Company Continued Strong Organic
Originations Momentum and Integrated $127.5 Million of Selected
Venture Assets Acquired from Ares Capital Corp. in Q4 2017
Q4 2017 Achievements and Highlights
- Q4 2017 closed new debt and equity
commitments totaling ~$330.6 million to 25 companies including 20
new and five (5) existing portfolio companies(1)
- Unscheduled principal repayments, or
“early loan pay-offs,” of ~$124.2 million, for Q4 2017
- Hercules portfolio company liquidity
events in Q4 2017 include three (3) completed initial public
offerings “IPOs” and two (2) completed or announced M&A
events
Year-to-date ending December 31, 2017 Achievements and
Highlights
- Closed cumulative new debt and equity
commitments of ~$882.0 million, for full-year 2017(1)
- Early loan pay-offs of ~$505.6 million,
for full-year 2017
- Ended 2017 with pending new commitments
(signed non-binding term sheets) of ~$122.0 million as of January
8, 2018(2)
Q1 2018 Achievements and Highlights
- Q1 2018 closed new debt and equity
commitments of ~$45.0 million as of January 8, 2018
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules” or the
“Company”), the leading specialty finance company to innovative
venture growth, pre-IPO and M&A stage companies backed by
leading venture capital firms, today announced its portfolio update
for the fourth quarter and full-year 2017.
“We witnessed unprecedented activity in both new commitments and
early pay-offs during the fourth quarter and full year 2017,”
stated Manuel A. Henriquez, founder, chairman and chief executive
officer of Hercules. “Our fourth quarter portfolio activity
reflects a strong finish to fiscal year 2017 with new closed
commitments exceeding $330 million. This achievement exemplifies
our continued diligent deployment of capital to new and existing
companies, our continued access to the leading venture
capital-backed companies and our recent acquisition of select
venture debt investments recently acquired from Ares Capital.
Collectively, this puts Hercules Capital on pace to deliver $882
million in new commitments for 2017 which surpasses 2016 by over
eight percent (8.0%). This more than offset the continued and
unprecedented high level of unanticipated early loan repayments
throughout the year. Once again, Hercules continues to demonstrate
its unparalleled access to new deal originations and our strong
industry leadership position and brand reputation within the
venture lending marketplace.”
New Debt and Equity Commitments for Q4 2017:
As of December 31, 2017, Hercules has originated ~$330.6 million
of new debt and equity commitments to 25 new and existing portfolio
companies, including 12 new portfolio company investments acquired
from Ares Capital.
20 new commitments to new innovative venture growth stage
companies
Technology Portfolio – $62.0
Million
- $20.0 million to a provider of digital
media content targeting millennial women
- $20.0 million to a leading platform for
selling, distributing, and managing cloud-based products and
services
- $12.0 million to a leading provider of
software for drafting, proofreading, comparing, repairing and
cleaning documents in the legal and life sciences industries
worldwide
- $10.0 million to a data science
software platform developer that provides an integrated environment
for data preparation, machine learning, deep learning, text mining
and predictive analytics
Life Sciences Portfolio – $115.0
Million
- $40.0 million to a rapidly growing and
innovative population health business operating primary care
clinics focused on Medicare beneficiaries
- $30.0 million to a medical device
company that develops proprietary and innovative technologies that
help eliminate a majority of the most common barriers to glucose
testing
- $25.0 million to a pharmaceutical
company creating first-in-class orally available medicines for
autoimmune diseases, inflammatory disorders and oncology
- $20.0 million to a clinical stage
biopharmaceutical company that develops and commercializes novel
antibiotics for the treatment of serious and life-threatening
infections caused by multi-drug bacteria
Acquired Portfolio Companies from Ares
Capital – $127.5 Million
- $30.0 million to a technology company
that provides an online digital marketplace designed to help
millions of patients dramatically improve access to care
- $25.0 million to a leading technology
developer of a social analytics platform that global companies use
to run brands, build businesses and connect with consumers
- $20.0 million to a technology developer
that provides a secure communications and collaboration platform
that unites physicians, nurses, and other care team members,
facilitating a timely interaction among them
- $20.0 million to a developer of the
largest working capital marketplace in the world in which companies
across the globe use the technology to improve their financial
position
- $12.5 million to a network technology
provider that operates as an enterprise-class
Infrastructure-as-a-Service “IAAS” cloud service provider
- $6.0 million to an industry-leading
provider of clinical payment and communication technology
solutions
- $4.6 million to a developer of energy
efficient glass for commercial, residential and automotive
applications
- $3.3 million to a provider of financial
aid management software solutions for higher education
institutions
- $1.5 million to a developer of speech
analytics software that enables enterprise customers to uncover
actionable business intelligence in call center recordings
- $1.3 million to a developer that
creates proprietary analytics from big data in the public sector,
giving businesses in every industry a distinct advantage when
working with the government
- $3.3 million in equity/warrant
positions, including $1.9 million equity-only in two (2) portfolio
companies
Five (5) New Commitments to Existing
Portfolio Companies – $26.1 Million
- $12.9 million to a developer of email
marketing technologies that offers a software that enables
organizations to create, send and track email marketing campaigns
and online surveys
- $5.0 million to a biopharmaceutical
company focused on discovering and developing drugs to improve
outcomes for patients with cancer
- $5.0 million to a leading provider of
affordable and interoperable healthcare information technology
solutions and services
- $2.2 million to a leading developer of
platforms for integrating, visualizing and analyzing
information
- $1.0 million to an online fantasy
sports service that enables sports enthusiasts to play daily
fantasy games and win cash prizes
Unscheduled Principal Repayments Or “Early Loan
Pay-Offs”:
As of December 31, 2017, Hercules received ~$124.2
million in unscheduled principal repayments “early loan
pay-offs,” nearly 25.0% higher than initially anticipated.
Portfolio Company IPO, M&A and Other Activity in Q4
2017:
IPO Activities
- In December 2017, Hercules’ Portfolio
company Quanterix Corporation (NASDAQ: QTRX) completed its
IPO and raised $73.7 million by offering more than 4.9 million
shares of common stock at $15.00 per share. Hercules held 272,479
shares of Preferred Series D stock and warrants for 173,428 and
38,828 shares of Preferred Series C and Preferred Series D stock,
respectively, as of September 30, 2017, which represents an
unrealized gain of approximately $1.2 million as of the closing
price of $21.47 for Quanterix on December 29, 2017.
- In November 2017, Hercules’ portfolio
company Aquantia Corporation (NYSE: AQ) raised approximately
$61.3 million by offering 6.8 million shares of its common stock at
$9.00 per share. Hercules held warrants for 196,831 shares of
Preferred Series G stock, as of September 30, 2017, which
represents an unrealized gain of approximately $5,000.00 as of the
closing price of $11.33 for Aquantia on December 29, 2017.
- In October 2017, Hercules’ portfolio
company ForeScout Technologies, Inc. (NASDAQ: FSCT)
completed its IPO and raised approximately $117.0 million by
offering 5.3 million shares of its common stock at $22.00 per
share. Hercules held 319,099 and 80,587 shares of Preferred Series
D and Preferred Series E stock, respectively, as of September 30,
2017, which represents an unrealized gain of approximately $5.8
million as of the closing price of $31.89 for ForeScout on December
29, 2017.
As of December 31, 2017, Hercules held warrant and equity
positions in two (2) portfolio companies that had filed
Registration Statements confidentially under the JOBS Act in
contemplation of a potential IPO.
There can be no assurances that companies that have yet to
complete their IPOs will do so.
M&A Activities
- In August 2017, Hercules’ portfolio
companies Cempra, Inc. (NASDAQ: CEMP), a clinical-stage
pharmaceutical company focused on developing differentiated
anti-infectives for acute care and community settings to meet
critical medical needs in the treatment of infectious diseases, and
Melinta Therapeutics, Inc., a privately held company focused
on discovering, developing, and commercializing novel antibiotics
to treat serious bacterial infections, announced that the companies
had entered into a definitive agreement under which Melinta will
merge with a subsidiary of Cempra. The deal closed on November 6,
2017. Melinta Therapeutics commenced trading on November 6, 2017 on
the NASDAQ Global Market under the symbol “MLNT.” Hercules
committed $40.0 million in venture debt financing to Cempra from
2011 to 2014. Hercules initially committed $30.0 million in venture
debt financing to Melinta in December 2014 and held 1,914,448
shares of Preferred Series 4 stock and warrants for 1,382,323
shares of Preferred Series 3 stock as of September 30, 2017.
- In November 2017, Hercules’ portfolio
company Sonian Inc., a leading provider of public cloud
archiving and business insights, was acquired by Barracuda
Networks, Inc. (NYSE: CUDA), a leading provider of cloud-enabled
security and data protection solutions. Terms of the transaction
were not disclosed. Hercules initially committed $5.5 million in
venture debt financing in December 2013 and held warrants for
185,949 shares of Preferred Series C stock as of September 30,
2017.
Portfolio Company
Activities
- In December 2017, Hercules’ portfolio
company Revance Therapeutics, Inc. (NASDAQ: RVNC), a
biotechnology company developing neuromodulators for use in
treating aesthetic and underserved therapeutic conditions,
announced positive top-line results from two pivotal Phase 3
studies, evaluating its next-generation neuromodulator, RT002
(daxibotulinumtoxin), for reducing wrinkles that lies between the
brows (glabellar lines). Hercules held 22,765 shares of common
stock as of September 30, 2017.
- In December 2017, Hercules’ portfolio
company Verastem, Inc. (NASDAQ: VSTM), a biopharmaceutical
company focused on discovering and developing drugs to improve
outcomes for patients with cancer, announced positive results from
the Phase 3 DUO study which demonstrated duvelisib significantly
improves progression of free survival in relapsed or refractory
chronic lymphocytic leukemia and small lymphocytic lymphoma.
- In November 2017, Hercules’ portfolio
company Dynavax Technologies Corporation (NASDAQ: DVAX)
announced that the U.S. Food and Drug Administration (FDA) had
approved HEPLISAV-B for prevention of infection caused by all known
subtypes of hepatitis B virus in adults age 18 years and older.
HEPLISAV-B is the first new hepatitis B vaccine in the United
States in more than 25 years and the only two-dose hepatitis B
vaccine for adults. Hercules held 20,000 shares of common stock as
of September 30, 2017.
- In October 2017, Hercules’ portfolio
company OptiScan Biomedical Corporation, a developer of
innovative continuous monitoring systems for use in the surgical
intensive care unit (SICU), announced that the US Food and Drug
Administration (FDA) granted 510(k) clearance for the OptiScanner
5000 Glucose Monitoring System.
- In September 2017, Hercules’ portfolio
company Insmed Incorporated (NASDAQ: INSM), a global
biopharmaceutical company focused on the unmet needs of patients
with rare diseases, announced positive top-line results from Phase
3 CONVERT study of ALIS (Amikacin Liposome Inhalation Suspension)
in adult patients with treatment-refractory Nontuberculous
Mycobacterial (NTM) lung disease caused by Mycobacterium Avium
Complex (AVM). Hercules held 70,771 shares of common stock as of
September 30, 2017.
Accompanying Footnotes:
(1) Includes venture debt portfolio assets purchased
from Ares Capital announced on November 2, 2017. (2) Signed
non-binding term sheets are subject to satisfactory completion of
Hercules’ due diligence and final investment committee approval
process as well as negotiations of definitive documentation with
the prospective portfolio companies. These non-binding term sheets
generally convert to contractual commitments in approximately 90
days from signing. It is important to note that not all signed
non-binding term sheets are expected to close and do not
necessarily represent future cash requirements or investments.
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC) (“Hercules”) is the leading
and largest specialty finance company focused on providing senior
secured venture growth loans to high-growth, innovative venture
capital-backed companies in a broad variety of technology, life
sciences and sustainable and renewable technology industries. Since
inception (December 2003), Hercules has committed more than $7.0
billion to over 390 companies and is the lender of choice for
entrepreneurs and venture capital firms seeking growth capital
financing. Companies interested in learning more about financing
opportunities should contact info@htgc.com, or call
650.289.3060.
Hercules’ common stock trades on the New York Stock Exchange
under the ticker symbol "HTGC."
In addition, Hercules has three outstanding bond issuances of
6.25% Unsecured Notes due July 2024 (NYSE: HTGX), 4.375%
Convertible Senior Notes due February 2022 and 4.625% Unsecured
Investment Grade Notes due October 2022.
Forward-Looking Statements
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. You should understand that under Section 27A(b)(2)(B) of
the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of
the Securities Exchange Act of 1934, as amended, or the Exchange
Act, the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995 do not apply to forward-looking
statements made in periodic reports we file under the Exchange
Act.
The information disclosed in this press release is made as of
the date hereof and reflects Hercules most current assessment of
its historical financial performance. Actual financial results
filed with the SEC may differ from those contained herein due to
timing delays between the date of this release and confirmation of
final audit results. These forward-looking statements are not
guarantees of future performance and are subject to uncertainties
and other factors that could cause actual results to differ
materially from those expressed in the forward-looking statements
including, without limitation, the risks, uncertainties, including
the uncertainties surrounding the current market volatility, and
other factors the Company identifies from time to time in its
filings with the SEC. Although Hercules believes that the
assumptions on which these forward-looking statements are based are
reasonable, any of those assumptions could prove to be inaccurate
and, as a result, the forward-looking statements based on those
assumptions also could be incorrect. You should not place undue
reliance on these forward-looking statements. The forward-looking
statements contained in this release are made as of the date
hereof, and Hercules assumes no obligation to update the
forward-looking statements for subsequent events.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180109005575/en/
Hercules Capital, Inc.Michael Hara, 650-433-5578Investor
Relations and Corporate Communicationsmhara@htgc.com
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