Deerfield and ARCH back a new $200M SPAC run by California VC firm
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Two prominent life sciences firms have teamed up to sponsor a new SPAC that made its way to Nasdaq on Tuesday evening.
Deerfield Management and ARCH Venture Partners are backing the blank check company known as DA32 Life Science Tech Acquisition Corp., which priced at $200 million Monday, the firms announced. The pair is teaming up with California-based VC firm Section 32, whose managing partner Steven Kafka will run the SPAC.
Axios had first reported a SPAC might be in the works back in early June.
Though ARCH previously launched a blank check company when Bob Nelsen and former Vertex CEO Jeff Leiden got a $500 million SPAC off the ground in March, Nelsen won’t be involved in this effort. The high-profile investor was not mentioned in the blank check company’s S-1.
Instead, it will be ARCH co-founder Keith Crandell running point for the firm, as Crandell nabs a seat on the SPAC’s board of directors. He’ll join Deerfield partner Andrew ElBardissi and SPAC CFO Christopher Wolfe, who the S-1 said has managed financials for at least three previous blank check companies for Deerfield prior to their mergers.
Wolfe is the only director with any personal shares in the blank check company, taking home a 2.5% stake.
Kafka, meanwhile, has completed his metamorphosis from his previous stint as a biotech CEO. Beginning in April 2019, Kafka worked as founder and CEO of cancer blood test company Thrive Earlier Detection, before Exact Sciences bought it out in an October 2020 cash and stock deal for up to $2.15 billion.
Prior to joining Thrive, Kafka had served as COO of Foundation Medicine for about five years before Roche acquired it for $2.4 billion back in 2018.
Unlike the previous ARCH SPAC, which hinted toward a focus on “technologies like wearable sensors, remote continuous data capture, point of care diagnostics, telehealth capabilities and artificial intelligence/machine learning tools,” the new blank check outfit is providing fewer details on potential targets.
The S-1 also included much of the boilerplate language that’s become common throughout the SPAC boom of the last 12 to 18 months, including several mentions that the SPAC is “not prohibited” from pursuing a merger with any of the directors’ affiliated companies.
The market saw a massive influx of SPACs at the beginning of the year, with more than 300 across all sectors being filed or priced in the first quarter alone. But with that activity came bigger scrutiny from regulators, with the SEC beginning to ask financial institutions to voluntarily provide documents over how they were internally policing such blank check efforts.
Activity has ramped back up since then, though not to the market’s previous heights. And the glut of SPACs has brought an uptick in mergers over the last few months, with nearly a dozen life sciences reverse mergers occurring in the second quarter, per the Endpoints News tally. Overall, SPACs have brought more than $17 billion to the biotech sector in 2021.