Cormorant's Bihua Chen joins the SPAC game, looking to raise $100M for a company that matches 5 key criteria
Another day, another life sciences SPAC.
The last two days alone have already seen Brent Saunders price his $400 million LLC and Carl Icahn protégé Alex Denner file for his $175 million raise. Now, Bihua Chen and the rest of the crossover investors over at Cormorant Asset Management are looking to raise $100 million for a specialty purpose acquisition company called Helix Acquisition.
With their raise, Cormorant is following a bunch of other late-stage life science investors who in just the last few months have turned a “here be dragons” area for biotech into well-charted territory. As retail investors have poured cash into virtually any major biotech — and some minor ones — that’s filed for an S-1 during the pandemic, established firms have been able to raise significant capital on the promise of being able to eventually pick which private company is worth taking public.
RA Capital raised over $100 million for their Therapeutics Acquisitions and Casdin raised $385 million. RTW Health Sciences and Perceptive Advisors, each of whom had successfully played the game before, both offered new SPACs.
In their filing, Cormorant noted their successes in crossovers for other major biotech companies, including joining such rounds for BridgeBio and Forma Therapeutics, who had two of the largest life sciences IPOs over the last 18 months. Most notably, they led the crossover round for Principia, the auto-immunity biotech recently bought out by Sanofi for $3.7 billion.
Chen and Cormorant CFO Jay Collins take the time to sketch out in 5 lines what they’re looking for in a company to merge with, although much of it is standard checklist for a large late-stage biotech investor:
- Rigorous science: A new approach or new insight combined with targets that have a “clear, simple” rationale.
- Already generated data for the specific candidate or for the platform that suggest it can offer something more than current treatments for a serious disease
- A clear path to more data and to regulators
- A management team that can follow that path and “develop and commercialize” those candidates and will benefit from Cormorant’s cash and advice
- An “attractive” valuation because it “was overlooked as too early, misunderstood due to complex science, or undercapitalized and that can offer near-term liquidity and significant upside for investors.”
Different firms have taken different approaches in their filings, all of which tend to be necessarily vague. But, for example, this list stands in contrast with Casdin, whose SPAC listed three core areas — among them, conspicuously, synthetic biology — but sparse words on company specifics. And it looks quite similar, with different wording, to the list RA Capital laid out. But RA Capital’s included the stipulation that any company “would be funded for at least one year past a key value inflection point” after a merger.
They’ll have two years to find a company that can match.