Vical wraps up another direct stock offering; Siga secures $9.08 million from PIPE

By Sheri Kasprzak

New York, Oct. 19 - Biotech offerings made up the abundance of private placement offerings Thursday as the Dow Jones Industrial Average topped out above 12,000 for the first time.

Market sources said earlier this week that the gains from the Dow will positively impact PIPE activity because it enhances investor confidence.

In specific offerings, Vical Inc. led a relatively active day, announcing the conclusion of a $25.1 million registered direct stock offering. This offering comes right on the heels of a $12.55 million direct stock deal Vical closed earlier this week.

The deal sent the company's stock down by 3.08%, or 17 cents, to end the session at $5.35 (Nasdaq: VICL).

Vical sold 5 million shares at $5.02 each to Temasek Holdings (Private) Ltd. The shares were sold under the company's shelf registration.

Vical raises 'smart money'

"The good news is they have raised smart money," said one sellside trader about Vical. "The new money is all institutional, so this has been vetted by informed investors. Moreover, they are growing a larger global footprint with the latest deals and investments.

"The bad news is these investments dilute long-term holders, but worse Vical shows little to no interest protecting the value of current shareholders. It would be nice to see Vijay [Vical chief executive officer Vijay Samant] spend some of this loot on a marketing strategy that would help the market realize the value of Vical. Perhaps that would make these deals more difficult by driving the share price up and forcing the smart money partners to pay more. However, adding an in-house marketing officer would signal the dilution is over and the company is serious about making the news flow."

"We are pleased that Temasek Holdings has selected Vical as an addition to it investment portfolio," said Samant, in a news release. "We look forward to the benefits of Temasek's substantial resources and international perspective as we progress in our program to develop a DNA vaccine against pandemic influenza."

Proceeds will be used for development of the company's pandemic influenza DNA vaccine candidate, including phase 1 human clinical testing. The remainder will be used for general corporate purposes.

This direct deal comes just days after Vical wrapped up a $12.55 million direct offering of 2.5 million shares at the same price.

Vical, based in San Diego, develops DNA-based vaccines for infectious diseases and cancer.

Siga stock off on PIPE

Elsewhere in the biotech sector, Siga Technologies, Inc. is gearing up to settle a $9.08 million offering of its stock.

News of the deal released Thursday morning sent the stock down 11.45%, or 52 cents, to end the day at $4.02, but advanced by a penny in after-hours activity.

The company plans to sell 2 million shares at $4.54 each. The price per share is on par with the company's closing stock price on Wednesday.

The investors will receive warrants for 1 million shares, exercisable at $4.994 each.

"The $9 million placement is meaningful, and at today's close it is also accretive," said a biotech fund manager based in New York. "I don't know what Siga is worth but obviously between the offer of a merger, the grants thrown at them, the level of the $9 million placement, there has to be value here."

Siga announced earlier this week that its lead drug, SIGA-246, was the first drug to demonstrate total protection against human smallpox virus in a primate trial conducted as the federal Centers for Disease Control and Prevention.

Empire Financial Group and The Shemano Group were the placement agents.

New York-based Siga applies viral and bacterial genomics and computational modeling to develop novel products to treat infectious diseases, including products for biological warfare.

Amarin to raise $18.7 million

Amarin Corp. plc, a London-based biotech firm, secured $18.7 million from a direct placement of shares, the company announced Thursday.

The deal includes 8,947,368 shares at $2.09 each purchased by new and existing institutional and other investors. The price per share is a 15% discount to the company's $2.46 closing stock price on Wednesday.

Amarin expects the deal to close Oct. 23.

The company's stock gave up 8.54%, or 21 cents, to end the day at $2.25 (Nasdaq: AMRN).

Banc of America Securities LLC was the placement agent.

"This financing strengthens our balance sheet and allows us to accelerate our core development programs, particularly Miraxion for melancholic depression and Parkinson's disease and our novel oral formulation of apomorphine for advanced Parkinson's disease," said Amarin CEO Rick Stewart in a statement. "In addition, it gives us the capital to expand our neuroscience pipeline and to negotiate new drug development and licensing agreements from a position of strength."

Amarin develops novel drugs to treat central nervous system disorders.

Trubion stock advances

A day after announcing that it would complete a $10.4 million stock offering, Trubion Pharmaceuticals, Inc. saw its stock climb by 1.6%.

The stock gained 21 cents to end at $13.30 (Nasdaq: TRBN) but lost a nickel in after-hours activity.

The company's stock began trading Thursday after completing a $52 million initial public offering.

In the PIPE, Wyeth Pharmaceuticals has agreed to buy shares at $13.00 each, the IPO price.

Seattle-based Trubion develops treatments for autoimmune disease and cancer.

Vertical's $22 million deal

Moving to the technology sector, Vertical Communications, Inc. will conclude a $22 million offering of series E convertible preferred stock.

The offering was announced Thursday afternoon, and by the end of the session, the stock had gained 33.33%, or 20 cents, to end at $0.80 (OTCBB: VRCC).

The deal includes up to 22,000 shares of the preferreds at $1,000 each. The preferreds pay dividends at $80.00 per year and are convertible into 46,226,415 common shares at $0.53 each.

The investors will receive tranche I warrants for 20,754,717 shares and tranche II warrants for 20,754,717 shares.

Both sets of warrants are exercisable at $0.58 each. The tranche I warrants expire in 10 years, and the tranche II warrants are exercisable only if the company fails to consummate another financing with 270 days of closing. If exercised, the tranche II warrants also expire in 10 years.

Completion of the placement is contingent upon the closing of Vertical's merger with Vodavi Technology, Inc.

Located in Cambridge, Mass., Vertical develops hardware and software used in the communications sector.

Ronda Fears contributed to this report.

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