Neurogen to seal $40 million direct sale of stock; Third Wave caps $14.8 million PIPE

By Sheri Kasprzak

New York, Dec. 19 - Two biotech companies led PIPE action on Tuesday with a $40 million registered direct deal from Neurogen Corp. and a $14.88 million offering of discounted convertible notes from Third Wave Technologies, Inc.

Ahead of the upcoming holiday, PIPE volume remained relatively active, according to two sellsiders, despite some speculation that volume will be tapering off this week.

"I still think it will [taper off]," said one sellsider based in New York. "What you're seeing are deals that have already priced and are just about to close. There's hardly anything out there being priced right now. A few here and there, that's all."

"It seems pretty healthy to me," said another sellsider when asked about volume on Tuesday. "Every year near the end things pick up for a while. It might settle down a little later on this week as people head off for the holiday."

Moving back to the Neurogen offering, the company plans to close a $40 million direct placement of 6.993 million shares with a group of institutional investors later this week.

The shares are being sold at $5.72 each, on par with the company's closing stock price from Monday.

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

Pacific Growth Equities, LLC is the bookrunner for the offering, set to close Dec. 21.

News of the deal sent the company's stock up a bit, gaining 12 cents, or 2.1%, on the day to close at $5.84 (Nasdaq: NRGN). The stock gained another penny in after-hours trading.

Proceeds will be used for developing clinical and pre-clinical product candidates, discovering additional product candidates and for general corporate purposes.

Based in Branford, Conn., Neurogen develops small molecule drugs to treat insomnia, Parkinson's disease, restless leg syndrome, pain, depression and obesity.

Third Wave's offering

Elsewhere in the sector, Third Wave Technologies, Inc. came away from an offering of $20 million in discounted senior subordinated convertible promissory notes with proceeds of $14,881,878.

The zero-coupon notes sold to Shark Onshore Master Holding LLC were priced at 74 and are due December 2011.

The notes are convertible into common shares at $6.00 each, a rate of 124.01565 shares per $1,000 in principal for a total of 2,480,313 shares.

"Third Wave is dedicated to creating shareholder value by commercializing the highest-value molecular diagnostic products, particularly our HPV [human papillomavirus] offerings," said Kevin Conroy, the company's chief executive officer, in a statement.

"We are pleased to take advantage of this opportunity to strengthen the company's balance sheet. The successful placement of these notes is also a significant expression of investor confidence in Third Wave's strategy and prospects for success."

Proceeds will be used for general corporate purposes.

The company's stock gave up 6 cents, or 1.2%, Tuesday to close at $4.93 and lost another 8 cents in after-hours closing (Nasdaq: TWTI). The deal was announced Tuesday morning.

Headquartered in Madison, Wis., Third Wave develops molecular diagnostic reagents for DNA and RNA analysis applications used for procedures like in vitro fertilization.

RegeneRx's stock climbs

In secondary market action in the biotech sector, RegeneRx Biopharmaceuticals, Inc. saw its stock rebound after tanking Monday on word of a $9.55 million stock sale.

The stock gained 8.5%, or 17 cents, to close at $2.17 (Nasdaq: RGN). On Monday, when the deal was announced, the stock gave up 16%, or 38 cents, to close at $2.00.

A buysider who said he likes RegeneRx said he wasn't surprised the stock came back to life Tuesday.

"Sometimes stocks just respond that way when news comes out," he said. "I'm still holding my position."

The company plans to sell stock at $1.80 each on Thursday an investment group that includes Sigma-Tau Group, its largest shareholder. The shares are being sold at a 24.3% discount to the company's $2.38 closing stock price on Friday.

Piper Jaffray & Co. was the placement agent.

Proceeds will be used for clinical development of the company's Thymosin beta 4 technology platform to promote cell regeneration in the skin.

Based in Bethesda, Md., RegeneRx develops molecules used to repair tissue and organs.

Jinpan to close offering

In other PIPE news, Jinpan International Ltd. announced late Tuesday that it plans to close a $25.7 million stock offering later this week.

News of the deal sent the company's stock tumbling. The stock gave up 49 cents, or 1.85%, to close at $26.00 (Amex: JST) with the stock losing another 80 cents in after-hours activity. Volume of Jinpan shares traded Tuesday took off with 1,225,900 shares traded compared with the average 85,689 shares.

The full terms of the deal could not be determined by press time, but the offering will include 1.35 million shares.

Proceeds will be used to expand the company's operating facilities in Haikou, China and to build a new manufacturing facility in Wuhan, China. The rest will be used to acquire a 15% minority interest in Hainan Jinpan Electric Co. Ltd., the company's operating company.

Jefferies & Co., Inc. was the placement agent.

Jinpan, based in Englewood Cliffs, N.J., manufactures cast coil transformers for distribution equipment in China.

Denison's C$100 million deal

In Canada, Denison Mines Corp. priced a C$100,000,725 offering of 8,510,700 shares at C$11.75 each.

The deal is being placed through a syndicate of agents led by Sprott Securities Inc. and GMP Securities LP.

On Tuesday, Denison's stock gained 20 cents, or 1.67%, to close at C$12.15 (Toronto: DML).

Proceeds will be used for general corporate purposes.

Toronto-based Denison is a uranium exploration company with projects in the Athabasca Basin of Saskatchewan and in the Southwestern United States.

Smith & Wesson's stock drops

A day after announcing an $80 million convertibles deal, handgun manufacturer Smith & Wesson Holding Corp.'s stock dropped by 2.8%.

The stock dipped by 29 cents to close at $10.07 and lost another 7 cents in after-hours activity. On Monday, the company's stock gained 9 cents to close at $10.36 (Nasdaq: SWHC).

Smith & Wesson sold 4% notes convertible into common shares at $12.34 each, a 20% premium to the company's $10.28 closing stock price on Dec. 14.

Cowen and Co., LLC and Merriman Curhan Ford & Co. were the placement agents for the most recent deal.

Smith & Wesson is based out of Springfield, Mass.

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