All about converts

$150m (+22.5m) sen unsec cb coming tomorrow from JPM/MS:Terms:5y 2¼-¾% up 30-35%, full pctns. UOP=note hedge/gcp. $460m biotech specializing in iron oxide nanoparticle tech w/it’s main drug, Feraheme representing ~70% of rev (FY13 sales=$71m & JEF analyst forecasting $121m FY20. PFcash=343m, debt=150m, LTMebitda=(.5m), FCF=(8.4m). We’d assume L+600. ADV=140k, no leaps, all historic vol metrics >50%. B/sheet cash offsets -ve gamma on way down but small mkt cap/meagre ADV=capped vol @ 35%. Initial brw concerns offset by obvious l/only demand, we’ll use GC. Theo=101.8/103.8/ 105.8. Mkt likes these pharma/biotech plays; FLDM came 01/29 2¾ up 40 (7½% thru rich premo) & traded +5.5pts o/swap. CPHD came 02/3 1¼up 32½ (¼% thru rich cpn) & traded +2⅛. Enough said.