Antigenics seals $25 million convertible notes offering; mergers may be boosting PIPE issuance

By Sheri Kasprzak

New York, Oct. 31 - Biotech firm Antigenics Inc. led PIPE news Tuesday while in the broader market sellsiders said more mergers and acquisitions may be fueling issuance in the private placement market as a whole.

In the Antigenics deal, the company intends to issue $25 million in senior convertible notes with an 8% coupon and a $3.50 conversion price to Ingalls & Snyder Value Partners LP and Penrith Ltd. The conversion price represents a 74% premium to the company's $2.01 closing stock price Monday.

The notes, due Aug. 30, 2011, may alternatively be converted into a 30% interest in Antigenics MA, the company's subsidiary.

"I was long with a lot of shares when the phase 3 test [for Oncophage] did not work out and still have a small position," said one buysider based in New York, who said he was holding his position. "I really believe this company has something the world needs. I hope [chief executive officer Armen] Garo will be able to jump through all the hoops to get the various products approved and produced. This should be a great takeover prospect. Unfortunately, it could probably be taken over now and I would still be in the hole."

Even though Antigenics' stock ended the day up, one trader said there was considerable profit-taking from the company's third-quarter earnings results and the fund raising.

The stock gained 18 cents, or 8.96%, to close at $2.19 (Nasdaq: AGEN) but gave up a penny in after-hours trading.

Antigenics posted a net loss of $11.2 million for the third quarter, compared with a net loss of $17.5 million for the corresponding 2005 quarter.

New York-based Antigenics develops treatments for cancers, infectious diseases and autoimmune disorders.

Mergers may help volume

Sellside market sources said Tuesday mergers and acquisitions may be responsible for a slight boost in offerings.

"We do seem to be running into quite a few mergers lately," said a New York-based sellsider. "A lot of times these [PIPE offerings] are a condition of the merger and other times, an issuer just wants to boost capital in order to acquire another company."

Another sellsider said he agrees.

"I'm not saying it's completely pushing the market right now, but a small portion of the deals are being done because of mergers," he said.

On Tuesday, Amish Naturals, Inc., an organic foods distribution company, announced the completion of a $2.61 million private placement as part of its merger with FII International Inc. And also on Tuesday, GoFish Corp. settled a $12 million unit offering as part of its merger with GoFish Technologies, Inc. GoFish had previously done business under the name Unibio, Inc.

On Monday, InferX Corp. wrapped a private placement for $1,114,696 connected to its reverse merger with Black Nickel Acquisition Corp. I.

GoFish's $12 million deal

In the GoFish offering, the company sold 8 million units at $1.50 each.

The units include one share and one half-share warrant with each whole warrant exercisable at $1.75 for five years.

After the deal closed and the merger was completed, GoFish's stock began trading, closing at $4.70 Tuesday (OTCBB: GOFH).

Sanders Morris Harris, Inc. and Canaccord Capital Corp. were the placement agents.

Some of the units were used to cancel $2,387,419 in existing convertible promissory notes prior to the merger. The noteholders who did not accept the units to cancel the notes were repaid in full.

"The successful completion of the merger and financing represent a major milestone for GoFish, positioning the company for accelerated growth," said Michael Downing, the company's chief executive officer, in a news release. "The financial resources and corporate visibility provided by today's announcement will enable us to accelerate the development of our online products, recruit additional key team members and build out our infrastructure as well as aggressively grow our community of video enthusiasts."

Proceeds from the deal will be used to strengthen the company's infrastructure and product offerings.

Under the terms of the stock-for-stock merger, 3,632,555 shares of Unibio, Inc. were issued to the shareholders of GoFish Technologies. The stockholders of Unibio retained 7,500,006 common shares.

San Francisco-based GoFish develops consumer online video content.

RSX leads energy offerings

Looking to Canadian energy deals, RSX Energy Inc. led PIPE news there, pricing a C$12.15 million offering of flow-through shares.

The deal comes as oil prices climbed after dropping by $2.39 on Monday. Oil gained 37 cents to settle at $58.36 per barrel.

The company plans to sell 3 million shares at C$4.05 shares. Insiders plans to buy 200,000 of the shares.

The deal is being placed through a syndicate of underwriters led by Raymond James Ltd.

The placement is expected to close Nov. 17.

The company's stock climbed by 1.56%, or 5 cents, to close at C$3.25 (TSX Venture: RSX).

Proceeds will be used for ongoing exploration.

Calgary, Alta.-based RSX is an oil and natural gas exploration company.

In related news, Avery Resources Inc. priced a C$10 million private placement of 20 million shares.

Paradigm Capital Inc. is the placement agent for the deal, which is set to close Nov. 15.

Calgary, Alta.-based Avery is a hydrocarbon exploration and production company focused on drilling in the Cooper Basin region of Australia.

Nautilus stock up

In other resources news, Nautilus Minerals Inc. saw its stock climb by 3.7% Tuesday after announcing a $68.5 million stock deal Monday.

The stock gained 10 cents to close at C$2.80 (TSX Venture: NUS). On Monday, the stock gained 40.62%, or 78 cents, settle at C$2.70.

The volume of Nautilus shares traded, however, settled back down with 53,321 shares traded compared with the average 50,174 shares. On Monday, there were 909,666 shares traded.

In the placement, the company plans to sell shares at US$3.00 each, including US$25 million pledged by Anglo American plc.

The company's stock climbed in spite of a dip in gold prices Tuesday. Gold gave up 60 cents to close at $606.80 per ounce. On Monday, gold had climbed $6.40 to end at $607.40 per ounce.

Vancouver, B.C.-based Nautilus is a gold and copper exploration and development company focused on underwater mineral exploration.

Ronda Fears contributed to this report.

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