Favrille prepares to settle $45.23 million PIPE; Genta prices $40.85 million direct offering

By Sheri Kasprzak and Ronda Fears

New York, March 7 - Favrille, Inc. and Genta Inc., two biopharmaceutical companies, led PIPE activity Tuesday with sizable stock deals.

The Favrille deal includes 8.6 million shares at $5.26 to be sold to a group of institutional investors in the coming days. The price per share is equal to the company's closing stock price on March 6.

As of Oct. 31, Favrille had 20,324,884 outstanding common shares.

The investors in the deal are led by MPM BioEquities Adviser, LLC and include Federated Kaufmann Fund, T. Rowe Price Associates, Tang Capital Management, ProMed Management, Forward Ventures, Sanderling Ventures, Alloy Ventures and William Blair Partners.

Favrille intends to use the proceeds for clinical development of the company's FavId product for B-cell non-Hodgkin's lymphoma. The remainder will be used for working capital and general corporate purposes.

"$45 million will get this product [FavId] to market," said one sellside trader. "Smart move. We go higher. This is a product with a future; $45 million is a lot."

Indeed, the company's chief executive officer said in a statement that he feels the funding will be enough to get the company through the phase 3 clinical trial of FavId.

"This financing should be sufficient to fund operations through the analysis of our primary endpoint, time to disease progression, in the pivotal phase 3 clinical trial of FavId during the second half of 2007," said CEO John Longenecker in a statement. "This will enable us to continue our clinical development of FavId for B-cell non-Hodgkin's lympohoma while aggressively preparing for its commercial launch. We have also strengthened our shareholder base in the process and helped to position our company for long-term growth."

"Favrille is poised to provide a major advance in the treatment of non-Hodgkin's lymphoma patients," said Kurt von Emster, general partner with MPM Capital, in a statement. "The MPM BioEquities team has been impressed with the quality of Favrille's management, the impressive results from the previous trials of FavID, and the many near-term milestones to be achieved by this talented team."

The offering was announced Tuesday morning, and the company's stock advanced slightly by the end of the day, gaining 4 cents, or 0.76%, to close at $5.30 (Nasdaq: FVRL).

Looking to the company's latest earnings report, Favrille reported a net loss of $8,524,000 for the quarter ended Sept. 30, 2005, compared with a net loss of $7,295,000 for the same period in 2004.

San Diego-based Favrille is a biopharmaceutical company focused on immunotherapies used to treat cancer.

Genta prices direct deal

Elsewhere in the biopharmaceutical sector, Genta, Inc. priced the direct placement it announced late Monday night.

The company intends to sell 19 million shares at $2.15 each, an 11.5% discount to the company's closing stock price of $2.43 on March 6.

Genta had 114,417,093 outstanding shares as of Oct. 31.

The deal is slated to close March 10, and the shares will be sold under the company's shelf registration.

SG Cowen & Co., LLC is the bookrunner with Rodman & Renshaw, LLC as co-agent.

Word of the placement sent the company's stock down 24 cents, or 9.88%, to end at $2.19 (Nasdaq: GNTA). Volume in the stock was up Tuesday, with some 20 million shares traded compared with the normal 6.3 million shares.

The most recent offering is the third stock offering the company has concluded in the past 15 months. The company closed a $17.5 million offering in August 2005 and a $22.5 million deal in December 2004.

Berkeley Heights, N.J.-based Genta is a biopharmaceutical company focused on treatments for cancer. Its lead product is Genasense, which completed phase 3 trials in combination with chemotherapy in the treatment of several types of cancer.

Genta faces stiff competition from other biotech companies, including Isis Pharmaceuticals, Inc., that have been better received by the market, one buyside source said.

Shares of Carlsbad, Calif.-based Isis gained Tuesday by 17 cents, or 2.18%, to $7.98. Isis markets its antisense drug Vitravene for the treatment of cytomegalovirus and retinitis in AIDS patients in the United States and Europe, and has seen success with its Triangulation Identification for Genetic Evaluation of Risks, or Tiger, technology - a biosensor system, for identification of infectious diseases.

"The more I have come to understand the Tiger technology, the more I am impressed with it. There is simply nothing like it. It can identify any organism (previously known or unknown) if the sample contains as few as 10 organisms. It can do so using a wide variety of sample types (blood, air, soil, pus, sputum, soil, water, etc.)," the buysider said. "Isis is farther along in the game and it still is not understood by Wall Street.

"Tiger is almost certainly going to make a lot of money. When the money begins to roll in, Wall Street will become a quick learner. Until then, however, this stock is a tremendously undervalued investment."

As to Genta's earnings, the company reported a net loss of $7,904,000 for the quarter ended Sept. 30, 2005. For the same quarter of 2004, the company reported a net loss of $5.58 million, according to the latest available earnings report.

Immune Response closes $8 million PIPE

In another biopharmaceutical deal, Immune Response Corp. finished an $8 million convertible note deal that sent its stock up by almost 50%.

The stock advanced by 48.98%, or 8 cents, Tuesday to end at $0.24 (OTCBB: IMNR).

The 8% notes mature Jan. 1, 2008 and are convertible into 400 million shares at $0.02 each.

Spencer Trask Ventures, Inc. was the placement agent.

"This offering puts us in a much stronger financial position, giving us immediate capital to pursue our business and clinical strategy," said Michael Green, the company's chief operating officer, in a statement. "More importantly, the $24 million potential additional proceeds from the two tranches of warrant exercised during 2006 could provide us with long-term capital to complete important phase 2 clinical trials over the next two years."

Based in Carlsbad, Calif., Immune Response is a biopharmaceutical company focused on immune-based therapies for HIV and multiple sclerosis.

Tenke prices C$103.2 million stock deal

Heading up Canadian PIPE offerings Tuesday was a C$103.2 million non-brokered stock deal from Tenke Mining Corp.

The deal includes 8 million shares priced at C$12.90 each, a discount of just over 1% to the company's closing stock price of C$13.05 on March 6.

Tenke halted trading of its secondary shares late Tuesday morning just ahead of the pricing, and when trading commenced later in the day, the company's stock went on to gain 20 cents, or 1.53%, to close at C$13.25 (Toronto: TNK).

Trading volume of Tenke's stock also jumped on Tuesday to 180,290 shares traded compared to the average 87,603 shares.

"They're a solid company and it [the pricing] looks pretty strong," said one market source based in Vancouver, B.C.

Proceeds will be used for the development of the company's Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo and for working capital.

Based in Vancouver, Tenke is a mineral exploration company.

Higher prices trigger uranium offerings

Elsewhere in the natural resources sector, a surge of activity in uranium development, mainly in Africa, is sending uranium prices up and fueling some activity among uranium companies in the PIPE market.

"Uranium seems to be a hot commodity right now, especially in some parts of Africa," said one market source. "It certainly provides for more [private placements] because there are more prospects being developed and that means a need for more money."

Among the uranium offerings announced Tuesday was a C$3 million deal from Rampart Ventures Ltd., priced at C$0.25.

Crossfire stock gains 13.7%

After pricing a C$10 million PIPE on Monday, Crossfire Holdings Inc.'s stock advanced by almost 13.7% Tuesday.

The stock gained 13.68%, or 13 cents, to end at C$1.08 (TSX Venture: CFE).

When the deal priced Monday morning, the stock gained 211.48%, or C$0.645, to settle at C$0.95.

Crossfire intends to sell shares at C$1.00 apiece on April 7.

Calgary, Alta.-based Crossfire acquires and develops oil and natural gas service and technology companies.

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