Morning Commentary: Horizon Pharma drops; Clovis in focus; Anacor, Depomed slip; Chesapeake gains

By Rebecca Melvin

New York, April 12 – Horizon Pharma plc’s convertibles fell along with the underlying shares early Tuesday after the Ireland-based pharmaceutical company lowered guidance for its first- and second-quarter sales and earnings forecasts, although full-year sales guidance was confirmed.

Horizon’s 2.5% convertibles due 2022 dropped to 80.90 from about 93, according to Trace data, but the convertibles were not trading actively, a New York-based trader said.

Horizon shares dropped $4.17, or 23%, to $14.06 last.

The company’s new sales guidance for the first and second quarters was well below the current estimates. But full-year 2016 net sales and earnings guidance was confirmed. The 2016 full-year net sales guidance was $1.025 billion to $1.050 billion, and full-year 2016 adjusted EBITDA guidance was $505 million to $520 million, representing 37% and 41% growth at the midpoints, respectively, the company said.

Traders were also watching Clovis Oncology Inc.’s convertibles as the Boulder, Colo.-based biotechnology company met with a panel of federal regulators Tuesday morning to discuss its New Drug Application for rociletinib.

The Clovis 2.5% convertibles due 2021 had not yet traded and were last at 63.62, according to Trace data.

There looked to be profit-taking in the health care convertibles space in general following gains notched in that area last week, a New York-based trader said.

“Stocks are down on the day and pharma is definitely one of the main reasons for the drag down,” a trader said.

Anacor Pharmaceuticals Inc.’s 2% bonds were down nearly 6 points on an outright basis to 112.8, according to Trace data, and Depomed Inc.’s 2.5% convertibles fell 4.3 points to 103.

Elsewhere, Chesapeake Energy Corp.’s convertibles were up again along with the underlying shares. On Monday the Oklahoma City-based natural gas company announced that it has amended its $4 billion revolving credit facility agreement, granting relief of some debt covenants and allowing the company to continue to borrow at unchanged levels.

Chesapeake’s 2.5% convertibles due 2037 traded up nearly 3 points to 73.25 after jumping about 10 points on Monday.

“It will be interesting to see how that goes,” a New York-based trader said of Chesapeake.

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