Perceptive looks for more capital to invest in healthcare companies

The firm has upped its target for Fund II after Fund I beat it fundraising goal.

Healthcare investor Perceptive Advisors is seeking up to $500 million for its latest investment vehicle, which will deploy capital into both public and private companies.

The New York-based firm is in the market with Percept Credit Opportunities Fund II, according to a Securities and Exchange Commission regulatory filing. It is the successor vehicle to the firm’s debut fund that raised $323 million, clearing the $300 million target.

Limited partners committing to the earlier fund included family offices, endowments and institutional investors, according to an October 2016 statement announcing the closing of Fund I.

Perceptive, which was not immediately available for comment, looks to deploy $10 million-$100 million per investment in multiple fields including biopharma, medical devices, diagnostics, life sciences research and healthcare information technology, according to the firm’s website. The firm aims to provide debt as “less dilutive growth capital” or instead of crossover financing.

Investments from Fund I include a $35 million loan to Kadmon Holdings; a $30 million loan to Retrophin; a $15.5 million loan to Alliqua BioMedical; a $15 million credit facility to Zymeworks; a $6 million loan to VBI Vaccines; and almost $1 million in warrants to Affimed. Perceptive also holds warrants in some of the companies it lends to.

Alliqua and Kadmon have both entered into amendments to after failing to comply with covenants under each of their credit agreements.

Alliqua was in default of a gross revenue covenant for multiple quarters, most recently having failed to bring in $33.8 million as of 30 September, according to its third-quarter report. The document said its financial condition revealed “substantial doubt~ of its ability to remain a going concern. By the end of the third quarter, the firm accumulated a deficit of $138.2 million following losses since the company’s founding.

The firm entered into a forbearance agreement on 31 August, pursuant to which Perceptive deferred monthly payments until the end of January and the company would pay its lender $1.62 million in proceeds from the sale of one of its product lines to Argentum Medical.

The two parties entered into a second forbearance agreement on 5 February, in which it agreed to forbear from exercising its remedies under the credit agreement, according to an SEC filing.

For its part, Kadmon has entered into three amendments staving off defaults, which related to developmental milestones related to winning federal approval in the US of its drug for idiopathic pulmonary fibrosis.

In April, Perceptive agreed to defer both monthly principal payments until 31 January 2018 and the requirement to raise $17 million from 30 June to 31 December 2017. In December, Kadmon disclosed that it was now in compliance with the milestone agreements.