Discovery Labs procures $50 million equity line; Alteon plans $2.5 million unit sale

By Sheri Kasprzak

New York, April 19 - Discovery Laboratories, Inc. led PIPE activity on Wednesday, securing a $50 million equity line with Kingsbridge Capital Ltd.

The equity line was announced late Wednesday, and even though the stock gave up 10 cents on the day to close at $4.28, it rebounded in after-hours trading, gaining 3 cents (Nasdaq: DSCO).

For the first quarter of 2006, Discovery's highest closing stock price was $8.60 and the lowest was $6.66, compared to a highest closing stock price of $8.60 and a lowest of $5.05 for the first quarter of 2005.

Under the terms of the committed equity financing facility (CEFF), Kingsbridge will buy shares of Discovery at discount ranging from 6% to 10%, depending upon market capitalization. There is a minimum price equal to the higher of $2.00 or 85% of the volume weighted average price for the day before an eight-day pricing period. There is a three-year term on the agreement.

Kingsbridge received warrants for 490,000 shares, exercisable at $5.6186 each, a 30% premium over the average closing bid price for the five trading days before the agreement was signed, for five years.

"This new CEFF, coupled with our existing cash, should provide us with financial resources adequate to progress Surfaxin through the final stages of the U.S. and European regulatory review and approval processes for our initial indication, respiratory distress syndrome in premature infants," said Jon G. Cooper, the company's chief financial officer, in a statement.

"In addition, it will allow us to support our manufacturing and commercialization initiatives, and our key SRT [surfactant replacement therapies] pipeline programs, Surfaxin for bronchopulmonary dysplasia and Aerosurf.

"This new CEFF provides potential advantages over our 2004 CEFF, including an adjusted minimum stock threshold price which gives us the ability, once effective, to access capital. In addition, the discounts to be applied to the share price ranges have improved, financing tranches will be completed over an eight-day rather than 15-day period, and this new CEFF will be available into 2009, whereas the 2004 CEFF would have expired in October 2007. With this CEFF and our ability to access other traditional financing structures, we believe we are in a position to make strategic financing decisions in support of the company's plans."

Discovery reported a net loss of $58.9 million for the year ended Dec. 31, compared with a net loss of $46.2 million for the year ended Dec. 31, 2004.

Based in Warrington, Pa., Discovery is a biotechnology company focused on surfactant replacement therapies for respiratory diseases.

Alteon's $2.57 million offering

Looking elsewhere in the biotech sector, Alteon Inc. negotiated a $2,575,000 unit deal as part of its merger plans with HaptoGuard, Inc.

Alteon said some new and existing institutional investors will buy 10.3 million units of one share and one warrant at $0.25 each. The warrants are exercisable at $0.30 each for five years.

Rodman & Renshaw, LLC is the placement agent.

Proceeds will be used to fund clinical development efforts after the merger of Alteon and HaptoGuard is completed.

Under the merger terms, Alteon and HaptoGuard will combine operations in a stock transaction equal to $8.8 million. HaptoGuard's shareholders will receive 37.4 million shares of Alteon, which represents 31% of the company's total share capital.

"We believe that this transaction will truly benefit the shareholders of Alteon by bringing to the company a promising clinical-stage product, additional proprietary technologies, as well as additional management and board expertise," said Kenneth Moch, the company's chief executive officer, in a news release.

"By combining our operations, we will become a new company with a promising product pipeline focused on cardiovascular disease and diabetes," said HaptoGuard CEO Noah Berkowitz in the same release. "We look forward to potentially initiating new phase 2 clinical trials for both alagebrium and BXT-51072."

On Wednesday, Alteon's stock gained a penny, or 4%, to settle at $0.26, and gained another 5 cents in after-hours trading.

Based in Parsippany, N.J., Alteon is a biotechnology company focused on treatments for heart disease and diabetes.

Uranium Resources wraps $49.08 million PIPE

Moving to the natural resources sector, Uranium Resources, Inc. pocketed $49,082,844 from a private placement of 10,016,907 shares at $4.90 each.

The company intends to raise another $900,000 from the deal by April 21.

Rice, Voelker LLC was the placement agent.

Uranium's stock advanced 5 cents to close at $6.80 on Wednesday (OTCBB: URRE).

Uranium Resources, based in Lewisville, Texas, is a mineral exploration company focused on uranium.

PIPE's mid-year blues

In the broader PIPE market Wednesday, one sellsider said volume has been off for the past two weeks, possibly because it's getting closer to the middle of the year.

"At the first of the year, everyone wants to start funding programs or projects," he said. "At the end of the year, same thing. But in the middle, [issuers] start running out of the need for a cash infusion. I don't necessarily think it means that investors aren't interested in PIPE offerings, I just think fewer issuers have a need to [conduct a financing]."

Tom Exploration plans C$12 million deal

Moving to Canada, Tom Exploration Inc. led activity there, pricing a C$12 million partially convertible debenture offering.

The 10% debenture, due in three years, is partly convertible at C$0.30 each. Up to C$3.6 million of the debenture may be converted.

Anchor Securities Inc. is the placement agent.

The placement is scheduled to close May 15.

The proceeds will be used to acquire the Beacon II gold project in Val d'Or, Quebec, and to fund underground exploration on the project.

Tom's stock dropped by a penny on Wednesday to close at C$0.29 (TSX Venture: TUM).

Based in Rouyn-Noranda, Quebec, Tom is a gold exploration company.

CV Therapeutics stock advances

A day after completing a $200 million equity line with Azimuth Opportunity Ltd., CV Therapeutics, Inc.'s stock made gains.

The stock closed up 1.46%, or 33 cents, to end at $22.88 (Nasdaq: CVTX).

On Tuesday, when the equity line was announced, the stock climbed 83 cents, or 3.82%, to end at $22.55 and gained another 45 cents in after-hours trading.

Under the terms of the equity line, Azimuth agreed to buy shares of CV at discounts ranging from 3.8% to 5.8% of the daily volume weighted average price on the date of a draw. The discount will be dependent upon the company's market capitalization at the time of a draw.

Based in Palo Alto, Calif., CV is a biopharmaceutical company focused on developing treatments for cardiovascular diseases.

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