Our Favorite Biotech Trade

By Wayne Mulligan, on Thursday, April 9, 2015

Over the past 12 months, biotech’s been booming:

In fact, the NASDAQ Biotechnology Index (NBI) has risen by more than 46%.

IPOs have played a big part in that rise...

For example, Ultragenyx Pharmaceutical (NASDAQ: RARE), debuted at $21 and now sits at over $60 per share. That’s a 300% return in 12 months.

In total, there were about 115 biotech-related IPOs last year — that’s nearly double any other sector.

But the real profits weren’t made by those who bought shares at the IPO…

The real profits were made by investors who got in before the IPO — while these companies were still private and their shares were cheap.

Most folks, probably including you, missed these gains. In fact, most folks were legally prohibited from taking part in them.

But today you’ll learn a dead simple way to make sure you never miss out again.

You’re going to learn about an opportunity that grants you the massive upside potential of investing in private biotech companies...

And, it pays you a 9% yield.


If you’re a regular Crowdability reader, you’ll understand why most investors weren’t able to get access to pre-IPO deals:

Since 1933, only wealthy investors — known as “accredited investors” — have been allowed to invest in private companies.

In just a few short months, however, thanks to a new set of laws known as The JOBS Act, all investors will be able to access private, pre-IPO investments.

But we discovered a little loophole you can use to access these deals right now...

Business Development Companies

We’ve written about this loophole before...

It involves investing in something known as a “Business Development Company,” or “BDC” for short.

BDCs are similar to mutual funds or ETFs — essentially, they’re investment funds that trade on a public stock exchange.

But BDCs only invest in private companies.

This special investment structure allows ALL investors — regardless of their net worth or income – to get access to pre-IPO companies.

Not only that, but BDCs are legally mandated to pay out nearly all of their profits to their shareholders. Meaning, if one of the private companies they invest in goes IPO, you’ll receive your share of profits as a distribution.

And if you find the right BDC to invest in, those profits can be substantial.

For example, investors in a BDC called GSV Capital (NASDAQ: GSVC), saw 100% gains in just a few months back in late 2013. How?

Well, GSV Capital was an early backer of Twitter. And as Twitter readied for an IPO in November 2013, GSV’s shares soared — jumping from just $7.86 per share in July to $16.48 by October. That’s a gain of 109% in only four months.

Herculean Profits

We’re always on the lookout for new BDC opportunities. And we recently came across one we wanted to share with Crowdability readers.

Its name is Hercules Technology Growth Capital (NYSE: HTGC).

Similar to GSV, Hercules invests in pre-IPO companies – meaning, it will make money if one of its companies goes public or gets acquired.

But Hercules goes a step further: its unique investment strategy allows shareholders to earn a significant dividend while they wait for these big profits.

You see, in addition to investing in the pre-IPO stock of these companies, Hercules acts as a lender to them. And in exchange, these companies pay Hercules cash interest on the loans.

And since Hercules is legally mandated to pass its profits through to shareholders, you can collect those interest payments for yourself.

Learn All About Hercules

Hercules is currently yielding about 9%.

It has over 300 pre-IPO companies in its portfolio, many of which are in the Biotechnology and Healthcare sectors...

Companies like:

    • ADMA Biologics — a biotech company focused on developing specialty therapeutics to care for immune-compromised patients with infectious diseases.
    • Coronado Biosciences — a biopharmaceutical company focused on immunotherapy agents for autoimmune diseases and cancer.
    • NetBio, Inc. — a leader in the emerging field of Rapid DNA Analysis (RDA), which allows for rapid biological-threat detection.

If you’re interested in learning more about this BDC and its holdings, we’d like to give you a gift today.

We recently published a new research report on this opportunity. You can download it right now by visiting this link »

We hope you enjoy it — please let us know if you have any questions or feedback in the comments section below.

Please note: Crowdability has no financial relationship with Hercules. We’re an independent provider of education, information and research on start-ups and alternative investments.

Happy investing.

Best Regards,
Wayne Mulligan
Wayne Mulligan


If you enjoyed this article, subscribe to updates:

Sign-up today and you'll receive our daily insights on early-stage investing, as well as our FREE "Equity Crowdfunding Action Kit" – where you'll learn:

  • The Ins & Outs of Equity Crowdfunding
  • A step-by-step path to get started
  • Tips from dozens of Venture Capitalists
subscribe to updates

Thank you for subscribing!

Tags: Biotech IPO Pre-IPO Private Equity

Share This:
comments powered by Disqus