Keryx Biopharmaceuticals stock rises on $82.8 million direct deal; Metabasis to raise $39.96 million

By Sheri Kasprzak

New York, March 27 - Keryx Biopharmaceuticals, Inc.'s stock gained more than 2.5% Monday after the company announced the pending completion of an $82.8 million direct stock sale.

Keryx said two institutional investors agreed to buy 4.5 million shares at $18.40 each, on par with the company's closing stock price March 23. The shares will be offered under Keryx's shelf registration.

On Monday, the stock gained 53 cents, or 2.87%, to finish at $19.01 (Nasdaq: KERX). Trading volume took off Monday after word of the placement, with 653,813 shares traded compared with the three-month running average of 357,982 shares.

Keryx chief financial officer Ronald Renaud did not return calls for comment on the offering by press time Monday.

The deal is non-brokered and that seemed to impress at least one sellside biotech stock trader.

"Great news that they raised up that kind of money without having to pay [broker] fees," said the New York-based trader. "It is equivalent to almost $20.00 a share if they had been paying 7%."

The trader said the financing move could be "an effort to put themselves in as strong a negotiating position as possible with potential Sulonex partners or a reflection of the company's intent to go it alone, a hedge against a bad phase 3 results, or all of the above. In any event, it's another smart move by [chief executive] Mike Weiss."

Sulonex, previously referred to as Sulodexide, or KRX-101, is being studied in a pivotal phase 3/4 study.

The placement, in fact, comes just a week after the company said it plans to acquire Accumin, a novel diagnostic product to directly measure and quantify intact urinary albumin, from AusAm Biotechnologies, Inc.

Keryx exchanged 300,000 shares of its stock and entered into a royalty agreement under which Keryx may be required to pay AusAm up to $16.1 million to acquire the diagnostic product.

In mid-July, Keryx raised $70.7 million in gross proceeds with a follow-on offering of 5 million shares of stock at $14.05 per share - also even with the previous day's closing price. JPMorgan Securities was bookrunner of that deal.

New York-based Keryx develops drugs used to treat diabetes and cancer. Sulonex is an oral heparinoid compound for the treatment of diabetic nephropathy, a life-threatening kidney disease caused by diabetes.

Metabasis' $39.69 million direct offering

Elsewhere in the rather busy biotech sector Monday, Metabasis Therapeutics, Inc. was also planning to complete a direct stock deal, this one for $39.96 million.

A group of institutional investors agreed to buy 4.9 million shares at $8.10 each, a 9.5% discount to the company's $8.96 closing stock price on Friday.

The shares will be sold under the company's shelf registration through bookrunner Cowen & Co., LLC with Piper Jaffray & Co. as co-agent.

The deal is scheduled to wrap up on Thursday.

"I was glad to see this deal finally got done," said one biotech fund manager in Atlanta. "Maybe now we can move upward. I see at least a $10.00 share price by year-end. This is exactly what they needed, more liquidity."

The company's stock certainly advanced on word of the deal, gaining 14 cents, or 1.56%, to close the day at $9.10 (Nasdaq: MBRX). Volume also took off with 81,767 shares traded compared with the three-month running average of 24,441 shares.

Based in San Diego, Metabasis is a biopharmaceutical company focused on the development of treatments for chronic diseases involving the pathway to the liver.

The two direct offerings led a slate of biotech stock deals Monday, and one buysider said even though biotech stocks are mixed, the investor community seems almost overly optimistic.

"We're still approaching [biotech PIPEs] very carefully," he said. "But a lot of investors seem to be more optimistic than we are. Certainly [biotech] stocks are looking a bit better than in weeks past, but we're looking at things more on an issuer-by-issuer basis rather than the sector in general. It does seem like buyers are gobbling these things up."

EP MedSystems wraps $10 million PIPE

Back to particular biotech offerings, EP MedSystems, Inc. pocketed $10,004,310 from the sale of 3.78 million shares at $2.25 each to new and existing investors and 617,000 shares at $2.43 each to FatBoy Capital, LP, an organization connected to the company's chief executive officer.

CEO David Jenkins is a managing member of FatBoy Capital.

The shares not sold to FatBoy were priced at an 11.4% discount to the company's closing stock price of $2.54 on Friday, and the shares sold to FatBoy were priced at a 4.3% discount to the same closing stock price.

C.E. Unterberg, Towbin, LLC was the placement agent.

"We are pleased to have brought additional equity financing into the company and intend to use the proceeds to support our sales, marketing and clinical development efforts," Jenkins said in a news release. "We believe the additional resources will help us better realize value from our innovative product lines."

EP MedSystems' stock gained a penny on Monday to end at $2.55 (Nasdaq: EPMD).

Based in West Berlin, N.J., EP MedSystems develops electrophysiology products used to diagnose and treat cardiac rhythm disorders.

Idera's $9.75 million offering

Yet another biotech company, Idera Pharmaceuticals Inc., had a private placement announcement in the pipeline Monday. Idera closed a $9.75 million offering and received an agreement for another $9.75 million from Biotech Shares Ltd.

A group of institutions led by Baker Brothers Investments and including Tang Capital Partners, LP and OrbiMed Advisors, LLC bought 22,159,092 shares at $0.44 each, a 33.3% discount to the company's $0.66 closing stock price on Friday.

The investors also will receive warrants for 16,619,319 shares, exercisable at $0.65 each for five years.

Proceeds will be used for the development of the company's pipeline of Toll-like receptors currently in phase 2 clinical trials. The receptors are used to treat renal cell cancer. The proceeds will also be used for preclinical development of a lead compound, IMO-2125, used to treat infectious diseases.

"We share Idera's long-term vision that therapeutics targeted to Toll-like receptors may play an important role across a broad range of therapeutic areas," said Julian Baker of Baker Brothers, in a statement. "We look forward to the advancement of the company's preclinical and clinical pipeline of product candidates in the coming years."

Connected to the offering, Biotech Shares Ltd. agreed to buy $9.75 million in shares from June 24 through Dec. 31 in up to three draws.

For its agreement to buy the additional shares, Biotech received warrants for 6,093,750 shares, exercisable at $0.75 each for five years.

"These financings provide Idera with a strong financial footing to advance our clinical development and drug discovery programs that are all derived from Idera's proprietary approach to creating TLR-based therapeutics," said Sudhir Agrawal, the company's CEO, in a news release. "We are very pleased to have the strong interest of new, well-respected biotechnology institutional investors and the continued support of several current long-term investors."

Idera's stock gained 2 cents Monday to settle at $0.68 (Amex: IDP).

Idera, based in Cambridge, Mass., develops targeted immune therapies based on the modulation of Toll-like receptors.

Great Canadian raises C$80 million

Moving up to Canada, casino operator Great Canadian Gaming Corp. negotiated an C$80 million unit deal designed to avoid an event of default on its series A and B senior secured notes.

The placement includes 6,206,361 units at C$12.89 each, 1.6% discount to the company's C$13.10 closing stock price on Friday.

The units consist of one share and one warrant. Each warrant is exercisable at C$12.89 for two years.

Ross McLeod, the company's chief executive officer, plans to buy C$50 million of the units.

The company is in danger of defaulting on existing debt because of a high debt-to-EBITDA ratio for the end of March.

For the fourth quarter, Great Canadian reported a net loss of C$9.2 million compared with net income of C$9.7 million for the same quarter of 2004.

The company's stock advanced 40 cents to close the session at C$13.50 (Toronto: GCD).

Proceeds will be used reduce existing debt. The remainder will be used for working capital.

Great Canadian is based in Richmond, B.C.

Looking to the resources sector in Canada, Baja Mining Corp. priced a C$14 million unit deal at a substantial discount to market.

The company hopes to sell 15,555,556 units of one share and one half-share warrant at C$0.90 each - a 34.3% discount to the company's C$1.37 closing stock price on Friday.

The whole warrants allow for the purchase of another share at C$1.25 each for two years. The warrant strike price is an 8.7% discount to the same closing stock price.

A syndicate of agents led by Westwind Partners Inc. has a greenshoe for up to 10 million additional units.

Baja's stock slipped 6 cents on Monday to finish at C$1.31 (TSX Venture: BAJ).

Proceeds will be used for a feasibility study on the company's Boleo project and for general corporate purposes.

The deal is expected to settle on Friday.

Based in Vancouver, B.C., Baja is a mineral exploration company.

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