Bil­lions of dol­lars worth of SPACs are rid­ing on the biotech IPO boom

Bil­lion­aire hedge fund man­ag­er Bill Ack­man’s push to raise $4 bil­lion for his blank check com­pa­ny, Per­sh­ing Square Ton­tine Hold­ings, is cast­ing a spot­light on the SPACs. And amid a his­toric SPAC boom, biotechs are set­ting sev­er­al records on what some ob­servers say is shap­ing up to be a third ma­jor track — be­sides IPO and M&A — to go pub­lic.

Jay Heller

“SPACs were ap­prox­i­mate­ly 3% of the IPO mar­ket back in 2014, now they are al­most 35% of all new list­ings,” Jay Heller, the Nas­daq’s head of cap­i­tal mar­kets, told End­points News.

Even though bio­phar­ma ap­pears large­ly un­scathed by the volatil­i­ty in the broad­er pub­lic mar­ket, see­ing in­stead a his­toric run of de­buts, SPACs have still emerged as an al­ter­na­tive ve­hi­cle that can off­set some risks.

Es­tab­lished more than three decades ago, SPACs, or spe­cial pur­pose ac­qui­si­tion com­pa­nies, are es­sen­tial­ly clean­er re­verse merg­er shells for pri­vate com­pa­nies look­ing to make a quick flip to the pub­lic mar­ket. The way it works: An in­vest­ment firm would cre­ate a cor­po­ra­tion and file for an IPO based on noth­ing but its rep­u­ta­tion for pick­ing out win­ner op­por­tu­ni­ties — and the team has two years to do so af­ter rais­ing the cap­i­tal, sole­ly re­served for buy­ing out an ex­ist­ing com­pa­ny.

While it’s had a check­ered past tied with fraud­u­lent out­fits, blue chip spon­sors from RTW In­vest­ments to Per­cep­tive Ad­vi­sors are in­creas­ing­ly set­ting up their own SPACs.

For both in­vestors and com­pa­nies (as well as their orig­i­nal back­ers), it saves time and trou­ble ne­go­ti­at­ing terms or set­ting a price — al­though ex­ist­ing share­hold­ers do have the right to vote down a merg­er last minute.

Jonas Gross­man

“We pre­dict­ed at least six biotech fo­cused SPACs this year and we are al­most there,” said Jonas Gross­man, the pres­i­dent of Chardan.

Chardan raised $70 mil­lion to cre­ate its own SPAC, Chardan Health­care Ac­qui­si­tion, back in 2018. It then ze­roed in on Bio­mX, an Is­raeli mi­cro­bio­me-fo­cused biotech, as a merg­er tar­get, bring­ing the first and on­ly biotech SPAC com­bi­na­tion of 2019.

Since then, RTW’s Health Sci­ences has com­bined with Im­muno­vant, Per­cep­tive’s Arya Sci­ences has merged with Im­mat­ics, EcoR1’s Panacea has priced its $125 mil­lion IPO, and LifeSci Ac­qui­si­tion Corp has raised $60 mil­lion. Chardan it­self has pooled $85 mil­lion for a sec­ond SPAC.

Last week, Ther­a­peu­tics Ac­qui­si­tions — a SPAC spon­sored by RA Cap­i­tal — marked an­oth­er first by an IPO by sell­ing $118 mil­lion worth of com­mon shares rather than units. Prac­ti­cal­ly, it means that the of­fer­ing didn’t in­clude any trad­able war­rants, which used to be a fix­ture in such pub­lic list­ings.

The com­pa­ny had ini­tial­ly struc­tured the IPO based on units, Heller of Nas­daq not­ed, con­sist­ing of one share of Class A com­mon stock and one-third of one re­deemable war­rant.

“They were prob­a­bly able to re­struc­ture the deal be­cause of strong in­vestor de­mand,” he wrote. “The af­ter­mar­ket trad­ing of this se­cu­ri­ty will be a test to see if this will be adopt­ed by fu­ture SPACs.”

5AM Ven­tures: Fu­el­ing the Next Gen­er­a­tion of In­no­va­tors

By RBC Capital Markets
With Andy Schwab, Co-Founder and Managing Partner at 5AM Ventures

Key Points

Prescription Digital Therapeutics, cell therapy technologies, and in silico medicines will be a vital part of future treatment modalities.
Unlocking the potential of the microbiome could be the missing link to better disease diagnosis.
Growing links between academia, industry, and venture capital are spinning out more innovative biotech companies.
Biotech is now seen by investors as a growth space as well as a safe haven, fuelling the recent IPO boom.

Hal Barron, GSK via YouTube

What does $29B buy you in Big Phar­ma? In Glax­o­SmithK­line’s case, a whole lot of un­com­fort­able ques­tions about the pipeline

Talk about your bad timing.

A little over a week ago, GSK R&D chief Hal Barron marked his third anniversary at the research helm by taking a turn at the virtual podium during JP Morgan to make the case that he and his team had built a valuable late-stage pipeline capable of churning out more than 10 blockbusters in the next 5 years.

And then, just days later, one of the cancer drugs he bet big on as a top prospect — bintrafusp, partnered with Merck KGaA — failed its first pivotal test in non-small cell lung cancer.

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Janet Woodcock (AP Images)

End­points poll: Janet Wood­cock takes the (in­ter­im) helm at the FDA. And a large ma­jor­i­ty of our read­ers want her to stay there

It’s official: Janet Woodcock is now the acting chief of the FDA.

And — according to an Endpoints poll — most industry readers would like her to stay there, although a significant minority is strongly opposed.

To recap: Joe Biden is reportedly choosing between Woodcock and former deputy FDA commissioner Joshua Sharfstein as his nominee for the permanent position. Given their respective track records, the decision is set to determine the agency’s lodestar for years to come.

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An Endpoints Zoom meeting; and the email header employees will see if your company is a Premium subscriber

What’s next for End­points — and how to sup­port our in­de­pen­dent bio­phar­ma news mis­sion

The firehose of biopharma news is gushing these days.

That’s why broader and deeper is the theme for 2021 at Endpoints. You can expect new coverage outside our core R&D focus, with deeper reporting in some key areas. When John Carroll and I launched Endpoints nearly five years ago, we were wading in waist-high waters. Now we’re a team of 25 full-time staffers (and growing) with plans to cover the flood of biopharma news, Endpoints-style.

Janet Woodcock and Joshua Sharfstein (AP, Images)

Poll: Should Joshua Sharf­stein or Janet Wood­cock lead the FDA from here?

It’s time for a new FDA commissioner to come on board, a rite of passage for Joe Biden’s administration that should help seal the new president’s rep on seeking out the experts to lead the government over the next 4 years.

As of now, the competition for the top job appears to have narrowed down to 2 people: The longtime CDER chief Janet Woodcock and Joshua Sharfstein, the former principal deputy at the FDA under Peggy Hamburg. Both were appointed by Barack Obama.

Fast on Glax­o­SmithK­line's heels, Au­rinia wins OK to steer a sec­ond lu­pus nephri­tis drug straight to the mar­ket

GlaxoSmithKline’s Benlysta isn’t alone in the small circle of approved lupus nephritis drugs anymore.

Little Aurinia Pharmaceuticals has gotten the green light from the FDA to start marketing its first and only program, voclosporin, under the brand name Lupkynis — something CEO Peter Greenleaf says it’s been ready to do since December.

Regulators went right down to the wire on the decision, keeping the company and the entire salesforce it’s already assembled on its toes.

Charlie Fuchs, Roche and Genentech global head of product development for oncology and hematology (Yale Cancer Center)

Yale can­cer spe­cial­ist Char­lie Fuchs tapped as new glob­al de­vel­op­ment chief for Roche/Genen­tech

Roche and their big sub Genentech have just recruited a top cancer specialist at Yale to head up global product development in oncology and hematology.

I just got word that the pharma giant, which leads one of the most active cancer research operations in the world, recruited Charlie Fuchs, director of the Yale Cancer Center and physician-in-chief of Smilow Cancer Hospital. He’ll join the global operation March 1 and will be based in South San Francisco, where Genentech is based.

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Jonathan Weissman (MIT)

Can a new CRISPR tech­nique un­lock the se­crets of how can­cer spreads?

Jonathan Weissman’s team watched the cancer cells spread across the doomed mouse. Engineered with a bioluminescent enzyme, they appeared in scans first as a small navy blue diamond lodged near the heart; a week later, as a triangle splayed across the mouse’s upper body, with streaks of green and two distinct bright red hubs of activity. By day 54, the mouse resembled a lava lamp.

The images would have been familiar to any cancer biologist, but they didn’t actually tell you much about what was going on: why the cancer was metastasizing or which cells were responsible. For that, Weissman’s team had designed a new tool. Inside the original navy blue diamond, they had engineered the microbiological equivalent of an airplane’s black box — a “molecular recorder” that, after the mouse’s death, could allow them to extract the cells and wind back intimate footage of a single cancer’s ascent.

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Kimberly Smith, ViiV R&D chief (ViiV Healthcare)

Af­ter sting­ing FDA set­back, Glax­o­SmithK­line's Vi­iV fi­nal­ly notch­es US ap­proval for long-act­ing HIV in­jec­tion

GlaxoSmithKline’s HIV unit ViiV was dealt a stinging loss back in late 2019 when the FDA slammed the brakes on its application for a once-monthly injection based on manufacturing issues. Now, with that roadblock in the rearview, ViiV has finally made good on its promise to change the HIV game.

The FDA on Thursday approved ViiV’s Cabenuva (cabotegravir and rilpivirine) as a long acting, once-monthly therapy for HIV-positive adults who are virologically suppressed and on a stable antiviral regimen.