Cerevel to raise $445M, hit Wall Street via blank check company

Unlike a traditional biotech built around a lab discovery, Cerevel Therapeutics got a “unique” start: with $350 million from Bain Capital and a clutch of central nervous system programs from Pfizer. Now, it’s continuing its unorthodox streak as it taps the public markets.

The company is going public by merging with a public special purpose acquisition company (SPAC) set up by Perceptive Advisors. Also called blank check companies, SPACs are shell companies that go public with the intention of acquiring or merging with another company.

“What SPACs do when they go public is they raise $100, $200, $300 million and then go out and look for something to acquire,” Jordan Saxe, head of healthcare listings at Nasdaq, told Fierce Biotech in a previous interview. “It’s not a reverse merger, but a way for a company to merge into a publicly listed entity, to go public without going through a roadshow.”

It wasn’t Cerevel’s original plan, CEO Tony Coles, M.D., told Fierce Biotech.

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“We had been planning a more traditional route to market of a series B/crossover round, and then an IPO later in the fall,” he said. “The lead investor of the series B happened to be Perceptive Advisors, who were also the sponsors for Arya II, the SPAC. In a strategic conversation with them, we started thinking seriously about trying to do in one step what takes most companies two steps to do.”

Going that route not only meant avoiding the “unknown market risk” of taking a company public, but also that Cerevel would “inherit a very strong, high-quality shareholder base as a result of the investors in the SPAC,” Coles said.

“It’s a group of dream investors any biotech company would want to have,” he added.

After all is said and done, Cerevel expects to have $445 million in the bank to propel its pipeline. The shell company brings with it $150 million, while Cerevel will bank another $320 million from the likes of Bain, Perceptive, Pfizer, Fidelity and RA Capital Management through a private round.

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The cash will push a trio of assets through the clinic, including tavapadon, a dopamine D1/D5 partial agonist that Cerevel is testing in several phase 3 trials on its own and in combination with levodopa in patients with early- and late-stage Parkinson’s disease. The company is also developing CVL-231, a positive allosteric modulator (PAM) of the M4 receptor, for patients with schizophrenia, and CVL-865, a PAM that targets certain subunits of the GABAA receptor, for epilepsy and acute anxiety.

Cerevel will also use the capital to broaden its pipeline programs into “synergistic indications.” This includes testing CVL-231 in patients with psychosis associated with Alzheimer’s disease.

“We think this agent that we are testing in schizophrenia patients could potentially play a role and we expect to explore the possibilities in the months ahead,” Coles said.

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The company is already planning for what comes next behind the programs it picked up from Pfizer. As part of building out its discovery unit, Cerevel teamed up with Cyclica to use the latter’s artificial-intelligence-based technology to ramp up its discovery efforts.

“We think there are sophisticated AI approaches that will complement the standard approaches to drug discovery. What we hope to do is expedite the identification of lead molecules that can be potentially disease-modifying for the diseases we care about,” Coles said. “Partnering with an organization like Cyclica, we believe, helps to catalyze our efforts at novel drug discovery and better understand new mechanisms for these diseases.”