Morning Commentary: Gilead lower outright after Express Scripts-AbbVie deal; MGM weaker again

By Rebecca Melvin

New York, Dec. 22 – Gilead Sciences Inc.’s convertibles were trading actively early Monday in a generally quiet market, a New York-based trader said.

The Gilead convertibles traded lower with shares that were down 14% after news that pharmacy benefits manager Express Scripts Holding Co. has chosen AbbVie over Gilead as its sole provider of hepatitis C treatment based on cost benefits.

Gilead has been a dominant player in hepatitis C treatment, but its Solvaldi treatment has been criticized as being very expensive.

Gilead’s D convertibles, or the 1.625% convertibles due 2016, traded down 56 points to 422, according to Trace data, with Gilead shares down $15.35, or 14%, at $93.08.

MGM Resorts International’s convertibles were weaker again on Monday as implied volatility continues to erode on its short-dated convertibles that mature April 2015, the trader said.

The MGM 4.25% convertibles were seen to have changed hands at 113.45 with shares of the Las Vega-based casino operator down nearly 2% at $19.93.

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