Acusphere set to wrap $40.2 million direct deal; Environmental Tectonics secures $15 million equity line

By Sheri Kasprzak

New York, April 7 - Acusphere, Inc. rounded out the week in PIPEs with word that it will conclude a $40,216,437 direct placement of units early in the April 10 week.

After the deal was announced Friday morning, the stock gave up 7.31%, or 51 cents, to end at $6.47 (Nasdaq: ACUS). On Thursday, the stock lost 22 cents to settle a $6.98.

In the placement, a group of institutional investors agreed to buy 5,772,004 units at $6.9675 each, a slight discount to the company's closing stock price on Thursday.

The units are comprised of one share and one third-share warrant with each whole warrant exercisable at $7.97. The strike price is a 14.2% premium to the Thursday closing stock price.

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

Cowen & Co., LLC is the placement agent for the deal, which is expected to settle on April 12.

Trading volume of Acusphere's stock took off on Friday with 392,740 shares traded compared with the three-month running average of 116,944 shares.

"Par for the course," said one buysider based in Florida. "I first bought in before the Nycomed deal [in October 2005]. Sherri [Oberg, the company's chief executive officer] has given me so many haircuts since then I have lost count. The bad news here is this money was raised to fund the company through 2007 and, of course, they will have to raise another $50 million to fund the sales force/launch in 2008.

"The stock is definitely not cheap in here given the time value, despite the fact that the interim data might be good. Plus, as in anything else new that gets launched, the initial uptake is always slower than planned, which will cause disappointment."

Another buysider, this one based in Boston, said the timing of the offering might be a bit early.

"The point is between now and the actual commercialization, the company would have needed cash," said the Boston buysider. "If it were up to me, without knowing internal data and facts, I would have waited [until] after positive results of the phase 3 trials [for AI-700 - the company's coronary disease product] when obviously the stock price would have been higher and the dilutive impact would have been smaller.

"But if you think about it, there are many positives to this offering. The first obvious is that the company has a lot more cash to make it through this year and [the] first part of next. They sold it at a 52-week high point of close to $7 a share. Also, even through warrants were issued, they carry an exercise price of close to $8. Obviously there was plenty of demand for the stock at these levels.

"The increased cash balance puts the company in a great position to cut a much better deal with Big Pharma if that's what's going on after phase 3. The company doesn't have to give a discount because it's worried about cash. Finally, and most importantly, if you really believe the phase 3 and the eventual commercialization will be a success, this offering really doesn't matter jack crap. If you work through the numbers, if this drug works, you'll get anywhere from $15 to $80-plus stock, easily. So let people sell, the stock should fall naturally because of the dilutive impact. But if it goes below that theoretical level [$7], I'm buying again."

Acusphere has tapped the PIPE market before, raising $18,721,500 from a direct placement of its stock on Sept. 28, 2005. In the direct deal, the company sold 3,566,000 shares at $5.25 each.

Based in Watertown, Mass., Acusphere develops treatments for cancer, asthma and cardiac disorders, including AI-700.

Environmental Tectonics' equity line

Looking elsewhere in PIPEs Friday, Environmental Tectonics Corp. released the terms of a rather unique equity line.

The company plans to sell series B convertible preferreds under an equity line with H.F. Lenfest.

"It's not [a structure] I've seen before," said one market source when asked about the rarity of an equity line composed of convertibles. "I would think it's better for them in terms of flexibility. They can certainly draw when their stock performs better so the conversion price is higher."

Under the terms of the deal, Lenfest agreed to buy 6% preferreds for up to $15 million over the course of 18 months. The draws on the line must be made in $1 million increments.

The conversion price will be equal to Environmental Tectonics' closing stock price on the day before a draw with a $4.95 floor price.

On Friday, the company made its first draw of $3 million, selling 3,000 shares of preferred stock with an initial conversion price of $4.95.

The company's stock gained 10 cents, or 2.01%, to settle at $5.08 (Amex: ETC).

Based in Southampton, Pa., Environmental Tectonics develops public entertainment systems, clinical hyperbaric systems, environmental testing and simulation systems and other related products.

Northwestern Mineral prices C$15 million

Moving north of the border, Northwestern Mineral Ventures Inc. negotiated a C$15 million unit offering at a 17.5% discount to the company's market price on Thursday.

The company plans to sell 17,647,059 units at C$0.85 each. The units are comprised of one share and one half-share warrant with each whole warrant exercisable at C$1.15 for 18 months.

A syndicate of agents led by Westwind Partners Inc. and Toll Cross Securities Inc. has a greenshoe for up to 5,882,353 units exercisable for 30 days after the deal closes.

The placement is scheduled to close May 4.

The stock slipped a penny to end at C$1.02 (TSX Venture: NWT).

Northwestern presently has 81,110,090 outstanding common shares.

Proceeds will be used for exploration on the company's properties in Niger, Canada and Mexico.

Toronto-based Northwestern is a mineral exploration company.

In other resources news, Aurelian Resources Inc. priced a C$10 million stock offering.

The deal includes up to 3,636,364 shares at C$2.75 each, an 8.3% discount to the company's C$3.00 closing stock price on Thursday.

Underwriters Dundee Capital Corp. and Canaccord Capital Inc. have a greenshoe for up to C$10 million.

Proceeds will be used for the advancement of the company's mineral projects and for general corporate purposes.

Aurelian's stock gained 3%, or 9 cents, to end at C$3.09 (TSX Venture: ARU).

Located in Toronto, Aurelian is a mineral exploration and development company focused on properties in Ecuador.

Oscient stock gives up 5.3%

Over in the biopharmaceutical sector, Oscient Pharmaceuticals Corp.'s stock dipped Friday after announcing its plans to settle a $34.74 million stock offering planned for early in the April 10 week.

The stock slipped 5.29%, or 10 cents, to finish the day at $1.79 (Nasdaq: OSCI). In after-hours trading, the stock edged up a penny.

The company intends to sell 18 million shares on Tuesday to a group of institutional and accredited investors.

The price per share is a 1% discount to the company's $1.95 closing stock price on Wednesday.

Waltham, Mass.-based Oscient is a biopharmaceutical company focused on antibiotic products.

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