2016 J.P. Morgan Healthcare Conference

January 05, 2016


2016 J.P. Morgan Healthcare Conference

Meet WR Hambrecht + Co at the Annual Healthcare Conference

It has been 34 years since Hambrecht & Quist (H&Q) held the first Healthcare Conference in San Francisco at the Westin St. Francis Hotel in January, 1983. Presenting companies at the first H&Q Conference included hospital operators, medical device manufacturers, a medical information services provider, and five biotechnology startup firms: Centocor, Collagen, Genentech, Monoclonal Antibodies, Inc. and Xoma.

The Conference has been an extraordinarily popular annual event since then. In 1999, after acquisitions, this must-attend meeting was renamed the Chase H&Q Healthcare Conference, then the J.P. Morgan Healthcare Conference. WR Hambrecht + Co, like its predecessor firm Hambrecht & Quist, seeks to identify high prospects growth-stage companies, and provide them with access to the much-needed capital necessary to fund development, marketing and infrastructure allowing them to achieve their full potential.

“We at WR Hambrecht + Co continue to be astonished at the energy, inventiveness and sheer horsepower exhibited by early stage life sciences companies out to improve the human condition and build significant enterprises along the way,”

WRH+Co’s Regulation A+ strategy is a continuation of Bill Hambrecht’s legacy of conducting small public offerings for what were once considered high-risk start-ups and are now household names and Fortune 500 companies. Currently WR Hambrecht + Co has three offerings on file under the new Regulation A+, Hunting Dog Capital Corp., Aperion Biologics Inc. and Allegiancy Inc. “We at WR Hambrecht + Co continue to be astonished at the energy, inventiveness and sheer horsepower exhibited by early stage life sciences companies out to improve the human condition and build significant enterprises along the way,” said Kurt Kruger, Partner, and leader of the healthcare practice.

Kurt Kruger
Partner, Healthcare
Kurt has enjoyed a 30 year career in Medical Technology. His deep involvement in the field has ranged from product design and development as a biomedical engineer to raising capital for, and following, publicly traded medical product companies as an equities research analyst. As a marketing manager at Guidant, Kruger developed the launch plans for the first-ever implantable defibrillator. As a securities analyst he showed uncommon perspicuity leading Hambrecht & Quist to provide venture funds for, and then take public, Ventritex, a high profile, Wall Street darling that was later acquired by St. Jude Medical. Kruger received an Sc.B. degree in Biomedical Engineering from Brown University; a Master’s degree in Bioengineering from the University of Michigan; and a business degree (S.M) from the Sloan School at the Massachusetts Institute of Technology (MIT). He also completed the premedical post-baccalaureate program at Columbia University.

Press Release: Statement on SEC’s New Regulation A

June 22, 2015

FOR IMMEDIATE RELEASE: June 22, 2015

Helen Miazga
WR Hambrecht + Co
(212) 313-3237
hmiazga@wrhambrecht.com

W.R. Hambrecht + Co., LLC Statement on SEC’s New Regulation A

On Friday, June 19, 2015, new rules to expand and update Regulation A became effective, marking the first day that great small and emerging companies can now take advantage of them. These changes were mandated by Section 401 of the Jumpstart Our Business Startups Act (or JOBS Act), and were adopted by the Securities and Exchange Commission on March 25, 2015.

These Regulation A reforms will transform and re-invigorate a capital raising for smaller companies, their executives, and their early funders. W.R. Hambrecht + Co., LLC and its founder, Bill Hambrecht, have been longtime advocates for these reforms, and were cited over 40 times in the SEC’s adoption of the rule implementing these changes. We are now leading the efforts to take advantage of these changes to help numerous great companies obtain the capital they need to survive and grow.

“We’ve been engaged by a lot of great companies looking to take advantage of the new Regulation A, and I’m glad that we can now get started,” said John Hullar, Managing Partner. “As with any new thing, we’re working through some technical issues, but because so many of our clients are working through these issues at the same time, we’re moving quite quickly to match these great companies with investors eager to provide them with capital.”

About WR Hambrecht + Co: WR Hambrecht + Co was founded in January 1998 to level the playing field for investors and our corporate clients. Our Founder and Chairman, Bill Hambrecht, is a Silicon Valley pioneer that has been financing growth companies from Apple to Google during his time at Hambrecht & Quist and WRH+Co. The firm’s impartial auctions have dramatically changed the traditional investment banking landscape by allowing the market itself to determine pricing and allocations.

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Regulation A+ Part Two:
Advantages for Founders, Employees, and Early Investors

May 04, 2015

This is another installment in a series of blogs from W.R. Hambrecht + Co., LLC. In this series, we will explore the capital raising challenges facing small and emerging companies and recent regulatory changes that should greatly help executives, venture capitalists, and individual investors meet these challenges head-on.


Growing a Small Businesses is Challenging

Even the most promising small companies have a lot of challenges. Two right at the top of the list are:

  1. attracting and retaining great employees and
  2. getting the capital they need to survive, adapt, and grow.

And as any good entrepreneur knows, the expansion from a handful of employees to the first 100 is often the hardest part. The company may be too large to keep financing it with your friends and family or with the angel investor(s) you’ve had all along. And banks won’t lend you nearly what you need.

Viable Options for Raising Capital Have Been Limited

In recent years, this dilemma has resulted in essentially one of two paths—multiple rounds of venture capital investing or selling out. Both may be viable options, but both present significant challenges for founders, employees, and early investors. With venture investors, a company’s early investors and founders may be heavily diluted each successive round—threatening the culture and vision of the firm. Although they help to pay salaries, these investments often hurt employee attraction and retention because they typically dilute employees’ interests. And being acquired is often the end of the ride.

Public financing for growth-stage companies has all but fallen off the table in recent years amid ever-climbing legal and compliance costs. Until now.

Regulation A+ Creates Viable New Options

On March 25, 2015, the SEC adopted revisions to Regulation A (often called Reg A+). This new rule puts public financing back on the table for great small and emerging companies. It allows management to raise capital from all types of investors, not just a handful of venture funds, giving them leverage to fight dilution and maintain their company’s culture. Just as important, Reg A+ opens up the valuation of the company beyond what just a small subset of the investing world might think. It gives employees freely-tradable securities that they can sell right away. If anyone wants to know the value of their holdings, they can just look to the public quote. And it gives early investors the opportunity to monetize some of their success.

Regulation A will allow companies to raise up to $50 million (including up to $15 million from selling shareholders) from the public markets. It throws open the doors to capital formation by giving a much larger pool of investors access to great companies. While there are some upfront costs and documentation requirements that don’t come with most private offerings, these costs should be less than those of a full IPO.

The Two Types of Regulation A+ Offerings: Tier 1 and Tier 2

Regulation A provides two tiers of offerings, with the filing obligations scaled to the size of the offering and the capabilities of the company. For offerings up to $20 million, “Tier 1” allows companies to raise capital without audited financials and without significant ongoing reporting requirements. For offerings up to $50 million, ”Tier 2” allows for abridged initial filings and ongoing reporting requirements, which should generally be far more streamlined than full Exchange Act reporting requirements, including the oft-dreaded Sarbanes-Oxley.

With lower costs and modest filing requirements compared to a fully-registered public offering, but with many of the advantages of one, we expect the new Regulation A to be an attractive option for founders, employees, and early investors.

Regulation A+ Part One:
Get Out of My Dreams, and into the new Regulation A

April 29, 2015

This is the first of a series of blogs from W.R. Hambrecht + Co., LLC. In this series, we will explore the capital raising challenges facing small and emerging companies and recent regulatory changes that should greatly help executives, venture capitalists, and individual investors meet these challenges head-on.


It Begins with a Dream

Every successful entrepreneur has, at least once in her life, dreamed about her company’s IPO. Finally. Stock that is publicly traded. Stock that she or her employees can sell—to anyone, at any time. Stock that she can use to borrow against, or sell or buy things with. Stock that, put simply, can make her—and her dedicated investors, employees, and supporters—rich. The crowning achievement of years of hard work. Her early venture investors have probably had a similar dream.

But these folks aren’t the only dreamers. Investors dream too. They dream of having access to fantastic small companies. They want to research, identify, and invest in promising smaller companies, ranging from biotechnology firms to restaurants to everything in between. They’ve been locked out of these investments, which have been the exclusive terrain of venture and angel investors. They want to find the next company developing a break-through cancer treatment, killer app, or fantastic food concept.

Closing the Distance from Dream to Reality

The one thing these dreams have in common is that, until recently, they looked a lot more like fantasy than reality. Well, it’s time for these folks to wake up, because the dream may be becoming reality—and sooner than we all thought. The SEC dusted off and fixed an old exemption from the securities laws and has just made it a lot easier for small and emerging companies to raise capital by selling debt or equity securities to the public.

Regulation A was never used much before, but in its latest incarnation, and unless the lawyers manage to mess this up (a possibility), there’s a great chance for it to revolutionize capital raising for small and emerging companies, and investing for individual and professional investors. We at WRH+Co have been pushing for these changes for years—and are thrilled that Congress and the SEC seemed to finally listen. The SEC cited us over 40 times in its final rule.

You can read the entirety of the Reg A+ final rule here. The document can seem a little intimidating, but the “Introduction” section provides a good, accessible overview beginning on page 6.

Introducing the New Regulation A

By now, many in the venture community have heard about these reforms to Regulation A. They know that it allows for public offerings of securities (up to $50 million!) without having to register with the SEC. And they know that these securities can be sold to anyone, not just the elite. Regulation A now allows companies, their founders, and early investors a way to both raise money, and monetize their existing positions.

There are also a lot of advantages for investors. First off, before now, most investors couldn’t even access these companies. They had to wait until the IPO several years later at the expense of substantial returns on investment. Regulation A now welcomes investors of all shapes and sizes. For sophisticated investors who would probably have made another private investment in the company anyway, this gives them liquidity they wouldn’t otherwise have. For ordinary investors, this gives them access to these terrific companies earlier.

Larger Regulation A offerings, known as Tier 2 offerings, will also have a number of critical investor protections that aren’t usually found in private offerings. For example, companies would need to provide audited financial statements and submit regular updates to the SEC. But, these updates are not the full-blown Exchange Act reporting requirements and the oft-dreaded Sarbanes-Oxley requirements; rather they are just straightforward updates on key company information. So the burden on companies shouldn’t be onerous.

The Reg A+ Opportunity Begins this Summer

To be sure, the biggest risk with Regulation A right now is that it’s new. These changes come into effect June 19th of 2015, and there are many details that still need to be worked out including issues related to how and where these securities will trade after an offering is made, how the state involvement will work, and just how onerous the initial filing requirements might be. But those topics will be for another part of the series. In the meantime, we think it’s time for companies, founders, executives, and investors to take a long, hard look at Regulation A—it might just be the opportunity you’ve been dreaming about.

Press Release: SEC Adoption of Regulation A Reform

March 25, 2015

FOR IMMEDIATE RELEASE: March 25, 2015

Helen Miazga
WR Hambrecht + Co
(212) 313-3237
hmiazga@wrhambrecht.com

WR Hambrecht + Co Statement on SEC Adoption of Regulation A Reform

Today, in an open meeting, the SEC Commissioners voted to adopt rules and forms related to the offer and sale of securities pursuant to Section 3(b) of the Securities Act of 1933 to implement Section 401 of the Jumpstart Our Business Startups Act (or JOBS Act). In doing so, the SEC has cleared a new path for capital raising by expanding and updating the Regulation A exemption for small issues. We believe this development has the promise to transform and re-invigorate a capital raising landscape that, in recent years, has grown increasingly challenging for smaller issuers as a result of industry consolidation, regulation and market structure.

WR Hambrecht + Co has long been an advocate for improving access to capital for small businesses. Based on his decades of experience working with growth companies as an investor and investment banker, our Chairman, Bill Hambrecht, has testified before the House Committee on Financial Services and presented to the SEC Advisory Committee on Small and Emerging Companies with our thoughts on spurring new growth in public capital formation and job creation for smaller issuers. We were honored that our commentary to the SEC was quoted extensively in the proposed Regulation A rules released in December 2013, and with today’s announcement, we once again would like to commend the SEC Commissioners for taking this important step in expanding access to capital markets.

“We’re already hearing from businesses across all sorts of industries who want to learn more about the changes in Regulation A and how they can take advantage of this powerful capital raising tool,” said John Hullar, Managing Partner at WR Hambrecht + Co. “We look forward to sponsoring and advising companies that want to raise capital through the expanded Regulation A exemption, which will enable them to invest in their business, stay independent and grow in the future. This is a breakthrough for companies that need growth capital, as well as for investors looking for real access to great small companies.”

About WR Hambrecht + Co: WR Hambrecht + Co was founded in January 1998 to level the playing field for investors and our corporate clients. Our Founder and Chairman, Bill Hambrecht, is a Silicon Valley pioneer that has been financing growth companies from Apple to Google during his time at Hambrecht & Quist and WRH+Co. The firm’s impartial auctions have dramatically changed the traditional investment banking landscape by allowing the market itself to determine pricing and allocations.

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Additional information

View the SEC release here:

SEC Adopts Rules to Facilitate Smaller Companies’ Access to Capital

Morrison & Foerster Regulation A+ Final Rules Overview:

Final Rules Offer Important Capital Raising Alternatives

What Can We Learn from the Alibaba IPO?

September 15, 2014

Alibaba will soon have its IPO event. Since it is likely to be the largest in history (expected to raise more than $20 billion), it deserves the media attention we see and hear on a daily basis. It is a truly exciting event. All eyes of the professional community will be on the initial pricing of the shares and the early trading.

How a Normal IPO Process Works

There will be a global institutional roadshow with group meetings and one-on-ones with company management for the largest institutions and/or best trading customers of the co-lead managers of the offering. The institutional investor research analysts and portfolio managers will scrutinize the business plan and financial model, asking focused questions in hope of receiving some added insight. Getting this ‘edge’ will help them determine the valuation they are willing to place on the company, which correlates into what they will pay for shares. This marketing period is considered essential for raising interest in the shares and determining price/value.

Alibaba is Not a Normal Issuer

As can already be seen in the case of Alibaba, there is less need to raise interest; the business mass media has done much of this already. In some respects, there may be too much interest in the shares. Individual investors will no doubt have a strong desire to participate in the offering as well.

The question on our minds is:

How is the demand for shares going to be translated into the initial offering price?

In this case, Alibaba management is sophisticated and understands bidding, trading, pricing, auctioning; their business model is based on transactional activity. Likely the Company has built into the process some method to balance their interest with that of the banks and the buyers they bring to the table so they work toward a fair pricing — balancing and aligning incentives between institutional customers of the world’s largest banks and the needs of Alibaba as an issuer.

What can be learned from the Alibaba IPO?

For issuers who do not have the leverage of a company like Alibaba, it can be harder to align interests between buyers and sellers – i.e. the investors and the issuer. While we believe it is important for a company to offer shares so they trade in a stable way in the aftermarket, we do not believe in overly discounting IPO shares. Although a first day ‘pop’ can make for great media headlines, it often disproportionately rewards large banks’ proprietary client base.

We believe it is better to use an auction mechanism to find a market price in a fair and open process. In the case of our OpenIPO® auction, all bids are treated equally with the goal of avoiding a first day ‘pop’ thus attracting long term shareholders and optimizing the total money raised for the issuer.