Morning Commentary: Pacira deal prices rich, pops above par; Impax rises on strategic review news

By Stephanie N. Rotondo

Seattle, March 8 – A new $300 million convertible bond issue from Pacira Pharmaceuticals Inc. was dominating early trading on Wednesday, according to a market source.

Of the $172 million convertibles traded as of mid-morning, Pacira’s 2.375% convertible senior notes due 2022 made up over $102 million of the volume, the source said.

The paper was already above par, trading close to 104.5.

The company’s underlying equity (Nasdaq: PCRX) was also better, adding 65 cents, or 1.34%, to trade at $49.30.

The deal came late Tuesday with an initial conversion premium of 37.5%. The terms were rich to the initial price talk of 2.75% to 2.875% and beyond the rich end of talk for an initial conversion premium of 27.5% to 32.5%.

J.P. Morgan Securities LLC, Jefferies & Co. and RBC Capital Markets LLC ran the books.

Away from the new issue, Impax Laboratories Inc.’s 2% convertible notes due 2022 were being eyed after the company said it had hired Morgan Stanley to look into its strategic alternatives, including a possible sale.

On the news, the convertibles were seen up a deuce at 75.

The company’s stock (Nasdaq: IPXL) also got a nice pop, rising 27 cents, or 3.02%, to $9.38.

Impax is a generic drug manufacturer that had struggled amid increasing drug price concerns and the quicker pace of generic drug approvals.

The company is also continuing to search for a new chief executive officer after Fred Wilkinson’s exit in December. Impax hopes to fill the role by April, and any decision on the strategic review will come after a new CEO is appointed.

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