Blockbuster Year and Bright Horizons for SPACs

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Oct 13, 2020, 08:30 ET

NEW YORK, Oct. 13, 2020 /PRNewswire/ -- The year 2020 has already seen 127 SPAC IPOs, which have collectively raised over $48.5 billion in proceeds — more than the past ten years combined. A special purpose acquisition company (SPAC) is essentially a blank-check company formed to raise capital through an IPO with the sole intent of buying or merging with another operating company. SPACs have evolved to become an expedited and cost-effective way of doing an M&A deal and have been utilized by multiple Wall Street heavyweights. Going public via a SPAC enables a company to get a deal done in weeks instead of months, and the approach is proving to be an especially attractive vehicle for biotech companies by providing ready access to capital and much greater public visibility. A successful biotech SPAC hinges on shrewd management and a target company that offers a strong risk/reward proposition, is focused on unmet medical needs, and has proven scientific and clinical leadership. After evaluating over 50 companies to meet these criteria for success, KBL Merger Corp. IV (NASDAQ: KBLM) entered into a definitive merger agreement with 180 Life Sciences Corp. (180 Profile), which is expected to close within one month. 180 Life Sciences represents a new business model in biotech. The company is founded and run by four world-renowned scientists and entrepreneurs who invested their own money to start the company. Of considerable note: the founders own the majority of the equity in 180 Life Sciences and aren't selling any in this transaction. Immatics N.V. (NASDAQ: IMTX) received proceeds of around $250 million in a biotech SPAC business combination. Immunovant Inc. (NASDAQ: IMVT), a biopharmaceutical company, went public via a SPAC business merger, and four months later, the company was able to raise $134 million in a new public offering. AdaptHealth Corp. (NASDAQ: AHCO), the third-largest distributor of home medical equipment in the United States, also went public via a SPAC business merger in July and has appreciated 50% since. After raising $1.1 billion, a business combination is expected this month between Churchill Capital Corp III (NYSE: CCXX) and MultiPlan Inc., a market leader in health-care cost-management solutions. It's already been a heck of a year for SPACs, and some say the best is yet to come.

SPACs offer new method for IPOs and M&As.
SPACs have attracted big names and big money.
SPACs work well for biotech — quick access to capital and high visibility.
180 Life Sciences Corp. is anticipated to merge before year end, expectations high for success.

Click here to view the custom infographic of the 180 Life Sciences Corp. (NASDAQ: KBLM) editorial.

SPAC Attack

The flurry of SPACs this year is a reaction to a multiplicity of long simmering factors. The traditional IPO process is inherently costly, cumbersome and risky. Most companies follow the traditional IPO process, but it's an expensive and extensive process. After months of negotiations, due diligence and road shows — bankers price the IPO and then a block of shares are sold at the set price to institutional investors — not everyone ends up pleased with either the pricing or the process.

It only took a few high-profile SPACs led by big names to show investors and companies that there are faster and simpler ways to go public other than a conventional IPO, especially during these uncertain times of COVID-19. SPACs are proving to be a good option for companies looking to go public, especially in the biotech arena. SPACs allow companies to get financed and reach the public market quicker. SPACs have also traded well, many delivering outsized returns, bolstering both investor confidence and demand.

Perfect Target

KBL Merger Corp. IV is the fourth SPAC run by CEO Marlene Krauss, MD. She's a pioneer in the field, completing her first SPAC in 1998, and is a member of an elite group of only three women, including herself, who have served in the capacity of SPAC CEO and chairperson. She was also one of the first people to obtain both an MD degree and MBA degree from Harvard, and she's one of the few physicians to lead a SPAC. Through her unique combination of intimate knowledge and shrewd experience, she was able to find and fund Summit Autonomous Inc., which manufactures Summit Technology excimer laser, the first laser to be approved by the FDA for LASIK refractive eye surgery. The advent of LASIK created a new industry and a much-improved standard of care. Summit, now a subsidiary of Novartis, was sold to Alcon for $893 million. Krauss's devotion to improving lives by improving health-care solutions has led to the transaction with 180LS. Krauss and her team closely evaluated and discarded more than a dozen companies before finally selecting 180LS to merge with KBLM.

That company — 180 Life Sciences Corp. — was started by four world-renowned scientists and entrepreneurs who invested their own money to start the company. These same distinguished biomedical pioneers were the first to successfully develop new anti-inflammatory drugs in the late '90's, drugs such as the anti-TNF biologics and the anti-integrin inhibitors. These drugs are still on the market, generating multiple billions of dollars per year in sales; in addition, they have spawned a new class of therapeutics to treat inflammation. The talent and genius at 180 Life Sciences is now focused on creating the next generation of innovative anti-inflammatory drugs to inhibit the ravages of chronic inflammation and provide relief for millions of patients with inflammatory disease.

Expectations are high for 180 Life Sciences (180LS) since the founders have all succeeded at this before: developing large-market novel drugs that were sold to big pharma for multiple billions of dollars. Now they're aspiring to do it again — but in their own unique way. They've minimized both the risk and the cost typically associated with biotechnology by creating a collaborative system of basic science and clinical trials conducted simultaneously at three major universities across the globe: Stanford University, Hebrew University and Oxford University. The international collaboration between this cadre of scientific luminaries and the effective sharing of programs and platforms developed through decades of research and clinical development has resulted in the creation of 180LS with three drug platforms at various stages of clinical development.

The company's primary targets are fibrosis and inflammation using anti-TNF therapy, which suppresses the immune system by blocking the activity of a substance in the body that can cause inflammation and lead to immune-system diseases. The Fibrosis & Anti-TNF program based at Oxford University is completing phase 2b/3. This program is led by Jagdeep Nanchahal, a surgeon-scientist running the phase 2 trials, and Marc Feldmann, a world-renowned immunologist and a pioneer of anti-TNF therapy. Preclinical studies in liver fibrosis and nonalcoholic steatohepatitis (NASH) are set to begin in late 2020. Two additional clinical programs are projected to start Q3/4 2021 with a grant awarded by the UK's National Institute for Health Research.

The other two preclinical programs are Inflammatory Pain, directed by Raphael Mechoulam at the Hebrew University in Israel, which is focused on discovering novel compounds to treat chronic inflammatory pain; and A7nAChR, which is led by Lawrence Steinman and Jonathan Rothbard, MD, seeking to develop a treatment for ulcerative colitis in ex-smokers by targeting the a7nAChR, a nicotine receptor in the body and a central factor in the body's method of controlling inflammation. James N. Woody, MD, PhD, is CEO of 180LS and was instrumental in the discovery of Remicade, the first anti-TNF blockbuster, as chief scientific officer at Centocor. Woody previously founded Avidia and Proteolix, both of which were subsequently sold to Amgen, and also served as general manager of Roche Biosciences, the former Syntex Pharmaceutical Company.

This unique global collaboration of scientific pioneers and biomedical entrepreneurs mitigates costs and risks while maximizing opportunities for 180LS. The team's cumulative experience, acumen and respect from big pharma enhances opportunities for developing drugs to commercialization as well as increased opportunities for licensing and joint ventures.

Bringing Opportunity to Fruition

It's often said that opportunity and convenience seldom walk hand in hand. In fact, to bring opportunity to fruition is never convenient — it requires hard work, intelligence and diligence. Due to the vision and diligence of Krauss, 180 Life Sciences is slated to merge with KBL Merger Corp. IV soon, obtaining capital to press its mission to completion. This is an opportunity to potentially affect the trajectory of treatment protocols for millions of patients with untreatable inflammatory disease and these vast unmet medical needs may soon have new solutions created from the hard work and the brilliance of the collaborative team at 180 Life Science. For investors, it's also an opportunity to participate in what may become a potential blockbuster drug spawned from a SPAC. It's been a heck of a year, and the best may be on the horizon.

SPAC Success

Immatics N.V. (NASDAQ: IMTX), a clinical-stage biopharmaceutical company active in the discovery and development of T cell redirecting cancer immunotherapies, went public through a business combination with Arya Sciences Acquisition Corp., a SPAC sponsored by Perceptive Advisors. Proceeds from the transaction were approximately $250 million. Immatics is developing targeted immunotherapy candidates based on its suite of technologies that enables the identification of otherwise inaccessible intracellular protein targets displayed on the cell's surface. Accessing these targets is generally recognized as an important key to unlocking hard-to-treat cancers.

Immunovant Inc. (NASDAQ: IMVT), a clinical-stage biopharmaceutical company focused on enabling normal lives for patients with autoimmune diseases, went public via a SPAC business merger in December 2019. Once public, the company was able to raise $134 million in a public offering priced at $14.50 a share, and the stock just hit $38.50. Immunovant is developing IMVT-1401, a novel, fully human anti-FcRn monoclonal antibody, as a subcutaneous injection for the treatment of autoimmune diseases mediated by pathogenic IgG antibodies. The company just announced closing of a $200 million public offering

AdaptHealth Corp. (NASDAQ: AHCO), the third-largest distributor of home medical equipment in the country, also went public via a business combination with DFB Healthcare Acquisitions Corp., a special purpose acquisition company. The combined company represented an initial enterprise value of approximately $1 billion and market capitalization of approximately $800 million. AdaptHealth offers a full suite of medical products for both rental and sale, with a focus on respiratory and/or mobility equipment, including CPAP sleep equipment, oxygen equipment, wheelchairs, walkers and hospital beds. The company has created a scalable, purpose-built, and centralized operating platform that optimizes client service and delivery, improves compliance, drives operational and financial efficiencies, and increases enterprise-wide profitability.

After raising $1.1 billion, a business combination is expected on October 8, 2020, between Churchill Capital Corp III (NYSE: CCXX) and MultiPlan Inc., a market leader in health-care cost-management solutions and a trusted partner to over 700 health-care payers in the commercial health, dental, government and property and casualty markets. MultiPlan interprets clients' needs and customizes innovative solutions that combine its payment integrity, network-based and analytics-based services. Churchill Capital Corp III is a public investment vehicle formed for the purpose of effecting a merger, acquisition, or similar business combination. Churchill III was founded by a group of leading current and former business and financial leaders.

This year may well be remembered as the year of the SPAC, representing a new paradigm in IPOs and M&A transactions. If past is prologue, expect even more SPACs in years to come. The ready access to capital and speed to public markets make SPACs attractive vehicles, especially for biotech companies such as 180 Life Sciences.

For more information about 180 Life Sciences Corp., please visit 180 Life Sciences Corp. and see the 180 Life Sciences company presentation.

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