CDAK Codiak BioSciences Inc.

8.57
-0.28  -3%
Previous Close 8.85
Open 8.93
52 Week Low 7.9
52 Week High 14.4
Market Cap $159,352,414
Shares 18,594,214
Float 18,076,762
Enterprise Value $150,530,149
Volume 64,959
Av. Daily Volume 0
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Drug Stage Catalyst Date
exoIL-12
Cutaneous T cell lymphoma
Phase 1
Phase 1
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exoSTING
Solid tumors
Phase 1/2
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Latest News

  1. CAMBRIDGE, Mass., Nov. 23, 2020 (GLOBE NEWSWIRE) -- Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, today announced that its President and Chief Executive Officer, Douglas E. Williams, Ph.D., will participate in a fireside chat at the Evercore ISI 3rd Annual HealthCONx Conference. Details are as follows:

    Evercore ISI 3rd Annual HealthCONx Conference
    Date: Wednesday, December 2
    Time: 4:45 p.m. ET

    A live webcast of the fireside chat will be available on the Investors & Media section of the Codiak website at www.codiakbio.com. An archived replay will be available for approximately 90 days following the fireside chat.   

    About Codiak

    CAMBRIDGE, Mass., Nov. 23, 2020 (GLOBE NEWSWIRE) -- Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, today announced that its President and Chief Executive Officer, Douglas E. Williams, Ph.D., will participate in a fireside chat at the Evercore ISI 3rd Annual HealthCONx Conference. Details are as follows:

    Evercore ISI 3rd Annual HealthCONx Conference

    Date: Wednesday, December 2

    Time: 4:45 p.m. ET

    A live webcast of the fireside chat will be available on the Investors & Media section of the Codiak website at www.codiakbio.com. An archived replay will be available for approximately 90 days following the fireside chat.   

    About Codiak BioSciences

    Codiak is a clinical-stage biopharmaceutical company focused on pioneering the development of exosome-based therapeutics, a new class of medicines with the potential to transform the treatment of a wide spectrum of diseases with high unmet medical need. By leveraging the biology of exosomes as natural intercellular transfer mechanisms, Codiak has developed its proprietary engEx Platform to expand upon the innate properties of exosomes to design, engineer and manufacture novel exosome therapeutic candidates. Codiak has utilized its engEx Platform to generate a deep pipeline of engineered exosomes aimed at treating a broad range of disease areas, spanning oncology, neuro-oncology, neurology, neuromuscular disease and infectious disease.

    Media Contact

    Lindy Devereux

    Scient PR

    T: 646-515-5730

    E:

    Investor Contact

    Christine Labaree

    Evergreen Communications

    T: 650-600-1697

    E: investor@codiakbio.com



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  2. – Human clinical testing now underway with Codiak's first two candidates, exoIL-12™ and exoSTING™ –

    – Initial safety results and preliminary systemic exposure/pharmacokinetics of exoIL-12 in healthy volunteers anticipated YE 2020 -

    – Biomarker, safety and clinical outcome results in cancer patients anticipated mid-2021 for both exoSTING and exoIL-12 –

    CAMBRIDGE, Mass., Nov. 19, 2020 (GLOBE NEWSWIRE) -- Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage company focused on pioneering the development of exosome-based therapeutics, today reported third quarter 2020 financial results and operational progress.

    "Codiak was founded to realize the potential of engineered exosomes as a new and important class of biologic medicines for the…

    – Human clinical testing now underway with Codiak's first two candidates, exoIL-12™ and exoSTING™ –

    – Initial safety results and preliminary systemic exposure/pharmacokinetics of exoIL-12 in healthy volunteers anticipated YE 2020 -

    – Biomarker, safety and clinical outcome results in cancer patients anticipated mid-2021 for both exoSTING and exoIL-12 –



    CAMBRIDGE, Mass., Nov. 19, 2020 (GLOBE NEWSWIRE) -- Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage company focused on pioneering the development of exosome-based therapeutics, today reported third quarter 2020 financial results and operational progress.

    "Codiak was founded to realize the potential of engineered exosomes as a new and important class of biologic medicines for the treatment of a broad range of diseases," said Douglas E. Williams, Ph.D., President and Chief Executive Officer of Codiak. "The creativity, expertise, and execution of our team has enabled us to bring the field's first two engineered exosome candidates into the clinic and we are on track to initiate a third clinical program next year. The recent successful completion of our initial public offering provides additional funding to progress our development programs, invest in our platform and sustain the positive momentum we have built."

    Third Quarter 2020 and Recent Highlights

    • Closed initial public offering (IPO) in October 2020, raising $74.4 million in net proceeds
    • Initiated healthy volunteer dosing of exoIL-12 in a Phase 1 clinical trial designed to transition into patients with cutaneous T cell lymphoma (CTCL)
    • Initiated subject dosing in a Phase 1/2 clinical trial of exoSTING for the treatment of advanced/metastatic, recurrent and injectable solid tumors
    • Continued to advance exoASO™-STAT6 for the intravenous treatment of myeloid-rich cancers through IND-enabling studies
    • Presented preclinical data on exoIL-12 and the engEx™ Platform at the 35th Annual Meeting of the Society for Immunotherapy of Cancer (SITC)
    • Expanded executive team with addition of Yalonda Howze as Executive Vice President, Chief Legal Officer
    • Welcomed Jason Haddock to the Board of Directors and as Audit Committee Chairman

    Anticipated Milestones and Events

    • Initial safety, tolerability and systemic exposure/pharmacokinetics data from the healthy volunteer portion of the exoIL-12 Phase 1 clinical trial are expected by year-end, with biomarker, safety and preliminary pharmacodynamics and efficacy data in CTCL patients expected by mid-2021
    • Safety and preliminary pharmacodynamics and efficacy data from exoSTING Phase 1/2 clinical trial in patients with solid tumors expected by mid-2021
    • Evercore ISI HEALTHCONx Virtual Conference, December 2, 2020

    Third Quarter 2020 Financial Results

    Total revenues for the quarter ended September 30, 2020 were $1.0 million, compared to $0.2 million for the same period in 2019. This increase was primarily due to an increase in collaboration revenue driven primarily by activities in connection with the collaboration with Sarepta.

    Net loss for the quarter ended September 30, 2020 was $35.3 million, compared to a net loss of $20.7 million for the same period in 2019. Net loss for the quarter ended September 30, 2020 was driven primarily by clinical development, general and administrative, and personnel expenses, and ongoing development of the engEx Platform. The current quarter net loss was inclusive of a $15.0 million milestone payment to Kayla Therapeutics in connection with dosing of the first patient in the Phase 1/2 clinical trial of exoSTING.

    Research and development expenses were $30.7 million for the quarter ended September 30, 2020 compared to $16.5 million for the same period in 2019. The increase was primarily driven by an increase in license milestones, personnel costs, and clinical development expenses related to the initiation of the exo-IL12 and exoSTING clinical trials in September 2020.

    General and administrative expenses were $5.3 million for the quarter ended September 30, 2020 compared to $4.8 million for the same period in 2019. The increase was primarily driven by an increase in consulting and legal fees, personnel costs, and other administrative expenses in anticipation of operating as a public company.

    As of September 30, 2020, Codiak had cash, cash equivalents, and marketable securities of $48.3 million. In October 2020, the completion of the IPO resulted in net proceeds of $74.4 million.

    About Codiak BioSciences

    Codiak is a clinical-stage biopharmaceutical company focused on pioneering the development of exosome-based therapeutics, a new class of medicines with the potential to transform the treatment of a wide spectrum of diseases with high unmet medical need. By leveraging the biology of exosomes as natural intercellular transfer mechanisms, Codiak has developed its proprietary engEx Platform to expand upon the innate properties of exosomes to design, engineer and manufacture novel exosome therapeutic candidates. Codiak has utilized its engEx Platform to generate a deep pipeline of engineered exosomes aimed at treating a broad range of disease areas, spanning oncology, neuro-oncology, neurology, neuromuscular disease and infectious disease.

    Forward-Looking Statements

    This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, among other things, statements concerning the development and therapeutic potential of exoSTING and exoIL-12, including timing of release of data, statements concerning the development of exoASO-STAT6, including the timing of initiation of its clinical program, and statements regarding the capabilities and potential of Codiak's engEx Platform and engineered exosomes generally. Any forward-looking statements in this press release are based on management's current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by such forward-looking statements. For a discussion of these risks and uncertainties, and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section entitled "Risk Factors" in Codiak's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and in subsequent filings with the Securities and Exchange Commission, as well as discussions of potential risks, uncertainties and other important factors in Codiak's subsequent filings with the Securities and Exchange Commission. All information in this press release is current as of the date of this report, and Codiak undertakes no duty to update this information unless required by law. 

    Media Contact

    Lindy Devereux

    Scient PR

    T: 646-515-5730

    E:

    Investor Contact

    Christine Labaree

    Evergreen Communications

    T: 650-600-1697

    E: investor@codiakbio.com

    CODIAK BIOSCIENCES, INC.

    CONDENSED CONSOLIDATED BA
    LANCE SHEETS

    (In thousands, except share and per share data)

    (Unaudited)

      SEPTEMBER 30,

    2020
      DECEMBER 31,

    2019
     
    Assets        
    Current assets:        
    Cash and cash equivalents $48,339  $10,316 
    Investments     73,065 
    Restricted cash     367 
    Prepaid expenses and other current assets  4,022   10,370 
    Total current assets  52,361   94,118 
    Property and equipment, net  31,544   17,626 
    Restricted cash, net of current portion  4,170   4,170 
    Operating lease right-of-use assets  22,226    
    Other non-current assets  50   48 
    Total assets $110,351  $115,962 
    Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit        
    Current liabilities:        
    Accounts payable $2,488  $2,381 
    Accrued expenses  23,858   15,818 
    Deferred revenue  6,268   742 
    Deferred rent     814 
    Operating lease liabilities  1,778    
    Total current liabilities  34,392   19,755 
    Long-term liabilities:        
    Deferred revenue, net of current portion  58,069   54,870 
    Note payable, net of discount  24,825   9,572 
    Deferred rent, net of current portion     9,814 
    Operating lease liabilities, net of current portion  37,102    
    Total liabilities  154,388   94,011 
    Commitments and contingencies (Note 10)        
    Series A redeemable convertible preferred stock, $0.0001 par value; 33,200,000 shares

    authorized as of September 30, 2020 and December 31, 2019; 33,200,000 shares issued and

    outstanding as of September 30, 2020 and December 31, 2019; liquidation value as of September

    30, 2020 and December 31, 2019 of $46,162 and $44,169, respectively
      46,162   44,169 
    Series B redeemable convertible preferred stock, $0.0001 par value; 21,400,000 shares

    authorized as of September 30, 2020 and December 31, 2019; 20,583,328 and 20,520,828 shares

    issued and outstanding as of September 30, 2020 and December 31, 2019, respectively; liquidation

    value as of September 30, 2020 and December 31, 2019 of $84,769 and $80,874, respectively
      84,769   81,108 
    Series C redeemable convertible preferred stock, $0.0001 par value; 20,204,100 shares

    authorized as of September 30, 2020 and December 31, 2019; 20,204,079 shares issued and

    outstanding as of September 30, 2020 and December 31, 2019; liquidation value as of September

    30, 2020 and December 31, 2019 of $94,102 and $89,507, respectively
      94,102   89,507 
    Stockholders' deficit:        
    Common stock, $0.0001 par value; 150,000,000 shares authorized as of September 30, 2020

    and 120,000,000 shares authorized as of December 31, 2019; 3,195,355 and 2,997,040 shares

    issued and outstanding as of September 30, 2020 and December 31, 2019, respectively
          
    Additional paid-in capital  1,063   2 
    Accumulated other comprehensive income     43 
    Accumulated deficit  (270,133)  (192,878)
    Total stockholders' deficit  (269,070)  (192,833)
    Total liabilities, redeemable convertible preferred stock and stockholders' deficit $110,351  $115,962 
             

    CODIAK BIOSCIENCES, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF OPER
    ATIONS AND COMPREHENSIVE LOSS

    (In thousands, except share and per share data)

    (Unaudited)

      THREE MONTHS ENDED

    SEPTEMBER 30,
      NINE MONTHS ENDED

    SEPTEMBER 30,
     
      2020  2019  2020  2019 
    Revenue:                
    Collaboration revenue $954  $151  $1,275  $238 
    Total revenue  954   151   1,275   238 
    Operating expenses:                
    Research and development  30,640   16,546   60,653   41,794 
    General and administrative  5,342   4,835   13,933   16,786 
    Total operating expenses  35,982   21,381   74,586   58,580 
    Loss from operations  (35,028)  (21,230)  (73,311)  (58,342)
    Other income (expense):                
    Interest income  4   344   246   1,145 
    Interest expense  (607)  (3)  (1,196)  (3)
    Other income  338   226   553   878 
    Total other income (expense), net  (265)  567   (397)  2,020 
    Net loss $(35,293) $(20,663) $(73,708) $(56,322)
    Cumulative dividends on redeemable convertible

    preferred stock
      (3,457)  (3,454)  (10,296)  (10,247)
    Net loss attributable to common stockholders $(38,750) $(24,117) $(84,004) $(66,569)
    Net loss per share attributable to common stockholders,

    basic and diluted
     $(12.83) $(8.05) $(27.92) $(22.29)
    Weighted average common shares outstanding, basic and

    diluted
      3,020,055   2,995,917   3,008,576   2,986,889 
    Comprehensive income (loss):                
    Net loss $(35,293) $(20,663) $(73,708) $(56,322)
    Other comprehensive income (loss):                
    Unrealized gain (loss) on investments, net of tax of $0     (8)  (43)  72 
    Total other comprehensive income (loss)     (8)  (43)  72 
    Comprehensive loss $(35,293) $(20,671) $(73,751) $(56,250)
                     



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  3. – exoIL-12™ demonstrates tissue-retained pharmacology, enhanced anti-tumor activity, potent M1 myeloid recruitment, and superior T cell responses in vivo

    – Engineered exosomes with directed cellular tropism achieve targeted payload delivery –

    CAMBRIDGE, Mass., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, today announced that preclinical data from programs using its engEx™ Platform are being presented this week at the 35th Annual Meeting of the Society for Immunotherapy of Cancer (SITC). Results from multiple studies highlight the potential of Codiak's precision engineered exosomes to direct…

    – exoIL-12™ demonstrates tissue-retained pharmacology, enhanced anti-tumor activity, potent M1 myeloid recruitment, and superior T cell responses in vivo

    – Engineered exosomes with directed cellular tropism achieve targeted payload delivery –

    CAMBRIDGE, Mass., Nov. 09, 2020 (GLOBE NEWSWIRE) -- Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, today announced that preclinical data from programs using its engEx™ Platform are being presented this week at the 35th Annual Meeting of the Society for Immunotherapy of Cancer (SITC). Results from multiple studies highlight the potential of Codiak's precision engineered exosomes to direct pharmacological payloads to specific cells and to achieve enhanced immune mediated anti-tumor activity with an expanded safety margin.

    Exosomes are naturally occurring, extracellular vesicles that have evolved as an intercellular messenger system to protect and deliver functional macromolecules between cells. Utilizing its engEx Platform, Codiak can engineer exosomes with distinct properties, load them with various types of therapeutic molecules and alter tropism so they reach specific cellular targets. Codiak is developing exosome therapeutic candidates to target multiple pathways throughout the body to treat various forms of cancer, neurological diseases, and infectious diseases. The company initiated clinical trials in September 2020 for two engineered exosome candidates, exoIL-12 and exoSTING™, for the treatment of lymphoid and solid tumors.

    "These data provide further in vivo evidence that we can effectively harness the inherent biology of exosomes to improve the therapeutic window for selectively delivering potent drug molecules to engage promising targets that have eluded other approaches," said Douglas E. Williams, Ph.D., President and Chief Executive Officer of Codiak. "With both of our lead oncology clinical programs now underway, we look forward to seeing results from the healthy volunteer portion of our exoIL-12 study by the end of the year and safety, biomarker and preliminary efficacy data from both exoIL-12 and exoSTING programs by the middle of next year."

    Tumor-Retained Pharmacology and Superior In Vivo Efficacy of exoIL-12 Widens the Therapeutic Window

    exoIL-12 is a novel exosome therapeutic candidate engineered to display active IL-12 on the surface of the exosome. exoIL-12 facilitates potent local pharmacology at the injection site with precisely quantified doses with minimal systemic exposure. The current studies extend observations from previous presentations demonstrating tumor retention and increased tumor growth inhibition across multiple mouse models. Additionally, these data demonstrate significant remodeling of the tumor microenvironment and confirm tissue-retained pharmacology in non-human primate models, thereby widening the therapeutic window for this potent cytokine. Highlights from the data presented at SITC 2020 include:

    • exoIL-12 showed 15-fold improved retention at the injection site and demonstrated four-fold prolonged and improved interferon gamma (IFNγ) production as compared to recombinant IL-12 (rIL-12).
    • exoIL-12 was ~100 fold more potent in tumor growth inhibition than rIL-12. Complete responses were observed in 63% of mice treated with exoIL-12 compared to 0% in mice treated with an equivalent dose of rIL-12.
    • exoIL-12 showed dramatic change in the tumor microenvironment as evidenced by ~8-fold increase in cytotoxic T-cell infiltration and ~150-fold increase in M1 macrophage recruitment.
    • In the non-human primates, exoIL-12 demonstrated tissue-localized pharmacology, local induction of IFNg, and lack of systemic exposure.

    Engineered Exosomes Allow for Targeting of Multiple Immune Cell Types

    Results from multiple in vitro and in vivo studies demonstrated the ability of the engEx Platform to alter cellular tropism and increase functional payload delivery in multiple immune cell types.

    • Exosomes engineered to display several types of targeting domains on the surface exhibited greater association with the target cell types, including dendritic cells (DCs), T cells and B cells, both in vitro and in vivo.
    • Notably, exosomes engineered to display scFabs targeting Clec9A resulted in increased uptake in Clec9A positive DCs that are important in generating anti-tumor immune responses.
    • Anti-Clec9A exosomes loaded with a STING agonist induced pro-inflammatory cytokines in primary mouse DCs at levels up to 15-fold greater than an untargeted control exosome.
    • Preliminary in vivo data show that intra-tumorally administered anti-Clec9A exosomes reduced the required STING agonist dose by 10-fold to control tumor growth and induced greater immune responses against tumor-associated antigens when compared to untargeted controls.

    Data from the posters titled Exosome surface display of IL-12 results in tumor-retained pharmacology with superior potency and limited systemic exposure in non-human primates (709) and Engineered exosomes with altered cellular tropism achieve targeted STING agonist delivery and single-agent tumor control in vivo (703) will be presented on Wednesday, November 11 from 5:15-5:45 p.m. EST and on Friday, November 13 from 4:40-5:10 p.m. EST. The posters will be made available on the Publications & Presentations page of the Codiak website.

    About exoIL-12™

    exoIL-12 is Codiak's exosome therapeutic candidate engineered to display active IL-12 on the surface of the exosome using the exosomal protein, PTGFRN, as a scaffold protein, and designed to facilitate potent local pharmacology at the injection site with precisely quantified doses. By limiting systemic exposure of IL-12 and associated toxicity, Codiak hopes to enhance the therapeutic index with exoIL-12, delivering a more robust tumor response, dose control, and an improved safety profile.

    Codiak intends to focus development of exoIL-12 on tumors that have, in previous clinical testing, shown clinical responses to IL-12 used as a monotherapy. This includes cutaneous T cell lymphoma (CTCL), melanoma, Merkel cell carcinoma, Kaposi sarcoma, glioblastoma multiforme, and triple negative breast cancer. A Phase 1 clinical trial is currently underway with preliminary results from healthy volunteers anticipated by the end of 2020 and safety, biomarker, and preliminary efficacy results from CTCL patients anticipated in mid-2021.

    About exoSTING™

    exoSTING is Codiak's exosome therapeutic candidate engineered to incorporate a proprietary STING (stimulator of interferon genes) agonist inside the lumen of the exosome while expressing the exosomal protein, PTGFRN, on the exosome surface to facilitate specific uptake in tumor-resident antigen presenting cells (APCs). Codiak believes that exoSTING has the potential to overcome certain limitations of free STING agonists and enhance the therapeutic index and selectivity of delivery to desired cells in the tumor microenvironment.

    Codiak is developing exoSTING for the treatment of multiple solid tumors enriched in the target APCs. exoSTING has demonstrated encouraging activity in preclinical models and is now being evaluated in a Phase 1/2 clinical trial in patients with advanced/metastatic, recurrent, and injectable solid tumors. Safety, biomarker, and preliminary efficacy data from the dose-escalation phase of the trial is expected in mid-2021. Future development of exoSTING may be expanded to neuro-oncology indications such as glioblastoma and leptomeningeal cancer disease.

    About the engEx™ Platform

    Codiak's proprietary engEx Platform is designed to enable the development of engineered exosome therapeutics for a wide spectrum of diseases and to manufacture them reproducibly and at scale to pharmaceutical standards. By leveraging the inherent biology, function and tolerability profile of exosomes, Codiak is developing engEx exosomes designed to carry and protect potent drug molecules, provide selective delivery and elicit the desired pharmacology at the desired tissue and cellular sites. Through its engEx Platform, Codiak seeks to direct tropism and distribution by engineering exosomes to carry on their surface specific targeting drug moieties, such as proteins, antibodies/fragments, and peptides, individually or in combination. Codiak scientists have identified two exosomal proteins that serve as surface and luminal scaffolds. By engineering the exosome surface or lumen and optimizing the route of administration, Codiak aims to deliver engEx exosomes to the desired cell and tissue to more selectively engage the drug target, potentially enhancing the therapeutic index by improving potency and reducing toxicity.

    About Codiak BioSciences

    Codiak is a clinical-stage biopharmaceutical company focused on pioneering the development of exosome-based therapeutics, a new class of medicines with the potential to transform the treatment of a wide spectrum of diseases with high unmet medical need. By leveraging the biology of exosomes as natural intercellular transfer mechanisms, Codiak has developed its proprietary engEx Platform to expand upon the innate properties of exosomes to design, engineer, and manufacture novel exosome therapeutic candidates. Codiak has utilized its engEx Platform to generate a deep pipeline of engineered exosomes aimed at treating a broad range of disease areas, spanning oncology, neuro-oncology, neurology, neuromuscular disease, and infectious disease.

    Forward-Looking Statements

    This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, among other things, statements concerning the development and therapeutic potential of exoSTING and exoIL-12, including timing of release of data, and capabilities of Codiak's engEx Platform. Any forward-looking statements in this press release are based on management's current expectations of future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially and adversely from those set forth in or implied by such forward-looking statements. For a discussion of these risks and uncertainties, and other important factors, any of which could cause our actual results to differ from those contained in the forward-looking statements, see the section entitled "Risk Factors" in the final prospectus related to Codiak's initial public offering filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933, as amended, as well as discussions of potential risks, uncertainties and other important factors in Codiak's subsequent filings with the Securities and Exchange Commission. All information in this press release is current as of the date of this report, and Codiak undertakes no duty to update this information unless required by law. 

    Media Contact 
    Lindy Devereux 
    Scient PR 
    T: 646-515-5730 
    E: 
    
    Investor Contact 
    Christine Labaree 
    Evergreen Communications 
    T: 650-600-1697 
    E: 

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  4. Net Investment Income provides 106% Coverage of Base Distribution Payout

    Record Q3 New Debt and Equity Commitments and Total Fundings

    Maintains Strong Liquidity of $465.1 Million

    Undistributed Earnings Spillover of $78.2 Million, or $0.68(1) per Ending Shares Outstanding

    Q3 2020 Financial Achievements and Highlights

    • Net Investment Income "NII" of $38.7 million, or $0.34 per share
      • Provides 106% coverage of base distribution payout
    • Total Investment Income of $70.3 million
    • Record Q3 new debt and equity commitments of $514.3 million, an increase of 113.1% year-over-year
      • Record Q3 total gross fundings of $265.5 million, an increase of 50.0% year-over-year
    • Unscheduled early principal repayments or "early loan repayments" of $190.8

    Net Investment Income provides 106% Coverage of Base Distribution Payout

    Record Q3 New Debt and Equity Commitments and Total Fundings

    Maintains Strong Liquidity of $465.1 Million

    Undistributed Earnings Spillover of $78.2 Million, or $0.68(1) per Ending Shares Outstanding

    Q3 2020 Financial Achievements and Highlights

    • Net Investment Income "NII" of $38.7 million, or $0.34 per share
      • Provides 106% coverage of base distribution payout
    • Total Investment Income of $70.3 million
    • Record Q3 new debt and equity commitments of $514.3 million, an increase of 113.1% year-over-year
      • Record Q3 total gross fundings of $265.5 million, an increase of 50.0% year-over-year
    • Unscheduled early principal repayments or "early loan repayments" of $190.8 million
    • $465.1 million of available liquidity, subject to existing terms and covenants
    • 13.6% Return on Average Equity "ROAE" (NII/Average Equity)
    • 6.4% Return on Average Assets "ROAA" (NII/Average Assets)
    • GAAP leverage of 111.4% and regulatory leverage of 102.9%(2)
    • Net Asset Value "NAV" increased to $10.26 from $10.19, up 0.7% from Q2 2020
    • 12.6% GAAP Effective Yield and 11.3% Core Yield(3), a non-GAAP measure

    Year-to-date ending September 30, 2020 Financial Highlights

    • NII of $115.0 million, or $1.03 per share, an increase of 11.4%, compared to $103.2 million for the nine months ending September 30, 2019
    • Total investment income of $211.9 million, an increase of 7.4%, compared to $197.3 million for the nine months ending September 30, 2019
    • New equity and debt commitments of $1.04 billion
      • Total fundings of $631.4 million
    • Net debt investment portfolio growth of $113.6 million
    • Unscheduled early loan repayments of $426.7 million

    Footnotes:

    (1) $0.69 per Weighted Average Shares Outstanding

    (2) Regulatory leverage represents debt-to-equity ratio, excluding the Company's Small Business Administration "SBA" debenture

    (3) Core Yield excludes early loan repayments and one-time fees, and includes income and fees from expired commitments

    Hercules Capital, Inc. (NYSE:HTGC) ("Hercules" or the "Company"), the largest and leading specialty financing provider to innovative venture, growth and established stage companies backed by some of the leading and top-tier venture capital and select private equity firms, today announced its financial results for the third quarter ended September 30, 2020.

    "We delivered an unseasonally strong record third quarter of originations and fundings of $514 million and $266 million, respectively, while maintaining the overall strong credit quality of the debt investment portfolio," stated Scott Bluestein, chief executive officer and chief investment officer of Hercules. "With a record debt investment portfolio and stabilizing core yields, our net investment income produced 106% coverage of our base shareholder distribution and allowed us to declare a $0.02 supplemental distribution on top of our base distribution to our shareholders."

    Bluestein added, "Looking forward, we will continue to vigilantly monitor our portfolio companies and their future liquidity needs as they address the economic uncertainty associated with the ongoing global health pandemic. With strong liquidity and conservative leverage, we are well positioned to help our management teams through this period of volatility and believe we will enter 2021 in a position of relative strength."

    Q3 2020 Review and Operating Results

    Debt Investment Portfolio

    Hercules delivered new debt and equity commitments totaling $514.3 million and gross fundings totaling $265.5 million.

    During the third quarter, Hercules realized early loan repayments of $190.8 million, which along with normal scheduled amortization of $20.6 million, resulted in total debt repayments of $211.4 million.

    The new debt investment origination and funding activities lead to net debt investment portfolio growth of $4.8 million during the third quarter, on a cost basis.

    The Company's total investment portfolio, (at cost and fair value) by category, quarter-over-quarter is highlighted below:

    Total Investment Portfolio: Q3 2020 to Q2 2020

    (in millions) Debt Equity Warrants Total Portfolio
    Balances at Cost at 6/30/20

    $

    2,278.9

     

    $

    191.7

    $

    30.8

     

    $

    2,501.4

     

    New fundings

     

    262.5

     

     

    1.0

     

    2.0

     

     

    265.5

     

    Warrants not related to Q3 2020 fundings

     

     

     

     

    0.1

     

     

    0.1

     

    Early payoffs(a)

     

    (190.8

    )

     

     

     

     

    (190.8

    )

    Principal payments received on investments

     

    (20.6

    )

     

     

     

     

    (20.6

    )

    Net changes attributed to conversions, liquidations, and fees

     

    (46.3

    )

     

    0.6

     

    (4.1

    )

     

    (49.8

    )

    Net activity during Q3 2020

     

    4.8

     

     

    1.6

     

    (2.0

    )

     

    4.4

     

    Balances at Cost at 9/30/20

    $

    2,283.7

     

    $

    193.3

    $

    28.8

     

    $

    2,505.8

     

     
     
    Balances at Value at 6/30/20

    $

    2,216.3

     

    $

    125.7

    $

    21.5

     

    $

    2,363.5

     

    Net activity during Q3 2020

     

    4.8

     

     

    1.6

     

    (2.0

    )

     

    4.4

     

    Net change in unrealized appreciation (depreciation)

     

    43.4

     

     

    6.5

     

    3.0

     

     

    52.9

     

    Total net activity during Q3 2020

     

    48.2

     

     

    8.1

     

    1.0

     

     

    57.3

     

    Balances at Value at 9/30/20

    $

    2,264.5

     

    $

    133.8

    $

    22.5

     

    $

    2,420.8

     

     
    (a)Early payoffs include $4.1 million of paydowns on revolvers during Q3 2020.

    Debt Investment Portfolio Balances by Quarter

    (in millions) Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
     
    Ending Balance at Cost

    $2,283.7

     

    $2,278.9

     

    $2,242.9

     

    $2,170.1

     

    $2,101.3

     

     

     

     

     

     

     

     

     

     
    Weighted Average Balance

    $2,217.0

     

    $2,248.0

     

    $2,178.0

     

    $2,164.0

     

    $2,061.0

     

    Debt Investment Portfolio Composition by Quarter

    (% of debt investment portfolio) Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
     
    First Lien Senior Secured

    85.5%

     

    83.5%

     

    83.0%

     

    84.0%

     

    84.8%

     

     

     

     

     

     

     

     

     

     
    Floating Rate w/Floors

    97.9%

     

    97.9%

     

    97.8%

     

    97.4%

     

    97.6%

     

    Effective Portfolio Yield and Core Portfolio Yield ("Core Yield")

    The effective yield on Hercules' debt investment portfolio was 12.6% during Q3 2020, as compared to 12.2% for Q2 2020. The Company realized $190.8 million of early loan repayments in Q3 2020 compared to $85.4 million in Q2 2020, or an increase of 123.4%. Effective yields generally include the effects of fees and income accelerations attributed to early loan repayments, and other one-time events. Effective yields are materially impacted by the elevated or reduced levels of early loan repayments and derived by dividing total investment income by the weighted average earning investment portfolio assets outstanding during the quarter, which excludes non-interest earning assets such as warrants and equity investments.

    Core yield, a non-GAAP measure, was 11.3% during Q3 2020, within the Company's expected range of 11.0% to 12.0%, and decreased slightly compared to 11.5% in Q2 2020. Hercules defines core yield as yields that generally exclude any benefit from income related to early repayments attributed to the acceleration of unamortized income and prepayment fees and includes income from expired commitments.

    Income Statement

    Total investment income increased to $70.3 million for Q3 2020, compared to $69.2 million in Q3 2019, an increase of 1.6% year-over-year. The increase is primarily attributable to a higher average debt investment balance offset by lower core yields due to the impact of the Fed Funds cut in March 2020 between periods.

    Non-interest and fee expenses were $15.0 million in Q3 2020 versus $15.4 million for Q3 2019. The decrease was due to lower general and administrative expenses offset by higher employee compensation expenses.

    Interest expense and fees were $16.6 million in Q3 2020, compared to $15.0 million in Q3 2019. The increase was due to higher weighted-average borrowings between periods.

    The Company had a weighted average cost of borrowings comprised of interest and fees, of 5.1% in Q3 2020, as compared to 5.1% for Q3 2019.

    NII – Net Investment Income

    NII for Q3 2020 was $38.7 million, or $0.34 per share, based on 113.5 million basic weighted average shares outstanding, compared to $38.9 million, or $0.37 per share, based on 104.3 million basic weighted average shares outstanding in Q3 2019. The decrease is attributable to a higher average debt investment balance offset by an increase in total operating expenses and lower core yields between periods.

    Continued Credit Discipline and Strong Credit Performance

    Hercules' net cumulative realized gain/(loss) position, since its first origination activities in October 2004 through September 30, 2020, (including net loan, warrant and equity activity) on investments, totaled ($65.0) million, on a GAAP basis, spanning over 16 years of investment activities.

    When compared to total new debt investment commitments during the same period of over $11.0 billion, the total realized gain/(loss) since inception of ($65.0) million represents approximately 59 basis points "bps," or 0.59%, of cumulative debt commitments, or an effective annualized loss rate of 4.0 bps, or 0.04%.

    Realized Gains/(Losses)

    During Q3 2020, Hercules had net realized gains/(losses) of $(48.5) million primarily from gross realized losses of ($50.0) million, offset by gross realized gains of $1.5 million from the sale of the Company's equity holdings.

    Unrealized Appreciation/(Depreciation)

    During Q3 2020, Hercules recorded $52.8 million of net unrealized appreciation, all of which was net unrealized appreciation from our debt, equity and warrant investments.

    Portfolio Asset Quality

    As of September 30, 2020, the weighted average grade of the debt investment portfolio, at fair value, improved to 2.22, compared to 2.30 as of June 30, 2020, based on a scale of 1 to 5, with 1 being the highest quality. Hercules' policy is to generally adjust the credit grading down on its portfolio companies as they approach their expected need for additional growth equity capital to fund their respective operations for the next 9-14 months. Various companies in the Company's portfolio will require additional rounds of funding from time to time to maintain their operations.

    Additionally, Hercules may selectively downgrade portfolio companies, from time to time, if they are not meeting the Company's financing criteria, or underperforming relative to their respective business plans.

    As of September 30, 2020, grading of the debt investment portfolio at fair value, excluding warrants and equity investments, was as follows:

    Credit Grading at Fair Value, Q3 2020 - Q3 2019 ($ in millions)

    Q3

    2020

     

     

    Q2

    2020

     

     

    Q1

    2020

     

     

    Q4

    2019

     

     

    Q3

    2019

     

    Grade 1 - High

    $

    406.5

    17.9

    %

    $

    443.6

    20.1

    %

    $

    390.4

    17.7

    %

    $

    387.3

    18.0

    %

    $

    237.9

    11.4

    %

    Grade 2

    $

    1,053.1

    46.5

    %

    $

    877.9

    39.6

    %

    $

    818.1

    37.3

    %

    $

    1,180.5

    55.0

    %

    $

    1,331.2

    64.0

    %

    Grade 3

    $

    772.3

    34.1

    %

    $

    849.7

    38.3

    %

    $

    917.2

    41.8

    %

    $

    509.9

    23.7

    %

    $

    479.0

    23.1

    %

    Grade 4

    $

    26.7

    1.2

    %

    $

    25.0

    1.1

    %

    $

    54.3

    2.5

    %

    $

    69.0

    3.2

    %

    $

    29.7

    1.4

    %

    Grade 5 - Low

    $

    5.9

    0.3

    %

    $

    20.1

    0.9

    %

    $

    15.5

    0.7

    %

    $

    1.8

    0.1

    %

    $

    2.1

    0.1

    %

     
    Weighted Avg.

     

    2.22

     

    2.30

     

    2.34

     

    2.15

     

    2.17

    Non-Accruals

    Non-accruals decreased as a percentage of the overall investment portfolio in the third quarter of 2020. As of September 30, 2020, the Company had five (5) debt investments on non-accrual with an investment cost and fair value of approximately $23.5 million and $6.2 million, respectively, or 0.9% and 0.3% as a percentage of the Company's total investment portfolio at cost and value, respectively.

    Compared to June 30, 2020, the Company had five (5) debt investments on non-accrual with an investment cost and fair value of approximately $61.1 million and $11.5 million, respectively, or 2.4% and 0.5% as a percentage of the total investment portfolio at cost and value, respectively.

    Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019
     
    Total Investments at Cost

    $2,505.8

     

    $2,501.4

     

    $2,466.3

     

    $2,402.0

     

    $2,336.3

     

     

     

     

     

     

     

     

     

    Loans on non-accrual as a % of Total

     

     

     

     

     

     

     

     

     

    Investments at Value

    0.3%

     

    0.5%

     

    0.0%

     

    0.0%

     

    0.1%

     

     

     

     

     

     

     

     

     

    Loans on non-accrual as a % of Total

    0.9%

     

    2.4%

     

    0.8%

     

    0.4%

     

    0.4%

    Investments at Cost

    Liquidity and Capital Resources

    The Company ended Q3 2020 with $465.1 million in available liquidity, including $27.6 million in unrestricted cash and cash equivalents, and $437.5 million in available credit facilities, subject to existing terms and advance rates and regulatory and covenant requirements.

    During the three months ending September 30, 2020, the Company did not sell any shares of common stock under the equity ATM program. During the nine months ending September 30, 2020, the Company sold approximately 6.0 million shares of common stock, which were issued under the equity ATM program, for total accumulated net proceeds of approximately $73.9 million, including $810,000 of offering expenses, all accretive to net asset value. As of October 26, 2020, approximately 16.2 million shares remain available for issuance and sale under the Equity Distribution Agreement.

    Bank Facilities

    As of September 30, 2020, there were $37.5 million in outstanding borrowings under the Hercules' $400.0 million committed credit facility with Union Bank as Agent and no outstanding borrowings under the Hercules' $75.0 million committed credit facility with Wells Fargo Capital Finance, for a total of $37.5 million.

    Leverage

    As of September 30, 2020, Hercules' GAAP leverage ratio, including its Small Business Administration "SBA" debentures, was 111.4%. Hercules' regulatory leverage, or debt-to-equity ratio, excluding its SBA debentures, was 102.9% and net regulatory leverage, a non-GAAP measure (excluding cash of approximately $27.6 million), was 100.6%. Hercules' net leverage ratio, including its SBA debentures, was 109.0%.

    Available Unfunded Commitments – Representing 9.7% of Total Assets

    The Company's unfunded commitments and contingencies consist primarily of unused commitments to extend credit in the form of loans to select portfolio companies. A portion of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones in order to gain access to additional funding. Furthermore, the Company's credit agreements contain customary lending provisions that allow us relief from funding obligations for previously made commitments. In addition, since a portion of these commitments may also expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements.

    As of September 30, 2020, the Company had $242.5 million of available unfunded commitments at the request of the portfolio company and unencumbered by any milestones, including undrawn revolving facilities, representing 9.7% of Hercules' total assets. This increased from the previous quarter of $165.1 million of available unfunded commitments or 6.7% of Hercules' total assets.

    Existing Pipeline and Signed Term Sheets

    After closing $514.3 million in new debt and equity commitments in Q3 2020, Hercules has pending commitments of $45.4 million in signed non-binding term sheets outstanding as of October 26, 2020. Since the close of Q3 2020 and as of October 26, 2020, Hercules has closed new debt and equity commitments of $85.8 million and funded $77.0 million.

    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.

    Net Asset Value

    As of September 30, 2020, the Company's net assets were $1.17 billion, compared to $1.16 billion at the end of Q2 2020. NAV per share increased 0.7% to $10.26 on 114.3 million outstanding shares of common stock as of September 30, 2020, compared to $10.19 on 114.2 million outstanding shares of common stock as of June 30, 2020. The increase in NAV per share was primarily attributed to the net change in unrealized appreciation and earnings exceeding the distribution paid in Q3 of $0.02 per share.

    Interest Rate Sensitivity

    Hercules has an asset sensitive debt investment portfolio with 97.9% of its debt investment portfolio being priced at floating interest rates as of September 30, 2020, with a Prime or LIBOR-based interest rate floor, combined with 97.1% of its outstanding debt borrowings bearing fixed interest rates, leading to higher net investment income sensitivity.

    Based on Hercules' Consolidated Statement of Assets and Liabilities as of September 30, 2020, the following table shows the approximate annualized increase/(decrease) in components of net income resulting from operations of hypothetical base rate changes in interest rates, such as Prime Rate, assuming no changes in Hercules' debt investments and borrowings. These estimates are subject to change due to the impact from active participation in the Company's equity ATM program and any future equity offerings.

    (in thousands) Interest Interest Net EPS(2)
    Basis Point Change Income(1) Expense Income

    (75)

    $

    (53

    )

    $

    (45

    )

    $

    (8

    )

    $

    -

    (50)

    $

    (53

    )

    $

    (30

    )

    $

    (23

    )

    $

    -

    (25)

    $

    (53

    )

    $

    (15

    )

    $

    (38

    )

    $

    -

    25

    $

    2,197

     

    $

    15

     

    $

    2,182

     

    $

    0.02

    50

    $

    4,581

     

    $

    30

     

    $

    4,551

     

    $

    0.04

    75

    $

    6,964

     

    $

    45

     

    $

    6,919

     

    $

    0.06

    100

    $

    9,471

     

    $

    60

     

    $

    9,411

     

    $

    0.08

    200

    $

    21,622

     

    $

    121

     

    $

    21,501

     

    $

    0.19

    (1)

    Source: Hercules Capital Form 10-Q for Q3 2020

    (2)

    EPS calculated on basic weighted shares outstanding of 113,489. Estimates are subject to change due to impact from active participation in the Company's equity ATM program and any future equity offerings.

    Existing Equity and Warrant Portfolio

    Equity Portfolio

    Hercules held equity positions in 55 portfolio companies with a fair value of $133.8 million and a cost basis of $193.3 million as of September 30, 2020. On a fair value basis, 31.1% or $41.6 million is related to existing public equity positions.

    Warrant Portfolio

    Hercules held warrant positions in 108 portfolio companies with a fair value of $22.5 million and a cost basis of $28.8 million as of September 30, 2020. On a fair value basis, 30.9% or $7.0 million is related to existing public warrant positions.

    Portfolio Company IPO and M&A Activity in Q3 2020

    IPO Activity

    As of October 26, 2020, Hercules held warrant or equity positions in three (3) portfolio companies that had filed Registration Statements in contemplation of a potential IPO, including:

    • Three (3) portfolio companies filed confidentially under the JOBS Act.
    • In August 2020, Hercules portfolio company Oak Street Health, Inc. (NYSE:OSH), a fast-growing network of value-based, primary care centers for adults on Medicare, completed its initial public offering of 15.6 million shares of common stock at an initial public offering price of $21.00 per share on the New York Stock Exchange. Hercules initially committed $30.0 million in venture debt financing in August 2017 and an additional $50.0 million in April 2019.
    • In September 2020, Hercules portfolio company Palantir Technologies Inc. (NYSE:PLTR), a data analytics platform focused on the government and financial sectors, completed its direct listing at a reference price of $7.25 per share on the New York Stock Exchange. Hercules currently holds 2,085,421 shares of common stock as of September 30, 2020.
    • In September 2020, Hercules portfolio company Outset Medical, Inc. (NASDAQ:OM), a medical device company which provides a hemodialysis system for kidney diseases, completed its initial public offering of 9.0 million shares of common stock at an initial public offering price of $27.00 per share on the Nasdaq Global Market. Hercules committed $25.5 million in venture debt financing beginning in September 2013 and currently holds 38,243 shares of common stock and warrants for 62,794 shares of common stock as of September 30, 2020.
    • In October 2020, Hercules portfolio company Codiak BioSciences, Inc. (NASDAQ:CDAK), a clinical-stage biotech company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, completed its initial public offering of 5.5 million shares of common stock at an initial public offering price of $15.00 per share on the Nasdaq Global Market. Hercules initially committed $25.0 million in venture debt financing in September 2019.

    There can be no assurances that companies that have yet to complete their IPOs will do so.

    M&A Activity

    • In July 2020, Hercules' portfolio company Postmates Inc., a leader in on-demand food delivery, announced that it has reached a definitive agreement to be acquired by Uber Technologies, Inc. (NYSE:UBER), a ride-hailing company offering services that include peer-to-peer ridesharing, ride service hailing, and food delivery, for approximately $2.65 billion in an all-stock transaction. Hercules initially committed $20.0 million in venture debt financing in July 2018 and currently holds warrants for 189,865 shares of common stock as of September 30, 2020.
    • In August 2020, Hercules' portfolio company Yumanity Therapeutics, Inc., a clinical-stage biopharmaceutical company that is developing disease-modifying therapies for neurodegenerative diseases, announced that they have entered into a definitive merger agreement with Proteostasis Therapeutics, Inc. (NASDAQ:PTI), a clinical-stage biopharmaceutical company developing small molecule therapeutics to treat cystic fibrosis and other diseases caused by dysfunctional protein processing. The combined company will operate under the name Yumanity Therapeutics, Inc. and trade on the Nasdaq Global Market under the ticker symbol "YMTX." The transaction has been approved by the boards of directors of both companies. The merger is expected to close during the fourth quarter of 2020, subject to customary closing conditions, including the approval of the merger agreement by the shareholders of PTI. Hercules initially committed $20.0 million in venture debt financing in December 2019 and currently holds 73,110 shares of Class C Preferred Units, as of September 30, 2020.
    • In September 2020, Hercules' portfolio company Patron Technology, Inc., a technology developer whose products help live event organizers create better experiences for attendees and deeper relationships with sponsors through a complete, data-driven event technology solution, announced that they have been acquired by Vector Capital, a private equity firm specializing in transformational investments in established technology businesses.

    Subsequent Events

    1.

    As of October 26, 2020, Hercules has:

     

     

     

     

    a.

    Funded $77.0 million to new and existing commitments since the close of the third quarter 2020.

     

     

     

     

    b.

    Pending commitments (signed non-binding term sheets) of $45.4 million.

    The table below summarizes the Company's year-to-date closed and pending commitments as follows:

     

    Closed Commitments and Pending Commitments (in millions)

    January 1 – September 30, 2020 Closed Commitments(a)

    $1,037.3

    Q4 2020 Closed Commitments (as of October 26, 2020)(a)

    $85.8

    Year-to-Date 2020 Closed Commitments

    $1,123.1

    Q4 2020 Pending Commitments (as of October 26, 2020)(b)

    $45.4

    Year-to-Date 2020 Closed and Pending Commitments

    $1,168.5

    Notes:

     

    a.

    Closed Commitments may include renewals of existing credit facilities. Not all Closed Commitments result in future cash requirements. Commitments generally fund over the two succeeding quarters from close.

     

     

     

     

    b.

    Not all pending commitments (signed non-binding term sheets) are expected to close and do not necessarily represent any future cash requirements.

     

     

     

    2.

    Subsequent to September 30, 2020 and as of October 26, 2020, the Company sold 306,401 shares of its common stock under the 2020 Equity Distribution Agreement. As of October 26, 2020, 16.2 million shares remain available for issuance and sale under the 2020 Equity Distribution Agreement.

     

     

     

    3.

    On October 27, 2020, HT IV was licensed to operate as a Small Business Investment Company (SBIC) under the SBA. This additional license has a 10-year term. The Company will gain access to $175 million of capital through the SBA debenture program, in addition to its regulatory capital contribution of $87.5 million to HT IV which will be used for investment purposes, subject to the issuance of a capital commitment by the SBA and customary procedures.

    Conference Call

    Hercules has scheduled its third quarter 2020 financial results conference call for October 29, 2020 at 2:00 p.m. PT (5:00 p.m. ET). To listen to the call, please dial (877) 304-8957 (or (408) 427-3709 internationally) and reference Conference ID: 4431939 if asked, approximately 10 minutes prior to the start of the call. A taped replay will be made available approximately three hours after the conclusion of the call and will remain available for seven days. To access the replay, please dial (855) 859-2056 or (404) 537-3406 and enter the passcode 4431939.

    About Hercules Capital, Inc.

    Hercules Capital, Inc. (NYSE:HTGC) 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 $11.0 billion to over 520 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 , or call 650.289.3060.

    Hercules' common stock trades on the New York Stock Exchange (NYSE) under ticker symbol HTGC. In addition, Hercules has two retail bond issuances of 5.25% Notes due 2025 (NYSE:HCXZ) and 6.25% Notes due 2033 (NYSE:HCXY).

    Category: Earnings

    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.

    HERCULES CAPITAL, INC.
    CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
    (dollars in thousands, except per share data)
     
    September 30, 2020 December 31, 2019
    Assets
    Investments:
    Non-control/Non-affiliate investments (cost of $2,352,003 and $2,248,524, respectively)

    $

    2,355,935

     

    $

    2,232,972

     

    Control investments (cost of $65,242 and $65,333, respectively)

     

    55,092

     

     

    59,746

     

    Affiliate investments (cost of $88,584 and $88,175, respectively)

     

    9,800

     

     

    21,808

     

    Total investments in securities, at value (cost of $2,505,829 and $2,402,032, respectively)

     

    2,420,827

     

     

    2,314,526

     

    Cash and cash equivalents

     

    27,554

     

     

    64,393

     

    Restricted cash

     

    20,507

     

     

    50,603

     

    Interest receivable

     

    19,506

     

     

    20,207

     

    Right of use asset

     

    9,884

     

     

    11,659

     

    Other assets

     

    5,723

     

     

    580

     

    Total assets

    $

    2,504,001

     

    $

    2,461,968

     

     
    Liabilities
    Accounts payable and accrued liabilities

    $

    28,782

     

    $

    30,306

     

    Operating lease liability

     

    9,753

     

     

    11,538

     

    SBA Debentures, net (principal of $99,000 and $149,000, respectively)(1)

     

    98,668

     

     

    148,165

     

    2022 Notes, net (principal of $150,000 and $150,000, respectively)(1)

     

    148,907

     

     

    148,514

     

    July 2024 Notes, net (principal of $105,000 and $105,000, respectively)(1)

     

    103,869

     

     

    103,685

     

    February 2025 Notes, net (principal of $50,000 and $0, respectively)(1)

     

    49,493

     

     

     

    2025 Notes, net (principal of $75,000 and $75,000, respectively)(1)

     

    73,256

     

     

    72,970

     

    June 2025 Notes, net (principal of $70,000 and $0, respectively)(1)

     

    69,233

     

     

     

    2033 Notes, net (principal of $40,000 and $40,000, respectively)(1)

     

    38,582

     

     

    38,501

     

    2027 Asset-Backed Notes, net (principal of $200,000 and $200,000 respectively)(1)

     

    197,521

     

     

    197,312

     

    2028 Asset-Backed Notes, net (principal of $250,000 and $250,000, respectively)(1)

     

    247,579

     

     

    247,395

     

    2022 Convertible Notes, net (principal of $230,000 and $230,000, respectively)(1)

     

    227,786

     

     

    226,614

     

    Credit Facilities

     

    37,492

     

     

    103,919

     

    Total liabilities

    $

    1,330,921

     

    $

    1,328,919

     

     
    Net assets consist of:
    Common stock, par value

     

    115

     

     

    108

     

    Capital in excess of par value

     

    1,225,823

     

     

    1,145,106

     

    Total distributable earnings (loss)

     

    (52,858

    )

     

    (12,165

    )

    Total net assets

    $

    1,173,080

     

    $

    1,133,049

     

    Total liabilities and net assets

    $

    2,504,001

     

    $

    2,461,968

     

     
    Shares of common stock outstanding ($0.001 par value, 200,000,000 authorized)

     

    114,317

     

     

    107,364

     

    Net asset value per share

    $

    10.26

     

    $

    10.55

     

    (1) The Company's SBA Debentures, February 2025 Notes, June 2025 Notes, 2033 Notes, 2025 Notes, 2022 Notes, 2027 Asset-Backed Notes, 2028 Asset-Backed Notes, 2022 Convertible Notes, and July 2024 Notes, as each term is defined herein, are presented net of the associated debt issuance costs for each instrument.
    HERCULES CAPITAL, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except per share data)
     

    Three Months Ended September 30,

     

    Nine Months Ended September 30,

     

    2020

     

     

     

    2019

     

     

     

    2020

     

     

     

    2019

     

    Investment income:
    Interest income
    Non-control/Non-affiliate investments

    $

    64,403

     

    $

    62,696

     

    $

    192,408

     

    $

    176,568

     

    Control investments

     

    740

     

     

    1,055

     

     

    2,117

     

     

    3,119

     

    Affiliate investments

     

    232

     

     

    493

     

     

    609

     

     

    1,740

     

    Total interest income

     

    65,375

     

     

    64,244

     

     

    195,134

     

     

    181,427

     

    Fee income
    Commitment, facility and loan fee income
    Non-control/Non-affiliate investments

     

    2,985

     

     

    3,591

     

     

    10,692

     

     

    11,069

     

    Control investments

     

    5

     

     

    5

     

     

    15

     

     

    13

     

    Affiliate investments

     

     

     

    26

     

     

     

     

    186

     

    Total commitment, facility and loan fee income

     

    2,990

     

     

    3,622

     

     

    10,707

     

     

    11,268

     

    One-time fee income
    Non-control/Non-affiliate investments

     

    1,974

     

     

    1,372

     

     

    6,085

     

     

    4,602

     

    Total one-time fee income

     

    1,974

     

     

    1,372

     

     

    6,085

     

     

    4,602

     

    Total fee income

     

    4,964

     

     

    4,994

     

     

    16,792

     

     

    15,870

     

    Total investment income

     

    70,339

     

     

    69,238

     

     

    211,926

     

     

    197,297

     

    Operating expenses:
    Interest

     

    14,807

     

     

    13,857

     

     

    44,415

     

     

    39,927

     

    Loan fees

     

    1,824

     

     

    1,138

     

     

    5,268

     

     

    5,793

     

    General and administrative
    Legal expenses

     

    673

     

     

    1,586

     

     

    2,563

     

     

    4,212

     

    Tax expenses

     

    994

     

     

    815

     

     

    3,028

     

     

    1,706

     

    Other expenses

     

    3,624

     

     

    3,967

     

     

    11,622

     

     

    10,398

     

    Total general and administrative

     

    5,291

     

     

    6,368

     

     

    17,213

     

     

    16,316

     

    Employee compensation
    Compensation and benefits

     

    7,181

     

     

    7,559

     

     

    22,575

     

     

    23,372

     

    Stock-based compensation

     

    2,522

     

     

    1,443

     

     

    7,477

     

     

    8,716

     

    Total employee compensation

     

    9,703

     

     

    9,002

     

     

    30,052

     

     

    32,088

     

    Total operating expenses

     

    31,625

     

     

    30,365

     

     

    96,948

     

     

    94,124

     

    Net investment income

     

    38,714

     

     

    38,873

     

     

    114,978

     

     

    103,173

     

    Net realized gain (loss) on investments
    Non-control/Non-affiliate investments

     

    (48,501

    )

     

    4,807

     

     

    (41,393

    )

     

    13,633

     

    Total net realized gain (loss) on investments

     

    (48,501

    )

     

    4,807

     

     

    (41,393

    )

     

    13,633

     

    Net change in unrealized appreciation (depreciation) on investments
    Non-control/Non-affiliate investments

     

    54,299

     

     

    (26,351

    )

     

    19,483

     

     

    15,533

     

    Control investments

     

    646

     

     

    2,489

     

     

    (4,563

    )

     

    421

     

    Affiliate investments

     

    (2,111

    )

     

    (547

    )

     

    (12,416

    )

     

    (3,773

    )

    Total net unrealized appreciation (depreciation) on investments

     

    52,834

     

     

    (24,409

    )

     

    2,504

     

     

    12,181

     

    Total net realized and unrealized gain(loss)

     

    4,333

     

     

    (19,602

    )

     

    (38,889

    )

     

    25,814

     

    Net increase(decrease) in net assets resulting from operations

    $

    43,047

     

    $

    19,271

     

    $

    76,089

     

    $

    128,987

     

    Net investment income before investment gains and losses per common share:
    Basic

    $

    0.34

     

    $

    0.37

     

    $

    1.03

     

    $

    1.03

     

    Change in net assets resulting from operations per common share:
    Basic

    $

    0.38

     

    $

    0.18

     

    $

    0.68

     

    $

    1.29

     

    Diluted

    $

    0.38

     

    $

    0.18

     

    $

    0.67

     

    $

    1.29

     

    Weighted average shares outstanding:
    Basic

     

    113,489

     

     

    104,314

     

     

    111,342

     

     

    99,615

     

    Diluted

     

    113,744

     

     

    104,655

     

     

    111,590

     

     

    100,043

     

    Distributions paid per common share:
    Basic

    $

    0.32

     

    $

    0.34

     

    $

    1.04

     

    $

    0.98

     

     

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  5. Codiak BioSciences, Inc. ("Codiak"), a clinical-stage company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, today announced the pricing of its initial public offering of 5,500,000 shares of its common stock at a public offering price of $15.00 per share, for gross proceeds of approximately $82.5 million, before deducting underwriting discounts and commissions and offering expenses. All of the shares are being offered by Codiak. In addition, Codiak has granted the underwriters a 30-day option to purchase up to 825,000 additional shares of common stock at the initial public offering price, less underwriting discounts and commissions.

    The shares are scheduled to begin trading on the Nasdaq Global…

    Codiak BioSciences, Inc. ("Codiak"), a clinical-stage company focused on pioneering the development of exosome-based therapeutics as a new class of medicines, today announced the pricing of its initial public offering of 5,500,000 shares of its common stock at a public offering price of $15.00 per share, for gross proceeds of approximately $82.5 million, before deducting underwriting discounts and commissions and offering expenses. All of the shares are being offered by Codiak. In addition, Codiak has granted the underwriters a 30-day option to purchase up to 825,000 additional shares of common stock at the initial public offering price, less underwriting discounts and commissions.

    The shares are scheduled to begin trading on the Nasdaq Global Market on October 14, 2020 under the ticker symbol "CDAK," and the offering is expected to close on October 16, 2020, subject to customary closing conditions.

    Goldman Sachs & Co. LLC, Evercore ISI and William Blair are acting as joint book-running managers for the offering and as representatives of the underwriters. Wedbush PacGrow is acting as lead manager for the offering.

    A registration statement relating to these securities has been filed with the Securities and Exchange Commission and became effective on October 13, 2020. This offering is being made only by means of a prospectus. Copies of the final prospectus, when available, may be obtained from: Goldman Sachs & Co. LLC, Attention: Prospectus Department, 200 West Street, New York, New York 10282, telephone: 1-866-471-2526, or email: ; Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52nd Street, 36th Floor, New York, NY 10055, telephone: (888) 474-0200, or email: ; or William Blair & Company, L.L.C., Attention: Prospectus Department, 150 North Riverside Plaza, Chicago, IL 60606, telephone: 1-800-621-0687, or email: .

    This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

    About Codiak

    Codiak is a clinical-stage biopharmaceutical company focused on pioneering the development of exosome-based therapeutics, a new class of medicines with the potential to transform the treatment of a wide spectrum of diseases with high unmet medical need. By leveraging the biology of exosomes as natural intercellular transfer mechanisms, Codiak has developed its proprietary engEx Platform to expand upon the innate properties of exosomes to design, engineer and manufacture novel exosome therapeutic candidates. Codiak has utilized its engEx Platform to generate a deep pipeline of engineered exosomes aimed at treating a broad range of disease areas, spanning oncology, neuro-oncology, neurology, neuromuscular disease and infectious disease.

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