NGAS raises $37 million in note sale; biotech deals continue to dominate PIPE offerings

By Sheri Kasprzak

New York, Dec. 14 - NGAS Resources, Inc., a Kentucky-based natural gas company, headed up PIPE news Wednesday as biotechnology offerings accounted for the majority of the private placement offerings announced during the session.

NGAS sold 6% notes that mature on Dec. 15, 2010 and are convertible at $14.34 each. The conversion price, according to a statement from the company, is equal to 110% of the volume weighted average price of its stock for the five trading days before the agreement.

As of Nov. 7, NGAS had 19,959,920 outstanding common shares.

The investors received warrants for up to 945,809 shares, exercisable at $13.04 each.

NGAS's stock lost 67 cents, or 5.13%, to end the day at $12.40 and lost another 14 cents in after-hours trading.

The company's chief executive officer, William Daugherty, did not return calls for additional comment on the deal by press time Wednesday.

This is not the first time NGAS has looked to the PIPE market for financing.

The company sold a $6.1 million convertible note to BayStar Capital Fund II on Oct. 4. The 7% note due Oct. 4, 2009 is convertible into common shares at $6.00 each. The Shemano Group was the placement agent for the October offering.

In its most recent earnings report, NGAS reported a net income of $187,197 for the quarter ended Sept. 30, up from a net income of $17,068 for the same quarter in 2004.

The Lexington, Ky.-based NGAS Resources focuses on natural gas development drilling.

In the broader markets, oil prices on Wednesday slipped, driving up stock prices briefly before the major indexes ended the day mixed. Oil lost $0.52 to finish the day at $60.85. Meanwhile, the Dow Jones Industrial Average gained 59.79 to end at 10,883.51; the Nasdaq composite index fell 2.41 to close at 2,262.59; and the Standard & Poor's 500 composite index edged up 5.31 to close at 1,272.74.

Moving to the broader PIPE market, even though biotech offerings were prevalent in the market Wednesday, one sellside source said drug stocks were mixed on Wednesday and this could mean some smaller issuers may back off in the coming days.

"It's hard to say because we're seeing a lot of smaller [issuers] and most of the bigger companies are the ones making the [stock] gains," he noted. "I still think biotech will be a huge player in the coming year. It has been for several years now and I don't think that this past year was any different."

Heading up those drug offerings was a $20.01 million direct stock deal from Discovery Laboratories, Inc.

The Warrington, Pa.-based biotech company intends to sell 3 million shares at $6.67 apiece to a group of institutions on Dec. 19.

After the offering was announced Wednesday morning, the company's stock fell 64 cents, or 8.71%, to end at $6.71.

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

SG Cowen & Co., LLC is the placement agent.

In October, Discovery settled a $4,472,000 direct offering, selling 650,000 shares at $6.88 each to Laboratorios del Dr. Esteve, SA.

Discovery is focused on treatments for respiratory diseases.

Immtech's $3.34 million deal

Elsewhere in the biotech sector, Immtech International, Inc. settled a $3.34 million convertible preferred stock deal and has an option to increase the proceeds by 25% to $4,175,000.

The company issued 133,600 shares of series E convertible preferred stock at $25 each to a group of accredited investors and foreign individuals. The preferreds are initially convertible into 3.5511 common shares. The investors also received warrants for 83,500 shares, exercisable at $10.00 each for three years.

Proceeds from the deal will be used for phase 3 pivotal trials.

"We are energized by the unwavering support from our investors, who understand Immtech's achievements in getting our first oral drug candidate, DB289, into three advanced-stage clinical trials with a time- and cost-effective drug development model," said Stephen Thompson, the company's chief executive officer, in a statement released Wednesday. "We are focused on the rapid commercialization of our first drug candidate and we will explore all avenues available to achieve this goal.

"The company is supported by capital sources that it may access from time to time to reach stated corporate goals."

Based in Vernon Hills, Ill., Immtech is a pharmaceutical company focused on treating infectious diseases.

On Wednesday, the company's stock gained 18 cents, or 2.56%, to close at $7.20.

NeoMagic prices $9 million offering

In the technology sector, NeoMagic Corp. negotiated a $9 million stock deal Wednesday.

The deal was announced Wednesday morning, but by the end of the day, the company's stock had plummeted 17.3%, or $1.34, to end at $6.41. In after-hours trading, the company's stock slipped another penny.

The company, which develops multimedia features for handheld devices, plans to sell 1.5 million shares at $6.00 each on Dec. 16. The investors will receive warrants for 750,000 shares, exercisable for five years at $9.00 each.

Proceeds will be used for working capital and general corporate purposes.

NeoMagic is based in Santa Clara, Calif.

Jovian leads Canadians

Looking north of the border, Jovian Capital Corp. led offerings with its C$17.85 million stock deal.

The issue is comprised of 21 million shares at C$0.85 each.

Genuity Capital Markets and MGI Securities Inc. are the placement agents and have a greenshoe for up to 8,411,764 additional shares.

The offering is slated to close on Dec. 20.

Proceeds from the deal will be used for future acquisitions, debt repayment and internal growth.

Based in Toronto, Jovian is a wealth- and asset-management firm.

On Wednesday, the company's stock gained 5 cents, or 5.88%, to close at C$0.90.

Halozyme stock slips 3.7%

Halozyme Therapeutics Inc.'s stock edged down on Wednesday, a day after the company announced its plans to wrap a $16.1 million direct offering. On Tuesday, the company also announced that it has received agreements for another $1.45 million in the deal.

The company's stock fell 7 cents, or 3.68%, to close at $1.83. The previous day, the company's stock had fallen 28 cents.

The San Diego-based biopharmaceutical company will sell a total of 10,028,571 shares at $1.75 each.

The shares will be sold under the company's shelf registration.

Halozyme is focused on developing recombinant human enzymes for infertility, ophthalmology and oncology.

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