Biotech deals again dominate PIPE issuance; Langer seals $28.88 million convertible offering

By Sheri Kasprzak

New York, Dec. 11 - With what one sellside market source called "an almost unending need for cash," the biotech sector again took up the majority of PIPE offerings announced Monday. Meanwhile, stocks climbed, setting the market up for a strong week of issuance, another sellsider said.

"I think we can expect quite a bit [of deals] coming up," he said. "The interest is there, both from issuers and investors, so it will be busy for certain. Conditions are good for it."

The Dow Jones Industrial Average climbed 20.99 to end the day at 12,328.48; the Nasdaq composite index edged up 5.50 to close at 2,442.86; and the Standard & Poor's 500 composite index settled up 3.20 at 1,413.04.

In the biotech sector, a sellsider based in New York said companies are eager to settle offerings before the year closes out.

"They want to get the cash on the books before the year closes," he said. "[Biotech companies] have an almost unending need for cash."

Heading up the medical sector offerings Monday was a $28.883 million sale of subordinated convertible notes from Langer, Inc.

The 5% notes are due Dec. 7, 2011 and are convertible at $4.75 each, a 14.7% premium to the company's $4.14 closing stock price Friday.

Wm. Smith Securities Inc. was the placement agent.

On Monday, the stock climbed 13 cents, or 3.14%, to end the day at $4.27 (Nasdaq: GAIT).

"Langer intends to use the net proceeds from this private placement to fund a number of projects including, among other things, capital expenditures, working capital needs and the funding of acquisitions," said Gray Hudkins, the company's chief executive officer, in a news release. "We may also seek additional outside senior financing in the future to augment our liquidity and capital resources."

Headquartered in Deer Park, N.Y., Langer produces medical products for the orthopedic, orthotic and prosthetic markets.

Advancis to raise $18 million

Elsewhere in the biotech sector, Advancis Pharmaceutical Corp. is preparing to close an $18 million private placement of its stock with a group of institutional investors.

The investors agreed to buy 6 million shares in the deal, which is scheduled to close Thursday. The price per share is a 10.4% discount to the company's $3.35 closing stock price on Friday.

Pacific Growth Equities, LLC was the lead agent in the deal.

On Monday, the company's stock gained 30 cents, or 8.96%, to close at $3.65 (Nasdaq: AVNC), but gave up 5 cents in after-hours trading.

Proceeds will be used for the commercial launch of the company's Amoxicillin Pulsys, for the development of other products and for working capital.

Located in Germantown, Md., Advancis is a pharmaceutical company focused on developing anti-infective products.

Also, Halozyme Therapeutics, Inc. closed an $11,068,950 private placement with Roche Finance Ltd., an affiliate of drug company F. Hoffman-La Roche Ltd.

Roche bought 3.385 million shares at $3.27 each.

Halozyme entered into a licensing agreement with F. Hoffman-La Roche to develop and commercialization of rHuPH20, the company's recombinant human hyaluronidase.

The company's stock gave up 22 cents, or 3.43%, to settle at $6.20 (Amex: HTI). In after-hours trading the company's stock gained 5 cents. The deal was announced late in the day Monday.

San Diego-based Halozyme develops recombinant human enzymes to treat infertility, palliative care, drug delivery and oncology treatments.

Haemacure's C$12.5 million deal

Moving to Canada but still in biotech, Haemacure Corp. negotiated the terms of a C$12.5 million private placement.

The offering includes 125 million units of one share, one half-share series A warrant and one half-share series B warrant on a non-brokered basis.

Each whole series A warrant is exercisable at C$0.30 and each whole series B warrant at C$0.20. Haemacure may force exercise of the series B warrants if its stock trades above C$0.40 for more than 20 consecutive trading days.

The lead investors in the deal will be Firebird Global Master Fund, Ltd. and Firebird Global Master Fund II, Ltd., both affiliates of Firebird Management, LLC.

The deal is scheduled to close Dec. 22. For the deal to close, Haemacure must raise at least C$5 million in the offering.

Proceeds will be used to develop the company's febrin sealant Hemaseel, which is in phase 3 clinical trials, and the haemostatic agent Hemaseel Thombin.

Haemacure's stock jumped by 108%, or 7 cents, to end at C$0.135 Monday (Toronto: HAE).

Montreal-based Haemacure develops biological adhesives, biomaterials and surgical devices for the surgical wound care market.

InStorage plans PIPE

In other Canadian offerings, InStorage Real Estate Investment Trust priced a private placement for up to C$25,000,300 as part of an acquisition plan.

The deal includes up to 19.231 million trust units at C$1.30 each, an 18.75% discount to the company's C$1.60 closing stock price on Friday.

Underwriter Canaccord Adams Inc. has a greenshoe for up to 3.847 million additional units for an added C$5,001,100 in additional proceeds any time before closing.

The offering is set to close Dec. 29.

The deal sent the company's stock down 5 cents, or 3.12%, to end at C$1.55 (TSX Venture: IS).

Proceeds will be used to fund a portion of the purchase price of three of 10 self-storage properties in western Canada. The rest will be used to fund a mezzanine loan to InScotia Developments LP in principal of C$13.8 million.

The acquisition of the remaining seven properties will be funded by cash on hand and a secured bank financing.

Under the acquisition terms, both InStorage and InScotia plan to invest in a portfolio of 10 self-storage locations in western Canada. Three of the properties are operating on a stabilized basis. The price tag attached to the 10 properties is C$21.7 million.

The acquisition is expected to close Feb. 15, 2007.

"The acquisition of these self-storage properties will increase our exposure to western Canada, further expand our national platform and solidify InStorage as a leading national consolidator of self-storage properties," said James Tadeson, the company's CEO, in a statement. "This is consistent with our stated strategy of producing a stable and growing stream of cash distributions for unitholders from the ownership and management of high-quality self-storage properties."

Toronto-based InStorage is a real estate investment trust focused on acquiring and developing self-storage properties.

Petrosearch raises $3.22 million

Moving to the resources sector, Petrosearch Energy Corp. watched its stock skyrocket after concluding a $3.22 million stock sale.

The stock gained 26.25%, or 21 cents, to close at $1.01 (OTCBB: PTSG).

The company sold 6.44 million shares in the deal to a group of accredited investors. The price per share is a 37.5% discount to the company's $0.80 closing stock price on Friday.

The investors also received warrants for 6.44 million shares, exercisable at $0.92 each for five years.

Scarsdale Equities, LLC was the placement agent.

Headquartered in Houston, Petrosearch is an oil and natural gas exploration company.

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