Intercept Pharmaceuticals gaps down; Merrimack, Wayfair lower; new issuance light during week

By Rebecca Melvin

New York, Sept. 22 – Intercept Pharmaceuticals Inc.’s convertibles gapped down again on Friday after a slide on Thursday when the U.S. Food and Drug Administration warned doctors to monitor patients taking Intercept’s liver disease drug Ocaliva, market sources said.

The Intercept convertibles were a focus, they said, with the stock dropping another $12.11, or 16%, to $61.59. Shares had plunged by 25% on Thursday.

The Intercept 3.25% convertibles due 2023 tumbled to about 78 to 79 on Friday, having fallen to 88 from 96.5 on Thursday. The drop was the equivalent of 7 or 8 points on a dollar-neutral, or hedged, basis, traders said.

“Borrow deteriorated a bit, and the huge stock move the last two days after FDA notice likely spooked a lot of people, which is why the bonds gapped down,” a New York-based trader said.

The FDA letter said that some patients were taking too much of the drug, and if the drug is incorrectly dosed in patients with moderate to severe liver function impairment, it could result in “an increased risk of serious liver injury and death.”

Elsewhere, Merrimack Pharmaceuticals Inc. convertibles were indicated lower against a 4% drop in the underlying shares. The Merrimack 4.5% convertibles were seen down at about 81 compared to 85.8 on Thursday.

Wayfair Inc. shares were also indicated lower, dropping to about 101 from 105 previously. Shares fell $7.16, or 8.8% to $74.59.

Marriott Vacations Worldwide Corp.’s convertibles remained active early Friday after those bonds debuted in the market on Thursday.

The Orlando-based vacation-ownership company priced $200 million of the five-year senior notes at the middle of price talk for a 1.5% coupon and 30% initial conversion premium, and they had improved about 1.5 points on a dollar-neutral, or swap, basis.

The U.S. convertibles primary market has been quieter than usual for September, with just $540 million in three deals pricing this past week, according to Prospect News data.

Mentioned in this article:

Intercept Pharmaceuticals Inc. Nasdaq: ICPT

Merrimack Pharmaceuticals Inc. Nasdaq: MACK

Marriott Vacations Worldwide Corp. NYSE: VAC

Wayfair Inc. NYSE: W

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