Cell Genesys grabs $75 million equity line; Enzo secures $15 million from stock offering

By Sheri Kasprzak

New York, Feb. 5 - Three biotech companies topped private placement news on Monday, led by Cell Genesys, Inc.'s $75 million equity line from Kingsbridge Capital Ltd.

In the broader market, a sellsider said biotech offerings are not necessarily going to be a trend.

Dipping drug stocks, in fact, may mean more equity line offerings like the one completed by Cell Genesys Monday.

"When stocks are down, [issuers] tend to go for deals where they can sell their shares when their stock is better," he said. "It's at a discount of course, but they have control over the timing."

In the Cell Genesys offering, the company may sell shares at discounts ranging from 6% to 10%, depending upon the average market price of the stock during an eight-day pricing period with a minimum acceptable price equal to the higher of $1.75 or 85% of the company's share price the day before a draw.

Kingsbridge came away from the offering with warrants for 421,918 shares, exercisable at $4.68 each.

Proceeds will be used for research and development as well as general corporate purposes.

"We are very pleased with the outcome of our first [committed equity financing facility] with Kingsbridge," said Sharon E. Tetlow, the company's chief financial officer, in a statement. "We raised approximately $35.1 million in proceeds by selling 8.7 million shares over a nine-month period. We are fortunate to continue to have the resources necessary to advance our lead program, GVAX immunotherapy for prostate cancer, through phase 3 development."

On Monday, Cell Genesys' stock gained 2 cents to settle at $3.25 and put on another penny in after-hours trading.

In March 2006, Cell Genesys entered into another $75 million equity line with Kingsbridge with remarkably similar terms. Under that three-year line, the company could sell shares at discounts ranging from 6% to 10% over the average market price for an eight-day pricing period. The minimum price for that line was the higher of $3.00 or 85% of the company's closing stock price the day before a draw.

Based in South San Francisco, Calif., Cell Genesys develops and commercializes treatments for cancer.

Enzo to raise $15 million

In other biotech news, Enzo Biochem, Inc. will close later this week on a $15 million direct placement of stock.

A group of life-science institutional investors has agreed to buy 1 million shares of the company's stock on Wednesday. The shares are being sold under the company's shelf registration.

Lazard Capital Markets LLC was the placement agent.

Proceeds will be used for future acquisitions, clinical research and development programs, clinical development of product candidates, capital expenses and working capital.

"We are pleased to report this transaction, which further enhances our capital base, but also, importantly, represents, we believe, a significant vote of confidence by a highly regarded, knowledgeable life sciences investment fund in Enzo and the company's prospects," said Barry Weiner, the company's president, in a news release.

Enzo's stock gained 19 cents to close at $15.27 Monday (NYSE: ENZ).

Enzo is also no stranger to direct placements, having raised $46 million in an offering of 3,285,715 shares at $14.00 each in December 2006. Lazard was also the agent on that offering.

New York-based Enzo develops therapeutic treatments for HIV-1 infection, for hepatitis B and hepatitis C and for Crohn's disease.

Nanogen wraps direct deal

In other direct placement news, Nanogen, Inc. sealed a $7,571,667 registered direct placement of its stock on Monday.

News of the deal sent the company's stock diving 13.48%, or 24 cents, to close the day at $1.54 (Nasdaq: NGEN). In after-hours trading, the stock gained 3 cents.

The drop in Nanogen's stock began early as the company's stock slipped 11.8% by 11 a.m. after the deal was announced.

Nanogen issued 4,916,667 shares at $1.54 each to a group of institutional investors. The price per share is a 13.48% discount to the company's $1.78 closing stock price on Friday.

The investors also received warrants for 983,333 shares, exercisable at $1.85 each for five years.

Ascendiant Securities LLC is the placement agent.

The shares are being sold under the company's shelf registration.

San Diego-based Nanogen develops human molecular diagnostic products used in clinical laboratories and point-of-care markets.

Petrosearch to raise $10 million

Moving to the energy sector, Petrosearch Energy Corp. secured $10 million from an offering of 8% senior secured convertible promissory notes.

The offering comes as oil prices dipped Monday following a rally on Friday.

Oil gave up 28 cents to close at $58.74 per barrel after gaining $1.72 on Friday to end at $59.02 per barrel.

In the Petrosearch offering, a single institutional investor has agreed to buy the three-year notes, which are convertible at $1.00 each. The conversion price is a 12.3% discount to the company's $1.14 closing stock price on Friday.

The investor will also receive warrants for 5 million shares, exercisable at $1.40 each for four years.

The placement is expected to close Friday.

"We are pleased to have entered into an agreement for financing that will provide the company with the anticipated capital needed for our Barnett Shale project through 2007 and into 2008," Petrosearch CEO Richard Dole said in a statement. "Upon completion of this transaction, coupled with the SW Garwood financing completed in November 2006, we will have significant momentum in two of our major projects."

The company's stock dipped by 2 cents Monday to close at $1.12 (OTCBB: PTSG).

Houston-based Petrosearch is an oil and natural gas exploration company with activities in the Barnett Shale trend, the Wilcox trend in south Texas and the Anadarko basin in the north Texas panhandle.

Bronco Energy plans deal

In other energy offerings, Bronco Energy Ltd. is negotiating a C$50 million stock offering.

The terms of the deal have not been determined yet, but the offering is set to close on Feb. 20.

RBC Dominion Securities Inc. is the lead agent for the deal.

Proceeds will be used for exploration, development and acquisition expenses as well as for general corporate purposes.

The company's stock dropped 4.16%, or 33 cents, Monday to close at C$7.60 (TSX Venture: BCF).

Bronco is based in Calgary, Alta.

Nautilus prices C$88.5 million deal

Elsewhere in Canadian offerings, Nautilus Minerals Inc. negotiated the terms of a private placement announced back in December 2006 for C$88,500,097.

The company plans to sell 20,344,850 units at C$4.35 each.

The units include one share and one half-share warrant. Each full warrant allows for the purchase of another share at C$5.655 each for two years.

The deal is being placed through a syndicate of agents led by Salman Partners Inc. and is expected to close Feb. 20.

Proceeds will be used for exploration and development on the company's Solwara projects in Papua New Guinea and elsewhere in the Pacific. The rest will be used for working capital.

"The above financing is the next piece in our business plan to enable us to develop a low-cost base metal mine based on seafloor massive sulphide copper-zinc-gold silver deposits," said David Heydon, the company's CEO, in a news release from Monday morning.

"This financing from North American institutional investors will complement the US$100 million U.K. financing announced earlier this month and the US$99.6 million financings completed last year by Anglo American, Teck Cominco and Epion. Upon closing this proposed financing, Nautilus will have raised about US$295 million in the first nine months since listing on the [Toronto Stock Exchange's Venture Exchange], providing a strong capital base to fund the company's plans."

On Monday, the company's stock gave up 23 cents, or 4.95%, to end at C$4.42 (TSX Venture: NUS).

Vancouver, B.C.-based Nautilus is a gold-copper-zinc-silver seafloor exploration company.

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