Novavax's stock up 11.7% on $20 million direct deal; Avalon raises $7.25 million in stock offering

By Sheri Kasprzak

New York, Feb. 27 - Novavax, Inc.'s stock got a boost Monday on word that the company is preparing to wrap a $20 million direct placement.

The stock gained 11.72%, or 60 cents, to close at $5.72 (Nasdaq: NVAX) after the deal was announced Monday morning.

In the direct offering, Kleiner Perkins Caufield & Byers and Prospect Venture Partners agreed to buy 4,597,701 shares at $4.35 each. The price per share is a 15% discount to the company's closing stock price of $5.12 on Feb. 24.

As of Nov. 4, the company had 49,110,558 outstanding common shares.

The shares are being offered under the company's shelf registration.

Novavax is scheduled to release its earnings report on Wednesday, and industry insiders expect the company to show "nice numbers."

"Typically such an offering, at such a discount to where the stock is trading right now, even in the PIPEs market, will just kill a stock afterward," said a sellside trader of the rise in Novavax's stock in the wake of the deal. "But these guys [buyers for the direct placement] are smart cookies. It got a lot of attention."

"This is huge," said one buyside player in Novavax. "I am looking for a chair in the office that comes equipped with a seatbelt. Hang on. It's going to be a fun ride this week."

"The week of their [earnings] conference call is here - those that have been sideliners are now climbing aboard," said a sellside trader. He said the stock was "stair-stepping - [the] price action that goes up quickly, consolidates quickly and keeps repeating - very bullish."

Proceeds will be used for the clinical development of virus-like particles-based avian and seasonal influenza vaccines, as well as internal research and development programs. The remainder will be used for general corporate purposes.

"Our investment in Novavax is aligned with our intent to support global efforts to address the public health threat posed by the current H5N1 strain or other strains of avian influenza virus," said Brook Byers, managing partners of Kleiner Perkins Caufield & Beyers. "We believe in Novavax's management team and in their virus-like particle technology platform to create effective and flexible vaccines against avian flu strains and other pathogens, and the company's creative manufacturing approach to rapidly create worldwide supply of such vaccine candidates."

"We are pleased that Kleiner Perkins and Prospect Venture Partners have committed such a significant investment in Novavax," said Rahul Singhvi, Novavax's chief executive officer, in a statement. "The track record of these venture firms is legendary, and their active participation in the company will be invaluable in supporting us in successfully executing our plans to create an effective vaccine against pandemic influenza. We will work closely with both firms to leverage their substantial expertise in health care and biotechnology."

Novavax completed another direct placement back in November for $18 million. In that deal, the company issued 4,186,047 shares at $4.30 each to Cranshire Capital, LP; Iroquois Master Fund, Ltd.; and Omicron Master Trust. Rodman & Renshaw, LLC was the placement agent for that offering.

Looking to the company's latest earnings report, Novavax reported a net loss of $2,727,000 for the quarter ended Sept. 30, 2005, compared with a net loss of $2,657,000 for the same quarter of 2004.

Based in Malvern, Pa., Novavax develops and commercializes drug-delivery and biological technologies, including virus-like particles-based vaccines.

Avalon wraps $7.25 million deal

Elsewhere in the biopharmaceutical sector, Avalon Pharmaceuticals, Inc. settled a $7.25 million stock offering Monday, sending the company's stock up slightly.

The company sold 1,666,666 shares at $4.35 each to institutional investor led by Biotechnology Value Fund, LP.

The company had 8,405,542 outstanding common shares as of Nov. 14.

"We believe there is significant value in Avalon given its clinical-stage IMPDH [inosine monophosphate dehydrogenase] inhibitor, advanced pre-clinical pipeline and world-class discovery capabilities," said Mark Lampert, president of Biotechnology Value Fund, in a statement. "More than $100 million has already been invested in the company and this incremental financing will allow the company to execute its plan while simultaneously tapping into the extraordinary potential of the unique AvalonRx technology."

The stock advanced by 2 cents on Monday to end the day at $4.99 (Nasdaq: AVRX). The placement was announced Monday morning.

The proceeds from the offering will be used to expand the company's internal oncology drug discovery programs and provide working capital as the company continues clinical trials on its lead drug candidate, AVN944.

"This additional funding allows Avalon to expand the use of our proprietary technology, AvalonRx, for discovery of additional novel drugs, while continuing the clinical development of AVN944 and lead optimization of our beta-catenin and aurora kinase inhibitor programs," said Kenneth Carter, Avalon's CEO, in a statement. "The expanded use of AvalonRx enables us to pursue the broadening of our cancer pipeline without compromising our focus on our existing internal programs or our discovery partnerships with others. Essentially, this financing will allow us to take greater advantage of the AvalonRx engine."

Avalon recently reported a net loss of $3,643,000 for the quarter ended Sept. 30, 2005, compared with a net loss $3,663,000 for the year-ago quarter.

Avalon, based in Germantown, Md., develops small molecule therapeutics used for the treatment of cancer.

Higher stocks may mean more PIPEs

In the broader PIPE market, one market source said a boost the stock market got on Monday may help push more private placement activity later in the week.

"There really are two factors at work," said the sellside market source. "We're looking at earnings and we're looking at oil. If oil stays put, stocks will probably keep moving up and that could mean more [PIPE] activity."

The Dow Jones Industrial Average gained 35.70 to end at 11,097.55, the Nasdaq composite index advanced 20.14 to close at 2,307.18 and the Standard & Poor's 500 composite index moved up 4.69 to settle at 1,294.12.

Oil prices, however, took a fall, losing $1.91 to close at $61.00 per barrel.

Coastport's C$5.4 million unit placement

In Canada Monday, Coastport Capital Inc. led activity with a C$5.4 million private placement of units.

The company plans to sell 6 million units of one share and one half-share warrant. Each whole warrant is exercisable at C$1.10 for 18 months.

Proceeds will be used for the company's 2006 exploration programs on the Shyri and La Plata projects in Ecuador, as well as for working capital.

The stock remained unchanged Monday at C$0.90 (TSX Venture: CPP).

Based in Vancouver, B.C., Coastport is a gold exploration company.

Route1 prices C$5 million offering

Elsewhere in Canadian PIPEs, Route1 Inc. priced a C$5 million private placement it had announced earlier this month.

The offering includes 41,666,667 units at C$0.12 apiece. The units are comprised of one share and one warrant, and every warrant is exercisable at C$0.155 each for two years.

Westwind Partners Inc. is the placement agent for the deal, which is expected to close March 9.

"We are extremely pleased with the level of interest we have received from institutional investors, both from those who participated in this round as well as those who are now following our company's progress," said K. Andrew White, the company's CEO, in a statement.

On Monday, the company's stock lost 1 cent, or 6.67%, to end at C$0.14 (TSX Venture: ROI).

Toronto-based Route1 develops security products for mobile offices.

Remote Dynamics stock up 14.3%

After concluding a $5.75 million convertible note deal Friday, Remote Dynamics Inc.'s stock gained almost 14.3% Monday.

The company's stock advanced 14.29%, or 3 cents, to end at $0.24 (OTCBB: REDI).

On Friday, when the deal was settled, the stock closed unchanged at $0.21.

Remote Dynamics issued convertible notes to a group of institutional investors in the placement. The notes are convertible at $0.20 each.

Remote Dynamics, based in Richardson, Texas, develops telematics-based management products for commercial fleets.

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