Encysive stock skyrockets on nod from European agency; Alphatec stock slips on IPO

By Sheri Kasprzak

New York, June 2 - Encysive Pharmaceuticals Inc.'s stock took off Friday to round out the week after receiving approval from the European Agency for the Evaluation of Medicinal Products for its Thelin product to treat pulmonary arterial hypertension.

The stock ended the day up 36.11%, or $1.56, to close at $5.88 (Nasdaq: ENCY). By 3 p.m. ET, the stock had already climbed 36.57%, or $1.58.

"This is really huge for them," said one buysider familiar with the company. "What this basically means is that Thelin will be available for sale in [the European Union] by 2007. It's good news for investors, particularly."

The reason it's good news for investors, the buysider said, is that the Food and Drug Administration has been wary of Thelin. In particular, the FDA is concerned, the buysider said, about Thelin's interaction with another pulmonary arterial hypertension drug.

"The [EAEM] approval could be good for the FDA approval," he noted.

So what comes next for Thelin? The company will be given formal approval to market Thelin in the European Union within 90 days.

Thelin uses a small molecule that blocks the action of endothelin, a mediator of blood vessel constriction and growth of smooth muscle over vascular walls, according to an Encysive statement released Friday.

Also on Friday, Encysive's 2.5% convertibles due 2012 climbed about 8 points outright after the EAEM approval.

"It's a pity I wasn't in it," said a sellside convertible bond trader.

The convertible traded at about 79 against a stock price of $6.00 on Friday. The lightly traded convertible previously changed hands at about 70.75 on May 25 when the stock closed at $4.45.

"That not a name that necessarily trades," said the trader.

The FDA stopped short of giving Thelin full approval in March, and investors feared then that Encysive may have to conduct expensive additional trials. But Encysive's stock surged on May 25 after the company said it submitted a complete response to the FDA, raising hopes that approval may be possible without further tests. The FDA is expected to respond this month.

Houston-based Encysive develops novel, synthetic, small molecule compounds to treat cardiac, vascular and other diseases.

Alphatec stock dips on IPO

After pricing an $83.7 million initial public offering, Alphatec Holdings, Inc.'s stock slipped Friday.

The stock ended the day down 2 cents to close at $8.98 (Nasdaq: ATEC).

The company priced its IPO at $9.00 per share, under its target range of $11.00 to $12.00.

Deutsche Bank Securities and First Albany Capital are joint bookrunners for the IPO with RBC Capital Markets as co-manager.

The deal has a greenshoe for 1.395 million shares.

Alphatec will use $35.7 million of the $71.4 million net proceeds to meet redemption obligations and to pay dividends to existing shareholders. Another $26.3 million will be used to expand the company's sales and marketing, to support its research and development, to fund the clearance or approval and subsequent commercialization of near-term product candidates, and to acquire complementary businesses, products or technologies, or to obtain rights to complementary technologies.

An additional $9.4 million will be used to repay debt, including repaying $6.8 million outstanding on the company's revolving credit facility with Bank of the West and $2.6 million to repay a loan to chairman, president and chief executive officer Shunshiro "Roy" Yoshimi. Following the IPO, Alphatec has 34.76 million shares outstanding.

Alphatec is a Carlsbad, Calif., medical device company concentrating on products for the surgical treatment of spine disorders.

Luna prices $21 million IPO

Luna Innovations Inc. priced a $21 million initial public offering Friday at $6.00 per share, the low end of a reduced target range.

The offering was reduced to 3.5 million shares from 4 million shares.

Guidance was for a price of $6.00 to $8.00 per share, reduced from $11.00 to $13.00 previously.

When it first filed for the IPO, Luna was aiming to raise as much as $57.5 million.

ThinkEquity Partners LLC was lead manager. WR Hambrecht + Co and Merriman Curhan Ford & Co. were co-managers.

The sale has a greenshoe of 525,000 shares. Following the sale, Luna has 9,734,325 shares outstanding.

On Friday, the stock remained unchanged at $6.00 (Nasdaq: LUNA).

Luna is a Roanoke, Va.-based company involved in research, development and commercialization of technologies in molecular technology solutions and sensing solutions, such as magnetic resonance imaging. Proceeds will be used for working capital, capital expenditures, other corporate expenses and potential acquisitions.

Despite the decrease in the size of the proceeds, Luna will still have enough funding to meet its operating and investing requirements through the beginning of 2008, according to an FWP filing with the Securities and Exchange Commission.

Generex stock dips on PIPE

Moving to the PIPE sector, Generex Biotechnology Corp. settled a stock offering for $7 million but saw its stock drop after the deal was announced Friday morning.

The stock fell 4.6%, or 9 cents, to close at $1.87 and lost another penny in after-hours trading (Nasdaq: GNBT).

Generex issued 3,414,636 shares at $2.05 each to four accredited investors. The investors received warrants for 2,416,980, exercisable at $2.45 each for five years.

Connected to the offering, Generex accelerated the expiry of warrants for 4,364,190 to June 1 from Aug. 28, 2006 and July 23, 2006. The warrants were exercisable at $1.25 and $1.60 each.

Toronto-based Generex develops oral drug delivery systems and technologies.

NicOx settles €15 million stock deal

Meanwhile, NicOx SA concluded a €15 million stock deal with Pfizer, Inc.

After the offering was announced Friday morning, NicOx's stock slipped €0.57 to close the session at €11.19 (Frankfurt: NXO).

In the placement, Pfizer purchased 1,350,135 shares at €11.11 each, a 4.9% premium to the average closing prices for the 20 trading days before closing.

The offering was conducted as part of an agreement between the two companies in which Pfizer was granted the exclusive right to apply NicOx's nitric oxide-donating technology in the field of ophthalmology. For the agreement, NicOx may receive up to €300 million plus royalties.

Located in Sophia Antipolis, France, NicOx is a biopharmaceutical company focused on developing nitric oxide-donating drugs used to treat inflammatory and cardio-metabolic disorders.

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