Cadence wraps $85.54 million stock placement; Beacon Power to raise $18 million through stock sale

By Stephanie N. Rotondo

Portland, Ore., Feb. 20 - The medical and energy sectors dominated the PIPEs market Friday, with Cadence Pharmaceuticals Inc. leading the pack.

Cadence announced that it completed a nearly $86 million stock sale, according to a press release. The deal represented about 30% of the company's total market capitalization, the company told Prospect News.

Meanwhile, Beacon Power Corp. said it plans to raise up to $18 million in a three-tranche stock placement. The company is also working on obtaining a loan from the Department of Energy.

Ariad Pharmaceuticals Inc. announced a direct placement of stock totaling almost $25 million. Proceeds from the deal will be used to strengthen the company's balance sheet, as well as to fund product development through the year.

Elsewhere in the medical arena, EnteroMedics Inc. entered into a deal to issue 12.1 million shares of its common stock. The transaction, which also includes warrants for an additional 6.5 million shares, totals $24.3 million.

Empire Energy Corp. International will raise up to A$10.03 million through a deal that includes both a convertible loan and stock. Proceeds will be used to fund drilling operations.

Meanwhile, PMI Gold Corp. will issue $20 million in 12% senior promissory notes, the company said late Thursday. The placement includes warrants. Investors also have the option to convert principal and interest into gold bullion.

Cadence sells $85.54 million of stock

Cadence Pharmaceuticals (Nasdaq: CADX) completed an $85.84 million private placement of common stock, according to a press release.

The deal, settled on Feb. 18, totaled just over 12 million shares at $7.13 per share. Just over 6 million five-year warrants were also issue as well, and are exercisable at $7.84 per share.

William R. LaRue, senior vice president and chief financial officer, told Prospect News that the company was "very pleased" with the deal, which he added represented about 30% of the company's market capitalization, about $286 million.

Cadence's stock closed the week at $7.08, a loss of 32 cents, or 4.32%.

"Given the overall market conditions at this point in time, we felt it was a real indication of support for Cadence," LaRue said, adding that there was "continuing support from existing investors" and that the deal also attracted new investors.

When asked why Cadence chose a private versus public offering, LaRue said that the company was concerned a public offering would pressure the stock. Furthermore, the resulting private placement meant more money than what could have been raised publicly, given that the company has only a $60 million shelf registration.

"We thought 86 was a more appropriate number," he said. "To accomplish that, we felt we needed to go the PIPE route."

Cadence is a San Diego-based biopharmaceutical company.

Beacon to raise up to $18 million

Beacon Power (Nasdaq: BCON) plans to raise up to $18 million by issuing common stock to Seaside 88 LP, the company announced Friday.

The agreement requires Seaside to purchase $1 million in common stock each month for up to 18 months. The transaction will come in three tranches in six-month intervals, beginning on Friday and continuing on the 20th of each month, according to a press release.

No warrants were issued as part of the deal.

At the end of business Friday, Beacon's stock was at 38.58 cents, a decline of 3.4 cents, or 8.14%. Market capitalization is $35.1 million.

"We expect this agreement to provide some of the funds necessary to manufacture our flywheel systems and the containers to house them," said Bill Capp, Beacon Power's president and chief executive officer, in a statement. "The structure of this agreement, with its reasonable pause and extension options, gives us considerable flexibility to minimize shareholder dilution as we execute our business plan."

"In addition to this financing," Capp continued, "we remain optimistic about receiving a loan under the Department of Energy's loan guarantee program. Our application is in the final stage of due diligence. The loan would cover a majority of the capital requirements for our 20 MW frequency regulation plant in Stephentown, N.Y."

Beacon Power is a Tyngsboro, Mass.-based power company.

Ariad plans direct stock sale

Ariad Pharmaceuticals (Nasdaq: ARIA) announced that it had agreed to sell more than 14 million new common shares in a direct placement for total proceeds of $24.3 million.

The shares were sold at $1.69 per share, reflecting the company's closing price as of Feb. 19. Purchasers of the stock also received three-quarters of a warrant, exercisable at $2.15 per share for additional stock. The warrants have a three-year term from the issuance date and can be redeemed after six months.

After fees and expenses, net proceeds came to $22.8 million.

The transaction is expected to close on Feb. 25. Lazard Capital Markets LLC acted as placement agent.

Ariad's equity closed 21 cents, or 12.43%, weaker to $1.48. Market capitalization is $102.95 million.

"We're happy with what we raised in total," Maria E. Cantor, vice president of corporate communications and investor relations, told Prospect News. She added that the company had wanted to raise about $25 million to "strengthen our balance sheet," as well as to further product development through 2009.

Ariad is a Cambridge, Mass.-based pharmaceutical company specializing in cancer treatments.

EnteroMedics to raise $15.89 million

EnteroMedics, a developer of medical devices that help to treat obesity, plans to raise $15.89 million through a private placement of common stock, the company said.

EnteroMedics (Nasdaq: ETRM) will issue 12.1 million shares of common stock along with warrants to purchase another 6.5 million shares. The price per share is $1.15, the closing price as of Feb. 19. The warrants will have an exercise price of $1.38 per share.

On Friday, the company's stock closed at $1.15, a 2-cent, or 1.71%, loss. Market capitalization is $19.24 million.

The deal is expected to close by Feb. 24. Canaccord Adams Inc. acted as placement agent.

Proceeds from the deal will be used, in part, to fund clinical trials of the company's VBLOC Therapy.

EnteroMedics is a St. Paul, Minn.-based medical device company.

Empire plans loan, stock offering

Lenexa, Kan.-based Empire Energy announced plans to raise up to A$10.03 million in a combined loan and stock financing deal.

The deal includes a convertible loan of £1.15 million, or A$2.53 million, as well as up to $5 million, or A$7.5 million, earned through a stock sale.

Proceeds from the transaction will be used to resume drilling at one of the company's wells, as well as to continue other drilling operations.

Empire's equity (OTC: EEGC) gained 1.3 cents, or 40.63%, to close at 4.5 cents. Market capitalization is $11.15 million.

Empire Energy is an oil and gas explorations company.

PMI to issue promissory notes

PMI Gold (TSX.V: PMV) is looking to raise $20 million by issuing 12% senior promissory notes in a private placement, the company announced Thursday.

PMI is working with Jesup & Lamont Securities Corp. to place the deal, according to a press release. The deal is expected to close by March 17.

The fund raising also includes a "unique feature," the release said. Principal and interest, due on the third anniversary of the closing, are convertible into gold bullion at 110% of the one-week average price for the commodity on the New York Stock Exchange at the time of closing.

Investors will also receive a total of 10 million warrants for new common stock at 50 cents per share.

The company's stock ended at 5 cents, a loss of 1 cent, or 16.67%.

PMI Gold is a Vancouver, B.C.-based gold mining company.

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