Italy's Gentium secures $22.13 million from PIPE; Isonics raises $16 million from convertibles

By Sheri Kasprzak

New York, May 31 - Italian biopharmaceutical company Gentium SpA led an active day for PIPEs as the stock market rebounded from a crippling blow on Tuesday.

"It was tough [yesterday]," said one market source of the hit stocks took Tuesday. "Things seem to be getting a little better today. We're seeing more [PIPE deals] coming through."

The activity was led by a $22,136,750 offering of American Depositary Shares from Gentium.

Institutional investors in both Italy and the United States agreed to buy 1,943,525 ADS at $11.39 each, a 6.4% discount to the company's $12.17 closing stock price on May 30. The investors also will receive warrants for 388,705 ADS at $14.50 each.

ThinkEquity Partners LLC was the lead agent.

"This financing strengthens our balance sheet and allows us to continue development of Defibrotide to prevent veno-occlusive disease and to treat multiple myeloma," said Laura Ferro, Gentium's chief executive officer, in a news release. "In addition, it gives us the capital to negotiate new drug development and licensing agreements from a position of strength.

"We are pleased with the support shown by some of our existing shareholders as well as by the enthusiasm of a number of new, recognized biotech investors who participated in this financing."

The offering was announced Wednesday afternoon, and Gentium's stock climbed 7.31%, or 89 cents, to close at $13.06 (Nasdaq: GENT).

The placement was announced on the same day as Gentium's first-quarter earnings report.

For the quarter ended March 31, the company reported net revenues of €663,000, compared with net revenues of €950,000 for the same quarter of 2005.

The company reported a net loss of €3.41 million for the quarter, compared with a net loss of €3.11 million for the corresponding 2005 quarter.

Villa Guardia, Italy-based Gentium is a biopharmaceutical company focused on developing drugs derived from DNA extracted from natural sources. The company's drugs are used to treat cancer and vascular diseases.

In the broader market, stocks rebounded on Wednesday as oil prices retreated. The major stock indexes took a rather nasty hit on Tuesday.

On Wednesday, the Dow Jones Industrial Average climbed 73.88 to end at 11,168.31; the Nasdaq composite index gained 14.14 to settle at 2,178.88; and the Standard & Poor's 500 composite index ended up 10.25 at 1,270.09.

On Tuesday, however, the picture was very different with the Dow down 184.18 to end at 11,094.43. The Nasdaq composite index was down 45.63 to close at 2,164.74 and the S&P 500 lost 20.28 to end at 1,259.88.

Oil prices slipped on Wednesday, losing 74 cents to close at $71.29 per barrel. On Tuesday, oil prices gained 63 cents to close at $72.03 per barrel.

Isonics' $16 million deal

Looking to the tech sector, Isonics Corp. wrapped up a $16 million private placement of 6% convertible debentures.

The three-year debentures are convertible into common stock at the lesser of $1.25 each or 80% of the volume weighted average price of the company's stock the day before conversion.

The investors received warrants for 2 million shares, exercisable at $1.25 each for three years, for 3 million shares, exercisable at $1.75 each for three years and for 3 million shares, exercisable at $2.00 each for three years. The investors also received 660,000 common shares.

Proceeds from the offering will be used to pay holders of existing 8% debentures.

The stock slipped by 2 cents, or 2.66%, to end at $0.91 (Nasdaq: ISON).

"We believe that this transaction significantly strengthens our financial position and allows us to continue to invest in our rapidly growing homeland security and semiconductor businesses," said James Alexander, the company's chief executive officer, in a statement. "The additional funds will allow us to support ongoing development activities, to make cash-flow positive acquisitions and strategic investments, and to provide general working capital.

"We have worked diligently and invested over the past 18 months to increase the fundamental value underlying our business and to position the company for achieving positive operating cash flow leading to profitability. The proceeds from this transaction are key to reaching that objective."

Golden, Colo.-based Isonics manufactures, commercializes and markets materials that are sub-atomically re-engineered.

Imperial prices $12 million PIPE

Heading back to the energy sector, Imperial Petroleum, Inc. negotiated a $12 million private placement of 9% convertible debentures.

The debentures are convertible into common shares at a 20% discount to the market price with a $0.40 floor, before the company effects a four-for-one reverse stock split.

The maturity of the debentures could not been determined Wednesday afternoon.

The proceeds will be used to repay existing debt after the proposed restructuring of its current debt facility, to provide development for oil and gas wells, to fund initial requirements for a biodiesel deal with Domestic Energy Partners and to provide acquisition and working capital.

"This financing will allow us to more aggressively pursue opportunities that we believe will drive our future growth plans both in the traditional oil and gas exploration and production sector and the emerging biofuels markets," said Jeffrey Wilson, Imperial's president, in a statement. "We are extremely excited with the financial group who is participating in this financing as the underwriter since it will give our company's story an audience in both the institutional and retail markets as we continue to grow."

The stock remained unchanged on Wednesday to close at $0.195 (OTCBB: IPTM).

Located in Evansville, Ind., Imperial is an oil and natural gas exploration company.

In other oil news, Calgary, Alta.'s Duvernay Oil Corp. pocketed C$56 million from the sale of 1 million flow-through shares.

The deal was placed through a syndicate of underwriters led by Peters & Co. Ltd.

The proceeds will be used for exploration expenses on the company's Canadian properties.

On Wednesday, the stock gained C$1.42, or 3.4%, to end the session at C$43.16 (Toronto: DDV).

Based in Calgary, Alta., Duvernay is an oil and natural gas exploration company.

Vical stock dips

A day after closing the first tranche of a $10.85 million PIPE connected to a research and development agreement with AnGes MG Inc., Vical Inc.'s stock slipped but rebounded in after-hours activity.

The stock gave up a dime to close at $6.45 (Nasdaq: VICL) on Wednesday. In after-hours trading, the stock gained 20 cents.

On Tuesday, when the company announced the closing, the stock climbed 7.73%, or 47 cents, to end at $6.55.

AnGes bought shares at $6.50 each for $6.9 million and will buy another $3.95 million in stock at a price equal to the volume weighted average price for the 30 trading days before the second closing.

The second closing will occur once Vical obtains shareholder approval.

The placement is part of Vical's research and development agreement with AnGes for Vical's Allovectin-7R cancer immunotherapeutic.

Under the terms of the agreement, AnGes will fund the phase 3 pivotal trial, which will be conducted in the U.S. AnGes will retain marketing rights for Allovectin-7R in certain Asian countries. Vical will receive royalties of up to $77.5 million in total sales milestones based on the net sales in those Asian countries.

The total funding will be $22.6 million with a portion of that coming from the private placement.

Word of the offering led both buysiders and sellsiders to say that Vical's stock could reach double-digit levels by the end of the year.

San Diego-based Vical is a biopharmaceutical company focused on developing treatments for melanoma and other types of cancer.

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