Basically Baker Bros are rolling over or extending their financing at low interest rates! They are not converting their current converts into INCY shares at the $8.75 strike price. Instead that in the money convert is being priced at current market rates and that valuation is then being used to roll over into the new debt convert. At a low interest rate and quite a high strike price. This is good because it avoids dilution since INCY is not issuing new shares and also the convert price is pretty close to $60. This means Baker Brothers expect INCY to go past $60 in the next 1-2 years! Maybe potential acquirers have already tried to test the waters with feelers of acquiring INCY in the 60's now. Thus Baker Brothers feel confident in rolling over the debt, which is unsecured. So, there is definitely a lot of risk for Baker Brothers if something bad were to happen! I see this deal as being bullish because Baker Brothers sit on the board, are insiders, specialize in biotech and have an incredibly stellar history of success in biotech investments based on their deep knowledge of the science and all the related business aspects of pharmas and biotechs!