Northstar Neuroscience stock climbs on upsized IPO; Praecis stock jumps 22.3% on earnings

By Sheri Kasprzak and Kenneth Lim

New York, May 5 - Northstar Neuroscience, Inc. priced an upsized $106.5 million initial public offering of stock of, increased from $90 million, and watched its stock jump by more than 10.5% in the process.

"It really is surprising," said one sellsider on Friday afternoon, noting that other IPOs in the sector have not gone as well. "It is absolutely dismal for [biotech] IPOs right now, so it really says a lot for them that they were able to price at [$15.00]."

In the IPO, Northstar sold 7.1 million shares, above the originally planned 6 million, at $15.00 each, above the talked $12.00 to $14.00 price range.

Citigroup Global Markets Inc. and Cowen & Co., LLC were joint bookrunners for the offering.

For comparison's sake, Omrix Biopharmaceuticals, Inc. sold 3.4 million shares in its IPO on April 21 at $10.00 each, $5.00 less than the range first set by lead underwriter UBS.

Northstar plans to use proceeds from its IPO for clinical trials, to build sales and marketing capabilities, for working capital and for other general corporate purposes.

Located in Seattle, Northstar develops neurostimulation therapies for a broad range of neurological diseases and disorders.

Praecis stock jumps on earnings

Praecis Pharmaceuticals Inc.'s stock skyrocketed by 22.3%, or 99 cents, to end the day at $5.43 (Nasdaq: PRCS) after the company's first-quarter earnings statement was released Friday.

The volume of shares of Praecis traded also took off on Friday with 253,366 shares traded compared to the average 59,679 shares.

According to the earnings statement, Praecis incurred a net loss of $7,052,000 for the first quarter, compared with a net loss of $12,345,000 for the same quarter of 2005.

Praecis attributed the reduction in net loss to a reduction in expenses from the company's strategic restructuring program started in May 2005. In particular, promotional activities for Praecis's Plenaxis product in the United States was discontinued. Also, the company reduced its workforce.

"They've done the fat-cutting, they've streamlined and it worked for them," said one sellside trader who looked at the deal Friday. "They've shown they can produce and now's the time to buy in. So, good for them."

The company is now looking to advancing its PPI-2458 clinical program, currently in phase 1, to treat patients with non-Hodgkin's lymphoma and solid tumors, chief executive officer Kevin McLaughlin said in a statement released Friday morning.

Praecis is based in Waltham, Mass.

Another big winner was NeoPharm, Inc., which also released its first-quarter earnings Friday.

The stock climbed 10.72%, or 73 cents, to settle at $7.54 (Nasdaq: NEOL) after announcing that its net loss for the quarter was reduced by 26% over the same quarter of 2005.

For the quarter ended March 31, NeoPharm reported a net loss of $8,114,463, compared with a net loss of $10,864,273 for the same period of 2005.

The company posted revenues of $1,610 for the quarter, compared with revenues of $71,300 for the same quarter of 2005.

NeoPharm has projected a net loss range of $36 million to $38 million for the year.

After the earnings report was released Friday morning, the volume of NeoPharm shares traded jumped to 574,630 shares, compared with the average of 279,360 shares.

Based in Waukegan, Ill., NeoPharm is focused on developing therapeutic treatments for cancer.

Keryx stock climbs

Keryx Biopharmaceuticals, Inc. also saw its stock advance after releasing its earnings statement for the first quarter.

The stock moved up 94 cents, or 5.7%, to finish at $17.44 Friday (Nasdaq: KERX).

For the quarter, Keryx reported a net loss of $19,596,000, up from a net loss of $4,832,000 in the year-ago period.

According to Keryx's statement released Friday, the increase in the net loss came from research and development expenses related to the company's Sulonex's phase 3 and phase 4 clinical program. Sulonex is a treatment for diabetic nephropathy.

New York-based Keryx develops treatments for diabetes and cancer.

Emisphere stock dips

After announcing not only its first quarter earnings but the fact that it may not be able to continue its operations past mid-July, Emisphere Technologies, Inc.'s stock dropped by more than 2%.

Emisphere's stock fell 2.44%, or 21 cents, to settle at $8.40 (Nasdaq: EMIS).

The company reported an operating loss of $6.6 million for the quarter, compared with a loss of $8.2 million for the same quarter of 2005. The net loss for the quarter was $26.8 million, compared with net income of $6.5 million for the first quarter of 2005.

The increase in net loss may force the company to cease operations.

"The company anticipates that its existing capital resources will not enable it to continue operations past mid-July of 2006," said the earnings statement released Friday morning. "As a result of these conditions, the audit report prepared by Emisphere's independent registered public accounting firm relating to its consolidated financial statements for the year ended Dec. 31, 2005 includes an explanatory paragraph expressing substantial doubt about the company's ability to continue as a going concern."

Emisphere is based in Tarrytown, N.Y., and develops oral delivery products of drugs that are ordinarily injected.

Allergan convertibles flat

Looking to biotech convertibles Friday, Allergan Inc.'s convertibles were flat early Friday as the stock held firm after a two-day slide in the aftermath of the Botox maker's first-quarter loss.

The Allergan zero-coupon convertible due 2022, which has been called, was seen at 113 versus a stock price of $100.50 early Friday, while the new 1.5% convertible due 2026 traded at 96.75 at the same stock level.

Shares of Irvine, Calif.-based Allergan (NYSE: AGN) closed at $100.66, higher by a hair's width of 0.01% or 1 cent.

Teva Pharmaceutical Industries Ltd.'s 0.5% convertible due 2024 was seen trading in the morning within Thursday's range at 118.625 against a stock price of $43.25.

The company's 1.75% convertible due 2026 was also flat from Thursday, changing hands at 101.75 versus a $43.25 stock price on Friday.

Israel-based Teva's stock (Nasdaq: TEVA) closed higher by 0.55% or 24 cents at $43.51.

The generic drug maker reported early Friday that sales of its multiple sclerosis drug Copaxone rose 29% in the first quarter to reach $329 million. Teva is expected to announce its first-quarter results on Wednesday.

Biotech heavyweight Amgen Inc.'s zero-coupon convertible due 2032 also saw a couple of big trades early Friday, changing hands slightly higher than Thursday's levels at about 73.5 versus a stock price of $67.50, a sellsider said.

Amgen's stock (Nasdaq: AMGN) finished at $67.11, higher by 0.24% or 16 cents.

Medicure to close $25.6 million PIPE

Looking to biotech private placements, Medicure, Inc. announced its plans Friday to settle a $25.6 million private placement of stock with U.S.- and Europe-based institutional investors.

Word of the offering sent the company's stock down 7 cents, or 4.05%, to end the day at $1.66 (Amex: MCU).

Medicure intends to sell 16 million shares at $1.60 each and issue warrants for 4 million additional shares. The price per share is a 7.5% discount to the company's $1.73 closing stock price on Thursday.

The warrants are exercisable at $2.10 each for five years.

Deutsche Bank Securities Inc. was the bookrunner of the offering, which is scheduled to closing in the coming days.

Medicure plans to use the proceeds to develop its lead clinical products - MC-1 and MC-4232. The rest will be used for general corporate purposes.

"We are extremely pleased with the degree of U.S. institutional interest exhibited in this placement and are delighted to welcome a number of new high-quality investors as Medicure shareholders," said Medicure CEO Albert Friesen in a news release. "We remain committed to advancing our partnership discussions for the development of MC-1. The proceeds of this financing provides us with the flexibility to proceed with the single phase 3 MEND-CABG study with MC-1."

Based in Winnipeg, Man., Medicure develops treatments for cardiovascular disorders.

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