Medtronic wins patent case against NuVasive; Human Genome gains; Alpha pulls down coal

By Stephanie N. Rotondo

Portland, Ore., Sept. 21 - Convertibles were "better for sale" on Wednesday, a trader said.

He noted that he didn't "see or hear of any macro themes" that might have resulted in that situation, however.

Medtronic Inc. received a favorable ruling in its patent-infringement lawsuit against NuVasive Inc. on Wednesday. NuVasive was ordered to pay more than $100 million to Medtronic and, as a result, NuVasive's convertible notes took a bit of a hit. Medtronic, for its part, saw its notes ending modestly higher.

The coal sector was also coming under pressure as Alpha Natural Resources Inc. cut its shipping outlook for the year. Alpha's stock "got killed," a trader said, and the news wasn't all that positive for the convertibles either. Also dragged down in the wake of the news was Patriot Coal Corp.

In other energy-related names, Suntech Power Holdings Co. and JA Solar Holdings Co. Ltd. were continuing to weaken in line with concerns about the industry as a whole.

Medtronic wins patent case

A federal jury in San Diego has awarded Medtronic $101.2 million in its patent fight against NuVasive.

A trader said the news was "a negative" for NuVasive, and while its shorter-dated paper "held in OK," the longer-dated "more equity sensitive" issues were falling.

He quoted NuVasive's 2.75% convertible notes due 2017 at 87 bid versus a stock price around $18.96 shortly before the close.

The stock ended down $2.56, or 12.07%, to $18.65 on Wednesday.

Medtronic's 1.625% convertibles due 2013 meantime inched up to around par, while its stock fell 95 cents, or 2.73%, to $33.87.

Medtronic brought the suit against NuVasive, alleging that the company had infringed on three of its patents related to spinal implants. NuVasive has said that it intends to "aggressively challenge this verdict."

Human Genome gains

Elsewhere in the health arena, a trader said Human Genome Sciences Inc.'s convertibles were "way up" after the company presented at the UBS Global Life Sciences Conference.

The trader placed the 2.25% convertibles coming due next month at 103 and the 2.25% convertibles due 2012 at 110, versus a stock price of $14.55 at midday.

The trader called the convertibles up 4 or 5 points on the day.

The stock finished up $1.58, or 12.15%, at $14.58 on Wednesday.

Alpha, coal sector tumble

Alpha Natural Resources cut its shipping outlook for the year to 102.5 million to 109.5 million tons from 104 million to 112 million tons.

The news did not bode well for Alpha or the rest of the coal sector, according to a market source.

"Everything with that isn't going so well," he said. Alpha's stock "got killed," he said, speculating that the equity was hitting a 52-week low.

Alpha's 2.375% convertible notes due 2015 fell nearly 5 points, according to a market source, ending around par. The stock dropped $4.62, or 17.16%, to $22.30 on Wednesday.

The news also brought down Patriot Coal's 8.25% notes due 2018, a trader said. He said the issue was trading around 96 a week ago and was around 95 on Wednesday.

Patriot Coal's equity declined $1.30, or 11.39%, to $10.11 on Wednesday.

No shine for solar

Concerns about the solar energy industry as a whole are continuing to beat down solar convertibles, a trader said.

"The whole sector is weak," he said.

Suntech Power's 3% convertibles due 2013 fell to 54 from 57 outright, he said. "So they have gotten much weaker."

JA Solar's 4.5% converts due 2013 were "weaker as well," offered at 74 with "no bids around."

Chatter has it that China and Taiwan will soon have an excess capacity of solar power, which could dampen revenues. Additionally, the current economic conditions within the U.S. and Europe are not helping matters.

Mentioned in this article:

Alpha Natural Resources Inc. NYSE: ANR

Human Genome Sciences Inc. Nasdaq: HGSI

Medtronic Inc. NYSE: MDT

NuVasive Inc. Nasdaq: NUVA

Patriot Coal Corp. NYSE: PCX

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