NPS Pharmaceuticals pockets $50 million; Azur wraps $48 million stock deal

By Sheri Kasprzak

New York, Aug. 7 - NPS Pharmaceuticals, Inc. led another day filled with biotech PIPE offerings Tuesday.

The company sold $50 million in convertible notes due 2014 to a group of funds managed by Visium Asset Management, LLC.

The 5.75% notes are convertible into common shares at $5.44 each, a 30% premium to the five-day volume weighted average price of the company's stock between July 31 and Aug. 6.

"NPS will use these funds and the $50 million in proceeds generated from our recently announced transaction with Drug Royalty to retire approximately half of the 3% convertible debt due June 2008," NPS chief financial officer Gerard Michel said in a news release.

The stock gained 19 cents, or 4.88%, to end the day at $4.08 (Nasdaq: NPSP).

Located in Parsippany, N.J., NPS develops small molecules and recombinant proteins to treat metabolic, bone and mineral and central nervous system diseases.

Azur raises $48 million

Another biotech company, Azur Pharma Ltd., sold $48 million in shares, an offering that comprised 28% of the company's outstanding share capital.

The full terms of the deal were unavailable Tuesday.

Davy Corporate Finance Ltd. was the placement agent.

"We are pleased to announce the successful completion of our offering and the closing of the acquisition of FazaClo," said Seamus Mulligan, chief executive officer of Azur, in a statement.

"The offering leaves us with strong cash resources after funding the acquisition. We have now raised in excess of $100 million of equity since our formation in mid-2005."

FazaClo, Mulligan said in the news release, is the company's third acquisition. The company purchased Gastrocrom in January 2006 and Pharmelle in February 2007.

Proceeds will be used for the acquisition of products and pipeline assets.

Dublin's Azur acquires and develops late-stage pharmaceutical products.

Drug deals popular

In the broader market, sellsiders said Tuesday that biotech offerings will likely continue to become more prevalent in the PIPE market.

Drug stocks continued to get a boost on Tuesday, and this rise in stocks could result in more offerings.

"Drug makers are always looking for funds," said one market source familiar with the biotech sector. "When stocks go up, that's going to make them even more eager to get into the market."

Another sellsider agreed.

"It's fair to say that biotech is probably going to be out there, at least unless stocks make a major downward turn," he said.

Biotech offerings on Monday were led by a $65.3 million stock deal from BioCryst Pharmaceuticals, Inc.

On Monday, after the deal was announced, the stock gained 84 cents, or 10.66%, to close at $8.72 (Nasdaq: BCRX). On Tuesday, the stock gained another 57 cents, or 6.54%, to end at $9.29 but lost 32 cents in after-hours trading.

In the placement, a group of institutional funds bought shares at $7.80 each.

Birmingham, Ala.-based BioCryst develops small-molecule pharmaceuticals for the prevention, treatment and control of cancer, cardiovascular diseases and viral infections.

Another biotech company that announced plans to close a PIPE on Monday saw its stock jump by 23.76% on Tuesday.

Curis, Inc.'s stock skyrocketed by 24 cents to end the session at $1.25 (Nasdaq: CRIS). On Monday, the stock slipped by a penny to close at $1.01.

The company sold units of one share and one warrant for 0.35 shares at $1.06375 each for $13 million in proceeds.

The deal is set to close Aug. 8.

Proceeds will be used for research and development costs as well as for general corporate purposes.

Located in Cambridge, Mass., Curis develops novel treatments for cancer.

Callisto raises $11.24 million

In other biotech news, Callisto Pharmaceuticals, Inc. sealed an $11,245,500 placement of series B convertible preferred stock.

The company issued 1,124,550 shares of the preferred stock at $10.00 apiece.

The preferreds were sold to a group of investors led by RAB Special Situations (Master) Fund Ltd. and Absolute Octane Master Fund Ltd.

The preferreds are convertible into common shares at $0.50 each.

The investors also received warrants for 22.491 million shares, exercisable at $0.70 each for three years.

On Tuesday, the company's stock remained unmoved at $0.72 (Amex: KAL).

Proceeds will be used for clinical development of the company's Atripimod, for low- to intermediate-grade neuroendocrine carcinoma, and L-Annamcyin, for children with relapsed or refractory acute leukemia, as well as for the development of Guanilib, the company's product for gastrointestinal diseases.

"Our two co-leads, RAB Capital and Absolute Capital Management, are highly regarded long-term fundamental investors who have specifically mandated that 50% of the funds raised in this financing be used to advance development of Guanilib," said Gabriele M. Cerrone, Callisto's chairman, in a news release.

"Up until now, Callisto has not had the financial wherewithal to take this drug into the clinic. This marks the first time in our history that we will be able to unlock Guanilib's true value and should provide us with the means to take the drug all the way into phase 2 clinical testing."

Callisto, located in New York, develops drugs to treat cancer and gastrointestinal diseases.

BioMarck Pharmaceuticals, another drug company, wrapped a $4 million offering, the terms of which were unavailable Tuesday.

Proceeds will be used for the completion of a phase 2 proof of concept clinical study.

Based in Raleigh, N.C., BioMarck develops treatments for respiratory disorders.

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