TEKLA HEALTHCARE INVESTORS
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2019
(Unaudited)
SHARES |
|
|
| VALUE |
| |
|
| CONVERTIBLE PREFERRED AND WARRANTS(a) - 1.9% of Net Assets |
|
|
| |
|
|
|
|
|
| |
|
| Biotechnology — 1.5% |
|
|
| |
326,667 |
| Amphivena Therapeutics, Inc. Series B, 6.00% (Restricted) (b) |
| $ | 4,900,001 |
|
525,972 |
| Amphivena Therapeutics, Inc. Series C, 6.00% (Restricted) (b) |
| 1,887,315 |
| |
802,477 |
| Arkuda Therapeutics, Inc. Series A, 6.00% (Restricted) (b) |
| 1,909,093 |
| |
968,076 |
| Decipher Biosciences, Inc. Series II, 8.00% (Restricted) (b) |
| 1,461,795 |
| |
962,412 |
| Decipher Biosciences, Inc. Series III, 8.00% (Restricted) (b) |
| 2,090,358 |
| |
277,444 |
| Oculis SA, Series B2 (Restricted) (b) (c) |
| 2,386,855 |
| |
2,692,309 |
| Rainier Therapeutics, Inc. Series A, 6.00% (Restricted) (b) |
| 269 |
| |
1,559,715 |
| Rainier Therapeutics, Inc. Series B, 6.00% (Restricted) (b) |
| 156 |
| |
210,000 |
| Trillium Therapeutics, Inc. Series II (c) |
| 216,300 |
| |
|
|
|
| 14,852,142 |
| |
|
| Health Care Equipment & Supplies (Restricted)(b) — 0.1% |
|
|
| |
951,000 |
| IlluminOss Medical, Inc. Series AA, 8.00% |
| 792,659 |
| |
895,848 |
| IlluminOss Medical, Inc. Junior Preferred, 8.00% |
| 90 |
| |
71,324 |
| IlluminOss Medical, Inc. Warrants (expiration 03/31/27, exercise price $1.00) |
| 0 |
| |
59,426 |
| IlluminOss Medical, Inc. Warrants (expiration 09/06/27, exercise price $1.00) |
| 0 |
| |
23,771 |
| IlluminOss Medical, Inc. Warrants (expiration 11/20/27, exercise price $1.00) |
| 0 |
| |
47,542 |
| IlluminOss Medical, Inc. Warrants (expiration 01/11/28, exercise price $1.00) |
| 0 |
| |
47,542 |
| IlluminOss Medical, Inc. Warrants (expiration 02/06/28, exercise price $1.00) |
| 0 |
| |
46,462 |
| IlluminOss Medical, Inc. Warrants (expiration 01/29/29, exercise price $1.00) |
| 0 |
| |
12,964 |
| IlluminOss Medical, Inc. Warrants (expiration 04/29/29, exercise price $1.00) |
| 0 |
| |
20,470 |
| IlluminOss Medical, Inc. Warrants (expiration 05/13/29, exercise price $1.00) |
| 0 |
| |
28,301 |
| IlluminOss Medical, Inc. Warrants (expiration 07/02/29, exercise price $1.00) |
| 0 |
| |
9,250 |
| IlluminOss Medical, Inc. Warrants (expiration 08/29/29, exercise price $1.00) |
| 0 |
| |
53,690 |
| IlluminOss Medical, Inc. Warrants (expiration 09/27/29, exercise price $1.00) |
| 0 |
| |
|
|
|
| 792,749 |
| |
|
| Pharmaceuticals (Restricted)(b)(d) — 0.4% |
|
|
| |
3,173,164 |
| Curasen Therapeutics, Inc. Series A |
| 3,500,000 |
| |
|
| TOTAL CONVERTIBLE PREFERRED AND WARRANTS |
| 19,144,891 |
| |
The accompanying notes are an integral part of this Schedule of Investments.
PRINCIPAL |
|
|
| VALUE |
| ||
|
| CONVERTIBLE NOTES (Restricted)(b) - 0.4% of Net Assets |
|
|
| ||
|
|
|
|
|
| ||
|
| Biotechnology — 0.2% |
|
|
| ||
$ | 1,522,783 |
| Rainier Therapeutics, Inc. Promissory Notes, 8.00% due 03/31/20 |
| $ | 1,331,271 |
|
661,638 |
| Vectivbio Holding AG Promissory Note, 4.00% due 12/19/21 |
| 661,638 |
| ||
|
|
|
| 1,992,909 |
| ||
|
| Health Care Equipment & Supplies — 0.2% |
|
|
| ||
1,682,973 |
| IlluminOss Medical, Inc. Promissory Notes, 8.00% due 12/31/21 |
| 1,682,973 |
| ||
|
| TOTAL CONVERTIBLE NOTES |
| 3,675,882 |
| ||
SHARES |
|
|
| VALUE |
|
|
| COMMON STOCKS AND WARRANTS - 94.8% of Net Assets |
|
|
|
|
|
|
|
|
|
|
| Biotechnology — 58.2% |
|
|
|
11,814 |
| AbbVie, Inc. |
| 1,046,012 |
|
119,074 |
| AC Immune SA (a) (c) |
| 1,014,510 |
|
144,057 |
| ACADIA Pharmaceuticals, Inc. (a) |
| 6,162,758 |
|
17,325 |
| Adynxx, Inc. |
| 21,656 |
|
240,033 |
| Alexion Pharmaceuticals, Inc. (a) |
| 25,959,569 |
|
137,956 |
| Alkermes plc (a) |
| 2,814,302 |
|
49,208 |
| Allakos, Inc. (a) |
| 4,692,475 |
|
55,311 |
| Allogene Therapeutics, Inc. (a) |
| 1,436,980 |
|
92,391 |
| Alnylam Pharmaceuticals, Inc. (a) |
| 10,640,671 |
|
234,955 |
| Amarin Corp plc (a) (c) (e) |
| 5,037,435 |
|
297,401 |
| Amgen, Inc. |
| 71,694,459 |
|
256,431 |
| Amicus Therapeutics, Inc. (a) |
| 2,497,638 |
|
82,022 |
| AnaptysBio, Inc. (a) |
| 1,332,857 |
|
85,598 |
| Apellis Pharmaceuticals, Inc. (a) |
| 2,621,011 |
|
103,950 |
| Aquamed Technologies, Inc. (a) (b) |
| 5,561 |
|
14,306 |
| Arena Pharmaceuticals, Inc. (a) |
| 649,779 |
|
29,426 |
| Argenx SE (a) (c) (e) |
| 4,723,462 |
|
62,072 |
| Arrowhead Pharmaceuticals, Inc. (a) |
| 3,937,227 |
|
43,154 |
| Ascendis Pharma A/S (a) (c) (e) |
| 6,003,584 |
|
173,216 |
| Atreca, Inc. (a) |
| 2,679,652 |
|
37,732 |
| Avrobio, Inc. (a) |
| 759,545 |
|
54,497 |
| BeiGene Ltd. (a) (c) (e) |
| 9,033,423 |
|
The accompanying notes are an integral part of this Schedule of Investments.
SHARES |
|
|
| VALUE |
| |
|
| Biotechnology — continued |
|
|
| |
152,541 |
| Biogen, Inc. (a) (f) |
| $ | 45,263,491 |
|
20,197 |
| Biohaven Pharmaceutical Holding Co., Ltd. (a) |
| 1,099,525 |
| |
177,343 |
| BioMarin Pharmaceutical, Inc. (a) |
| 14,994,351 |
| |
61,763 |
| Bluebird Bio, Inc. (a) |
| 5,419,703 |
| |
76,291 |
| Blueprint Medicines Corp. (a) |
| 6,111,672 |
| |
27,027 |
| Bridgebio Pharma, Inc. (a) |
| 947,296 |
| |
77,143 |
| Coherus BioSciences, Inc. (a) |
| 1,388,960 |
| |
52,574 |
| CRISPR Therapeutics AG (a) (c) |
| 3,202,019 |
| |
55,466 |
| CymaBay Therapeutics, Inc. (a) |
| 108,713 |
| |
42,334 |
| Deciphera Pharmaceuticals, Inc. (a) |
| 2,634,868 |
| |
61,500 | �� | Dermira, Inc. (a) |
| 932,340 |
| |
98,206 |
| Editas Medicine, Inc. (a) |
| 2,907,880 |
| |
13,882 |
| Eidos Therapeutics, Inc. (a) |
| 796,688 |
| |
233,719 |
| Epizyme, Inc. (a) |
| 5,749,487 |
| |
119,981 |
| Esperion Therapeutics, Inc. (a) |
| 7,154,467 |
| |
352,719 |
| Exelixis, Inc. (a) |
| 6,214,909 |
| |
106,511 |
| Fate Therapeutics, Inc. (a) |
| 2,084,420 |
| |
126,349 |
| FibroGen, Inc. (a) |
| 5,419,109 |
| |
6,543 |
| Galapagos NV (a) (c) (e) |
| 1,353,289 |
| |
137,500 |
| Galera Therapeutics, Inc. (a) |
| 1,809,500 |
| |
206,310 |
| Galera Therapeutics, Inc. (Restricted) (a) (b) |
| 2,443,534 |
| |
11,382 |
| Genmab A/S (a) (c) (e) |
| 254,160 |
| |
955,313 |
| Gilead Sciences, Inc. |
| 62,076,239 |
| |
99,786 |
| Global Blood Therapeutics, Inc. (a) |
| 7,931,989 |
| |
213,908 |
| Incyte Corp. (a) |
| 18,678,447 |
| |
108,559 |
| Insmed, Inc. (a) |
| 2,592,389 |
| |
41,016 |
| Intellia Therapeutics, Inc. (a) |
| 601,705 |
| |
21,332 |
| Intercept Pharmaceuticals, Inc. (a) |
| 2,643,461 |
| |
134,781 |
| Ionis Pharmaceuticals, Inc. (a) |
| 8,142,120 |
| |
158,178 |
| Iovance Biotherapeutics, Inc. (a) |
| 4,378,367 |
| |
21,371 |
| Ligand Pharmaceuticals, Inc. (a) |
| 2,228,782 |
| |
14,939 |
| Merus N.V. (a) (c) |
| 210,341 |
| |
24,052 |
| Molecular Templates, Inc. (a) |
| 336,367 |
| |
147,820 |
| Nektar Therapeutics (a) |
| 3,190,695 |
| |
126,677 |
| Neurocrine Biosciences, Inc. (a) |
| 13,616,511 |
| |
260,913 |
| Ovid Therapeutics, Inc. (a) |
| 1,082,789 |
| |
848,209 |
| Pieris Pharmaceuticals, Inc. (a) |
| 3,070,517 |
| |
54,790 |
| Pieris Pharmaceuticals, Inc., Series A Warrants (expiration 06/08/21, exercise price $3.00) (a) (b) |
| 60,817 |
| |
27,394 |
| Pieris Pharmaceuticals, Inc., Series B Warrants (expiration 06/08/21, exercise price $2.00) (a) (b) |
| 41,091 |
| |
102,766 |
| Portola Pharmaceuticals, Inc. (a) |
| 2,454,052 |
| |
63,053 |
| PTC Therapeutics, Inc. (a) |
| 3,028,436 |
| |
35,515 |
| Puma Biotechnology, Inc. (a) |
| 310,756 |
| |
15,656 |
| Ra Pharmaceuticals, Inc. (a) |
| 734,736 |
| |
110,454 |
| Regeneron Pharmaceuticals, Inc. (a) |
| 41,473,268 |
| |
144,100 |
| Rocket Pharmaceuticals, Inc. (a) |
| 3,279,716 |
| |
35,859 |
| Rubius Therapeutics, Inc. (a) |
| 340,660 |
| |
The accompanying notes are an integral part of this Schedule of Investments.
SHARES |
|
|
| VALUE |
| |
|
| Biotechnology — continued |
|
|
| |
62,470 |
| Sage Therapeutics, Inc. (a) |
| $ | 4,509,709 |
|
103,856 |
| Sangamo Therapeutics, Inc. (a) |
| 869,275 |
| |
120,163 |
| Sarepta Therapeutics, Inc. (a) |
| 15,505,834 |
| |
179,428 |
| Seattle Genetics, Inc. (a) |
| 20,501,443 |
| |
447,797 |
| Sutro Biopharma, Inc. (a) |
| 4,925,767 |
| |
317,526 |
| Trillium Therapeutics, Inc. (a) (c) |
| 327,052 |
| |
67,710 |
| Ultragenyx Pharmaceutical, Inc. (a) |
| 2,891,894 |
| |
45,312 |
| uniQure N.V. (a) (c) |
| 3,247,058 |
| |
43,002 |
| United Therapeutics Corp. (a) |
| 3,787,616 |
| |
875,000 |
| Vectivbio Holding AG (Restricted) (a) (b) |
| 691,250 |
| |
262,710 |
| Vertex Pharmaceuticals, Inc. (a) |
| 57,520,355 |
| |
74,157 |
| Xencor, Inc. (a) |
| 2,550,259 |
| |
66,898 |
| Xenon Pharmaceuticals Inc. (a) (c) |
| 877,033 |
| |
7,803 |
| Y-mAbs Therapeutics, Inc. (a) |
| 243,844 |
| |
26,021 |
| Zai Lab Ltd. (a) (e) |
| 1,082,213 |
| |
|
|
|
| 585,089,800 |
| |
|
| Drug Discovery Technologies — 0.1% |
|
|
| |
117,030 |
| ImmunoGen, Inc. (a) |
| 597,438 |
| |
|
|
|
|
|
| |
|
| Health Care Equipment & Supplies — 3.6% |
|
|
| |
9,421 |
| ABIOMED, Inc. (a) |
| 1,607,128 |
| |
19,400 |
| Axonics Modulation Technologies, Inc. (a) |
| 537,574 |
| |
22,237 |
| Baxter International, Inc. |
| 1,859,458 |
| |
2,140 |
| Becton, Dickinson and Co. |
| 582,016 |
| |
160,000 |
| Cercacor Laboratories, Inc. (Restricted) (a) (b) |
| 894,587 |
| |
21,888 |
| DENTSPLY Sirona, Inc. |
| 1,238,642 |
| |
10,398 |
| Edwards Lifesciences Corp. (a) |
| 2,425,749 |
| |
2,985 |
| Guardant Health, Inc. (a) |
| 233,248 |
| |
21,082 |
| Hologic, Inc. (a) |
| 1,100,691 |
| |
6,736 |
| IDEXX Laboratories, Inc. (a) |
| 1,758,972 |
| |
11,476 |
| Inogen, Inc. (a) |
| 784,155 |
| |
7,188 |
| Masimo Corp. (a) |
| 1,136,135 |
| |
70,363 |
| Medtronic plc |
| 7,982,682 |
| |
67,580 |
| NovoCure Ltd. (a) |
| 5,694,967 |
| |
138,309 |
| Quotient Ltd. (a) |
| 1,315,319 |
| |
29,890 |
| Stryker Corp. |
| 6,275,107 |
| |
6,068 |
| Zimmer Biomet Holdings, Inc. |
| 908,258 |
| |
|
|
|
| 36,334,688 |
| |
|
| Health Care Providers & Services — 4.1% |
|
|
| |
54,500 |
| Acadia Healthcare Co., Inc. (a) |
| 1,810,490 |
| |
23,992 |
| Anthem, Inc. |
| 7,246,304 |
| |
3,527 |
| Charles River Laboratories International, Inc. (a) |
| 538,785 |
| |
25,532 |
| Cigna Corp. |
| 5,221,039 |
| |
100,776 |
| CVS Health Corp. |
| 7,486,649 |
| |
14,868 |
| HCA Healthcare, Inc. |
| 2,197,639 |
| |
6,380 |
| Humana, Inc. |
| 2,338,398 |
| |
222,222 |
| InnovaCare, Inc. Escrow Shares (Restricted) (a) (b) |
| 203,644 |
| |
13,049 |
| Medpace Holdings, Inc. (a) |
| 1,096,899 |
| |
The accompanying notes are an integral part of this Schedule of Investments.
SHARES |
|
|
| VALUE |
| |
|
| Health Care Providers & Services — continued |
|
|
| |
44,072 |
| UnitedHealth Group, Inc. |
| $ | 12,956,287 |
|
|
|
|
| 41,096,134 |
| |
|
| Health Care Technology — 0.2% |
|
|
| |
231,027 |
| Evolent Health, Inc. (a) |
| 2,090,794 |
| |
|
| Healthcare Services — 0.6% |
|
|
| |
6,284 |
| Laboratory Corporation of America Holdings (a) |
| 1,063,064 |
| |
91,031 |
| Syneos Health, Inc. (a) |
| 5,414,069 |
| |
|
|
|
| 6,477,133 |
| |
|
| Life Sciences Tools & Services — 7.5% |
|
|
| |
31,672 |
| Bio-Techne Corp. |
| 6,952,321 |
| |
154,983 |
| Illumina, Inc. (a) |
| 51,414,060 |
| |
344,015 |
| Pacific Biosciences of California, Inc. (a) |
| 1,768,237 |
| |
88,234 |
| PRA Health Sciences, Inc. (a) |
| 9,807,209 |
| |
17,778 |
| Thermo Fisher Scientific, Inc. |
| 5,775,539 |
| |
|
|
|
| 75,717,366 |
| |
|
| Medical Devices and Diagnostics — 1.8% |
|
|
| |
3,773 |
| Align Technology, Inc. (a) |
| 1,052,818 |
| |
122,199 |
| Boston Scientific Corp. (a) |
| 5,525,839 |
| |
32,315 |
| Danaher Corp. |
| 4,959,706 |
| |
10,550 |
| Intuitive Surgical, Inc. (a) |
| 6,236,633 |
| |
3,823 |
| ResMed, Inc. |
| 592,450 |
| |
|
|
|
| 18,367,446 |
| |
|
| Pharmaceuticals — 18.6% |
|
|
| |
55,772 |
| Acceleron Pharma, Inc. (a) |
| 2,957,031 |
| |
46,285 |
| Aerie Pharmaceuticals, Inc. (a) |
| 1,118,708 |
| |
178,012 |
| Aerpio Pharmaceuticals, Inc. (a) |
| 110,990 |
| |
143,413 |
| Agios Pharmaceuticals, Inc. (a) |
| 6,847,971 |
| |
8,583 |
| Allergan plc (c) |
| 1,640,812 |
| |
12,760 |
| AmerisourceBergen Corp. |
| 1,084,855 |
| |
137,351 |
| ArQule, Inc. (a) |
| 2,741,526 |
| |
60,088 |
| Aurinia Pharmaceuticals, Inc. (a) (c) |
| 1,217,383 |
| |
321,905 |
| Bristol-Myers Squibb Co. |
| 20,663,082 |
| |
798,651 |
| Bristol-Myers Squibb Co., CVR 03/31/21 (a) (g) |
| 2,403,940 |
| |
21,025 |
| Eli Lilly & Co. |
| 2,763,316 |
| |
465,507 |
| Endo International plc (a) (c) |
| 2,183,228 |
| |
210,543 |
| Foamix Pharmaceuticals Ltd. (a) (c) |
| 701,108 |
| |
32,891 |
| GW Pharmaceuticals plc (a) (c) (e) |
| 3,439,083 |
| |
41,384 |
| Heron Therapeutics, Inc. (a) |
| 972,524 |
| |
192,060 |
| Horizon Therapeutics plc (a) |
| 6,952,572 |
| |
334,273 |
| Immunomedics, Inc. (a) |
| 7,073,217 |
| |
60,156 |
| Intra-Cellular Therapies, Inc. (a) |
| 2,063,952 |
| |
5,958 |
| IQVIA Holdings, Inc. (a) |
| 920,570 |
| |
51,827 |
| Jazz Pharmaceuticals plc (a) |
| 7,736,735 |
| |
110,428 |
| Johnson & Johnson |
| 16,108,132 |
| |
9,280 |
| Madrigal Pharmaceuticals, Inc. (a) |
| 845,501 |
| |
The accompanying notes are an integral part of this Schedule of Investments.
SHARES |
|
|
| VALUE |
| |
|
| Pharmaceuticals — continued |
|
|
| |
13,913 |
| McKesson Corp. |
| $ | 1,924,446 |
|
68,939 |
| Medicines Co. (The) (a) |
| 5,855,679 |
| |
247,434 |
| Merck & Co., Inc. |
| 22,504,122 |
| |
522,657 |
| Milestone Pharmaceuticals, Inc. (a) |
| 8,367,739 |
| |
46,197 |
| Mirati Therapeutics, Inc. (a) |
| 5,952,945 |
| |
555,772 |
| Mylan N.V. (a) (c) |
| 11,171,017 |
| |
13,430 |
| MyoKardia, Inc. (a) |
| 978,846 |
| |
324,369 |
| Pfizer, Inc. |
| 12,708,777 |
| |
17,533 |
| Reata Pharmaceuticals, Inc. (a) |
| 3,584,271 |
| |
59,240 |
| Revance Therapeutics, Inc. (a) |
| 961,465 |
| |
69,411 |
| Sanofi (c) (e) |
| 3,484,432 |
| |
79,790 |
| Spectrum Pharmaceuticals, Inc. (a) |
| 290,436 |
| |
28,747 |
| Tetraphase Pharmaceuticals, Inc. (a) |
| 80,779 |
| |
291,666 |
| Teva Pharmaceutical Industries Ltd. (a) (c) (e) |
| 2,858,327 |
| |
78,725 |
| Theravance Biopharma, Inc. (a) |
| 2,038,190 |
| |
3,911 |
| Turning Point Therapeutics, Inc. (a) |
| 243,616 |
| |
67,727 |
| WaVe Life Sciences Ltd. (a) |
| 542,832 |
| |
53,922 |
| Zoetis, Inc. |
| 7,136,577 |
| |
71,728 |
| Zogenix, Inc. (a) |
| 3,739,181 |
| |
|
|
|
| 186,969,913 |
| |
|
| TOTAL COMMON STOCKS AND WARRANTS |
| 952,740,713 |
| |
|
| EXCHANGE TRADED FUNDS - 0.7% of Net Assets |
|
|
| |
19,508 |
| iShares Nasdaq Biotechnology ETF |
| 2,350,909 |
| |
48,046 |
| SPDR S&P Biotech ETF |
| 4,569,655 |
| |
|
| TOTAL EXCHANGE TRADED FUNDS |
| 6,920,564 |
| |
PRINCIPAL |
|
|
|
|
| |
|
| SHORT-TERM INVESTMENT - 0.6% of Net Assets |
|
|
| |
$ | 5,932,000 |
| Repurchase Agreement, Fixed Income Clearing Corp., repurchase value $5,932,000, 0.12%, dated 12/31/19, due 01/02/20 (collateralized by U.S. Treasury Note 2.75%, due 09/15/21, market value $6,055,356) |
| 5,932,000 |
|
|
| TOTAL SHORT-TERM INVESTMENT |
| 5,932,000 |
| |
|
| TOTAL INVESTMENTS BEFORE MILESTONE INTERESTS - 98.4% |
| 988,414,049 |
| |
INTEREST |
|
|
|
|
|
|
| MILESTONE INTERESTS (Restricted) (a) (b) - 1.1% of Net Assets |
|
|
|
|
| Biotechnology-0.3% |
|
|
|
1 |
| Therachon Milestone Interest |
| 3,365,251 |
|
The accompanying notes are an integral part of this Schedule of Investments.
INTEREST |
|
|
| VALUE |
| |
|
| Health Care Equipment & Supplies — 0.0% |
|
|
| |
1 |
| Therox Milestone Interest |
| $ | 6,906 |
|
|
| Pharmaceuticals — 0.8% |
|
|
| |
1 |
| Afferent Milestone Interest |
| 582,605 |
| |
1 |
| Ethismos Research Milestone Interest |
| 0 |
| |
1 |
| Neurovance Milestone Interest |
| 2,835,984 |
| |
1 |
| TargeGen Milestone Interest |
| 4,721,948 |
| |
|
|
|
| 8,140,537 |
| |
|
| TOTAL MILESTONE INTERESTS |
| 11,512,693 |
| |
NUMBER OF |
|
|
|
|
| |
|
| CALL OPTION CONTRACTS PURCHASED- 0.0% of Net Assets |
|
|
| |
110/3,850,000 |
| Biogen, Inc. Jun20 350 Call |
| 125,400 |
| |
|
| TOTAL CALL OPTION CONTRACTS PURCHASED |
| 125,400 |
| |
|
| TOTAL INVESTMENTS - 99.5% |
| 1,000,052,142 |
| |
|
| OTHER ASSETS IN EXCESS OF LIABILITIES - 0.5% |
| 4,745,720 |
| |
|
| NET ASSETS - 100% |
| $ | 1,004,797,862 |
|
(a) Non-income producing security.
(b) Security fair valued using significant unobservable inputs. See Investment Valuation and Fair Value Measurements.
(c) Foreign security.
(d) Affiliated issuers in which the Fund holds 5% or more of the voting securities (total market value of $3,500,000).
(e) American Depository Receipt
(f) A portion of security is pledged as collateral for call option purchased.
(g) Contingent Value Right
The accompanying notes are an integral part of this Schedule of Investments.
TEKLA HEALTHCARE INVESTORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
(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, 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 the Tekla Capital Management 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 company’s financial statements, products, intended markets or the company’s technologies; (iii) the price of the same or similar security negotiated at arm’s length in an issuer’s 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, 2019, the cost of securities for Federal income tax purposes was $802,355,751. The net unrealized gain on securities held by the Fund was $197,696,391, including gross unrealized gain of $288,778,526 and gross unrealized loss of $ 91,082,135.
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, 2019 were as follows:
TEKLA HEALTHCARE INVESTORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
(Unaudited, continued)
Affiliated |
| Beginning |
| Purchases at |
| Proceeds |
| Net |
| Change in |
| Ending Value |
| ||||||
Curasen Therapeuitics, Inc |
| $ | 3,500,000 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 3,500,000 |
|
|
| $ | 3,500,000 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 3,500,000 |
|
Affiliated |
| Shares/ |
| Dividend/ |
| Capital Gain |
|
|
|
|
|
|
| ||
Curasen Therapeuitics, Inc. |
| 3,173,164 |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
|
| 3,173,164 |
| $ | — |
| $ | — |
|
|
|
|
|
|
|
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 Fund’s 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.
For the period ended December 31, 2019, the total amount of transfers between Level 3 and Level 2 was $2,310,000. The one investment was transferred due to an initial public offering lock-up period and the values are being supported by significant observable inputs. There were no other transfers between these levels.
The following is a summary of the levels used as of December 31, 2019 to value the Fund’s net assets.
Assets at Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| ||||
Convertible Preferred and Warrants |
|
|
|
|
|
|
|
|
| ||||
Biotechnology |
| $ | 216,300 |
| — |
| $ | 14,635,842 |
| $ | 14,852,142 |
| |
Health Care Equipment & Supplies |
| — |
| — |
| 792,749 |
| 792,749 |
| ||||
Pharmaceuticals |
| — |
| — |
| 3,500,000 |
| 3,500,000 |
| ||||
Convertible Notes |
|
|
|
|
|
|
|
|
| ||||
Biotechnology |
| — |
| — |
| 1,992,909 |
| 1,992,909 |
| ||||
Health Care Equipment & Supplies |
| — |
| — |
| 1,682,973 |
| 1,682,973 |
| ||||
Common Stocks and Warrants |
|
|
|
|
|
|
|
|
| ||||
Biotechnology |
| 581,847,547 |
| $ | 2,443,534 |
| 798,719 |
| 585,089,800 |
| |||
Drug Discovery Technologies |
| 597,438 |
| — |
| — |
| 597,438 |
| ||||
Health Care Equipment & Supplies |
| 35,440,101 |
| — |
| 894,587 |
| 36,334,688 |
| ||||
Health Care Providers & Services |
| 40,892,490 |
| — |
| 203,644 |
| 41,096,134 |
| ||||
Health Care Technology |
| 2,090,794 |
| — |
| — |
| 2,090,794 |
| ||||
Healthcare Services |
| 6,477,133 |
| — |
| — |
| 6,477,133 |
| ||||
Life Sciences Tools & Services |
| 75,717,366 |
| — |
| — |
| 75,717,366 |
| ||||
Medical Devices and Diagnostics |
| 18,367,446 |
| — |
| — |
| 18,367,446 |
| ||||
Pharmaceuticals |
| 186,969,912 |
| — |
| — |
| 186,969,912 |
| ||||
Exchange Traded Funds |
| 6,920,564 |
| — |
| — |
| 6,920,564 |
| ||||
Short-term Investment |
| — |
| 5,932,000 |
| — |
| 5,932,000 |
| ||||
Milestone Interests |
|
|
|
|
|
|
|
|
| ||||
Biotechnology |
| — |
| — |
| 3,365,251 |
| 3,365,251 |
| ||||
Health Care Equipment & Supplies |
| — |
| — |
| 6,906 |
| 6,906 |
| ||||
Pharmaceuticals |
| — |
| — |
| 8,140,537 |
| 8,140,537 |
| ||||
Other Assets |
| — |
| — |
| 729,056 |
| 729,056 |
| ||||
Total |
| $ | 955,537,091 |
| $ | 8,375,534 |
| $ | 36,743,173 |
| $ | 1,000,655,798 |
|
Other Financial Instruments |
|
|
|
|
|
|
|
|
| ||||
Assets |
|
|
|
|
|
|
|
|
| ||||
Call Option Contracts Purchased |
| $ | 125,400 |
| $ | — |
| $ | — |
| $ | 125,400 |
|
TEKLA HEALTHCARE INVESTORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
(Unaudited, continued)
The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.
Investments in |
| Balance as of |
| Net realized |
| Cost of |
| Proceeds |
| Net |
| Balance as of |
| ||||||
Convertible Preferred and Warrants |
| ||||||||||||||||||
Biotechnology |
| $ | 19,080,590 |
| $ | (2,370,586 | ) | $ | 235,838 |
| $ | — |
| $ | (2,310,000 | ) | $ | 14,635,842 |
|
Health Care Equipment & Supplies |
| 792,749 |
| — |
| — |
| — |
| — |
| 792,749 |
| ||||||
Pharmaceuticals |
| 3,500,000 |
| — |
| — |
| — |
| — |
| 3,500,000 |
| ||||||
Convertible Notes |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Biotechnology |
| 1,395,283 |
| (191,643 | ) | 789,269 |
| — |
| — |
| 1,992,909 |
| ||||||
Health Care Equipment & Supplies |
| 1,682,973 |
| 26,388 |
| — |
| (26,388 | ) | — |
| 1,682,973 |
| ||||||
Common Stocks and Warrants |
|
|
|
|
|
|
|
|
|
|
| ||||||||
Biotechnology |
| 857,885 |
| (50,635 | ) | — |
| (8,531 | ) | — |
| 798,719 |
| ||||||
Health Care Equipment & Supplies |
| 835,359 |
| 59,228 |
| — |
| — |
| — |
| 894,587 |
| ||||||
Health Care Providers & Services |
| 2,039,287 |
| (1,116,687 | ) | 203,644 |
| (922,600 | ) | — |
| 203,644 |
| ||||||
Milestone Interests |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Biotechnology |
| 3,357,712 |
| 7,539 |
| — |
| — |
| — |
| 3,365,251 |
| ||||||
Health Care Equipment & Supplies |
| 6,851 |
| 55 |
| — |
| — |
| — |
| 6,906 |
| ||||||
Pharmaceuticals |
| 8,295,459 |
| (154,922 | ) | — |
| — |
| — |
| 8,140,537 |
| ||||||
Other Assets |
| 724,661 |
| — |
| 4,395 |
| — |
| — |
| 729,056 |
| ||||||
Total |
| $ | 42,568,809 |
| $ | (3,791,263 | ) | $ | 1,233,146 |
| $ | (957,519 | ) | $ | (2,310,000 | ) | $ | 36,743,173 |
|
Net change in unrealized appreciation (depreciation) from investments still held as of December 31, 2019: | ($2,700,963) |
The following is a quantitative disclosure about significant unobservable inputs used in the determination of the fair value of Level 3 assets.
TEKLA HEALTHCARE INVESTORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
(Unaudited, continued)
|
| Fair Value at |
| Valuation Technique |
| Unobservable Input |
| Range |
| |
Private Companies and Other Restricted Securities |
| $ | 1,002,056 |
| Income approach, Black-Scholes |
| Discount for lack of marketability |
| 20.00% (20.00%) |
|
|
| 12,763,038 |
| Probability weighted expected return model |
| Discount rate Price to sales multiple |
| 23.63%-52.67% (42.65%) 4.55x-12.86x (10.95x) |
| |
|
| 6,980,532 |
| Market approach, recent transaction |
| (a) |
| N/A |
| |
|
| 3,552,154 |
| Market comparable |
| Discount for lack of marketability |
| 15.00% (15.00%) |
| |
|
|
|
|
|
| Earning ratio |
| 6.53x (6.53x) |
| |
|
|
|
| Probability adjusted value |
| Probability of events |
| 0.00%-100% (50.84%) |
| |
|
| 12,445,393 |
|
|
| Timing of events |
| 0.00-17.25(3.34) years |
| |
|
| $ | 36,743,173 |
|
|
|
|
|
|
|
(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 to provide 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 4% of the Fund’s net assets at December 31, 2019.
At December 31, 2019, the Fund had a commitment of $3,500,000 relating to additional investments in one private company.
The following table details the acquisition date, cost, carrying value per unit, and value of the Fund’s private companies and other restricted securities at December 31, 2019. The Fund on its own does not have the right to demand that such securities be registered.
TEKLA HEALTHCARE INVESTORS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
(Unaudited, continued)
Security (#) |
| Acquisition |
|
| Cost |
| Carrying Value |
|
| Value |
| |||
Afferent Milestone Interest |
| 07/27/16 |
|
| $ | 377,701 |
| $ | 582,605.00 |
|
| $ | 582,605 |
|
Amphivena Therapeutics, Inc. |
|
|
|
|
|
|
|
|
|
|
| |||
Series B Cvt. Pfd |
| 07/17/17 |
|
| 4,902,852 |
| 15.00 |
|
| 4,900,001 |
| |||
Series C Cvt. Pfd |
| 12/10/18 |
|
| 1,887,315 |
| 3.59 |
|
| 1,887,315 |
| |||
Arkuda Therapeutics, Inc. Series A Cvt. Pfd |
| 05/16/19 |
|
| 1,909,093 |
| 2.38 |
|
| 1,909,093 |
| |||
Cercacor Laboratories, Inc. Common |
| 03/31/98 | † |
| 0 |
| 5.59 |
|
| 894,587 |
| |||
Curasen Therapeutics, Inc. Series A Cvt. Pfd |
| 09/18/18 |
|
| 3,500,000 |
| 1.10 |
|
| 3,500,000 |
| |||
Decipher Biosciences, Inc. |
|
|
|
|
|
|
|
|
|
|
| |||
Series II Cvt. Pfd |
| 03/29/19 |
|
| 4,485,337 |
| 1.51 |
|
| 1,461,795 |
| |||
Series III Cvt. Pfd |
| 03/29/19 |
|
| 1,014,610 |
| 2.17 |
|
| 2,090,358 |
| |||
Ethismos Research Milestone Interest |
| 10/31/17 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Galera Therapeutics, Inc. Common |
| 08/30/18 |
|
| 2,310,150 |
| 11.84 |
|
| 2,443,534 |
| |||
IlluminOss Medical, Inc. |
|
|
|
|
|
|
|
|
|
|
| |||
Series AA Cvt. Pfd |
| 01/21/16 |
|
| 960,650 |
| 0.83 |
|
| 792,659 |
| |||
Junior Preferred |
| 01/21/16 |
|
| 3,468,037 |
| 0.00 | †† |
| 90 |
| |||
Cvt. Promissory Note |
| 03/18/17 |
|
| 286,619 |
| 100.00 |
|
| 285,294 |
| |||
Cvt. Promissory Note |
| 11/21/17 |
|
| 95,433 |
| 100.00 |
|
| 95,083 |
| |||
Cvt. Promissory Note |
| 01/11/18 |
|
| 190,281 |
| 100.00 |
|
| 190,166 |
| |||
Cvt. Promissory Note |
| 02/06/18 |
|
| 190,166 |
| 100.00 |
|
| 190,166 |
| |||
Cvt. Promissory Note |
| 09/05/18 |
|
| 237,708 |
| 100.00 |
|
| 237,708 |
| |||
Cvt. Promissory Note |
| 01/28/19 |
|
| 185,849 |
| 100.00 |
|
| 185,849 |
| |||
Cvt. Promissory Note |
| 04/10/19 |
|
| 51,858 |
| 100.00 |
|
| 51,858 |
| |||
Cvt. Promissory Note |
| 05/10/19 |
|
| 81,882 |
| 100.00 |
|
| 81,881 |
| |||
Cvt. Promissory Note |
| 07/01/19 |
|
| 113,205 |
| 100.00 |
|
| 113,205 |
| |||
Cvt. Promissory Note |
| 08/29/19 |
|
| 37,000 |
| 100.00 |
|
| 37,000 |
| |||
Cvt. Promissory Note |
| 09/27/19 |
|
| 214,763 |
| 100.00 |
|
| 214,763 |
| |||
Warrants (expiration 03/31/27) |
| 03/28/17 |
|
| 331 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 09/06/27) |
| 09/05/18 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 11/20/27) |
| 11/21/17 |
|
| 88 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 01/11/28) |
| 01/11/18 |
|
| 29 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 02/06/28) |
| 02/06/18 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 01/29/29) |
| 01/28/19 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 04/29/29) |
| 04/10/19 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 05/13/29) |
| 05/10/19 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 07/02/29) |
| 07/01/19 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 08/29/29) |
| 08/29/19 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
Warrants (expiration 09/27/29) |
| 09/27/19 |
|
| 0 |
| 0.00 |
|
| 0 |
| |||
InnovaCare, Inc. Escrow Shares |
| 12/21/12 | † |
| 203,655 |
| 0.92 |
|
| 203,644 |
| |||
Neurovance Milestone Interest |
| 03/20/17 |
|
| 4,917,881 |
| 2,835,984.00 |
|
| 2,835,984 |
| |||
Oculis SA, Series B2 Cvt. Pfd |
| 01/16/19 |
|
| 2,355,687 |
| 8.60 |
|
| 2,386,856 |
| |||
Rainier Therapeutics, Inc. |
|
|
|
|
|
|
|
|
|
|
| |||
Series A Cvt. Pfd |
| 01/19/16, 10/24/16 |
|
| 1,751,520 |
| 0.00 | †† |
| 269 |
| |||
Series B Cvt. Pfd |
| 03/03/17 |
|
| 1,166,879 |
| 0.00 | †† |
| 156 |
| |||
Cvt. Promissory Note |
| 01/30/19 |
|
| 442,608 |
| 0.00 | †† |
| 0 |
| |||
Cvt. Promissory Note |
| 03/28/19 |
|
| 442,608 |
| 0.00 | †† |
| 0 |
| |||
Cvt. Promissory Note |
| 07/16/19 |
|
| 510,187 |
| 208.78 |
|
| 1,065,076 |
| |||
Cvt. Promissory Note |
| 10/07/19 |
|
| 127,511 |
| 208.78 |
|
| 266,195 |
| |||
TargeGen Milestone Interest |
| 07/20/10 |
|
| 0 |
| 4,721,948.00 |
|
| 4,721,948 |
| |||
Therachon Milestone Interest |
| 07/01/19 |
|
| 3,277,735 |
| 3,365,250.00 |
|
| 3,365,250 |
| |||
Therox Milestone Interest |
| 06/18/19 |
|
| 9,360 |
| 6,906.00 |
|
| 6,906 |
| |||
Vectivbio Holding AG |
|
|
|
|
|
|
|
|
|
|
| |||
Common |
| 07/01/19 | † |
| 682,719 |
| 0.79 |
|
| 691,250 |
| |||
Cvt. Promissory Note |
| 12/19/19 |
|
| 661,638 |
| 1.00 |
|
| 661,638 |
| |||
|
|
|
|
| $ | 43,050,945 |
|
|
|
| $ | 38,350,182 |
| |
(#) See Schedule of Investments and corresponding footnotes for more information on each issuer.
† Interest received as part of a corporate action for a previously owned security.
†† Carrying value per unit is greater than $0.00 but less than $0.01
