Biotechs rule PIPE activity; Minrad International wraps $7.04 million preferred offering

By Sheri Kasprzak

Atlanta, June 14 - Despite biotechnology stocks remaining virtually unchanged all of last week and into this week, biotech and biopharmaceutical companies dominated PIPE headlines Tuesday as volume in the broader market remained relatively light with stocks making meager gains.

"It's an interesting thing," said one market source familiar with biotechs. "On one hand, we haven't seen much in the way of impressive biotech gains, but there does seem to be a market for biotech deals. News could definitely be pushing investor interest, especially, as you say, with the ImClone news from last week."

ImClone Systems Inc. announced last week that it expects to make solid profits from its anti-tumor drug Erbitux.

Despite lackluster gains last week, biotech and biopharmaceutical stocks did move higher Tuesday, with the American Stock Exchange's Biotechnology Index gaining 0.5% to close at 540.99 and AMEX's Pharmaceutical Index gaining 0.4% to close at 327.49.

Among the biopharmaceutical and biotech deals seen in the private placement market Tuesday was a $7,035,000 offering wrapped by Minrad International, Inc.

Buffalo, N.Y.-based Minrad sold 7,035 shares of 6% series A convertible preferred stock at $1,000 each.

The preferreds are convertible into a total of 3,517,500 common shares.

The company also issued warrants for 1,758,750 common shares, exercisable at $3.85 each for three years.

Minrad said it plans to use the majority of the proceeds to expand its anesthesia and analgesia plant in Bethlehem, Pa., launch and support new real-time image guidance products, develop a conscious sedation system and repay outstanding debt. The remainder will be used for working capital and general corporate purposes.

Minrad is an acute care, medical device and pharmaceutical company.

Other biotech deals closed Tuesday include a $1 million offering of 250,000 shares by London-based medical imaging developer Medicsight Inc.

Activity level low elsewhere

In the broader private placement market, sell-siders said volume remains reasonably light as stocks continued to creep ahead.

"I think volume will pick up once we see some significant gains among the major indexes," said one sell-sider. "Issuers are probably waiting for market conditions to improve enough to justify doing a PIPE."

The Dow Jones Industrial Average gained 25.01 to close at 10,547.57; the Nasdaq composite index edged up 0.08 to end at 2,069.04 and the S&P 500 closed up 3.09 at 1,203.91.

Decidedly absent from the PIPE market Tuesday were new natural resources offerings.

Mineral stocks took a turn down Tuesday, sell-siders in Canada said, forcing issuers to think twice about pricing deals.

"This whole sector just sank today," the sell-sider said. "I don't think it's a trend, but it definitely kept these deals out of the market today."

Comprehensive Care raises $3.6 million

Back to health-care related offerings, Tampa-based Comprehensive Care Corp. closed a $3.6 million private placement of series A convertible preferred stock.

Comprehensive sold 14,400 preferred shares at $250 each to Woodcliff Healthcare Investment Partners, LLC.

The preferreds are convertible into common shares on the basis of 294.12 common shares for each preferred share.

"We are gratified by the faith these investors have shown in CompCare's future," said Mary Jane Johnson, the company's president and chief executive officer, in a statement. "This investment provides working capital that will allow us to add more resources to our sales and marketing efforts and enhance our position in bidding for larger contracts."

Steven Nelson, a member of Woodcliff, said his investment firm believes the proceeds Comprehensive will receive from the offering will enable it to solidify Medicare and Medicaid contracts.

"We believe Woodcliff's investment in CompCare will enhance its chance of success in bidding on direct government Medicaid contracts and in obtaining new business in the commercial and Medicare markets, particular in light of the advent of the Medicare Modernization Act," Nelson said in a statement.

Comprehensive Care is a behavioral health, substance abuse and employee assistance program provider for governmental agencies, managed-care companies and employer groups.

Logibec arranges C$10.5 million deal

Moving to Canadian offerings, Logibec Groupe Informatique Ltd., which develops information systems for the health and social services sector, announced its plans Tuesday to head to the private placement market with a C$10.5 million offering.

The company plans to sell 1 million shares at C$10.50 each.

GMP Securities Ltd. is the underwriter in the offering and has an over-allotment option for up to 250,000 additional shares.

Logibec is based in Montreal. The proceeds will be used to reduce debt Logibec incurred from its recently completed takeover bid for the outstanding shares of MDI Technologies, Inc.

Holly Energy's stock drops

Holly Energy Partners LP's stock dipped Tuesday, a day after the company announced its plans to raise up to $35 million in a private placement of stock.

The company's stock dropped $0.60, or 1.38%, to close at $42.80 Tuesday.

After the deal was first announced Monday, the company's stock gained $0.50, or 1.17%, to close at $43.40.

The company sold shares to institutional investors as $29.166, a 33% discount to its closing stock price on Monday.

Dallas-based Holly Energy provides refined petroleum product transportation and terminal services.

Pimaris's stock closes down

A day after announcing its plans to close a C$40 million private placement, Toronto-based Primaris Retail Real Estate Investment Trust's stock closed lower.

The company's stock lost C$0.18 to close at C$14.55 Tuesday.

When the deal was first announced Monday, the company's stock gained C$0.28 to close at C$14.73.

The company sold exchangeable securities at C$14.04 each to five private investors who own a property the company is buying. The securities are exchangeable into trust units.

Primaris is a real estate investment trust.

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