New WebMD gains on debut; existing WebMDs mixed; Renewable Energy to price; Ionis plunges

By Rebecca Melvin

New York, May 26 – WebMD Health Corp.’s newly priced 2.625% convertibles were well received in the market on Thursday, with a bid for the new notes at 102 even before final terms were set, according to a New York-based trader.

The new bonds priced ahead of the open after overnight marketing. They came at the cheap end of talked terms, which were for a 2.125% to 2.625% coupon and a 30% to 35% premium.

The new WebMD bonds were up at 102.75 on an outright basis around mid-session when shares of the Elmwood Park, N.J.-based provider of health information services were down $3.86, or 6%, at $63.12.

The new bonds traded actively, accounting for the lion’s share of the day’s trading volume, according to Trace data.

WebMD’s existing convertibles were also trading actively in mixed action. The WebMD 2.5% convertibles due 2018 edged up slightly from low prints notched Wednesday. They were at 114.73 compared to 114.25 on Wednesday, but still down from 117.25 on Tuesday.

WebMD’s more equity sensitive issue, the 1.5% convertibles due 2020, dropped about 7 points on an outright basis to 135 in active trade, from 142.42 last on Wednesday and about 141 on Tuesday.

The WebMD convertibles were priced via bookrunner Mizuho Securities USA Inc. and the Renewable Energy bonds are being sold via Piper Jaffray & Co.

Also in the primary arena, Renewable Energy Group Inc. launched an offering of $125 million of 20-year convertible senior notes that was seen pricing after the market close at a 3.5% to 4% coupon and 25% to 30% premium.

One trader said that market participants were looking at this bond as another good deal for convertibles investors.

Back in established issues, Ionis Pharmaceuticals Inc.’s 1% convertible bonds due 2021 slid 12 or 13 points on an outright basis on Thursday into the mid-70s after news that GlaxoSmithKline, the co-developer of its therapy for patients with TTR amyloid cardiomyopathy, has decided not to initiate a Phase 3 study with the Carlsbad, Calif.-based developer of gene-based drugs.

Ionis said it is currently evaluating IONIS-TTRRx in an ongoing Phase 3 study, NEURO-TTR, in patients with transthyretin (TTR) familial amyloid polyneuropathy. In addition, the company is evaluating IONIS-TTRRx in an investigator-initiated Phase 2 open-label study in patients with TTR-related amyloid cardiomyopathy.

GlaxoSmithKline, which has an option to exclusively license IONIS-TTRRx, has decided not to initiate a Phase 3 outcome study, CARDIO-TTR, which was planned to evaluate the therapy.

As announced in April, the U.S. Food and Drug Administration had placed this study on clinical hold as a result of safety findings.

Ionis shares plunged $13.90, or 39%, to $21.36 in ultra-heavy volume.

Ionis’ 1% convertibles due 2021 traded at about 75 during the session and were indicated down at 74.4 at the end of the day, having dropped from 87 previously.

Ionis, formerly known as Isis Pharmaceuticals Inc., changed its name to Ionis in December 2015.

Also in the secondary market, Palo Alto Networks Inc. saw its shares plunge in after-hours trading action after the cyber security company posted positive quarterly results but guided the current quarter lower.

The Palo Alto 0% convertibles due 2019 traded down to 136.6 on Thursday, which was down from trades in the mid to upper 140s on Wednesday, according to Trace data.

New WebMD trades up

The new WebMD 2.625% convertibles traded late in the session at 102.375 at which point its shares were down $3.04, or 4.5%, at $63.94.

The bonds also traded at 102.25 versus an underlying share price of $63.42, and at 102.625 versus $62.52, according to a New York-based trader.

“These deltas looked a little bit heavy, but swap trades nevertheless,” the trader said.

Pricing of the Rule 144A deal came at the cheap end of talked terms for a 2.125% to 2.625% coupon and a 30% to 35% premium.

Mizuho Securities USA Inc. was the bookrunner for the deal that came on an overnight basis. There is an over-allotment option for up to an additional $50 million of notes.

The notes are non-callable and will mature June 15, 2023. They have dividend and takeover protection.

Proceeds from the sale will be used for general corporate purposes, which may include acquisitions, repurchases of common shares, repurchases of outstanding convertibles and working capital.

WebMD’s two existing convertible bond issues traded mixed on Wednesday. The WebMD 1.5% convertibles due 2020, a $300 million issue that priced in November 2013, traded up slightly, and the WebMD 2.5% convertibles due 2018, a $400 million issue that priced in January 2011, traded down a few points.

Renewable Energy on tap

Renewable Energy’s shares fell $1.25, or 12.6%, to $8.62 during Thursday’s session following the launch of the $125 million convertibles deal.

Renewable Energy plans to price $125 million of 20-year convertible senior notes after the market closed at3.5% to 4% coupon and 25% to 30% initial conversion premium.

The Rule 144A deal has a greenshoe for $18.75 million and was being marketed by Piper Jaffray & Co. as bookrunner.

The notes are convertible if the trading price of the shares exceeds 130% of the conversion price for at least 20 trading days during a 30-day period.

The convertibles are non-callable for five years and freely callable after that. There are investor puts in years five, 10 and 15. There is standard takeover and dividend protection, and the company is also entering into capped call transactions with the underwriters or their affiliates.

About $50 million of proceeds will be used to repurchase a portion of Renewable Energy’s outstanding 2.75% convertible senior notes due 2019, about $30 million will be used to repurchase shares of common stock concurrently with the pricing of the notes, which will establish the capped call. Remaining proceeds will be used for working capital and general corporate purposes, which may include additional repurchases of the 2019 notes and shares of common stock and to finance potential strategic transactions.

Ames, Iowa-based Renewable Energy is a biodiesel producer.

Mentioned in this article:

Ionis Pharmaceuticals Inc. Nasdaq: IONS

Palo Alto Networks Inc. Nasdaq: PANW

Renewable Energy Group Inc. Nasdaq: REGI

WebMD Health Corp. Nasdaq: WBMD

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