SEC Small Business Forum – November 2015 Christopher Weekes — Managing Director, Equity Capital Markets
Exemptions Utilization Various Regulation Exem ptions Afforded to I ssuers Section 4 ( a) ( 2 ) — Private Unlimited amount No reporting Non-reporting + reporting Restricted securities Sophisticated investors Purchase Agreement No general solicitation No bad actor provision Regulation D — 5 0 6 ( b) Marked directly to known investors Restricted securities No general solicitation Typically requires financial intermediary Up to 35 non-accredited investors; no limit on accredited Bad actor provision No $ limit Regulation D — 5 0 6 ( c) General solicitation allowed No $ limit Only accredited investors Restricted securities I ssuer / broker must verify investor status, i.e. No requirement for financial intermediary “reasonable steps” 1 4 4 A Sold to QI Bs only Require disclosure/ documentation, i.e. Offering Memorandum, Purchase Agreement Financial intermediary required Expectation securities will be “registered” shortly Securities are restricted thereafter Free resale to QI Bs Regulation A Public offering up to $50mm Preempts registration and qualification requirements under Blue Sky laws Streamlined SEC process Excludes foreign issuers (except Canadian companies) Less onerous initial and ongoing disclosure requirements No requirement for financial intermediary 1
Regulation A — An Investment Bank’s Perspective Benefits Considerations Up to $50mm in proceeds Limited to non-reporting companies under Exchange Act Preempts Blue Sky laws Limited to US and Canadian issuers Streamlined SEC process in place Limited to $50mm USD in a 12-month period Test-the-waters (“TTW”) meetings are allowed No Safe Harbor from Section 12(a)(2) liability for Accredited + non-accredited investors can participate research reports No financial intermediary required, reducing cost No clear trading market / liquidity concerns Advertising to all investors is allowed Market structure (i.e. decimalization) already inhospitable to small and micro cap companies Freely tradeable securities Blue Sky restriction on resale of Tier II Reg. A will impede trading unless such trading benefits from preemption of Blue Sky 2
Conclusions / Recommendations Conclusions / Recom m endations 1) We propose that Tier 2 of Regulation A should apply to public micro cap companies, thereby enabling these companies to raise a sufficient amount of capital needed to grow their businesses in a cost effective manner. We believe it may be appropriate to consider conditioning the availability of tier 2 on a micro cap company being current for the past two years in its reporting obligations in the Exchange Act 2) We propose that micro cap companies should be permitted to incorporate by reference their Exchange Act reports into their Offering Circular, thereby reducing the time and the cost of a Regulation A offering 3) We propose that foreign private issuers should be allowed to conduct Tier 2 Regulation A offerings 4) We propose that there be a safe-harbor from Section 12(a)(2) liability for research reports prepared by broker dealers on Regulation A issuers 5) We believe Regulation A should go further and preempt state blue-sky laws for re-sales of Regulation A securities as well Source: Cowen and Company / Andreesen Horowitz Letter to SEC, Re: Release No. 33-9497, File No. S7-11-13 - Regulation A and Exemptions Under Section 3(b) of the Securities Act of 1933. 3
I. Appendix
Cowen Group Overview A growth-oriented investment bank that is dedicated to helping its clients outperform We enable corporate clients with differentiated financing advice and advisory services aimed at helping them outperform their comparable groups Cow en Mission: We provide portfolio managers with specialized equity research, non-conflicted trading and execution services and high-quality capital markets transactions Delivering Alpha We deliver investment management clients with access to a range of alternative investment products and services Business Lines Our Core Sectors Health Care Consum er I nvestm ent Banking Research Sales and Trading Corporate Access Asset Managem ent Over 90 Investment Industry leading, 100+ professionals Top 10 in U.S. Broad range of Banking Sector and specialized research covering 1,800+ Corporate Access, in differentiated alpha- Product Specialists product institutional accounts independent polls, generating alternative including II investment products Strong focus on key 46+ publishing 1.1x research sales- and services sectors of the U.S. research analysts to-research analyst Organizes hundreds of REI Ts TMT economy: consumer, ratio non-deal marketing 20 years of proven 787+ stocks under health care and days for clients every experience research coverage Non-conflicted trading technology year and execution services Product Coverage A&D / I ndustrials Transportation Equity Capital Markets Debt Capital Markets Strategic Advisory Financial Sponsors 248 transactions executed 50 transactions executed › 100 M&A transactions Coverage of > 200 middle I. APPENDIX since 2014 since 2012 announced market and large cap private equity firms 81 IPOs since 2013 with 44 $10B+ of debt raised since › $30B of total transaction on a lead-managed basis 2012 value Energy I T Services Active across all of Cowen’s Raised ~ $23B in equity for Market leader in private loans Recent sellside, buyside and verticals and products our clients since 2014 and bonds in $50 – $300 JV mandates across the firm million range 5
Cowen is Focused Solely on the Sophisticated Institutional Investor High Net W orth + Retail I ncrem ental I nvestors Middle Market I nvestors Mega-Fund I nvestors I. APPENDIX 6
Select Private Placement Transactions $ 7 5 m illion $ 2 0 Million $ 2 0 0 Million $ 4 0 Million Cowen views capital formation through the Digital Health / Digital Health / Diagnostics/ Diagnostics/ Patient Patient Bioinformatics Bioinformatics lens of long-term value creation and Engagement Engagement Platform Platform Platform Platform strategically building a business Private Placement Private Placement Private Placement Private Placement Sole Placement Agent Sole Placement Agent Sole Placement Agent Sole Placement Agent Cowen is a market leader in private In Process In Process In Process In Process placement financings and has worked on a $ 6 5 Million $ 7 5 Million $ 7 5 Million $ 2 2 Million significant number of high-profile transactions with the goal of: Private Placement Private Placement Private Placement Private Placement Ensuring that the Company’s vision is Series C Series B Series B PIPE shared with potential investors while October 2 0 1 5 Septem ber 2 0 1 5 August 2 0 1 5 July 2 0 1 5 minimizing management’s time so they can focus on the business $ 2 2 Million $ 3 0 Million $ 2 5 Million $ 1 5 Million Optimizing optionality and valuation for all shareholders so they can make an informed decision based on what’s on the Private Placement Private Placement Private Placement Private Placement table PIPE Series B PIPE Series C Building a syndicate of investors who are June 2 0 1 5 Novem ber 2 0 1 4 Septem ber 2 0 1 4 Septem ber 2 0 1 4 long-term partners and will continue to support the Company post transaction $ 5 5 Million $ 3 2 Million $ 2 0 Million $ 3 8 Million Cowen views the private financing round as I. APPENDIX an opportunity to build the foundation for a Private Placement Private Placement Private Placement Private Placement long and lasting partnership Series B — Crossover Series B — Crossover PIPE PIPE April 2 0 1 4 April 2 0 1 4 January 2 0 1 4 January 2 0 1 4 7
2013 – 2015 Life Sciences Pre-Money Valuations Pre-Money Valuations ( 1 ) for LS I POs Since 2 0 1 3 (Pre-Money Equity Valuation in $millions) 600 $1700 500 Median Pre-$ Valuation: $ 2 5 6 .5 400 300 Median Pre-$ Valuation: $ 1 2 2 .1 200 100 0 SPHS SCYX BI OC REPH ALDX RGDO HTBX ZYNE EVOK STML CLCD ADMA CDTX CFRX ADRO AGRX AMBI DPRX AQXP ONCE ZSAN PFNX TTPH MRNS NRX CERU NERV MI RN PARN FOMX VBLT CLLS FATE GLYC ADHD VTAE XENE GLPG CBYL XNCR PRTO EBIO TLOG GLMD CALA ADAP EGLT CNAT ARGS EARS AFMD NBRV KURA VTVT AGTC I NNL CLDN ORPN OMTH CATB NDRM KBI O TRVN GWPH NEOT FLXN I NSY AKAO CYAD ESPR I MDZ LOXO GNCA ATRA DRNA NEOS FPRX ACRS CNCE BPMC EGRX CYNA AERI RDUS RCPT AI MT CARA BI ND RVNC VTL BLPH FLKS ENTA ARDX PRQR ASPX MDWD OCUL DERM MYOK PTCT TKAI ALDR QURE AXON AMPH ONTX EDGE ENZY OTI C RLYP ZFGN ADMS CMRX DMTX VYGR ZSPH COLL WVE KMDA AAVL TCON ASND BLUE MGNX DNAI CHMA BLCM XLRN KPTI CTMX SAGE VSAR PTLA EPZM OMED CHRS I TEK RGNX AGI O GBT RARE OPHT MESO KI TE MCRB LIFE FGEN VKTX NVLS KMPH JUNO NVCR NK I. APPENDIX Last Round Crossover Led Last Round Not Crossover Led Source: CapIQ and Company Filings as of November 13, 2015. Does not include Intrexon or Forward Pharma. (1) Calculated using fully-diluted shares outstanding via treasury stock method. 8
Recommend
More recommend
