Morning Commentary: Biotech sector firm, led by Medicines, Ionis; Pandora convertibles in decline

By Stephanie N. Rotondo

Seattle, Jan. 6 – The Medicines Co.’s convertible bonds were faring better in early Friday trading, due to sector peer Amgen’s patent victory over Sanofi and Regeneron.

The judge overseeing the case barred Sanofi from selling a new anti-cholesterol drug, citing two patents held by Amgen. As such, Sanofi cannot offer the drug – which was initially discovered by Regeneron and then licensed to Sanofi – until those patents expire.

But that could be a boon for Medicines, as its own anti-cholesterol drug is not made the same way, meaning the company could avoid any patent-related issues.

In response, the 2.75% convertible notes due 2023 ticked up about 1.5 points to straddle 101.

The underlying stock (Nasdaq: MDCO) was meantime up 85 cents, or 2.39%, at mid-morning, trading at $36.37.

Elsewhere in the biotech space, Ionis Pharmaceuticals Inc.’s 1% convertible notes due 2021 were seen popping 3.5 points in early trades to 104.785. The common stock (Nasdaq: IONS) was also better, rising $1.99, or 4.23%, to $49.08.

Ionis’ gains came as the company said it had inked a collaboration deal with Novartis on two cardiovascular treatments. Ionis said the deal could be worth as much as $1 billion, if successful.

Away from biotech, Pandora Media Inc.’s 1.75% convertible notes due 2020 declined over 2 points to 100.25, according to a market source. The weakness followed a slip in the stock, which came as Sirius XM’s management indicated that a merger of the two companies was not likely.

The equity (NYSE: P) fell 71 cents, or 5.46%, to $12.30.

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