Morning Commentary: Isis trades up in line with shares on J&J deal; oil drags markets lower

By Rebecca Melvin

New York, Jan. 5 – Isis Pharmaceuticals Inc.’s 1% convertible bonds traded up in line, or flat on a dollar-neutral basis, with the company’s shares as the stock rose on Monday after news that the Carlsbad, Calif.-based developer of gene-based therapeutic drugs has entered into a deal with a unit of Johnson & Johnson to develop antisense drugs to treat autoimmune disorders of the gastrointestinal tract. Isis will receive $35 million in upfront payments.

The agreement with J&J unit Janssen Biotech Inc. will cover three programs. Isis is eligible to receive nearly $800 million in development, regulatory and sales milestone payments and license fees, and to receive royalties, while Janssen has the option to license a drug from each of the programs once a development candidate is identified, Isis’ release stated.

Isis’ 1% convertibles due 2021 traded at 116.125 versus an underlying share price of $64.00, a New York-based trader said. Earlier, the bond was bid at 115.5 versus $64.00, a second New York-based trader said.

Isis shares jumped on the news and were last up $5.21, or 8.5%, at $66.42.

Overall, the convertibles market was quiet to start the week as 2015 gets underway following the year-end holiday season.

Crude oil prices began the new week where they left off last week, with prices extending losses.

West Texas intermediate crude for February delivery fell another $1.66, or 3%, to $51.03 a barrel.

The S&P 500 stock index fell 24.70 points, or 1%, to 2,033.50, the Dow Jones industrial average fell 206.66 points, or 1%, to 17,626.33, and the Nasdaq stock index dropped 39.59 points, or 0.8%, to 4,687.23.

Yahoo Inc.’s 0% convertibles due 2018 changed hands down nearly 1.5 points to 112.125, according to Trace data. Yahoo shares were off 70 cents, or 1.4%, at $49.47.

© 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.