ViroPharma jumps on takeout chatter; new Protalix moves up outright; GSV Capital gains

By Rebecca Melvin

New York, Sept. 13 - ViroPharma Inc.'s convertibles surged on an outright basis along with the underlying shares on Friday and expanded about a point on a dollar-neutral, or hedged, basis after a news report that the Exton, Pa.-based biopharmaceutical company may be getting close to a takeout.

In the same space, Protalix BioTherapeutics Inc.'s newly priced 4.5% convertibles traded up to 104 to 106 on an outright basis on their debut in the secondary market despite lower shares after the Carmel, Israel-based biopharmaceutical company priced $60 million of the five-year notes at the middle of coupon talk and beyond the rich end of premium talk.

The convertibles of another biopharma, Akorn Inc.'s 3.5% convertibles due 2016, were seen at 218.375 bid, 218.75 offered versus a share price of $18.66 on Friday, which was mostly in line on a 93% delta, but "creeping up," a New York-based trader said.

Elsewhere, GSV Capital Corp.'s new 5.25% convertibles, which debuted in the secondary market on Thursday, gained more than half a dozen points to 107.5 to 109.5 amid a 14% surge in the underlying shares. The gain was generated by buzz over the Twitter initial public offering given that Woodside, Calif.-based GSV reported a 15% weighting of its investments in Twitter as of June 30.

CBIZ Inc., a Cleveland-based business services provider, didn't see any trading of its 4.875% convertibles due 2015, but this name was also in focus after an early spike in the underlying shares. The CBIZ convertibles have two more years until maturity and are an equity-sensitive name with a low 20% premium and negative yield.

Of the four new issues that priced in the U.S. convertibles market this past week - all of which were on the small side - Alon USA Energy Inc.'s new 3% convertibles made the biggest splash. They expanded on their debut on lower shares after the Dallas-based refiner priced $130 million of the five-year notes.

Clean Energy Fuels Corp.'s new 5.25% convertibles, which also priced this past week, represented the week's biggest deal at $220 million in size, but there was no stock borrow available in the name, and at Friday's close the convertible was quoted 100.5 bid, 101.5 offered with the stock at $12.63.

Outside of the names in focus, the convertibles market got quiet heading into the Friday close. Equities continued to rise, notching a strong weekly gain. On the day, the Dow Jones industrial average was up 75.42 points, or 0.5%, at 15,376.06; the S&P 500 stock index was up 4.57 points, or 0.3%, to 1,687.99, and the Nasdaq stock index gained 6.22 points, or 0.2%, to 3,722.18.

ViroPharma surges

ViroPharma's 2% convertibles due 2017 surged to 208 bid, 208.25 offered versus a share price of $38.00 late Friday, according to a New York-based trader.

Slightly earlier, but still in the second half of trading, the ViroPharma converts were seen at 207 versus an underlying share price of $38.00, according to a second New York-based trader. That compared to a previous level of 173.5 bid, 174.25 offered, versus an underlying share price of $31.10 and represented a 0.5 point to 1 point of expansion on a dollar-neutral basis, assuming a 90% delta, the trader said.

Shares surged $8.66, or 28%, to $39.13.

Sanofi and Shire plc are among the would-be acquirers of ViroPharma, according to a Bloomberg news report, citing unnamed sources, and the company has hired Goldman Sachs to help it navigate a possible takeover, the article said.

Before the news report, the stock had been trading little changed.

Also on Friday, Wells Fargo cut its rating on ViroPharma shares to "market perform" from "outperform."

New Protalix higher

Protalix's 4.5% convertibles due 2018 traded up to 104 in early trading Friday despite shares of the company wallowing in negative territory.

At the close, the convertibles were called 104 bid, 106 offered, according to a syndicate source.

Protalix shares closed down 6 cents, or 1.3%, at $4.66.

The new bonds were trading only on an outright basis, a syndicate source said.

The small market cap company, with a capitalization of just $435.6 million, priced the $60 million convert deal at par at the midpoint of coupon talk.

The wide spread was said to be due to the small size of the deal.

The deal came with a 22% initial conversion premium, which was beyond the rich end of 15% to 20% premium talk.

The Rule 144A offering has a $9 million over-allotment option.

Citigroup Global Markets Inc. was the bookrunner.

The notes are non-callable for three years. Holders will have a put option at par if a fundamental change occurs.

According to the market source, the convertibles were expected to be provisionally callable after three years if the share price rises to 130% of the conversion price or more.

Proceeds will be used to fund clinical trials for the company's product candidates, to fund its research and development activities, to enhance its manufacturing capacity and for working capital and general corporate purposes.

Protalix is a biopharmaceutical company focused on the development and commercialization of recombinant therapeutic proteins expressed through its proprietary plant cell-based expression system, ProCellEx.

Mentioned in this article:

Akorn Inc. Nasdaq: AKRX

Alon USA Energy Inc. NYSE: ALJ

CBIZ Inc. NYSE: CBZ

Clean Energy Fuels Corp. Nasdaq: CLNE

GSV Capital Corp. Nasdaq: GSVC

Protalix BioTherapeutics Inc. NYSE: PLX

ViroPharma Inc. Nasdaq: VPHM

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.