Innoviva’s ‘old’ convertibles active ahead of new issue pricing; Intercept remains weak

By Stephanie N. Rotondo

Seattle, Aug. 1 – The convertible bond market was looking at the calendar on Tuesday as Innoviva Inc. – formerly known as Theravance Inc. – was slated to bring a $175 million offering of eight-year convertible senior notes.

However, the Rule 144A deal had not priced as of 6:30 p.m. ET.

Price talk was for a 2.25% to 2.75% yield and an initial conversion premium of 27.5% to 32.5%.

The new issue was first announced late Monday. Pricing was expected after Tuesday’s close.

Morgan Stanley & Co. LLC and Deutsche Bank Securities Inc. are running the books.

Ahead of pricing, a trader said the “old” Innoviva bonds – the 2.125% convertible notes due 2023, which are linked to the company’s former moniker – were trading at 93.30 against a stock price of $13.20.

That compared to earlier levels in a 92.5 to 92.75 context against a stock price of $13.00.

“When you raise new capital, the old debt generally improves,” the trader said. “You get that extra layer.”

Innoviva’s shares dropped 44 cents, or 3.21%, to $13.28.

A portion of the proceeds will be used to refinance the company’s 9% fixed rate term notes due 2029. The company may also use the funds for privately negotiated stock repurchase transactions.

The South San Francisco, Calif.-based biopharmaceutical company changed its name on Jan. 7, 2016, about a year and a half after it was spun off from Theravance Biopharma Inc.

Last week, the company reported quarterly results that beat expectations.

For the second quarter, net income was $35.1 million, or 30 cents per share. Revenue was $58.6 million.

Analysts polled by Zacks Investment Research had forecast EPS of 28 cents.

Meanwhile, Intercept Pharmaceuticals Inc.’s 3.25% convertible notes due 2023 were “trading again,” a trader said.

The bonds had been busy in the previous session, as investors digested earnings that beat expectations and mostly positive trial results. But just like in the previous session, the bonds – as well as the underlying equity – were in decline.

A trader said the convertibles were trading between 99.75 ad 100.625.

“It looks like a lot of these prints were outright,” he said. “[The bonds] are just tracking the stock lower.”

The shares waned $6.37, or 5.44%, to $110.76.

On Monday, the New York-based pharmaceutical company reported second-quarter results that beat expectations.

For the quarter, net loss came to $86.56 million, or $3.46 a share. That compared to a net loss of $77.3 million, or $3.14 a share, the year before.

Revenue was reported at $30.9 million, a gain of $5.5 million year over year.

Analysts polled by FactSet had forecast a loss per share of $3.65 on revenue of $27.5 million.

In addition to the earnings, Intercept also announced that a mid-stage clinical trial for an obeticholic acid therapy in primary sclerosing cholangitis – a rare liver disease – hit its primary endpoint.

However, the company did note that one study patient died during the treatment. While an independent safety committee said the death was not likely due to the treatment, Intercept said it could not be completely ruled out.

Mentioned in this article:

Innoviva Inc. Nasdaq: INVA

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

© 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.