Investors Funnel $14M into Neose PIPE

Publicly traded biotechnology developer Neose Technologies Inc. raised $14.25 million two weeks ago in its first return to the private equity market since going public in 1997.

Neose raised the money from a syndicate of private equity investors that included Nomura Switzerland. The company retained Paramount Capital of New York as a finder for a portion of the investor group, said Sherrill Neff, president and chief executive at the Horsham, Pa.-based company.

“The phenomena today is that investors are more likely to invest in a PIPE than in a straight private equity deal because it takes the intangible and makes it tangible,” said Peter Kash, senior managing director at Paramount.

The placement consisted of 1.5 million shares of common stock priced at $9.50 per share, which was the closing bid price of the stock on June 17. Neff said that each of the company’s directors invested in the offering, providing $1.5 million of the total capitalization.

Neose raised approximately $30 million in private equity prior to going public, and Paramount worked closely with the company through its venture period. In fact, Paramount was the original investor in Neose.

Neff said the company opted for the private market in order to protect the company from short-sellers that jump in when a company declares a secondary offering. Originally, the firm was looking for as much as $12 million, but strong indications of interest led to the expansion of the round.

Neose synthetically manufactures complex carbohydrates for pharmaceutical, nutritional and consumer uses. The company is currently focused on developing ingredients for food and consumer products, pharmaceutical products to treat pediatric ear infections, gastritis and peptic ulcers, and nutritional additives for infant formula.

Proceeds from the financing were not specifically earmarked, but the company will seek to expand its in-licensing program through other midsize companies as well as acquisitions of other properties. An example of potential acquisition targets is the company’s recent purchase of the patents, licenses and other intellectual property of Cytel Corp.’s Glytec business.