Elan bonds on tap; Acorda rises on acquisition buzz; Neurochem, CollaGenex, Dendreon sell PIPEs

By Ronda Fears

Memphis, Nov. 16 - Biotech fund-raising got some encouragement Thursday, as year-end rapidly approaches, with a success story from medical devices maker Hansen Medical, Inc. pricing its initial public offering within range.

"This was good, but Hansen is not a fundamental biotech and the biotechs are still going to have a tough time pricing within range," said a buyside source in Boston.

"I will give you this: Biotech is at a crossroads; it looks like make or break time. The bankers have a tough row to hoe if you ask me. But if they smarten up, lots of the deals on the calendar could get cleared. But what we are seeing is more and more biotechs tap the PIPEs market."

Indeed, there were three sizable biotech PIPEs on the tape Thursday, from Neurochem, Inc., CollaGenex Pharmaceuticals, Inc. and Dendreon Corp. In addition, Elan Corp. plc and China Medical Technologies, Inc. are in the market with bond deals.

Mountain View, Calif.-based Hansen raised $75 million in gross proceeds in its IPO of 6.25 million shares at $12 apiece, the middle of guidance for $11 to $13 per share, via joint bookrunners Morgan Stanley & Co. and J.P. Morgan Securities Inc.

Hansen shares (Nasdaq: HNSN) traded in a band of $12 to $14 during the session before easing back to settle the day with a gain of 20 cents as some 4.2 million of the issue changed hands.

Hansen, which develops and manufactures robotics designed to position, manipulate and control catheter technologies, plans to use proceeds for sales, marketing and general corporate purposes.

Elan bond deal on tap Friday

In the high-yield bond market, Elan Finance Corp. set price talk for its $500 million offering of seven-year notes (B3/B) in two tranches, an informed source told Prospect News on Wednesday. Pricing is expected on Friday.

A tranche of fixed-rate notes, which come with four years of call protection, is talked at the 9% area. Meanwhile a tranche of floating-rate notes, which come with two years of call protection, is talked at Libor plus 400 to 425 basis points.

Goldman Sachs & Co. is the bookrunner for the Rule 144A and Regulation S offering. Morgan Stanley and Davy Securities are the co-managers.

The Dublin, Ireland, biotech plans to used proceeds to redeem Elan Capital Corp. Ltd.'s $254 million 6½% convertible notes due 2008 not converted into equity and to repay a portion Athena Neurosciences Finance, LLC's $613 million 7¼% guaranteed senior notes due 2008.

Acorda up on acquisition buzz

Elan, co-developer of the multiple sclerosis drug Tysabri with Biogen Idec, Inc., was rumored Thursday to be in the process of acquiring Acorda Therapeutics, Inc., which is working on two MS drugs, and Acorda shares shot sharply higher.

"There was a rumor circulating around noon that Elan is buying Acorda at $21 a share," said a sellside equity trader. "I never saw anything further, but the stock just kept trading up. It makes enough sense that you have to at least take a stab at it. Even if it doesn't, Acorda is a great stand-alone story."

Acorda shares (Nasdaq: ACOR) gained 67 cents on the day, or 4.36%, to close at $16.02 and in after-hours trade was seen up another 38 cents, or 2.37%, at $16.40.

Hawthorne, N.Y.-based Acorda focuses on multiple sclerosis, spinal cord injury and other central nervous system disorders. It has a marketed product, Zanaflex Capsules, approved for spasticity and its lead product candidate, Fampridine-SR, is in a phase 3 clinical trials to improve walking ability in people with MS.

Acorda just went public in February, pricing its IPO of 5.5 million shares at $6 each - the low end of revised price talk of $6 to $7, which had been lowered from $11 to $13 per share.

The stock skyrocketed in September after the company reported positive phase 3 trial data on Fampridine-SR. Before the news, the stock was at around $2.22, and has risen steadily since.

Then in October, the company raked in $31.5 million from a private placement of stock, at $9.75 a share, to boost its cash on hand after the IPO fell short of the intended target. The PIPE, chief executive Ron Cohen said, allowed the company to beef up available cash without having to wait another year to conduct a follow-on offering. He added that Acorda wanted to have more than a year's worth of capital in the bank, and the placement provided a quick and easy vehicle for that infusion.

Neurochem up 6% after PIPE

In the wake of its PIPE, Neurochem Inc. shares were sharply higher. On the tape Thursday, the company said the greenshoe on the previously announced private placement of senior convertible notes was exercised, bringing total proceeds from the deal to $42 million.

Neurochem shares (Nasdaq: NRMX) shot up $1.11 on Thursday, or 6.11%, to $19.27.

Via the greenshoe, the company sold another $2.085 million in principal of the notes. The offering, for $40 million, closed on Nov. 9. FMRC Family Trust, Power Technology Investment Corp. and insiders of the company participated in the offering.

The 6% notes are due Nov. 15, 2026 and are convertible at a 20% premium to the then-current market price, initially $19.72.

Proceeds will be used for clinical development programs, research on new or existing products, capital expenditures and general corporate purposes. Laval, Quebec-based Neurochem develops treatments for AA amyloidosis and Alzheimer's.

CollaGenex bags $45.5 million

In another deal, CollaGenex Pharmaceuticals, Inc. is gearing up to close a $45.5 million direct placement of stock with a group of institutional and other investors who are buying 3.5 million shares at $13.00 each, a 2% discount to the $13.31 closing stock price on Wednesday.

CollaGenex shares (Nasdaq: CGPI) gained 18 cents on the day, or 1.35%, to close at $13.49 on Thursday.

Lazard Capital Markets LLC was the bookrunner with Leerink Swann & Co. as co-agent.

Proceeds from the deal will be used for research and development expenses, manufacturing expenses, clinical trials, administrative expenses, potential acquisitions and working capital.

Based in Newtown, Pa., CollaGenex develops therapies for acne, rosacea and other skin disorders.

Dendreon drops 11% on PIPE

In a third PIPE, Dendreon Corp. has negotiated a $45 million direct placement of 9,890,110 shares at $4.55 each to institutional investors, with the price couched against a $5.35 close on Wednesday.

Dendreon shares (Nasdaq: DNDN) closed Thursday with a loss of 59 cents, or 11.03%, to $4.76.

Credit Suisse Securities (USA) LLC and Lazard Capital Markets LLC are joint bookrunners for the deal.

Seattle-based Dendreon develops novel therapeutics used to boost the immune system to fight cancer.

China Medical sells convertibles

In another deal of note, Beijing-based medical devices maker China Medical Technologies Inc., sold $125 million of convertible senior subordinated notes due 2011 to yield 3.5% with an initial conversion premium of 20%.

The notes will mature on Nov. 15, 2011 and are convertible into China Medical American Depositary Shares at $32.23.

China Medical shares (Nasdaq: CMED) dropped 28 cents on the day, or 1.09%, to close at $25.50.

China Medical said it will use net proceeds from the offering to repurchase about $30 million of its ADSs as well as for general corporate purposes and acquisitions of businesses, products and technologies.

The company concentrates on products using high-intensity focused ultrasound, or HIFU, for the treatment of solid cancers and benign tumors, and systems to detect SARS, diabetes and thyroid disorders.

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