No SPAC slack as more shell companies targeting biotech buys hit Wall Street

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Investors who back a special purpose acquisition company are essentially trusting the shell company’s management team to make the right bet. (diegograndi)

The SPAC attack is not abating. This week alone, Foresite Capital’s second special purpose acquisition company raised $175 million in its IPO, while two other biotech SPACs—European Biotech Acquisition and Frontier Acquisition—filed to raise a total of $300 million in their Nasdaq debuts. 

The news comes the same week that Humacyte, a regenerative tissue developer, went public via the SPAC route and two weeks after 23andMe did the same by combining with Richard Branson’s Virgin Group. 

RELATED: 23andMe intertwines with Branson's Virgin Group to go public in $3.5B SPAC deal 

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Also called blank check companies, SPACs are shell companies that go public with the intention of acquiring or merging with another company. Investors who back a SPAC are essentially trusting the shell company’s management team to make the right bet. 

In the case of Foresite’s FS Development II, that’s Foresite CEO Jim Tananbaum, Chief Financial Officer Dennis Ryan and Managing Director Michael Rome, who are on the hunt for acquisition targets in the biotech and life science infrastructure sector, according to a securities filing. The team already has one SPAC deal under its belt: Foresite's first blank check company, FS Development, went public in August 2020 and snapped up Gemini Therapeutics earlier this month. All told, the deal was worth about $216 million, including funds in the SPAC’s trust account and proceeds from a concurrent private round. 

By the Securities and Exchange Commission’s count, this was a speedy turnaround—the agency noted in a recent bulletin that deals in which a SPAC acquires or merges with a private company happen “often many months or more than a year after, the SPAC has completed its own IPO.” 

Frontier Acquisition was founded earlier this year and aims to raise $200 million in its IPO, according to a securities filing. It is incorporated in the Cayman Islands and is led by Rick Gerson, founder, chief investment officer and chairman of Falcon Edge Capital, and Christian Angermayer, founder of Presight Capital and Apeiron Investment Group. 

RELATED: Humacyte takes the SPAC track to Wall Street, raising $275M 

Like Frontier, European Biotech Acquisition, was founded in 2021 and is incorporated in the Cayman Islands. It plans to raise $100 million in its Wall Street debut and is looking for a biotech to acquire specifically in Europe, it said in a securities filing. Martijn Kleijwegt, founder and managing partner of LSP, and Eduardo Bravo, who was previously interim CEO of OncoDNA and CEO of Nordic Nanovector, lead the company.