Novocure convertible notes skyrocket on clinical results; Enphase Energy, Okta lower

By Abigail W. Adams

Portland, Me., Jan. 5 – The convertibles primary market remained dormant on Thursday, which was not a surprise to sources, who expected a slow start to the New Year.

While equity markets opened the year as they closed the last – with volatility – sources anticipate an active primary in the coming weeks.

Meanwhile, there was an uptick of activity in the secondary space with topical news and portfolio rebalancing driving volume.

Equity indexes were again in the red on Thursday after the latest ADP National Employment Report, which came in well above expectations and reflected the continued strength of the labor market.

The Dow Jones industrial average closed Thursday down 340 points, or 1.02%, the S&P 500 index closed down 1.16%, the Nasdaq Composite index closed down 1.47% and the Russell 2000 index closed down 1.09%.

While it was a red day for equity markets, one name was the exception.

Novocure Ltd.’s 0% convertibles due 2025 dominated the tape on Thursday and made large outright and dollar-neutral gains as stock doubled following positive clinical results for a lung cancer treatment.

While Novocure was the “name du jour,” Okta Inc.’s 0.125% convertible notes due 2025 were also active with the notes lower in heavy volume.

Enphase Energy Inc.’s 0% convertible notes due 2026 were also lower in active trading as stock continued its downtrend after hitting a 52-week high in early December.

Novocure jumps

Novocure’s 0% convertible notes due 2025 made strong outright and dollar-neutral gains as stock more than doubled in price, a source said.

The notes jumped 14 points outright with stock up more than 50%.

The convertibles were changing hands at 102.5 versus a stock price of $102.87 early in the session, according to a market source.

They were seen at 103.125 versus a stock price of $105.93 in the mid-afternoon.

The notes expanded 3.5 points dollar-neutral on a 40% delta on the move up, a source said.

There was $43 million in reported volume.

Novocure’s 0% convertible notes hit their highest outright level on Thursday since November 2021.

However, the notes were seen as rich at their previous trading level in the high 80s.

“They were expensive when they were trading down in the 80s but someone was expecting something,” a source said.

Novocure’s stock traded to a low of $94.36 and a high of $120.03 before closing the day at $118.81, an increase of 68.45%.

Stock surged after the oncology company announced its LUNAR study evaluating the efficacy of Tumor Treating Fields together with standard therapies for treating stage 4 non-small cell lung cancer had met its primary endpoint.

Novocure’s stock was one of the top gainers on a red day for equity markets.

Okta lower

Okta’s 0.125% convertible notes due 2025 were lower in active trading.

The notes were off about 0.625 point outright with stock down about 4%.

The 0.125% notes were changing hands at 87.5 versus a stock price of $67.11 in the late afternoon.

The yield was about 5.2%.

There was $13 million in reported volume.

Okta’s stock traded to a high of $69.10 and a low of $66.12 before closing the day at $66.76, a decrease of 4.87%.

Enphase’s downtrend

Enphase’s 0% convertible notes due 2026 were lower in active trade as stock continued its downtrend after hitting a 52-week high in early December.

The 0% convertible notes were off 2.75 points with stock down about 4.5%.

The notes were changing hands at 109 versus a stock price of $242.21 in the late afternoon.

There was about $13 million in reported volume.

Enphase’s stock traded to a low of $239.41 and a high of $251.85 before closing the day at $240.37, a decrease of 4.48%.

Stock has been on a steady downtrend after peaking in early December at about $340.

While 2021 marked a historic low for global financial markets, Enphase was the outlier with stock surging in the second half on the heels of positive earnings and investor demand for renewable energy companies.

Enphase’s convertible notes were outperformers in 2022 with the 0% convertible notes due 2026 lifted from below par to trade as high as 130 when stock was at its peak.

Mentioned in this article:

Enphase Energy Inc. Nasdaq: ENPH

Novocure Ltd. Nasdaq: NVCR

Okta Inc. Nasdaq: OKTA

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