Biotech offerings lead PIPE action to end week; Auxilium secures $46.75 million from stock sale

By Sheri Kasprzak

New York, Sept. 15 - As the week came to an end, biotechnology offerings led the pack in the PIPE market with two direct offerings and a private offering of convertible preferreds.

One sellside market source said even though drug stocks have been slipping, they did rebound on Friday and this may be pushing some activity in the PIPE market. But more undervalued companies may be looking to direct placements for more reasonable pricing terms.

"When you can't get a price you want with unregistered shares, it sometimes does help to do a registered direct offering," he said. "You can sometimes negotiate a better price."

Among those offerings on Friday was a $46.75 million direct stock sale from Auxilium Pharmaceuticals, Inc.

That company has secured agreements from a group of institutional investors for 5.5 million shares at $8.50 each, an 8.6% discount to the company's $9.30 closing stock price on Thursday.

The offering was announced Friday morning, but by the end of the day, Auxilium's stock had slipped by 95 cents, or 2.76%, to close at $33.47 (Nasdaq: ALXN).

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

The deal is scheduled to close Sept. 20.

Thomas Weisel Partners LLC is the lead agent.

Proceeds will be used for product development, capital expenditures, working capital and general corporate purposes.

Auxilium is a Malvern, Pa., pharmaceutical company focused on treatments for hypogonadism.

Barrier to raise $25.3 million

In other biotech direct offerings, Barrier Therapeutics, Inc. priced a $25,305,000 direct placement of stock. News of the placement sent the stock up 6.84% Friday.

The company plans to sell up to 4.82 million shares at $5.25 each. The price per share is a 3% discount to the company's $5.41 closing stock price on Thursday.

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

The stock gained 37 cents to end the session at $5.78 (Nasdaq: BTRX).

Pacific Growth Equities, LLC is the underwriter for the deal, which is set to close Sept. 20.

Proceeds will be used for research and development, commercialization expenses and general corporate purposes.

Princeton, N.J.-based Barrier develops treatments for psoriasis, acne and fungal infections.

Interpharm raises $10 million

Another drug company, Interpharm Holdings Inc., sealed a $10 million private placement of series C-1 convertible preferred stock Friday, nudging its stock up 3.42% on the day.

The company's stock gained 5 cents at the end of the day to close at $1.51 (Amex: IPA).

Aisline Capital II, LP purchased the 8.25% preferreds, which are convertible at $1.53 each, a 4.8% premium to the company's closing stock price of $1.46 on Thursday.

The investor also received warrants for 2,281,914 shares, exercisable at $1.639 each.

The proceeds will be used for research and development as well as for the pursuit of certain target projects.

"With the four-year business plan already fully funded, this financing will provide the capital necessary to implement already identified projects that reach beyond the scope of our existing plan," said Cameron Reid, the company's chief executive officer, in a statement released Friday morning. "Aisling brings a strong understanding of the pharmaceutical sector and we look forward to working with them. Their long-term goals and objectives coincide with ours."

"Changes in the health care system have created tremendous opportunities for manufacturers of generic pharmaceuticals," said Drew Schiff, managing director at Aisling, in a statement. "Interpharm is very well-positioned to identify and benefit from these opportunities for growth. We are pleased to support their efforts."

Located in Hauppauge, N.Y., Interpharm develops generic prescription and over-the-counter drugs.

International Assets' PIPE

In other PIPE news, International Assets Holding Corp. negotiated a $27 million private placement of senior subordinated convertible notes due 2011.

A group of institutional investors agreed to buy the 7.625% notes by Sept. 22. The notes are convertible into common shares at $25.50 each, a 6.4% discount to the company's $23.97 closing stock price on Thursday.

The company's stock fell by 11.72%, or $2.81, on Thursday after the offering was announced in the morning to settle at $21.16, gaining 9 cents in after-hours trading (Nasdaq: IAAC). The stock started its descent early, losing 13.89% by 11:30 a.m. ET.

Proceeds will be used to repay existing debt. The rest will be used for general corporate purposes.

Located in Altamonte Springs, Fla., International Assets is a financial services company focused on international securities and the commodities markets.

Alberta Star's C$11 million deal

Moving north of the border, Alberta Star Development Corp. said it plans to raise C$11.02 million in a private placement of up to 5.8 million flow-through units.

The units, which include one share and one half-share warrant, are priced at C$1.90 each.

Each whole warrant is exercisable at C$2.15 each for 18 months.

Pacific International Securities Inc. is the placement agent for the deal, which is scheduled to close Oct. 18. The agent has a greenshoe for up to 580,000 additional units.

Proceeds will be used for exploration expenses on the company's Canadian properties.

The company's stock slipped by 9 cents, or 4.62%, to end the session at C$1.86 (TSX Venture: ASX) Friday.

Vancouver, B.C.-based Alberta Star is a mineral exploration company focused on copper, gold, uranium, silver and cobalt.

Geokinetics' stock edges up

In secondary market action, Geokinetics Inc.'s stock edged up Friday after making substantial gains Thursday after announcing a $55 million PIPE.

The stock climbed by a penny, or 0.56%, to close at $1.78 (OTCBB: GOKN). On Thursday, when the deal to help fund the company's acquisition of seismic data provider Grant Geophysical Inc. was announced, the stock gained 10.62%, or 17 cents, to end at $1.77.

Volume of Geokinetics' shares traded Friday also remained elevated with 9,680 shares traded compared to the average of 5,998 shares. On Thursday, there were 43,200 shares traded compared to the average of 5,333 shares.

In the placement, Geokinetics plans to sell shares of convertible preferred stock at $250 each to a group of investors that include Avista Capital Partners, LP; Avista Capital Partners (Offshore), LP; and Levant America SA.

Under the terms of the acquisition, Geokinetics will pay $125 million in cash for all of the outstanding shares of Grant, a Houston-based company that provides seismic data to the oil and gas sector.

Houston-based Geokinetics provides three-dimensional seismic data to the oil and natural gas exploration sector.

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