Novelos prepares to close $15.05 million stock deal; MediGene plans €15.63 million PIPE

By Sheri Kasprzak

New York, March 2 - Two biotech companies led private placement activity Thursday with Novelos Therapeutics, Inc. leading the action with the pending closure of a $15,052,500 offering.

The offering nudged the company's stock up slightly Thursday. The stock gained a penny to end at $2.00 (OTCBB: NVLT).

The offering includes 11.15 million shares at $1.35 offered to a group of institutional investors.

The shares are priced at a 32% discount to the company's closing stock price of $1.99 on March 1.

"Just look at the discount," said one buyside market source familiar with the sector. "That is enormous. They clearly had to settle for that and it's big indication that this company really isn't worth looking at, if you ask me."

One sellsider put it even more bluntly, saying, "A waste of time."

The investors in the offering will also receive warrants for 8.37 million shares, exercisable at $2.50 each.

Oppenheimer & Co. and Rodman & Renshaw LLC were the placement agents.

Proceeds will be used for the phase 3 development of NOV-002, the company's lung cancer treatment, as well as the clinical development of some of the company's other programs, including a compound for chemotherapy-resistant ovarian cancer and chronic hepatitis B.

"I am very pleased to have quality institutional investors participate in this financing, which will provide significant funding to vigorously proceed with the phase 3 development of NOV-002 in lung cancer, in addition to our other clinical development programs, including chemotherapy-resistant ovarian cancer and chronic hepatitis C with NOV-205, our second compound," said Harry Palmin, the company's chief executive officer, in a news release. "Meanwhile, we will continue to seek out government procurement of 'dirty bomb' treatment with NOV-002."

Novelos closed a $3 million private placement of series A convertible preferred stock on Oct. 3, 2005. The company raised another $200,000 from that offering on Nov. 3, 2005.

The preferreds are convertible into common shares at $1.65 each.

Based in Newton, Mass., Novelos is a biotechnology company focused on treatments for cancer and hepatitis B.

In another biotech offering Thursday, MediGene AG priced a €15,632,500 stock deal comprised of 1.85 million shares at €8.45 each.

The price per share is a 5% discount to the average of the last five closing prices of the company's stock.

Proceeds will be used for the commercialization of the company's drugs and the addition of new products to the company's portfolio.

"We are very proud that several renowned investors from Europe and the USA participated in the capital increase," said Peter Heinrich, the company's CEO, in a statement. "The increasing revenues from commercialization of our drugs and our further improved cash position will enable us to continuously pursue our development projects, and too add new products to our portfolio, should the situation arise."

On Thursday, the company's stock lost €0.25, or 2.84%, to close at €8.56 (Frankfurt: MDG).

Based in Martinsried, Germany, MediGene develops pharmaceuticals to treat cancer and cardiovascular ailments.

BioForce's $6 million placement

Moving to the technology sector, BioForce Nanosciences Holdings, Inc. arranged a $6 million private placement as part of its merger with subsidiary Silver River Acquisitions, Inc.

The offering includes up to 4 million post-consolidation shares at $1.50 each.

Completion of the merger is contingent upon BioForce raising at least $2.5 million in the placement.

The company has already effected a 2-for-1 forward stock split and changed its name from BioForce Nanosciences, Inc.

Ames, Iowa-based BioForce develops technologies used in silicon chips and other surfaces.

Oil prices spark PIPE activity

Looking to the energy sector, oil prices rose for the second straight session, inciting more private placement activity among energy issuers.

Oil prices gained $1.39 to close at $63.36 per barrel.

"As long as oil keeps gaining, there will be investor interest," said one Canadian market source familiar with natural resources.

Even though higher oil prices sparked more activity among oil companies, volume in general took a hit as stocks slipped.

The Dow Jones Industrial Average lost 28.02 to close at 11,025.51; the Nasdaq composite index fell 3.53 to end at 2,311.11; and the Standard & Poor's 500 composite index dipped 2.10 to settle at 1,289.14.

Among those oil offerings, Javelin Capital Corp. priced a C$17.5 million deal comprised of subscription receipts exchangeable on a one-for-one basis for stock upon the completion of the company's acquisition of Warrior Energy Corp.

The company plans to sell 50 million receipts at C$0.35 apiece.

A syndicate of placement agents led by Salman Partners Inc. and Raymond James Ltd. has a greenshoe for 5 million additional receipts.

After the deal was announced Thursday afternoon, the company's stock advanced by 26.58%, or C$0.105, to close at C$0.50 (TSX Venture: JVC).

The offering is expected to close March 22.

Proceeds will be used for the acquisition.

Once the private placement wraps and the acquisition is closed, Javelin intends to consolidate its shares on the basis of one share of the new company for every four shares of the old company. The company's name will be changed to Javelin Energy Inc.

Based in Calgary, Alta., Javelin is an oil and natural gas exploration company.

Elsewhere in oil offerings, Churchill Energy Inc. has negotiated a C$9,000,140 private placement of flow-through and non flow-through shares.

The deal is comprised of 2,353,000 non flow-through shares at C$1.70 each and up to 2,325,600 flow-through shares at C$2.15 each.

Placement agent Acumen Capital Finance Partners Ltd. has a greenshoe for up to 1,176,500 common shares.

This offering is also expected to close March 22.

Proceeds will be used for the company's 2006 capital expenditure program. Proceeds from the flow-through shares will be used for development on the company's Canadian properties.

The company's stock remained unchanged at C$1.80 on Thursday (TSX Venture: CEI).

Based in Calgary, Alta., Churchill is an oil and natural gas exploration company.

Akorn stock gains 5%

A day after announcing its $19,402,510 private placement, Akorn Inc.'s stock advanced by more than 5%.

The stock gained 5.09% Thursday, or 23 cents, to close at $4.75 (Amex: AKN).

On Wednesday, when the deal was announced, the company's stock fell 13 cents, or 2.8%, to end at $4.52.

The offering was announced Wednesday morning as a $15,102,508 offering of 3,356,113 shares at $4.50 each. Later in the day, the company sold another 955,556 shares.

Based in Buffalo Grove, Ill, Akorn develops sterile ophthalmic pharmaceuticals.

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