deCODE secures $30 million from stock sale; Micrus stock edges up following public stock offering

By Ronda Fears and Sheri Kasprzak

New York, July 14 - deCODE genetics's stock dipped after the company announced the imminent completion of a $30 million direct placement of its stock.

The stock fell 48 cents, or 8.45%, to end the session at $5.20 and lost another 4 cents in after-hours trading (Nasdaq: DCGN). Volume of the company's stock climbed with 300,156 shares traded compared with the average 105,490 shares.

In the placement, a group of institutional investors agreed to buy 6 million shares in a deal slated to close Tuesday.

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

Lehman Brothers Inc. is the lead agent with Thomas Weisel Partners LLC as co-agent.

The 12% discount from Thursday's close sent the stock reeling, and the convertible followed suit. deCODE's 3.5% convertible bond due 2011 "widened out some," as one sellsider put it, trading at 73.5 versus a stock price of $5.10.

The biotech said net proceeds are expected to be $27.8 million. No use of proceeds was specified but the company announced plans in late June to start new clinical trials for a heart drug it is working on.

"This is as much of a wake-up call as folks (investors in deCODE) are going to get," said a buyside analyst. "deCODE has missed earnings twice and has missed deadlines on DG031 horribly and repeatedly.

"Sure I had my head in the clouds too wishing that deCODE might one day accidentally change into a good company. However, today's sucker punch below the belt is a wakeup call for anybody.

"deCODE is an airplane in a death spiral heading straight to the ground. The pilot (CEO) has a blindfold on and is playing games in the cockpit. Meanwhile the bondholders/shareholder-passengers are holding hands with each other trying to assure each other everything is going to be all right. It's not going to be all right.

deCODE, based in Reykjavik, Iceland, develops drugs used to treat common diseases through human genetics applications.

DG051 is deCODE's follow-on investigational compound for the prevention of heart attack. In late June, the company filed an Investigational New Drug application with the Food and Drug Administration and said, pending clearance, it expects to begin phase 1 clinical trials later this summer.

Micrus plans stock sale

Elsewhere, Micrus Endovascular Corp. priced a public offering of 1.27 million shares on Friday at $11.89 each, a slight discount to the company's $11.90 closing stock price on Thursday.

The stock got a boost on Friday, gaining 25 cents, or 2.1%, to end at $12.15 (Nasdaq: MEND).

All of the shares are being offered by selling stockholders and the company won't receive any proceeds from the deal.

Even so, the company may benefit from a greenshoe for 190,531 shares that will be sold by the company.

A.G. Edwards & Sons, Inc. and CIBC World Markets Corp. are the joint bookrunners with Needham & Co., LLC as co-agent.

Proceeds from the over-allotment option, if exercised, will be used for working capital and general corporate purposes, geographic expansion and potential future acquisitions.

"Good for the stockholders," said one sellside trader when asked about the offering Friday. "The only way they're [Micrus] going to benefit is from the greenshoe. I think they'll come away with at least something."

The secondary sale was originally planned at 3 million shares but some of the stockholders subsequently dropped out. Sellers on Thursday were PolyTechnos Medical Devices Ltd., with 965,936 shares, director Michael R. Henson with 297,609 shares and director Fred Holubow with 6,666 shares.

Micrus, based in Sunnyvale, Calif., develops, manufactures and markets both implantable and disposable medical devices used in the treatment of cerebral vascular diseases.

Teva steady on Lexapro loss

Another name from the health care area, Teva Pharmaceutical Industries Ltd., was steady in the face of a loss to Forest Laboratories, Inc. in their patent dispute for Teva to make a generic version of Forest's antidepressant Lexapro.

Late Thursday, Forest said the U.S. District Court in Delaware ruled the patent on Lexapro was valid and infringed on by a generic version proposed by Teva. Forest shares (NYSE: FRX) surged 15.62%, or $6.00, to end the session at $44.40, slipping a penny in after-hours activity, and Teva gained instead of declining but one buyside onlooker said he was exiting the story on the strength.

"The generics game ain't what it used to be. The game has changed. People are better off in Big Pharma right now than generics," the biotech buysider said.

Teva's 1.75% convertible traded on the news at 91 with the underlying stock at $30.50. Teva shares (Nasdaq: TEVA) closed out the session down a penny at $30.50.

Lorus raises C$10.37 million in PIPE

Looking to the private placement market, Lorus Therapeutics Inc. announced its plans to wrap up a C$10,368,000 private placement of its stock with HighTech Beteilgungen GmbH & Co. KG.

HighTech has agreed to purchase 28.8 million shares at C$0.36 each, a 7.5% premium over the company's C$0.335 closing price on Thursday.

The offering is scheduled to close Aug. 14.

The stock closed unchanged at C$0.335 (Toronto: LOR).

Toronto-based Lorus develops therapeutics and technologies to treat cancer.

Peregrine announces earnings

In earnings news, Peregrine Pharmaceuticals Inc.'s stock dipped on Thursday following the release of the company's fourth-quarter earnings statement that showed its loss for the year had widened from the year-ago period.

The stock fell by 2 cents, or 1.43%, to end at $1.38, losing a penny in after-hours trading (Nasdaq: PPHM).

According to the earnings statement, Peregrine posted a net loss for the year ended April 30 of $17.1 million, compared with a net loss of $15.5 million for the same period of 2005.

Revenues for the year dropped to $3.2 million from $5 million for 2005.

Peregrine, based in Tustin, Calif., develops treatments for hepatitis C and cancer.

In other earnings news, Vitrolife AB also saw its stock close off after releasing second-quarter earnings.

The stock lost 2.72%, or SEK 0.70, to close at SEK 25 (Stockholm: VITR).

According to the report, Vitrolife's gross income for the first half of the year was SEK 59.2 million, a 42% increase over the year and a gross income of SEK 29.1 million for the second quarter, up 37% from the corresponding quarter of 2005.

Net income for the second quarter was SEK 2.8 million.

Located in Stockholm, Vitrolife develops technologies to cultivate and store human tissues, cells and organs.

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