Cleveland BioLabs wraps $30 million PIPE; Chelsea Therapeutics to close $12.5 million offering

By Sheri Kasprzak

New York, March 19 - As the stock market rebounded on Monday, market sources said the fervor may be returning to the PIPE market this week as well. Meanwhile, two biotech offerings led news with Cleveland BioLabs, Inc. closing a $30,020,984 offering of convertible preferred stock and Chelsea Therapeutics International, Ltd. announcing plans to close a $12.5 million deal.

"Everyone feels better when the stock market is doing fine," said one sellside market source. "There are some sectors that fare better than others at certain times, of course, but the overall feeling of the market gets a little more positive when stocks do better. That just makes sense."

Another sellsider said he feels volume will improve somewhat this week because of Monday's gains.

"Things are pretty quiet here today but I really do think we'll be seeing more stuff coming up," he said. "Biotech is looking pretty good as is tech."

The Dow Jones Industrial Average put on 115.76 to close at 12,226.17 after a disappointing week last week. The Nasdaq composite index gained 21.75 to settle at 2,394.41 and the Standard & Poor's 500 composite index edged up 15.11 to close at 1,401.06, the first time in weeks the index has made it over 1,400.

In the Cleveland BioLabs offering, the company sold 4,288,712 shares of series B convertible preferred stock at $7.00 each.

The 5% preferreds are convertible into common shares at $7.00 each, a 31.3% discount to the company's closing stock price on Friday of $10.19.

By 10:37 a.m. ET, the company's stock had already begun its sharp descent, giving up 16.91%, or $1.72. At the end of the day, the stock had fallen 13.48%, or $1.37, to close at $8.82 (Nasdaq: CBLI).

The offering was conducted to fund a U.S. Department of Defense application submission of its Protectan CBLB502 as a drug candidate to treat radiation poisoning.

The Defense Department denied a similar application made by Hollis-Eden Pharmaceuticals earlier this month.

"We look forward to submitting our Protectan CBLB502 compound as a candidate for this contract," said Michael Fonstein, Cleveland's chief executive officer, in a statement. "We believe CBLB502's unique abilities to mitigate the damaging effects of ionizing radiation on the gastrointestinal system as well as demonstrate significant survival benefits are ideally suited to the DoD's requirements."

Fonstein went on to say in the statement that Cleveland hopes to file an application for final approval of CBLB502 with the U.S. Food and Drug Administration in mid-to-late 2008.

The offering also included warrants for 2,144,356 shares, exercisable at $10.36 each for five years.

Reedland Capital Partners and Basic Investors, Inc. were the placement agents.

Based in Cleveland, Cleveland BioLabs develops treatments for cancer.

Chelsea's $12.5 million deal

In other biotech news, Chelsea Therapeutics International plans to close a $12.5 million private placement.

The offering includes roughly 2.6 million shares at $4.72 each to a group of existing institutional and accredited investors. The deal also includes warrants for 794,000 shares, exercisable at $5.66 each for five years.

The deal is set to close March 22.

Leerink Swann & Co. is the bookrunner.

Proceeds will be used for the continued development of CH-1504, the company's lead anti-folate compound for rheumatoid arthritis.

On Monday, the company's stock gained 5.93%, or 28 cents, to settle at $5.00 and gained another 8 cents in after-hours trading (Nasdaq: CHTP).

Located in Charlotte, N.C., Chelsea is a biopharmaceutical company focused on developing anti-folate compounds used to treat a variety of diseases, including immunological disorders and inflammatory ailments.

Neuralstem stock climbs

After sealing a $5.135 million private placement on Friday, Neuralstem Inc.'s stock gained 10.51%.

The stock climbed 29 cents Monday to settle at $3.05 (OTCBB: NRLS).

On Friday, the stock slid by a penny to settle at $2.76.

In the placement, Neuralstem sold units of one share and one half-share warrant at $2.50 each to a group of institutional investors.

T.R. Winston and Co. was the placement agent.

Proceeds will be used for the company's anticipated first human trial and for working capital and general corporate purposes.

Based in Rockville, Md., Neuralstem develops technologies to transplant human neural stem cells.

ATS stock dips

In other secondary market news, ATS Medical, Inc.'s stock slipped slightly on Monday after the company announced plans to settle a $16.25 million stock deal.

The stock fell by 2 cents to close at $2.15 and lost another 2.68 cents in after-hours trading (Nasdaq: ATSI). On Friday, the stock gained 3 cents to close at $2.17.

In the placement, the company plans to sell shares at $2.00 each to institutional investors.

RBC Capital Markets was the placement agent.

Proceeds will be used for working capital and general corporate purposes.

Minneapolis-based ATS develops medical devices used in cardiac surgery.

Global Partners' $50 million offering

Elsewhere, Global Partners LP announced plans to close a $50 million private placement comprised of limited partnership units with Kayne Anderson MLP Investment Co. and funds managed by Tortoise Capital Advisors, LLC and Fiduciary Asset Management, LLC.

The investors have agreed to buy 1,785,714 units at $28.00 each.

The company's stock gained $1.33, or 4.25%, to close at $32.64 (NYSE: GLP).

The offering is being conducted to acquire three refined products terminals from ExxonMobil Oil Corp.

"This strategic acquisition enhances and expands our leading position in the northeast and furthers our key objectives - growth, asset diversification, product diversification and margin enhancement," said Eric Slifka, the company's CEO, in a statement released Monday afternoon.

"In addition to increasing our storage capacity by 19% to 8.1 million barrels, these assets are especially attractive because they provide opportunities that will enable us to generate strong returns from three operating activities - supply, throughput and marketing - across a wide range of refined products."

Based in Waltham, Mass., Global Partners is a wholesale distributor of distillates, gasoline and residual oil.

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