By Rebecca Melvin
New York, Oct. 19 – PTC Therapeutics Inc.’s convertibles swung lower on an outright basis on Monday as the common shares of the South Plainfield, N.J.-based pharmaceutical company fell sharply in what amounted to a delayed reaction to disappointing drug trial data that rocked investors overnight Thursday.
PTC shares plunged in after-hours action on Thursday but then rallied on Friday, ending up 11%. On Monday, the shares reversed course, plunging 16%, and the convertibles on Monday fell 6 or 7 points on an outright basis to about 90 to 91.
Market sources watching PTC said there didn’t seem to be a good explanation as to why there was a delayed response other than that investors were digesting the data.
Also in health care, Immunomedics Inc.’s 4.75% convertibles, a $100 million issue that priced early this year, traded up about 3 points on an outright basis while the underlying shares rallied 11% after the Morris Plains, N.J.-based biopharmaceutical company released positive data intraday related to its cancer therapy to fight solid breast and lung cancers.
Away from health care, and also trading better amid a big swing in the underlying shares, was the 4.75% exchangeable of Campus Crest Communities Inc.
The Charlotte, N.C.-based student housing properties company is selling its assets to Harrison Street Real Estate Capital for $6.90 per share. It also expects that it will sell its interest in a joint venture (its partial ownership of Holiday Inn Midtown in Montreal) to its joint venture partner, resulting in an additional $0.13 per share for its shareholders.
In contrast to the above outsized moves, most U.S. convertibles were trading mildly and mostly in line with the companies’ common shares underlying the bonds on Monday.
SanDisk Corp.’s convertibles continued to trade higher on an outright basis and were unchanged to higher on a dollar-neutral, or swap, basis as takeout chatter continued to swirl around the Milpitas, Calif.-based storage chipmaker.
Korea’s Samsung was among the list of potential acquirers in recent press reports. The other suspects include Micron Technology Inc., Western Digital Corp. and China’s Tsinghua Unigroup.
SanDisk’s 0.5% convertibles due 2020 were quoted at 106.92 bid, 107.22 offered with the underlying shares around $72.60, which was up $2.59, or 3.7%.
The SanDisk 1.5% convertibles due 2017 were seen at 155.15 bid, 155.45 offered, that was up about 6.5 points on an outright basis.
Other fairly liquid convertibles seen trading were Twitter Inc., as “there are believers in that again,” a trader said; and Iconix Inc., which gained on a swap basis by about 0.5 point.
llumina Inc.’s 0.5% convertibles due 2021 were seen changing hands at 108.25 with the underlying common shares at $150.00. That compared to 107.6 to 108 against shares of $139.00 two weeks ago.
The Illumina 0% convertibles due 2019, or the A tranche, were at 102.6, which was essentially unchanged on the day and only about a point or so higher from levels to which they dropped after a sales warning earlier this month.
Illumina shares were trending little changed at about $150.00. But they closed lower by nearly $3.00, or 1.8%, at $147.48.
The shares dropped more than 10% after the San Diego-based developer of genetic research tools issued a sales warning. Illumina is slated to report earnings on Tuesday.
PTC Therapeutics drops
PTC’s 3% convertibles due 2022, of which $150 million priced in August, traded lower on Monday, a trader said.
Early in the day they changed hands into the bid price at 96, a trader said. Then they dropped to about 93 and then they traded down to 90. The bonds closed at about 90 bid, 91 offered, compared to a 96 bid, 97 offered close on Friday.
The move was “in line” with a big sell-off in the underlying shares to $29.59, which was down $5.66, or 16%.
“There were a bunch of prints at 90.75 on the offer side. But in all, not that many bonds traded,” the trader said.
There is some uncertainty about how significant the drug trial data would be in the scheme of things.
“The data wasn’t good, but it was probably good enough,” the trader said.
PTC said that its phase 3 trial of Translarna failed to meet certain endpoints but that it would still submit the compound for FDA approval this year as planned.
Translama (ataluren) is PTC’s lead product for the treatment of muscular dystrophy and cystic fibrosis and is in phase 3 clinical trials.
Still it was a “pretty big sell-off” for the stock, a second trader, who was not active in the name, said.
The biotech sector, in general, has been jumpy.
“It was all over the place. This morning it was reacting to Biden coming into the race because it lowers the chances for Hillary, who has been an outspoken opponent of independent drug pricing. Also the Republicans are now talking about drug pricing so it has been volatile, a trader said.
Immunomedics adds
Immunomedics’ 4.75% convertibles due 2020 were seen up about 3 points on the day, closing out at 71.75 bid, 72.75 offered versus an underlying share price of $2.44.
The New Jersey-based company develops antibody-based products to treat cancer, autoimmune and other diseases.
Around midsession it came out with news, and the stock rallied 11%.
“We’ll see what this means. We’ll see where they trade,” a trader said of the bonds.
He said that there remains a lot of uncertainty surrounding the company. “They are still looking for a partner,” he said.
The company has not recovered since disappointing lupus drug data, he said. “They lost a lot of credibility.”
Campus Crest around par
Campus Crest’s 4.75% exchangeable senior notes due 2018 traded at about par as shares jumped 13.6% on news that shareholders will receive $7.03 in cash consideration for each share of Campus Crest on the sale of its assets.
Parity for the exchangeables is 50. “With two years to go before its maturity and its sizable coupon, it will trade on its bond value and unlikely to move much with the stock,” a New York-based trader said.
Mentioned in this article:
| Campus Crest Communities: | NYSE: CCG
|
| Extra Space Storage Inc. | NYSE: EXR
|
| Iconix Inc. | Nasdaq: ICON
|
| Illumina Inc. | Nasdaq: ILMN
|
| Immunomedics Inc. | Nasdaq: IMMU
|
| PTC Therapeutics Inc. | Nasdaq: PTCT
|
| SanDisk Corp. | Nasdaq: SNDK
|
| Twitter Inc. | Nasdaq: TWTR
|
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