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UNITED STATES |
OMB APPROVAL |
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OMB Number: 3235-0578 | |
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FORM N-Q |
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QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number |
811-06565 |
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Tekla Life Sciences Investors | ||||||
(Exact name of registrant as specified in charter) | ||||||
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100 Federal Street, 19th Floor, Boston, MA |
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02110 | ||||
(Address of principal executive offices) |
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(Zip code) | ||||
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(Name and address of agent for service) | ||||||
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Registrants telephone number, including area code: |
617-772-8500 |
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Date of fiscal year end: |
September 30 |
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Date of reporting period: |
12/31/16 |
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Item 1. Schedule of Investments.
TEKLA LIFE SCIENCES INVESTORS
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
(Unaudited)
SHARES |
|
|
|
VALUE |
| |
|
|
CONVERTIBLE PREFERRED AND WARRANTS (Restricted) (a) (b) 5.6% of Net Assets |
|
|
| |
|
|
Biotechnology 0.5% |
|
|
| |
1,153,847 |
|
BioClin Therapeutics, Inc. Series A |
|
$ |
750,001 |
|
2,568,939 |
|
EBI Life Sciences, Inc. Series A (c) |
|
13,102 |
| |
933,333 |
|
GenomeDx Biosciences, Inc. Series C |
|
1,400,000 |
| |
|
|
|
|
2,163,103 |
| |
|
|
Health Care Equipment & Supplies 2.9% |
|
|
| |
2,338,198 |
|
AlterG, Inc. Series C |
|
1,122,335 |
| |
79,330 |
|
CardioKinetix, Inc. Series C |
|
0 |
| |
142,574 |
|
CardioKinetix, Inc. Series D |
|
0 |
| |
439,333 |
|
CardioKinetix, Inc. Series E |
|
502,158 |
| |
481,378 |
|
CardioKinetix, Inc. Series F |
|
1,644,387 |
| |
N/A(e) |
|
CardioKinetix, Inc. warrants (expiration 12/11/19) |
|
0 |
| |
N/A(e) |
|
CardioKinetix, Inc. warrants (expiration 6/03/20) |
|
0 |
| |
8,822 |
|
CardioKinetix, Inc. warrants (expiration 8/15/24) |
|
0 |
| |
951,000 |
|
IlluminOss Medical, Inc. Series AA |
|
951,000 |
| |
895,848 |
|
IlluminOss Medical, Inc. Series Junior Preferred |
|
895,848 |
| |
5,126,388 |
|
Insightra Medical, Inc. Series C (c) |
|
5,126 |
| |
3,891,340 |
|
Insightra Medical, Inc. Series C-2 (c) |
|
3,891 |
| |
366,171 |
|
Insightra Medical, Inc. warrants (expiration 3/31/25) (c) |
|
0 |
| |
2,013,938 |
|
Insightra Medical, Inc. warrants (expiration 5/28/25) (c) |
|
0 |
| |
1,464,682 |
|
Insightra Medical, Inc. warrants (expiration 8/18/25) (c) |
|
0 |
| |
9,606,373 |
|
Palyon Medical Corporation Series A (c) |
|
0 |
| |
18,832,814 |
|
Palyon Medical Corporation Series B (c) |
|
0 |
| |
N/A(e) |
|
Palyon Medical Corporation warrants (expiration 4/26/19) (c) |
|
0 |
| |
3,280,000 |
|
Tibion Corporation Series B |
|
0 |
| |
N/A(e) |
|
Tibion Corporation warrants (expiration 07/12/17) |
|
0 |
| |
N/A(e) |
|
Tibion Corporation warrants (expiration 10/30/17) |
|
0 |
| |
N/A(e) |
|
Tibion Corporation warrants (expiration 11/28/17) |
|
0 |
| |
2,606,033 |
|
Veniti, Inc. Series A (c) |
|
3,129,324 |
| |
1,307,169 |
|
Veniti, Inc. Series B (c) |
|
1,635,007 |
| |
716,720 |
|
Veniti, Inc. Series C (c) |
|
1,060,459 |
| |
|
|
|
|
10,949,535 |
| |
|
|
Life Sciences Tools & Services 1.3% |
|
|
| |
2,161,090 |
|
Dynex Technologies, Inc. Series A |
|
1,080,545 |
| |
98,824 |
|
Dynex Technologies, Inc. warrants (expiration 4/01/19) |
|
0 |
| |
7,877 |
|
Dynex Technologies, Inc. warrants (expiration 5/06/19) |
|
0 |
| |
2,446,016 |
|
Labcyte, Inc. Series C |
|
3,590,751 |
| |
107,178 |
|
Labcyte, Inc. Series D |
|
169,877 |
| |
|
|
|
|
4,841,173 |
| |
|
|
Pharmaceuticals 0.9% |
|
|
| |
2,862,324 |
|
Euthymics Biosciences, Inc. Series A (c) |
|
2,862 |
| |
53,948 |
|
Neurovance, Inc. Series A (c) |
|
178,568 |
| |
670,837 |
|
Neurovance, Inc. Series A-1 (c) |
|
2,220,470 |
| |
240,770 |
|
Ovid Therapeutics, Inc. Series B |
|
965,488 |
| |
|
|
|
|
3,367,388 |
| |
|
|
TOTAL CONVERTIBLE PREFERRED AND WARRANTS |
|
21,321,199 |
| |
The accompanying notes are an integral part of this Schedule of Investments.
PRINCIPAL |
|
|
|
VALUE |
| ||
|
|
CONVERTIBLE AND NON-CONVERTIBLE NOTES 0.2% of Net Assets |
|
|
| ||
|
|
Convertible Notes (Restricted)(a) (c) 0.2% |
|
|
| ||
|
|
Health Care Equipment & Supplies 0.0% |
|
|
| ||
$ |
186,000 |
|
Insightra Medical, Inc. Promissory Note, 8.00%, due 4/15/17 |
|
$ |
0 |
|
|
|
Pharmaceuticals 0.2% |
|
|
| ||
93,551 |
|
Neurovance, Inc. Cvt. Promissory Note, 6.00%, due 10/31/17 |
|
93,551 |
| ||
187,101 |
|
Neurovance, Inc. Cvt. Promissory Note, 6.00%, due 10/31/17 |
|
187,101 |
| ||
280,652 |
|
Neurovance, Inc. Cvt. Promissory Note, 6.00%, due 10/31/17 |
|
280,652 |
| ||
140,326 |
|
Neurovance, Inc. Cvt. Promissory Note, 8.00%, due 10/31/17 |
|
140,326 |
| ||
140,326 |
|
Neurovance, Inc. Cvt. Promissory Note, 8.00%, due 10/31/17 |
|
140,326 |
| ||
|
|
|
|
841,956 |
| ||
|
|
TOTAL CONVERTIBLE NOTES |
|
841,956 |
| ||
|
|
Non-Convertible Notes (Restricted)(a) (b) 0.0% |
|
|
| ||
|
|
Health Care Equipment & Supplies 0.0% |
|
|
| ||
238,286 |
|
Tibion Corporation Non-Cvt. Promissory Note, 0.00%, due 12/31/18 |
|
0 |
| ||
28,211 |
|
Tibion Corporation Non-Cvt. Promissory Note, 0.00%, due 12/31/18 |
|
0 |
| ||
|
|
TOTAL NON-CONVERTIBLE NOTES |
|
0 |
| ||
|
|
TOTAL CONVERTIBLE AND NON-CONVERTIBLE NOTES |
|
841,956 |
| ||
|
|
|
|
|
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SHARES |
|
|
|
|
| ||
|
|
COMMON STOCKS AND WARRANTS 88.1% of Net Assets |
|
|
| ||
|
|
Biotechnology 70.9% |
|
|
| ||
443,851 |
|
Achillion Pharmaceuticals, Inc. (b) |
|
1,833,105 |
| ||
27,500 |
|
Adaptimmune Therapeutics plc (b) (f) |
|
111,375 |
| ||
159,699 |
|
Alexion Pharmaceuticals, Inc. (b) |
|
19,539,173 |
| ||
73,025 |
|
Alnylam Pharmaceuticals, Inc. (b) |
|
2,734,056 |
| ||
53,557 |
|
Amgen Inc. |
|
7,830,569 |
| ||
418,730 |
|
Amicus Therapeutics, Inc. (b) |
|
2,081,088 |
| ||
811,227 |
|
ARCA biopharma, Inc. (b) (c) |
|
2,311,998 |
| ||
324,491 |
|
ARCA biopharma, Inc. warrants (Restricted, expiration 6/11/22) (a) (b) (c) |
|
120,062 |
| ||
320,135 |
|
Ardelyx, Inc. (b) |
|
4,545,917 |
| ||
60,000 |
|
Bellicum Pharmaceuticals, Inc. (b) |
|
817,200 |
| ||
120,640 |
|
Biogen Inc. (b) |
|
34,211,091 |
| ||
154,100 |
|
BioMarin Pharmaceutical Inc. (b) |
|
12,765,644 |
| ||
26,545 |
|
bluebird bio, Inc. (b) |
|
1,637,827 |
| ||
275,871 |
|
Celgene Corporation (b) |
|
31,932,068 |
| ||
40,000 |
|
Cellectis S.A. (b) (d) (f) |
|
678,000 |
| ||
308,892 |
|
Chimerix, Inc. (b) |
|
1,420,903 |
| ||
132,472 |
|
Cidara Therapeutics, Inc. (b) |
|
1,377,709 |
| ||
226,826 |
|
CytomX Therapeutics, Inc. (b) |
|
2,492,818 |
| ||
47,908 |
|
Dermira, Inc. (b) |
|
1,453,050 |
| ||
120,475 |
|
Dynavax Technologies Corporation (b) |
|
475,876 |
| ||
329 |
|
Eiger BioPharmaceuticals, Inc. warrants (Restricted, expiration 10/10/18) (a) (b) |
|
3 |
| ||
The accompanying notes are an integral part of this Schedule of Investments.
SHARES |
|
|
|
VALUE |
| |
|
|
Biotechnology continued |
|
|
| |
84,000 |
|
Epizyme, Inc. (b) |
|
$ |
1,016,400 |
|
165,599 |
|
Exelixis, Inc. (b) |
|
2,469,081 |
| |
46,000 |
|
Galapagos NV (b) (d) |
|
2,950,832 |
| |
35,896 |
|
Galapagos NV (b) (f) |
|
2,304,164 |
| |
443,120 |
|
Gilead Sciences, Inc. |
|
31,731,823 |
| |
172,500 |
|
Global Blood Therapeutics, Inc. (b) |
|
2,492,625 |
| |
200,000 |
|
Halozyme Therapeutics, Inc. (b) |
|
1,976,000 |
| |
259,915 |
|
Incyte Corporation (b) |
|
26,061,677 |
| |
71,842 |
|
Intellia Therapeutics, Inc. (b) |
|
941,849 |
| |
142,583 |
|
Merus B.V. (b) |
|
3,009,927 |
| |
152,900 |
|
Momenta Pharmaceuticals, Inc. (b) |
|
2,301,145 |
| |
120,000 |
|
Myovant Sciences, Ltd. (b) |
|
1,492,800 |
| |
350,000 |
|
Nabriva Therapeutics AG (b) (f) |
|
2,082,500 |
| |
170,641 |
|
Natera, Inc. (b) |
|
1,998,206 |
| |
138,884 |
|
Neurocrine Biosciences, Inc. (b) |
|
5,374,810 |
| |
358,000 |
|
Novavax, Inc. (b) |
|
451,080 |
| |
829,191 |
|
Pieris Pharmaceuticals, Inc. (b) |
|
1,160,867 |
| |
23,821 |
|
Pieris Pharmaceuticals, Inc., Series A warrants (Restricted, expiration 6/8/21) (a) (b) |
|
6,193 |
| |
11,911 |
|
Pieris Pharmaceuticals, Inc., Series B warrants (Restricted, expiration 6/8/21) (a) (b) |
|
4,526 |
| |
54,632 |
|
Regeneron Pharmaceuticals, Inc. (b) |
|
20,054,861 |
| |
167,949 |
|
Retrophin, Inc. (b) |
|
3,179,275 |
| |
54,000 |
|
Sage Therapeutics, Inc. (b) |
|
2,757,240 |
| |
68,850 |
|
Sarepta Therapeutics, Inc. (b) |
|
1,888,556 |
| |
24,300 |
|
Spark Therapeutics, Inc. (b) |
|
1,212,570 |
| |
26,520 |
|
Ultragenyx Pharmaceutical Inc. (b) |
|
1,864,621 |
| |
191,377 |
|
Vertex Pharmaceuticals Incorporated (b) |
|
14,098,744 |
| |
20,000 |
|
Xencor, Inc. (b) |
|
526,400 |
| |
466,662 |
|
Xenon Pharmaceuticals Inc. (b) |
|
3,593,297 |
| |
13,307 |
|
Zafgen, Inc. (b) |
|
42,316 |
| |
|
|
|
|
269,413,917 |
| |
|
|
Health Care Equipment & Supplies 2.2% |
|
|
| |
495,000 |
|
Alliqua BioMedical, Inc. (b) |
|
292,050 |
| |
130,000 |
|
Cercacor Laboratories, Inc. (Restricted) (a) (b) |
|
240,096 |
| |
93,349 |
|
GenMark Diagnostics, Inc. (b) |
|
1,142,592 |
| |
55,158 |
|
IDEXX Laboratories, Inc. (b) |
|
6,468,379 |
| |
7,157 |
|
TherOx, Inc. (Restricted) (a) (b) |
|
143 |
| |
|
|
|
|
8,143,260 |
| |
|
|
Health Care Providers & Services 0.0% |
|
|
| |
148,148 |
|
InnovaCare Health, Inc. (Restricted) (a) (b) (g) |
|
126,667 |
| |
|
|
Life Sciences Tools & Services 3.1% |
|
|
| |
120,000 |
|
Accelerate Diagnostics, Inc. (b) |
|
2,490,000 |
| |
73,258 |
|
Illumina, Inc. (b) |
|
9,379,954 |
| |
|
|
|
|
11,869,954 |
| |
The accompanying notes are an integral part of this Schedule of Investments.
SHARES |
|
|
|
VALUE |
| ||
|
|
Pharmaceuticals 11.9% |
|
|
| ||
54,450 |
|
Acceleron Pharma, Inc. (b) |
|
$ |
1,389,564 |
| |
125,504 |
|
Adamas Pharmaceuticals, Inc. (b) |
|
2,121,018 |
| ||
235,842 |
|
Akorn, Inc. (b) |
|
5,148,431 |
| ||
17,915 |
|
Allergan plc (b) |
|
3,762,329 |
| ||
232,351 |
|
Auris Medical Holding AG (b) |
|
248,616 |
| ||
29,100 |
|
Endo International plc (b) |
|
479,277 |
| ||
233,000 |
|
Flamel Technologies SA (b) (f) |
|
2,420,870 |
| ||
48,637 |
|
Flex Pharma, Inc. (b) |
|
256,803 |
| ||
124,140 |
|
Foamix Pharmaceuticals Ltd. (b) |
|
1,377,954 |
| ||
35,949 |
|
Impax Laboratories, Inc. (b) |
|
476,324 |
| ||
57,022 |
|
Jazz Pharmaceuticals plc (b) |
|
6,217,109 |
| ||
181,570 |
|
Medicines Company (The) (b) |
|
6,162,486 |
| ||
127,980 |
|
Mylan NV (b) |
|
4,882,437 |
| ||
207,300 |
|
Paratek Pharmaceuticals, Inc. (b) |
|
3,192,420 |
| ||
21,315 |
|
Shire plc (f) |
|
3,631,650 |
| ||
88,764 |
|
Tetraphase Pharmaceuticals Inc. (b) |
|
357,719 |
| ||
187,100 |
|
TherapeuticsMD, Inc. (b) |
|
1,079,567 |
| ||
46,452,687 |
|
Verona Pharma plc (b) (d) |
|
1,789,009 |
| ||
18,581,075 |
|
Verona Pharma plc, warrants (Restricted, expiration 7/31/17) (a) (b) (d) |
|
45,112 |
| ||
|
|
|
|
45,038,695 |
| ||
|
|
TOTAL COMMON STOCKS AND WARRANTS |
|
334,592,493 |
| ||
|
|
|
|
|
| ||
PRINCIPAL |
|
|
|
|
| ||
|
|
SHORT-TERM INVESTMENT 5.8% of Net Assets |
|
|
| ||
$ |
21,876,000 |
|
Repurchase Agreement, Fixed Income Clearing Corp., repurchase value $21,876,000, 0.03%, dated 12/30/16, due 01/03/17 (collateralized by U.S. Treasury Note 2.750%, due 02/15/24, market value $22,318,507) |
|
21,876,000 |
| |
|
|
TOTAL SHORT-TERM INVESTMENTS |
|
21,876,000 |
| ||
|
|
TOTAL INVESTMENTS BEFORE MILESTONE INTERESTS - 99.7% |
|
378,631,648 |
| ||
|
|
|
|
|
| ||
INTEREST |
|
|
|
|
| ||
|
|
MILESTONE INTERESTS (Restricted)(a) (b) 0.3% of Net Assets |
|
|
| ||
|
|
Pharmaceuticals 0.3% |
|
|
| ||
1 |
|
Afferent Milestone Interest |
|
1,120,507 |
| ||
1 |
|
TargeGen Milestone Interest |
|
42,375 |
| ||
|
|
TOTAL MILESTONE INTEREST |
|
1,162,882 |
| ||
The accompanying notes are an integral part of this Schedule of Investments.
|
|
TOTAL INVESTMENTS - 100.0% |
|
379,794,530 |
| |
|
|
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS - 0.0% |
|
(32,681 |
) | |
|
|
NET ASSETS - 100% |
|
$ |
379,761,849 |
|
(a) Security fair valued. See Investment Valuation and Fair Value Measurements.
(b) Non-income producing security.
(c) Affiliated issuers in which the Fund holds 5% or more of the voting securities (total market value of $11,522,825).
(d) Foreign security.
(e) Number of warrants to be determined at a future date.
(f) American Depository Receipt
(g) Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of this Schedule of Investments.
TEKLA LIFE SCIENCES INVESTORS
NOTES TO SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
(Unaudited)
Investment Valuation
Shares of publicly traded companies listed on national securities exchanges or trading in the over-the-counter market are typically valued at the last sale price, as of the close of trading, generally 4 p.m., Eastern time. The Board of Trustees of the Fund (the Trustees) has established and approved fair valuation policies and procedures with respect to securities for which quoted prices may not be available or which do not reflect fair value. Convertible bonds, corporate and government bonds are valued using a third-party pricing service. Convertible bonds are valued using this pricing service only on days when there is no sale reported. Restricted securities of companies that are publicly traded are typically valued based on the closing market quote on the valuation date adjusted for the impact of the restriction as determined in good faith by Tekla Capital Managment LLC (the Adviser) also using fair valuation policies and procedures approved by the Trustees described below. Non-exchange traded warrants of publicly traded companies are generally valued using the Black-Scholes model, which incorporates both observable and unobservable inputs. Short-term investments with a maturity of 60 days or less are generally valued at amortized cost, which approximates fair value.
Convertible preferred shares, warrants or convertible note interests in private companies, milestone interests, and other restricted securities, as well as shares of publicly traded companies for which market quotations are not readily available, such as stocks for which trading has been halted or for which there are no current day sales, or which do not reflect fair value, are typically valued in good faith, based upon the recommendations made by the Adviser pursuant to fair valuation policies and procedures approved by the Trustees.
The Adviser has a Valuation Sub-Committee comprised of senior management which reports to the Valuation Committee of the Board at least quarterly. Each fair value determination is based on a consideration of relevant factors, including both observable and unobservable inputs. Observable and unobservable inputs the Adviser considers may include (i) the existence of any contractual restrictions on the disposition of securities; (ii) information obtained from the company, which may include an analysis of the companys financial statements, the companys products or intended markets or the companys technologies; (iii) the price of the same or similar security negotiated at arms length in an issuers completed subsequent round of financing; (iv) the price and extent of public trading in similar securities of the issuer or of comparable companies; or (v) a probability and time value adjusted analysis of contractual terms. Where available and appropriate, multiple valuation methodologies are applied to confirm fair value. Significant unobservable inputs identified by the Adviser are often used in the fair value determination. A significant change in any of these inputs may result in a significant change in the fair value measurement. Due to the uncertainty inherent in the valuation process, such estimates of fair value may differ significantly from the values that would have been used had a ready market for the investments existed, and differences could be material. Additionally, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different from the valuations used at the date of this Schedule of Investments.
Federal Income Tax Cost
At December 31, 2016, the cost of securities for Federal income tax purposes was $316,905,097. The net unrealized gain on securities held by the Fund was $62,889,433, including gross unrealized gain of $123,647,500 and gross unrealized loss of $60,758,067.
Other Transactions with Affiliates
An affiliate company is a company in which the Fund holds 5% or more of the voting securities. Transactions involving such companies during the period ended December 31, 2016 were as follows:
Issuer |
|
Value on |
|
Purchases |
|
Sales |
|
Income |
|
Value on |
| |||||
ARCA Biopharma, Inc. |
|
$ |
2,458,019 |
|
|
|
|
|
|
|
$ |
2,432,060 |
| |||
EBI Life Sciences, Inc. |
|
13,102 |
|
|
|
|
|
|
|
13,102 |
| |||||
Euthymics Biosciences, Inc. |
|
2,862 |
|
|
|
|
|
|
|
2,862 |
| |||||
Insightra Medical, Inc. |
|
9,017 |
|
|
|
|
|
$ |
3,720 |
|
9,017 |
| ||||
Neurovance, Inc. |
|
2,960,342 |
|
$ |
286,402 |
|
|
|
10,084 |
|
3,240,994 |
| ||||
Palyon Medical Corporation |
|
0 |
|
|
|
|
|
|
|
0 |
| |||||
Veniti, Inc. |
|
6,174,813 |
|
|
|
|
|
|
|
5,824,790 |
| |||||
|
|
$ |
11,618,155 |
|
$ |
286,402 |
|
$ |
|
|
$ |
13,804 |
|
$ |
11,522,825 |
|
TEKLA LIFE SCIENCES INVESTORS
NOTES TO SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
(continued)
Fair Value Measurements
The Fund uses a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels. Level 1 includes quoted prices in active markets for identical investments. Level 2 includes prices determined using other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.). The Independent pricing vendor may value bank loans and debt securities at an evaluated bid price by employing methodologies that utilize actual market transactions, broker-supplied valuations, and/or other methodologies designed to identify the market value for such securities and such securities are considered Level 2 in the fair value hierarchy. Level 3 includes prices determined using significant unobservable inputs (including the Funds own assumptions in determining the fair value of investments). These inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of December 31, 2016 to value the Funds net assets. For the period ended December 31, 2016, there were no transfers between Levels 1 and 3. The Fund accounts for transfers between levels at the beginning of the period.
Assets at Value |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
Convertible Preferred and Warrants |
|
|
|
|
|
|
|
|
| ||||
Biotechnology |
|
|
|
|
|
$ |
2,163,103 |
|
$ |
2,163,103 |
| ||
Health Care Equipment & Supplies |
|
|
|
|
|
10,949,535 |
|
10,949,535 |
| ||||
Life Sciences Tools & Services |
|
|
|
|
|
4,841,173 |
|
4,841,173 |
| ||||
Pharmaceuticals |
|
|
|
|
|
3,367,388 |
|
3,367,388 |
| ||||
Convertible and Non-Convertible Notes |
|
|
|
|
|
|
|
|
| ||||
Health Care Equipment & Supplies |
|
|
|
|
|
0 |
|
0 |
| ||||
Pharmaceuticals |
|
|
|
|
|
841,956 |
|
841,956 |
| ||||
Common Stocks and Warrants |
|
|
|
|
|
|
|
|
| ||||
Biotechnology |
|
$ |
269,283,133 |
|
|
|
130,784 |
|
269,413,917 |
| |||
Health Care Equipment & Supplies |
|
7,903,021 |
|
|
|
240,239 |
|
8,143,260 |
| ||||
Health Care Providers & Services |
|
|
|
|
|
126,667 |
|
126,667 |
| ||||
Life Sciences Tools & Services |
|
11,869,954 |
|
|
|
|
|
11,869,954 |
| ||||
Pharmaceuticals |
|
44,993,583 |
|
|
|
45,112 |
|
45,038,695 |
| ||||
Short-term Investment |
|
|
|
$ |
21,876,000 |
|
|
|
21,876,000 |
| |||
Milestone Interest |
|
|
|
|
|
|
|
|
| ||||
Pharmaceuticals |
|
|
|
|
|
1,162,882 |
|
1,162,882 |
| ||||
Other Assets |
|
|
|
|
|
342,612 |
|
342,612 |
| ||||
Total |
|
$ |
334,049,691 |
|
$ |
21,876,000 |
|
$ |
24,211,451 |
|
$ |
380,137,142 |
|
During the period ended December 31, 2016, the amount of transfers between Level 2 and 1 was $1,111,787. The investment was transferred from Level 2 to 1 due to the expiration of the lockup period following the companys initial public offering and the value is now being supported by quoted prices.
The following is a reconciliation of level 3 assets for which significant unobservable inputs were used to determine fair value.
TEKLA LIFE SCIENCES INVESTORS
NOTES TO SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
(continued)
Level 3 Assets |
|
Balance as of |
|
Net realized |
|
Cost of |
|
Proceeds |
|
Net |
|
Balance as of |
| ||||||
Convertible Preferred and Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Biotechnology |
|
$ |
1,845,795 |
|
$ |
(177 |
) |
$ |
317,485 |
|
|
|
|
|
$ |
2,163,103 |
| ||
Health Care Equipment & Supplies |
|
11,980,833 |
|
(1,307,813 |
) |
276,515 |
|
|
|
|
|
10,949,535 |
| ||||||
Life Sciences Tools & Services |
|
4,641,917 |
|
199,256 |
|
|
|
|
|
|
|
4,841,173 |
| ||||||
Pharmaceuticals |
|
4,662,008 |
|
(1,297,939 |
) |
3,319 |
|
|
|
|
|
3,367,388 |
| ||||||
Convertible and Non-Convertible Notes |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Pharmaceuticals |
|
561,304 |
|
(2,431 |
) |
283,083 |
|
|
|
|
|
841,956 |
| ||||||
Common Stocks and Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Biotechnology |
|
126,674 |
|
3,779 |
|
331 |
|
|
|
|
|
130,784 |
| ||||||
Health Care Equipment & Supplies |
|
214,150 |
|
26,089 |
|
|
|
|
|
|
|
240,239 |
| ||||||
Health Care Providers & Services |
|
126,667 |
|
|
|
|
|
|
|
|
|
126,667 |
| ||||||
Pharmaceuticals |
|
64,304 |
|
(19,784 |
) |
592 |
|
|
|
|
|
45,112 |
| ||||||
Milestone Interest |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Pharmaceuticals |
|
1,123,203 |
|
36,492 |
|
3,187 |
|
|
|
|
|
1,162,882 |
| ||||||
Other Assets |
|
374,787 |
|
|
|
|
|
(32,175 |
) |
|
|
342,612 |
| ||||||
Total |
|
$ |
25,721,642 |
|
$ |
(2,362,528 |
) |
$ |
884,512 |
|
$ |
(32,175 |
) |
$ |
|
|
$ |
24,211,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2016 |
|
$ |
(2,362,528 |
) | |||||||||||||||
The following is a quantitative disclosure about significant unobservable inputs used in the determination of the fair value of Level 3 assets.
|
|
Fair Value at |
|
Valuation Technique |
|
Unobservable Input |
|
Range (Weighted Average) | |
Private Companies and Other Restricted Securities |
|
$ |
415,992 |
|
Income approach, Black-Scholes |
|
Discount for lack |
|
20%-80% (55.87%) |
|
|
20,562,454 |
|
Adjusted capital |
|
Discount rate |
|
16.35%-44.34% (23.34%) 1.24-8.50 (3.25) | |
|
|
965,488 |
|
Probability-weighted expected return model |
|
Discount rate |
|
51.39% (51.39%) 8.43 (8.43) | |
|
|
804,398 |
|
Market approach, |
|
(a) |
|
N/A | |
|
|
1,463,119 |
|
Probability adjusted value |
|
Probability of events Timing of events |
|
20%-95% (35.28%) 0.25-7.75(2.62)years | |
|
|
$ |
24,211,451 |
|
|
|
|
|
|
TEKLA LIFE SCIENCES INVESTORS
NOTES TO SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
(continued)
(a) The valuation technique used as a basis to approximate fair value of these investments is based upon subsequent financing rounds. There is no quantitative information as these methods of measure are investment specific.
Private Companies and Other Restricted Securities
The Fund may invest in private companies and other restricted securities if these securities would currently comprise 40% or less of net assets. The value of these securities represented 6% of the Funds net assets at December 31, 2016.
At December 31, 2016, the Fund had a commitment of $280,652 relating to additional investments in one private company.
The following table details the acquisition date, cost, carrying value per unit, and value of the Funds private companies and other restricted securities at December 31, 2016. The Fund on its own does not have the right to demand that such securities be registered.
Security (#) |
|
Acquisition |
|
Cost |
|
Carrying Value |
|
Value |
| |||
Afferent Milestone Interest |
|
7/27/16 |
|
$ |
1,123,622 |
|
$ |
1,120,507 |
|
$ |
1,120,507 |
|
AlterG, Inc. |
|
|
|
|
|
|
|
|
| |||
Series C Cvt. Pfd |
|
4/12/13 |
|
1,427,310 |
|
0.48 |
|
1,122,335 |
| |||
ARCA biopharma, Inc. |
|
|
|
|
|
|
|
|
| |||
Warrants (expiration 6/11/22) |
|
6/11/15 |
|
522 |
|
0.37 |
|
120,062 |
| |||
BioClin Therapeutics, Inc. |
|
|
|
|
|
|
|
|
| |||
Series A Cvt. Pfd |
|
1/19/16, 10/24/16 |
|
750,377 |
|
0.65 |
|
750,001 |
| |||
CardioKinetix, Inc. |
|
|
|
|
|
|
|
|
| |||
Series C Cvt. Pfd |
|
5/22/08 |
|
1,653,343 |
|
0.00 |
|
0 |
| |||
Series D Cvt. Pfd |
|
12/10/10 |
|
545,989 |
|
0.00 |
|
0 |
| |||
Series E Cvt. Pfd |
|
9/14/11 |
|
1,253,763 |
|
1.14 |
|
502,158 |
| |||
Series F Cvt. Pfd |
|
12/04/14 |
|
1,645,092 |
|
3.42 |
|
1,644,387 |
| |||
Warrants (expiration 12/11/19) |
|
12/10/09, 2/11/10 |
|
123 |
|
0.00 |
|
0 |
| |||
Warrants (expiration 6/03/20) |
|
6/03/10, 9/01/10 |
|
123 |
|
0.00 |
|
0 |
| |||
Warrants (expiration 8/15/24) |
|
8/15/14 |
|
129 |
|
0.00 |
|
0 |
| |||
Cercacor Laboratories, Inc. Common |
|
3/31/98 |
|
0 |
|
1.85 |
|
240,096 |
| |||
Dynex Technologies, Inc. |
|
|
|
|
|
|
|
|
| |||
Series A Cvt. Pfd |
|
1/03/12 |
|
199,963 |
|
0.50 |
|
1,080,545 |
| |||
Warrants (expiration 4/01/19) |
|
1/03/12 |
|
60 |
|
0.00 |
|
0 |
| |||
Warrants (expiration 5/06/19) |
|
1/03/12 |
|
5 |
|
0.00 |
|
0 |
| |||
EBI Life Sciences, Inc. |
|
|
|
|
|
|
|
|
| |||
Series A Cvt. Pfd |
|
12/29/11 |
|
13,597 |
|
0.01 |
|
13,102 |
| |||
Eiger BioPharmaceuticals, Inc. |
|
|
|
|
|
|
|
|
| |||
Warrants (expiration 10/10/18) |
|
10/10/13 |
|
161 |
|
0.01 |
|
3 |
| |||
Euthymics Biosciences, Inc. |
|
|
|
|
|
|
|
|
| |||
Series A Cvt. Pfd |
|
7/14/10 - 5/21/12 |
|
2,635,558 |
|
0.00 |
|
2,862 |
| |||
GenomeDx Biosciences, Inc. |
|
|
|
|
|
|
|
|
| |||
Series C Cvt. Pfd |
|
2/22/16 |
|
1,401,098 |
|
1.50 |
|
1,400,000 |
| |||
IlluminOss Medical, Inc. |
|
|
|
|
|
|
|
|
| |||
Series AA Cvt. Pfd |
|
1/21/16 |
|
956,234 |
|
1.00 |
|
951,000 |
| |||
Series Junior Preferred Cvt. Pfd |
|
1/21/16 |
|
1,561,187 |
|
1.00 |
|
895,848 |
| |||
InnovaCare Health, Inc. Common |
|
12/21/12 |
|
643,527 |
|
0.86 |
|
126,667 |
| |||
Insightra Medical, Inc. |
|
|
|
|
|
|
|
|
| |||
Series C Cvt. Pfd |
|
4/29/13 - 4/17/14 |
|
2,175,727 |
|
0.00 |
|
5,126 |
| |||
Series C-2 Cvt. Pfd |
|
5/25/15 |
|
1,648,611 |
|
0.00 |
|
3,891 |
| |||
Cvt. Promissory Note |
|
4/15/16 |
|
186,012 |
|
0.00 |
|
0 |
| |||
Warrants (expiration 3/31/25) |
|
7/24/15 |
|
103 |
|
0.00 |
|
0 |
| |||
Warrants (expiration 5/28/25) |
|
5/28/15 |
|
565 |
|
0.00 |
|
0 |
| |||
Warrants (expiration 8/18/25) |
|
8/8/15 |
|
411 |
|
0.00 |
|
0 |
| |||
TEKLA LIFE SCIENCES INVESTORS
NOTES TO SCHEDULE OF INVESTMENTS
DECEMBER 31, 2016
(continued)
Labcyte, Inc. |
|
|
|
|
|
|
|
|
| ||
Series C Cvt. Pfd |
|
7/18/05 |
|
1,283,959 |
|
1.47 |
|
3,590,751 |
| ||
Series D Cvt. Pfd |
|
12/21/12 |
|
68,607 |
|
1.59 |
|
169,877 |
| ||
Neurovance, Inc. |
|
|
|
|
|
|
|
|
| ||
Series A Cvt. Pfd |
|
12/29/11 |
|
204,452 |
|
3.31 |
|
178,568 |
| ||
Series A-1 Cvt. Pfd |
|
10/11/12 - 10/10/13, 3/17/15 |
|
2,501,248 |
|
3.31 |
|
2,220,470 |
| ||
Cvt. Promissory Note |
|
2/23/16 |
|
93,647 |
|
100.00 |
|
93,551 |
| ||
Cvt. Promissory Note |
|
3/14/16 |
|
281,024 |
|
100.00 |
|
280,652 |
| ||
Cvt. Promissory Note |
|
7/12/16 |
|
187,500 |
|
100.00 |
|
187,101 |
| ||
Cvt. Promissory Note |
|
11/18/16 |
|
140,454 |
|
100.00 |
|
140,326 |
| ||
Cvt. Promissory Note |
|
12/22/16 |
|
140,326 |
|
100.00 |
|
140,326 |
| ||
Ovid Therapeutics, Inc. |
|
|
|
|
|
|
|
|
| ||
Series B Cvt. Pfd |
|
8/7/15 |
|
1,499,997 |
|
4.01 |
|
965,488 |
| ||
Palyon Medical Corporation |
|
|
|
|
|
|
|
|
| ||
Series A Cvt. Pfd |
|
4/28/09 |
|
2,070,077 |
|
0.00 |
|
0 |
| ||
Series B Cvt. Pfd |
|
6/28/13 |
|
1,314,744 |
|
0.00 |
|
0 |
| ||
Warrants (expiration 4/26/19) |
|
4/25/12 |
|
21 |
|
0.00 |
|
0 |
| ||
Pieris Pharmaceuticals, Inc., |
|
|
|
|
|
|
|
|
| ||
Series A Warrants (expiration 6/8/21) |
|
6/7/16 |
|
3,211 |
|
0.26 |
|
6,193 |
| ||
Series B Warrants (expiration 6/8/21) |
|
6/7/16 |
|
1,606 |
|
0.38 |
|
4,526 |
| ||
TargeGen Milestone Interest |
|
7/20/10 |
|
2,965,131 |
|
42,375.00 |
|
42,375 |
| ||
TherOx, Inc. |
|
9/11/00, 7/8/05 |
|
2,388,426 |
|
0.02 |
|
143 |
| ||
Tibion Corporation |
|
|
|
|
|
|
|
|
| ||
Series B Cvt. Pfd |
|
2/23/11 |
|
905,158 |
|
0.00 |
|
0 |
| ||
Non-Cvt. Promissory Note |
|
7/12/12 |
|
238,525 |
|
0.00 |
|
0 |
| ||
Non-Cvt. Promissory Note |
|
4/12/13 |
|
28,211 |
|
0.00 |
|
0 |
| ||
Warrants (expiration 07/12/17) |
|
7/12/12 |
|
0 |
|
0.00 |
|
0 |
| ||
Warrants (expiration 10/30/17) |
|
10/30/12 |
|
0 |
|
0.00 |
|
0 |
| ||
Warrants (expiration 11/28/17) |
|
11/28/12 |
|
0 |
|
0.00 |
|
0 |
| ||
Veniti, Inc. |
|
|
|
|
|
|
|
|
| ||
Series A Cvt. Pfd |
|
2/28/11 |
|
2,276,613 |
|
1.20 |
|
3,129,324 |
| ||
Series B Cvt. Pfd |
|
5/24/13 |
|
1,199,747 |
|
1.25 |
|
1,635,007 |
| ||
Series C Cvt. Pfd |
|
12/12/14 |
|
821,260 |
|
1.48 |
|
1,060,459 |
| ||
Verona Pharma plc |
|
|
|
|
|
|
|
|
| ||
Warrants (expiration 7/31/17) |
|
7/28/16 |
|
1,230 |
|
0.00 |
|
45,112 |
| ||
|
|
|
|
$ |
40,438,386 |
|
|
|
$ |
23,868,839 |
|
(#) See Schedule of Investments and corresponding footnotes for more information on each issuer.
Carrying value per unit is greater than $0.00 but less than $0.01
Interest received as part of a corporate action for a previously owned security.
Item 2. Controls and Procedures.
(a.) The registrants principal executive officer and principal financial officer have concluded, based on their evaluation of the registrants disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-Q is (i) accumulated and communicated to the investment companys management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.
(b.) There were no changes in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrants last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 3. Exhibits.
Separate certifications for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)). Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) |
Tekla Life Sciences Investors |
| ||
|
| |||
By (Signature and Title) |
/s/ Daniel R. Omstead |
| ||
|
Daniel R. Omstead, President |
| ||
|
| |||
Date |
2/24/17 |
| ||
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title) |
/s/ Laura Woodward |
| |
|
Laura Woodward, Treasurer |
| |
|
| ||
Date |
2/24/17 |
| |
Exhibit 99.CERT
EXHIBIT 1
CERTIFICATIONS
I, Daniel Omstead, certify that:
1. I have reviewed this report on Form N-Q of Tekla Life Sciences Investors;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: |
2/24/17 |
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/s/ Daniel R. Omstead |
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Daniel R. Omstead, President |
CERTIFICATIONS
I, Laura Woodward, certify that:
1. I have reviewed this report on Form N-Q of Tekla Life Sciences Investors;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4. The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
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Date: |
2/24/17 |
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/s/ Laura Woodward |
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Laura Woodward, Treasurer |