Ligand takes a crack at a SPAC to buoy spun-off antibody discovery business

Ligand Pharmaceuticals was ready to spin off its antibody discovery wing into a new company when special purpose acquisition company Avista Public Acquisition Corp. came knocking. 

So now, a month after slicing off OmniAB, Ligand is pushing the independent venture onto Wall Street via SPAC. Ligand announced the deal with APAC Thursday, which will fund the antibody spin-off with an expected $850 million pre-money valuation.

The formal plan comes a month after Ligand announced plans to break out the unit into a new company, which focuses on using transgenic animals to generate human antibodies. In an earnings report last month, the company said the original idea was to have OmniAB launch an IPO on its own, but ultimately settled on a direct spin-off so that the separation could happen sooner.

Ligand CEO John Higgins said Avista Capital Partners, sponsor of APAC, approached the company with an offer for the SPAC merger as the spin-out was in progress. As part of the agreement, Avista will invest $115 million while Ligand will contribute $15 million of its own cash. The new company will be led by Ligand President and COO Matt Foehr. 

“OmniAb’s merger with APAC and its subsequent status as a standalone public company will help propel the company toward a new phase of growth and value creation,” said APAC CEO David Burgstahler. 

The deal comes as the general appetite for SPACs has declined amid a cratering public market for biotechs. As a result, companies are likely playing it safe on SPAC deals, Otello Stampacchia, CEO of VC firm Omega Funds, said in a February interview with Fierce Biotech. 

“I do get the feeling people are being a little bit more, shall I say, realistic and pragmatic maybe about this,” he said. 

But Ligand offers a critical ingredient for successful biotechs: experience. OmniAB is currently partnered with over 55 other pharmas and biotechs, including Johnson & Johnson and Genentech, and has more than 250 programs in development or commercialized. In the earnings report last month, Higgins touted OmniAB as having its “most prolific year ever” after nine antibodies derived from the platform entered the clinic in 2021. 

Moving forward, Foehr will shed his president and COO titles in exchange for CEO as he takes the helm of the new venture. OmniAB is also hiring Kurt Gustafson as chief financial officer after he held the same role at oncology-focused Halozyme Therapeutics.