Sangamo $20.5 million deal tops market activity in slow session; Titan tops Canada business

By Ronda Fears

Nashville, Nov. 11 - A handful of PIPEs deals hit the tape Friday with two out of the United States totaling $30.5 million and a couple out of Canada that together approached C$30 million in an otherwise very low-key trading session for private placements. The lull was due in part to the Veterans Day holiday in the United States that the bond market observed while stocks continued to trade.

"Not much at all is going on," said a syndicate source north of the border. "Canadian bond markets are closed as well, and traffic in Toronto was very light this morning. I would not expect much to happen this afternoon."

A couple of bigger biotech deals, from Sangamo BioSciences, Inc. and IT&E International Group, Inc., along with sizable PIPEs transactions from Titan Exploration Ltd. and Cordero Energy Inc. in Canada were the focus of the day, but there were a few other smaller deals out of Canada, as well.

Calgary, Alta.-based Suroco Energy Inc. announced completion of a previously disclosed non-brokered private placement of units at a price of $0.44 each for gross proceeds of $7.2 million, with proceeds earmarked for acquisition, exploration and development of oil and natural gas properties.

In addition, Richmond Hill, Ont.-based Monster Copper Corp. downsized its private placement of units to C$500,000 and cut the issue price, and Photon Control Inc., based in Burnaby, B.C., announced plans for a C$3 million PIPEs deal.

Energy, metals still leading

When asked about the remainder of this year and expectations for next, the Canadian market source said he was doubtful about a year-end surge in activity in the PIPEs market. But the outlook for next year appears hopeful, what with record commodity prices.

But, he added, "2006 will be driven by commodity prices. If oil and the metal price remain strong [there will be] lots of business. Most of the PIPE business in Canada is in these areas."

On Friday, the Associated Press reported that crude oil futures dropped but as a forecast calling for colder weather in the Northeast United States next week tempered a sell-off tied to rising supplies and slack demand. On the New York Mercantile Exchange, the December contract for crude oil fell 27 cents to settle at $57.53 a barrel, the lowest level since July 21.

Copper prices hit a record high Friday, for the second straight session, and gold surged as well. December copper climbed to a record $1.9065 a pound, up 3.4 cents, on the Merc, while gold futures were up $1.70 to close at $469.40 an ounce.

Sangamo wraps $20.5 million

Biotech concern Sangamo BioSciences, Inc. announced a $20.5 million equity transaction that consisted of a direct placement led by licensing partner Dow AgroSciences, LLC, a subsidiary of Dow Chemical Co., and $1 million to director Michael Wood.

The company has commitments for 5.08 million shares at $3.85 each from Dow, but Wood agreed to buy 235,849 shares at $4.24, the closing price on Thursday.

Sangamo shares closed Friday at $4.30.

"Smart move by Sangamo," said a sellsider familiar with the deal. "It looks like they will end the year with $48 million in the bank, 3.5 or 4 years worth. This removes any cash issue that large investors may have been concerned about and lets Sangamo focus on moving trials through phase 1, 2 and into phase 3."

In early October, Sangamo licensed its gene regulation technology to Dow AgroSciences. Based in Richmond, Calif., Sangamo is working on the development of DNA-binding proteins for therapeutic gene regulation and modification, concentrating on zinc finger DNA-binding proteins. Its most advanced programs are in phase 1 clinical trials for evaluation of safety in patients with diabetic neuropathy and peripheral artery disease.

JMP Securities and Piper Jaffray & Co. were lead placement agents. Leerink Swann & Co. was co-placement agent.

Cordero bags C$15.1 million

Calgary, Alta.-based Cordero Energy Inc., an oil, natural gas and coal bed methane exploration company, boosted its PIPEs deal Friday to C$15.1 million from previous plans for C$12.6 million. The deal now involves 2.6 million shares at C$5.80 each, up from the 2.2 million shares announced on Thursday.

Proceeds from the deal will be used to expand the company's exploration and development in 2006. The company's present capital budget for 2006 was reported at C$53 million Thursday.

Titan taps C$14.25 million

Titan Exploration Ltd. said it will raise C$14.25 million in a private placement of 3 million class A shares at C$4.75 each.

Based in Calgary, Alta., Titan is an oil and natural gas exploration company. It plans to use the proceeds for exploration and development as well as the expansion of its drilling program in Saskatchewan to 11 wells.

IT&E pockets $10 million

San Diego-based IT&E International Group, Inc. announced that ComVest Investment Partners is the lead investor in an equity investment transaction providing $10 million, which will be used to repay existing debt, accelerate its acquisition strategy and fund continued expansion.

On the news, IT&E shares rose $0.03, or 17.65%, to close at $0.20.

The capital infusion will be used to eliminate a $5 million senior convertible note, said Peter Sollenne, chief executive of IT&E. In addition, IT&E has completed its acquisition of Purchase, N.Y.-based Millennix, Inc., a full-service contract research organization focused on oncology and infectious diseases.

Michael Falk, managing partner of ComVest, said the firm has been "strong believers in the opportunity to build a high quality mid-sized CRO [contract research organization] through the combination of smaller well managed CRO's with committed and satisfied customer relationships."

IT&E focuses on providing project-based consulting services in the areas of Food and Drug Administration regulatory compliance, data management, biometrics and clinical validation throughout the clinical trials lifecycle. Its services range from providing patients for drug trials, skilled personnel for trials, enterprise software and training to manage data and ensure FDA compliance and validation of new pharmaceutical manufacturing facilities to biostatistics support and analysis, audits, contract research services, data entry and verification services and providing total clinical solutions through phase 4 clinical trials.

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