Morning Commentary: Exelixis jumps outright, expands on hedge on positive data; U.S. Steel drops

By Rebecca Melvin

New York, July 20 – Exelixis Inc.’s 4.25% convertibles jumped on an outright basis and were better on swap on Monday along with a pop in the underlying shares of the South San Francisco, Calif.-based biotechnology company after it announced positive results in its phase 3 trial of a kidney cancer drug.

Exelixis said the trial comparing cabozantinib to everolimus in 658 patients with metastatic renal cell carcinoma met its primary endpoint. Cabozantinib reduced the risk of disease progression or death by 42% compared to the everolimus arm, according to a release.

The Exelixis convertibles were quoted at 114.23 versus a share price of $5.49. The shares were up 42%.

“That looks 3 points better,” a New York-based trader said.

Elsewhere, United States Steel Corp.’s 2.75% convertibles due 2019 traded down a couple of points with the Pittsburg-based steel company’s underlying shares down 1%.

The shares, which were last at $17.68, have been on a slide for the last month. The bonds traded at 101.5 last and also at 103.25 early Monday, according to Trace data. That was down from 105ish on Friday and about 120 in early June.

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