Isis Pharmaceuticals secures $51 million in stock sale; PIPE volume regains some momentum

By Sheri Kasprzak

New York, Aug. 22 - Isis Pharmaceuticals Inc. led a more upbeat private placement market on Monday with word that it is gearing up to close a $51 million stock offering.

The Carlsbad, Calif.-based pharmaceutical company has received definitive agreements for the sale of 12 million shares at $4.25 each, a 2.3% discount to the 60-day average trading price.

Needham & Co. and Fortis Securities LLC are the agents in the offering, which is expected to close by Aug. 24.

Proceeds from the deal will be used for research, drug discovery and development, capital expenses and general corporate purposes.

"This financing strengthens our balance sheet, providing sufficient cash to fund our operations with reasonable assumptions for new sources of revenue and cash, at least through 2007," said B. Lynne Parshall, the company's chief financial officer, in a statement.

"In addition, it gives us the capital to negotiate potential drug discovery and development collaborations and other licensing arrangements from a position of financial strength."

On Monday, Isis's stock closed down $0.03 to end at $5.05. In after-hours trading, the company's stock slid another $0.66.

According to its latest earnings report, Isis sustained a net loss of $19,659,000 for the quarter ended June 30, down from a net loss of $25,949,000 for the same quarter in 2004.

As of Aug. 4, Isis reported 57,684,428 outstanding common shares.

Isis is focused on using RNA to develop drugs to treat cancer, as well as metabolic, cardiovascular and inflammatory disorders.

Moving to the broader private placement market, sell-siders said volume recovered somewhat after taking a dive on Friday.

"Things are looking up, I guess you could say," said one source. "Stocks were off a bit earlier but seem to be coming back now."

However, another source commented that comparing volume on a Monday to that of a Friday is pointless.

"It's always slower on Friday," he said. "Things pick up on Mondays and that's all there really is to it. We're seeing some bigger things here and there, a few biotech deals that look pretty decent, but other than that, not too much going on."

Of the biotech offerings, the market source said he felt the quality of some of the biopharmaceutical and biotech companies with PIPE deals has improved over the last month.

"About a month ago, we were seeing some pretty low-end issuers [in the sector]," he said. "Now we're seeing some bigger names, some better quality - companies with some stability to them."

In Canada, one market source said better overall stocks led by advancing energy stocks helped the private placement market there.

"We're seeing a few oil deals out of it," he said. "But overall, we're seeing better volume because stocks are up. Energy stocks are for certain pushing things, so we may see better volume throughout the week. We'll see how it goes."

Oil rose $0.10 to close at $65.45 per barrel Monday.

MTI raises $20 million

Moving to the tech sector, MTI Technology Corp. said it sold $20 million in series B convertible preferred stock.

The preferreds will be sold at the lesser of $19.50 each or 10 times 90% of the average closing price per share for 15 trading days before closing.

The preferred shares were sold to EMC Corp. and Advent International Corp.

"We are very pleased with Advent's continued support of MTI and we look forward to strengthening an already strong partnership," said Thomas Raimondi, MTI's president and chief executive officer, in a statement. "With Advent's continued strategic and financial support, we believe we are well-positioned to focus on shareholder value."

Each preferred share is initially convertible into 10 common shares.

The investors will also receive warrants equal to 37.5% of the shares initially issuable upon conversion. The strike price and expiry of the warrants could not be determined by press time Monday.

Based in Tustin, Calif., MTI is a data-storage technology company.

MTI's stock gained $0.03 to end at $1.91 Monday.

Nitar gets $35 million equity line

Elsewhere in the tech sector, Toronto's Nitar Technology Corp. raised $35 million from a standby equity distribution agreement with Cornell Capital Partners LP.

Cornell may buy shares of Nitar over the course of two years, but the pricing details of the deal could not be determined Monday. The company's president, Luiz Brazil, did not return calls for comment on the offering by press time.

The proceeds will be used for an advertising campaign for the company's internet child-safety products and its choozmail product.

Nitar develops e-mail and internet technologies. Its stock closed unchanged at $2.37 Monday.

Medicure wraps $3.85 million deal

Back to the biotech sector, Medicure Inc. closed a $3.85 million stock offering Monday.

The company sold 5,205,500 shares at $0.74 each.

Medicure also issued warrants for 2,602,750 shares, exercisable at $0.97 each for five years.

Needham & Co. was the placement agent for the offering.

"This financing expands our institutional investor base in the U.S. and Europe in advance of the anticipated results from the phase II trials for our lead products, MC-1 and MC-4232," said the company's chief executive officer, Albert Friesen, in a statement. "The capital raised through this financing provides us with the necessary resources to prepare for phase III clinical trials."

Based in Winnipeg, Man., Medicure develops treatments for cardiovascular diseases. The proceeds from the deal will be used for clinical trials.

Vyteris's stock remains unmoved

After announcing its plans to conduct a $10 million private placement on Friday, Vyteris Holdings, Inc.'s stock remained unchanged Monday.

The company's stock held steady at $2.40.

On Friday, when the deal was announced, the company's stock also stayed the same.

Vyteris will sell convertible debentures to accredited investors in the offering. The debentures are convertible into common shares at $2.40 each.

Vyteris, based in Fair Lawn, N.J., develops non-invasive drug delivery products.

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