Lorus secures C$10.36 million from PIPE; deCODE gears up to wrap $30 million direct stock deal

By Sheri Kasprzak and Ronda Fears

New York, July 14 - Heading up PIPE action to finish the week was a C$10,368,000 stock deal from Lorus Therapeutics Inc. The offering came while stocks took another hit as violence raged on in the Middle East and oil prices shot up to record highs.

In the Lorus offering, HighTech Beteiligungen GmbH & Co. KG agreed to purchase 28.8 million shares at C$0.36 each, a 7.5% premium over the company's C$0.335 closing price on July 13.

The offering is scheduled to close Aug. 14.

The stock finished the session unchanged at C$0.335 (Toronto: LOR).

Toronto-based Lorus develops therapeutics and technologies to treat cancer.

In U.S. biotech activity, deCODE genetics's stock dipped after the company announced the imminent completion of a $30 million direct placement of its stock.

The shares fell 48 cents, or 8.45%, to end the session at $5.20 and lost another 4 cents in after-hours trading (Nasdaq: DCGN). Volume climbed with 300,156 shares traded compared to the average 105,490 shares.

In the placement, a group of institutional investors have agreed to buy 6 million shares and the deal is slated to close July 18.

The shares are being sold under the company's shelf registration.

Lehman Brothers Inc. is the lead agent with Thomas Weisel Partners LLC as co-agent.

The 12% discount from Thursday's close sent the stock reeling, and the convertible followed suit. deCode's 3.5% convertible bond due 2011 "widened out some," as one sellsider put it, trading at 73.5 versus a stock price of $5.10.

The biotech said net proceeds are expected to be $27.8 million. No use of proceeds was specified but the company announced plans in late June to start new clinical trials for a heart drug it is working on.

deCODE investors get 'wake-up' call

"This is as much of a wake-up call as folks (investors in deCODE) are going to get," said a buyside analyst.

"deCODE has missed earnings twice and has missed deadlines on DG031 horribly and repeatedly.

"Sure I had my head in the clouds too wishing that deCODE might one day accidentally change into a good company. However, today's sucker punch below the belt is a wakeup call for anybody.

"deCODE is an airplane in a death spiral heading straight to the ground. The pilot (CEO) has a blindfold on and is playing games in the cockpit. Meanwhile the bondholders/shareholder-passengers are holding hands with each other trying to assure each other everything is going to be all right. It's not going to be all right. We have to yank the blind fool out of the cockpit and put someone in there who knows how to fly the plane. Otherwise, all is lost."

deCODE, based in Reykjavik, Iceland, develops drugs used to treat common diseases through human genetics applications.

DG051 is deCode's follow-on investigational compound for the prevention of heart attack. In late June, the company filed an investigational New Drug Application with the Food and Drug Administration and said, pending clearance, it expects to begin phase 1 clinical trials later this summer.

Stocks take hit

As violence in the Middle East raged on Friday, U.S. stocks sustained losses and oil prices rose to record highs.

The Dow Jones Industrial Average fell 106.94 to close at 10,739.35; the Nasdaq composite index slipped 16.76 to end at 2,037.35 and the Standard & Poor's 500 composite index dropped 6.09 to close at 1,236.20.

Conflict in the Middle East led to higher oil prices, with crude gaining 33 cents to end at $77.03 per barrel after climbing above $78 per barrel during the session.

"Everyone's waiting to see," said one market source when asked how battles in Lebanon and Israel will impact stocks and the PIPE market. "Obviously when stocks are down, it makes pricing a bit tricky."

Galantas prices C$3.2 million deal

Oil wasn't the only thing to get a push from the troubles in the Middle East. Gold prices also got a jolt with prices settling up $13.60 to end at $668 per ounce.

This could lead to more gold offerings, one market source in Vancouver said Friday afternoon.

"Higher prices means higher stocks, generally, so we'll see," he said. "There have been some here and there."

Among those offerings was a C$3.2 million deal priced by Galantas Gold Corp.

The offering includes up to 12.8 million units at C$0.25 apiece.

The units are comprised of one share and one warrant with each warrant exercisable at C$0.32 for two years.

Placement agent Union Securities Ltd. has a greenshoe for up to 1.2 million units.

The deal is scheduled to close July 25.

Proceeds will be used for exploration and development on the company's Omagh gold project in Northern Ireland.

On Friday, the company's stock climbed by 12.5%, or 3 cents, to end at C$0.27 (TSX Venture: GAL).

Toronto-based Galantas is a gold explorer.

Another gold company, Tagish Lake Gold Corp., arranged a private placement of 5,555,600 flow-through units for proceeds of C$1,000,008.

The units are priced at C$0.18 each.

The units are comprised of one share and one half-share warrant. The full warrants are exercisable at C$0.22 each for 18 months.

Separately, the company plans to conduct another non-brokered private placement for C$810,000.

The company intends to sell 5.4 million non flow-through units at C$0.15 each.

The units include one share and one half-share warrant. Each whole warrant is exercisable at C$0.22 for 18 months.

Proceeds from both offerings will be used to advance exploration on the Skukum Creek gold-silver project and for general corporate purposes.

Tagish Lake's stock remained unchanged at C$0.17 (TSX Venture: TLG).

Richmond, B.C.-based Tagish Lake is a gold exploration company.

G-III's stock edges up

G-III Apparel Group, Ltd. saw its stock climb a day after it settled a $15,165,000 stock sale.

The stock gained 2.41%, or 25 cents, to end at $10.61 (Nasdaq: GIII). On Thursday, when the deal closed, the stock gained 5.71%, or 56 cents, to close at $10.36.

In the placement, affiliates of Prentice Capital Management, LP agreed to buy shares of G-III at $10.11 each, a 3% premium to the company's $9.80 closing stock price on July 12.

The investors received warrants for 375,000 shares, exercisable at $11.00 each for five years.

Proceeds will be used to repay the balance of G-III's revolving credit agreement.

G-III, based in New York, manufactures sportswear under licensed labels and under its own label.

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