United Therapeutics lands $150 million partnership; Level 3 funds buybacks; Cleanfield, Ontex offer stock

By Kenneth Lim

Boston, Nov. 17 - United Therapeutics Corp. announced a $150 million investment by new partner Eli Lilly and Co. as part of a new licensing deal.

Level 3 Communications, Inc. placed $400 million of new convertibles with seven investors to buy back its earlier-dated convertible debt.

Cleanfield Alternative Energy Inc. wrapped up the initial C$1 million of a planned C$3 million stock placement to a joint venture partner.

Meanwhile, Ontex Resources Ltd. announced a C$4 million flow-through financing exercise to fund its gold projects in Ontario.

United Therapeutics in Eli Lilly deal

United Therapeutics will place $150 million of its common stock with Eli Lilly as part of a deal to commercialize a potential pulmonary arterial hypertension treatment.

The shares will be sold at 90% of the lesser of the average share price of United Therapeutics common stock during the five-day period ended Nov. 14 and the average closing share price of the five-day period beginning Nov. 17.

United Therapeutics common stock (Nasdaq: UTHR) fell 35.24%, or $31.90, to close at $58.62 on Monday.

United Therapeutics will also make an upfront payment of $150 million to Eli Lilly for an exclusive right to develop, market, promote and commercialize Eli Lilly's tadalafil pulmonary arterial hypertension treatment in the United States and Puerto Rico. The amount will be refunded if tadalafil is not approved for pulmonary arterial hypertension under a different brand name.

Tadalafil also is the active pharmaceutical ingredient in Cialis, developed and marketed by Eli Lilly.

The license agreement will become effective upon completion of the private placement.

United Therapeutics is a Silver Spring, Md.-based drugmaker.

The licensing agreement came as United Therapeutics announced its hypertension drug Remodulin failed a late-stage study as an oral formulation. The drug is already approved and sold in injection form.

"United Therapeutics brings substantial expertise and passion to the treatment of patients with PAH and will be an excellent partner for this product," Eli Lilly Research Labs vice president Gwen G. Krivi said in a statement. "Their experience in this field will greatly enhance the ability to provide tadalafil for PAH, if approved, as a new therapeutic option for this very serious disease. We are also pleased to make a financial investment in a promising and profitable biotechnology company."

United Therapeutics chairman and chief executive Martine Rothblatt added, "The addition of tadalafil for PAH expands our portfolio and strengthens United Therapeutics' position in the area of cardiovascular disease. Building upon the success of Remodulin, we are committed to addressing the unmet medical needs of patients. We also welcome the support and confidence expressed by Lilly through their financial investment in our company."

Level 3 funds buybacks

Level 3 Communications is placing $400 million of 15% convertible senior notes due 2013 to buy back up to about $1.1 billion of earlier-dated convertibles.

The new notes will have an initial conversion price of $1.80 per share. Level 3 common stock (Nasdaq: LVLT) closed at $0.90 on Monday, higher by 3.45%, or $0.03.

Fairfax Financial Holdings will buy $117.56 million of the notes; Southeastern Asset Management will subscribe for $117.56 million of the notes as well; Chou Associates Management Inc. has agreed to invest $50 million; Steelhead Partners, Markel Corp. and Gary and Mary West have all three agreed to buy $25 million of the notes each; Walter Scott Jr. and related accounts will invest $36.98 million; and Robert E. Julian and related accounts will buy $2.9 million of the notes.

Proceeds will be used to repurchase Level 3's $354.541 million of 2.875% convertible senior notes due 2010, its $481.666 million of 6% convertible subordinated notes due 2010 and its $305.135 million of 6% convertible subordinated notes due 2009.

Level 3 is a Broomfield, Colo.-based provider of internet protocol services, broadband transport and infrastructure services, collocation services and voice and voice-over-internet-protocol services.

The company is offering $620 for every $1,000 par 2.875% note, $700 for every $1,000 par 6% note due 2010 and $920 for every $1,000 par 6% note due 2009. The placement is conditional upon the company accepting for payment at least 50% of the 2010 notes.

Cleanfield raises C$1 million

Cleanfield Alternative Energy said it settled the initial C$1 million tranche of a planned C$3 million stock placement to Zhejian Jingye Technology Co. Ltd.

The company sold about 1.69 million common shares at C$0.59 apiece in the initial placement. The company may sell up to C$2 million more of the shares in the next two years based on market prices.

Cleanfield common stock (TSX: AIR) fell 11.11%, or C$0.05, to settle at C$0.40 on Monday.

Cleanfield and Zhejiang Jingye have a joint venture in China to distribute Cleanfield's turbines.

Based in Ancaster, Ont., Cleanfield develops renewable energy products.

"We are extremely pleased to be establishing this joint venture with ZJT and taking a decisive step into the Chinese market that is strategically important for the growth of our wind turbine business," Cleanfield president and chief executive Tony Verrelli said in a statement. "Cleanfield will be well-positioned to participate in China's rapidly developing renewable energy industry. China is key to our global strategy as we commence our global expansion. We view ZJT as an ideal strategic partner and undoubtedly this joint venture will bring about long-term benefits to both partners not only with the V3.5 wind turbines but with future renewable energy products."

Ontex in flow-through deal

Ontex plans to raise C$4 million through a private placement of flow-through common shares and units.

Each unit will consist of one common share and one half-share warrant.

Proceeds will be used for exploration and general working capital purposes.

Ontex is based in London, Ont.

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