MetaSolv pockets $23 million from unit deal; proposed Cell Therapeutics convertible talked at 6.75%

By Sheri Kasprzak and Ronda Fears

New York, Oct. 27 - MetaSolv, Inc. led private placement news on Thursday with the completion of a $23 million unit offering.

The company sold 7,666,667 units at $3.00 apiece through agent Raymond James Ltd. The units are comprised of one share and one half-share warrant, the whole of which is exercisable at $4.00 each for five years.

On June 30, MetaSolv reportedly had 41,899,864 outstanding common shares.

"We are extremely pleased to have completed this financing," said T. Curtis Holmes, the company's president and chief executive officer, in a statement released late Thursday. "The additional funds significantly strengthen our balance sheet and provide us flexibility to react to an ever-changing landscape within the telecommunications industry."

The private placement was announced Thursday afternoon, and the company's stock gained $0.05 to close at $2.90.

Looking to the company's earnings, MetaSolv's net losses have decreased since the second quarter of 2004. For the quarter ended June 30, the company reported a net loss of $663,000, compared to a net loss of $4,748,000 for the same quarter of 2004.

"Our quarterly revenues are dependent, in part, upon orders booked and delivered during that quarter," said the company's latest earnings report. "We expect that our sales will continue to involve large financial commitments from a relatively small number of customers. As a result, the cancellation, deferral or failure to complete the sale of even a small number of licenses for our products and related services may cause our revenue to fall below expectations."

Based in Plano, Texas, MetaSolv provides operation support systems, including multi-service order management, inventory management and service activation capabilities, for communication service providers.

Cell Therapeutics may price convertible

Heading to the biotech sector, sellsiders were abuzz Thursday about a proposed $50 million convertible offering from Cell Therapeutics, Inc.

The company's stock was lower, as is typically the case when a new convertible offering emerges, but traders noted that with the market down it was difficult to attribute the Cell Therapeutics decline to a new deal. A call to the company was not returned by press time, and market sources had only sketchy information available.

One sellsider said there was chatter early Thursday that Cell Therapeutics was planning a $50 million convertible, with terms circulated at a 6.75% coupon and 10% initial conversion premium.

However, it was unclear whether those terms were speculation among convertible traders or actual indicative terms from bookrunners. Cell Therapeutics has a couple of convertible issues in play - a 5.75% due 2008 and 4% due 2010, both of which are busted and trading in the 60s.

The stock ended Thursday off by 11 cents, or 4.42%, at $2.38, but gained another $0.02 in after-hours trading.

A European-based fund manager said early Thursday there was an item on the wires abroad about a €10 million deal afloat. Around noon eastern time, he said the figure he was hearing had been bumped to $30 million and noted that Cell Therapeutics chief financial officer Louis Bianco had talked about a deal being "done soon" on a company conference call in September.

The sellsider said a reconciliation of the deal size figures might be that of the $50 million deal size he heard, there was supposedly one buyer set up for a $20 million chunk, so perhaps only $30 million would be marketed. He wasn't interested in the deal, though, and commented, "I don't like this company nor the management. They have never delivered anything."

The buysider said, though, that he was expecting third quarter will be better as they have restructured operations with a workforce reduction in the United States.

"However, the company needs millions of dollars to commercialize just one product. They will probably decide for an offering before the end of the year," he said.

Cell Therapeutics "has three important products in the pipeline, Xyotax (considered a blockbuster), Pixantrone and Ct2106. Now, they are thinking about a partner for all the three products, for Xyotax they have contacts with some Big Pharma."

Cell Therapeutics is expected to report earnings in early to mid-November.

Last Friday, the company said in an SEC filing that it was continuing negotiations with Chugai Pharmaceuticals Co., Ltd. to terminate a licensing agreement for its lung and ovarian cancer chemotherapy drug Xyotax that dates back to October 2001, noting other third parties have expressed an interest in it.

Lower stocks, recovering oil impact PIPEs

In the broader PIPE market Thursday, sellsiders said a combination of lower stocks and climbing oil prices negatively affected private placements.

The Dow Jones Industrial Average dove 115.03 to end the day at 10,229.95; the Nasdaq composite index ended the day down 36.24 at 2,063.81 and the Standard & Poor's 500 composite index lost 12.48 to end at 1,178.90.

Oil prices, on the other hand, rose $0.43 to finish the day at $61.09 per barrel.

"It's not looking too good," said one market source when asked about oil and stocks and their impact on PIPEs. "Volume's taken a hit."

Another market source said with cooler weather, oil prices shrugged off increased crude oil inventories, which could mean more energy offerings in the short term.

"I don't really think it means much for the longer term, but for the next few days we may see more energy [offerings]," he said.

Forbes Medi-Tech raises $6 million

Looking elsewhere in the biotech sector, Vancouver, B.C.'s Forbes Medi-Tech Inc. concluded a $6 million convertible preferred stock deal.

The company issued series B convertible preferreds due Oct. 27, 2008. The preferreds are convertible into common stock at $1.65 each.

The investors received warrants for 1,818,182 shares, exercisable at $2.06 each for five years.

Merriman Curhan Ford & Co. was the placement agent.

"The financing is a strong vote of confidence by our new institutional investors for the company's growth prospects and allows us to focus our pharmaceutical development efforts on our cholesterol-lowering compound, FM-VP4, and the FM-VPx library of compounds," said Charles Butt, the company's chief executive officer, in a statement.

After the offering was announced Thursday morning, Fobes Medi-Tech's stock lost 14.14%, or $0.28, to end the day at $1.70.

Proceeds will be used for pharmaceutical research and for operational purposes.

Forbes Medi-Tech is focused on the research, development and commercialization of treatments for cardiovascular disease.

Protox arranges C$4 million deal

Biotechnology offerings even led Canadian PIPE news Thursday with Vancouver's Protox Therapeutics Inc. pricing a C$4 million unit deal.

The company intends to sell 8 million units at C$0.50 each on a non-brokered basis.

The units include one share and one warrant. The two-year warrants are exercisable at C$0.65 each.

Proceeds will be used for phase I clinical trials, research and development and working capital.

The company's stock closed unchanged at C$0.54 Thursday.

ADA-ES stock slips 3.5%

A day after settling a $13,414,513 stock deal, Littleton, Colo.-based ADA-ES, Inc.'s stock dipped almost 3.5%, losing $0.66 to end at $18.23 Thursday.

On Wednesday, the company announced that it had issued shares to a group of institutional investors at $17.00 each.

ADA-ES develops and implements environmental technology and specialty chemicals used to mitigate the environmental impact of electric power and industrial companies.

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