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Anacor Pharmaceuticals: $250 Million in Convertible Senior Notes

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Apr. 6 2016, Updated 9:08 a.m. ET

IBB mid-caps

Mid-cap stocks of the iShares Nasdaq Biotechnology ETF (IBB) rose 1.5% and outperformed the SPDR S&P 500 ETF (SPY), which returned -0.7%. IBB’s mid-cap stocks also outperformed its large-cap stocks. Mid-cap stocks account for ~18.6% of IBB’s portfolio. IBB has 27 mid-cap stocks as of April 4, 2016. Of these stocks, 21 have risen and five have fallen.

The above graph reflects the daily changes of IBB mid-cap stocks compared to the SPDR S&P 500 ETF (SPY). So far in April, IBB mid-caps have managed to outperform SPY.

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Anacor rises as it raises $250 million in convertible senior notes

Anacor Pharmaceuticals (ANAC) announced in a March 31, 2016, press release “the pricing of its offering of $250,000,000 aggregate principal amount of 2.00% Convertible Senior Notes due 2023 (the “Convertible Notes”) in a private placement under the Securities Act of 1933.”

The press release went on to say, “The Convertible Notes will bear interest at a fixed rate of 2.00% per year, payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2016.” The notes will mature on April 15, 2023. The conversion rate will start at 14.1 shares of common stock for every $1,000 of convertible notes.

Anacor Pharmaceuticals rose 7.8% and closed at $61.51 on April 4, 2016. It was trading above its 20-day moving average. Year-to-date, the stock has fallen 45.6%. Anacor Pharmaceuticals has a book value of $1.17 per share. With its current pricing, the stock is trading at a price-to-book value of 52.6x. Some of its peers such as Acadia Pharmaceuticals (ACAD), Intercept Pharmaceuticals (ICPT), and Horizon Pharma (HZNP) are trading at price-to-book values of 15.3x, 5.4x, and 2.2x, respectively. Anacor has a weight of 0.6% in IBB’s portfolio.

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