Cord Blood arranges long-term investment; Somaxon plans stock sale; Jazz to sell equity units

By Stephanie N. Rotondo

Portland, Ore., July 7 - The private placement market was dominated by the pharmaceutical and medical-related sectors during Tuesday's session.

Cord Blood America Inc. said it had secured a $7.5 million capital commitment in which the company will sell preferreds. The company's top executive said that the funds, along with "internally generated revenues," should be enough to fund operations for the foreseeable future.

Meanwhile, Somaxon Pharmaceuticals Inc. announced it would issue more than 5 million new common shares to raise nearly $6 million. The first tranche was expected to settle Tuesday.

Yet another pharmaceutical company, Jazz Pharmaceuticals Inc., said it would sell equity units for $7 million in funding. The offering came with a new board member, appointed by the company's investor.

Genta Inc. hopes to take in $10 million via a private placement of units. The units will include common stock and a convertible note.

Over in the mining sector, Northern Star Mining Corp. said it will raise C$20 million by selling subscription receipts. Proceeds will be used in part to prepay outstanding debt.

Cord Blood arranges investment

Los Angeles-based Cord Blood America arranged a $7.5 million investment capital commitment, the company announced.

Under the terms of the deal, Cord Blood will issue series A preferred stock and five-year warrants good for common shares.

Proceeds will fund new stem cell initiatives, potential acquisitions and working capital. The funds "coupled with internally generated revenues, should be sufficient to fund operations in the foreseeable future," Matthew Schissler, the company's founder and chief executive, said in a press release.

"This long-term equity financing will allow for the company to grow and expand in ways we have not seen before, without the constant pressure of discounted debt financing," Schissler said in the statement. "As stated throughout 2009, our three pillars of planned business success include organic growth, acquisitions and debt reduction. This financing will provide us the capital needed for the first two, without adding debt to the balance sheet.

"To have secured this financing in these difficult economic times is a major signal and endorsement of our business strategies and our management team," Schissler added.

Cord Blood's stock (OTCBB: CBAI) gained $0.0004, or 12.9%, to $0.0035.

Cord Blood America is the parent company of CorCell, which offers umbilical cord blood stem cell preservation for expectant parents and their children.

Somaxon plans share placement

Somaxon Pharmaceuticals, a San Diego-based specialty pharmaceutical company focused primarily on psychiatry and neurology, will issue approximately 5.1 million common shares in an approximately $6 million private placement.

The shares will sell at $1.05 per share. Warrants equal to another 5.1 million shares are included. The warrants carry a strike price of $1.155 for seven years.

The company said that several existing investors participated in the transaction, as well as some new investors, including Tavistock Life Sciences.

"We are extremely pleased about the strong support shown by our existing investors participating in this financing, and we are equally excited about the participation of a new investor with the life science industry experience of The Tavistock Group," said Richard W. Pascoe, Somaxon's president and CEO. "Based on our current operating plan, we expect that the cash raised in this financing, together with our existing resources, will allow us to operate our business through the FDA review cycle of the NDA resubmission and extend our cash runway through the second quarter of 2010.

"The acceptance of the Silenor NDA resubmission and this $6 million cash infusion represent the achievement of two significant milestones in our strategic plan," continued Pascoe. "Going forward, we will continue to execute on our strategic plan by focusing on obtaining FDA approval of Silenor and advancing our current discussions relating to a potential commercial partnership for Silenor. We believe that the Silenor resubmission fully addressed all of the issues raised in the complete response letter we received from the FDA, and we look forward to continuing to work closely with the FDA in the review process. With respect to a commercial partnership, our goal is to enter into an agreement that will maximize the potential commercial success of our current lead product."

Settlement is expected by July 8.

Somaxon's equity (Nasdaq: SOMX) improved 2 cents, or 2%, to $1.02. Market capitalization is $19.4 million.

Jazz to sell equity units

Jazz Pharmaceuticals will raise $7 million via a private placement of equity units, the company said.

The company signed a deal on July 6 with Longitude Venture Partners, LP and Longitude Capital Associates, LP to sell approximately 1.89 million of the units at $3.6925 per unit.

Each unit holds one common share and one half-share warrant. Each whole warrant is exercisable at $4.00 for seven years.

Also, Patrick Enright, managing director of Longitude Capital, joined Jazz's board of directors in connection with the financing arrangement.

Proceeds will be used for general corporate purposes.

Jazz's stock (Nasdaq: JAZZ) increased 58 cents, or 15.98%, to $4.21. Market capitalization is $134 million.

Jazz Pharmaceuticals is a Palo Alto, Calif.-based pharmaceutical company.

Genta to raise $10 million

Genta will take in $10 million from a private placement of units, according to a press release.

According to the deal's terms, the units will comprise 30% of common shares at $0.002 per share and 70% of an unsecured convertible note. Two-year warrants will also be included for 25% of the shares underlying the notes.

The convertible notes bear interest at 8% and are convertible into common stock at 500,000 shares per $1,000 in principal amount.

"We are pleased to have entered into this key transaction", said Raymond P. Warrell, Jr., Genta's CEO, in the release. "Having completed accrual to our randomized phase 3 trial of Genasense in patients with advanced melanoma, we expect these proceeds will enable determination of final results for progression-free survival, a co-primary endpoint of the study. Assuming positive results, we expect these data will comprise the basis of worldwide regulatory applications for marketing approval. We anticipate release of these results in the fourth quarter of this year."

Settlement of the first $3 million is expected by July 7.

Genta's shares (OTCBB: GNTA) fell $0.008, or 9.41%, to $0.0077. Market capitalization is $7.91 million.

Genta is a Berkeley Heights, N.J.-based biopharmaceutical company focused on cancer treatments.

Northern Star secures financing

Northern Star plans to issue subscription receipts in its effort to raise C$20 million, according to a press release.

The Vancouver, B.C.-based gold mining company will sell unit subscription receipts at C$0.50. Each receipt will automatically convert to one common share and one half-share warrant. Each whole warrant is exercisable at C$0.70 for three years.

Northern Star will also sell flow-through subscription receipts. The receipts - which will sell at C$0.65 each - will automatically convert to one flow-through common share.

Also, the warrants included with the unit receipts could expire sooner than three years from issuance should the company's shares exceed C$1.10 for 15 consecutive trading days. Upon notification, the warrants would expire within 30 days.

Of the proceeds, C$15 million will be used to prepay its senior secured notes issued in 2008. Funds will also go toward further exploration of the company's assets and general working purposes. Settlement is expected by July 23.

Northern Star's stock (TSX Venture: NSM) slipped 6 cents, or 10%, to C$0.54. Market capitalization is C$61.7 million.

Elsewhere in the mining sector, Osisko Mining Corp. announced it raised C$75 million though a private placement of a convertible debenture.

The company sold the five-year 7½% note to Societe generale de financement du Quebec. The notes are convertible at C$9.18 per share.

"We are very happy to have such a strong financial partner from Quebec showing interest in the development of the Canadian Malartic project," said Sean Roosen, president and CEO of Osisko, in a press release. "This project, which requires investment of [C$1 billion], is important for the Abitibi-Temiscamingue region and putting it into production will result in important economic benefits for the region and for Quebec."

In order to close on the funds, Osisko must satisfy certain requirements, including securing another C$225 million in financing for the Malartic project.

"Osisko continues to pursue discussions with diverse financial institutions and strategic partners to complete the required financing for the development of the Canadian Malartic project," the company stated in the release. "In addition Osisko currently has 44, 274,050 warrants outstanding at an exercise price of $5.45 per share that will expire Nov. 17, 2009. The eventual exercise of these warrants would result in proceeds of an additional $241 million dollars to the Osisko treasury."

Osisko's equity (Toronto: OSK) dipped 2 cents, or 0.3%, to C$6.60. Market capitalization is C$1.68 billion.

Osisko is a Montreal-based gold exploration and production company.

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