Antigenics climbs on drug data; Electronic Data flat as rumors continue; BioMarin, Lawson launch deals

By Kenneth Lim

Boston, April 16 - Antigenics Inc. got a sharp boost on Monday after the company said that a developmental drug appeared to show promise as a brain cancer treatment in early-stage trials.

Electronic Data Systems Corp. remained active but remained mostly flat amid ongoing unconfirmed rumors of a potential takeover.

Off the secondary market, BioMarin Pharmaceutical Inc. returned to tap the convertible market with a planned $250 million offering, while Lawson Software Inc. also announced a $200 million deal. Both deals are expected to price Tuesday after the market closes.

The convertible market remained slow on Monday, but interest appeared to firm up from the previous week's weakness.

"It was quiet, but we did see a little firmer market," a sellsider said. "The last couple of days last week was softer. There's spotty activity, but I would said it's mixed."

Antigenics bid up

Antigenics' lightly traded 5.25% convertible due 2025 was bid about 10 points higher from week-ago levels after the company said its Oncophage cancer vaccine appeared to aid survival among a small group of late-stage brain cancer patients.

The convertible was marked around 81.25 against a stock price of $5.25 at a large convertible shop and was seen bid even higher elsewhere, although actual trades were scarce. Antigenics stock (Nasdaq: AGEN) surged 20.71% or 76 cents to close at $4.43.

"We never seen any of these things trade," a sellside convertible trader said. "It's one of those closely held names. Of course you're going to see better bids today, but nobody's selling."

New York-based Antigenics, a biotech company, said a trial of 12 patients with late-stage brain cancer showed that Oncophage boosted the immune systems of all 12 patients. The lead investigator in the trial plans to pursue a phase 2 trial for the drug in brain cancer treatment this year, and initial results could be available in about 18 months. Antigenics has already failed late-stage trials in treating skin and kidney cancers.

A sellside convertible analyst said that with a small company like Antigenics, any good news for the stock would be good for the convertible, although arbitrageurs likely enjoyed less of Monday's jump.

"I would think the outright guys did better than the hedge guys," the analyst said.

The convertible trader said that despite the lack of volume in the name, the news could keep Antigenics on the radar for convertible investors.

"If the results are promising, you could see them come to the convertible market again," the trader said. "Or some of the bigger pharmas could start to take a closer look and you'll have some acquisitions to stir things up."

Electronic Data flat but active

Electronic Data's 3.875% convertible due 2023 was unchanged to slightly higher on Monday as speculation about a possible buyout remained unconfirmed.

The convertible was 103.375 against a stock price of $28.75 early Monday, up by about an eighth-point. Electronic Data stock (NYSE: EDS) gained 1.26% or 36 cents to finish at $28.87.

"EDS was up a touch," a convertible trader said. "I heard about the takeover rumors, but all it's been is rumors."

Electronic Data stock leapt at the end of the previous week after rumors emerged that the company could be a takeout target. The company did not comment on the speculation. Electronic Data is a Plano, Texas-based provider of information technology and business process outsourcing services.

"Guys who looked at the options are seeing quite a bit of bullishness in the stock," the trader said. "So you had a lot of people trying to figure out what was going on and then probably somebody heard from somebody that somebody might be interested in buying the company, and then what you have is rumors chasing rumors. I don't know whether any of the rumors are true, so as far as I know this could go either way."

A convertible analyst also said there was scant backing for the rumors.

"I don't know if there's really a buyout here," the analyst said. "Given the run-up over the past couple of days I would say any acquirer would have to take another look. Some of this may simply be guys taking positions before they report earnings, which is still interesting but probably doesn't have as much upside as you'd expect."

Electronic Data is expected to report its first-quarter earnings on May 3.

BioMarin launches deal

BioMarin said after the market closed that it plans to price $250 million of 10-year convertible senior subordinated unsecured notes in an off-the-shelf offering slated to price Tuesday after the close.

The deal is talked at a coupon of 1.625% to 2.125% and an initial conversion premium of 17.5% to 22.5%.

The convertibles will be offered at par.

There is an over-allotment option for a further $37.5 million.

Merrill Lynch is the bookrunner of the registered offering.

BioMarin, a Novato, Calif.-based biopharmaceutical company, said the proceeds of the deal will be used to fund future business development transactions and general corporate purposes.

BioMarin has $172.5 million outstanding of a 2.5% convertible due 2013 that was offered in 2006. The existing convertible did not trade on Monday, but was last seen at 127.45 a week ago, when the stock closed at $17.54. BioMarin stock (Nasdaq: BMRN) closed at $17.83 on Monday, up by 0.73% or 13 cents, before the deal was announced.

Lawson plans offering

Lawson Software also plans to price $200 million of five-year convertible senior notes on Tuesday after the market closes. It deal is talked at a coupon of 2.25% to 2.75% and an initial conversion premium of 32.5% to 37.5%.

The convertibles will be offered at par.

There is an over-allotment option for a further $40 million.

Lehman Brothers is the bookrunner of the Rule 144A offering.

Lawson, a St. Paul, Minn.-based software developer, said it will use some of the proceeds to fund convertible note hedge and warrant transactions. The company will also concurrently buy back up to $70 million of its common stock and fund general corporate purposes.

Lawson stock (Nasdaq: LWSN) slipped 1.12% or 10 cents to $8.86 in after-hours trading following the announcement of its deal.

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