Exelixis jumps outright, expands on hedge on positive trial data; Depomed better on hedge

By Rebecca Melvin

New York, July 20 – Exelixis Inc. was the name of the day in the convertibles market on Monday as its 4.25% convertibles surged more than 30 points on an outright basis and expanded about 3 points on swap in active trade after the South San Francisco, Calif.-based biotechnology company announced positive results for a phase 3 trial of a kidney cancer drug. Shares of the company surged 50%.

Exelixis said the trial comparing cabozantinib to everolimus in 658 patients with metastatic renal cell carcinoma met its primary endpoint.

The drug is not a first line treatment, but, if approved, would be used under certain circumstances, a convertibles trader said.

Depomed Inc.’s convertibles outperformed the underlying shares of the Newark, Calif.-based pharmaceutical company. Last week, the company adopted a poison pill in response to a hostile takeover bid from Horizon Pharma plc. The bid represented a 42% premium over Depomed’s share price on the day it was announced.

Horizon Pharma also has convertible bonds, but the 2.5% convertible issue was not heard in trade on Monday.

Illumina Inc.’s convertibles were quiet. The San Diego-based developer of genetic research tools was set to report quarterly results after the market close on Tuesday.

Illumina’s 0% convertible notes due 2019 traded last at 122, which was little changed compared to Friday.

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