Midday Commentary: Medicines expands on hedge after disappointing court opinion; McDermott eyed

By Rebecca Melvin

New York, April 1 - The Medicines Co.'s 1.375% convertibles due 2017 plunged on an outright basis but held in on a dollar-neutral, or hedged, basis early Tuesday after negative news for the Parsippany, N.J.-based drug company related to its patent infringement case against Hospira Inc.

A judge in the U.S. District Court of Delaware issued a trial opinion in the company's case saying that two key patents on Medicines' Angiomax bivaliridin drug are valid but that Hospira did not infringe the asserted claims.

Medicines' 1.375% convertibles fell nearly 10 points outright, but they expanded about 0.25 point to 0.75 point on a dollar-neutral basis depending on one's delta coming into the day. The bonds were last at 112.25 bid, 112.75 offered versus an underlying share price of $24.20.

The Medicines' stock was down about 15% in intraday trading.

Meanwhile, market players were eyeing McDermott International Inc.'s planned $250 million of tangible equity units, which were seen pricing after the market close Tuesday as the first new deal of the new quarter.

McDermott shares were down 48 cents, or 6%, at $7.24 at late morning.

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