IDEC Pharma $675 million proceeds convertibles talked at 1.5-2.0% yield, up 35-40%

By Ronda Fears

Nashville, Tenn., April 23 - IDEC Pharmaceuticals was in the overnight Rule 144A deal pitching $675 million in proceeds of 30-year zero-coupon convertible senior notes talked to yield 1.5% to 2.0% with a 35% to 40% initial conversion premium, via sole lead manager Merrill Lynch & Co.

One trader said the new deal was bid at issue price in the gray market with offers at 0.3125 point above issue price. However, another trader said a "good sized chunk" of the paper traded 0.125 point below issue price.

The San Diego-based biotech firm said it will use some of the proceeds to buy back up to $135 million of its common stock simultaneously with the issue, which is an enticement for hedged convertible buyers. Remaining proceeds will be used for general corporate purposes, including capital expenditures and working capital.

Also, IDEC said it plans to enter into negotiations with holders of its outstanding 0% convertible notes due 2019 to obtain agreements to convert those notes into common stock. The issue is deep in the money.

Last week, San Diego-based IDEC reported first quarter net income of $29.7 million, or 17c a diluted share, from $20.8 million, or 12c, in first quarter 2001. Revenues gained to $79.7 million from $56.5 million.

IDEC attributed much of the improvement to sales of the non-Hodgkin's lymphoma drug Rituxan, which is promoted in conjunction with Genentech Inc. Rituxan net sales rose to $235 million for the quarter from $168 million a year earlier with IDEC's share totaling $78.2 million in first quarter, up from $48.6 million.

Ealier this month, IDEC launched commercial sales of Zevalin, another antibody-based drug used to treat lymphoma, through Syncor International Corp. The drug, which delivers cancer-killing radiation directly to tumors, was developed in conjunction with Schering AG. IDEC has all U.S. marketing rights to Zevalin and Schering has marketing rights outside the U.S.

IDEC shares closed down $1.68 to $61.15 but were seen as low as $58.90 in after-hours trading.

The IDEC 0% due 2019, which was issue in November 1999 at 33.78, was quoted down 4 points to 251.5 bid, 252.5 offered.

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