Kosan secures $45.5 million from stock sale; DOR raises $5.49 million

By Sheri Kasprzak

New York, Feb. 9 - Two more biotech companies led PIPE news to round out the week, led by a $45.5 million registered direct offering from Kosan Biosciences Inc. DOR BioPharma, Inc. also closed an offering - for $5,489,999.

The Kosan deal is one of a few direct placements conducted by a pharmaceutical company this week.

One sellsider familiar with the sector said sometimes issuers can negotiate better pricing terms with a direct placement rather than trying to sell unregistered shares.

"Sometimes it works that way where you've looked at other options and you just decide it's better to sell off the shelf," he said.

Earlier this week, Cell Therapeutics, Inc. announced the imminent completion of a $17.6 million direct offering of convertible preferred stock and Immtech Pharmaceuticals, Inc. announced the upcoming settlement of an $8.1 million offering.

In the Kosan deal, the company sold 7 million shares at a 6.47% discount to the company's $6.95 closing stock price on Thursday. The price per share was $6.50.

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

Cowen & Co., LLC is the bookrunner.

The deal is slated to close Tuesday.

On Friday, the company's stock fell 28 cents, or 4.03%, to close at $6.67 (Nasdaq: KOSN).

Based in Hayward, Calif., Kosan is a biotechnology company focused on developing treatments for cancer.

Cell Therapeutics stock dips

After announcing that $17.6 million offering of convertible preferreds on Thursday, Cell Therapeutics' stock dropped on Friday.

The stock gave up 5 cents, or 3.07%, to close at $1.58 and lost another 2 cents in after-hours trading (Nasdaq: CTIC). On Friday, volume took off with 2,383,552 shares traded compared with the average 856,168 shares.

On Thursday, the stock gained 2 cents to end at $1.63 and volume was lower than usual with 195,678 shares traded compared with the average 876,479 shares.

Meanwhile, Immtech's stock climbed 12 cents, or 1.61%, to settle at $7.59 (Amex: IMM). The stock fell 78 cents, or 9.65%, on Thursday to close at $7.47.

DOR raises $5.48 million

In another biotech offering, DOR sold 11,680,851 shares at $0.47 each for proceeds of $5,489,999.

The share price in that offering was a 6% discount to the $0.50 closing stock price on Thursday.

Proceeds will be used for the continuation of regulatory interaction with the Food and Drug Administration and the European Medicines Evaluation Agency for orBec, the company's corticosteroid. The rest will be used for the company's clinical and preclinical pipeline and for general corporate purposes.

On Friday, the company's stock fell 2 cents to end at $0.49 (OTCBB: DORB).

"The new year is off to an exciting start for DOR and its shareholders," said Christopher J. Schaber, the company's chief executive officer, in a news release on Friday morning. "This financing was completed at near-market price and without the issuance of any warrants demonstrating a strong vote of confidence by highly regarded investors.

"With a significantly strengthened balance sheet, we will be able to focus on obtaining regulatory approval of orBec while continuing to explore all potential strategic and partnering options from a position of strength. We look forward to building on our recent achievements and expect 2007 to be an eventful year."

Miami-based DOR develops cancer treatments and treatments for gastrointestinal diseases, as well as vaccines for bioterrorism agents.

PacificNet raises $5 million

Moving to the tech sector, PacificNet, Inc. said Pope Asset Management, LLC agreed to fund a $5 million secured convertible note.

The 8% note is due Feb. 6, 2010 and is convertible into 26% to 32% ownership interest in subsidiary PacificNet Games Ltd., depending upon certain net income milestones reached during fiscal-year 2007.

WR Hambrecht + Co. was the placement agent.

Proceeds will be used for the expansion of the company's gaming technology operations and for acquisitions in China. The rest will be used for general corporate purposes.

"We are delighted to receive the first institutional investment for PacGames, which should help us further accelerate our product development and sales marketing for our gaming products in Macau and the rest of Asia and expand our market share in Asia's high-growth gaming market," said Victor Tong, the company's CEO, in a statement.

"After achieving early success in the Macau gaming market, we believe that PacGames is ready to expand into other parts of Asia as we see strong demand and opportunities for growth in other Asian gaming markets."

Based in Macau, China, PacificNet provides customer relationship management, mobile internet, e-commerce and gaming technology.

Digital Angel's $6 million deal

Elsewhere in the tech sector, Digital Angel Corp. wrapped a $6 million offering of debentures with warrants.

Imperium Master Fund, Ltd. bought the 10.25% debentures and received warrants for 699,600 shares, exercisable at $2.973 each for five years.

Digital Angel's stock slipped 2 cents on Friday to close at $2.65 (Amex: DOC).

Located in St. Paul, Minn., Digital Angel provides sensor and communications technologies used to identify, track and monitor pets, humans and livestock through implantable chips.

Verso raises $5 million

Verso Technologies, Inc. was back in PIPE news Friday, closing a $5 million stock deal.

The company sold 5 million shares in the offering to a single institutional investor. The investor, in the final tranche, picked up warrants for 375,000 shares, exercisable at $1.25 each for five years.

Proceeds will be used for general corporate purposes and to satisfy an obligation to Zhone Technologies, Inc. connected to the company's recent acquisition of the iMarc product line from Zhone.

On Friday, the company's stock dipped a penny to close at $1.07 and lost another cent in after-hours trading (Nasdaq: VRSO).

The offering comes just days after Verso settled a $2 million stock deal with Enable Growth Partners, LP; Enable Opportunity Partners, LP; and Pierce Diversified Strategy Master Fund, LLC.

"We are pleased to have completed this private placement and to have established these valuable institutional financial relationships," said Steven Odom, Verso's chairman, in a statement. "We used a portion of the proceeds from this private placement transaction towards the purchase price of the previously announced acquisition of the iMarc produce line from Zhone Technologies, Inc.

"The integration of the iMarc product line is progressing well and has strengthened our access product offerings, substantially expanded our tier-1 customer base and is complementary to the Verso Verilink WanSuite product line."

Verso, based in Atlanta, is a communications company for carriers and service providers.

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