Guess what's SPAC? Ocean Biomedical resuscitates Wall Street play all but dead in 2022

SPACs are … back? It’s surely too early to say whether the Wall Street flex that ran rampant during the market’s 2020 sugar high is fully on the upswing but at least one company is giving it a try.

Ocean Biomedical is merging with Aesther Healthcare Acquisition Corp, a special acquisition corporation (SPAC). The new company unveiled Wednesday is expected to be valued at $345 million. 

After the SPAC route ascended in 2020 and 2021, virtually all biotechs have avoided it this year. In the first quarter, not a single SPAC deal was done as the market cooled off from what many investors considered a slight overheating. According to Evaluate Vantage, the second quarter was the weakest for new biotech IPOs since 2012.

Evidently, Ocean believes it can swim against the tide. The company has three disease areas in its crosshairs, eyeing cancer, infectious disease and fibrosis as initial disease areas.

In cancer, Ocean is developing “several drugs” mainly targeting chitinase 3-like1, a gene that codes for a protein that regulates tumors. The company says its monoclonal and bispecific antibodies targeting the gene have shown an 85-90% reduction in tumor burden in animal models. The company is first targeting non-small cell lung cancer and glioblastoma multiforme, a lethal form of brain cancer, but says the technology could expand to other solid tumors. 

As for the other two disease areas, the company is developing a small-molecule candidate to treat idiopathic pulmonary fibrosis and hermansky-pudlak syndrome. Lastly, the company is working on a vaccine and “therapeutic candidates” to treat Malaria. All told, Ocean says its pipeline is made up of assets that have received a total of $123.9 million in grant funding. In general, Ocean is looking to accelerate science from a duo of Brown University researchers.

The company's CEO is Elizabeth Ng, a former Big Pharma leader who helped run commercial strategy at Gilead before taking on other strategy-focused roles at Merck and BioMarin. The company’s board is made up of an eclectic group of business executives and pharma alum, including former Colorado governor William Owens, former Chimerix CEO Michelle Berrey, M.D., investment banker-turned-serial company director Martin Angle and a previous chairman of the National Wildlife Foundation, Jerome Ringo.

Aesther Healthcare, on the other hand, is relatively unproven, nearing its one-year anniversary since going public for $105 million in September 2021. The company has no full-time employees and said in its annual report that it didn’t expect to have any until making its first transaction. As part of the deal with Ocean, Aesther is equipped with a $40 million backstop from a Cayman Islands shell company, Vellar Opportunity Fund.