) -- Shares of

Biosante Pharmaceuticals


fell in after-hours action on Monday after the Lincolnshire, Ill.-based drug developer disclosed a deal to sell $18 million worth of securities to institutional investors.

After the closing bell, the company, which works on products for female sexual health and oncology indications, said it's selling 10.6 million common shares and warrants for the purchase of an additional 5.3 million shares in a registered direct offering. The institutional investors have made commitments to buy the units pursuant to an effective shelf registration statement.

The units -- the equivalent of one share and one warrant to purchase 0.50 of a share -- are being sold for $1.70 each, a price that Biosante noted represents a premium to the stock's closing price of $1.58 on Dec. 23.

Of course, the shares available on the open market last Thursday didn't include the warrant component, and the shares that will be available when the bell rings on Tuesday last changed hands in regular trading at $2 after the stock jumped almost 27% in Monday's session, rising 42 cents.

Volume on Monday was as extraordinary as the stock's appreciation ahead of this announcement. Almost 10.6 million shares changed hands, easily more than 30 times the issue's trailing three-month daily average of around 350,000. The five-year warrants included in the offering, which is expected to close on Dec. 30, will be exercisable immediately at $2 per share.

The stock was last quoted at $1.75, down 12.5%, with volume approaching 95,000, according to

. Based on that regular session close at $2, the shares had advanced 8.6% year-to-date, but that's already being wiped out in extended action. Even at that level, the stock was down 20% since hitting a 52-week high of $2.50 on May 3.

"We are pleased to have a commitment from these new and existing institutional investors," said Stephen Simes, the company's president and CEO, in a statement. "This additional funding from these high quality biotechnology institutional investors provides us with a strong cash position as we close out the year, ensuring our ongoing focus on our LibiGel Phase III clinical study program."

Biosante didn't disclose the identities of the investors in its press release but one of its biggest shareholders is also a recent investor. Hedge fund Green Point Partners disclosed a brand new stake of 6.145 million common shares, about 8.7% stake of its outstanding stock, as of Sept. 30 in a

Securities and Exchange Commission

filing on Nov. 15. Other investment managers with sizeable stakes as of Sept. 30 included Kopp Investment Advisors with a 4.2% stake, and BlackRock Institutional Trust Co. with a 3.9% stake.

Of the four analysts currently covering the stock, three rate it at strong buy and the other is at buy. One of the firms acted as the placement agent for this offering -- Rodman & Renshaw -- while two others, Oppenheimer & Co. and Roth Capital Partners, served as financial advisors on the transaction, along with JMP Securities and Trout Capital. Biosante expects to receive proceeds of $16.9 million from the stock sale after fees and expenses.

CEO Simes said Biosante is aiming to submit a new drug application for LibiGel, a proposed treatment for hypoactive sexual desire disorder in menopausal women, by the end of 2011.


Written by Michael Baron in New York.

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