Novavax volatile outright, mixed on hedge; Guardant Health down; Exact Sciences up

By Abigail W. Adams

Portland, Me., Dec. 16 – The convertibles primary market priced what many expect to be the last deal of the year after the market close on Thursday.

Novavax Inc. priced an upsized $150 million of five-year convertible notes after the market close on Thursday.

The notes were volatile on an outright basis with the notes crumbling out of the gate but ending the day with gains.

Their performance on hedge was also varied with some players seeing a large dollar-neutral expansion while the notes contracted for others.

The new paper hit the secondary space amid continued selling in equities although indexes pared their losses into the close.

The Dow Jones industrial average closed Friday down 282 points, or 0.85%, the S&P 500 index closed down 1.11%, the Nasdaq Composite index closed down 0.97% and the Russell 2000 index closed down 0.63%.

The secondary space was active with $435 million in reported volume about one hour before the close.

New paper and topical news were driving activity in the space.

Exact Sciences Corp.’s convertible notes made large outright gains as Guardant Health Inc.’s 0% convertible notes due 2027 suffered large losses after Guardant Health released the results of a study for its colorectal cancer test.

Novavax volatile

Novavax priced an upsized $150 million of five-year convertible notes after the market close on Thursday at the midpoint of talk with a coupon of 5% and an initial conversion premium of 25%.

Price talk was for a coupon of 4.75% to 5.25% and an initial conversion premium of 22.5% to 27.5%.

The greenshoe was also upsized to $25.25 million.

The initial size of the offering was $125 million with a greenshoe of $18.75 million.

While the convertible notes offering was upsized, the size of Novavax’s concurrent secondary offering was reduced.

Concurrently, the company priced a secondary offering of $65 million, or 6.5 million shares at $10.00 per share.

The company initially planned a secondary offering of up to $125 million.

Novavax’s 5% notes crumbled out of the gate.

The notes traded as low as 96.25 pre-open but pared some losses and were changing hands at 98.5 versus a stock price of $9.94 early in the session, according to a market source.

The notes erased their outright losses as stock caught a bid with the notes shooting above par mid-session.

They were changing hands at 101.25 versus a stock price of $10.48 in the late afternoon, a source said.

The notes either made significant dollar-neutral gains or a large contraction based on when players were able to establish their hedge.

“Anybody who was on hedge and sold stock yesterday made many, many points,” a source said.

However, those on hedge from where it priced saw the notes contract about 1 point, a source said.

The small issue dominated activity in the secondary space with $45 million in reported volume heading into the market close.

Novavax’s stock traded to a new 52-week low of $9.36 and a high of $11.16 before closing the day at $11.03, a decrease of 2.56%.

Colon wars

Exact Sciences and Guardant Health were in focus in the secondary space after Guardant released study results for its colorectal cancer test.

Guardant’s losses were Exact Sciences’ gains with Exact Sciences’ convertible notes surging outright while Guardant Health’s 0% convertible notes due 2027 plummeted.

Exact Sciences’ 0.375% convertible notes due 2027 jumped 8 points outright with stock up 16%.

The notes were changing hands at 84 versus a stock price of $52.78 in the late afternoon, according to a market source.

There was $30 million in reported volume.

Exact Sciences’ 0.375% convertible notes due 2028 jumped 7.75 points outright.

The notes were trading at 79.75 versus a stock price of $52.99 in the late afternoon.

There was $17 million in reported volume.

Exact Sciences’ 1% convertible notes due 2025 climbed 6 points outright.

They were changing hands at 106.5 versus a stock price of $53.74 in the late afternoon.

There was $4 million in reported volume.

Exact Sciences’ stock traded to a high of $56.52 and a low of $51.39 before closing the day at $51.92, an increase of 16.39%.

Guardant Health’s 0% convertible notes due 2027 fell 6.625 points outright with stock down 27%.

The notes were seen at 62.75 versus a stock price of $29.25 in the late afternoon.

The yield climbed to 9.75%.

There was $14.5 million in reported volume.

Guardant Health’s stock traded to a low of $27.75 and a high of $31.17 before closing the day at $30.06, a decrease of 27.14%.

Guardant plunged after it released the results of a study of its blood test for colorectal cancer, which was in direct competition with Exact Sciences’ flagship product Cologuard.

Guardant’s blood test was less effective than Exact Sciences’ stool-sample test, according to a company news release.

However, Guardant is seeking Food and Drug Administration approval for its colorectal cancer screening blood test in early 2023.

Mentioned in this article:

Exact Sciences Corp. Nasdaq: EXAS

Guardant Health Inc. Nasdaq: GH

Novavax Inc. Nasdaq: NVAX

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.