Boston Life Sciences raises $12.78 million; oil prices drive down stocks as hurricane strikes

By Sheri Kasprzak

New York, Aug. 30 - Light private placement volume Tuesday was led by offerings from two pharmaceutical companies, the largest of which came from Boston Life Sciences, Inc.

The Boston-based company plans to raise $12.78 million by selling 6 million shares at $2.13 each. As of Aug. 5, the company had 10,422,457 outstanding common shares.

This is not the first time this year Boston Life has completed a stock offering of this type. The company wrapped a similar deal on March 9 for proceeds of $5 million after selling 2 million shares at $2.50 each.

Financially, the research and clinical development company has improved over the past year. It still, however, suffered net losses for the quarter ended June 30. The company lost $2,397,797 in the second quarter, compared to a loss of $4,027,950 for the corresponding quarter in 2004.

Boston Life Sciences is focused on therapeutic products for the central nervous system.

On Tuesday, the company's stock slipped $0.06 to end at $2.10.

The other pharmaceutical offering announced on Tuesday was an $11,947,957 deal wrapped by Manhattan Pharmaceuticals, Inc.

To fund the development of three of its lead compounds, the company sold 10,763,926 shares at $1.11 each.

On Aug. 10, the company had 40,858,692 outstanding common shares.

The shares came with warrants for 2,152,758 shares, exercisable for five years at $1.44 each.

Paramount BioCapital, Inc. was the placement agent.

"We are pleased to have completed this financing and we believe that it evidences the investment community's confidence in the clinical prospects for our product portfolio and its commercial potential," said Doug Abel, the company's chief executive officer, in a statement. "The additional funds will allow us to continue advancing the development of our products and pipeline."

The proceeds not used for the lead compounds will be used for general corporate purposes and working capital.

That working capital may come in handy since the company sustained some significant net losses in the second quarter.

The New York-based pharmaceutical company lost $13,484,995 in the quarter ended June 30, up sharply from losses of $1,042,288 for the same quarter in 2004.

"Management believes that the company will continue to incur net losses and negative cash flows from operating activities through at least June 30, 2006," said the company's latest earnings statement.

"Based on the resources of the company available at June 30, 2005, management believes that the company will need additional equity or debt financing or will need to generate revenues during 2005 through licensing of its products or entering into strategic alliances to be able to sustain its operations through 2005 and that it will need additional financing thereafter until it can achieve profitability, if ever. These matters raise substantial doubt about the company's ability to continue as a going concern."

Manhattan is a pharmaceutical company focused on prescription drugs to treat obesity. The company's stock remained unchanged at $1.45 Tuesday.

Oil drives down stocks

Moving to the broader private placement market, oil prices jumped upward - at one point early in the day reaching almost $71 per barrel - after Hurricane Katrina made landfall, striking an area of the Gulf Coast rich in oil refineries. Oil ended the day up $3.65 to close at $70.85 per barrel.

Stocks were shoved down by the rising oil and this may impact PIPE issuance for the remainder of the week, one sellside source predicted.

"It's slower than usual already," he said. "I'm not one to say that this is going to have this massive impact and we're not going to see a single deal until doomsday, but it will slow things down a bit."

In fact, the surge in oil has been good for the energy companies that dominate the Canadian PIPE market.

Two new oil deals were priced on Tuesday, in fact.

Antrim Energy Inc., a Calgary, Alta.-based oil explorer, announced its plans to raise C$11 million through the sale 6,111,111 special warrants at C$1.80 each.

The special warrants are exchangeable for units of one share and one half-share warrant. The whole warrants are exercisable at C$3.00 each for 18 months.

Concurrently, the company plans to raise C$15 million in a public offering of 8,333,333 prospectus units at C$1.80 each. The prospectus units are being sold under the same terms as the units associated with the special warrants.

The private placement is being conducted through a syndicate of placement agents led by Research Capital Corp.

Proceeds will be used for the Causeway prospect in the North Sea. The remainder will be used for general corporate purposes.

After the offering was announced late Monday, Antrim's stock slipped 4.5%, losing C$0.09 to end at C$1.88 Tuesday.

The other offering was priced by Exxel Energy Corp. for $9 million.

Exxel, a Vancouver, B.C.-based oil exploration company, intends to sell 1.8 million units to one institutional investor at $5.00 each.

The units include one share and one half-share warrant, the whole of which is exercisable at $7.50 each for two years.

In June, Exxel completed a similar offering with Gemini Energy Corp., raising $10 million from the sale of 2 million units at $5.00 each.

Exxel's stock closed unchanged at $6.2441 on Tuesday.

The proceeds will be used for property acquisition and working capital.

Savannah Bancorp raises $12.2 million

Looking away from oil deals, Savannah Bancorp, Inc. sealed a $12,199,619 stock offering on Tuesday.

The bank holding company sold 366,148 shares at $30.50 each to unaffiliated investors and 31,125 shares at $33.16 each to affiliated investors.

Sterne, Agee & Leach, Inc. was the placement agent for the deal.

The company plans to use a portion of the proceeds to capitalize its new banking company, Harbourside Community Bank on Hilton Head Island, S.C. The rest will be used for general corporate purposes.

Company chief executive officer Mike Odom did not return calls for comment on the offering by press time Tuesday.

Savannah Bancorp is based in Savannah, Ga. Its stock closed unchanged at $33.50 Tuesday.

Big Sky stock slips

Big Sky Energy Corp.'s stock dipped less than 1% on Tuesday after the completion of an amended $42 million private placement.

The company's stock lost a penny to end at $1.25 Tuesday.

On Monday, after the private placement closed, the company's stock dropped $0.03 to close at $1.26.

In the private placement, Big Sky sold units and special warrants to investors in the United States and Canada at $1.00 each.

Big Sky Energy Corp. led private placement news Monday as it completed a $42 million deal that has been in the works since July.

Based in Calgary, Big Sky is an oil exploration company.

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