Convertibles rebound; Corium notes active on buyout; Verastem prices at 15% premium

By Rebecca Melvin

New York, Oct. 12 – Many U.S. convertibles bounced back with shares on Friday after a two-day slide that whipsawed the broader markets on Wednesday and Thursday.

Issues like those of Square Inc., Illumina Inc. and Tilray Inc., which were hit hard in recent sessions, were higher on an outright basis. Square’s 0.375% convertibles due 2022 spurted up 25 points. Illumina’s 0.5% notes due 2021 were back up to 136.6 from 132 to 133 on Thursday.

Corium International Inc.’s 5% convertibles due 2025, of which $120 million priced in the first quarter, were very active but little changed at 99.75 despite a 50% surge in the underlying shares after news that health care fund Gurnet Point Capital will acquire the outstanding shares of the Menlo Park, Calif.-based commercial-stage biopharmaceutical company for $12.50 each. Corium will offer to repurchase all of its convertible debt when the deal closes.

Meanwhile, Boston-based cancer drug discovery company Verastem Inc. joined Karyopharm Therapeutics Inc. to price new notes this week.

Verastem priced $150 million of long 5% convertible notes due 2048 in a registered direct offering on Thursday. The bonds priced cheaply with just a 15% initial conversion premium over the current stock price. Its shares slid more than 9% on Friday despite the general updraft in equity markets.

Karyopharm priced $150 million of 3% convertibles due 2025 late Wednesday at the cheap end of coupon talk.

The U.S. convertibles market saw lighter issuance this past week with four smaller deals totaling little more than $500 million. Market players expected issuance to tail off heading into the third-quarter earnings reporting period when companies are subject to blackout periods.

Earnings season kicked off on Friday with several big banks reporting results that topped estimates, including J.P. Morgan Chase, Citigroup and Wells Fargo.

Mentioned in this article:

Corium International Inc. Nasdaq: CORI

Karyopharm Therapeutics Inc. Nasdaq: KPTI

Illumina Inc. Nasdaq: ILMN

Square Inc. NYSE: SQ

Tilray Inc. Nasdaq: TLRY

Verastem Inc. Nasdaq: VSTM

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