Sunesis stock leaps 11.4% on $45 million PIPE; Salix's stock drops on FDA approval of OsmoPrep

By Sheri Kasprzak

New York, March 17 - Sunesis Pharmaceuticals, Inc. saw its stock jump by more than 11.4% after the company announced its plans to close a $45 million stock offering.

Sunesis plans to sell 7.25 million shares at $6.20 each to investors including Alta Partners, Deerfield Management, Baker Brothers Investments and Warburg Pincus LLC, and those investors will receive warrants for 2.17 million shares - for an extra $0.125 each. The warrants are exercisable at $6.21 each.

Sunesis had 21,460,214 outstanding common shares as of Nov. 10.

On word of the deal, Sunesis stock gained 71 cents, or 11.41%, to end the day at $6.93 (Nasdaq: SNSS).

The offering also sent the volume of the company's stock through the roof, with 101,530 shares traded, compared to the average of 21,396 shares.

"They seem to be responding well," said one sellside source familiar with the offering Friday. "[It] looks pretty good to me, a strong deal."

S.G. Cowen & Co., LLC was the placement agent.

Proceeds will be used for clinical development on the company's oncology products, including phase 2 clinical trails on its non-small cell and small-cell lung and ovarian cancer treatments and phase 1 and 2 clinical trails on SNS-595 to treat acute leukemia. The company will also use the proceeds on a phase 1 and 2 clinical trial in advanced solid tumors and a phase 1 trial in B-cell malignancies with its SNS-032 compound.

"With this financing, we have over $90 million in cash, cash equivalents and marketable securities on a pro forma basis as of Dec. 31, 2005," said Daniel Swisher, the company's chief executive officer, in a news release. "We are pleased with the quality of the new investors we were able to attract to this offering and we also wish to thank our current investors for their continued support."

According to its latest earnings report, Sunesis sustained a net loss of $5,642,020 for the quarter ended Sept. 30, 2005, compared with a net loss of $4,542,211 for the same quarter of 2004.

San Francisco-based Sunesis develops small molecule therapeutics for cancer and other diseases.

Salix shares fall after FDA news

Salix Pharmaceuticals, Inc. sustained a 9% drop in its stock Friday after the Food and Drug Administration gave its nod to the company's OsmoPrep product.

Salix stock ended the day off 9.10%, or $1.51, to finish at $15.08 (Nasdaq: SLXP) after making some gains early in the session. The losses continued in after-hours trading with the stock losing another 0.93%.

The FDA approved Salix's OsmoPrep product used to cleanse the colon in preparation for colonoscopies.

Salix, based in Morrisville, N.C., develops treatments for gastrointestinal diseases.

NexMed stock slips on earnings

NexMed, Inc.'s stock dropped slightly after the company reported a 567% increase in its revenue on the year.

The stock fell 5 cents, or 4.76%, to end at $1.00 (Nasdaq: NEXM).

According to the earnings report released Friday, NexMed brought in $2,399,161 in revenues for the year ended Dec. 31, up from the $359,369 the company turned for year-end 2004.

In a statement released Friday morning, NexMed said the increase is mostly attributable to its licensing agreement with Novartis Inc.

NexMed reported a net loss of $16,550,479 on the year, down from a net loss of $17,023,648 for the same period in 2004.

"The decrease in net loss applicable to common stock is primarily attributable to the increase in revenues and ongoing efforts to reduce overhead," said the statement.

Located in East Windsor, N.J., NexMed develops transdermal products as well as treatments for nail fungus, sexual disorders and other ailments through is NexACT drug delivery technology.

Unigene pens $13 million stock deal

Unigene Laboratories, Inc. disclosed the terms of a $13 million stock deal Friday, sending its stock up more than 1.5% after gaining substantially more in early trading.

The company was slated to close the placement late Friday, selling 4 million shares at $3.25 each to a group of institutions. The price per share is a 14.5% discount to Unigene's closing stock price of $3.80 on Friday.

The investors will also receive warrants for 1 million shares, exercisable at $4.25 each, an 11.8% premium to the closing stock price Friday.

As of March 1, Unigene had 83,418,815 outstanding common shares.

After the deal was announced Friday morning, Unigene's stock gained 6 cents, or 1.6%, to settle at $3.80 (OTCBB: UGNE). The stock had gained as much as 4.8% in earlier trading.

The company intends to use the proceeds to repay existing debt.

"This transaction significantly strengthens Unigene's financial position, allowing us to expand our existing programs while continuing to reduce corporate debt and should further help to improve the prospects for listing our common stock on a national exchange," said Warren Levy, the company's CEO, in a news release Friday morning. "Furthermore, we believe that increasing institutional ownership of our stock is desirable and may provide additional support and stability for future growth."

The offering comes just a day after the company's year-end earnings report was released.

The company also reduced its net losses on the year. Unigene reported a net loss of $496,000 for the year ended Dec. 31compared with a net loss of $5,941,000 for year-end 2004.

For the fourth quarter of 2005, Unigene reported a net loss of $2,652,995. For the same period ended Dec. 31, 2004, the company reported a net loss of $1,745,846.

In the first quarter of 2005, Unigene reported that its highest intraday trading price was $2.63 and the lowest was $1.49. In the fourth quarter of 2005, its highest intraday trading price was $4.63 and the lowest was $2.71.

Based in Fairfield, N.J., Unigene is a biopharmaceutical company focused on developing oral and nasal delivery of peptide drugs to treat ailments like osteoporosis.

Nanogen stock drops 2.4%

In other news, Nangoen, Inc.'s stock fell 2.42%, or 7 cents, to close the day Friday at $2.82 (Nasdaq: NGEN) after gaining 14.68% on Thursday on word of a $15 million direct placement of stock. Titan Pharmaceuticals, Inc. also watched its stock sink Friday after making gains in pre-market activity a day after the company announced a $10 million direct stock offering.

In pre-market activity, Nanogen's stock started the day off on a sour note, losing 1.73% by 9:25 a.m. ET after losing as much as 2.08% earlier in the day.

Titan's stock got off to a better start, gaining 3.58% by 9:25 a.m. ET. By the end of the day, however, Titan's stock had fallen 15 cents, or 4.13%, to end at $3.48 (Amex: TTP).

On Thursday, when San Francisco-based Nanogen's direct placement was announced, the company's stock took off, gaining 14.68%, or 37 cents, to close at $2.89.

Under the terms of the offering, Fisher Scientific International Inc. agreed to buy 5,660,377 shares of Nanogen at $2.65 under the issuer's shelf registration.

Titan's stock, on the other hand, dropped dramatically after announcing the pending completion of a $10,000,250 direct offering of shares at $3.25 each, a 25% discount to the company's $4.33 closing stock price on March 15.

The drop in Titan didn't surprise one buysider.

"It really doesn't surprise me to see them off by so much, given the discount," said the buysider. "I don't think they really had much choice but to do this type of offering, but it's still going to send the stock down, at least for the short term."

Nanogen produces diagnostic tests used by researchers, clinicians and physicians.

San Francisco-based Titan develops novel treatments for central nervous system disorders.

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