Amgen trades actively on positive trial news; Equinix dips but pares losses; Vale edges up

By Rebecca Melvin

New York, July 8 - The main action in convertibles trading Wednesday was in Amgen Inc., which saw its convertibles and underlying stock higher the day after the biotechnology giant announced a late-phase drug trial showed promise in the treatment of bone metastases.

The Amgen convertibles may have slightly underperformed, a sellsider said, since most of the trades in the name of late have been outright and they don't have the same sensitivity to price when selling.

Equinix Inc. traded down early in the session, mostly in line with its underlying shares, amid rumors of an accounting problem.

Losses were pared later after the company said in a regulatory filing that it was not aware of any undisclosed accounting matters.

Cephalon Inc. saw its new 2.5% convertibles due 2014, which priced at the end of May, trade at 98.25 versus a share price of $55.35.

Vale SA was bid up modestly in the early going upon its release to the secondary market after pricing on the cheap end of talk late Tuesday.

"People liked them enough to be bidding on them," a syndicate source said.

Also in the primary, Regis Corp. was expected to price $125 million of five-year convertible senior notes after the market close on Wednesday. But the notes had not been priced by Prospect News' deadline, according to a syndicate source.

The new convertibles were viewed 3.4% cheap by one sellside analyst.

Meanwhile Verigy Ltd. launched an offering of $110 million of five-year convertibles, which were expected to price after the market close Thursday.

The new convertible was talked to yield 5.5% to 6% with an initial conversion premium of 20% to 25%, according to market source.

The semiconductor test company also confirmed prior guidance Wednesday, saying that it expected its third-quarter revenue to increase 10% to 25% from the $71 million reported in the second quarter.

Amgen trades actively

The longer-dated Amgen 0.375% convertibles due 2013 jumped about 6 points to 97.625 versus a stock price of $60.25.

Amgen's shorter-dated 0.125% convertible due 2011 traded at 99 versus a share price of $60.25, which was a point or two higher than Tuesday.

Shares of Thousand Oaks, Calif.-based Amgen closed up $7.27, or 14%, to $59.50.

About $526.862 million of the Amgen convertibles traded by midafternoon, which accounted for about half of the $1.208 billion volume total. These figures are understated, a sellsider said, but still offer an indication of Amgen's action.

The company announced late Tuesday that a phase 3 trial evaluating denosumab versus Zometa (zoledronic acid) in the treatment of bone metastases in 2,049 patients with advanced breast cancer met its primary and secondary endpoints and demonstrated superior efficacy compared to Zometa.

Denosumab can reduce or delay the serious complications of bone metastases in breast cancer patients better than the current standard of care, and with a favorable benefit/risk profile, the company said in a news release.

Equinix dips, pares losses

Equinix's 4.75% convertibles due 2016 traded at 100.5 versus a share price of $65.30 on Wednesday. At the close the paper was seen closer to 101, which was little changed on the day, and versus a share price of $67.19.

The Equinix 3% paper traded at 77.5 versus a share price of $65.30, and the Equinix 2.5% paper due 2012 traded at 87, according to a sellside source.

Shares of the Foster City, Calif.-based information-technology company pared early losses but still ended lower by $1.46, or 2%, at $67.19.

The company filed an 8-K in which it said that several investors had contacted the company to inquire about a rumor in the market regarding "speculation about Equinix's accounting."

It is the company's policy to decline to comment on unsubstantiated rumors, the filing stated. But, one of the company's directors, contacted by an investor, responded that he was not aware of any facts supporting the rumor.

"Accordingly, the company is making this filing in order to inform all investors that the company is not aware of any undisclosed accounting matters affecting the company," the filing stated.

Vale mandatories edge up

The newly priced Vale 6.75% mandatory convertibles were up to 51, and the Vale 6.75% convertible preferreds were 51.25 at midafternoon, after early trades a little better than 50. The issues' par price is 50.

The two tranches traded about evenly in terms of volume, according to a syndicate source.

Vale shares ended up 24 cents, or 1.5%, at $16.12.

The Rio de Janeiro-based diversified metals and mining company priced $941.7 million of three-year mandatory convertible notes in two tranches after the close of markets Tuesday at the cheap end of talk to yield 6.75% with an initial conversion premium of 17.5%.

Talk was for a coupon of 6.25% to 6.75% with an initial exchange premium of 17.5% to 22.5% for both tranches.

The $292.45 million of VALE-2012 notes will be converted to American Depositary Shares, each representing one common share of Vale. And the $649.2 million of VALE.P-2012 notes will be convertible to ADSs, each representing one preferred class A share.

Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. were joint bookrunners of the registered offering, which will be issued through wholly owned subsidiary Vale Capital II.

Vale will use proceeds for general corporate purposes.

Mentioned in this article:

Amgen Inc. Nasdaq: AMGN

Cephalon Inc. Nasdaq: CEPH

Equinix Inc. Nasdaq: EQIX

Regis Corp. NYSE: RGS

Vale SA NYSE: VALE

Verigy Ltd. Nasdaq: VRGY

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