Morning Commentary: Apellis expands ‘massively’; Clovis buys back convertible notes

By Abigail W. Adams

Portland, Me., Jan. 7 – The convertible secondary space launched Tuesday with decent trading volume with large movements from several names in the biotech sector.

Apellis Pharmaceuticals Inc.’s 3.5% convertible notes due 2026 expanded “massively” following positive results from a clinical trial, a market source said.

The 3.5% convertible notes rose more than 20 points outright and expanded more than 5 points on a dollar-neutral, or hedged, basis, the source said.

The notes traded as high as 140 early in the session and were changing hands around 123 shortly before 11 a.m. ET.

Apellis stock traded as high as $42.48 at the market open but came in as the session progressed. Stock was trading at $36.94, an increase of 22.36%, shortly before 11 a.m. ET.

Apellis stock soared following positive clinical results for the pharmaceutical company’s experimental treatment for rare blood diseases.

Clovis Oncology Inc.’s 4.5% convertible notes due 2024 sank on an outright basis alongside stock after the company announced it was issuing new shares in exchange for some of the convertible notes.

While volume was light, the 4.5% convertible notes dropped 15 points on an outright basis to 124.5.

Clovis stock was taking a hit following the pricing of new shares.

Stock was changing hands at $8.40, a decrease of 9.14%, shortly before 11 a.m. ET.

Clovis announced prior to the market open that it sold 17,777,679 shares to some holders of its 4.5% convertible notes at $9.25 per share.

Proceeds from the share sale were used to purchase $123.4 million of its 4.5% convertible notes from those holders, according to a company news release.

Following the transaction, $139 million of the 4.5% convertible notes remained outstanding.

The 4.5% convertible notes saw one of the greatest rebounds in 2019 with the notes trading in the low 60s in October 2019 but trading up to 180 in early December as stock ripped.

Booking Holdings Inc.’s convertible notes continued to see heavy trading volume although with little movement in price.

The soon-to-mature 0.35% convertible notes due June 15, 2020 saw more than $15 million in reported volume less than one hour into Tuesday’s session.

While active, the notes were largely moving sideways and were changing hands at 155.5 with stock largely flat.

The 0.9% convertible notes due 2021 also remained major volume movers with about $5 million on the tape. The notes were changing hands around 116.375.

Booking’s stock was $2,053.68, an increase of 0.31%, shortly before 11 a.m. ET.

Booking’s convertible notes have been heavy volume movers for the past few weeks.

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