Catalyst shares sink after announcing $4.46 million direct offering; Northern Star eyes $42 million

By Devika Patel

Knoxville, Tenn., Sept. 12 - Catalyst Pharmaceutical Partners, Inc. saw its shares tank after an announcement that it will conduct a $4.46 million direct offering of shares.

Investors expressed disapproval Friday as the company stock (Nasdaq: CPRX) plummeted 23.95%, or 97 cents, to close at $3.08.

Catalyst plans to use most of the proceeds to fund more studies of CPP-109, which the company has been evaluating as a treatment for cocaine and methamphetamine addiction but recently has been shown to be useful in treating conditions besides addiction.

Separately, Northern Star Mining Corp. said it completed a $42 million private placement of units with an $8 million tranche after the close Thursday. The news seemed to encourage investors.

Northern Star's vice president of corporate finance spoke with the Prospect News about the deal Friday, saying that the company plans to use the proceeds to keep up work at its "very promising" Midway-Malartic gold project in Quebec.

The company believes this deal should be enough to fund drilling work on the project through the end of the year.

Catalyst tries for $4.46 million

Catalyst, a Coral Gables, Fla.-based specialty pharmaceutical company, said it hopes to raise $4.46 million in a registered direct offering of shares.

The company filed a prospectus supplement relating to the deal with the Securities and Exchange Commission on Friday.

Catalyst plans to sell 1,488,332 common shares at $3.00 apiece. The deal's investors include Federated Kaufmann Funds, and the agent will be Rodman & Renshaw.

Proceeds will be used to fund certain required non-clinical studies of CPP-109 for cocaine addiction, to complete one or more pilot studies for other indications, which may include a study for binge-eating disorder, and for general corporate purposes.

"We are pleased to broaden our institutional investor base, increase market float and potential trading volume and shareholder liquidity and develop important new relationships with a number of high quality institutional investors," Catalyst president and chief executive officer Patrick J. McEnany said in a press release.

"The offering will allow us to accelerate the non-clinical development program we believe will be required for us to file an NDA for CPP-109, broaden our pilot study program and provide us with additional financial strength as we move forward with our business activities including ongoing discussions with potential strategic partners."

The company is evaluating the use of CPP-109, its version of vigabatrin, for the treatment of both cocaine and methamphetamine addiction.

The drug recently has been found to also lead to rapid weight loss and reduced food intake in animals, which may indicate it could be used for the treatment of obesity. Two FDA-approved U.S. phase 2 clinical trials are ongoing.

CPP-109 is an orally administered, small molecule drug that inhibits psychostimulant-induced dopamine release. McEnany also has indicated in past press releases that the company may also evaluate the drug's use for obsessive compulsive disorders.

The direct offering is expected to settle on Sept. 16.

Northern Star wraps $42 million

Vancouver, B.C.-based Northern Star said after the close Thursday that it raised another $8 million from a private placement of units. The company raised a total of $42 million, which includes a $34 million tranche that settled on Aug. 14.

Each unit consists of a $1,000 two-year transferable senior secured note and 750 transferable warrants.

Each warrant is exercisable at C$1.20 until Aug. 13, 2013.

The notes carry a 14% coupon and mature in two years at 125% of par.

Casimir Capital LP was the lead agent.

Proceeds will be used to carry out further surface and underground exploration and development work on Northern Star's Midway-Malartic Gold Project in Quebec and for general working capital.

"The company is very pleased with the drill results at the Malartic gold camp in Quebec," Northern Star's vice president of corporate finance, Jonathan Awde, told the Prospect News. "We expect to use the majority of the funds raised in this financing for further work at the camp, which is a world renowned gold mining district and also shows signs of having significant diamond mineralization as well.

"Right now, we're very excited about the results, and believe we can complete drilling in several more holes before the year is out.

"We're very satisfied with our progress this year, and shareholder approval is at an all-time high right now, which tells us we're on the right track."

Awde spoke of the company's annual general meeting in June, at which more than half of the company's shareholders voted overwhelmingly to re-elect the corporate board of directors, giving a nod of approval to the board members' progress this year.

The Malartic-Midway gold project shows a lot of potential, Awde said. The grade and thickness of the gold found there is "highly valued," he said.

Northern Star is a development/advanced exploration stage company engaged in the acquisition, exploration and development of mineral properties in Quebec. The company's shares (TSX Venture: NSM) got an 8.43% boost on Friday, or 4 cents, to close at C$0.45.

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