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.

What Regulation A+ Means for Investors

August 07, 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.

Investing is almost always a risk/reward proposition. Most start-ups fail. But many don’t. The ones that are successful can lead to significant rewards for their early investors. Who wouldn’t want to have been an early investor in Apple or Google (two companies who we helped take public)? But how do you get to invest?

Until recently, the federal securities laws have largely prevented most ordinary investors from funding early-stage companies. Experienced angel and venture investors that were plugged into the groups, law firms, and brokers-dealers were able to see the deals. But ordinary investors were generally shut out of these opportunities.

Private placements couldn’t be advertised in public, and sales could only be to so-called “accredited investors.” So, if you knew somebody, and you have a lot of money, then you could participate. But if not, then you pretty much had to wait until after an IPO, if one ever came.

Regulation A+ Creates New Options for Investors

On June 19, 2015, revisions to Regulation A (often called Reg A+) became effective, and the world changed. Reg A+ allows companies to raise up to $50 million (including up to $15 million from selling shareholders) from the public markets.

Investors should know that there are two tiers of Reg A offerings. “Tier 1” offerings allow companies to raise up to $20 million, while “Tier 2” offerings allow companies to raise up to $50 million a year. The rules are very different for these two tiers, and investors should be cognizant of the differences.
For companies raising only smaller amounts of capital, but who don’t necessarily have audited financials or the ability to provide much in the line of ongoing reporting requirements, Tier 1 is an option. Investors should be keenly aware of the risks these companies present. These may be offered over the internet, likely with the help of a smaller law firm. Investors should be very careful to conduct their own due diligence of these offerings, particularly if there isn’t an investment bank involved. That’s because investment banks helping with offerings have to conduct basic levels of due diligence to ensure that the companies, the management, and the offerings are all legitimate. States’ regulations of these securities may provide additional protections, but may also limit how tradable and valuable the securities are for investors.

Tier 2 offerings provide significant additional protections for investors, but also additional costs for companies. Most importantly, companies who sell securities using Tier 2 have audited financials and have committed to providing ongoing reporting that should keep investors informed about key issues for the company.

As far as liquidity goes, there should be plenty of places for Tier 2 offerings to trade. For example, OTC Markets Group recently proposed revising its Standards for its OTCQB platform to accept the Tier 2 ongoing reporting as adequate to allow for quoting and trading on its platform. Of course, a company could list on NYSE or Nasdaq, and thus become a full Exchange Act reporting company (with full quarterly SEC filings). And we expect other trading venues to pop up as well. Thus, under Tier 2, no matter what, investors should be able to stay well-informed about their companies and have venues where they can trade their securities.

We expect that ordinary investors seeking to get in on great growth-stage companies may soon be able to access them. Finally. This is the democratization of capital.

If you are an investor looking to access great growth-stage companies, please contact us.

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

Thomas Thurston Interviewed by Wired.com

February 10, 2015

Thomas Thurston, Managing Director at WR Hambrecht Ventures, was interviewed by Wired.com about his research firm, Growth Science.

Click here to read the full article on Wired.com

Excerpt from the article:

He (Thurston) says his simulations correctly predicted that Snapchat, Uber, and Airbnb would be big—and that they’re now right about 66 percent of the time when predicting that a company will still exist within five years. When predicating that a company will fail, he adds, they’re right 88 percent of the time.

In the News: The First Hambrecht & Quist Healthcare Conference

February 03, 2015

From LSF Magazine,  Winter 2015

LSFMagWinter-2015-page1
LSFMagWinter-2015-page2

The 33rd Annual JPM Healthcare Conference traces back to The First Hambrecht & Quist (H&Q) Healthcare Conference held in 1983. The conference, held at the St. Francis Hotel, brought together stock analysts, bankers, and company executives for a three-day meeting to learn about new opportunities in biotechnology. Presenting companies included hospital operations, medical device manufacturers, a medical information services provider, and five biotechnology startup firms: Centocor, Collagen, Genentech, Monoclonal Antibodies, Inc., and Xoma.

For the complete version of LSF Magazine, Winter 2015, Click Here.

WR Hambrecht + Co Update

January 2015 was a month for business development at WR Hambrecht + Co – focused on the JPM conference. We held over 40 meetings during the conference with the leaders of emerging biotech companies. We also co-hosted a cocktail reception with Torreya Partners extending our opportunity to meet with those who traveled from all over the world to this event. At WR Hambrecht + Co we are proud of the lineage of the Healthcare Conference and we continue to work to bring innovative technologies and disruptive startup firms to the public market.

Sincerely,

John Hullar, Managing Partner
and Kurt Kruger, Partner, Healthcare

Announcing Our New Alliance with Summit Research

January 09, 2015

San Francisco, CA – January 8, 2015

WR Hambrecht + Co (WRH+Co), a San Francisco based, technology- driven capital raising platform, and Summit Research Partners (SRP), a Greater New York based independent equity research firm, today announced that they have entered into an alliance to distribute SRP’s proprietary technology-focused equity research to institutional investors. Under the terms of the agreement, SRP will operate as a division of WR Hambrecht + Co, and SRP will provide its unparalleled research exclusively through WRH+Co, effective immediately.

“Summit Research is excited to begin its exclusive relationship with WR Hambrecht + Co,” says Srini Nandury, founder of Summit Research Partners. “WRH+Co has long been identified with technology investment research and investment banking, and Summit’s unmatched combination of tech industry expertise and research depth is a perfect complement to that offering. We share a passion with WRH +Co to provide a differentiated product to the ever-evolving technology investment space.”

“Investment Research is important to our clients, with the Summit Research alliance, we offer them a compelling and differentiated product and service,” noted John Hullar, Managing Partner of WRH+Co. “SRP analysts are known for their knowledge of the tech sector and the forces that are driving the industry. With the addition of SRP to our platform, we are giving our clients what they are not getting from other research providers.”

About WR Hambrecht + Co:
WR Hambrecht + Co was founded in January 1998 to level the playing field for investors and corporate clients. WRH+Co’s Founder and Chairman, Bill Hambrecht, is a Silicon Valley pioneer who 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. WRH+Co’s current innovation initiatives include applying Data Science and Disruption Theory Analytics to better understand companies and industries at all stages. WR Hambrecht + Co is headquartered in San Francisco with offices in New York. For more information, please call 415-551-8600 or visit www.wrhambrecht.com

About Summit Research Partners LLC:
Established in 2012, Summit Research is an independent equity research firm focused on the global technology industry. Summit Research covers companies in the Semiconductors, Semicap Equipment, Storage, Wireless and Wireline Networking, and Enterprise Software industries. Summit Research analysts are particularly known for their deep industry work experience & knowledge, contacts and company relationships. Summit Research is located in Summit, N.J., and has offices in New York City and Milpitas, CA. For more information, please call 212-343-2011, ext. 301 or visit www.summitresearchllc.com

Aftermath from the World’s Biggest IPO: BABA

September 30, 2014

The Results are In

The Deal Managers of the Alibaba IPO, the largest in history, priced the shares at $68.

According to the Wall Street Journal:

“Over 1,700 investment management firms world-wide put in orders for Alibaba shares, according to people familiar with the matter. About half of them got no stock, and many others got less than 5% of what they asked for, the people said.

Some 25 investment management firms were sold about half of the stock in the IPO, people familiar with the deal said. That is unusually concentrated for a deal of this size, said a banker familiar with the process.”

A Windfall for a Select Few

On Friday, the shares opened above $90 and traded at that level, or higher, throughout the day. Those 25 investment management firms have had a big performance day for their funds and their end customers, who must be very happy. Many of them had a chance to sell shares at the higher prices to those investment management firms and individuals who were literally shut out by the Deal Managers.

The Deal Managers surely had many reasons and lots of “color” to share with Alibaba management as to why they allocated so much into such a small number of institutional hands. But we have to wonder if the fact the 25 investment management firms most likely are the top trading clients of the Deal Managers figured into those conversations.

A “Pop” for Headlines and Early Investors

Much of the business media has been mesmerized by the size of the offering and the “big first day pop”! But who benefits when a stock “pops” on opening day? In this case, the $24.70 increase from initial pricing to opening trade represents $8 Billion of value that was captured by a small group of IPO investors instead of Alibaba and other selling shareholders.

Understanding no system will be perfect, we see room for improvement. We believe it is possible to provide better results for investors and companies raising money through an IPO. Our recipe for change has three key ingredients:

  1. market based pricing through an auction
  2. fairness in allocation through a pro-rata approach
  3. transparency for the issuer

We will keep shedding light on this topic and look forward to bringing innovation to markets for the benefit of all participants.