International Stem Cell picks up $11.2 million from stock sale; Targeted Genetics raises $8.72 million

By Sheri Kasprzak

New York, Jan. 8 - Biotech names led the charge to kick off the week in private placements, including an $11,205,950 offering from International Stem Cell Corp.

A market source said Monday afternoon that he doesn't consider the surge in biotech offerings a "trend" but did admit that he expects to see more action from the sector in the coming months.

"It's not a trend because biotech has been big [in PIPEs] for a long time now," he said. "I only consider something a trend if it's new and if it's something we haven't seen before. Biotech will always be a big issuer here. It is the beginning of the year, though, and I fully expect to see a number of [offerings] coming up because there are trials."

One buysider said he feels stem cell research companies are likely the wave of the future when it comes to specific issuers.

"[Stem cell research] is very controversial [but] we expect it to also be profitable in the future," he said.

Of the International Stem Cell offering announced Monday, the buysider said he wasn't particularly familiar with the company but noted that the merger with BTHC III, Inc. does not surprise him.

In the International Stem Cell deal, the company sold roughly 12 million shares at a price that could not be determined by press time Monday evening.

The deal was conducted as part of International Stem Cell's share exchange with BTHC. BTHC bought all of International Stem Cell's outstanding stock for 33,111,502 of its shares, including the shares issued in the private placement.

On Monday, BTHC's stock remained unchanged at $2.50 (OTCBB: BTHC).

BTHC will operate under the International Stem Cell name and will develop therapeutic products used to treat diabetes, liver disease and retinal disease through stem cell transplant therapy.

International Stem Cell is based in Oceanside, Calif.

Targeted Genetics' PIPE

In other biotech news, Targeted Genetics Corp. watched it stock sink by more than 20% after announcing the pending completion of an $8.72 million stock sale.

The stock gave up $1.09 to end at $4.32 Monday (Nasdaq: TGEN). The losses started early with Targeted's stock falling 11.85%, or 64 cents, by 11:48 a.m. ET. Volume was slightly elevated with 611,105 shares compared with the average 510,040 shares.

In the placement, Targeted plans to sell 2.18 million shares at $4.00 each to a group of institutional investors, which includes Special Situations Fund's Special Situations Life Sciences Fund and Special Situations Fund III. Greenway Capital is also participating in the offering. The price per share represents a 16% discount to the company's 45-day trailing average closing stock price.

The investors will also receive warrants for 763,000 shares, exercisable at $5.41 each.

The deal is set to close Jan. 11.

Proceeds will be used for clinical and preclinical programs as well as for working capital and general corporate purposes.

Pacific Growth Equities, LLC was the placement agent.

"We are pleased to announce this financing with a good group of investors that we believe are interested in the potential value of our clinical programs," said H. Stewart Parker, the company's chief executive officer, in a statement released Monday morning. "Combined with the funding expected from partners and license agreements, we believe that we are in a solid financial position as we begin 2007. These funds will be important for continuation of our clinical and preclinical programs, as well as exploitation of our recently issued patents related to expressed RNAi."

Seattle-based Targeted Genetics develops molecular therapies to treat acquired and inherited diseases like inflammatory arthritis, AIDS prophylaxis, congestive heart failure and Huntington's disease.

Napo to close £3.3 million deal

San Francisco's Napo Pharmaceuticals, Inc. is preparing to seal a private placement of its stock for £3,320,485.

The company intends to sell 3,513,741 shares at 94.5p each by the end of March.

The deal will be closed in two tranches, the first of which will include 3,026,643 shares and is expected to close later this month. The second tranche, for 487,098 shares, will close before March 31.

Proceeds from the deal will be used for the acceleration of the company's NP-500 product for the treatment of diabetes to phase 2 studies. The company also plans to use some of the proceeds to expand its operations to include the testing of a lower dose of crofelemer in a final phase 3 trial for HIV/AIDS-related diarrhea.

On Monday, Napo announced that it has entered into a binding letter of intent for the license of a use patent for NP-500. The license will allow Napo to move NP-500 into phase 2 proof-of-concept testing.

"This financing demonstrates continued investor interest in the Napo business plan," said Lisa Conte, the company's chief, in a statement. "Based on recent data and to optimize the commercial value of crofelemer upon launch, it is important that the company have the financial resources to potentially test lower doses of crofelemer in our upcoming phase 3 trial for HIV/AIDS related diarrhea. Pricing and reimbursement will be based on tested doses.

"We are also pleased with the diversification to an additional clinical-stage product the NP-500 program allows. Diabetes and insulin-resistance syndromes are epidemic throughout the world, afflicting up to 30% of the population. Napo is looking forward to progressing NP-500 through the clinic to commercialization in conjunction with global partnerships."

Napo's stock closed unchanged at 97p on Monday (London: NAPL).

Napo develops treatments for metabolic and gastrointestinal disorders.

ProLink's $10.42 million deal

Moving to the tech sector, ProLink Holdings, Inc. sealed a $10.42 million private placement of series C convertible preferred stock with Ashford Capital, Lewis Asset Management, Straus Capital and other investors.

The company issued 1,042 shares of the 5% preferreds at $10,000 each.

The preferreds are convertible into common shares at $1.35 each.

The investors received 23 warrants for 3,855,400 shares, exercisable at $1.40 each through Jan. 8, 2012.

Merriman Curhan Ford & Co. was the placement agent.

On Monday, the company's stock gained 8 cents, or 5.65%, to close at $1.42 (OTCBB: PLKH).

"In the last 90 days, ProLink has substantially strengthened its working capital position and overall financial condition," said Lawrence Bain, the company's CEO, in a news release. "This financing represents the most significant step in that initiative.

"Today, ProLink is the strongest company in the golf cart GPS industry from a competitive and financial perspective, with more than 65% market share. This transaction now solidifies our footprint as the permanent player in this exploding market segment. We plan on continuing to invest our infrastructure to support our existing and future clients with reliable and dependable long-term products and customer support."

Based in Chandler, Ariz., ProLink develops global positioning systems used on golf courses.

Implant Sciences raises $1.5 million

In other tech news, Implant Sciences Corp. pocketed $1.5 million from a nine-month secured term loan with warrants from Laurus Master Fund, Ltd.

The company also extended an existing credit facility to $5 million from $1.5 million.

The note bears interest at Prime rate plus 100 basis points and included warrants for up to 458,000 shares, exercisable at $2.50 each for five years.

Also, the company issued warrants for 18,939 shares, exercisable at $2.64 each for seven years, to Bridge Bank for the extension on the credit facility. The company plans to use part of the extended revolving credit facility to pay off $700,000 on a credit facility with another bank.

The company's stock gained 2.67%, or 6 cents, Monday to end at $2.31 (Amex: IMX).

Located in Wakefield, Mass., Implant Sciences develops radioactive products to treat cancer and also develops art ion implantation and wafer analytical services for the semiconductor industry.

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