Slacking stocks stave off new PIPE deals; Nektar Therapeutics raises $24 million in direct placement

By Sheri Kasprzak

New York, Aug. 16 - The PIPE market suffered Tuesday as stocks sagged on word of reduced consumer spending because of higher oil prices, sell-siders said.

"I was fully expecting things to pick up [today]," said one market source.

He noted that stocks had recovered from a fall on Monday and expected that recovery to help volume Tuesday.

"I guess in any given day, it's really hard to read what exactly is going to come along and knock things down again," he said. "You have some clues, but it really is a waiting game."

Another sell-sider noted that retail offerings, and even companies associated with the sector - including transportation and manufacturing companies - may be affected by the drop and those potential issuers will probably back away from conducting private placements for a while.

"It's a pretty wide net of people impacted," he said. "I fully expect this will be a very temporary drop though. In other words, we should be back in business again soon."

The damage from the sinking consumer spending report? The Dow was knocked down 120.93 to end at 10,513.45, the Nasdaq composite closed down 29.98, and the S&P 500 lost 14.53 to end at 1,219.34.

Nektar Therapeutics Inc. led news Tuesday with word that it will soon be wrapping a $24 million direct stock offering to buy competitor Aerogen, Inc.

Nektar is selling 1,436,266 shares at $16.71 each to Mansfield Enterprises, Inc.

The company will use the proceeds to pay the stock portion of the acquisition of Aerogen. The acquisition is also expected to cost about $8 million in cash.

Both Aerogen and Nektar are in the business of developing drug-delivery technologies used by biotech and pharmaceutical companies.

The shares are being sold under the company's shelf registration, and the offering should be funded in full by Aug. 19, according to the company's prospectus.

Reedland Capital Partners is the placement agent.

After the offering was announced Tuesday morning, Nektar's stock took a slip, losing $0.14, or about 0.8%, to close at $17.48.

For the quarter ended June 30, Nektar reported a net loss of $26,912,000, compared to a net loss of $22,164,000 for the corresponding quarter in 2004.

The company is in substantial debt, according to its most recent earnings report, and may have a harder time accessing the capital markets because of that debt.

"As of June 30, 2005, we had approximately $173.9 million in long-term convertible subordinated notes and debentures, $20.5 million in non-current capital lease obligations and $11.6 million in other long-term debt," the earnings report said. "Our substantial long-term indebtedness, which totaled $206 million as of June 30, 2005, has and will continue to impact us by making it more difficult to obtain additional financing and constraining our ability to react quickly in an unfavorable economic climate."

As of July 29, the company had 85,356,454 outstanding common shares, according to the earnings report.

Nektar is based in San Carlos, Calif.

Sonus wraps $17.82 million stock sale

Elsewhere in the biotech sector, Bothell, Wash.-based pharmaceutical company Sonus Pharmaceuticals, Inc. closed a $17,821,750 private placement.

The company sold 4.65 million shares at $3.77 each to several institutional investors.

The investors bought warrants for 2.33 million shares at $0.125 each. The warrants are exercisable at $4.15 each for five years.

Punk Ziegel & Co. was the placement agent.

Sonus focuses on therapies to treat cancer and related conditions.

Punk Ziegel & Co. was the placement agent.

"As reported on our recent quarterly conference call, we believe that we're on track to achieve one of our key near-term objectives: to move our lead product candidate Tocosolr Paclitaxel into phase III testing," said company chief executive officer Michael Martino in a statement. "This capital gives us the ability to maintain the timeline for the phase III study, including initiation of patient enrollment by the end of September, while we actively progress negotiations with prospective partners."

According to the company's latest earnings report, it had 21,418,668 outstanding common shares as of July 27.

For the quarter ended June 30, the company sustained a net loss of $4,090,749, up from a net loss of $3,761,412 for the same quarter in 2004.

Sonus is focused on therapies to treat cancer and related conditions.

The deal was announced Tuesday afternoon. Sonus's stock gained $0.15, or 3.82%, to end at $4.08.

Lakeview arranges C$10.3 million offering

Heading up private placements in Canada was a C$10.3 million offering from Winnipeg, Man.-based Lakeview Hotel Real Estate Investment Trust.

The REIT plans to sell up to 3,433,333 class A trust units at C$3.00 apiece.

Wellington West Capital Inc. is the placement agent.

Proceeds will be used for acquisitions and working capital.

Lakeview is a real estate investment trust focused on the purchase and operation of hotels and resorts.

Lakeview's stock edged up C$0.05 to close at C$2.95 Tuesday.

Peerless Energy prices C$10.05 million

Moving to the energy sector, Calgary, Alta.-based Peerless Energy Inc. has arranged a private placement for up to C$10.05 million, the company reported Tuesday.

The company intends to sell up to 3 million class A common shares at C$3.35 each.

The offering is being placed through a syndicate of underwriters led by FirstEnergy Captial Corp.

Proceeds from the deal will be used to acquire a private oil and gas company.

Peerless is an oil and natural gas exploration, development and production company.

After the deal was announced Tuesday morning, Peerless's stock gained C$0.11 to end at C$4.01.

First Republic Bank stock slips

A day after announced a $25 million private placement for $25 million, First Republic Bank's stock dipped.

The company's stock lost $1.63, or 4.29%, to end at $36.35 on Tuesday.

On Monday, when the deal priced, the company's stock gained $0.82 to finish at $37.98.

The San Francisco-based private bank and wealth management firm plans to sell shares at $37.88 each.

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