Morning Commentary: Sarepta convertibles soar on FDA fast-track status for drug

By Abigail W. Adams

Portland, Me., May 15 – The convertibles primary market was quiet early Monday but is not expected to remain so for long as issuers stampede to capital markets ahead of the June 1 U.S. government default deadline.

The investment-grade and high-yield calendar ballooned early Monday with the convertibles market expected to soon follow suit.

As investors eyed a potentially active week for new deal activity, the secondary space was relatively quiet on a flat open for equities.

Equity indexes were either side of unchanged early Monday with the Dow Jones industrial average up 6 points, or 0.01%, the S&P 500 index up 0.04%, the Nasdaq Composite index up 0.15% and the Russell 2000 index up 0.61% shortly before 11 a.m. ET.

There was $94 million in reported convertibles trading volume about one hour into the session with the top three traded issues accounting for more than two-thirds of the activity in the space.

Sarepta Therapeutics Inc.’s 1.25% convertible notes due 2027 were the major movers of the session with the notes skyrocketing outright and expanding dollar-neutral after the Food and Drug Administration fast-tracked the approval process for a product in its pipeline.

The 1.25% notes jumped 17 points outright with stock up almost 25%.

The convertibles were changing hands just shy of 129 early in the session, a source said.

The notes expanded on the move up.

Sarepta’s stock was seen at $150.05, an increase of 24.83%, shortly before 11 a.m. ET.

Stock soared after the FDA voted to fast-track the approval process for the biotech’s gene therapy treatment for Duchenne muscular dystrophy.

Sarepta’s convertible notes have been volatile surrounding the approval process for its muscular dystrophy treatment.

Headlines in March about the FDA consulting with the advisory committee regarding the treatment’s approval sent the dollar-price of the convertible notes spiraling to 110 from 130.

While the advisory committee recommended the approval of the treatment, it was a close 8-6 vote.

The final decision is expected by May 29.

© 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.