Hercules Capital, a specialty finance company, provided its interim portfolio update for the first quarter 2017. As of March 31, 2017, Hercules has originated $190.7 million of new debt and equity commitments to 12 new and existing portfolio companies.

“Our first quarter 2017 portfolio activity reflects our slow and steady, conservative underwriting posture as we continue to navigate through the uncertainty of the new administration policies to be deployed, closing over $190 million of new commitments, adding eight new innovative venture growth stage technology and life sciences companies, backed by some of the leading venture capital firms in the U.S., to our portfolio,” stated Manuel A. Henriquez, chairman and chief executive officer of Hercules. “We continue to be guardedly optimistic and well positioned in the first half of 2017, maintaining a highly asset sensitive balance sheet that will benefit from future rate increases, having a strong-liquidity position to onboard investments that meet our stringent underwriting practices and maintaining a low-leveraged balance sheet, as we monitor the macro economic environment of the new administration’s proposed fiscal policies.”

New Debt and Equity Commitments for Q1 2017:
 
Technology Portfolio – $73.7 Million

• $40.0 million to a leading technology developer that provides advanced text analytics, enterprise survey and customer engagement to help hundreds of the world’s leading brands understand and improve their customer experience
• $15.0 million to a developer and pioneer of analytical devices for chemical and biomolecule analysis
• $15.0 million to a leading provider of on-demand project management software for small and midsize companies
• $3.7 million equity investment to a technology developer that provides the most complete enterprise social technology in the world, designed to help large companies collaborate across their entire organization to create intuitive, superior customer experiences across every social channel

Life Sciences Portfolio – $100.0 Million

• $55.0 million to a leading clinical-stage biopharmaceutical company focused on acquiring, developing and commercializing novel therapeutics for the treatment of dementia
• $20.0 million to a biopharmaceutical company committed to the development and commercialization of innovative new treatments for people with serious, rare muscle diseases through the application of adeno-associated virus (AAV) gene therapy technology
• $15.0 million to a medical devices company focused on bringing innovative, cost-effective, surgical reconstruction solutions to surgeons, hospitals and patients
• $10.0 million to a biopharmaceutical company focused on discovering and developing drugs to improve outcomes for patients with cancer

M&A Activities

• In January 2017, Hercules’ portfolio company Merrimack Pharmaceuticals, Inc. (MACK) announced that it had entered into a definitive asset and sale agreement with Ipsen (Euronext: IPN; ADR:IPSEY), a global specialty-driven pharmaceutical group committed to discovering new solutions for targeted debilitating diseases. Merrimack intends to use part of the proceeds to extinguish the $175.0 million in outstanding Senior Secured Notes due in 2022. Hercules anticipates the transaction to be completed by the end of Q1 2017, with the potential repayment of its outstanding debt obligation to follow.

• In February 2017, Hercules’ portfolio company Jaguar Animal Health, Inc. (JAGX) entered a binding merger agreement with Napo Pharmaceuticals, a company that focuses on the development and commercialization of proprietary pharmaceuticals for the global marketplace in collaboration with local partners. Subject to the conditions to closing, the proposed merger is expected to close during the second quarter of 2017.

• In February 2017, Hercules’ portfolio company Nasty Gal, a Los Angeles, CA-based fashion retail website for girls that sells vintage clothing, shoes and accessories, was acquired by Boohoo.com, a Manchester, England-based online fashion retailer, for $20.0 million in consideration for Nasty Gal’s intellectual property assets and customer databases. Hercules initially committed $20.0 million in venture debt financing, and has an outstanding balance at cost on its senior secured term loan with Nasty Gal of $13.1 million as of December 31, 2016. On February 28, 2017, Hercules received a partial payment of $12.6 million from the sale of Nasty Gal assets, with full repayment expected upon close of escrow.

• In February 2017, Hercules’ portfolio company Persimmon Technologies Corporation, a manufacturer and distributor of vacuum robotics, entered into a definitive agreement with Sumitomo Heavy Industries, Ltd. to be acquired in an all-cash transaction. In March 2017, the acquisition was completed. Persimmon will become a subsidiary of Sumitomo Heavy Industries. Hercules initially committed $7.0 million in venture debt financing in December 2015 and held warrants for 63,348 shares of Preferred Series D stock as of December 31, 2016.