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Morning Commentary: Tesaro surges after positive drug study data; Tesla lower; equities on the rise
By Rebecca Melvin
New York, June 29 – The convertibles of Tesaro Inc. were surging along with their underlying shares early Wednesday after news of positive late-stage study results for its experimental ovarian cancer drug niraparib, a New York-based sellsider said.
Tesaro’s 3% convertibles surged to the 234 to 235 context versus underlying shares for the Waltham, Mass.-based biopharmaceutical oncology company at $78.30.
On an 80% delta hedge last night, the bonds are up about 10 points on a dollar-neutral, or swap, basis, the sellsider said.
The expansion is delta dependent however, he noted.
The Tesaro bonds were trading very actively. Previously they were in the area of 140.
Tesaro said that its niraparib drug met the main goal of prolonging survival in patients, without the disease worsening. Shares more than doubled and shares of competitor Clovis Oncology Inc., which is developing a similar drug, were on the rise in sympathy on the Tesaro news.
Meanwhile, deteriorating stock borrow in Tesla Motors Inc. was continuing to pressure the deep in-the-money Tesla 1.5% convertible tranche. They were trading at about parity earlier Wednesday but were last down a point to 1.5 points on a dollar-neutral basis, a New York-based trader said.
Tesla shares were up $5.64, or 2.9%, at $207.59.
In the broader markets, U.S. equities were higher as fears regarding economic disruption related to the U.K. vote to leave the European Union died down. The Dow Jones industrial average rose 155 points, or 0.9%, to 17,564. The S&P 500 index was 1% higher, and the Nasdaq Composite rose 1.2%.
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