Volume stabilizes as week winds down; ReGen Biologics wraps $11.82 million offering

By Sheri Kasprzak

New York, July 15 - Volume in the PIPE market got a boost Friday from modest stock gains for the second straight session.

Still, some sell-siders felt issuance was merely recovering to its "normal" level after dropping Thursday on news items and a hefty drop in oil prices.

"If you ask me, this is where volume should be," said one market source. "This is normal. Stocks seem okay, but I think in this market, it's more to do with investor demand and what the issuers are doing rather than what sectors are doing."

Another sell-sider agreed - to a point.

"Of course it matters what the issuers are doing," he said. "To think otherwise is kind of stupid. Investors aren't going to pour money into a sinking ship. But I would say that sectors are still important in this market. They always have been. We're seeing biotech deals because biotech stocks are performing well."

In fact, a biotech deal led private placement offerings on Friday.

Franklin Lakes, N.J.-based ReGen Biologics, Inc. raised $11,815,000 in a stock offering.

The company sold 13.9 million shares at $0.85 each and issued to investors warrants for 25% of the shares sold in the deal.

The warrants are exercisable at $1 each for five years.

"We are delighted to announce the completion of this private placement of equity," said ReGen's chairman and chief executive officer Gerald Bisbee in a statement.

"We welcome new investors to ReGen in this round and we appreciate the continued support of existing investors. ReGen recently regained worldwide distribution rights for the patented Collagen Meniscus Implant and we have our sights set on effectively commercializing the product in Europe.

"This financing will serve to help us better execute on this strategy and it will permit us to continue our efforts in obtaining the pre-market approval required from the FDA to begin marketing the product in the U.S."

As of April 30, ReGen had 53,396,717 outstanding common shares.

According to the company's most recent earnings statement, it recorded revenues of $155,000 for the three months ended March 31, compared to $107,000 for the same period in 2004. The company incurred a net loss of $1.980 million for the quarter to March 31, 2005, compared to $1.682 million incurred over the same period for 2004.

ReGen develops tissue growth and repair products for the orthopedic-care industry.

On Friday, the company's stock gained a nickel, or 5.88%, to close at $0.90.

ThermoEnergy's $6.7 million offering

ThermoEnergy Corp., a Little Rock-based company that designs renewable energy facilities that use municipal and industrial wastewater to make biofuel, completed a $6,708,404 offering Friday.

The company issued 5,590,337 units at $1.20.

The units include one convertible preferred share and a warrant for 0.45 of a common share. The whole warrants allow for an additional share at $1.50 each.

The preferreds are convertible into common stock on a one-for-one basis.

"ThermoEnergy's corporate dynamic will be significantly affected as a result of this equity investment, enabling management to expedite its immediate and long-term growth strategy," said the company's president and chief executive officer, Dennis Cossey, in a statement.

"In addition, we were exceptionally pleased with the level of interest and participation by institutional investors who were responsible for over 80% of the total amount invested. We will be adding several new engineers to our soon-to-be-opened New York City office as well as expanding our Little Rock, Ark.-based management team."

ThermoEnergy recently entered into a commercial contract for a 500,000 gallon-per-day ammonia recovery process facility in New York. The facility will assist with the clean-up of Long Island Sound by eliminating the amount of nitrogen discharged in the Upper East River, according to a statement from the company.

As of March 31, according to the company's latest earnings report, ThermoEnergy had a net loss of $24,361,399, compared to $198,905 over the same period of 2004.

"The company will require substantially more cash to satisfy its anticipated operating expenses for the next 12 months than it has available," the earnings report said in part. "As of March 31, 2005, the company had a cash balance of approximately $105,700 and current liabilities of $1,202,000. During the years ended Dec. 31, 2004, 2003 and 2002, the company's operating expenses were $1,930,996; $5,117,925 and $1,545,517, respectively."

The company had 22,608,445 common shares outstanding as of March 31.

On Friday, the company's stock closed up $0.02 at $1.47.

Xenomics wraps $2.77 million deal

Repeat PIPE issuer Xenomics, Inc. closed a $2,771,000 offering of convertible preferred stock Friday.

The New York-based company sold 277,100 shares of series A convertible preferred stock at $10 each.

The preferreds are convertible into common shares at $2.15 each.

The investors received warrants for 386,651 shares, exercisable at $3.25 each for five years.

This is the third PIPE Xenomics has conducted this year.

In the first, which closed on Feb. 3, the company sold 1.47 million units of one share and one warrant at $1.95 each for proceeds of $2,866,500. The second offering, for $2,954,998, wrapped on April 13. In that deal, the company sold 1,515,384 units at $1.95 each. The terms for the units were the same as the February offering.

"This financing will reinforce and sustain Xenomics' innovative program to develop and deliver improved medical diagnostic tests based on our proprietary Transrenal-DNA technology," Randy White, the company's chief executive officer, said in a statement.

"Based on the proceeds from those financings [the February, April and July financings], our capital resources were sufficient to carry Xenomics' [research and development] operations through to the end of next year. The latest funding enables us to accelerate our efforts to develop Transrenal-DNA diagnostic tests for an increasingly broad range of applications."

Xenomics develops non-invasive diagnostic tests. The proceeds from the offering will be used to fund the development of diagnostic tests, as well as product regulatory approval and commercialization.

Xenomics' stock closed down $0.05 at $2.20 Friday.

Canadian offerings

Steeplejack Industrial Group Inc. led meager offerings north of the border Friday.

When asked why volume in Canada seems to be trailing off, one sell-sider north of the border blamed the season.

"Summer in the city," he said. "It is Stampede in Calgary [referring to the agricultural celebration in Alberta's largest city]. More people are interested in having a good time than doing deals. [I] would expect that to change in the next week."

Steeplejack announced its plans to sell 2 million shares at C$5.85 each Friday.

Raymond James Ltd. will lead a syndicate of underwriters for the offering.

Based in Edmonton, Alta., Steeplejack provides workers and equipment for scaffolding and insulation projects in western Canada.

The company's stock closed unchanged at C$6.34 Friday.

NCT's stock drops

A day after refinancing a $50 million equity line, NCT Group Inc.'s stock slid.

The company's stock lost $0.0015, or 12.5%, to close at $0.0105 Friday.

On Thursday, when the refinancing was first announced, the company's stock remained unchanged at $0.012.

Cy Hammond, the company's chief financial officer, did not immediately return calls for a comment on the drop in stock Friday.

Under the terms of the restated agreement with Crammer Road LLC, NCT will sell shares at a 7% discount to the lowest closing bid price for any three of 10 trading days before a put.

The equity line replaces an equity credit agreement NCT received from Crammer on Sept. 30, 2004, for $50 million.

Based in Westport, Conn., NCT develops products to reduce noise for companies in the media and entertainment industries.

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