Cytokinetics gets $75 million equity line; Telkonet raises $20 million from convertibles

By Sheri Kasprzak

New York, Oct. 28 - To close out the week, Cytokinetcs Inc. led PIPE news with its $75 million equity line with Kingsbridge Capital Ltd.

The San Francisco-based biopharmaceutical company will sell shares to Kingsbridge over the next three years.

The shares will be priced at discounts ranging from 6% to 10% depending upon the average market price of the company's stock during the eight-day pricing period with the minimum acceptable price equal to the higher of $3.50 or 85% of Cytokinetics' share price the day before each draw.

The investor also received warrants for 244,000 shares, exercisable at $9.13 each for five years.

The offering was announced Friday afternoon, and Cytokinetics' stock slipped almost 4.5%, losing $0.33 to settle at $7.02.

As to its earnings, Cytokinetics reported a net loss of $10.54 million for the quarter ended June 30, compared to a net loss of $9,231,000 for the same quarter of 2004.

"We expect to incur substantial costs as we continue to expand our research programs and related research and development activities," said the company's latest earnings statement.

The earnings report goes on to say that the company has funded all of its operations from private and public offerings of stock and other equity securities and that its existing cash resources will be sufficient to meet projected operating requirements for the next 20 months.

"To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution," said the statement. "To the extent that we raise additional funds through debt financing, if available, such financing may involve covenants that restrict our business activities. To the extent that we raise additional funds through strategic alliance and licensing arrangements, we will likely have to relinquish valuable rights to our technologies, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. In addition, we cannot assure you that any such funding, if needed, will be available on attractive terms, or at all."

Cytokinetics is a biopharmaceutical company focused on small-molecule drugs that target the cytoskeleton.

Meanwhile in the broader PIPE market, one sellsider said that an improvement in stocks made volume a bit sweeter but noted that projected gains in oil prices may make life a bit harder for issuers in the coming week.

"We'll see how it goes, but with the colder weather comes concerns about heating oil supplies," he said. "That could push oil right back up again."

On the affect that might have on PIPE issuers, the market source said more flexible structures may be in store.

"Possibly more equity lines, you could say that," he noted. "Anything that will take the pressure off of their share price right now would be appealing, I would wager."

Oil edged up only $0.13 Friday to close at $61.22 per barrel.

The Dow Jones Industrial Average gained 172.82 to end the day at 10,402.77; the Nasdaq composite index advanced 26.07 to settle at 2,089.88; and the Standard & Poor's 500 composite index rose 19.51 to close at 1,198.41.

Telkonet's $20 million notes

Moving to the tech sector, Telkonet Inc. pocketed $20 million from the sale of 7.25% convertible notes with two institutions.

The notes are payable in monthly installments beginning March 1, 2006. The conversion price could not be determined by press time Friday.

The investors also received warrants for 1 million shares, exercisable at $5.00 each for five years.

If the notes are prepaid, the investors will receive warrants equal to 65% of the amount prepaid at a strike price of $5.00 each.

First Albany Corp. was the placement agent.

Mike Porter, a spokesman for Telkonet, had not returned requests for comment on the offering by press time Friday.

Based in Germantown, Md., Telkonet develops technology used to transmit high-speed voice, video and data communications over existing electrical wiring.

The company's stock gained $0.07 to end the day at $4.71.

Maxim Power prices C$35 million offering

Heading north of the border, Calgary, Alta.'s Maxim Power Corp. negotiated a non-brokered, C$35 million stock deal Friday.

The company intends to sell 55,555,555 shares at C$0.63 each. The price per share is equal to the 10-day volume weighted average price of Maxim's stock.

Proceeds will be used to repay bridge loan facilities. The rest will be used for working capital.

Maxim develops and operates power-production facilities.

On Friday, the company's stock slipped C$0.03 to end at C$0.62.

TIR Systems finishes C$14.2 million deal

Elsewhere in Canada, TIR Systems Ltd. completed a previously announced PIPE for less than it anticipated, bringing in C$14.2 million instead of C$25 million.

Even so, the closing sent the company's stock soaring early in the day. At noon, just after the settlement was announced, TIR's stock jumped 21.67%, or C$0.26, to climb to C$1.46. By the end of the day, the company's stock had gained 30.83%, or C$0.37, to end the day at C$1.57.

TIR issued 7% convertible debentures due in 2011. The debentures are convertible into common shares at C$1.30 each.

For every C$1,000 in principal purchased, the investors will receive warrants for 200 shares. The warrants are exercisable at C$1.50 each for three years.

The Vancouver, B.C.-based company first announced the debenture offering on Aug. 15 as a C$10 million offering. The conversion price in the original offering had been set a C$2.00, the strike price of the warrants had been C$2.18 and the expiry of the warrants had been seven years. The size of the offering was increased to C$25 million on Sept. 6.

Proceeds will be used for commercialization and general corporate purposes.

TIR develops lighting systems using sound-based and other technologies.

MetaSolv stock loses 3.8%

MetaSolv, Inc. may have led PIPE news Thursday with the closing of a $23 million unit deal, but the company's stock took a slight dip on Friday.

MetaSolv's stock lost $0.11, or 3.79%, to close at $2.79.

On Thursday, when the offering was settled, the company's stock gained $0.05 to end at $2.90.

MetaSolv, Inc. led private placement news on Thursday with the completion of a $23 million unit offering.

The company sold units at $3.00 each through agent Raymond James Ltd.

Based in Plano, Texas, MetaSolv provides operation support systems, including multi-service order management, inventory management and service activation capabilities, for communication service providers.

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