Morning Commentary: New Isis trades below par, slips on hedge; Dendreon trading at 55.5

By Rebecca Melvin

New York, Nov. 12 – Isis Pharmaceuticals Inc.’s newly priced 1% convertible bonds traded below par in the early going Thursday after the Carlsbad, Calif.-based developer of gene-based therapeutic drugs priced $425 million of the seven-year notes at the cheap end of talked terms.

The new Isis 1% convertibles were seen at 99.375 bid, 99.875 offered versus an underlying share price of $51.00, a Connecticut-based trader said at late morning.

Shares opened lower and had traded as low as $49.46.

“The stock didn’t cooperate, and the bonds were heavy right from the get go,” a New York-based trader said. He said on a delta of 75% to 80%, the bonds were in about 0.25 point.

The lion’s share of trading was in this new bond.

But elsewhere, Dendreon Corp.’s convertibles were trading at about 55.5, which is essentially the new reset price after the bonds fell sharply on Monday after the Seattle-based biopharmaceutical company announced that it has filed for Chapter 11 bankruptcy protection.

The Dendreon bonds fell from the mid 60s to the upper 40s but bounced back to the mid 50s on Monday.

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