Bionovo pockets $15.8 million from stock sale; Avalon secures $10.02 million in private placement

By Sheri Kasprzak

New York, Jan. 22 - Two biotech companies led private placement news to kick off the week as stocks took a hit after oil prices climbed earlier in the session before dipping again.

Heading up the two biotech deals was a $15,781,500 stock offering from Bionovo, Inc.

A group of institutional investors bought 10.521 million shares at $1.50 apiece. The share price is a 4.5% discount to the average closing market price for the 20 trading days ended Jan. 12.

The investors included RA Capital, Paramount BioCapital Asset Management, Ironwood Capital and some existing private shareholders.

Cambria Capital, LLC and Blaylock & Co, Inc. were the placement agents for the deal.

A buysider involved with the offering said he likes Bionovo's products.

"We think [Bionovo] is a good company with good products," he said Monday morning.

Even so, the company's stock took a hit on Monday, giving up 17.19%, or 55 cents, to close at $2.65 (OTCBB: BNVI). Volume of Bionovo shares traded Monday took off with 869,846 shares traded compared with the average 109,561 shares.

"We are pleased with the quality of the investors in this financing and their support of our development initiatives," said Issach Cohen, the company's chief executive officer, in a statement released Monday morning. "This raise significantly strengthens our balance sheet and provides greater flexibility for advancing our clinical programs, such as our lead drug MF101 for menopausal hot flashes; BZL101, our lead candidate for advanced breast cancer; and VG101 for menopausal vaginal dryness."

Proceeds will be used for phase 1 and 2 clinical trials. The remainder will be used for working capital and general corporate purposes.

Based in Emeryville, Calif., Bionovo develops novel pharmaceutical products for cancer and women's health issues.

Avalon's $10.02 million deal

In other biotech news, Avalon Pharmaceuticals, Inc. secured $10.02 million from a private placement of its shares. The offering sent the company's stock up 12.34% on the day.

A group of institutional investors agreed to buy 3 million shares at $3.34 each, an 8.4% premium to the company's $3.08 closing stock price on Friday.

The deal is set to close Tuesday.

On Monday, the company's stock jumped 38 cents to settle at $3.46 (Nasdaq: AVRX).

Avalon last headed to the PIPE market in February 2006 when the company sold 1,666,666 shares at $4.35 each for proceeds of $7.25 million. Biotechnology Value Fund, LP was the lead investor in that offering.

Based in Germantown, Md., Avalon is a biopharmaceutical company focused on treatments for cancer.

New Frontier raises $22.23 million

Moving to the energy sector, New Frontier Energy, Inc. settled a $22.225 million offering as oil prices made a comeback early in the day Monday only to drop again in the afternoon.

Oil prices gave up 86 cents Monday to close at $51.13 per barrel. Prices had jumped as high as $53.44 per barrel.

"I would say that a lot of oil companies are probably staying away [from PIPEs] right now because of the serious volatility we're seeing," said one market source familiar with natural resources offerings. "The key is to wait until prices get stable again and then we could see more."

In the New Frontier deal, the company issued 444.5 units of $50,000 in series C cumulative convertible preferred stock, a three-year warrant for 47,619 shares and a three-year warrant for 23,810 shares at $50,000 each.

The preferreds are convertible into common shares at $1.05 each.

The warrants for 47,619 shares are exercisable at $1.05 each and the warrants for 23,810 shares are exercisable at $2.00 each.

Westminster Securities Corp. was the placement agent.

Of the proceeds, $8 million was used to acquire the operator of the Slater Dome Field's 36.66% working interest in 11 gas and one water disposal wells, as well as 33,949 acres in the Green River basin in Colorado and Wyoming. The remainder will be used for a drilling program and for working capital.

"We are pleased to have increased our working interest in the Slater Dome Field to just over 66%, a project that has been a central focus of our development efforts since 1998," said Paul Laird, the company's CEO, in a news release. "Becoming the operator of our core-producing asset will allow us to better monitor well completions and control costs, which we expect will expedite profitability for the project. The acquisition also increased our proven reserve base to over 16 billion cubic feet of natural gas."

New Frontier's stock remained unchanged at $1.35 Monday (OTCBB: NFEI).

Based in Denver, New Frontier is an oil and natural gas exploration, acquisition and development company.

Storm Cat stock drops

Looking to secondary market activity in the energy sector, Storm Cat Energy Corp.'s stock took a slight fall on Monday, losing 2.9% after pricing a $50 million convertible note offering on Friday.

The stock lost 3 cents on Monday to close at $0.97 (Amex: SCU).

In the placement, the company plans to sell series A notes for $19 million and series B notes for $31 million. Both notes bear interest at 9.25% annually and are convertible at $1.17 each.

Denver-based Storm Cat is an oil and natural gas exploration and development company.

Continuum raises C$7.5 million

In other resources news, Continuum Resources Ltd. wrapped a private placement for C$7,543,500.

The company sold a total of 30.204 million units C$0.25 each.

The units consist of one share and one half-share warrant. Each whole warrant is exercisable at C$0.25 for one year.

The deal closed in two tranches with the first, for 6.663 million, closing on Dec. 21.

Bolder Investment Partners, Ltd. was the placement agent.

Proceeds will be used to maintain the company's 24% interest in the San Jose property joint venture. The rest will be used for drilling and exploration at the Natividad mine in Mexico and for working capital.

The company's stock gained 4.55%, or 2 cents, to close at C$0.46 (TSX Venture: CNU).

Vancouver, B.C.-based Continuum is a mineral exploration company.

VinaLand stock climbs

Elsewhere, VinaLand Ltd.'s stock advanced on Monday after the company announced a $200.1 million private placement Friday, gaining 6.67%.

The stock closed up 10 cents at $1.60 (Pink Sheets: VNLDF). On Monday, when the deal closed, the stock fell 10 cents, or 6.25%, to settle at $1.50.

In the placement, which is scheduled to close March 7, VinaLand plans to sell shares at $1.38 each.

VinaLand, based in George Town, Grand Cayman, develops and manages real estate properties in Vietnam.

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