Protein Design Labs pockets $100 million from collaboration; mergers may generate more biotech PIPEs

By Sheri Kasprzak

New York, Sept. 13 - Protein Design Labs, Inc. led PIPE news on Tuesday as it closed a $100 million stock purchase agreement related to its collaboration on three pharmaceutical products with Biogen Idec MA Inc. In the process, the company's stock gained almost 2%.

Biogen Idec bought 4,058,935 shares for proceeds of roughly $100 million. Protein Design Labs had 107,104,133 outstanding common shares as of July 31, according to the company's latest earnings report.

Protein Design Lab's investor relations spokesman, James Goff, had not returned requests for additional details on the offering, such as the precise price per share, by Tuesday evening.

After the closing was announced Tuesday morning, Protein Design Lab's stock gained $0.57, or 1.95%, to end at $29.75 and edged up another $0.24 in after-hours trading.

Biogen Idec purchased the shares as part of a joint venture to develop, manufacture and commercialize three phase II antibody products.

According to the terms of the agreement, if multiple products are successfully developed and all milestones are achieved, Protein Design Labs could receive milestone payments totaling up to $660 million.

On the earnings front, Protein Design Labs managed to substantially reduce its net losses over the second quarter of 2004.

For the quarter ended July 30, 2005, the company sustained a net loss of $3.420 million, down from a net loss of $12.444 million for the corresponding quarter in 2004.

Protein Design Labs, based in Fremont, Calif., is a biopharmaceutical company focused on treatments for inflammation, autoimmune diseases, cardiac conditions and cancer.

Moving to the broader PIPE market, a couple of sellside sources said a recent slate of mergers among biotech and biopharmaceutical companies may herald in a rash of private placements within that sector.

"Any time you see a lot of mergers going on, you'll probably see a few more [offerings]," said one sellside source based in New York. "That seems to be going on now and we're seeing quite a few more. Most of them look like pretty solid companies."

Another source said the quality of the companies that have been introducing new PIPE offerings over the course of the past week or two has improved.

"We're seeing bigger names," he said. "Better quality deals, I'd say. A lot of it does have to do with mergers. If one of these no-namers gets bought out by some giant, the terms are at least more likely to be better than if they're selling to some institution. Under other circumstances, I think a lot of these [issuers], in the past, have been forced to kind of take whatever they can get."

As previously reported in PIPE Daily, Alnylam Pharmaceuticals, Inc. sold $58,517,292 in shares to a bigger name - Novartis Pharma AG - at $11.11 each.

On Tuesday, the Cambridge, Mass.-based company's stock slipped $0.77 to close at $13.42.

GeoGlobal wraps $27.64 million

Looking to the energy sector, GeoGlobal Resources completed a $27,640,600 unit offering Tuesday.

The Calgary, Alta.-based oil and natural gas exploration company sold 4,252,400 units at $6.50 each.

As of Aug. 10, GeoGlobal reportedly had 58,297,855 outstanding common shares.

The units consist of one share and one half-share warrant, the whole of which is exercisable at $9.00 each through Sept. 9, 2007.

Jones Gable & Co. Ltd. was the placement agent for 3,252,400 of the units.

Proceeds will be used for oil and natural gas exploration in India. The rest will be used for general purposes.

GeoGlobal is another company that has slashed its net losses over the year. For the second quarter of 2005, the company reported net losses of $198,511, down from $306,205 for the same quarter of 2004.

On Tuesday, GeoGlobal's stock gained 4.73%, or $0.29, to end at $6.42.

Elsewhere in the sector, Wentworth Energy, Inc. announced the closing a $1 million working capital line of credit.

The three-year credit line will be provided by Coach Capital, LLC and may be extended to $4 million.

The 10% loan is convertible into common shares at $0.90 each for the first $1 million, but any funds advanced over $1 million will be convertible at 75% of the five-day bid price before a draw.

The proceeds will be used for working capital.

"Today's announcement marks an important milestone as we continue to transform the company for early stage to a viable junior energy producer," said John Punzo, the company's chief executive officer, in a statement. "It is very difficult these days to secure traditional bank financing for a young company such as Wentworth Energy, and Coach Capital's eagerness to work with us speaks volumes for their confidence in our business plan and prospects."

Based in Forth Worth, Texas, Wentworth is an oil and natural gas exploration and development company.

The company's stock closed down $0.05, or 3.88%, at $1.24 on Tuesday.

Cord Blood raises $5 million

Los Angeles-based Cord Blood America, Inc. closed a $5 million offering of 12% convertible debentures.

Perennial PIPE investor Cornell Capital Partners, LP bought the two-year debentures, which are convertible into common shares at $0.35 each.

The investor also received warrants for 7 million shares, exercisable at $0.35 each and warrants for 8,285,000 shares, exercisable at $0.40 each.

"The financing with Cornell is an important step for our company and our shareholders," said Matthew Schissler, Cord Blood's chief executive officer, in a statement. "We evaluated multiple financing partners and felt strongly that Cornell provided the best terms."

Cord Blood America is an umbilical cord stem cell preservation company. Its stock remained unchanged at $0.33 Tuesday.

Genaera stock climbs

After completing a previously announced direct placement on Tuesday, Genaera Corp.'s stock recovered slightly.

The company's stock gained $0.04, or 1.78%, to end at $2.29 on Tuesday.

On Monday, the company announced that it was preparing to close a $24.51 million direct offering.

Genaera sold shares to a group of institutional investors at $2.15 each.

Based in Plymouth Meeting, Pa., Genaera is a biopharmaceutical company focused on developing treatments for eye and respiratory disorders and cancer.

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