Exelixis gets $150 million facility; Brockman sells stock; Genta offers convertible; Deep Down closes deal

By Kenneth Lim

Boston, June 5 - Exelixis, Inc. said it negotiated a $150 million credit facility with Deerfield Management to provide financial flexibility as it explores its partnering options.

Brockman Resources Ltd. said it will raise A$112.5 million for an iron ore project in order to take advantage of iron ore prices.

Genta Inc. announced a $40 million offering of two-year convertible notes priced at a sharp discount to its common stock's market value.

Deep Down, Inc. said it completed a $40 million stock placement that helped to fund an acquisition and will be used to repay debt.

Exelixis aims for flexibility

Exelixis said it has arranged a $150 million credit facility from Deerfield Management.

The funds can be drawn in $15 million increments at any time over the next 18 months at Exelixis' discretion. Exelixis is under no obligation to draw on the facility and can terminate the agreement without penalty at any time.

Funds drawn will be repayable in five years and can be repaid in common shares or cash at any time during the term of the agreement.

Exelixis will pay a quarterly commitment fee at a rate of 2.25% per annum, and amounts drawn will accrue interest until maturity at a rate of 6.75% per annum.

The facility matures in June 2013 and may be prepaid in whole or in part at any time, without penalty.

Deerfield received warrants for 1 million common shares, exercisable at C$7.40 per share. If Exelixis draws on the facility, Deerfield will receive warrants for an additional 10 million shares, in increments of 400,000 shares per $15 million drawdown.

Exelixis common stock (Nasdaq: EXEL) slipped 5.52% or $0.34 to close at $6.50 on Thursday.

In addition, Exelixis will issue warrants for 800,000 shares with each $15 million draw at an exercise price equal to 20% above the average of the daily volume weighted average stock price for each of the 15 trading days following the day on which Exelixis notifies Deerfield that it is drawing the funds.

Exelixis is a South San Francisco, Calif., biotechnology company.

"This transaction significantly increases our financial strength and flexibility over the next 18 months, even if we don't draw on the facility," Exelisis president and chief executive George A. Scangos said in a press release.

"We expect that the next few months will provide key insights into our pipeline, the future of our existing collaborations, and potential new collaborations. The Deerfield facility gives us the time to see our way through this period of major pipeline and business milestones and puts us in a position of strength as we advance our various partnering discussions.

"We are in discussions for a number of transactions, and we want to make sure that we have the ability to work through our options, taking into account the outcome of some of the important milestones that we expect to reach later this year. Our objective is to maximize the long-term value from the development of our pipeline and by having the Deerfield facility in place, we have significantly enhanced our ability to do so."

Deerfield partner William Slattery also commented: "The Exelixis discovery platform has been prolific, generating 14 targeted molecules currently in clinical development by either Exelixis or its partners. To complement its discovery capabilities, Exelixis has now built a top-tier development team that allows the company to independently optimize proof-of- concept studies for these products.

"Our goal with this financing is to provide a flexible, minimally dilutive form of capital that will allow Exelixis to advance development programs either internally or externally, depending on which strategy maximizes shareholder value."

Brockman to advance project

Brockman Resources plans to sell A$112.5 million of stock in a private placement to help fund a key iron ore project.

The company plans to sell 45 million ordinary shares at A$2.50 per share. Brockman common stock (ASX: BRM) slipped 2.96% or A$0.08 to close at A$2.62 on Thursday.

Proceeds will be used to accelerate the development of Brockman's Marillana Project.

Subiaco, Western Australia-based Brockman Resources acquires and explores mineral tenements in Australia.

Brockman said the shares will be placed with institutional and sophisticated investors, and expects to add new shareholders through the placement. The additional funding will also help the company to "fast-track its production plans to take advantage of strong iron ore prices," the company said in a statement.

"The outstanding response we have received to this capital raising is a reflection of the high quality of the Marillana Project - both in terms of the project's existing resource base and exploration upside - and the continuing strong outlook for iron ore underpinned by demand from China and other developing nations," said Brockman managing director Wayne Richards in a statement.

Genta funds late-stage drug

Genta said it is selling $40 million worth of two-year convertible notes to fund the development of a late-stage experimental drug and to advance its pipeline.

The senior secured notes carry a 15% coupon and are initially convertible into common shares at a penny per share. The company may force conversion if the closing bid price of its common stock exceeds $0.50 for 20 consecutive trading days.

Genta common stock (OTCBB: GNTA) closed at $0.23 on Thursday, lower by $0.10 or 30.3%.

Based in Berkeley Heights, N.J., Genta is a biopharmaceutical company focused on treatments for cancer.

"We view this transaction as a transforming financial event for our company that will enable us to achieve key programmatic milestones," Genta chairman and chief executive Raymond P. Warrell Jr. said in a statement.

"We believe this financing will allow us to fully enroll the ongoing phase 3 Agenda trial of Genasense in melanoma, to pursue regulatory actions related to the use of Genasense in chronic lymphocytic leukemia, and to make substantial progress in advancing our pipeline of clinical oncology products. We have recently undertaken a number of steps to reduce costs, and we greatly appreciate the votes of confidence in our company by key biotech investors in this offering."

Deep Down closes deal

Deep Down, Inc. said it closed a $40 million private placement of stock that was used for an acquisition and to pay down debt.

The company sold about 57.1 million common shares at $0.70 apiece. Deep Down common stock (OTCBB: DPDW) closed Thursday at $1.13, down by 1.74% or $0.02.

Deep Down said it used $22 million of the proceeds to complete the previously announced acquisition of Flotation Technologies, which closed Thursday. It will use $12.5 million of the net proceeds to repay a $12 million mezzanine facility that was provided by Prospect Capital Corp.

The company will use the remaining net proceeds for working capital and general corporate purposes.

Deep Down, based in Channelview, Texas, is a pipe installation engineering and management company.

"We are extremely pleased by the vote of confidence conveyed by the professional investors who are participating in this private placement," Deep Down president and chief executive Ronald E. Smith said in a statement. "The ability to raise $40 million with these sophisticated investors validates the business plan and strategy we have developed."

Deep Down chief financial officer Eugene L. Butler said the repayment of the mezzanine debt will give the company "an essentially debt-free balance sheet and save us over $2 million per year in interest and other related costs."

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