.

     BTG International. In March of 2000, we entered into an agreement with BTG
International for rights to certain patents related to the factor IX gene. The
license is non-exclusive and worldwide for the duration of the last to expire
patent, or approximately 2008. In consideration for the license, we paid an
initial license fee and issued 50,000 warrants to purchase our common stock. The
warrants were issued with a strike price equal to the fair market value on the
effective date of the agreement. We are also required to make additional
payments at the completion of certain clinical and regulatory milestones, as
well as a royalty based on net sales of product sales falling within the scope
of the license.

     Lawrence Berkeley National Laboratory. In July 2001, we entered into an
agreement with Lawrence Berkeley Laboratory ("LBL") for rights to a joint
invention relating to the treatment of Parkinson's disease. The license is
exclusive and worldwide for the duration of the last to expire patent, or
approximately 2018. In consideration for the license, we paid an initial license
fee and are required to pay LBL royalties based on net sales of products which
utilize the licensed technology.

     We have entered into other exclusive and nonexclusive license agreements
with certain research institutions and their representatives. Although specific
terms of the licenses vary, all of such licenses require us to achieve certain
development milestones. In addition, the agreements require us to pay certain
license fees and royalties to the licensors. All of the licenses provide for a
term which extends for the life of the underlying patent.

     The failure to achieve any required development milestones or to negotiate
appropriate extensions of any of our license agreements or to make all required
milestone and royalty payments when due, and the subsequent decision of any such
institution to terminate such license could have a material adverse effect on
our financial position.

COLLABORATION AGREEMENT

     Bayer Corporation. In November 2000, we announced a collaboration agreement
with Bayer Corporation, a worldwide health care and life sciences company and
leader in the development, manufacture, and distribution of hemophilia
treatments. Under the terms of the agreement, Bayer, in collaboration with
Avigen, will conduct the planned Phase II/III clinical trials for Avigen's
Coagulin-B gene therapy treatment for hemophilia B, and receive exclusive
worldwide marketing and distribution rights to the product. Avigen will file for
regulatory approvals and will be the holder of regulatory licenses worldwide,
including the United States, European Union, Canada, and Japan. Avigen will
manufacture the product and will receive a substantial share of the gross
revenues from future Coagulin-B sales, as well as a royalty on net sales of the
product for its intellectual property. The agreement also calls for Bayer to
make milestone payments to Avigen, pay for third-party costs of the clinical
trials, and pay Avigen's costs of manufacturing AAV vector used in the trials.
Under the terms of the deal, Bayer AG, an affiliate of Bayer Corporation,
purchased shares of our common stock for $15 million, which was at a premium to
the market price set at the time the deal was announced. The sale of the common
stock to Bayer AG was completed in February 2001, and was reflected in our
financial statements at June 30, 2001.

RESEARCH REVENUES AND EXPENSES

     Research and development expense for the years ended June 30, 2001, 2000
and 1999 for Avigen-sponsored research was $17.0 million, $8.0 million, and $6.5
million, respectively. Of that, $86,000, $58,000 and $185,000, respectively, was
reimbursed by third parties and reflected as grant revenues on the statement of
operations.
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     In 1998, Johns Hopkins University and Avigen entered into an agreement
under which Johns Hopkins University agreed to provide research funding through
a National Institutes of Health Grant. The funded project consisted of
researching Capsid-Targeted Viral Inactivation in the treatment of HIV. The
agreement was extended through March 2001, but has now expired. As of June 30,
2001, we were no longer party to any agreements that would reimburse our
research and development expenses from a third party.

MANUFACTURING

     We have developed a proprietary manufacturing process for AAV vectors and
have implemented government mandated manufacturing policies and procedures. The
manufacturing process involves the introduction into cells of a set of genes
that provide the cells with the instructions to make the AAV vector. After a
period of AAV vector production, the cells are recovered, broken apart, and AAV
vectors are purified from the resulting mixture. We perform a set of tests to
confirm the purity and activity of the material. Our manufacturing process does
not involve the use of adenovirus. We believe we have the capacity to
manufacture AAV vectors in commercial-scale quantities, and with the completion
of our second manufacturing facility, we believe we shall soon be able to
produce enough product to support the needs of two independent clinical trials.

COMPETITION

     The field of gene therapy drug development is new and rapidly evolving, and
it is expected to continue to undergo significant and rapid technological
change. We expect that we will experience intense competition both from other
companies in the gene therapy field and from companies that have other forms of
treatment for the diseases currently being targeted. We are aware of several
development-stage and established enterprises, including major pharmaceutical
and biotechnology firms, that are exploring gene-based drugs or are actively
engaged in gene delivery research and development. These include companies
making protein therapies for hemophilia, Gaucher disease, and anemia such as
Amgen Inc., Aventis S.A., Bayer Corporation, Baxter Healthcare Corporation,
Genzyme Corporation, Johnson & Johnson and Wyeth-Ayerst Laboratories. In
addition, companies directly engaged in gene therapy product development
include: Cell Genesys, Inc., Chiron Corporation, Genstar Corp., Medigene AG,
Targeted Genetics Corporation, and Transkaryotic Therapies, Inc.

     Many of our competitors or potential competitors have substantially greater
financial and other resources, larger research and development staffs, and more
extensive marketing and manufacturing organizations, than we do. In addition,
some of them have considerable experience in preclinical testing, clinical
trials and other regulatory approval procedures. There are also academic
institutions, governmental agencies and other research organizations that are
conducting research in areas in which we are working. They may also market
commercial products, either on their own or through collaborative efforts.

     Companies that complete clinical trials, obtain required regulatory
approvals, and commence commercial sales of their products before their
competitors, may achieve a significant competitive advantage. We are aware that
other companies or institutions are pursuing development of new drugs and
technologies directly targeted at applications for which we are developing drug
compounds. For example, we are aware that Transkaryotic Therapies is conducting
a Phase I/II clinical trial to treat hemophilia A patients using a nonviral
vector-based system.

     In order to compete successfully, we must develop proprietary positions in
patented products for therapeutic markets that have not been satisfactorily
addressed by conventional research strategies and, in the process, expand our
expertise in its AAV vector gene therapy products. Our products, even if
successfully tested and developed, may not be adopted by physicians over other
products and may not offer economically feasible alternatives to other
therapies.

GOVERNMENT REGULATION

     The production and marketing of our proposed products are subject to
regulation for safety, efficacy, and quality by numerous governmental
authorities in the United States and other countries. In the United States,
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<PAGE>   12

pharmaceutical products are subject to rigorous regulation by the FDA under the
Federal Food, Drug, and Cosmetic Act. Biological products, in addition to being
subject to certain provisions of this act, are also regulated under the Public
Health Service Act. These laws and the regulations promulgated thereunder
govern, among other things, testing, manufacturing, safety, efficacy, labeling,
storage, record keeping, advertising and promotional practices, and import and
export of drugs and biological products. In general, the Center for Biologics
Evaluation and Research holds primary responsibility for the regulation of
biological products and has handled the IND application submissions of most gene
therapy products to date. At the present time, we believe that our products will
be regulated as biologics by the FDA and comparable foreign regulatory bodies.
Gene therapy is, however, a relatively new technology and has not been
extensively tested in humans. The regulatory requirements governing gene therapy
products are uncertain and are subject to change. No gene therapy products have
been approved to date in the United States or any foreign country.

     Under the National Institutes of Health ("NIH") guidelines for research
involving recombinant DNA molecules, clinical protocols involving human gene
transfer conducted at institutions receiving NIH funds cannot be initiated
without simultaneous submission of information describing the proposed clinical
protocol to both the NIH and the FDA. Submission to the FDA will be in the form
of an IND application, while submission to the NIH shall be for registration
purposes and determination regarding the necessity of full review by the
Recombinant DNA Advisory Committee, or "RAC," of the NIH. Full RAC review of an
individual human gene transfer protocol can be initiated by the NIH director or
recommended to the NIH director by three or more RAC members or other federal
agencies. An individual human gene transfer protocol that is recommended for
full RAC review should represent novel characteristics deserving of public
discussion. Prior to submission of a human gene transfer experiment to NIH, the
principal investigator must obtain Institutional Biosafety Committee approval
from each institution that will handle recombinant DNA material that is to be
administered to human subjects and institutional review board, or "IRB,"
approval from each institution in which human subjects will undergo gene
transfer. The review process conducted by the NIH and the FDA can be
unpredictable and may result in considerable time and expense to us.

     The steps required before a new drug, including a biological product, may
be marketed in the United States generally include:

     - preclinical laboratory tests and preclinical animal studies;

     - the submission to the FDA of an IND application for human clinical
       testing, which must become effective before human clinical trials
       commence;

     - adequate and well-controlled human clinical trials to establish the
       safety and efficacy of the product;

     - the submission to the FDA of a Biologics License Application, or "BLA,"
       for a biological product;

     - successful inspection of manufacturing facilities by the FDA as part of
       the BLA approval process; and

     - FDA approval of the BLA prior to any commercial sale or shipment of the
       biological product.

     Domestic drug and biological manufacturing establishments are subject to
inspections at any time by the FDA and must comply with good manufacturing
practices regulations enforced by the FDA through its facilities inspection
program. Manufacturers of biological products also must comply with FDA general
biological product standards. In addition, since our manufacturing facilities
are all located in California, we have obtained a drug manufacturing license
from the State of California for any of our products administered to humans,
including products intended for clinical trials.

     Preclinical studies include laboratory evaluation of the product, as well
as animal studies to assess the potential safety and, if possible, efficacy of
the product. Preclinical safety studies must be conducted by laboratories that
comply with FDA regulations regarding good laboratory practices. The results of
the preclinical tests, together with manufacturing information and analytical
data, are submitted to the FDA as part of an IND, which must become effective
before human clinical trials may be commenced. The IND will become automatically
effective 30 days after its receipt by the FDA unless the FDA indicates prior to
the end of the 30-day period that it does not wish the trials to proceed as
outlined in the IND. In this case, the IND

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<PAGE>   13

sponsor and the FDA must resolve any outstanding concerns before clinical trials
can proceed. We cannot assure you that submission of an IND will result in FDA
authorization to commence clinical trials.

     Clinical trials must be conducted in accordance with the FDA's good
clinical practice guidelines and must be approved by the IRB at the institution
where the study will be conducted. The IRB will consider, among other things,
safety, and ethical issues, proper informed consent of the human subjects,
possible issues relating to health care costs and potential liability of the
institution. The IRB may require changes in a protocol, and we cannot assure you
that the IRB will permit any given study to be initiated or completed.

     Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. Phase I typically involves the initial introduction of the
drug into patients primarily to determine the drug's safety, metabolism,
pharmacokinetics and pharmacological actions in humans, and the side effects
associated with increasing doses. Phase II typically involves studies in a
limited patient population:

     - to further identify possible adverse effects and safety risks;

     - to determine the efficacy of the drug for specific diseases; and

     - to determine dosage tolerance and optimal dosage.

     If the drug appears to be effective and to have an acceptable safety
profile in Phase II evaluations, Phase III trials are undertaken to evaluate
efficacy and safety within an expanded patient population typically at
geographically dispersed clinical study sites. We cannot assure you that Phase
I, Phase II, or Phase III testing will be completed successfully within any
specific time period, if at all, with respect to any of our products subject to
this testing. Furthermore, the FDA may suspend clinical trials at any time on
various grounds, including a finding that patients are being exposed to an
unacceptable health risk. FDA regulations also subject sponsors of clinical
investigations to numerous regulatory requirements related to, among other
things, selection of qualified investigators, proper monitoring of
investigations, record keeping and record retention and notice to investigators
and the FDA of any death or serious unexpected adverse reaction. In addition,
the FDA may require post marketing clinical studies, sometimes referred to as
Phase IV clinical trials, which will require extensive patient monitoring and
record keeping and may result in restricted marketing of the product for an
extended period of time.

     The results of the pharmaceutical development, preclinical studies, and
clinical trials are submitted to the FDA in the form of a BLA for approval of
the manufacture, marketing, sale, and commercial shipment and distribution of
the biological product. The testing and approval process is likely to require
substantial time and effort, and we cannot assure you that any approval will be
granted on a timely basis, if at all. The FDA may deny a BLA if applicable
regulatory criteria are not satisfied, require additional testing or
information, or require post marketing testing and surveillance to monitor the
safety or efficacy of a product. Moreover, if regulatory approval of a
biological product is granted, this approval may entail limitations on the
indicated uses for which it may be marketed. Finally, product approvals may be
withdrawn if compliance with regulatory standards is not maintained or if
problems occur following initial marketing. Among the conditions for BLA
approval is the requirement that the prospective manufacturer's quality control
and manufacturing procedures conform to good manufacturing practices, which must
be followed at all times. In complying with standards set forth in these
regulations, manufacturers must continue to expend time, financial resources,
and effort in the area of production and quality control.

     In accordance with the Orphan Drug Act, the FDA may grant Orphan Drug
status to certain drugs intended to treat a "rare disease or condition" defined
as a disease or condition which affects fewer than 200,000 people in the United
States, or which affects more than 200,000 people for which the cost of
developing and marketing the drug will not be recovered from sales of the drug
in the United States. An approved Orphan Drug may provide certain benefits
including exclusive marketing rights in the United States to the drug for the
approved disease for seven years following marketing approval and federal income
tax credits for certain clinical trial expenses. In July 2001, Avigen announced
that we were notified by the FDA that Coagulin-B, our AAV vector for treating
hemophilia B delivered via intramuscular injection or infusion to the liver,
qualified for orphan drug designation. In addition, we believe that some of our
other potential products may qualify for Orphan Drug status as well, but we
cannot assure you that these products will receive
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<PAGE>   14

FDA approval or that Coagulin-B or our other potential products will receive any
benefit under the Orphan Drug Act. In addition, there is no assurance that
potential benefits provided by the Orphan Drug Act will not be significantly
limited by amendment by the United States Congress and/or reinterpretation by
the FDA.

     For clinical investigation and marketing outside the United States, we are
also subject to foreign regulatory requirements governing clinical trials and
marketing approval for pharmaceutical products. In Europe, the approval process
for the commencement of clinical trials varies from country to country. The
foreign regulatory approval process includes all of the risks associated with
FDA approval set forth above.

     In addition to regulations enforced by the FDA, we are also subject to
regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act, and other federal, state and local regulations. Our research and
development activities involve the controlled use of hazardous materials,
chemicals, biological materials, and various radioactive compounds. Although we
believe that our safety procedures for handling and disposing of these materials
comply with the standards prescribed by state and federal regulations, we could
be held liable for any damages that result from accidental contamination or
injury and this liability could exceed our resources.

LIABILITY INSURANCE

     The manufacture and sale of medical products entail significant risk of
liability claims. We have established liability insurance prior to beginning our
clinical trials; however, there can be no assurance that this coverage will be
adequate to protect us from any liabilities we might incur in connection with
the testing of our products in clinical trials or future sale of our products
upon commercialization. In addition, we may require increased product liability
coverage as additional products are used in clinical trials and commercialized.
This insurance is expensive and may not be available on acceptable terms in the
future, if at all. A successful liability claim or series of claims brought
against us in excess of its insurance coverage could have a material adverse
effect on our business and results of operations.

EMPLOYEES

     As of August 31, 2001, Avigen had 127 full-time employees, 28 of whom have
Ph.D. or M.D. degrees, including 102 employees in research and development, and
25 in general administration, finance, legal, and regulatory and clinical
affairs. We also rely on a number of part-time employees and consultants. None
of our employees are represented by a collective bargaining agreement nor have
we ever experienced a work stoppage. We believe that our relationship with our
employees is good.

SCIENTIFIC ADVISORY BOARD

     We have established a Scientific Advisory Board, consisting of experts in
the field of medicine, genetics and molecular biology, which reviews and
evaluates our research programs and advises us with respect to technical matters
in fields in which we are involved. The members of the Scientific Advisory Board
are prominent scholars in their field and, as a result, may serve as consultants
to a wide variety of companies. Our Scientific Advisory Board consists of the
following individuals:

     Alan McClelland, Ph.D. (Chairman), serves as Vice President, Research and
Development, of Avigen.

     Jef D. Boeke, Ph.D., D.Sc., is Professor of Molecular Biology & Genetics
and Professor of Oncology at The Johns Hopkins University School of Medicine.
Dr. Boeke studies the mechanism of insertion of mobile elements into DNA. He has
authored more than 150 publications.

     Katherine A. High, M.D., is the William H. Bennett Associate Professor of
Pediatrics at the University of Pennsylvania in Philadelphia and the Director of
Research of the Hematology Division at The Children's Hospital of Philadelphia.
Dr. High is an expert in both basic and clinical aspects of blood coagulation
and is a well-recognized authority on gene transfer for bleeding disorders. She
is an officer of the American Society of Gene Therapy and on the editorial board
of Molecular Therapy, the journal of ASGT.

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     Mark A. Israel, M.D., is Professor of Pediatrics and Genetics at Dartmouth
Medical School. He is Director of the Norris Cotton Cancer Center of
Dartmouth-Hitchcock Medical Center. Dr. Israel's research has focused on the
molecular and cellular biology of tumors of the nervous system. He has authored
more than 200 publications

     Yuichi Iwaki, M.D., Ph.D., serves as a director of Avigen, and is a
Professor of the Departments of Urology and Pathology at the University of
Southern California. He is currently Director of the Transplantation Immunology
and the Immunogenetic Laboratory. Dr. Iwaki also holds visiting professorships
at Nihon University School of Medicine in Japan, at the University of Pittsburgh
School of Medicine, and at the University of California, Irvine.

     Y.W. Kan, M.D., D.Sc., is the Louis K. Diamond Professor of Hematology at
the University of California at San Francisco. He also is an Investigator of the
Howard Hughes Medical Institute. Dr. Kan was the 1991 recipient of the Albert
Lasker Clinical Medical Research Award and is noted as a leader in the fields of
sickle cell anemia and thalassemia.

     Dr. Randal J. Kaufman, Ph.D., is a Professor of Biological Chemistry and
Investigator of the Howard Hughes Medical Institute at the University of
Michigan Medical School. Dr. Kaufman and scientists at Genetics Institute were
the first to isolate the factor VIII gene and develop recombinant factor VIII
for the treatment of hemophilia A. Dr. Kaufman is an expert on the molecular
biology of factor VIII and the treatment of Hemophilia A. A major part of his
present research is aimed at elucidating fundamental mechanisms that regulate
protein folding and cellular responses to unfolded protein within the secretory
pathway. He has authored over 200 publications.

     Mark Kay, M.D., Ph.D., is the Director of the Program in Human Gene
Therapy, and Professor in the Department of Pediatrics and Genetics at Stanford
University School of Medicine. Dr. Kay is one of the founders of the American
Society of Gene Therapy. Dr. Kay received the E. Mead Johnson Award for Research
in Pediatrics in 2000 and was elected to the American Society for Clinical
Investigation in 1997. He is respected worldwide for his work in gene therapy
for hemophilia. He is also an Associate Editor of Human Gene Therapy and is a
member of the editorial boards of Gene Therapy and Molecular Therapy.

     Haig H. Kazazian, Jr., M.D., is the Seymour Gray Professor and Chairman in
the Department of Genetics at the University of Pennsylvania School of Medicine.
He is the immediate past president of the American Board of Medical Genetics and
a member of the Institute of Medicine. Dr. Kazazian is best known for his
research which was instrumental to the molecular characterization of
beta-thalassemia. He also was first to discover active "jumping genes" in human
beings and has elucidated a number of mechanisms by which these mobile elements
have a major impact on the evolution of our genome. In addition, Dr. Kazazian's
lab has characterized the molecular defects in hemophilia A and developed a
small animal model of the disease.

     Keiya Ozawa, M.D., Ph.D., is a professor and chairman of the Department of
Hematology, Division of Cell Transplantation and Transfusion, and Division of
Genetic Therapeutics, Center for Molecular Medicine, at Jichi Medical School in
Japan, where he has established research and preclinical programs in gene
therapy. Dr. Ozawa is regarded as one of the leading authorities on gene therapy
in Japan and is responsible for drafting the Japanese government's gene therapy
guidelines. He has authored more than 190 publications regarding hematology,
virology and gene therapy.

     Jeffrey M. Rosen, Ph.D., is the C.C. Bell Professor of Molecular and
Cellular Biology at Baylor College of Medicine. Dr. Rosen is an internationally
recognized expert in the field of gene expression. His research focuses
primarily on the mechanisms by which hormones and growth factors regulate gene
expression and development in the mammary gland and how these mechanisms have
been altered in breast cancer. Dr. Rosen has served on the editorial boards of
the Journal of Biological Chemistry, Molecular and Cellular Endocrinology, and
Executive Editor of NucleicAcids Research and he is currently an Associate
Editor of Molecular Endocrinology. He is the recipient of the Endocrine Society
Edwin B. Astwood Lecture Award.

     David W. Russell, M.D.,Ph.D., is an Associate Professor in the Department
of Medicine at the University of Washington in Seattle. He is an expert on the
development of viral vectors for gene therapy, especially on
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the transduction mechanisms of AAV vectors. Dr. Russell's research interests
focus on stem cells and the manipulation of mammalian chromosomes.

                                  RISK FACTORS

     This section briefly discusses certain risks that should be considered by
stockholders and prospective investors in Avigen. Many of these risks are
discussed in other contexts in other sections of this report.

WE EXPECT TO CONTINUE TO OPERATE AT A LOSS AND WE MAY NEVER ACHIEVE
PROFITABILITY

     Since Avigen's inception in 1992, we have not been profitable, and we
cannot be certain that we will ever achieve and sustain profitability. To date,
we have been engaged in research and development activities and have not
generated any revenues from product sales. As of June 30, 2001, we had an
accumulated deficit of $67.8 million. The process of developing our products
will require significant research and development, preclinical testing and
clinical trials, as well as regulatory approval. We expect these activities,
together with our general and administrative expenses, to result in operating
losses for the foreseeable future. Our ability to achieve profitability will
depend, in part, on our ability to successfully complete development of our
proposed products, obtain required regulatory approvals and manufacture and
market our products directly or through partners.

OUR CLINICAL TRIALS FOR COAGULIN-B FOR THE TREATMENT OF HEMOPHILIA B ARE
CONDUCTED WITH A SMALL NUMBER OF PATIENTS OVER A SHORT PERIOD OF TIME, AND THE
RESULTS REPORTED MAY NOT BE INDICATIVE OF FUTURE RESULTS IN A LARGER NUMBER OF
PATIENTS OR HAVE LASTING EFFECTS

     Our current Coagulin-B clinical trial studies are based upon the
evaluations of very small groups of patients and any reported progress or
results may not be indicative of subsequent progress or results achieved from
larger populations, which could be less favorable. Also, since our Coagulin-B
clinical trial studies to date are still in very early stages, we do not yet
know if any favorable results achieved will have a lasting effect. If a larger
population of patients does not experience positive results, or any favorable
results do not demonstrate a lasting effect, this product candidate may not
receive approval from the FDA for further studies or commercialization. In
addition, any report of clinical trial results that are below the expectations
of financial analysts or investors would most likely cause our stock price to
drop dramatically.

THE SUCCESS OF OUR TECHNOLOGY IN ANIMAL MODELS DOES NOT GUARANTEE THAT THE SAME
RESULTS WILL BE REPLICATED IN HUMANS

     Even though our product candidates have shown successful results in mouse
and dog models, animals are different than humans and results in animal models
may not be replicated in our clinical trials with humans. For example, while the
results of our gene therapy treatment for hemophilia B were favorable in both
dogs and mice, the measured levels of factor IX gene expression for comparable
dosage sizes relative to body mass were different between the two animals.
Consequently, you should not rely on the results in any of our animal models as
being predictive of the results that we will see in our clinical trials with
humans.

BECAUSE OUR PRODUCT CANDIDATES ARE IN AN EARLY STATE OF DEVELOPMENT, THERE IS A
HIGH RISK THAT THEY MAY NEVER BE COMMERCIALIZED

     We do not have any product candidates that have received regulatory
approval for commercial sale, and we face the risk that none of our product
candidates will ever receive regulatory approval. All of our product candidates
are in early stages of development. We have only one product candidate,
Coagulin-B for the treatment of hemophilia B, in clinical trials, and this
product candidate is only in phase I of the clinical trial process. We are not
aware of any gene therapy products of other companies that have received
regulatory approval for commercial sale, and do not expect any of our
prospective products, including Coagulin-B for the treatment of hemophilia B, to
be commercially available for at least several years. As results of future
stages of clinical trials become available and are evaluated, we may decide at
any time to discontinue any further development of one or more of our potential
products.
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TECHNOLOGICAL CHANGE MAY MAKE OUR POTENTIAL PRODUCTS AND TECHNOLOGIES LESS
ATTRACTIVE OR OBSOLETE

     Gene therapy is new and rapidly evolving and is expected to continue to
undergo significant and rapid technological change. Rapid technological
development could result in our actual and proposed technologies, products or
processes becoming less attractive or obsolete.

ADVERSE EVENTS IN THE FIELD OF GENE THERAPY MAY NEGATIVELY IMPACT REGULATORY
APPROVAL OR PUBLIC PERCEPTION OF OUR POTENTIAL PRODUCTS

     In November 1999, the death of a patient involved in a clinical trial
unrelated to Avigen, which was testing a viral-based gene therapy treatment for
a rare metabolic disorder using adenovirus, was widely publicized. This death
and other potential adverse events in the field of gene therapy, as well as any
potential adverse events from other types of drug development clinical trials,
that may occur in the future could result in greater governmental regulation of
our potential products and potential regulatory delays relating to the testing
or approval of our potential products.

     The commercial success of our potential products will depend in part on
public acceptance of the use of gene therapy for the prevention or treatment of
human diseases. Public attitudes may be influenced by claims that gene therapy
is unsafe, and consequently our products may not gain the acceptance of the
public or the medical community. Negative public reaction to gene therapy in
general could result in greater government regulation and stricter labeling
requirements of gene therapy products, including any of our products, and could
cause a decrease in the demand for any products we may develop.

OUR POTENTIAL PRODUCTS MUST UNDERGO RIGOROUS CLINICAL TESTING AND REGULATORY
APPROVALS, WHICH COULD SUBSTANTIALLY DELAY OR PREVENT US FROM MARKETING ANY
PRODUCTS

     The clinical trial process is complex, uncertain and expensive. Positive
results from preclinical studies and early clinical trials do not ensure
positive results in clinical trials designed to permit application for
regulatory approval. Prior to marketing in the United States, any product
developed by us must undergo rigorous preclinical testing and clinical trials as
well as an extensive regulatory approval process implemented by the FDA. The FDA
approval process is typically lengthy and expensive, and approval is never
certain. Because of the risks and uncertainties in biopharmaceutical
development, our gene therapy products could take a significantly longer time to
gain regulatory approval than we expect or may never gain FDA approval. If we do
not receive these necessary approvals from the FDA, we will not be able to
generate substantial revenues and will not become profitable. We may encounter
significant delays or excessive costs in our efforts to secure regulatory
approvals. Factors that raise uncertainty in obtaining these regulatory
approvals include:

     - gene therapy is a new, largely unproven and rapidly evolving technology;

     - to date, there has been only limited research and development in gene
       therapy using adeno-associated virus ("AAV") vectors, which we believe
       will cause clinical trials to proceed more slowly than clinical trials
       involving traditional drugs;

     - FDA approval, which may be withheld, is required to begin clinical trials
       of our potential products;

     - we must demonstrate through clinical trials that the proposed product is
       safe and effective for its intended use;

     - we are not aware of any gene therapy products that have obtained
       marketing approval from the FDA;

     - whether or not our product candidates cause patients to develop
       antibodies to these potential products or the proteins produced by these
       potential products;

     - the regulatory requirements governing gene therapy products are uncertain
       and are subject to change;

     - none of our proposed products have yet been involved in tests designed to
       measure their effectiveness in humans; and

                                        15
<PAGE>   18

     - data obtained from preclinical and clinical activities are susceptible to
       varying interpretations which could delay, limit or prevent regulatory
       approvals.

     Failure to comply with applicable FDA or other regulatory requirements may
result in criminal prosecution, civil penalties and other actions that would
seriously impair our ability to conduct our business. Even if regulatory
approval is granted for a product, this approval will be limited to those
disease states and conditions for which the product is useful, as demonstrated
through clinical trials.

AAV TECHNOLOGY IS STILL NEW AND DEVELOPING RAPIDLY; VERY LITTLE CLINICAL DATA
RESULTS EXIST AND NEW INFORMATION MAY ARISE WHICH MAY CAUSE US DELAYS IN
DESIGNING OUR PROTOCOLS, SUBMITTING APPLICATIONS THAT SATISFY ALL NECESSARY
REGULATORY REVIEW REQUIREMENTS, AND ULTIMATELY COMPLETING THE CLINICAL TRIALS OF
OUR PRODUCTS

     Clinical trials are governed by regulations enforced by the FDA. Our
technology is fairly new, and we have limited historical data from preclinical
studies or clinical trials that are often necessary to satisfy the FDA's
regulatory review process. In addition, as new information about the technology
becomes available, it may change perceptions of previously accepted data, which
could require additional periods of time to review and interpret these data.
Consequently, we may encounter deficiencies in the design or application stages
while developing our clinical trial studies, or in the subsequent implementation
stages of such studies, which could cause us or the FDA to delay, suspend or
terminate our trials at any time. Potential problems we may encounter in the
implementation stages of our studies include the chance that we may not be able
to conduct clinical trials at preferred sites, obtain sufficient test subjects
or begin or successfully complete clinical trials in a timely fashion, if at
all. Furthermore, the FDA may suspend clinical trials at any time if it believes
the subjects participating in trials are being exposed to unacceptable health
risks or if it finds deficiencies in the clinical trial process or conduct of
the investigation.

WE MAY NOT BE SUCCESSFUL IN OBTAINING REQUIRED FOREIGN REGULATORY APPROVALS,
WHICH WOULD PREVENT US FROM MARKETING OUR PRODUCTS INTERNATIONALLY

     We cannot be certain that we will obtain any regulatory approvals in other
countries. In order to market our products outside of the United States, we also
must comply with numerous and varying foreign regulatory requirements
implemented by foreign regulatory authorities. The approval procedure varies
among countries and can involve additional testing. The time required to obtain
approval may differ from that required to obtain FDA approval. The foreign
regulatory approval process includes all of the risks associated with obtaining
FDA approval set forth above, and approval by the FDA does not ensure approval
by the health authorities of any other country.

WE HAVE LIMITED EXPERIENCE IN MANUFACTURING OUR POTENTIAL PRODUCTS, WHICH RAISES
UNCERTAINTY ABOUT OUR ABILITY TO MANUFACTURE OUR POTENTIAL PRODUCTS
COST-EFFECTIVELY

     Even if we are able to develop our potential products and obtain necessary
regulatory approvals, we have limited experience in manufacturing any of our
proposed products on a commercial basis. If we are unable to manufacture our
products in a cost-effective manner, we are not likely to become profitable. We
have not yet received a license from the FDA for our manufacturing facilities,
and cannot apply for one until we submit our product for commercial approval.
Even if we do receive a manufacturing license, we may fail to maintain adequate
compliance with the FDA's regulations concerning current good manufacturing
practices, in which case the license, and our authorization to manufacture
product, would be revoked.

WE HAVE NO EXPERIENCE IN MARKETING OR SELLING OUR POTENTIAL PRODUCTS, WHICH
RAISES UNCERTAINTY ABOUT OUR ABILITY TO COMMERCIALIZE OUR POTENTIAL PRODUCTS
COST-EFFECTIVELY

     Even if we are able to develop our potential products and obtain necessary
regulatory approvals, we have no experience in marketing or selling any of our
proposed products. We do not anticipate establishing our own sales and marketing
capabilities for any of our potential products in the foreseeable future. We
have entered into an agreement with Bayer Corporation, a worldwide health care
and life sciences company and a leader in the development, manufacture, and
distribution of hemophilia treatments, which grants Bayer Corporation

                                        16
<PAGE>   19

exclusive worldwide marketing and distribution rights for Coagulin-B. If Bayer
Corporation does not perform under this agreement, then we would need to market
this product ourselves, and we may not be able to establish adequate marketing
capabilities for this product. Similarly, we may not be able to develop adequate
marketing capabilities for our other potential products either on our own or
through other third parties.

WE MAY BE REQUIRED TO OBTAIN RIGHTS TO PROPRIETARY GENES AND OTHER TECHNOLOGIES
TO FURTHER DEVELOP OUR BUSINESS, WHICH MAY NOT BE AVAILABLE OR MAY BE COSTLY

     We currently investigate and use certain gene sequences or proteins encoded
by those sequences, including the factor VIII gene, and manufacturing processes
that are or may become patented by others. As a result, we may be required to
obtain licenses to these gene sequences or proteins or other technology in order
to test, use or market products. We may not be able to obtain these licenses on
terms favorable to us. In connection with our efforts to obtain rights to these
gene sequences or proteins or other technology, we may find it necessary to
convey rights to our technology to others. Some of our gene therapy products may
require the use of multiple proprietary technologies. Consequently, we may be
required to make cumulative royalty payments to several third parties. These
cumulative royalties could be commercially prohibitive. We may not be able to
successfully negotiate these royalty adjustments.

IF WE DO NOT ACHIEVE CERTAIN MILESTONES, WE MAY NOT BE ABLE TO RETAIN CERTAIN
LICENSES TO OUR INTELLECTUAL PROPERTY

     We have entered into license agreements with third parties for technologies
related to our gene therapy product development programs. Some of these license
agreements provide for the achievement of development milestones. If we fail to
achieve these milestones or to obtain extensions, the licensor may terminate
these license agreements with relatively short notice to us. Termination of any
of our license agreements could harm our business.

WE EXPECT THAT WE WILL FACE INTENSE COMPETITION, WHICH MAY LIMIT OUR ABILITY TO
BECOME PROFITABLE

     Our competitors may develop more effective or more affordable products, or
commercialize products earlier than we do, which would limit the prices that we
could charge for the products that we are able to market, and prevent us from
becoming profitable. We expect increased competition from fully integrated
pharmaceutical companies and more established biotechnology companies. Most of
these companies have significantly greater financial resources and expertise
than we do in the following:

     - research and development;

     - preclinical studies and clinical trials;

     - obtaining regulatory approvals;

     - manufacturing; and

     - marketing and distribution.

     Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical
companies. Academic institutions, government agencies and other public and
private research organizations also conduct research, seek patent protection and
establish collaborative arrangements for product development and marketing. In
addition, these companies and institutions compete with us in recruiting and
retaining highly qualified scientific and management personnel.

     We are aware that other companies are conducting preclinical studies and
clinical trials for viral and non-viral gene therapy products. For example, one
of these companies is supporting clinical studies for use of AAV vectors in the
treatment of cystic fibrosis, and a second company is conducting clinical
studies for use of AAV vectors for ex vivo cancer treatments. See "Item 1.
Business -- Competition" for a more detailed discussion of the competition we
face.

                                        17
<PAGE>   20

OUR SUCCESS IS DEPENDENT UPON OUR ABILITY TO EFFECTIVELY PROTECT OUR PATENTS AND
PROPRIETARY RIGHTS, WHICH WE MAY NOT BE ABLE TO DO

     Our success will depend to a significant degree on our ability to obtain
patents and licenses to patent rights, preserve trade secrets, and to operate
without infringing on the proprietary rights of others. If we are not successful
in these endeavors, our business will be substantially impaired.

     To date, we have filed a number of patent applications in the United States
relating to our technologies. In addition, we have acquired exclusive and
non-exclusive licenses to certain issued patents and pending patent
applications. We cannot be assured that patents will issue from these
applications or that any patent will issue on technology arising from additional
research or, if patents do issue, that claims allowed will be sufficient to
protect our technologies.

     The patent application process takes several years and entails considerable
expense. The failure to obtain patent protection on the technologies underlying
our proposed products may have a material adverse effect on our competitive
position and business prospects. Important legal issues remain to be resolved as
to the scope of patent protection for biotechnology products, and we expect that
administrative proceedings, litigation or both may be necessary to determine the
validity and scope of our and others' biotechnology patents. These proceedings
or litigation may require a significant commitment of our resources in the
future. If patents can be obtained, we cannot assure you that any of these
patents will provide us with any competitive advantage. For example, others may
independently develop similar technologies or duplicate any technology developed
by us, and patents may be invalidated in litigation. In addition, several of our
patents and patent applications are co-owned with co-inventors or institutions.
Under the terms of the agreements with the co-inventors, we have obtained or
have an option to obtain an exclusive, worldwide, transferable, royalty-bearing
license for the technology. To date, we have negotiated exclusive licenses for
two of the more significant co-invented technologies. If we cannot negotiate
exclusive rights to other co-owned technology, each co-inventor may have rights
to independently make, use, offer to sell or sell the patented technology.
Commercialization, assignment or licensing of the technology by a co-inventor
could harm our business.

     We also rely on a combination of trade secret and copyright laws, employee
and third-party nondisclosure agreements and other protective measures to
protect intellectual property rights pertaining to our products and
technologies. We cannot be certain that these measures will provide meaningful
protection of our trade secrets, know-how or other proprietary information in
the event of any unauthorized use, misappropriation or disclosure of our trade
secrets, know-how or other proprietary information. In addition, the laws of
certain foreign countries do not protect our intellectual property rights to the
same extent as do the laws of the United States. We cannot assure you that we
will be able to protect our intellectual property successfully.

OTHER PERSONS MAY ASSERT RIGHTS IN OUR PROPRIETARY TECHNOLOGY, WHICH WOULD BE
COSTLY TO CONTEST OR SETTLE

     Third parties may assert patent or other intellectual property infringement
claims against us with respect to our products or technology or other matters.
Any claims against us, with or without merit, as well as claims initiated by us
against third parties, can be time-consuming and expensive to defend or
prosecute and to resolve. There may be third-party patents and other
intellectual property relevant to our products and technology which are not
known to us. We have not been accused of infringing any third party's patent
rights or other intellectual property, but we cannot assure you that litigation
asserting claims will not be initiated, that we would prevail in any litigation,
or that we would be able to obtain any necessary licenses on reasonable terms,
if at all. If our competitors prepare and file patent applications in the United
States that claim technology also claimed by us, we may have to participate in
interference proceedings declared by the Patent and Trademark Office to
determine priority of invention, which could result in substantial cost to us,
even if the outcome is favorable to us. In addition, to the extent outside
collaborators apply technological information developed independently by them or
by others to our product development programs or apply our technologies to other
projects, disputes may arise as to the ownership of proprietary rights to these
technologies.

                                        18
<PAGE>   21

IF OUR PRODUCTS ARE NOT ACCEPTED BY PHYSICIANS AND INSURERS, WE WILL NOT BE
SUCCESSFUL

     Our success is dependent on acceptance of our gene therapy products. We
cannot assure you that our products will achieve significant market acceptance
among patients, physicians or third-party payors, even if we obtain necessary
regulatory and reimbursement approvals. Failure to achieve significant market
acceptance will harm our business. We believe that recommendations by physicians
and health care payors will be essential for market acceptance of our gene
therapy products. In the past, there has been concern regarding the potential
safety and efficacy of gene therapy products derived from pathogenic viruses
such as retroviruses and adenoviruses. While our proposed gene therapy products
are derived from AAV, which is a non-pathogenic virus, we cannot be certain that
physicians and health care payors will conclude that the technology is safe.

EVEN IF WE BRING OUR PRODUCTS TO MARKET, WE MAY BE UNABLE TO EFFECTIVELY PRICE
OUR PRODUCTS OR OBTAIN ADEQUATE REIMBURSEMENT FOR SALES OF OUR PRODUCTS, WHICH
WOULD PREVENT OUR PRODUCTS FROM BECOMING PROFITABLE

     If we succeed in bringing our proposed products to the market, we cannot
assure you that these products will be considered cost-effective and that
reimbursement to the consumer will be available or will be sufficient to allow
us to sell our products on a competitive basis. In both the United States and
elsewhere, sales of medical products and treatments are dependent, in part, on
the availability of reimbursement to the consumer from third-party payors, such
as government and private insurance plans. Third-party payors are increasingly
challenging the prices charged for medical products and services. Our business
and financial condition is affected by the efforts of government and third-party
payors to contain or reduce the cost of health care through various means. In
the United States, there have been and will continue to be a number of federal
and state proposals to implement government controls on pricing. In addition,
the emphasis on managed care in the United States has increased and will
continue to increase the pressure on the pricing of pharmaceutical products. We
cannot predict whether any legislative or regulatory proposals will be adopted
or the effect these proposals or managed care efforts may have on our business.

WE MAY BE UNABLE TO ATTRACT AND RETAIN THE QUALIFIED EMPLOYEES WE NEED TO BE
SUCCESSFUL

     We are highly dependent on members of our senior management, as well as
members of our staff that lead or play critical roles in our research and
development efforts. The loss of any of these persons, or our inability to
recruit additional personnel necessary to our business, could substantially
impair our research and development efforts and impede our ability to develop
and commercialize any of our products. Recruiting and retaining qualified
technical and managerial personnel will also be critical to our success. Our
business is located in the San Francisco Bay Area in California, where demand
for personnel with these skills is extremely high and is likely to remain high.
As a result, competition for and retention of personnel, particularly for
employees with technical expertise, is intense and the turnover rate for these
people is high. In addition, we rely on consultants and advisors to assist us in
formulating our research and development strategy. A majority of our scientific
advisors are engaged by us on a consulting basis and are employed on a full-time
basis by employers other than us and some have consulting or other advisory
arrangements with other entities that may conflict or compete with their
obligations to us.

WE MUST SECURE ADDITIONAL FINANCING, OTHERWISE WE WILL NOT BE ABLE TO DEVELOP
OUR PRODUCTS

     We will require substantial additional funding to complete the research and
development activities currently contemplated and to commercialize our products.
If we do not obtain these funds, we will not be able to develop our products. We
anticipate that our existing capital resources as of June 30, 2001, will be
adequate to fund our needs for at least the next three years. Our future capital
requirements will depend on many factors, including:

     - continued scientific progress in research and development programs;

     - the scope and results of preclinical studies and clinical trials;

     - the time and costs involved in obtaining regulatory approvals;

                                        19
<PAGE>   22

     - the costs involved in filing, prosecuting and enforcing patent claims;

     - competing technological developments;

     - the cost of manufacturing scale-up;

     - the cost of commercialization activities; and

     - other factors which may not be within our control.

     We intend to seek additional funding through public or private equity or
debt financing, when market conditions allow. If we raise additional funds by
issuing equity securities, there may be further dilution to existing
stockholders. We cannot assure you that we will be able to enter into financing
arrangements on acceptable terms, if at all. Without additional funding, we may
be required to delay, reduce the scope of or eliminate one or more of our
research or development programs.

WE FACE THE RISK OF LIABILITY CLAIMS WHICH MAY EXCEED THE SCOPE OR AMOUNT OF OUR
INSURANCE COVERAGE

     The manufacture and sale of medical products entail significant risk of
liability claims. We currently carry liability insurance; however, we cannot
assure you that this coverage will remain in place or that this coverage will be
adequate to protect us from all liabilities which we might incur in connection
with the use of our products in clinical trials or the future use or sale of our
products upon commercialization. In addition, we may require increased liability
coverage as additional products are used in clinical trials and commercialized.
This insurance is expensive and may not be available on acceptable terms in the
future, if at all. A successful liability claim or series of claims brought
against us in excess of our insurance coverage could harm our business. We must
indemnify certain of our licensors against any liability claims brought against
them arising out of products developed by us under these licenses.

OUR USE OF RADIOACTIVE AND OTHER HAZARDOUS MATERIALS EXPOSES US TO THE RISK OF
MATERIAL ENVIRONMENTAL LIABILITIES, AND WE MAY INCUR SUBSTANTIAL ADDITIONAL
COSTS TO COMPLY WITH ENVIRONMENTAL LAWS IN THE EVENT THAT WE DEVELOP OUR OWN
MANUFACTURING FACILITY

     Because we use radioactive materials and other hazardous substances in our
research and development operations, we are potentially subject to material
liabilities related to personal injuries or property damages that may be caused
by the spread of radioactive contamination or by other hazardous substance
releases or exposures at, or from, our research facility. Decontamination costs
associated with radioactivity releases, other clean-up costs, and related
damages or liabilities could harm our business.

     We are required to comply with increasingly stringent laws and regulations
governing environmental protection and workplace safety, including requirements
governing the handling, storage and disposal of radioactive and other hazardous
substances and wastes, and laboratory operating and safety procedures. These
laws and regulations can impose substantial fines and criminal sanctions for
violations. Maintaining in compliance with these laws and regulations with
regard to the operation of our own commercial manufacturing facility could
require substantial additional capital. These costs could decrease our ability
to conduct manufacturing operations in a cost-effective manner.

ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS AND DELAWARE LAW MAY
NEGATIVELY AFFECT THE ABILITY OF A POTENTIAL BUYER TO PURCHASE SOME OR ALL OF
OUR STOCK AT AN OTHERWISE ADVANTAGEOUS PRICE, WHICH MAY LIMIT THE PRICE
INVESTORS ARE WILLING TO PAY FOR OUR COMMON STOCK

     Certain provisions of our charter and the Delaware Law may negatively
affect the ability of a potential buyer to attempt a takeover of Avigen, which
may have a negative effect on the price investors are willing to pay for our
common stock. For example, our board of directors has the authority to issue up
to 5,000,000 shares of preferred stock and to determine the price, rights,
preferences, and privileges of those shares without any further vote or action
by the stockholders. This would enable the Board of Directors to establish a
shareholder rights plan, commonly referred to as a "poison pill," which would
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of Avigen. In addition, our board of
directors is divided into three classes, and each year on a rotating basis the
directors of one class are

                                        20
<PAGE>   23

elected for a three-year term. This provision could have the effect of making it
less likely that a third party would attempt to obtain control of Avigen.
Furthermore, certain other provisions of our restated certificate of
incorporation may have the effect of delaying or preventing changes in control
or management, which could adversely affect the market price of the our common
stock. In addition, we are subject to the provisions of Section 203 of the
Delaware General Corporation Law, an anti-takeover law.

OUR STOCK PRICE IS VOLATILE, AND AS A RESULT INVESTING IN OUR COMMON STOCK IS
VERY RISKY

     We believe that various factors may cause the market price of our common
stock to continue to fluctuate, perhaps substantially, including announcements
of:

     - technological innovations or regulatory approvals;

     - results of clinical trials;

     - new products by us or our competitors;

     - developments or disputes concerning patents or proprietary rights;

     - our failing to achieve certain developmental milestones;

     - public concern as to the safety of gene therapy, recombinant biotech or
       traditional pharmaceutical products;

     - health care or reimbursement policy changes by governments or insurance
       companies;

     - developments in relationships with corporate partners; or

     - a change in financial estimates or securities analysts' recommendations.

     In addition, in recent years the stock market in general, and the shares of
biotechnology and health care companies in particular, have experienced extreme
price fluctuations. These broad market and industry fluctuations may cause the
market price of our common stock to decline dramatically.

ITEM 2. PROPERTIES

     We lease approximately 90,500 square feet and sublease approximately 22,000
square feet in two adjacent buildings, for a total of 112,500 square feet of
manufacturing, research laboratory and office space in an established commercial
neighborhood in Alameda, California. One lease and the sublease account for
approximately 45,000 square feet, and expire in May 2003; however, we have an
extension for the combined space that runs for an additional five years and
expires in 2008. Also, in December 2000, we entered into an additional 10-year
lease for 67,500 square feet in a second building adjacent to the original
facility. The lease of this second building will expire in November 2010. We
believe that these facilities will be adequate to meet our property needs for at
least the next three years.

ITEM 3. LEGAL PROCEEDINGS

     Not Applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

                                        21
<PAGE>   24

                                    PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Shares of Avigen's common stock commenced trading on the Nasdaq National
Market on May 22, 1996, under the symbol "AVGN".

     We have never paid cash dividends and do not anticipate paying cash
dividends in the foreseeable future.

     The following table sets forth, for fiscal periods indicated, the range of
high and low sale prices available for the fiscal years 2000 and 2001.

<Table>
<Caption>
                            2000                               HIGH     LOW
                            ----                              ------   ------
<S>                                                           <C>      <C>
Quarter Ended 9/30/99.......................................  $13.25   $ 5.63
Quarter Ended 12/31/99......................................  $37.00   $12.25
Quarter Ended 3/31/00.......................................  $89.00   $28.00
Quarter Ended 6/30/00.......................................  $46.75   $25.00
</Table>

<Table>
<Caption>
                            2001                               HIGH     LOW
                            ----                              ------   ------
<S>                                                           <C>      <C>
Quarter Ended 9/30/00.......................................  $47.88   $29.63
Quarter Ended 12/31/00......................................  $49.75   $19.75
Quarter Ended 3/31/01.......................................  $21.50   $ 9.75
Quarter Ended 6/30/01.......................................  $22.50   $ 9.81
</Table>

     As of September 6, 2001, there were approximately 198 holders of record of
our common stock.

     During the three-month period ended June 30, 2001, Avigen issued the
following numbers of shares of its common stock to the following entities:

<Table>
<Caption>
          ENTITY            NUMBER SHARES  PRICE/SHARE   AGGREGATE PURCHASE PRICE
          ------            -------------  -----------   ------------------------
<S>                         <C>            <C>           <C>
Saint Honore vie Et Sante   55,618 shares     $2.18              $121,247
Prigest SA                  23,255 shares     $2.65              $ 61,626
</Table>

     The shares were issued upon the exercise of warrants previously sold in
private placements. These shares were issued in reliance on Section 4(2) under
the Securities Act in that they were issued to the original purchasers of the
warrants. These purchasers represented, in connection with such purchases of the
warrants, that they were accredited investors as defined in Regulation D under
the Securities Act.

                                        22
<PAGE>   25

ITEM 6. SELECTED FINANCIAL DATA

<Table>
<Caption>
                                                                                          OCTOBER 22,
                                               FISCAL YEARS ENDED JUNE 30,                    1992
                                    -------------------------------------------------     (INCEPTION)
                                      2001       2000      1999      1998      1997     TO JUNE 30, 2001
                                    --------   --------   -------   -------   -------   ----------------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>        <C>        <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Grant and other revenue...........  $    116   $     58   $   185   $     0   $    98       $    722
Expenses:
  Research and development........    17,041      7,953     6,490     6,235     4,033         50,082
  General and administrative......     6,761      4,516     3,445     2,990     2,352         24,321
  In-License Fees.................         0      5,034         0         0         0          5,034
                                    --------   --------   -------   -------   -------       --------
                                      23,802     17,503     9,935     9,225     6,385         79,437
                                    --------   --------   -------   -------   -------       --------
Loss from operations..............   (23,686)   (17,445)   (9,750)   (9,225)   (6,287)       (78,715)
Interest income, net..............     7,727      2,419       148       365       710         10,799
Other income, net.................       (55)       (13)       (9)      (17)       (1)            92
                                    --------   --------   -------   -------   -------       --------
Net loss..........................  $(16,014)  $(15,039)  $(9,611)  $(8,877)  $(5,578)      $(67,824)
                                    --------   --------   -------   -------   -------       --------
Net loss per share................  $  (0.85)  $  (1.03)  $ (0.99)  $ (1.22)  $ (0.77)
                                    ========   ========   =======   =======   =======
</Table>

<Table>
<Caption>
                                                                    JUNE 30,
                                              ----------------------------------------------------
                                                2001       2000       1999       1998       1997
                                              --------   --------   --------   --------   --------
                                                                 (IN THOUSANDS)
<S>                                           <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash, cash equivalents and available for
  sale securities...........................  $157,737   $ 77,953   $ 14,881   $  4,477   $ 13,039
Working capital.............................   158,341     76,732     13,471      4,635     11,936
Total assets................................   174,946     85,287     16,183      5,997     14,760
Long-term obligations.......................     5,391      4,113        265      1,052      1,316
Deficit accumulated during development
  stage.....................................   (67,823)   (51,810)   (36,771)   (27,160)   (18,283)
Stockholders' equity........................   167,182     79,013     14,323      3,583     12,341
</Table>

                                        23
<PAGE>   26

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties. Avigen's actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause or
contribute to such a differences include, but are not limited to, those
discussed herein and in "Risk Factors" in Item 1.

OVERVIEW

     Since its inception, Avigen has devoted substantially all of its resources
to research and development activities. We are a development stage company and
have not received any revenue from the sale of products, and we do not
anticipate generating revenue from the sale of products in the foreseeable
future. We expect our source of revenue, if any, for the next several years to
consist of government grants and payments under collaborative arrangements. We
have incurred losses since our inception and expect to incur substantial losses
over the next several years due to ongoing and planned research and development
efforts, including preclinical studies and clinical trials. At June 30, 2001 we
had an accumulated deficit of $67.8 million.

     In November 2000, we announced a collaboration agreement with Bayer
Corporation, a worldwide health care and life sciences company and leader in the
development, manufacture, and distribution of hemophilia treatments. Under the
terms of the agreement, Bayer, in collaboration with Avigen, will conduct the
planned Phase II/III clinical trials for Avigen's Coagulin-B gene therapy
treatment for hemophilia B, and receive exclusive worldwide marketing and
distribution rights to the product. Avigen will file for regulatory approvals
and will be the holder of regulatory licenses worldwide, including the United
States, European Union, Canada, and Japan. Avigen will manufacture the product
and will receive a substantial share of the gross revenues from future
Coagulin-B sales, as well as a royalty on net sales of the product for its
intellectual property. The agreement also calls for Bayer to make milestone
payments to Avigen, pay for third-party costs of the clinical trials, and pay
Avigen's costs of manufacturing AAV vector used in the trials. Under the terms
of the deal, Bayer AG, an affiliate of Bayer Corporation, purchased shares of
our common stock for $15 million, which was at a premium to the market price set
at the time the deal was announced. The sale of the common stock to Bayer AG was
completed in February 2001, and was reflected in our financial statements at
June 30, 2001.

RESULTS OF OPERATIONS

  Fiscal years ended June 30, 2001, 2000, and 1999.

     Our revenue consists primarily of grant revenue. Total revenue was $116,000
for the year ended June 30, 2001, compared to $58,000 and $185,000 for the years
ended June 30, 2000 and 1999, respectively. All grant revenue for these years
consisted of reimbursements under a grant from the National Institutes of
Health, which expired on March 31, 2001.

     Our research and development expenses totaled $17.0 million for the year
ended June 30, 2001, an increase from $8.0 million for the year ended June 30,
2000, and $6.5 million for the year ended June 30, 1999. The increase in
research and development expenses during fiscal 2001 over the previous year was
primarily related to an increase in personnel, an increase in new research and
production facilities placed in operation, and the consumption of higher levels
of raw materials used to produce larger quantities of vector than at the same
time last year. The increase in research and development expenses during fiscal
2000 over fiscal 1999 was primarily due to an increase in personnel and related
recruitment costs for additional scientific and manufacturing staff. These
additional personnel were hired to support the expansion of our product
development efforts, including our clinical trial for the treatment of
hemophilia B that began in June 1999. The increase in research and development
expenses in fiscal 2000, when compared to fiscal 1999, also included over
$650,000 in higher research fees paid to third-party collaborators in connection
with the clinical trial and other preclinical studies. We expect future research
and development spending to continue to increase over the next several years as
we continue to expand our research, product development, and clinical trial
efforts.

     General and administrative expenses totaled $6.8 million for the year ended
June 30, 2001, up from $4.5 million for the year ended June 30, 2000, and $3.4
million for the year ended June 30, 1999. During fiscal

                                        24
<PAGE>   27

2001, general and administrative expenses rose primarily due to higher personnel
and recruitment costs for increased staff and higher insurance costs due to
increases in coverage and market rates. The rise in expenses during fiscal 2000
over the previous year was also primarily related to higher personnel and
recruitment costs, as well as an increase in legal fees related to our patent
and other intellectual property activities. In general, we expect these expenses
to continue to increase as the level of our activities increase, but should
continue to decrease as a percentage of total expenses as we expand our research
and development efforts.

     In the year ended June 30, 2000, we incurred in-license fees of $5.0
million in connection with new agreements to in-license certain patents that we
use in our research and development efforts. The full-year expense included cash
payments to licensors of approximately $1.8 million and a non-cash charge for
warrants issued to a licensor that were valued at approximately $3.2 million.
These expenses are primarily initiation fees, and are not predictive of initial
in-license fees to be incurred in future periods.

     Interest income for the year ended June 30, 2001 was $7.9 million, up from
$2.5 million for the year ended June 30, 2000 and $326,000 in fiscal 1999.
Interest income has risen in each of the last two years due to the sizeable
increases in cash and investments in available for sale securities from the
application of proceeds received from the multiple sales of common stock. During
fiscal 2001, we raised a total of $102.7 million in connection with sales of
stock pursuant to a public offering in November 2000, in connection with a
collaborative agreement with Bayer Corporation in February 2001, and as a result
of on-going exercises of previously issued warrants and options. In fiscal 2000,
we raised $74.8 million in connection with sales of stock and warrants in a
private placement that was completed in November 1999, the sale of stock in a
public offering completed in April and May of 2000, and on-going exercises of
previously issued warrants and options.

LIQUIDITY AND CAPITAL RESOURCES

     Cash expenditures have significantly exceeded revenue since our inception.
Our operations have principally been funded through public offerings and private
placements of equity securities. Since our initial public offering in May 1996,
we have completed private placements of our common stock and warrants to
purchase our common stock, raising net proceeds of approximately $57.6 million,
and two public offerings raising net proceeds of approximately $113.7 million.
In addition, we completed the sale of common stock to Bayer AG that raised net
proceeds of $15.0 million. During the same five-year period since May 1996, as a
result of exercises of warrants and options to purchase our common stock, we
raised an additional $11.8 million. The timing and size of the exercise of these
warrants and options are determined by the decisions of the respective warrant
and option holders, and are not controlled by us. Therefore, funds raised from
exercises of stock options and warrants in past periods should not be considered
an indication of additional funds to be raised in the future periods. In
addition, we have attempted to contain costs and reduce cash flow requirements
by renting scientific equipment and facilities, contracting with other parties
to conduct research and development and using consultants, where appropriate. We
expect to incur additional future expenses, resulting in significant losses, as
we continue and expand our research and development activities and undertake
additional preclinical studies and clinical trials of our gene therapy product
candidates. We also expect to incur substantial expenses relating to the filing,
prosecution, maintenance, defense and enforcement of patent and other
intellectual property claims.

     At June 30, 2001, we had cash, cash equivalents and available for sale
securities, including accrued interest, of approximately $160.1 million,
compared to $78.9 million at June 30, 2000. This increase is principally due to
the November 2000 public offering of our common stock and the sale of stock to
Bayer AG in February 2001.

     For the year ended June 30, 2001, net cash used in operating activities was
$15.2 million, an increase over the same amounts for the years ended June 30,
2000 and 1999 of $11.7 million and $9.1 million, respectively. Excluding
interest income earned on our cash, cash equivalents, and available for sale
securities in each of these three years, cash used to cover operating expenses
rose to $21.6 million for the year ended June 30, 2001, up from $13.5 million
and $9.4 million, for the years ended June 30, 2000 and 1999, respectively.

     Our current office and facility includes approximately 112,500 square feet
of space. Of this, approximately 45,000 square feet of space is leased through
May 2008, carrying projected lease payments totaling
                                        25
<PAGE>   28

$701,000 for fiscal 2002, and approximately 67,500 square feet of space is
leased through November 2010, carrying projected lease payments totaling $1.0
million for fiscal 2002. Total annual lease obligations for the combined
properties continue to increase, rising to as much as $2.6 million for fiscal
2008. Scheduled rent obligations for the years ended June 30, 2009 and 2010 are
estimated at approximately $1.6 million each, and only include commitments for
the 67,500 square foot lease.

     In November 2000, we refinanced a $10.0 million revolving line of credit
that had been put in place with Wells Fargo Bank in June 2000 to provide
financial support for construction related activities. Under the terms of the
agreement, the line of credit continues to be available through June 1, 2003,
and bears interest at a floating rate based on the London Inter-Bank Offered
Rate, which is reset in three-month increments after the date of each drawdown.
At June 30, 2001, we had borrowed $5.0 million from the line of credit and had
reserved an additional $2.0 million in borrowing capacity to secure a letter of
credit in connection with the property lease entered into in November 2000. This
reduced our remaining borrowing capacity under the line of credit at June 30,
2001 to $3.0 million. Also in June 2001, we made the final payment on a secured
capital lease facility that was originated in May 1997. With this payment, the
facility was terminated and we had no further obligation or availability.

     We believe we will continue to require substantial additional funding in
order to complete the research and development activities currently contemplated
and to commercialize our proposed products. We anticipate that our capital
resources at June 30, 2001 will be adequate to fund our needs through at least
the next three years. However, this forward-looking statement is based upon our
current plans and assumptions, which may change. Our future operating and
capital requirements will depend on many factors, including:

     - continued scientific progress in research and development programs;

     - the scope and results of preclinical studies and clinical trials;

     - the time and costs involved in obtaining regulatory approvals.

     - the costs involved in filing, prosecuting and enforcing patents claims
       and other intellectual property rights;

     - competing technological developments;

     - the cost of manufacturing scale-up;

     - the costs of commercialization activities; and

     - other factors which may not be within our control.

     We intend to continue to seek additional funding through public or private
equity or debt financing, when market conditions allow. If we raise additional
funds by issuing equity securities, there may be further dilution to existing
stockholders. We cannot assure our investors that we will be able to enter into
such financing arrangements on acceptable terms or at all. Without additional
funding, we may be required to delay, reduce the scope of, or eliminate one or
more of our research or development programs.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not hold derivative financial investments, derivative commodity
investments or other financial investments or engage in foreign currency hedging
or other transactions that exposes us to material market risk. We have also
evaluated the risk associated with our Wells Capital Management investments in
securities and owing to the short-term nature of our available for sale
securities portfolio, have deemed this risk immaterial.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements required by this item are set forth beginning at
page F-1 of this report and are incorporated herein by reference. Supplementary
data for each of the quarters in the fiscal years ending

                                        26
<PAGE>   29

June 30, 2001 and 2000 are set forth under Note 13 of the financial statements
and are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information with respect to Directors and Executive Officers may be found
in the sections entitled "Proposal 1 -- Election of Directors,"
"Management -- Executive Officers of the Company," and "Section 16(a) Beneficial
Ownership Reporting Compliance" appearing in the definitive Proxy Statement to
be delivered to stockholders in connection with the solicitation of proxies for
Avigen's Annual Meeting of Stockholders to be held on November 16, 2001 (the
"Proxy Statement"). Such information is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is set forth in the Proxy Statement
under the heading "Management -- Executive Compensation," which information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is set forth in the Proxy Statement
under the heading "Security Ownership of Certain Beneficial Owners and
Management," which information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is set forth in the Proxy Statement
under the heading "Certain Relationships and Related Transactions," which
information is incorporated herein by reference.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Annual Report on Form
10-K:

     (1) Financial Statements:

    Report of Ernst & Young LLP, Independent Auditors
     Balance Sheets
     Statements of Operations
     Statements of Stockholders' Equity
     Statements of Cash Flows
     Notes to Financial Statements

     (2) Financial Statements schedules have been omitted from this report
because the information is provided in the Financial Statements or is not
applicable.

                                        27
<PAGE>   30

     (3) Exhibits

<Table>
<Caption>
           EXHIBIT
           NUMBER                                EXHIBITS
           -------                               --------
        <S>            <C>
         3.1(1)        Amended and Restated Certificate of Incorporation
         3.1.1(13)     Certificate of Amendment of Certificate of Incorporation
         3.2(1)        Restated Bylaws of the Registrant
         4.1(1)        Specimen Common Stock Certificate
        10.1(7)        Nonstatutory Stock Option Outside of Plans to Philip J.
                       Whitcome.
        10.2(1, 2)     1993 Stock Option Plan
        10.3(2, 14)    1996 Equity Incentive Plan, as amended
        10.4(1, 2)     Form of Incentive Stock Option Grant for 1996 Equity
                       Incentive Plan
        10.5(1, 2)     Form of Nonstatutory Stock Option Grant for 1996 Equity
                       Incentive Plan
        10.6(2, 14)    1996 Non-Employee Director Stock Option Plan, as amended
        10.7(2, 4)     1997 Employee Stock Purchase Plan
        10.8(1, 2)     Form of Indemnification Agreement between Avigen and its
                       directors and executive officers.
        10.9(1)        Form of Common Stock Warrant
        10.10(2, 5)    2000 Equity Incentive Plan
        10.11(2, 12)   Form of Nonstatutory Stock Option Grant for 2000 Equity
                       Incentive Plan
        10.12(1)       Form of Series C Preferred Stock Warrant
        10.13(3)       Form of Common Stock and Warrant Purchase Agreement, dated
                       October 29, 1999
        10.14          Form of Incentive Stock Option Grant for 1993 Stock Option
                       Plan
        10.15          Form of Nonstatutory Stock Option Grant for 1993 Option Plan
        10.20(1)       License Agreement between Avigen and Research Corporation
                       Technologies, Inc., dated May 15, 1992, as amended as of
                       March 21, 1996 and April 26, 1996
        10.21(1)       License Agreement between Avigen and The Johns Hopkins
                       University, dated November 23, 1993, as amended as of March
                       21, 1996
        10.27(1, 2)    Employment Agreement dated August 10, 1992, between Avigen
                       and John Monahan.
        10.29(2, 6)    Employment Agreement dated August 14, 1996, between Avigen
                       and Thomas J. Paulson.
        10.32          Revolving line of credit note signed November 2, 2000 with
                       Wells Fargo Bank.
        10.33          Letter Agreement to the revolving line of credit note signed
                       November 2, 2000 with Wells Fargo Bank.
        10.34          Form of Common Stock Warrant Issued In August/September
                       1998.
        10.35          Form of Common Stock Warrant Issued In October 1998 Private
                       Placement.
        10.36(2, 8)    Management Transition Plan
        10.37          Form of Common Stock Warrant Issued in February 1999 Private
                       Placement.
        10.38(4, 11)   Factor IX patent and know-how exclusive license agreement
                       between the Childrens Hospital of Philadelphia and Avigen,
                       dated May 20, 1999.
        10.39(11, 9)   License Agreement between Avigen and the University of
                       Florida Research Foundation, Inc., dated November 13, 1992,
                       and its First Amendment, dated March 25, 1996.
</Table>

                                        28
<PAGE>   31

<Table>
<Caption>
           EXHIBIT
           NUMBER                                EXHIBITS
           -------                               --------
        <S>            <C>
        10.40(11, 10)  License Agreement, dated March 3, 2000, by and between BTG
                       International Ltd., a British corporation and Avigen
        10.41(10)      Property Lease Agreement between ARE-1201 Harbor Bay, LLC
                       and Avigen, dated February 29, 2000
        10.42(10)      Property Sublease between Lucent Technologies, Inc. and
                       Avigen, dated February 1, 2000
        10.43(11)(13)  Agreement between Bayer Corporation and Avigen, dated
                       November 17, 2000
        10.44(13)      Subscription and Registration Rights Agreement by and
                       between Bayer AG and Avigen, Inc., dated November 17, 2000.
        10.45(13)      Office Lease Agreement between Lincoln-RECP Empire OPCO, LLC
                       and Avigen, Inc., dated November 2, 2000.
        10.46(13)      First Amendment to Lease Agreement between Lincoln-RECP
                       Empire OPCO, LLC and Avigen, Inc., dated December 1, 2000.
        10.47(13)      Second Amendment to Lease Agreement between Lincoln-RECP
                       Empire OPCO, LLC and Avigen, Inc., dated February 12, 2001.
        10.48          Amendment to Agreement between Bayer Corporation and Avigen,
                       dated June 30, 2001.
        23.1           Consent of Ernst & Young LLP, Independent Auditors
        24.1           Power of Attorney (Reference to the signature page herein)
</Table>

---------------
 (1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
     (No. 333-3220) and incorporated herein by reference.

 (2) Management Contract or Compensation Plan.

 (3) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended December 31, 1999, as filed with the SEC.

 (4) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K for the year ended June 30,
     1999, as filed with the SEC.

 (5) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Registration Statement on Form S-8 (Registration No.
     333-42210) filed with the SEC on July 25, 2000.

 (6) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K for the year ended June 30,
     1997, as filed with the SEC.

 (7) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Registration Statement on Form S-8 (Registration No.
     333-12087) filed with the SEC on September 16, 1996.

 (8) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended September 30, 1998, as filed with the SEC.

 (9) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K/A for the year ended June
     30, 1999, as filed with the SEC on February 11, 2000.

(10) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended March 31, 2000, as filed with the SEC.

(11) Portions of this exhibit have been omitted pursuant to a grant of
     confidential treatment.

(12) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K for the year ended June 30,
     2000, as filed with the SEC on September 27, 2000.

(13) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended December 31, 2000, as filed with the SEC.

                                        29
<PAGE>   32

(14) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Registration Statement on Form S-8 (Registration No.
     333-56274) filed with the SEC on February 27, 2001.

(b)  Avigen filed no reports on Form 8-K during the quarter ended June 30, 2001.

                                        30
<PAGE>   33

                                   SIGNATURES

     Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          AVIGEN, INC.

                                          By:       /s/ JOHN MONAHAN
                                            ------------------------------------
                                                    John Monahan, Ph.D.
                                             President, Chief Executive Officer
                                                         and Director
Dated: September 25, 2001

                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John Monahan and Philip J. Whitcome, and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments to this
Report, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<Table>
<Caption>
                      SIGNATURE                                   TITLE                     DATE
                      ---------                                   -----                     ----
<C>                                                    <C>                           <S>
                  /s/ JOHN MONAHAN                      President, Chief Executive   September 25, 2001
-----------------------------------------------------      Officer and Director
                 John Monahan, Ph.D.                       (Principal Executive
                                                                 Officer)

                /s/ THOMAS J. PAULSON                    Chief Financial Officer     September 25, 2001
-----------------------------------------------------    (Principal Financial and
                  Thomas J. Paulson                        Accounting Officer)

               /s/ PHILIP J. WHITCOME                     Chairman of the Board      September 25, 2001
-----------------------------------------------------
              Philip J. Whitcome, Ph.D.

                  /s/ ZOLA HOROVITZ                              Director            September 25, 2001
-----------------------------------------------------
                Zola Horovitz, Ph.D.

                  /s/ YUICHI IWAKI                               Director            September 25, 2001
-----------------------------------------------------
              Yuichi Iwaki, M.D., Ph.D.

              /s/ JOHN K.A. PRENDERGAST                          Director            September 25, 2001
-----------------------------------------------------
            John K.A. Prendergast, Ph.D.
</Table>

                                        31
<PAGE>   34

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Ernst & Young LLP, Independent Auditors...........   F-2
Balance Sheets at June 30, 2001 and 2000....................   F-3
Statements of Operations for Years Ended June 30, 2001,
  2000, 1999 and for the period from October 22, 1992
  (inception) through June 30, 2001.........................   F-4
Statements of Stockholders' Equity for Years Ended June 30,
  2001, 2000, 1999 and for the period from October 22, 1992
  (inception) through June 30, 2001.........................   F-5
Statements of Cash Flows for Years Ended June 30, 2001,
  2000, 1999 and for the period from October 22, 1992
  (inception) through June 30, 2001.........................   F-8
Notes to Financial Statements...............................   F-9
</Table>

                                       F-1
<PAGE>   35

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Avigen, Inc.

     We have audited the accompanying balance sheets of Avigen, Inc. (a
development stage company) as of June 30, 2001 and 2000 and the related
statements of operations, stockholders' equity and cash flows each of the three
years in the period ended June 30, 2001 and for the period from October 22, 1992
(inception) through June 30, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Avigen, Inc. at June 30,
2001 and 2000, and the results of its operations and its cash flows for each of
the three years in the period ended June 30, 2001 and for the period from
October 22, 1992 (inception) through June 30, 2001, in conformity with
accounting principles generally accepted in the United States.

                                          /s/ ERNST & YOUNG, LLP
Palo Alto, California
August 3, 2001

                                       F-2
<PAGE>   36

                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                                 BALANCE SHEETS
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)

                                     ASSETS

<Table>
<Caption>
                                                                    JUNE 30,
                                                              --------------------
                                                                2001        2000
                                                              --------    --------
<S>                                                           <C>         <C>
Current assets:
  Cash and cash equivalents.................................  $  6,092    $ 13,361
  Available for sale securities.............................   151,645      64,592
  Accrued interest..........................................     2,401         940
  Prepaid expenses and other current assets.................       576          --
                                                              --------    --------
          Total current assets..............................   160,714      78,893
Property and equipment, net.................................    12,488       4,025
Deposits and other assets...................................     1,744       2,369
                                                              --------    --------
          Total assets......................................  $174,946    $ 85,287
                                                              ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and other accrued liabilities............  $  1,765    $  1,656
  Accrued compensation and related expenses.................       608         268
  Current portion of capital lease obligations..............         -         237
                                                              --------    --------
          Total current liabilities.........................     2,373       2,161
Long-term loan payable......................................     5,000       4,000
Other long-term obligations.................................       391         113
Commitments
Stockholders' equity:
  Preferred stock, $0.001 par value, 5,000,000 shares
     authorized, none issued and outstanding, in 2001 and
     2000...................................................        --          --
  Common stock, $0.001 par value, 50,000,000 and 30,000,000
     shares authorized, 19,945,097 and 17,000,267 shares
     issued and outstanding, in 2001 and 2000,
     respectively...........................................        20          17
  Additional paid-in capital................................   233,946     130,886
  Accumulated other comprehensive income (loss).............     1,040         (80)
  Deficit accumulated during the development stage..........   (67,824)    (51,810)
                                                              --------    --------
          Total stockholders' equity........................   167,182      79,013
                                                              --------    --------
          Total liabilities and stockholders' equity........  $174,946    $ 85,287
                                                              ========    ========
</Table>

                            See accompanying notes.

                                       F-3
<PAGE>   37

                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF OPERATIONS
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)

<Table>
<Caption>
                                                                                     PERIOD FROM
                                                                                   OCTOBER 22, 1992
                                                   YEAR ENDED JUNE 30,               (INCEPTION)
                                          --------------------------------------       THROUGH
                                             2001          2000          1999       JUNE 30, 2001
                                          -----------   -----------   ----------   ----------------
<S>                                       <C>           <C>           <C>          <C>
Grant and other revenue.................  $       116   $        58   $      185       $    722
Operating expenses:
  Research and development..............       17,041         7,953        6,490         50,082
  General and administrative............        6,761         4,516        3,445         24,321
  In-license fees.......................           --         5,034           --          5,034
                                          -----------   -----------   ----------       --------
                                               23,802        17,503        9,935         79,437
                                          -----------   -----------   ----------       --------
Loss from operations....................      (23,686)      (17,445)      (9,750)       (78,715)
Interest expense........................         (180)         (129)        (178)        (1,439)
Interest income.........................        7,907         2,548          326         12,238
Other (expense) income, net.............          (55)          (13)          (9)            92
                                          -----------   -----------   ----------       --------
Net loss................................  $   (16,014)  $   (15,039)  $   (9,611)      $(67,824)
                                          ===========   ===========   ==========       ========
Basic and diluted net loss per share....  $     (0.85)  $     (1.03)  $    (0.99)
                                          ===========   ===========   ==========
Shares used in basic and diluted per
  share calculation.....................   18,730,437    14,557,999    9,684,329
                                          ===========   ===========   ==========
</Table>

                            See accompanying notes.

                                       F-4
<PAGE>   38

                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                       STATEMENTS OF STOCKHOLDERS' EQUITY

         PERIOD FROM OCTOBER 22, 1992 (INCEPTION) THROUGH JUNE 30, 2001
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)
<Table>
<Caption>
                                                                                      CLASS B
                                                                                    CONVERTIBLE                    ACCUMULATED
                                        PREFERRED STOCK        COMMON STOCK         COMMON STOCK     ADDITIONAL       OTHER
                                      -------------------   -------------------   ----------------    PAID-IN     COMPREHENSIVE
                                        SHARES     AMOUNT     SHARES     AMOUNT   SHARES    AMOUNT    CAPITAL     INCOME (LOSS)
                                      ----------   ------   ----------   ------   -------   ------   ----------   -------------
<S>                                   <C>          <C>      <C>          <C>      <C>       <C>      <C>          <C>
Balance at October 22, 1992
  (inception).......................          --    $ --            --    $ --         --    $ --     $     --       $   --
  Issuance of common stock at $.004
    per share in November and
    December 1992...................          --      --       896,062       1         --      --            4           --
  Issuance of common stock at $.554
    per share from January to June
    1993 for services rendered......          --      --        20,316      --         --      --           11           --
  Issuance of common stock at $.004
    to $.222 per share from November
    1992 to March 1993 for cash.....          --      --     1,003,406       1         --      --           54           --
  Issuance of Class B common stock
    at $.004 per share in December
    1992 for cash...................          --      --            --      --     90,293      --            1           --
  Issuance of Series A preferred
    stock at $4.43 per share from
    March to June 1993 for cash (net
    of issuance costs of
    $410,900).......................     678,865       1            --      --         --      --        2,595           --
  Issuance of Series A preferred
    stock at $3.85 per share in
    March 1993 for cancellation of
    note payable and accrued
    interest........................      68,991      --            --      --         --      --          266           --
  Issuance of common stock at $.004
    per share in November 1993
    pursuant to antidilution
    rights..........................          --      --        22,869      --         --      --            1           --
  Issuance of Series A preferred
    stock at $4.43 per share from
    July to November 1993 for cash
    and receivable (net of issuance
    costs of $187,205)..............     418,284      --            --      --         --      --        1,665           --
  Issuance of Series B preferred
    stock at $5.54 per share in
    March 1994 for cash (net of
    issuance costs of $34,968)......     128,031      --            --      --         --      --          674           --
  Issuance of Series C preferred
    stock at $4.87 per share from
    July 1994 to June 1995 for cash
    and receivables (net of issuance
    costs of $259,620)..............     739,655       1            --      --         --      --        3,344           --
  Issuance of Series C preferred
    stock at $4.87 per share in June
    1995 for cancellation of notes
    payable.........................      35,500      --            --      --         --      --          173           --
  Net loss and comprehensive loss
    from inception to June 30,
    1995............................          --      --            --      --         --      --           --           --
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 1995............   2,069,326       2     1,942,653       2     90,293      --        8,788           --
  Issuance of Series C preferred
    stock at $4.87 per share in July
    1995 for cash (net of issuance
    costs of $26,000)...............      41,042      --            --      --         --      --          174           --
  Issuance of Series D preferred
    stock at $7.09 per share from
    October 1995 to February 1996
    for cash (net of issuance costs
    of $25,279).....................     205,351      --            --      --         --      --        1,430           --
  Issuance of Series D preferred
    stock at $7.09 per share in
    March 1996 in settlement of
    accounts payable................      22,574      --            --      --         --      --          160           --
  Issuance of common stock at $.004
    per share in March 1996 pursuant
    to antidilution rights..........          --      --        17,630      --         --      --            1           --

<Caption>
                                        DEFICIT
                                      ACCUMULATED
                                      DURING THE        TOTAL
                                      DEVELOPMENT   STOCKHOLDERS'
                                         STAGE         EQUITY
                                      -----------   -------------
<S>                                   <C>           <C>
Balance at October 22, 1992
  (inception).......................   $     --       $     --
  Issuance of common stock at $.004
    per share in November and
    December 1992...................         --              5
  Issuance of common stock at $.554
    per share from January to June
    1993 for services rendered......         --             11
  Issuance of common stock at $.004
    to $.222 per share from November
    1992 to March 1993 for cash.....         --             55
  Issuance of Class B common stock
    at $.004 per share in December
    1992 for cash...................         --              1
  Issuance of Series A preferred
    stock at $4.43 per share from
    March to June 1993 for cash (net
    of issuance costs of
    $410,900).......................         --          2,596
  Issuance of Series A preferred
    stock at $3.85 per share in
    March 1993 for cancellation of
    note payable and accrued
    interest........................         --            266
  Issuance of common stock at $.004
    per share in November 1993
    pursuant to antidilution
    rights..........................         --              1
  Issuance of Series A preferred
    stock at $4.43 per share from
    July to November 1993 for cash
    and receivable (net of issuance
    costs of $187,205)..............         --          1,665
  Issuance of Series B preferred
    stock at $5.54 per share in
    March 1994 for cash (net of
    issuance costs of $34,968)......         --            674
  Issuance of Series C preferred
    stock at $4.87 per share from
    July 1994 to June 1995 for cash
    and receivables (net of issuance
    costs of $259,620)..............         --          3,345
  Issuance of Series C preferred
    stock at $4.87 per share in June
    1995 for cancellation of notes
    payable.........................         --            173
  Net loss and comprehensive loss
    from inception to June 30,
    1995............................     (8,608)        (8,608)
                                       --------       --------
Balance at June 30, 1995............     (8,608)           184
  Issuance of Series C preferred
    stock at $4.87 per share in July
    1995 for cash (net of issuance
    costs of $26,000)...............         --            174
  Issuance of Series D preferred
    stock at $7.09 per share from
    October 1995 to February 1996
    for cash (net of issuance costs
    of $25,279).....................         --          1,430
  Issuance of Series D preferred
    stock at $7.09 per share in
    March 1996 in settlement of
    accounts payable................         --            160
  Issuance of common stock at $.004
    per share in March 1996 pursuant
    to antidilution rights..........         --              1
</Table>

                                       F-5
<PAGE>   39
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                 STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

         PERIOD FROM OCTOBER 22, 1992 (INCEPTION) THROUGH JUNE 30, 2001
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)
<Table>
<Caption>
                                                                                      CLASS B
                                                                                    CONVERTIBLE                    ACCUMULATED
                                        PREFERRED STOCK        COMMON STOCK         COMMON STOCK     ADDITIONAL       OTHER
                                      -------------------   -------------------   ----------------    PAID-IN     COMPREHENSIVE
                                        SHARES     AMOUNT     SHARES     AMOUNT   SHARES    AMOUNT    CAPITAL     INCOME (LOSS)
                                      ----------   ------   ----------   ------   -------   ------   ----------   -------------
<S>                                   <C>          <C>      <C>          <C>      <C>       <C>      <C>          <C>
  Issuance of stock options in
    February 1996 in settlement of
    certain accrued liabilities.....          --    $ --            --    $ --         --    $ --     $    137       $   --
  Conversion of Class B common stock
    to common stock.................          --      --       231,304       1    (90,293)     --           (1)          --
  Issuance of warrants to purchase
    common stock in connection with
    1996 bridge financing in March
    1996............................          --      --            --      --         --      --          300           --
  Conversion of preferred stock to
    common stock in May 1996........  (2,338,293)     (2)    2,355,753       2         --      --           (1)          --
  Issuance of common stock at $8.00
    per share in connection with the
    May 1996 initial public offering
    (net of issuance costs of
    $798,414 and underwriting
    discount of $1,500,000).........          --      --     2,500,000       2         --      --       17,699           --
  Proceeds from exercise of options
    in June 1996....................          --      --         6,178      --         --      --            3           --
  Repurchase of common stock........          --      --       (18,325)     --         --      --           (1)          --
  Deferred compensation.............          --      --            --      --         --      --          164           --
  Amortization of deferred
    compensation....................          --      --            --      --         --      --         (128)          --
  Net loss and comprehensive loss...          --      --            --      --         --      --           --           --
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 1996............          --      --     7,035,193       7         --      --       28,725           --
  Issuance of common stock at $8.00
    per share in July 1996 in
    connection with the exercise of
    underwriters' over-allotment
    option (net of underwriting
    discount of $150,000)...........          --      --       250,000      --         --      --        1,850           --
  Proceeds from exercise of
    options.........................          --      --         3,387      --         --      --            1           --
  Amortization of deferred
    compensation....................          --      --            --      --         --      --           41           --
  Net loss and comprehensive loss...          --      --            --      --         --      --           --           --
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 1997............          --      --     7,288,580       7         --      --       30,716           --
  Proceeds from exercise of
    options.........................          --      --        17,278      --         --      --           10           --
  Amortization of deferred
    compensation....................          --      --            --      --         --      --           41           --
  Options granted for services......          --      --            --      --         --      --           68           --
  Net loss and comprehensive loss...          --      --            --      --         --      --           --           --
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 1998............          --      --     7,305,858       7         --      --       30,736           --
  Proceeds from exercise of
    options.........................          --      --       181,045      --         --      --          222           --
  Amortization of deferred
    compensation....................          --      --            --      --         --      --           41           --
  Issuance of common stock at
    $2.25 - $2.94 per share and
    warrants in August to September
    1998 in connection with a
    Private Placement (net of
    issuance cost of $233,584)......          --      --     1,306,505       1         --      --        2,734           --

<Caption>
                                        DEFICIT
                                      ACCUMULATED
                                      DURING THE        TOTAL
                                      DEVELOPMENT   STOCKHOLDERS'
                                         STAGE         EQUITY
                                      -----------   -------------
<S>                                   <C>           <C>
  Issuance of stock options in
    February 1996 in settlement of
    certain accrued liabilities.....   $     --       $    137
  Conversion of Class B common stock
    to common stock.................         --             --
  Issuance of warrants to purchase
    common stock in connection with
    1996 bridge financing in March
    1996............................         --            300
  Conversion of preferred stock to
    common stock in May 1996........         --             (1)
  Issuance of common stock at $8.00
    per share in connection with the
    May 1996 initial public offering
    (net of issuance costs of
    $798,414 and underwriting
    discount of $1,500,000).........         --         17,701
  Proceeds from exercise of options
    in June 1996....................         --              3
  Repurchase of common stock........         --             (1)
  Deferred compensation.............         --            164
  Amortization of deferred
    compensation....................         --           (128)
  Net loss and comprehensive loss...     (4,097)        (4,097)
                                       --------       --------
Balance at June 30, 1996............    (12,705)        16,027
  Issuance of common stock at $8.00
    per share in July 1996 in
    connection with the exercise of
    underwriters' over-allotment
    option (net of underwriting
    discount of $150,000)...........         --          1,850
  Proceeds from exercise of
    options.........................         --              1
  Amortization of deferred
    compensation....................         --             41
  Net loss and comprehensive loss...     (5,578)        (5,578)
                                       --------       --------
Balance at June 30, 1997............    (18,283)        12,341
  Proceeds from exercise of
    options.........................         --             10
  Amortization of deferred
    compensation....................         --             41
  Options granted for services......         --             68
  Net loss and comprehensive loss...     (8,877)        (8,877)
                                       --------       --------
Balance at June 30, 1998............    (27,160)         3,583
  Proceeds from exercise of
    options.........................         --            222
  Amortization of deferred
    compensation....................         --             41
  Issuance of common stock at
    $2.25 - $2.94 per share and
    warrants in August to September
    1998 in connection with a
    Private Placement (net of
    issuance cost of $233,584)......         --          2,735
</Table>

                                       F-6
<PAGE>   40
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                 STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

         PERIOD FROM OCTOBER 22, 1992 (INCEPTION) THROUGH JUNE 30, 2001
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)
<Table>
<Caption>
                                                                                      CLASS B
                                                                                    CONVERTIBLE                    ACCUMULATED
                                        PREFERRED STOCK        COMMON STOCK         COMMON STOCK     ADDITIONAL       OTHER
                                      -------------------   -------------------   ----------------    PAID-IN     COMPREHENSIVE
                                        SHARES     AMOUNT     SHARES     AMOUNT   SHARES    AMOUNT    CAPITAL     INCOME (LOSS)
                                      ----------   ------   ----------   ------   -------   ------   ----------   -------------
<S>                                   <C>          <C>      <C>          <C>      <C>       <C>      <C>          <C>
  Issuance of common stock at
    $3.81 - $4.88 per share and
    warrants in December 1998 in
    connection with a Private
    Placement (net of issuance cost
    of $438,183)....................          --    $ --     1,367,280    $  2         --    $ --     $  5,195       $   --
  Issuance of common stock at
    $5.50 - $6.00 per share and
    warrants in February to April
    1999 in connection with a
    Private Placement (net of
    issuance cost of $1,033,225)....          --      --     2,198,210       2         --      --       12,154           --
  Net loss and comprehensive loss...          --      --            --      --         --      --           --           --
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 1999............          --      --    12,358,898      12         --      --       51,082           --
  Proceeds from exercise of
    options.........................          --      --       440,259       1         --      --        1,533           --
  Proceeds from exercise of
    warrants........................          --      --     1,017,215       1         --      --        8,427           --
  Amortization of deferred
    compensation....................          --      --            --      --         --      --            5           --
  Options granted for services......          --      --            --      --         --      --           89           --
  Warrants granted for patent
    licenses........................          --      --            --      --         --      --        3,182           --
  Warrants granted for building
    lease...........................          --      --            --      --         --      --        1,738           --
  Issuance of common stock at $16.19
    to $25.56 per share and warrants
    in October and November 1999 in
    connection with a Private
    Placement (net of issuance cost
    of $2,804,255)..................          --      --     2,033,895       2         --      --       37,220           --
  Issuance of common stock at $26
    per share in April and May 2000
    in connection with a Public
    Offering (net of issuance cost
    of $2,288,966)..................          --      --     1,150,000       1         --      --       27,610           --
  Comprehensive loss:
    Net loss........................          --      --            --      --         --      --           --           --
    Net unrealized loss on
      available-for-sale
      securities....................          --      --            --      --         --      --           --          (80)
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
  Comprehensive loss................
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 2000............          --      --    17,000,267      17         --      --      130,886          (80)
  Proceeds from exercise of
    options.........................          --      --       165,700      --         --      --          869           --
  Proceeds from exercise of
    warrants........................          --      --       174,255       1         --      --          771           --
  Options granted for services......          --      --            --      --         --      --          336           --
  Issuance of common stock at $37.50
    to $45.06 per share in November
    2000 Public Offering (net of
    issuance cost of $4,622,188)....          --      --     2,291,239       2         --      --       86,084           --
  Issuance of common stock at $47.82
    per share in February 2001
    pursuant to a collaboration
    agreement.......................          --      --       313,636      --         --      --       15,000           --
  Comprehensive loss:
    Net loss........................          --      --            --      --         --      --           --           --
    Net unrealized gain on
      available-for-sale
      securities....................          --      --            --      --         --      --           --        1,120
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
  Comprehensive loss................
                                      ----------    ----    ----------    ----    -------    ----     --------       ------
Balance at June 30, 2001............          --    $ --    19,945,097    $ 20         --    $ --     $233,946       $1,040
                                      ==========    ====    ==========    ====    =======    ====     ========       ======

<Caption>
                                        DEFICIT
                                      ACCUMULATED
                                      DURING THE        TOTAL
                                      DEVELOPMENT   STOCKHOLDERS'
                                         STAGE         EQUITY
                                      -----------   -------------
<S>                                   <C>           <C>
  Issuance of common stock at
    $3.81 - $4.88 per share and
    warrants in December 1998 in
    connection with a Private
    Placement (net of issuance cost
    of $438,183)....................   $     --       $  5,197
  Issuance of common stock at
    $5.50 - $6.00 per share and
    warrants in February to April
    1999 in connection with a
    Private Placement (net of
    issuance cost of $1,033,225)....         --         12,156
  Net loss and comprehensive loss...     (9,611)        (9,611)
                                       --------       --------
Balance at June 30, 1999............    (36,771)        14,323
  Proceeds from exercise of
    options.........................         --          1,534
  Proceeds from exercise of
    warrants........................         --          8,428
  Amortization of deferred
    compensation....................         --              5
  Options granted for services......         --             89
  Warrants granted for patent
    licenses........................         --          3,182
  Warrants granted for building
    lease...........................         --          1,738
  Issuance of common stock at $16.19
    to $25.56 per share and warrants
    in October and November 1999 in
    connection with a Private
    Placement (net of issuance cost
    of $2,804,255)..................         --         37,222
  Issuance of common stock at $26
    per share in April and May 2000
    in connection with a Public
    Offering (net of issuance cost
    of $2,288,966)..................         --         27,611
  Comprehensive loss:
    Net loss........................    (15,039)       (15,039)
    Net unrealized loss on
      available-for-sale
      securities....................         --            (80)
                                       --------       --------
  Comprehensive loss................                   (15,119)
                                       --------       --------
Balance at June 30, 2000............    (51,810)        79,013
  Proceeds from exercise of
    options.........................         --            869
  Proceeds from exercise of
    warrants........................         --            772
  Options granted for services......         --            336
  Issuance of common stock at $37.50
    to $45.06 per share in November
    2000 Public Offering (net of
    issuance cost of $4,622,188)....         --         86,086
  Issuance of common stock at $47.82
    per share in February 2001
    pursuant to a collaboration
    agreement.......................         --         15,000
  Comprehensive loss:
    Net loss........................    (16,014)       (16,014)
    Net unrealized gain on
      available-for-sale
      securities....................         --          1,120
                                       --------       --------
  Comprehensive loss................                   (14,894)
                                       --------       --------
Balance at June 30, 2001............   $(67,824)      $167,182
                                       ========       ========
</Table>

                            See accompanying notes.
                                       F-7
<PAGE>   41

                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                                                  PERIOD FROM
                                                                                                  OCTOBER 22,
                                                                                                     1992
                                                                    YEAR ENDED JUNE 30,           (INCEPTION)
                                                              --------------------------------      THROUGH
                                                                2001        2000        1999     JUNE 30, 2001
                                                              ---------   ---------   --------   -------------
<S>                                                           <C>         <C>         <C>        <C>
OPERATING ACTIVITIES
Net loss....................................................  $ (16,014)  $ (15,039)  $ (9,611)    $ (67,824)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation and amortization of fixed assets.............      1,203         394        473         4,424
  Amortization of deferred compensation.....................         --           5         41           164
  Amortization of warrants issued in connection with the
    extension of the building lease.........................        217          72         --           289
  Amortization of deferred rent expense.....................        278          --         --           278
  Organization costs........................................         --          --         --           (73)
  Common stock, warrants, and stock options issued for
    services................................................        336          89         --         1,014
  Warrants issued for patent license........................         --       3,182         --         3,182
  Changes in operating assets and liabilities:
    Accrued interest........................................     (1,462)       (755)        --        (2,217)
    Prepaid expenses and other current assets...............       (575)         --       (185)         (760)
    Deposits and other assets...............................        408        (636)        94          (296)
    Accounts payable, other accrued liabilities and accrued
     compensation and related expenses......................        449         988         84         2,785
                                                              ---------   ---------   --------     ---------
Net cash used in operating activities.......................    (15,160)    (11,700)    (9,104)      (59,034)
INVESTING ACTIVITIES
Purchases of property and equipment and construction in
  progress..................................................     (9,666)     (3,369)      (164)      (16,615)
Purchases of available for sale securities..................   (180,757)   (150,233)   (35,263)     (404,522)
Maturities of available for sale securities.................     94,825      97,497     26,524       253,919
                                                              ---------   ---------   --------     ---------
Net cash used in investing activities.......................    (95,598)    (56,105)    (8,903)     (167,218)
FINANCING ACTIVITIES
Proceeds from long-term obligations.........................      1,000       4,000         --         7,133
Repayment of long-term obligations..........................         --          --         --        (1,710)
Proceeds from bridge financing..............................         --          --         --         1,937
Repayment of bridge financing...............................         --          --         --        (2,131)
Payments on capital lease obligations.......................       (237)       (572)      (638)       (2,154)
Proceeds from sale-leaseback of equipment...................         --          --         --         1,927
Proceeds from issuance of preferred stock, net of issuance
  costs.....................................................         --          --         --         9,885
Proceeds from warrants and options exercised................      1,640       9,962        222        11,838
Proceeds from issuance of common stock, net of issuance
  costs and repurchases.....................................    101,086      64,831     20,088       205,619
                                                              ---------   ---------   --------     ---------
Net cash provided by financing activities...................    103,489      78,221     19,672       232,344
Net increase (decrease) in cash and cash equivalents........  $  (7,269)  $  10,416   $  1,665     $   6,092
Cash and cash equivalents, beginning of period..............     13,361       2,945      1,280            --
                                                              ---------   ---------   --------     ---------
Cash and cash equivalents, end of period....................  $   6,092   $  13,361   $  2,945     $   6,092
                                                              =========   =========   ========     =========
SUPPLEMENTAL DISCLOSURE
Issuance of preferred stock for cancellation of accounts
  payable, notes payable and accrued interest...............  $      --   $      --   $     --     $     499
Issuance of stock options for repayment of certain accrued
  liabilities...............................................  $      --   $      --   $     --     $     137
Issuance of warrants in connection with bridge financing....  $      --   $      --   $     --     $     300
Issuance of warrants in connection with building lease......  $      --   $   1,738   $     --     $   1,738
Deferred compensation related to stock option grants........  $      --   $      --   $     --     $     164
Purchase of property and equipment under capital lease
  financing.................................................  $      --   $      --   $     --     $     226
Cash paid for interest......................................  $     180   $     129   $    178     $     946
</Table>

                            See accompanying notes.

                                       F-8
<PAGE>   42

                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                         NOTES TO FINANCIAL STATEMENTS

 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Description of Business and Basis of Presentation

     Avigen, Inc. (the "Company") was incorporated on October 22, 1992 in
Delaware for the purpose of development and commercialization of gene-based
therapeutic products. The Company's activities since inception have consisted
principally of acquiring product rights, raising capital, establishing
facilities and performing research and development. Accordingly, the Company is
considered to be in the development stage.

     The Company expects to continue to incur substantial losses over the next
several years during its development state. The Company plans to meet its
capital requirements primarily through issuances of equity securities, research
and development contract revenue, collaborative agreement revenue, and in the
longer term, revenue from product sales. The Company intends to seek additional
funding through public or private equity or debt financing, when market
conditions allow. There can be no assurance that the Company will be able to
enter into financing arrangements on acceptable terms in the future, if at all.

  Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

  Cash, Cash Equivalents, and Available for Sale Securities

     The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Company accounts
for its available for sale securities in accordance with Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The Company's available for sale securities consist
principally of corporate debt securities and federal agency obligations with a
minimum short-term rating of A1/P1 and a minimum long-term rating of A and with
maturities of less than three years. All unrealized gains and losses on
available for sale securities are recorded in other comprehensive income. The
cost of securities sold is based on the specific identification method. Interest
on securities classified as available for sale is included in interest income.

  Concentration of Credit Risk

     Cash, cash equivalents and available for sale securities include financial
instruments that potentially subject the Company to concentrations of credit
risk to the extent of the value of the assets recorded on the balance sheet. The
Company believes that it has established guidelines for investment of its excess
cash that maintain safety and liquidity through its policies on diversification
and investment maturity.

  Property and Equipment

     Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is provided over the estimated useful lives of the respective
assets, which range from three to seven years, using the straight-line method.

     Leasehold improvements and assets under capital leases are amortized over
the lives of the related leases or their estimated useful lives, whichever is
shorter, using the straight-line method.

                                       F-9
<PAGE>   43
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

  Revenue Recognition

     Revenue consists primarily of grant revenue, which includes amounts earned
pursuant to reimbursements under government grants. To date, all reimbursements
under government grants have come from the National Institutes of Health. The
Company records revenue in the period in which the revenue is earned as defined
by the grant agreement.

  Stock-Based Compensation

     The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB 25") and related interpretations, in
accounting for its employee and director stock based compensation. The Company
issues employee stock options equal to the market price of the underlying stock
on the date of the option grant. As a result, no compensation expense is
recognized. Additional disclosures required by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123"), are
included in Note 6.

     Stock based compensation arrangements to non-employees are accounted for in
accordance with SFAS 123 and Emerging Issues Task Force Consensus No. 96-18
(EITF 96-18) using a fair value approach, and the compensation cost of such
arrangements are subject to revaluation over their vesting terms, as earned.

  Comprehensive Loss

     Comprehensive loss is comprised of net loss and unrealized holding gains
and losses on available-for-sale securities, in accordance with Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income."
Comprehensive loss is shown in the statement of stockholders' equity.

  Research and Development Costs

     Research and development expenses consist of costs incurred for independent
and collaborative research and development. These costs include direct costs and
research-related overhead expenses and are charged to expense as incurred.

  Income Taxes

     Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS 109"). Under
the asset and liability method of SFAS 109, deferred tax assets and liabilities
are recognized for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities, and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period of enactment.

  Basic and Diluted Net Loss Per Share

     Basic net loss per share is computed using the weighted-average number of
common shares outstanding during the year. Securities that could potentially
dilute basic earnings per share in the future, but that have

                                       F-10
<PAGE>   44
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

been excluded from the diluted net loss per share computation because their
inclusion would have been anti-dilutive, were as follows:

<Table>
<Caption>
                                                                 JUNE 30,
                                                    -----------------------------------
                                                      2001         2000         1999
                                                    ---------    ---------    ---------
<S>                                                 <C>          <C>          <C>
Stock options outstanding.........................  3,905,559    2,355,313    1,856,700
Warrants to purchase common stock.................  1,433,862    1,613,366    2,025,369
                                                    ---------    ---------    ---------
                                                    5,339,421    3,968,679    3,882,069
                                                    =========    =========    =========
</Table>

  Impairment of Long-Lived Assets

     In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" ("SFAS 121"), the Company reviews long-lived assets, including
property and equipment, for impairment whenever events or changes in business
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. Under SFAS 121, an impairment loss would be recognized when
estimated un-discounted future cash flows expected to result from the use of the
asset and its eventual disposition is less than its carrying amount. Through
June 30, 2001, there have been no such losses.

  Reclassifications

     The Company has reclassified certain prior year amounts to conform to the
current year's presentation. The reclassifications had no impact on the
Company's financial position or results of operations.

  Recent Accounting Principles

     In June 1998, the Financial Accounting Standards Board issued Statement of
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). SFAS 133, as amended, establishes methods of accounting
for derivative financial instruments and hedging activities and is effective for
fiscal years beginning after June 15, 2000. As the Company holds no derivative
instruments and does not currently engage in hedging activities, the July 1,
2000 adoption of SFAS 133 did not have a material effect on the Company's
financial condition or results of operations.

     In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations", or "SFAS 141",
and Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets", or "SFAS 142". SFAS 141 requires the use of the purchase
method for all business combinations initiated after June 30, 2001, and provides
new criteria for determining whether an acquired intangible asset should be
recognized separately from goodwill. SFAS 142 eliminates the amortization of
goodwill and replaces it with an impairment-only model. The impairment-only
approach does not apply to the treatment of intangible assets. The provisions of
SFAS 141 and SFAS 142 will be effective for fiscal years beginning after
December 15, 2001. The Company believes the adoption of SFAS 141 and SFAS 142
will not have a material impact on its results of operations or financial
position.

                                       F-11
<PAGE>   45
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 2. CASH, CASH EQUIVALENTS, AND AVAILABLE FOR SALE SECURITIES

     The following is a summary of cash, cash equivalents, and available for
sale securities as of June 30, 2001 (in thousands):

<Table>
<Caption>
                                                        GROSS         GROSS
                                                      UNREALIZED    UNREALIZED      FAIR
                                            COST        GAINS         LOSSES       VALUE
                                          --------    ----------    ----------    --------
<S>                                       <C>         <C>           <C>           <C>
Cash....................................  $  2,573      $   --         $ --       $  2,573
Corporate debt securities...............    95,748         575          (78)        96,245
Federal agency obligations..............    50,544         470          (12)        51,002
Asset-backed and other securities.......     7,832          85           --          7,917
                                          --------      ------         ----       --------
          Total.........................  $156,697      $1,130         $(90)      $157,737
                                          ========      ======         ====       ========
Amounts included in:
  Cash and cash equivalents.............  $  6,092      $   --         $ --       $  6,092
                                          ========      ======         ====       ========
  Available for sale securities.........  $150,605      $1,130         $(90)      $151,645
                                          ========      ======         ====       ========
</Table>

     The following is a summary of cash, cash equivalents, and available for
sale securities as of June 30, 2000 (in thousands):

<Table>
<Caption>
                                                         GROSS         GROSS
                                                       UNREALIZED    UNREALIZED     FAIR
                                             COST        GAINS         LOSSES       VALUE
                                            -------    ----------    ----------    -------
<S>                                         <C>        <C>           <C>           <C>
Cash......................................  $ 1,681       $--           $ --       $ 1,681
Corporate debt securities.................   66,934        12            (93)       66,853
Federal agency obligations................    6,418         4             (1)        6,421
Asset-backed and other securities.........    3,000        --             (2)        2,998
                                            -------       ---           ----       -------
          Total...........................  $78,033       $16           $(96)      $77,953
                                            =======       ===           ====       =======
Amounts included in:
  Cash and cash equivalents...............  $13,361       $--           $ --       $13,361
                                            =======       ===           ====       =======
  Available for sale securities...........  $64,672       $16           $(96)      $64,592
                                            =======       ===           ====       =======
</Table>

     Realized gains and losses were not material for the years ended June 30,
2001, 2000, and 1999.

 3. PROPERTY AND EQUIPMENT

     Property and equipment consist of the following (in thousands):

<Table>
<Caption>
                                                                JUNE 30
                                                           ------------------
                                                            2001       2000
                                                           -------    -------
<S>                                                        <C>        <C>
Leasehold improvements...................................  $ 9,391    $ 1,613
Laboratory equipment.....................................    4,713      1,771
Furniture and fixtures...................................    1,627        618
                                                           -------    -------
                                                            15,731      4,002
Less accumulated depreciation and amortization...........   (3,960)    (2,934)
                                                           -------    -------
                                                            11,771      1,068
Construction in progress.................................      717      2,957
                                                           -------    -------
Property and equipment, net..............................  $12,488    $ 4,025
                                                           =======    =======
</Table>

                                       F-12
<PAGE>   46
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     As of June 30, 2001, the Company had made all payments due under prior
capital lease obligations, and no longer had any outstanding capital lease
commitments. As a result, property and equipment at June 30, 2001 did not
include any amounts subject to capital leases; however at June 30, 2000,
approximately $2,209,000 was under capital lease obligations. At June 30, 2001,
these assets were fully depreciated; however, at June 30, 2000, accumulated
amortization of these assets was $1,973,000.

 4. LOAN PAYABLE

     The Company entered into a financing arrangement for construction related
activities. Under this arrangement, the Company may borrow up to $10 million
through June 1, 2003. Amounts borrowed under this arrangement bear interest at
the London Inter-Bank Offered Rate plus 1.5% on the date of each drawdown and
this interest rate is subsequently reset every three months. The weighted
average interest rate for all outstanding drawdowns on this long-term obligation
was 5.9% at June 30, 2001. The outstanding long-term obligation is secured by
the Company's portfolio of available for sale securities. As of June 30, 2001,
the Company has drawn $5 million from the line of credit. Payments of interest
only are due monthly through June 1, 2003, at which time a balloon payment of
outstanding principal is due. In November 2000, the Company reserved borrowing
capacity from the line of credit to secure a $2 million letter of credit. The
letter of credit was established pursuant to the terms required under a ten-year
property lease entered into in December 2000, and was issued in favor of the
property owner. This reduced the remaining borrowing capacity under the line of
credit to $3 million at June 30, 2001.

 5. STOCKHOLDERS' EQUITY

  Common Stock

     In August and September 1998, the Company issued an aggregate of 1,306,505
shares of its common stock at $2.25 to $2.94 per share to selected institutional
investors. The offering was completed through a private placement. As part of
the transaction, the Company issued warrants to purchase 261,301 shares of its
common stock with an exercise price of $2.18 to $3.67 per share. The exercise
price was 125% of the fair market value per share of the underlying stock on the
corresponding closing day and the warrants carry a five-year term. After
deducting commissions and fees from the gross proceeds of $2,969,000, net
proceeds from this transaction approximated $2,735,000.

     In December 1998, the Company issued 1,367,280 shares of common stock at
$3.81 to $4.88 per share to selected institutional investors. The offering was
completed through a private placement. As part of this transaction, the Company
issued warrants to purchase 273,456 shares of its common stock with an exercise
price ranging from $4.76 to $6.09 per share. The exercise price was 125% of the
fair market value per share of the underlying stock on the corresponding closing
day and the warrants carry a five-year term. After deducting commissions and
fees from the gross proceeds of $5,635,000, net proceeds from this transaction
approximated $5,197,000.

     In February and April 1999, the Company issued an aggregate of 2,198,210
shares of common stock at $5.50 to $6.00 per share to selected institutional
investors. The offering was completed through a private placement. As part of
this transaction, the Company issued warrants to purchase 439,642 shares of its
common stock with an exercise price of $6.87 to $7.50 per share. The exercise
price was 125% of the fair market value per share of the underlying stock on the
corresponding closing day and the warrants carry a five-year term. After
deducting commissions and fees from the gross proceeds of $13,189,000, net
proceeds from this transaction approximated $12,156,000.

     In October and November 1999, the Company issued an aggregate of 2,033,895
shares of its common stock at $16.19 to $25.56 per share to selected
institutional investors. The offering was completed through a

                                       F-13
<PAGE>   47
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

private placement. As part of this transaction, the Company issued warrants to
purchase 406,779 shares of its common stock with an exercise price of $20.25 to
$31.95 per share. The exercise price was 125% of the fair market value per share
of the underlying stock on the corresponding closing day and the warrants carry
a five-year term. After deducting commissions and fees from the gross proceeds
of $40,028,000, net proceeds from this transaction approximated $37,224,000.

     In March 2000, the Company issued a warrant to purchase 40,000 shares of
its common stock as partial consideration for the extension of the Company's
building lease. The fair value of this warrant at the date of issuance was
approximately $1,738,400. This fair value is being amortized over the life of
the lease extension. This warrant was issued with an exercise price equal to the
fair market value per share of the underlying stock at the time of issuance,
$56.00, and carries a five-year term.

     Also, in March 2000, the Company issued a warrant to purchase 50,000 shares
of its common stock as partial consideration for the acquisition of certain
patent licenses used in its research and development activities. The fair value
of this warrant was approximately $3,182,000 and was fully expensed in the year
ended June 30, 2000. This warrant was issued with an exercise price equal to the
fair market value per share of the underlying stock at the time of issuance,
$82.00, and carries a five-year term.

     In April and May 2000, the Company issued an aggregate of 1,150,000 shares
of its common stock at $26 per share through a public offering. After deducting
commissions and fees from the gross proceeds of $29,900,000, net proceeds from
this transaction totaled $27,611,000.

     In November 2000, the Company issued an aggregate of 2,291,239 shares of
its common stock between $37.50 and $45.06 per share through a public offering.
After deducting combined commissions and fees from the gross proceeds of
$90,706,000, net proceeds from this transaction totaled $86,084,000.

     In February 2001, the Company issued 313,636 shares of common stock at
$47.82 per share to Bayer AG in connection with a collaboration agreement
entered into with Bayer Corporation dated November 17, 2000. Net proceeds from
this transaction totaled $15,000,000.

     At June 30, 2001, the Company had outstanding warrants to purchase shares
of common stock as follows:

<Table>
<Caption>
 NUMBER                                   EXPIRATION
OF SHARES   EXERCISE PRICE   ISSUE DATE      DATE
---------   --------------   ----------   ----------
<S>         <C>              <C>          <C>
   13,324       $5.36           1995         2005
    4,514       $7.09           1995         2005
  101,754   $2.47 - $3.67       1998         2003
  209,903   $4.19 - $6.09       1998         2003
  593,334   $6.05 - $7.50       1999         2004
  244,932   $17.81 - $20.63     1999         2004
  157,540   $23.43 - $27.96     1999         2004
   18,561   $28.12 - $31.95     1999         2004
   40,000       $56.00          2000         2005
   50,000       $82.00          2000         2005
---------
1,433,862   $2.47 - $82.00                2003 - 2005
=========
</Table>

                                       F-14
<PAGE>   48
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

  Shares Reserved for Future Issuance

     The Company has reserved shares of common stock for future issuance as
follows:

<Table>
<Caption>
                                                              JUNE 30,
                                                                2001
                                                              ---------
<S>                                                           <C>
Stock options outstanding...................................  3,905,559
Stock options, available for grant..........................  3,856,161
Warrants to purchase common stock...........................  1,433,862
Shares available for Employee Stock Purchase Plan...........    360,000
                                                              ---------
                                                              9,555,582
                                                              =========
</Table>

 6. STOCK OPTION PLANS

  Employee Stock Option Plans

     Under the 1993 Stock Option Plan (the "1993 Plan"), prior to March 1996,
incentive and nonqualified stock options could be granted to key employees,
directors and consultants of the Company to purchase up to 1,500,000 shares of
common stock. Under the 1993 Plan, options could be granted at a price per share
not less than the fair market value at the date of grant. In March 1996, the
Board determined to grant no further options under the 1993 Plan and adopted the
1996 Equity Incentive Plan. At June 30, 2001, there were options to purchase
approximately 36,000 shares outstanding under the 1993 Plan, with no further
shares available for grant.

     The 1996 Equity Incentive Plan ("1996 Plan") provides for grants of
incentive and nonqualified stock options, restricted stock purchase awards,
stock bonuses and stock appreciation rights to employees, directors and
consultants of the Company. The Plan originally authorized the grant of options
to purchase up to 600,000 shares of common stock. The 1996 Plan was later
amended and approved by stockholders to increase the number of shares available
for grant to 1,300,000 in November 1997, to 1,900,000 in November 1999, and
again to 2,500,000 in November 2000. Under the 1996 Plan, incentive stock
options may be granted at a price per share not less than the fair market value
at the date of grant, and nonqualified stock options may be granted at a price
per share not less than 85% of the fair market value at the date of grant.
Options granted generally have a maximum term of 10 years from the grant date
and become exercisable over four years. At June 30, 2001, there were options to
purchase approximately 1,525,000 shares outstanding under the 1996 Plan and
approximately 405,000 shares available for grant.

     In June 2000, the Board of Directors adopted the 2000 Equity Incentive Plan
("2000 Plan") which provides for grants of nonqualified stock options,
restricted stock purchase awards, and stock bonuses to employees, directors and
consultants of the Company to purchase up to 5,000,000 shares of common stock;
provided, however, that generally only up to 40% of the shares subject to grants
under the 2000 Plan may be made to directors and officers. Under the 2000 Plan,
options may be granted at a price per share not less than 85% of the fair market
value at the date of grant. Options granted generally have a maximum term of 10
years from the grant date and become exercisable over four years. At June 30,
2001, there were options to purchase approximately 1,719,000 shares outstanding
under the 2000 Plan and approximately 3,281,000 shares available for grant.

  Non-employee Stock Option Plans

     In July 1995, the Company granted a member of its Board of Directors an
option to purchase 515,248 shares of common stock at $0.49 per share,
exercisable for 10 years from the date of grant. The shares vested in equal
monthly installments over a period of three years beginning with the grant date.
At June 30, 2001, the

                                       F-15
<PAGE>   49
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

option was fully vested; however, no part of this option had been exercised.
Such grant was made outside of any of the Company's stock option plans.

     The 1996 Non-Employee Directors' Stock Option Plan (the "Directors' Plan")
provides for automatic grants of options to purchase shares of common stock to
non-employee directors of the Company. The Plan originally authorized the grant
of options to purchase up to 200,000 shares of common stock. The Directors' Plan
was later amended and approved by stockholders to increase the number of shares
available for grant to 300,000. As of June 30, 2001, nonqualified options to
purchase 130,000 shares of common stock between $2.00 - $40.75 per share,
exercisable for 10 years from the date of grant, have been granted under the
Directors' Plan, of which options to purchase 110,000 shares remained
outstanding. At June 30, 2001, there were approximately 170,000 shares available
for grant under the Directors' Plan.

     The following table summarizes option activity with regard to all stock
option plans:

<Table>
<Caption>
                                                          OUTSTANDING OPTIONS
                                                      ---------------------------
                                                                     WEIGHTED-
                                                                      AVERAGE
                                                      NUMBER OF    EXERCISE PRICE
                                                       SHARES        PER SHARE
                                                      ---------    --------------
<S>                                                   <C>          <C>
Outstanding at July 1, 1998.........................  1,554,413        $ 2.05
  Granted...........................................    761,751          4.87
  Canceled..........................................   (278,419)         3.32
  Exercised.........................................   (181,045)         1.22
                                                      ---------
Outstanding at June 30, 1999........................  1,856,700          3.10
  Granted...........................................    980,344         32.04
  Canceled..........................................    (42,693)         4.16
  Exercised.........................................   (439,038)         3.49
                                                      ---------
Outstanding at June 30, 2000........................  2,355,313         15.05
  Granted...........................................  1,774,076         20.27
  Canceled..........................................    (58,130)        23.54
  Exercised.........................................   (165,700)         5.25
                                                      ---------
Outstanding at June 30, 2001........................  3,905,559        $17.71
                                                      =========
</Table>

     The following table summarizes information with regard to total stock
options outstanding under all stock option plans at June 30, 2001:

<Table>
<Caption>
                            OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                    -----------------------------------   ---------------------
                                 WEIGHTED-
                                  AVERAGE     WEIGHTED-               WEIGHTED-
                                 REMAINING     AVERAGE                 AVERAGE
RANGE OF EXERCISE    NUMBER     CONTRACTUAL   EXERCISE     NUMBER     EXERCISE
     PRICES         OF SHARES      LIFE         PRICE     OF SHARES     PRICE
-----------------   ---------   -----------   ---------   ---------   ---------
<S>                 <C>         <C>           <C>         <C>         <C>
$ 0.44 - $ 0.49..     525,406      4.07        $ 0.49       525,406    $ 0.49
  0.71 -   3.63..     281,464      6.30          2.77       221,669      2.79
  4.00 -   6.31..     397,669      7.64          5.62       174,595      5.47
  6.32 -  14.31..      99,265      8.89         11.05        21,004      8.33
 14.62 -  17.75..   1,260,038      9.65         14.73        17,637     16.42
 18.06 -  29.00..     449,342      9.05         26.45        81,136     27.56
 30.14 -  38.19..     716,375      9.04         37.32       143,526     36.84
$38.88 -  56.00..     176,000      9.00         43.33        32,683     44.33
                    ---------                             ---------
                    3,905,559      8.22         17.71     1,217,656      9.25
                    =========                             =========
</Table>

                                       F-16
<PAGE>   50
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     The numbers of options exercisable at June 30, 2000 and 1999 were 875,787
and 998,720, respectively, with a weighted average exercise price of $2.31 and
$1.77, respectively.

     Pro forma information regarding net loss and net loss per share is required
by SFAS 123 and has been determined as if the Company had accounted for its
employee stock options under the fair value method prescribed by SFAS 123. For
purposes of pro forma disclosures, the estimated fair value of employee stock
options is amortized to expense over the vesting period of the options. The
Company uses the Black-Scholes option-pricing model to calculate the fair value
of these options for 2001, 2000 and 1999 with the following assumptions:

<Table>
<Caption>
                                                      YEAR ENDED JUNE 30,
                                                   --------------------------
                                                    2001      2000      1999
                                                   ------    ------    ------
<S>                                                <C>       <C>       <C>
Expected volatility..............................  2.3453    2.5884    2.9242
Risk free interest rate..........................    5.50%     6.50%     5.00%
Expected life of options in years................       5         5         5
Expected dividend yield..........................      --        --        --
</Table>

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options and warrants that have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected stock
price volatility. The Company's employee stock options have characteristics
significantly different from those of traded options, and changes in the
subjective input assumptions can materially affect the fair value estimate. In
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options. The pro forma
net loss and pro forma basic and diluted net loss per common share using the
assumptions noted above are as follows:

<Table>
<Caption>
                                                    YEAR ENDED JUNE 30,
                                              --------------------------------
                                                2001        2000        1999
                                              --------    --------    --------
<S>                                           <C>         <C>         <C>
Net loss -- as reported.....................  $(16,014)   $(15,039)   $ (9,611)
Net loss -- pro forma.......................   (24,479)    (17,245)    (10,374)
Net loss per share basic and diluted -- as
  reported..................................     (0.85)      (1.03)      (0.99)
Net loss per share basic and diluted -- pro
  forma.....................................     (1.31)      (1.18)      (1.07)
</Table>

     The pro forma information above may not be representative of the effects on
potential pro forma results for future years.

  Employee Stock Purchase Plan

     In September 1997, the Company adopted the 1997 Employee Stock Purchase
Plan ("Purchase Plan"). A total of 360,000 shares of common stock have been
reserved for issuance under the Purchase Plan. As of June 30, 2001, there have
been no employee contributions or shares issued to the Purchase Plan.

 7. EMPLOYEE PROFIT SHARING/401(K) PLAN

     In January 1996, the Company adopted a Tax Deferred Savings Plan under
Section 401(k) of the Internal Revenue Code (the "Plan") for all full-time
employees. Eligible employees can contribute amounts to the Plan via payroll
withholding, subject to certain limitations. The Company's contributions to the
Plan are discretionary. The Company has made no contributions to the Plan
through June 30, 2001.

                                       F-17
<PAGE>   51
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 8. COLLABORATION AGREEMENT

     In November 2000, the Company entered into a collaboration agreement with
Bayer Corporation (Bayer). Under the terms of the agreement, Bayer, in
collaboration with the Company, will conduct Phase II/III clinical trials for
the Company's product, Coagulin-B(TM), and receive exclusive worldwide marketing
and distribution rights to the product. The Company will file for regulatory
approvals and will be the holder of regulatory licenses worldwide. The Company
will manufacture the product and will receive a share of the gross revenues from
future Coagulin-B(TM) sales, as well as a royalty on net sales of the product
for its intellectual property. Bayer will also make milestone payments, pay for
third-party costs of the clinical trials, and reimburse costs of manufacturing
AAV vector used in the clinical trials. As at June 30, 2001 no revenue has been
recognized under this agreement.

     In connection with this collaboration agreement, in February 2001, the
Company issued to Bayer AG, an affiliate of Bayer, 313,636 shares of common
stock at $47.82 per share, raising proceeds of $15 million.

 9. RELATED PARTY TRANSACTIONS

     In fiscal 1999, the Company paid an entity managed by a Board member
$173,000 related to commissions and fund raising services provided by the entity
in relation to one of the Company's private placements.

10. COMMITMENTS

     The Company leases its laboratory, manufacturing, and office facilities
under multiple non-cancelable operating lease agreements, which expire at
various times through November 2010. As of June 30, 2001, the Company had made
all payments due under prior capital lease obligations, and no longer had any
outstanding capital lease commitments. Future minimum lease payments under
non-cancelable operating leases are as follows (in thousands):

<Table>
<Caption>
                                                           OPERATING
                                                             LEASE
                                                           ---------
<S>                                                        <C>
Year ending June 30:
  2002...................................................  $   1,820
  2003...................................................      1,948
  2004...................................................      2,200
  2005...................................................      2,285
  2006...................................................      2,284
  Thereafter.............................................      8,336
                                                           ---------
          Total non-cancelable lease payments............  $  18,873
                                                           =========
</Table>

     Rent expense for fiscal 2001, 2000, and 1999 was $1,923,000, $551,000, and
$390,000, respectively.

                                       F-18
<PAGE>   52
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. INCOME TAXES

     Significant components of the Company's deferred tax assets are as follows
(in thousands):

<Table>
<Caption>
                                                               JUNE 30,
                                                         --------------------
                                                           2001        2000
                                                         --------    --------
<S>                                                      <C>         <C>
Net operating loss carryforward........................  $ 23,800    $ 16,552
Research and development credit carryforwards..........     3,280       1,743
Capitalized research and development...................     2,380       1,887
Capitalized patents....................................     1,780       1,947
Other..................................................       860         691
                                                         --------    --------
Gross deferred tax assets..............................    32,100      22,820
Unrealized gain on investment..........................      (420)         --
Valuation allowance....................................   (31,680)    (22,820)
                                                         --------    --------
Net deferred tax assets................................  $     --    $     --
                                                         ========    ========
</Table>

     Due to the Company's history of losses, a valuation allowance has been
provided against the full amount of deferred tax assets.

     The valuation allowance increased by $8,860,000, $7,379,000, and $4,053,000
for fiscal 2001, 2000, and 1999, respectively.

     At June 30, 2001, the Company has net operating loss carryforwards for
federal and state income tax purposes of approximately $66,000,000 and
$23,000,000, respectively, which expire in fiscal years ended June 30, 2002
through June 30, 2021. At June 30, 2001, the Company has research and
development credit carryforwards for federal tax purposes of approximately
$2,200,000, which expire in fiscal years ended June 30, 2009 through June 30,
2020.

     Because of the "change in ownership" provisions of the Internal Revenue
Code of 1986, utilization of the Company's tax net operating loss carryforwards
and tax credit carryforwards may be subject to an annual limitation in future
periods. As a result of the annual limitation, a portion of these carryforwards
may expire before ultimately becoming available to reduce future income tax
liabilities.

12. SUBSEQUENT EVENT

     In August 2001, the Company announced that it would change its fiscal year
end from June 30 to December 31. This change became effective in August 2001,
and will not have any effect on the Company's reporting obligations for the year
ended June 30, 2001.

                                       F-19
<PAGE>   53
                                  AVIGEN, INC.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<Table>
<Caption>
                                                              YEAR ENDED JUNE 30, 2001
                                                      ----------------------------------------
                                                       FIRST     SECOND      THIRD     FOURTH
                                                      QUARTER    QUARTER    QUARTER    QUARTER
                                                      -------    -------    -------    -------
<S>                                                   <C>        <C>        <C>        <C>
Total revenue.......................................  $    30    $    --    $    --    $    86
Net loss............................................   (3,052)    (3,432)    (4,896)    (4,634)
Net loss per share basic and diluted................    (0.18)     (0.19)     (0.25)     (0.23)
</Table>

<Table>
<Caption>
                                                              YEAR ENDED JUNE 30, 2000
                                                      ----------------------------------------
                                                       FIRST     SECOND      THIRD     FOURTH
                                                      QUARTER    QUARTER    QUARTER    QUARTER
                                                      -------    -------    -------    -------
<S>                                                   <C>        <C>        <C>        <C>
Total revenue.......................................  $    --    $    39    $    19    $    --
Net loss............................................   (2,367)    (2,482)    (7,178)    (3,012)
Net loss per share, basic and diluted...............    (0.18)     (0.18)     (0.51)     (0.20)
</Table>

                                       F-20
<PAGE>   54

                                 EXHIBIT INDEX

<Table>
<Caption>
   EXHIBIT
   NUMBER                         DESCRIPTION OF DOCUMENT
-------------                     -----------------------
<C>             <S>
 3.1(1)         Amended and Restated Certificate of Incorporation
 3.1.1(13)      Certificate of Amendment of Certificate of Incorporation
 3.2(1)         Restated Bylaws of the Registrant
 4.1(1)         Specimen Common Stock Certificate
10.1(7)         Nonstatutory Stock Option Outside of Plans to Philip J.
                Whitcome.
10.2(1,2)       1993 Stock Option Plan
10.3 (2,14)     1996 Equity Incentive Plan, as amended
10.4(1,2)       Form of Incentive Stock Option Grant for 1996 Equity
                Incentive Plan
10.5(1,2)       Form of Nonstatutory Stock Option Grant for 1996 Equity
                Incentive Plan
10.6(2,14)      1996 Non-Employee Director Stock Option Plan, as amended
10.7(2,4)       1997 Employee Stock Purchase Plan
10.8(1,2)       Form of Indemnification Agreement between Avigen and its
                directors and executive officers.
10.9(1)         Form of Common Stock Warrant
10.10(2,5)      2000 Equity Incentive Plan
10.11(2,12)     Form of Nonstatutory Stock Option Grant for 2000 Equity
                Incentive Plan
10.12(1)        Form of Series C Preferred Stock Warrant
10.13(3)        Form of Common Stock and Warrant Purchase Agreement, dated
                October 29, 1999
10.14           Form of Incentive Stock Option Grant for 1993 Stock Option
                Plan
10.15           Form of Nonstatutory Stock Option Grant for 1993 Stock
                Option Plan
10.20(1)        License Agreement between Avigen and Research Corporation
                Technologies, Inc., dated May 15, 1992, as amended as of
                March 21, 1996 and April 26, 1996
10.21(1)        License Agreement between Avigen and The Johns Hopkins
                University, dated November 23, 1993, as amended as of March
                21, 1996
10.27(1,2)      Employment Agreement dated August 10, 1992, between Avigen
                and John Monahan.
10.29(2,6)      Employment Agreement dated August 14, 1996, between Avigen
                and Thomas J. Paulson.
10.32           Revolving line of credit note signed November 2, 2000 with
                Wells Fargo Bank.
10.33           Letter Agreement to the revolving line of credit note signed
                November 2, 2000 with Wells Fargo Bank.
10.34           Form of Common Stock Warrant Issued In August/September
                1998.
10.35           Form of Common Stock Warrant Issued In October 1998 Private
                Placement.
10.36(2,8)      Management Transition Plan
10.37           Form of Common Stock Warrant Issued in February 1999 Private
                Placement.
10.38(4,11)     Factor IX patent and know-how exclusive license agreement
                between the Childrens Hospital of Philadephia and Avigen,
                dated May 20, 1999.
10.39(11,9)     License Agreement between Avigen and the University of
                Florida Research Foundation, Inc., dated November 13, 1992,
                and its First Amendment, dated March 25, 1996.
</Table>

                                       F-21
<PAGE>   55

<Table>
<Caption>
   EXHIBIT
   NUMBER                         DESCRIPTION OF DOCUMENT
-------------                     -----------------------
<C>             <S>
10.40(11,10)    License Agreement, dated March 3, 2000, by and between BTG
                International Ltd., a British corporation and Avigen
10.41(10)       Property Lease Agreement between ARE-1201 Harbor Bay, LLC
                and Avigen, dated February 29, 2000
10.42(10)       Property Sublease between Lucent Technologies, Inc. and
                Avigen, dated February 1, 2000
10.43(11)(13)   Agreement between Bayer Corporation and Avigen, dated
                November 17, 2000
10.44(13)       Subscription and Registration Rights Agreement by and
                between Bayer AG and Avigen, Inc., dated November 17, 2000.
10.45(13)       Office Lease Agreement between Lincoln-RECP Empire OPCO, LLC
                and Avigen, Inc., dated November 2, 2000.
10.46(13)       First Amendment to Lease Agreement between Lincoln-RECP
                Empire OPCO, LLC and Avigen, Inc., dated December 1, 2000.
10.47(13)       Second Amendment to Lease Agreement between Lincoln-RECP
                Empire OPCO, LLC and Avigen, Inc., dated February 12, 2001.
10.48           Amendment to Agreement between Bayer Corporation and Avigen,
                dated June 30, 2001.
23.1            Consent of Ernst & Young LLP, Independent Auditors
24.1            Power of Attorney (Reference to the signature page herein)
</Table>

---------------
 (1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
     (No. 333-3220) and incorporated herein by reference.

 (2) Management Contract or Compensation Plan.

 (3) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended December 31, 1999, as filed with the SEC.

 (4) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K for the year ended June 30,
     1999, as filed with the SEC.

 (5) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Registration Statement on Form S-8 (Registration No.
     333-42210) filed with the SEC on July 25, 2000.

 (6) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K for the year ended June 30,
     1997, as filed with the SEC.

 (7) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Registration Statement on Form S-8 (Registration No.
     333-12087) filed with the SEC on September 16, 1996.

 (8) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended September 30, 1998, as filed with the SEC.

 (9) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K/A for the year ended June
     30, 1999, as filed with the SEC on February 11, 2000.

(10) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended March 31, 2000, as filed with the SEC.

(11) Portions of this exhibit have been omitted pursuant to a grant of
     confidential treatment.

(12) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Annual Report on Form 10-K for the year ended June 30,
     2000, as filed with the SEC on September 27, 2000.

(13) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Quarterly Report on Form 10-Q for the quarter year
     ended December 31, 2000, as filed with the SEC.

(14) Incorporated by reference from such document filed with the SEC as an
     exhibit to Avigen's Registration Statement on Form S-8 (Registration No.
     333-56274) filed with the SEC on February 27, 2001.

                                       F-22