Depomed seals $20 million direct placement of stock; Arbios raises $4.8 million

By Sheri Kasprzak

New York, April 23 - Depomed, Inc. led PIPE activity to kick off the week, settling a $20,007,500 registered direct placement of its stock.

Meanwhile, Arbios Systems, Inc., another biotech company, wrapped a $4.8 million offering of units.

In the broader market, one sellside market source said he feels drug stocks are strong enough now to push some of the smaller names into the PIPE market.

"It really does make a difference what the big guys are doing," said the sellsider. "Their stocks will sometimes - not always - push the smaller companies up. The sector as a whole is doing pretty well right now and they're [drug companies] always ripe for offerings."

In the Depomed deal, the company sold 5.3 million shares at $3.775 each. The offering was not brokered. The shares were sold under the company's shelf registration.

On Monday, the company's stock gained 3 cents to close at $3.98 but lost 3 cents in after-hours trading (Nasdaq: DEPO).

Depomed, based in Menlo Park, Calif., develops extended-release formulations of existing drugs.

Arbios' $4.8 million deal

In other biotech news, Arbios Systems, Inc. concluded a $4.8 million unit offering, selling 3,692,307 units of two shares and two warrants.

The units were sold at $1.30 each, a 94% premium to the company's $0.67 closing stock price on Friday.

The offering sent the company's stock up 4.48%, or 3 cents, to end the session at $0.70 (OTCBB: ABOS). Volume was off with 1,000 shares traded compared with the average 22,065 shares.

The units were sold to funds managed by MicroCapital, LLC and including Bristol Investment Fund, Ltd.

One of the warrants is exercisable at $1.00 each for two and a half years and the other at $1.40 each for five years.

Proceeds will be used for product registration of the company's Sepet liver assist device in Europe.

"Arbios represents an exceptionally high-quality development-stage opportunity that has not been widely appreciated by the investment industry," said Ian Ellis, president and portfolio manager of MicroCapital LLC, in a statement.

"It is unusual to find a company in the microcap market that is potentially this close to commercializing a product [Sepet] that could serve such a large, unmet medical need. We have sufficient confidence in the Arbios opportunity that we have not sought seniority over existing investors, thereby facilitating future investment. The financing terms also provide the possibility of up to nearly $9 million in further funding for Arbios through the future exercise of callable warrants."

"We anticipate these funds will enable us to move forward aggressively with our plans for product registration of our Sepet liver assist device in Europe under the medical device CE Mark, as well as for initiation of a pivotal clinical trial of Sepet in support of future commercialization of the product in the United States," said Walter Ogier, the company's chief executive officer, in a news release.

Musket Research Associates was the placement agent.

Located in Waltham, Mass., Arbios develops liver assist devices to diagnose and treat liver failure.

Nano-Proprietary raises $6 million

Looking to the tech sector, Nano-Proprietary, Inc. sealed a $6 million private placement of shares.

The company issued 2,608,698 shares at $2.30 each, a 4% discount to the company's $2.40 closing stock price on Friday.

The investors also received warrants for 2,608,698 shares, exercisable at $2.50 each for one year.

The company's stock fell 10 cents, or 4.17%, on Monday to close at $2.30 (OTCBB: NNPP).

Austin, Texas-based Nano-Proprietary is a nanotechnology research and development company focused on carbon nanotubes used in electronics, sensors and displays.

Formation Capital plans deal

Moving north of the border, Formation Capital Corp. negotiated the terms of a C$15 million unit offering to advance the purchase of new mining equipment.

The deal includes up to 20 million units at C$0.75 apiece.

The units consist of one share and one half-share warrant. The whole warrants are exercisable at C$1.00 each for 18 months.

Jennings Capital Inc., the placement agent, has a greenshoe for up to 3,333,333 additional units.

The deal is expected to close May 23.

On Monday, the stock fell 7 cents, or 8.43%, to close at C$0.76 (Toronto: FCO).

Based in Vancouver, B.C., Formation is a mineral exploration company.

In other mineral offerings, Kobex Resources Ltd. priced a C$17,500,425 offering of 6,140,500 units.

The company plans to sell the units, comprised of one share and one half-share warrant, at C$2.85 each. The whole warrants are exercisable at C$3.56 each for two years.

A syndicate of underwriters, led by Desjardins Securities Inc., has a greenshoe for up to 921,100 additional units.

The company expects the deal to close May 10.

Proceeds will be used for exploration on the company's Lucky Jack molybdenum property.

The stock advanced by 5 cents to close at C$3.25 on Monday (TSX Venture: KBX).

Toronto-based Kobex is a mineral exploration company.

Rentech stock slips

After announcing a $54,851,596 registered direct placement of stock on Friday, Rentech, Inc.'s stock dipped on Monday.

The stock gave up 3 cents to close at $2.61 but gained a penny in after-hours activity (Amex: RTK). On Friday, the stock fell 9 cents to end at $2.64.

In the placement, the company sold units of one share and one warrant for two-tenths of a share at $2.73 each.

The shares were sold under the company's shelf registration.

Proceeds will be used to fund long lead-time expenditures and site preparation costs related to the conversion of its East Dubuque plant to use coal as feedstock. The rest will be used for research and development and for general corporate purposes.

The deal is set to close April 25.

Credit Suisse (USA) LLC is the placement agent.

Rentech, based in Los Angeles, develops gas-to-liquid and coal-to-liquid synthetic fuels.

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