Inverness secures $151.25 million from stock offering; Oscient, unit completes private placements

By Sheri Kasprzak

New York, Aug. 21 - Leading private placement action to kick off the week was a $151.25 million private placement offering announced by Inverness Medical Innovations, Inc.

The company entered into agreements to sell 5 million shares at $30.25 each, an 11% discount to the company's $33.98 closing stock price on Friday.

"It surprises me," said one sellside market source when asked about the Inverness offering. "A lesser company would sell at this [discount]. They're a pretty decent company. I honestly can't tell you what may have forced them to sell at this [price]."

The stock on Monday slipped by 3.04%, or $1.04, to close at $32.94 (Amex: IMA).

A group of 17 institutional investors agreed to buy the shares in the offering, which is scheduled to close later this week.

Proceeds will be used for debt repayment and future acquisitions.

Inverness completed a similar placement in February, selling 3.4 million shares at $24.41 each for proceeds of $82,994,000. In August 2005, the company issued 4 million shares at $23.76 each for proceeds of $95.04 million.

According to Inverness' latest earnings statement, released Aug. 9, the company reported net revenue of $139.7 million for the quarter ended June 30, compared with net revenue of $102.3 million for the corresponding 2005 quarter. The company incurred a net loss of $10.6 million for the quarter, compared with a net loss of $2.5 million for the same quarter in 2005.

Based in Waltham, Mass., Inverness develops in vitro diagnostic products and technologies to diagnose heart disease, infectious disease and women's health issues.

In the broader market, stocks took a hit with the Dow Jones Industrial Average losing 36.42 to close at 11,345.05; the Nasdaq composite index giving up 16.20 to end at 2,147.75; and the Standard & Poor's 500 composite index edging down 4.78 to settle at 1,297.52.

Oscient stock climbs

In other biotech offerings, Oscient Pharmaceuticals Inc. said its subsidiary Guardian II settled a $20 million private placement of senior secured notes with warrants, and Oscient itself closed a $10 million stock offering.

Guardian sold 12% notes to Paul Royalty Fund Holdings II, LP. The notes are due in four years. Guardian may exercise an option to extend the maturity to six years.

The investor came away with warrants for 2,304,147 shares, exercisable for seven years at $0.8680 each.

Connected to that deal, Oscient sold 11,111,111 shares at $0.90 apiece to Paul Royalty Fund Holdings II, LP.

Paul Royalty Fund also received warrants for 2,304,147 shares, exercisable at $0.8680 each for seven years.

The two financings were conducted as part of Oscient's agreement to buy exclusive rights to Antarar 130 mg and Antarar 43 mg capsules from Reliant Pharmaceuticals, Inc. The drugs help lower blood cholesterol and high triglycerides.

Oscient has completed a private placement before. In April, the company raised $35.9 million from the sale of 18,601,036 at $1.93 each.

On Monday, the stock climbed by 7.2%, or 9 cents, to settle at $1.34 (Nasdaq: OSCI).

Based in Waltham, Mass., Oscient is a biopharmaceutical company focused on antibiotic products.

Pharmacyclics' equity line

Elsewhere in the sector, Pharmacyclics, Inc. received a $20 million equity line from Azimuth Opportunity Ltd.

Azimuth may purchase up to $20 million in stock over 18 months at discounts ranging from 5% to 7% of the volume weighted average price for the 10 consecutive trading days before a draw, based upon the company's then-current market capitalization.

The stock ended the day off a nickel, or 1.14%, to close at $4.34 (Nasdaq: PCYC).

Proceeds from the offering will be used for clinical trials, research and development expenses, general and administrative costs and working capital.

Located in Sunnyvale, Calif., Pharmacyclics develops treatments for cancer and other diseases.

GigaBeam raises $10 million

Moving to the tech sector, GigaBeam Corp. settled a $10 million private placement of series C convertible preferred stock on Monday.

The company sold 10,000 shares of the preferred stock at $1,000 each to a group of institutional investors. The preferreds are convertible into common shares at $6.10 each and pay annual dividends initially at 8%. The rate of dividends increases to 11% at the third anniversary and again at 14% after the fourth anniversary.

The investors also received warrants for 860,653 shares, exercisable at $6.39 each.

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

The company's stock advanced by 7.28%, or 39 cents, to end at $5.75 Monday (Nasdaq: GGBM).

In November 2005, GigaBeam wrapped a private placement of its series B convertible preferreds for $18.9 million. The company sold 18,900 shares at $1,000 each. The preferreds were convertible at $7.62 each.

In July 2005, the company settled a private placement of series A preferred stock for $7,950,285. The company sold 5,509 shares of the preferreds at $700 each.

GigaBeam, based in Herndon, Va., provides wireless point-to-point communications based on radio frequencies.

Wex leads Canadian deals

Moving to Canada, Wex Pharmaceuticals Inc. priced a C$2.06 million private placement.

The company plans to sell 7,773,584 shares at C$0.265 each to investors in China.

The non-brokered deal is scheduled to close Sept. 8.

Proceeds will be used for working capital.

On Monday, the company's stock gained 1.5 cents to settle at C$0.325 (Toronto: WXI).

Vancouver, B.C.-based Wex develops and commercializes pain treatments.

IsoRay stock closes lower

After wrapping a private placement for $5,158,000 late last week, IsoRay, Inc.'s stock fell by 2.3% on Monday.

The stock gave up 8 cents to finish the day at $3.42 (OTCBB: ISRY). On Friday, when the deal settled, the stock gained 11 cents, or 3.24%, to end at $3.50.

In the placement, IsoRay issued shares at $2.50 each to investors led by MicroCapital, LLC. The price per share is 26% discount to the company's $3.39 closing stock price Thursday.

Based in Richland, Wash., IsoRay develops Cesium-131 brachytherapy used to treat prostate cancer.

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