Coinbase convertibles eyed following SEC lawsuit; Novocure plunges on clinical results

By Abigail W. Adams

Portland, Me., June 6 – The convertibles primary market broke its silence on Tuesday with one sizable offering on deck.

Ionis Pharmaceuticals Inc. plans to price $500 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 1.5% to 2% and an initial conversion premium of 27.5% to 32.5%, according to a market source.

Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $75 million.

Meanwhile, trading activity in the secondary space remained muted on Tuesday with no new paper entering the space for almost two weeks, activity surrounding investment-grade issues tempering, and equity markets awaiting the next big catalyst for movement.

Equity indexes were mixed for most of Tuesday’s session with value stocks underperforming as small caps soared.

However, indexes closed in positive territory with the Dow Jones industrial average up 10 points, or 0.03%, the S&P 500 index up 0.24%, the Nasdaq Composite index up 0.36% and the Russell 2000 index up 2.69%.

There was $554 million in reported volume heading into the market close with topical news the driving force of trading activity.

And news that the Securities and Exchange Commission had filed suit against Coinbase Global Inc. was the market moving headline of the day.

Coinbase’s 0.5% convertible notes due 2026 sank on an outright and dollar-neutral basis as stock plunged with the SEC intensifying its crackdown on crypto-exchanges.

Novocure Ltd.’s 0% convertibles due 2025 also saw a large move to the downside following less-than-encouraging clinical results for a lung cancer treatment.

Meanwhile, Wayfair Inc.’s convertible notes continued to add outright as stock powered higher although they were largely moving in line dollar-neutral.

SEC V. Coinbase

Coinbase’s 0.5% convertible notes due 2026 were under pressure on Tuesday as stock plunged following an SEC lawsuit against the organization.

The 0.5% notes sank about 4 points outright with stock down more than 10%.

The convertibles were changing hands at 65.5 early in the session with the yield 14.5%.

They were trading at 65.75 in the afternoon.

The notes have a massive premium of over 600%, making their dollar-neutral move difficult to track, a source said.

However, accounts were playing them on a 50% delta with the notes contracted 2.5 to 3 points on Tuesday.

There was $22 million in reported volume.

Coinbase’s stock traded to a low of $46.43 and a high of $52.38 before closing at $51.61, a decrease of 12.09%.

Stock plunged with Coinbase the second crypto-exchange targeted in an SEC lawsuit in as many days.

The SEC suit alleges that Coinbase, the largest crypto-exchange in the United States, was evading regulations by allowing users to trade crypto tokens that were unregistered securities.

In March, the SEC served Coinbase with a Wells notice informing of its intention to take enforcement action against the company.

The SEC lawsuit against Coinbase comes the day after it filed suit against Binance, the largest global crypto-exchange, alleging that Binance had illegally operated in the United States and misused customer funds.

Coinbase’s convertible notes also fell on Monday following the enforcement action against Binance.

The notes closed the previous week wrapped around 71.

Novocure questioned

Novocure’s 0% convertible notes due 2025 also ranked as one of Tuesday’s largest losers as investors expressed a vote of no confidence following the release of clinical results.

The 0% notes sank 6 to 7 points outright with stock off more than 40%.

They were changing hands at 86 in the late afternoon.

The notes contracted on the move down, a source said.

There was $9 million in reported volume.

Novocure’s stock traded to a high of $75.16 and a low of $46.06 before closing at $47, a decrease of 43.04%.

Stock was among the worst performers on Tuesday as investors reacted to the release of clinical results testing the biotech company’s Optune wearable skin patch as a complimentary lung cancer treatment.

Optune is a currently approved treatment for brain cancer with its approval for lung cancer promising to expand its market.

However, the clinical results showed the treatment to be less effective than anticipated.

Wayfair ahead

Wayfair’s convertible notes continued to add outright in active trade as stock powered higher with analysts turning bullish on the company.

The most recently priced 3.5% convertible notes due 2028 again set a new outright high.

The notes climbed 5 points with stock up about 6%.

They were trading at 124.5 in the late afternoon.

There was $23 million in reported volume.

Wayfair’s 1% convertible notes due 2026 added 2 points outright to trade at 75.25 in the late afternoon.

There was $20 million in reported volume.

Wayfair’s 3.25% convertible notes due 2027 gained 4 points outright to trade at 100.5.

There was $15 million in reported volume.

Wayfair’s stock traded to a low of $45.63 and a high of $49.97 before closing at $49.44, up 6.9%.

Stock has been on a strong uptrend since last week when JPMorgan added it to its Analyst Focus List with an overweight rating.

Mentioned in this article:

Coinbase Global Inc. Nasdaq: COIN

Ionis Pharmaceuticals Inc. Nasdaq: IONS

Novocure Ltd. Nasdaq: NVCR

Wayfair Inc. NYSE: W

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