Morning Commentary: Twitter beats estimates but little changed; Flexion, Neurocrine deals in focus

By Stephanie N. Rotondo

Seattle, April 26 – A surprise earnings beat wasn’t doing much to shake up Twitter Inc.’s 0.25% convertible notes due 2019, a market source reported on Wednesday.

The source saw the bonds trading in a 94.5 to 94.625 context, which was deemed unchanged to up a touch.

The underlying stock (NYSE: TWTR), however, was popping, adding nearly 11% by mid-morning.

The equity’s upward push came as the social media company said that it added 9 million active monthly users in the first quarter. In the U.S. alone, 3 million users were added – not bad, considering that’s about how many users were gained in all of 2016.

However, the company did see sales decline, its first since going public in 2013.

Meanwhile, the market was waiting for two new issues that were expected to come after Wednesday’s close.

Late Tuesday, Flexion Therapeutics Inc. and Neurocrine Biosciences Inc. announced Rule 144A offerings. Flexion is selling $125 million of seven-year convertible senior notes, with the initial yield talked at 3.125% to 3.625% and an initial conversion premium of 30%.

Wells Fargo Securities LLC, BMO Capital Markets and RBC Capital Markets are running the books.

As for Neurocrine, it plans to price $450 million of seven-year convertible senior notes, with price talk at a 2.5% to 3% yield and an initial conversion premium of 37.5% to 42.5%.

Barclays and Jefferies LLC are the bookrunners.

In addition to being both pharmaceutical companies’ inaugural convertible issue, both carry similar terms. Flexion is provisionally callable after year three, while Neurocrine can be called after year four – both only if the stock hits a 130% price hurdle.

For its part, Flexion plans to use proceeds to further its Zilretta drug development, assuming it receives approval from the Food & Drug Administration. Neurocrine will meanwhile use the funds for general corporate purposes.

Ahead of pricing, Flexion’s stock (Nasdaq: FLXN) was getting beat down, falling almost 15% in early trading. Neurocrine’s shares (Nasdaq: NBIX) were little changed, though, dipping 19 cents to $53.43.

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