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Morning Commentary: Dermira convertibles jump in active trading; Citrix Systems active
By Abigail W. Adams
Portland, Me., March 18 – The convertibles secondary space launched the week with decent trading volume with $81 million on the tape about one hour into Monday’s session.
Dermira Inc.’s 3% convertible notes due 2022 were in focus early in the session with the notes jumping more than 10 points on an outright basis as stock soared after the biotech company released positive clinical results.
The 3% convertible notes traded up to 87.5 early in Monday’s session with stock up to $13.94, a market source said. More than $14 million of the bonds were on the tape less than one hour into Monday’s session.
While Dermira stock was up over 100% early in Monday’s session, the premium on the notes was still 122%.
Dermira stock was $13.70, an increase of 100.29%, shortly before 11 a.m. ET.
The notes were trading with a 7.52% yield to maturity.
With the hefty premium, continued negative cash flow, and negative EBITDA, sources were surprised the notes ran as much as they did.
“I think it’s overdone itself this morning,” a market source said.
Dermira stock soared after the company announced its phase 2 trial for Lebrikizumab, a treatment for a severe form of eczema, was successful.
The phase 3 study is planned for the end of 2019, according to a company news release.
Citrix Systems Inc.’s 0.5% convertible notes due April 15, 2019 also saw a fresh round of trading activity with the maturity of the notes less than one month away.
The 0.5% convertible notes were changing hands around 143.125. About $12 million of the bonds were on the tape less than one hour into Monday’s session.
The activity was end of life trades, a market source said.
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