BioMarin bonds, stock drop as FDA criticizes drug; Mentor falls; SunEdison draining

By Stephanie N. Rotondo

Seattle, Nov. 20 – BioMarin Pharmaceutical Inc. took a hit Friday as Food and Drug Administration staff issued a critical report on the company’s drug, drisapersen.

The company’s 0.75% convertible notes due 2018 and the 1.5% convertible notes due 2020 declined 4 to 5 points outright in early Friday trading, trading in a 124 to 125 and 128 to 129 context, respectively. The equity underlying the bonds meantime dropped nearly 6% to $97.00.

FDA staff said that thus far, the data provided by BioMarin did not support an approval of the muscle-wasting disorder drug. In particular, the staff was concerned about the impact the drug has on the kidneys, as well as how the drug affected children five years old and younger.

Meanwhile, weak earnings and a guidance revision hurt Mentor Graphics Corp.’s convertible notes.

“They went down a lot,” a trader said. “They spread out like 6 points on the way down.”

And, as has been the case of late, SunEdison Inc.’s convertibles “continued to stay active,” according to a trader.

At mid-afternoon, the trader said that about $20 million of the renewable energy company’s convertibles had traded, all continuing on their downward trajectory.

One of the more active issues was the 2.625% convertible notes due 2023, the trader said. He pegged that issue at 25.

“It came at par in May,” he said of the issue.

The trader also noted that the 6.75% $1,000-par series A perpetual convertible preferred shares were also trading around 25. The $650 million deal came in August.

“Both are down 75% [since issuance],” the trader remarked. “That’s impressive.”

SunEdison’s equity also remained actively traded and weaker, though the decline was less than that seen in previous sessions.

The paper closed at $2.82, down 4 cents, or 1.4%.

Mentor earnings disappoint

Mentor Graphics’ convertible debt took a hit “after earnings, or lack thereof,” a trader said.

The 4% convertible notes due 2031 fell to a 103 handle, which compared to a 106 to 107 range previously.

The stock was hammered, dropping $9.93, or 35.75%, to $17.85.

For the third quarter, the Wilsonville, Ore.-based company reported a profit of $14.7 million, or 12 cents per share. That compared to a profit of $21 million, or 18 cents per share, the year before.

On an adjusted basis, the profit per share rose to 28 cents.

Revenue fell to $290.5 million from $292.7 million.

Analysts polled by Thomson Reuters had forecast earnings per share of 29 cents on revenue of $292 million.

Following the weaker quarter, the company also lowered its projections for the fourth quarter and the full year – despite having previously raising its guidance back in August.

For the fourth quarter, Mentor Graphics expects adjusted earnings per share of 47 cents on revenue of $366 million. Analysts have been estimating EPS of 97 cents on revenue of $439 million.

For the year, adjusted EPS is expected to be $1.40 on revenue of $1.18 billion. The company’s previous expectations were for EPS of $1.90 on revenue of $1.29 billion.

Mentioned in this article:

BioMarin Pharmaceutical Inc. Nasdaq: BMRN

Mentor Graphics Corp. Nasdaq: MENT

SunEdison Inc. Nasdaq: SUNE

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