Novavax plummets after failed trials: Intel up with stock on better guidance; Wheeler prices

By Rebecca Melvin

New York, Sept. 16 – Novavax Inc.’s 3.75% convertibles plunged by 100 points to the low 40s by the end of Friday after the Rockville, Md.-based biotechnology company reported that trials for its RSV respiratory disease vaccine candidate had failed, market sources said.

The Novavax convertible was quoted at 41 bid, 43 offered by a market source after the market close on Friday. That was down from about 142 previously, a second market source said. The Novavax common stock collapsed $7.05, or 85%, to $1.29 in heavy trading during the day after Novavax reported the news late Thursday.

Elsewhere, Intel Corp.’s two convertible bonds added in tandem with gains in the underlying common stock after the Santa Clara, Calif.-based semiconductor company revised third-quarter revenue guidance upward.

The Intel 2.95% convertibles traded at 137.4 Friday, which was up 2.6 points on the day, and the Intel 3.25% convertibles traded at 181.5, which was up 4.5 points, according to Trace data. Both bonds were trading actively. Intel shares were up 2.5% at $37.48 on the Nasdaq stock market at late morning and closed up a little higher at $37.67.

In primary action, Wheeler Real Estate Investment Trust Inc. priced $40 million of 8.75% convertible preferred shares. The Virginia Beach, Va.-based commercial REIT’s deal came at the cheap end of price talk for a dividend of 8.5% to 8.75% and an initial conversion premium of 20% to 25%.

Wheeler REIT’s new preferreds were not heard in trade, but the underlying common stock fell 16 cents, or 9%, to $1.61.

In the broader markets, the Dow Jones industrial average lost 88.68 points, or 0.5%, to 18,123.80; the S&P 500 slipped 8.10 points, or 0.4%, to 2,139.16; and the Nasdaq composite edged down 5.12 points, or 0.1%, to 5,244.78.

Financial and energy stocks led declines. Bank company shares were lower in sympathy with Deutsche Bank AG, which fell 9% on the Frankfurt stock exchange, after news that the U.S. Justice Department wants Deutsche Bank to pay $14 billion to settle mortgage-securities investigations that stem from the financial crisis.

Meanwhile, oil prices were lower again. West Texas intermediate crude oil for October delivery fell 88 cents, or 2%, to $43.03 a barrel, which is down 6% for the week.

Novavax implodes

The Novavax 3.75% convertibles due 2023 fell to 46 late Thursday and lost another 5 points or so on Friday after the company’s damaging report about unfavorable results from two clinical trials.

The Novavax shares fell 84% in after-hours trading Thursday and closed down $7.05, or 85%, at $1.29 on Friday.

The bonds had also traded at 46 versus an underlying share price of $1.40, a New York-based trader said at late morning.

The Novavax convertible is less than a year old. The company priced an upsized $325 million of the bonds in early February.

Its drug candidate known as the RSV F Vaccine didn’t meet efficacy goals, including the primary objective related to prevention of respiratory tract disease.

“We are both surprised and disappointed by the outcome” of the Resolve Phase 3 trial of the vaccine, which included people at least 60 years of age, the company said. The drug also didn’t meet its secondary efficacy goal in the Phase 3 trial.

In a separate Phase 2 trial, the company observed “absence of efficacy of a single immunization,” but said “we did observe that a second season immunization could provide efficacy.”

Novavax had estimated RSV F Vaccine has “peak revenue potential” of $6 billion to $8 billion. Novavax is also developing flu and ebola vaccines, but doesn’t have any marketed products.

Wheeler prices $40 million

Wheeler REIT priced $40 million of series D cumulative convertible preferred shares with a liquidation preference of $25.00 per share to yield 8.75% and with an initial conversion premium of 20%, according to a regulatory filing.

The registered, off-the-shelf deal priced at the cheap end of price talk for a 8.5% to 8.75% dividend and 20% to 25% initial conversion premium.

Compass Point Research & Trading LLC and Wunderlich Securities Inc. were bookrunning managers and Ladenburg Thalmann & Co. Inc. was lead manager.

The perpetual preferreds are non-callable for five years, and holders can put the paper at year seven.

The dividend will step up by 2% a year beginning in 2023 until it reaches a maximum of 14%.

Wheeler REIT was approved to list the preferreds on the Nasdaq Capital Market under the symbol “WHLRD.” Trading is expected to begin Sept. 16.

Mentioned in this article:

Intel Corp. Nasdaq: INTC

Novavax Inc. Nasdaq: NVAX

Wheeler Real Estate Investment Trust Inc. Nasdaq: WHLR

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