Biotech names dominate PIPE issuance; Cougar Biotechnology secures $50 million from stock sale

By Sheri Kasprzak

New York, May 3 - As PIPE issuance picked back up on Thursday, action was led by a few substantial biotech deals.

Cougar Biotechnology, Inc. led the charge with word that it is planning to close a $50 million offering of shares with a group of institutional investors.

The deal is expected to wrap up on Tuesday.

In the offering, the investors have agreed to buy 2.5 million shares at $20.00 each. The share price is a 5.8% discount to the company's $21.25 closing stock price from Wednesday.

Leerink Swann & Co. is the placement agent.

Proceeds will be used for clinical development of the company's drug candidates.

News of the offering sent the company's stock up 4%, or 85 cents, to end at $22.10 (OTCBB: CGRB).

Los Angeles-based Cougar develops drugs to treat cancer.

Progen's deal

Another company focused on cancer treatments, Progen Pharmaceuticals Ltd. of Australia, announced plans to wrap a $32.775 million registered direct stock deal Thursday.

The offering news shoved the company's stock downward, giving up 20.4%, or $1.23, to end the session at $4.80 (Nasdaq: PGLA).

The company plans to sell 6.9 million shares at $4.75 apiece to a group of U.S.-based institutional and other investors. The share price was a 21.22% discount to the company's $6.03 closing stock price on Wednesday.

The price per share represents an 18% discount to the company's five-day Nasdaq volume weighted average price ended May 1.

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

Thomas Weisel Partners LLC was the placement agent.

The deal is slated to wrap up on Tuesday, and the company plans to use the proceeds for phase 3 clinical trials of its PI-88 drug for post-resection liver cancer and for the development of other product candidates.

Also at Progen, the company is conducting a one-for-nine non-renounceable entitlements offer to existing shareholders that is expected to raise another A$34.1 million. The offering includes 5.9 million shares at A$5.74 each.

The entitlement offering includes one option per two shares issued. Each option is exercisable at A$8.40 each through May 28, 2010.

Located in Brisbane, Australia, Progen develops treatments for cancer.

Quality of issuers questioned

Even though biotech names grabbed PIPE headlines on Thursday, one market insider questioned the value of the issuers.

"It just doesn't seem to me like there's much going on these days with any quality [company]," he said. "The issuers you see out there are mostly these nothing companies. I'm not saying that to be mean. I just happen to think that these are the companies that sell at incredibly deep discounts."

The market source said he had not seen the Cougar offering, which was priced at just a 5.8% discount to market.

"Maybe I'm completely off," he added. "I'm just mentioning some of the stuff I've seen around lately."

Boston Life Sciences stock up

After announcing the completion of an amended $6 million private placement of convertible promissory notes - priced in March - Boston Life Sciences, Inc.'s stock climbed by 8.32%, or 23 cents, to end at $2.97 (Nasdaq: BLSI).

Volume was also up with 38,913 shares traded compared with the average 12,485 shares.

In the placement, the company issued 5% notes due Dec. 31, 2010 to Robert L. Gipson, Thomas Gipson and Arthur Koenig.

Under the original terms, the investors had the option to purchase up to $9 million in additional notes through Dec. 31, 2007. That option was removed in the amended terms.

The notes are convertible into common shares at $2.50 each any time after Dec. 31, 2007.

For each $1,000 principal amount of converted notes, that payment will be 2% of pre-commercial income plus a royalty equal to 0.5% of net sales of molecular imaging products.

Boston Life Sciences is a biotechnology company based in Hopkinton, Mass.

BTB prices offering

In other news, BTB Real Estate Investment Trust negotiated the terms of its previously announced private placement of trust units for C$40 million.

The company intends to sell 15,686,275 units at C$2.55 each.

The deal is being placed through a syndicate of agents led by Blackmont Capital Inc. The syndicate has a greenshoe for up to 15% of the offering size.

Proceeds will be used for the acquisition of income-producing properties, for working capital and for general corporate purposes.

BTB's stock gained 2 cents to end at C$2.67 Thursday (TSX Venture: BTB).

Montreal-based BTB is a real estate investment trust.

Gales raises $8 million

Elsewhere, Gales Industries Inc. completed a private placement of series B convertible preferred stock for $8.023 million.

The company sold 802,300 shares of the preferreds in the most recent deal. The offering is an extension of its previously announced $4.955 million offering, closed in April.

The 7% preferreds are convertible into common shares at the VWAP of the company's stock for the 20 trading days before the original issue date.

The offering was oversubscribed from the originally planned $7 million.

Taglich Brothers Inc. was the placement agent for the offering.

"We are very encouraged by the growing interest in our company," said chief executive officer Peter Rettaliata in a statement.

"We commend Taglich Brothers for their ability to execute and bring to us an impressive group of supportive investors. These new stakeholders - as well as our existing shareholders and management team - support our initiatives to capitalize on the extraordinary opportunity for aggressive growth offered by the global commercial and military aerospace industry.

"With this financing in place, we are now better positioned to move into our next phase of consolidation and internally generated growth."

The stock edged up by a penny on Thursday to close at $0.35 (OTCBB: GLDS).

Based in Bay Shore, N.Y., Gales manufactures aircraft parts.

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