Aegerion adds on swap with higher shares; Titan Machinery slips on swap on lower shares

By Rebecca Melvin

New York, Aug. 27 – Aegerion Pharmaceuticals Inc.’s 2% convertibles, which priced earlier this month, rose on an outright basis and improved on a dollar-neutral, or hedged, basis on Wednesday as shares of the Cambridge, Mass.-based biopharmaceutical company rose 5%, a New York-based trader said.

Also among biotech names, Cubist Pharmaceuticals Inc. was still seeing strong outright interest with the Cubist 1.875% convertibles due 2020, or the B tranche, ending the session wrapped around 113.

“The health care, biotech space is one of the few places that is outperforming,” a trader said.

This week the biotech space was boosted by investors recycling money out of InterMune Inc. on the heels of a 50-point run in that company’s 2.5% convertibles on Monday. The run was caused by news that Swiss pharmaceutical giant Roche AG has offered to buy the California-based biotechnology firm.

That deal followed M&A chatter last week regarding a potential purchase of Salix Pharmaceuticals Ltd. by Allergan Inc.

Traders are looking at names that are takeout targets like Cubist and Jazz Pharmaceuticals plc.

“Cubists are terrible on swap on a takeover, however; so there isn’t hedged interest, but outright interest,” a trader said.

The InterMune deal “just added to the consolidation theme in the space, especially on the heels of the rumored Allergan for Salix news last week,” a second New York-based trader said.

Elsewhere, Titan Machinery Inc.’s 3.75% convertibles due 2019 traded little unchanged on an outright basis but were seen 0.125 point lower on swap on a 35% delta with the shares down nearly 7%.

“That was pretty much the market delta,” a trader said of the 35% figure.

Shares of Titan, a West Fargo, N.D.-based agriculture and construction equipment company, fell 92 cents to $12.53.

The Titan convertibles were quoted at 79 to 80 at the end of the day.

Web.com Group Inc.’s 1% convertible due 2018 crossed the tape at 92 and a little under, which was in the range of where it has traded since Aug. 1 when bonds and shares of the Jacksonville, Fla.-based global domain name register plunged on a quarterly revenue miss.

Overall in convertibles, there has been some outright interest in certain balanced names, a trader said. But volatility names have been “coming in on a valuation basis this week, as nothing is moving.”

“Generally, things have slowly leaked lower every day this week. But it’s not based on any large fundamental selling,” he said.

Aegerion adds on swap

Aegerion’s 2% convertibles due 2019 closed up at 103.75 bid, 104 offered against the closing underlying share price of $32.54, which was up 5%.

That was up from about 100 previously, and on swap, the bonds were better by 0.5 point on a delta of about 65%, a New York-based trader said.

Investors pushed shares higher by $1.57 on Wednesday. Early in the day the company announced a resolution of a warning letter for Juxtapid (lomitapide) capsules. It said it received a closeout letter from the Office of Prescription Drug Promotion signifying the resolution of the warning letter related to statements made about the drug during two television broadcast interviews in 2013. In light of corrective actions taken by Aegerion, including disseminating a corrective broadcast, the OPDP considered the matter closed.

Mentioned in this article:

Aegerion Pharmaceuticals Inc. Nasdaq: AEGR

Cubist Pharmaceuticals Inc. Nasdaq: CBST

InterMune Inc. Nasdaq: ITMN

Jazz Pharmaceuticals plc Nasdaq: JAZZ

Salix Pharmaceuticals Ltd. Nasdaq: SLXP

Titan Machinery Inc. Nasdaq: TITN

Web.com Group Inc. Nasdaq: WWWW

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