Kosan Biosciences gets $50 million equity line; GTC Biotherapeutics plans $17.53 million stock sale

By Sheri Kasprzak

New York, July 19 - Yet another light day of PIPE activity was led by a slate of biotech offerings. Those deals were headed up Wednesday by a $50 million equity line sealed by Kosan Biosciences Inc.

Kingsbridge Capital Ltd. agreed to buy shares over three years at discounts ranging from 6% to 10% depending upon the average price of the company's stock over an eight-day pricing period.

The draws may be made in tranches of up to $10 million or 2% of the company's market capitalization at the time of a draw.

Kingsbridge received warrants for up to 285,000 shares, exercisable at $4.94 each for five years.

"This financing facility offers Kosan the freedom to supplement our cash reserve in a controlled and predictable manner and at terms that we believe are favorable to the company and minimally dilutive to our shareholders," said Robert Johnson, the company's chief executive officer, in a news release.

"Kosan today has four cancer compounds rapidly progressing in clinical development and an early stage cancer pipeline that we intend to advance into the clinic. While the company is well-capitalized, we believe it is prudent to ensure that we will continue to have adequate resources to execute on our ambitious clinical and research programs in a focused and efficient manner."

The stock gained 1.83%, or 7 cents, to end the session at $3.90 (Nasdaq: KOSN).

Kosan, based in Hayward, Calif., develops treatments for cancer.

In the broader PIPE market Wednesday, stocks made significant gains, giving at least some credence to one sellside market source's contention earlier this week that a drop in volume has less to do with the stock market than with the time of the year.

Another sellsider, however, said he feels volume will pick up at the end of the week because of the gains in stocks Wednesday.

"Wait and see," he said. "I think you'll see things pick up a bit. I'm still optimistic. I think there is a demand out there."

The Dow Jones Industrial Average gained 212.19 to end the session at 11,011.42 and the Nasdaq composite index climbed 37.49 to close at 2,080.71. The Standard & Poor's 500 composite index closed up 22.95 at 1,259.81.

GTC's $17.5 million offering

In other biotech news Wednesday, GTC Biotherapeutics, Inc. saw its stock fall by almost 9.5% after announcing a private placement for up to $17,535,000.

The stock ended the day down 9.49%, or 13 cents, to close at $1.24 (Nasdaq: GTCB). By 10 a.m. ET, the company's stock fallen by 5.84%, or 8 cents.

The company intends to sell up to 12 million units of one share and one warrant for 0.65 of a share. The unit price is $1.46125.

The whole warrants are exercisable at $1.4145 each for 10 years.

The shares and underlying shares from the warrants will be issued under the company's shelf registration.

C.E. Unterberg, Towbin, LLC; Rodman & Renshaw, LLC; and Oppenheimer & Co. Inc. are the placement agents for the offering.

Proceeds from the deal will be used for general corporate purposes.

"The smart one bought at below a dollar and sold at $1.80 (double the money)," said one buyside market source in Washington State. "The optimistic ones (or greedy ones) kept waiting and sold at $1.60 (making some profit). The stubborn one sold at $1.50 (at the expense of those who came in late). The dumb ones kept it and saw it go to $1.30. And that's where we are."

Located in Framingham, Mass., GTC produces therapeutics proteins derived from genetically modified animals. The proteins are used to treat ailments like rheumatoid arthritis and cancer.

InNexus plans $5.5 million PIPE

Elsewhere in biotech news, InNexus Biotechnology Inc. negotiated a $5.5 million private placement of up to 13,857,394 units at $0.3969 each.

The units will be sold to SDS Capital Group SPC Ltd. and RAB Capital plc on a non-brokered basis.

The units consist of one share and one warrant. The warrants are exercisable at C$0.50 each for two years.

At the end of the day, the company's stock closed unchanged at C$0.51 (TSX Venture: IXS).

Scottsdale, Ariz.-based InNexus develops technology platforms to improve the potency of existing antibody products.

Eastshore Energy's C$10 million deal

In Canada, Eastshore Energy Ltd. priced a C$10 million private placement of 8 million shares.

The shares were priced at C$1.25 each, a 7.4% discount to the company's C$1.35 closing stock price on Tuesday.

Placement agent Jennings Capital Inc. has a greenshoe for up to 2 million additional shares.

The deal is scheduled to close in mid-August.

The company's stock closed down 5 cents, or 3.7%, to end at C$1.30 (TSX Venture: EST).

Proceeds will be used for ongoing exploration and development.

Calgary, Alta.-based Eastshore is an oil and natural gas exploration, development and production company.

BPK stock slips

In secondary market activity, BPK Resources, Inc.'s stock dropped on Wednesday for the first time since the company announced the settlement of a $4.5 million PIPE.

The stock slipped by 2 cents, or 7.7%, to end the day at $0.24 (OTCBB: BPKR).

The company's stock climbed by 4%, or a penny, to close at $0.26 on Tuesday, and on Monday, when the deal closed, the stock gained 19.05%, or 4 cents, to end at $0.25.

Volume remained higher than average with 44,000 shares traded compared to the average 27,018 shares. The volume of shares traded Tuesday was 158,000 shares traded compared to the average 24,862 shares.

In the placement, BPK sold 9% notes on behalf of subsidiary Graphite Technology Group. The notes are exchangeable for common stock at $0.23 each.

BPK, based in Delano, Pa., manufactures synthetic graphite and carbon-based materials.

Ronda Fears contributed to this article

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