Celgene sells $1 billion of stock; Hollis-Eden up amid Q3 net loss; Spectrum higher following earnings

By Sheri Kasprzak

New York, Nov. 3 - Leading biotech news to round out the week, Celgene Corp. priced a $1.032 billion stock offering after the close Friday.

The company brought the deal to meet - and take advantage of - demand for its stock as part of its inclusion in the Standard & Poor's 500 index. Celgene replaced AmSouth Bank in the index on Friday.

In the off-the-shelf transaction, the company will issue 20 million shares at $51.60 each, a slight discount to the company's $51.65 closing stock price Friday.

J.P. Morgan Securities Inc. and Merrill Lynch & Co. are the lead managers for the deal.

On Wednesday, Celgene had announced its plans to sell up to 20 million shares.

In trading Friday the stock climbed 1.12% on the day, or 57 cents, to end the session at $51.65 (Nasdaq: CELG) but gave up 4 cents in after-hours activity.

Volume of Celgene shares traded Friday skyrocketed with 15,867,555 shares traded compared to the average 3,798,790 shares.

Proceeds will be used for working capital, general corporate purposes, future acquisitions and strategic investments.

Celgene, based in Summit, N.J., develops treatments for cancer and inflammatory diseases.

Hollis-Eden better

In other news, Hollis-Eden Pharmaceuticals, Inc.'s stock advanced after the pharmaceutical giant released its third-quarter earnings report.

Hollis-Eden also announced that it may be getting a government contract for its radiation sickness drug Neumune.

"Let's face it, it's the government contract, not the earnings, that's pushing their stock today," said one sellside trader. "The volume you're seeing is mostly people buying in because this contract is going to be big for them."

The company reported late Thursday that it is the lead bid for a U.S. Department of Health and Human Services contract to develop Neumune for a national stockpile. Hollis-Eden said it will know by the end of January whether it has been awarded the contract.

For the third quarter, the company reported a net loss of $7.3 million, compared with a net loss of $5.7 million for the same quarter in 2005. Hollis-Eden said it incurred a net loss of $22.3 million for the nine months ended Sept. 30, compared with a net loss of $19 million for the first nine months of 2005.

Hollis-Eden said its research and development expenses for the quarter were $6 million and for the nine months ended Sept. 30 were $17.3 million. For the same quarter of 2005, research and development costs were $4.2 million and for the nine months ended Sept. 30, 2005 were $13.7 million.

"The increase in research and development expense was due mainly to the growth in the company's laboratory operations, preclinical and clinical activities and personnel associated with advancing the company's radio-protection drug candidate Neumune (HE2100), through development and stock-based compensation expense related to the adoption of SFAS No. 123R in 2006," said a statement released Friday.

The company's stock ended the day up 40 cents, or 6.02%, at $7.05 (Nasdaq: HEPH) and gained another 10 cents in after-hours trading.

Based in San Diego, Hollis-Eden develops small molecule compounds used to treat high levels of radiation following a nuclear or radiological incident.

Spectrum stock climbs

After announcing its third-quarter earnings, Spectrum Pharmaceuticals, Inc. saw its stock edge up Friday.

The third-quarter results sent the company's stock up slightly, gaining 11 cents, or 2.00%, to close at $5.60 (Nasdaq: SPPI).

The pharmaceutical company posted a net loss of $7.4 million for the quarter, compared with a net loss of $5.2 million for the corresponding 2005 quarter.

The company reported revenues of $92,000 for the quarter, compared with net revenues of $184,000 for the third-quarter of 2005.

According to a statement released Friday by Spectrum, the company's research and development expenses increased to $5.8 million in the third quarter from $3.3 million in the third quarter of 2005. Those increased costs were attributed to the "extended scope of the company's research and development activities, including an increase in the number of personnel in preparation for phase 3 trials for Eoquin and ozarelix."

"This quarter has been pivotal for Spectrum," said Rajesh Shrotriya, Spectrum's chief executive officer, in the news release. "We achieved significant milestones in two of our late-stage programs, including positive phase 3 results for satraplatin in patients with benign prostate hypertrophy."

Located in Irvine, Calif., Spectrum develops a wide range of drug candidates.

Adventrx to close stock deal

Looking to direct stock placements, Adventrx Pharmaceuticals, Inc. said it is set to wrap a $39,998,750 direct placement of its stock.

A group of institutional and other investors has agreed to buy 14,545,000 shares at $2.75 apiece. The price per share is a 10.4% discount to the company's $3.07 closing stock price on Nov. 2.

The shares will be sold under the company's shelf registration.

ThinkEquity Partners LLC is the bookrunner for the deal, which is scheduled to close Nov. 8.

After the deal was announced Friday morning, Adventrx's stock gave up 9.12% on the day, or 28 cents, to close at $2.79 (Nasdaq: ANX). The volume of Adventrx's stock traded Friday skyrocketed with 1,440,200 shares traded. On average, there are 340,150 shares traded daily.

The company's stock began dropping early, giving up 2.28% at 9 a.m. ET and falling another 8.47% by 11 a.m. ET.

San Diego-based Adventrx develops treatments for cancer and infectious diseases.

Another company announced a direct placement of its stock. Avanir Pharmaceuticals, Inc. said it will close next week a direct placement for $15,005,250.

The company plans to sell 5,265,000 class A shares at $2.85 each to a group of institutional investors.

The shares are being sold under the company's shelf registration.

The investors will receive warrants for 1,053,000 shares, exercisable at $3.30 each for six months.

Rodman & Renshaw, LLC is the placement agent for the deal, which is scheduled to close Nov. 6.

The stock dipped by 6.06%, or 20 cents, to end at $3.10 and gave up another 3 cents in after-hours trading (Nasdaq: AVNR).

Volume of Avanir shares traded Friday was through the roof with 11,483,700 shares traded, compared with the average 1,090,880 shares.

Based in San Diego, Avanir develops therapeutic treatments for central nervous system disorders.

Osiris stock advances

After releasing its third-quarter earnings statement and completing a $20 million convertible note offering earlier this week, Osiris Therapeutics, Inc. saw its stock end the week up 2.4%.

The company's stock closed up 35 cents at $14.93 (Nasdaq: OSIR).

The volume of Osiris shares traded Friday also took off with 238,082 shares traded compared with the average 81,950 shares.

On Friday, the company said its net loss widened to $15.6 million for the quarter from a net loss of $4.7 million for the same quarter of 2005.

The company said its third-quarter loss was attributed to non-recurring, non-cash charges associated with the company's recent initial public offering.

"Clearly this has been a great quarter for Osiris," said Randal Mills, the company's CEO, in a statement. "Osteocel continues to demonstrate our ability to develop stem cell therapies that translate into commercial success. The capacity to not only develop but launch and market stem cell products becomes more important with the advancement of our late-stage drug candidates."

Also, Osiris settled a $20 million private placement of convertible promissory notes earlier this week.

The 10% notes are due April 30, 2009 and are convertible at $18.00 each, a 12.36% premium to the company's $16.02 closing stock price on Wednesday.

After the offering was announced Thursday, the stock gave up $1.44, or 9%, to close at $14.58.

The company plans to use the proceeds to repay a $20.6 million 6% convertible promissory note held by a foreign investor.

Friedli Corporate Finance, Inc. was the placement agent.

Baltimore-based Osiris develops cellular therapies based on adult bone marrow stem cells.

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