Therapeutics Acquisition Corp. (TXACU) filed its S-1 yesterday for what we believe will be a highly-anticipated offering. The SPAC market is benefiting from recent successful high-profile combinations and the healthcare industry is gaining investor interest given the universal search for a vaccine. It seems fair to say a top biotech management team should have no trouble raising a $100M SPAC offering in this environment. Further, TXAC is presenting a deal very similar to other recent biotech SPAC’s: Panacea (filed last week) and Arya Sciences II, which upsized its June 5th IPO.
Therapeutics’ deal structure is most similar to Panacea’s $125M offering. Both Units have a 24 month life, include a share + 1/3 warrant, and both have $25M in future equity contributions from their sponsor lined up (Panacea has an FPA and Therapeutics has an IOI). From a team standpoint, however, Therapeutics looks much more like Arya Sciences.
Arya Sciences is backed by Perceptive advisors—one of the most respected biotech hedge funds on the street. The team has exceptional experience in both private and public investments, and was founded 21 years ago by a scientist, Joseph Edelman, their current CEO and Portfolio Manager.
Similarly, Therapeutics is being brought to market by Jefferies and is backed by RA Capital, an equally respected biotech-focused sponsor. The firm has been making investments for 18 years and is also run by a scientist, Peter Kolchinsky. But there is more to it than simply looking for an industry-specific sponsor that was founded by a practitioner. RA Capital’s leadership and transparency demonstrate the firm’s deep interests in the industry beyond investing and it shows in their most recent exits.
Therapeutics is led by Peter Kolchinsky, PhD, who is also the founder and Managing Partner at RA Capital—the sponsor. He is an active board member on multiple biotech companies, a member of the Board of Global Science and Technology for the National Academy of Sciences, an accredited writer, and sits in Boston rather than Manhattan. His best known book, The Great American Drug Deal, expresses his belief that it is the insurance industry that is to blame for drug pricing much more so than the drug companies themselves. He is a virologist with a PhD from Harvard, and has been on social media about his expectations for next steps in the world’s fight against Covid-19.
RA Capital uniquely has a team of scientists publish publicly available maps of diseases that analyze data from a variety of sources to anticipate scientific breakthroughs and the impacts they will have on stakeholders. They call it “TechAtlas”. To those of us who are not medically savvy, each map seems about as complex and useful as an ant-farm, though they serve as a testament to Peter & Co’s dedication to identifying where the next cure is likely to come from.
According to their website, the team has been successful in identifying high-value assets in the private markets with 62 successful exits. Further, the S-1 highlights how several of their exits in the last year were to big pharma companies—a confirmation of their evidence-based investment process.
The deal is for $100M with an IOI from the sponsor for $25M, so Jefferies can potentially sell less than $100M and the SPAC community could see another exciting first-day of trading. The 1/3 warrant seems appropriate since it is in-line with Arya Sciences II and Panacea’s IPO unit.
Summary of terms below: