Cubist trades down after patent setback; Energy XXI drops; IGI Laboratories launches deal

By Rebecca Melvin

New York, Dec. 9 – Cubist Pharmaceuticals Inc.’s two balanced convertibles contracted for a second straight day on Tuesday, with the bonds down slightly on an outright basis against lower shares after a negative patent ruling cast some uncertainty over its new deal with Merck & Co., market sources said.

The bonds traded all over the place, but eventually “they came in,” a New York-based sellsider said.

It was the second straight day that the Cubist convertibles were a centerpiece of the convertibles market and contracted. On Monday, the bonds jumped outright but underperformed the common shares on a hedged basis after news of the Merck deal.

The bonds came in again on news late Monday that the U.S. District Court in Delaware ruled four Cubist Cubicin patents are invalid and that Hospira Inc. can launch a generic version of the product as soon as 2016.

In the energy sector, Energy XXI Ltd. traded sharply lower despite higher crude oil prices, which buoyed shares of many energy and exploration companies, including its own.

Energy XXI’s 3% convertibles due 2018 traded down at 42 from 49 previously, a New York-based trader said. Meanwhile EXXI shares jumped 14% to $3.19.

After the market close on Tuesday, New Jersey-based pharmaceutical company IGI Laboratories Inc. joined the calendar with a $125 million deal of five-year convertible senior notes that were talked to yield 3.25% to 3.75% with an initial conversion premium of 25% to 30%.

© 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.