Volume improves after Memorial Day weekend; Protalex wraps $5.07 million offering

By Sheri Kasprzak

Atlanta, May 31 - Private placement volume picked up following the three-day Memorial Day weekend despite lackluster stocks on Tuesday.

"Less to do with stocks today and more to do with backlog, I think," said one market source. "We had a long weekend, Monday was a day that these companies would have otherwise done deals, so they're just getting done today instead."

Another sell-sider said even though volume was good Tuesday, it may not necessarily be a sign of things to come.

"With oil climbing, stocks in other sectors are dropping, so I don't think today's volume is any indication of what the big picture really is," said that source. "When you get down to it, issuance today was really pushed by the fact that yesterday was a market holiday. It's an illusion that [volume] is strong."

On Tuesday, in fact, stocks dropped as oil prices climbed to almost $52 per barrel. Oil rose $0.12 to close at $51.97 per barrel. Meanwhile, the Dow Jones Industrial Average gave up 75.07 to end at 10,467.48; the Nasdaq composite index closed down 7.51 at 2,068.22 and the S&P 500 edged down 7.28 to close at 1,191.50.

Of course, it was business as usual on Monday for Canadian issuers and volume remained reasonably good north of the border, according to sell-siders there.

"It wasn't bad," said one Canadian sell-sider. "Energy companies are getting back into the market, so that's always a good sign. I think we'll see a steady stream of them coming up."

Elsewhere in Canada, mineral companies are getting back into the game as well, thanks to stronger stocks in that sector.

"Everything but gold seems to be doing okay," said one Canadian market source.

Gold issuers may be out of the PIPE game for a while, the source said, thanks in part to the decline in the euro against the dollar following France's rejection of the European Union's constitution.

What may be coming up, according to sources in both the United States and Canada, is more issuance from biopharmaceutical and biotechnology companies.

One pharmaceutical company, New Hope, Pa.-based Protalex, Inc., closed up a $5.07 million private placement Tuesday.

The company sold 2.6 million shares at $1.95 each to vSpring Capital and other institutional investors. The offering included warrants for 787,000 shares, the terms of which could not be determined Tuesday.

"The company will use the proceeds of the private placement primarily to finance the upcoming phase I clinical trials for its lead compound, PRTX-100, in rheumatoid arthritis and pemphigus and general working capital purposes," said Steven Kane, the company's chief executive officer, in a statement.

"We are extremely pleased with the progress that Protalex has made over the past year and look forward to their success in the upcoming clinical trial phase," said Dinesh Patel of vSpring in a statement.

Protalex is a pharmaceutical company focused on the development of treatments for rheumatoid arthritis and autoimmune diseases.

The company's stock dropped $0.20, or 9.09%, to close at $2 on Tuesday.

Accrete's C$10.87 million deal

Over in the oil sector, Accrete Energy Inc. announced its C$10,875,000 offering of stock.

The company is offering up 1.5 million at C$7.25 each.

The deal is being offered through a syndicate of underwriters led by GMP Securities Ltd.

The underwriters have a greenshoe for up to 500,000 shares for a potential C$3,625,000 in additional proceeds.

The deal is priced at a 3% discount to the company's closing stock price of C$7.48 on May 30.

"It'll go well, I'm sure," said one Canadian market source. "Oil is doing well enough now and there's enough news pushing oil, if you ask me, that investors will feel good about this one."

After the offering was announced Tuesday morning, Accrete's stock slipped C$0.08, or 1.07%, to close at C$7.40.

Based in Calgary, Alta., Accrete is an oil and natural gas exploration and development company. The proceeds will be used for capital expenditures and general corporate purposes.

Florida Choice closes $4.9 million offering

Bank holding company Florida Choice Bankshares, Inc. closed a stock offering for $4,940,512 Tuesday.

The company issued 308,782 shares at $16 each, a 13.5% premium to the company's closing stock price on May 23.

Despite the premium, the company's stock did not budge on Tuesday, remaining at $14.10.

However, one source who had seen the deal insisted Tuesday that the company's stock may move once word of the closed offering gets around.

"Sometimes it just takes a while for the stock to be affected by these things [private placements]," said the source. "I have a feeling its stock will improve because of it, but that's just my feeling. It's a good premium, significant enough to make a difference, I would think."

Based in Mt. Dora, Fla., Florida Choice is a holding company for Florida Choice Bank.

NovaDel's stock slips

After announcing the closing of its $7,035,000 private placement, NovaDel Pharma Inc.'s stock edged down Tuesday.

The company's stock slid $0.05 to close at $1.15 Tuesday.

When the closing was first announced May 27, NovaDel's stock gained $0.02 to close at $1.20.

The company sold shares at $1.05 each.

"If you ask me, the discount is what got them," said one market source of why NovaDel's stock dropped.

The shares were sold at about an 11% discount to the company's closing stock price May 26.

Even so, the source said he felt the drop in stock was not significant. The drop was a 4.17% slip from the company's closing price Friday.

Based in Flemington, N.J., NovaDel is a pharmaceutical company that produces oral sprays and gelatin capsules.

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