Morning Commentary: Novocure convertible notes skyrocket on clinical results

By Abigail W. Adams

Portland, Me., Jan. 5 – It was a relatively quiet start to the session in the convertibles secondary space with equity indexes in the red after the latest ADP National Employment Report came in well above expectations.

However, one name was the exception.

Novocure Ltd.’s 0% convertible due 2025 dominated the tape on Thursday with the notes surging on an outright and dollar-neutral basis following positive clinical results for a lung cancer treatment.

The notes jumped 14 points outright with stock up more than 50%.

The convertibles were changing hands at 102.5 versus a stock price of $102.87 early in the session, according to a market source.

It was the highest outright level for the notes since November 2021.

The notes expanded 3.5 points dollar-neutral on a 40% delta on the move up, a source said.

There was $38 million in reported volume.

Novocure’s stock traded up to $114.34, an increase of 62.12%, shortly before 11 a.m. ET.

Stock surged after the oncology company announced its LUNAR study evaluating the efficacy of Tumor Treating Fields together with standard therapies for treating stage 4 non-small cell lung cancer had met its primary endpoint.

Novocure’s stock was one of the top gainers on a red day for equity markets.

Equity indexes returned to losses following the ADP report, which reflected continued strength in the labor market with the Dow Jones industrial average down 365 point, or 1.10%, the S&P 500 index down 1.09%, the Nasdaq Composite index down 1.21% and the Russell 2000 index down 0.88% shortly before 11 a.m. ET.

Outside of Novocure, the secondary space saw another slow start to the trading session with no other convertible bond issue seeing more than $5 million in reported trading volume.

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