Mitek Systems convertible offering eyed; Travere notes active; BridgeBio rebounds

By Abigail W. Adams

Portland, Me., Feb. 2 – The convertibles primary market had one deal in the works on Tuesday.

Mitek Systems Inc. plans to price $125 million of five-year convertible notes after the market close on Tuesday.

The small offering looked cheap; however, it was not on the radar of sources queried.

Meanwhile, trading activity in the secondary space remained subdued as equity markets continued to rip on Tuesday.

With “Reddit Army” trades beginning to crumble, investor concerns over valuations also began to fade and dip-buying pushed equities higher.

The Dow Jones industrial average closed the day up 475 points, the S&P 500 closed the day up 1.39%, the Nasdaq closed the day up 1.56% and the Russell 2000 closed the day up 1.19%.

There was $74.3 million on the tape about one hour into the session and $620 million in reported volume heading into the market close.

With no new paper entering the space, earnings and company specific news were the driving force of trading activity.

Travere Therapeutics Inc.’s 2.5% convertible notes due 2025 saw renewed attention as the company’s stock jumped due to positive results from a clinical trial.

Lumentum Holdings Inc.’s convertible bonds were active with the notes trading down on an outright basis as stock sold off following the company’s earnings report.

BridgeBio Pharma Inc.’s 2.25% convertible notes due 2029 topped par as stock rebounded after struggling for the past several sessions.

Mitek Systems in focus

Mitek Systems plans to price $125 million of five-year convertible notes after the market close on Tuesday with price talk for a coupon of 0.75% to 1.25% and an initial conversion premium of 30% to 35%, according to a market source.

It was unclear what assumptions underwriters were using for the small offering from the San Diego-based identity verifications solutions company.

However, one sources pegged assumptions at 525 basis points over Libor and a 40% vol.

Using those assumptions, the deal looked 2.41 points cheap at the midpoint of talk, a source said.

Another source pegged assumptions at 550 bps over Libor and a 40% vol., which looked 1.81 points cheap at the midpoint of talk.

However, the small offering was not on the radar of sources queried.

Travere improves

Travere Therapeutics’ 2.5% convertible notes due 2025 saw renewed attention in the secondary space with the notes jumping alongside stock following positive results from a clinical trial.

The 2.5% notes rose almost 11 points outright.

They were changing hands at 108 versus a stock price $29.07 in the late afternoon, according to a market source.

With $14 million in reported volume, the 2.5% notes were among the most active issues during Tuesday’s session.

Travere’s stock traded to a high of $33.09 and a low of $27.66 before closing the day at $28.79, an increase of 11.24%.

Stock popped after the biopharmaceutical company reported positive results from a clinical trial for its drug candidate sparsentan to treat FSGS, a kidney disease.

Lumentum’s earnings

Lumentum’s convertible bonds were active and trading down on an outright basis as stock sank following the optical component maker’s second-quarter earnings report.

Lumentum’s 0.5% convertible notes due 2026 dropped a little more than 5 points outright with stock down more than 8% in intraday activity.

The notes were changing hands at 119 versus a stock price of $88.43 in the late afternoon.

There was more than $16 million in reported volume.

Lumentum’s 0.25% convertible notes due 2024 were down almost 8 points outright to 160 with almost $8 million on the tape, according to a market source.

Lumentum’s stock traded to a high of $91.86 and a low of $85.90 before closing the day at $88.14, a decrease of 7.82%.

Lumentum reported earnings per share of $1.99 versus analyst expectations for earnings of $1.85.

Revenue was $478.8 million versus analyst expectations for earnings of $478.6 million.

BridgeBio on the mend

BridgeBio’s 2.25% convertible notes due 2029 topped par on Tuesday as stock rebounded from last week’s sell-off.

The 2.25% notes jumped 3.5 points outright with stock up more than 9% on Tuesday.

They traded as high as 101 and were changing hands at 100.5 versus a stock price of $63.00 in the late afternoon, according to a market source.

There was about $10 million in reported volume during Tuesday’s session.

BridgeBio’s stock traded to a low of $58.62 and a high of $63.45 before closing the day at $63.01, an increase of 9.72%.

Stock recovered after dropping almost 14% on the week last week. The 2.25% notes closed last Friday at 96.5.

Mentioned in this article:

BridgeBio Pharma Inc. Nasdaq: BBIO

Lumentum Holdings Inc. Nasdaq: LITE

Mitek Systems Inc. Nasdaq: MITK

Travere Therapeutics Inc. Nasdaq: TVTX

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