Tesaro surges after positive drug data; Tesla lower; Intercept Pharmaceuticals on tap

By Rebecca Melvin

New York, June 29 – Tesaro Inc.’s convertibles surged about 100 points on Wednesday in tandem with a 100% gain in the underlying shares of the Waltham, Mass.-based biopharmaceutical company after news of positive late-stage study results for its experimental niraparib ovarian cancer drug, a New York-based sellsider said.

Tesaro’s 3% convertibles surged to about 234 to 235 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 was delta dependent however, he noted.

Tesla Motors Inc.’s convertibles were higher on an outright basis but lower on swap, a New York-based trader said, citing deteriorating stock borrow for putting pressure on the deep in-the-money Tesla 1.5% convertible tranche in particular.

The Tesla bonds were trading at about parity early Wednesday but were last down 1 point to 1.5 points on a dollar-neutral basis, a New York-based trader said. Tesla shares gained $8.40, or 4%, to $210.19 on Wednesday.

In primary market action, Intercept Pharmaceuticals Inc. launched an offering of $400 million of seven-year convertibles after the market close for pricing overnight. Price talk was for a coupon of 3% to 3.5% with an initial conversion premium of 30% to 35%, according to market sources, and terms were expected to be set before the market open on Thursday.

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