MRV prepares to wrap $74.5 million PIPE; Nanogen stock gains 15% on direct stock deal

By Sheri Kasprzak

New York, March 16 - MRV Communications, Inc. saw its stock slip after announcing a $74.5 million share sale it plans to close soon.

The offering was announced before the stock market opened Thursday morning and sent the company's stock down early. By 9 a.m. ET, the stock had slipped 8.84%. By the end of the day, the stock gave up 9.48%, or $0.44, to end at $4.20 (Nasdaq: MRVC). On Tuesday, the stock lost 6 cents and on Wednesday lost 12 cents.

A group of institutional investors agreed to buy 19,866,667 shares at $3.75 each, a 19% discount to the company's closing stock price of $4.64 on March 15.

The shares priced, according to a company statement, at a 15% premium to the volume weighted average price for the 30 trading days before the agreement was signed.

Proceeds will be used for growth, working capital and general corporate purposes.

Looking to the company's latest earnings statement, the company reported a net loss of $16,299 for the year ended Dec. 31, compared with a net loss of $10,680 for year-end 2004.

Based in Chatsworth, Calif., MRV manufactures communications equipment.

In the biotech sector, Nanogen, Inc.'s stock climbed 14.68%, or 37 cents, to close the day at $2.89 (Nasdaq: NGEN) after announcing the imminent closing of a direct placement of stock with Fisher Scientific International Inc. In after-hours trading, the stock had lost 9 cents.

Fisher agreed to buy 5,660,377 shares at $2.65 each by market close Thursday.

As of Feb. 28, the company had 56,332,888 outstanding common shares.

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

"We are very pleased to initiate this relationship with Fisher," said Howard Birndorf, Nanogen's chief executive officer, in a statement. "Fisher shares our vision of developing diagnostics for personalized health care is gaining momentum and being adopted by mainstream diagnostic laboratories."

Nanogen reported a net loss of $96,494,000 for the year ended Dec. 31 that was up sharply from a net loss of $38,907,000 for the year closed Dec. 31, 2004.

Based in San Diego, Nanogen produces diagnostic tests used by researchers, clinicians and physicians.

Elite wraps $10 million preferreds deal

In the biopharmaceutical sector, Elite Pharmaceuticals, Inc. concluded a $10 million series B convertible preferred deal that sent its stock up slightly after the company sustained a loss early on.

The stock ended the day up 2 cents at $2.27 (Amex: ELI) after losing more than 2% early in the session.

"[It] should be a good ride today," said one sellside trader familiar with the deal Thursday morning, even though the stock was then heading south.

In the placement, Elite sold 10,000 shares of series B convertible preferred stock. The preferreds are initially convertible into 4,444,444 common shares at $2.25 each. The investors also received warrants for 1,111,111 shares exercisable at $2.75 each for five years and warrants for 1,111,111 shares exercisable at $3.25 each for five years.

Indigo Securities, LLC was the placement agent.

Proceeds will be used to develop the company's portfolio of pain products.

"We are pleased to have completed this placement, which will contribute materially to our efforts to advance our portfolio of pain products through the clinic as well as accelerate the development of our other controlled release products which utilize our proprietary oral drug delivery systems and abuse resistance technology," said Bernard Berk, Elite's chief executive officer, in a news release. "This financing is part of the plan we presented to the American Stock Exchange Listing Committee, which plan specified milestones, quarterly financial projections and details related to any strategic initiatives we plan to complete which are necessary to maintain continued listing compliance."

Elite, based in Northvale, N.J., is a pharmaceutical company focused on developing oral controlled-release products.

Titan to close direct deal

Titan Pharmaceuticals, Inc.'s stock fell 16.17% after the company announced its plans to close a $10,000,250 direct placement of stock.

The stock dropped 70 cents to end at $3.63 Thursday (Amex: TTP).

"Biotechs always need cash," said one Atlanta-based buysider. "At $3.25 for 3.1 million shares, it's a reasonable deal. Others have had PIPEs for half their current price with warrants also. They [Titan] need money so that they're not forced into a quick deal with a Big Pharma that hurts in the end. At least this one was for roughly 10% of the outstanding shares and not for 40% or 50% as others have done.

"Sure it's dilutionary' it can't be helped, but it will pass. To me, this is an investment, not a day-to-day deal. With money you keep some independence. My view is that this will not go below $3.63 or $3.64, barring any other news. Anything above that is actually a positive day."

Under the terms of the deal, Titan plans to sell 3,077,000 shares at $3.25 each to a group of institutional investors. The price per share is a 25% discount to the company's closing stock price of $4.33 on March 15.

The deal, which is being placed through Rodman & Renshaw, LLC, is scheduled to close March 20.

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

Titan tapped the equity market last year, inking a $35 million equity line agreement with Cornell Capital Partners on Sept. 28, 2005.

San Francisco-based Titan develops novel treatments for central nervous system disorders.

Garda leads Canadians

Looking to Canada, Garda World Security Corp. led a rather active day there, pricing a C$93.6 million offering of 4 million special warrants at C$23.40 each.

Each special warrant is exchangeable for one class A share once the company files a registration statement covering the underlying shares.

A syndicate of underwriters led by GMP Securities, LP had an over-allotment option for 500,000 special warrants.

The placement is expected to close March 30.

Proceeds will be used for debt repayment related to the company's acquisition of Rentokil Initial Canada Ltd., business development and working capital.

The stock slipped 1 cent, or 0.04%, to end at C$23.44 (Toronto: GW).

Garda, based in Montreal, is a physical security, cash handling and pre-employment screening services company.

Elsewhere in Canadian PIPEs, Response Biomedical Corp. negotiated a C$10 million unit deal.

The company plans to sell 20 million units of one share and one half-share warrant. Each whole warrant is exercisable for two years at C$0.62.

The offering will be brokered by a U.S.-based investment bank and a Canadian firm.

Connected to the placement, Response reduced the strike price on 1,875,000 warrants to C$0.90 from C$1.15.

Response's stock fell 3 cents to end at C$0.74 Thursday (TSX Venture: RBM).

Vancouver, B.C.-based Response develops diagnostic tests.

Exall's C$8.4 million deal

Moving to the natural resources sector, Exall Resources Ltd. priced an C$8.4 million brokered private placement and a C$2 million non-brokered deal Thursday.

The brokered deal includes 1.5 million flow-through shares at C$2.10 each and 3 million units of one share and one half-share warrant at C$1.75 each. The whole warrants are exercisable at C$2.25 for one year.

Dundee Securities Corp. and Dominick & Dominick Securities Inc. are the placement agents.

In the non-brokered deal, the company plans to sell 1,142,857 units at C$1.75 each. The units consist of one share and one half-share warrant with each whole warrant exercisable at C$2.25 each for one year.

Proceeds will be used for exploration on the company's Gold Eagle project and for working capital and general corporate purposes.

The two deals are expected to close March 29.

Exall's stock lost 6 cents to end at C$1.84 Thursday (Toronto: EXL).

Exall, based in Toronto, is a gold exploration company.

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