ARYx wraps $21.59 million placement; StemCells, Endocare offer stock; Commerce offers stock, assets

By Kenneth Lim

Boston, Nov. 12 - ARYx Therapeutics, Inc. closed a $21.59 million private placement of stock as it continues to seek strategic partners for its leading product candidates.

Separately, StemCells Inc. plans to sell $20 million of its common stock through a direct offering to raise working capital and funds for strategic purposes.

Endocare, Inc. announced details of a $16.25 million private stock placement, which it is planning as part of a merger with Galil Medical Ltd.

Commerce Energy Group, Inc. plans to raise $16 million through a sale of stock and assets to Universal Energy Group Ltd.

ARYx wraps stock deal

ARYx Therapeutics said it sold $21.59 million of stock through a private placement, according to a filing with the Securities and Exchange Commission.

The company sold about 9.65 million common shares at $2.20 apiece with 30% warrant coverage at $0.125 per full warrant, for a combined unit price of $2.2375.

The warrants are exercisable at $2.64 for five years.

ARYx common stock (Nasdaq: ARYX) closed at $2.58 on Wednesday, up by 17.27% or $0.38.

Proceeds will be used for working capital and other corporate and operational purposes.

Based in Fremont, Calif., ARYx Therapeutics is a biopharmaceutical company.

"We continue to make significant progress toward our clinical, strategic and importantly, financial goals and, as a result, we believe ARYx is well-positioned to achieve its corporate and product-related milestones," ARYx chairman and chief executive Paul Goddard said in a statement. "In fact, we are delighted to find ourselves progressing on multiple clinical programs while substantially strengthening our balance sheet.

"Presently, we are in active discussions with a number of potential partners related to our leading product candidates, the novel, oral anticoagulant, ATI-5923, and the novel oral anti-arrhythmic agent, ATI-2042. The announced private placement financing gives us increased leverage as we consider potential partnerships so that we can secure the right collaboration partner for these valuable assets."

StemCells offers stock

StemCells registered a direct offering of stock and warrant units to raise $20 million.

The placement involves about 13.79 million units of one common share and one warrant to purchase 0.75 of a share at $1.45 per unit. The warrants expire after five years and have a strike price of $2.30 per share.

StemCells common stock (Nasdaq: STEM) dropped 41.63%, or $0.87, to close at $1.22 on Wednesday.

Proceeds will be used for general corporate purposes, including working capital, product development and capital expenditures, as well as for other strategic purposes.

StemCells is a clinical-stage biotechnology company located in Palo Alto, Calif.

Endocare deal details

Endocare announced the pricing and the subscribers for its $16.25 million private stock placement.

The financing, which priced Nov. 10, was arranged as part of the company's planned merger with Galil Medical. Closing will take place after the merger is completed.

The placement comprises 16.25 million common shares at $1.00 apiece. Endocare common stock (Nasdaq: ENDO) closed at $0.99 on Wednesday, up by 6.46% or $0.06.

The investors are The Vertical Group, TMP Associates, Thomas, McNerney & Partners, Discount Investment Corp. Ltd., Berman & Co. Trading & Investments Ltd., RDC Rafael Development Corp. Ltd, Elron Electronic Industries Ltd., Investor Group, Investor Growth Capital Ltd. and Frazier Healthcare.

Located in Irvine, Calif., Endocare develops minimally invasive medical devices used for tissue and tumor ablation.

Following the merger, Galil president and chief executive Martin J. Emerson and Endocare chief financial officer Michael R. Rodriguez will lead the new management team.

"This merger allows the two companies to come together as one to combine the very best in cryoablation technologies, and to jointly demonstrate the clinical and economic advantages cryoablation has over radiation, radical prostatectomy and IMRT in the treatment of prostate cancer as well as in other oncology treatments where cryoablation has application," Emerson said in a statement. "The company will be much stronger financially following the combination and in a much better position to deliver the promise that cryoablation offers to physicians and patients all over the world."

Rodriguez added: "This combination has the potential to eliminate millions of dollars in redundant costs and we believe that annualized cost savings of over $10 million could be realized by mid-2010. We expect that this transaction will result in positive adjusted EBITDA within 18 months after the close of the transaction."

Commerce sells to Universal

Commerce Energy plans to raise $16 million through a private placement of stock and an asset sale.

Under the proposed deal, Universal Energy Group will acquire customer contracts in Ohio, Pennsylvania, New Jersey, Maryland and Michigan. It will also buy a number of common shares equal to 49% of the company's outstanding shares, and a warrant for a number of additional shares that, when taken together with the original common shares, would amount to 66 2/3% of the company's outstanding shares. The total consideration will be $16 million.

Commerce Energy will retain its business providing retail electric power and natural gas in various markets.

Within 10 days of signing a definitive agreement, Universal Energy must replace or arrange to replace Commerce Energy's facility with Wachovia Capital Finance (Western).

Costa Mesa, Calif.-based Commerce Energy is an electricity and natural gas marketing company.

"We are pleased to have entered into this agreement with Universal Energy for a potential asset sale and equity investment against the backdrop of an unprecedented global credit and financial crisis," said Commerce Energy chief executive Gregory L. Craig in a press release. "We believe that this proposed transaction would be in the best interests of Commerce Energy's shareholders, particularly in view of the current economic and banking climate."

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