Cytogen to seal $20 million private placement; biotechs lead PIPE activity

By Sheri Kasprzak

New York, Nov. 7 - As volume in the PIPE market picked up Tuesday after a lull earlier this week, biotech names dominated the activity.

"Biotech companies have an almost constant need for cash so when they can price a [PIPE], they're going to," said one market source familiar with the sector. "Right now is a good time to get in if you need the capital."

Cytogen Corp. led the influx of private placement offerings, announcing its plans to settle a $20,000,012 offering.

A group of institutional investors has agreed to buy 7,092,203 units at $2.82 each. The price per unit is a 1.8% premium to the company's $2.77 closing stock price on Monday.

The units consist of one share and one half-share warrant. The whole warrants are exercisable at $3.32 each for five years.

The offering sent the company's stock down early. By 10 a.m. ET, the stock had given up 4.4%. At the end of the day, the stock fell 7.94%, or 22 cents, to close at $2.55 (Nasdaq: CYTO).

"I like the raising of funds," said a biotech fund manager in Florida. "They placed the shares at $2.82, plus warrants.... What is not to like? A group wanted a chunk of this company and paid what amounts to a premium for it. Heck, we can go to the open market today and get a nearly 10% discount on the same shares from what the placement was priced at.

"Now Cytogen seems to be moving in the right direction with a new [chief financial officer]. Earnings are improving. With products like ProstaScint, Quadramet and Caphosol, Cytogen does have a real future."

Proceeds will be used to launch Caphosol, a medical device used to treat oral mucositis and dry mouth. The remainder will be used for clinical programs, in-licensing opportunities and general corporate purposes.

Cytogen, located in Princeton, N.J., develops treatments for cancer and for pain related to cancer.

Transition's C$25 million deal

In other biotech news, Transition Therapeutics Inc. plans to close a C$25 million private placement with Great Point Partners, LLC.

Two funds managed by Great Point plans to buy 26,881,720 shares at C$0.93 each on Wednesday.

Proceeds will be used for clinical studies, research and development, working capital and general corporate purposes.

After the deal was announced Tuesday morning, the stock gave up 5.88%, or 6 cents, to settle at C$0.96 (Toronto: TTH).

The company announced in September that it is teaming up with Irish biotech firm Elan Corp. plc to develop new Alzheimer's drug AZD-103 in a deal that could be worth up to $200 million.

Under the terms of the collaboration, Transition will receive upfront payments of $15 million from Elan - half in 2006 and half in 2007. If developed to commercialization, Transition would also receive milestone payments of up to $185 million.

Toronto-based Transition develops novel therapeutics for Alzheimer's disease, hepatitis C and other diseases.

Introgen to raise $6.1 million

Elsewhere, Introgen Therapeutics, Inc. settled a direct placement of its stock for $6,099,995 million.

The company sold 1,326,086 shares to an institutional investor at $4.60 each.

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

Mulier Capital was the placement agent.

Proceeds will be used for the clinical development of Advexin, INGN 241 and its other program. The remainder will be used for working capital and general corporate purposes.

The company's stock gave up 2%, or 10 cents, to end at $4.93 (Nasdaq: INGN).

Austin, Texas-based Introgen develops targeted molecular therapies to treat cancer and other diseases.

Epoch pockets $10 million

In other news, Epoch Holding Corp. closed a $10 million private placement of series A convertible preferred stock with General American Investors Co., Inc.

General American bought 10,000 shares of the preferreds at $1,000 each.

The 4.6% preferreds are convertible into 1,666,667 common shares at $6.00 each.

The preferreds will automatically convert into common shares on the fifth anniversary of issuance.

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

"We are pleased to have General American as an investor," said chief executive officer William Priest in a statement. "The investment proceeds, along with our current cash and our debt-free balance sheet, will allow us to accelerate the development of our goal to become a global investment management company."

The company's stock gained 6 cents on the day to end at $6.48 (Nasdaq: EPHC).

New York-based Epoch Holding is the parent company of Epoch Investment Partners, Inc., an investment manager and adviser.

Opti plans C$40 million deal

In Canadian resources news, Opti Canada Inc. priced a private placement of flow-through stock for C$40,093,800.

The offering includes up to 840,000 flow-through shares at C$22.80 each. Also, insiders of the company intend to buy another 918,500 shares at the same price. The price per share represents a 26.73% premium to the company's $17.99 closing stock price Monday.

The deal is set to close Nov. 22.

The placement is being conducted through a syndicate of underwriters led by Tristone Capital Inc. and including CIBC World Markets, FirstEnergy Capital Corp., Genuity Capital Markets, Peters & Co. Ltd. and Richardson Partners Financial Ltd.

Proceeds will be used for Canadian exploration expenses on the company's oil sands leases in the Athabasca basin of Alberta.

The stock gave up 32 cents, or 1.78%, to close at C$17.67 (Toronto: OPC).

Calgary, Alta.-based Opti develops oil sands projects.

Grande Portage prices offering

In other resources news, Grande Portage Resources Ltd. negotiated an C$8 million private placement of up to 8 million units and 3 million flow-through units.

The non flow-through units are priced at C$0.70 each and the flow-through units at C$0.80 each.

The non flow-through units include one share and one half-share warrant. The whole warrants are exercisable at C$1.10 each for 18 months. The flow-through units consist of one share and one half-share warrant with each whole warrant exercisable at C$1.10 for 18 months.

The deal is being placed through a syndicate of agents led by Pacific International Securities Inc.

Proceeds will be used for exploration on the Merry Widow sulphide properties and for working capital.

The offering is set to close Dec. 11.

Grande Portage's stock closed unchanged at C$0.74 (TSX Venture: GPG).

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

Ronda Fears contributed to this report.

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