Semper Paratus (NASDAQ:LGST) has entered into a definitive agreement to combine with Tevogen Bio at an enterprise value of $1.2 billion.

Warren, New Jersey-based Tevogen is developing a treatment to boost the immune systems of COVID patients undergoing cancer treatments or that have other comorbidities.

The combined company is expected to trade on the NYSE under the symbol “TVGN” once the deal is completed in the fourth quarter of 2023.

Transaction Overview

Semper Paratus has an estimated $10.4 million in its current trust after seeing 93% of shares redeemed in an extension vote that pushed its transaction deadline to December 15, 2023.

It has not yet attached additional committed funding, but the SPAC has agreed to make commercially reasonable efforts to secure a PIPE of $35 million to $60 million. Semper Paratus must maintain at least $25 million in cash available in order for the deal to close.

Tevogen shareholders stand to earn up to 20,000,000 additional shares through an earnout. These are to be dispersed in equal thirds should company stock trade with a VWAP at $15, $17.50  then $20 for 20 of 30 trading days within three years of close.

Semper Paratus’ sponsor can earn up to 4,500,000 shares divided up with terms that mirror those of the company earnout.

Both sides have agreed to a one-year lock-up, but Semper Paratus’ sponsor may be released early should the company trade at or above $12 for 20 of 30 days at least 150 days out from close.

Quick Takes: This is the latest SPAC deal to follow quickly on the heels of a sponsor takeover and with a familiar name to boot.

On May 9, Semper Paratus’ sponsor announced that it had sold 7,988,889 Class A shares and 1,000,000 private placement units to SSVK Associates for $1 in total. The SPAC would also take on a $151,000 loan from Polar Multi-Strategy Fund to be repaid with 151,000 ordinary shares at close.

All and all, this was a sweet deal for the incoming investors who were only required to pick up the tab on the SPAC’s D&O insurance and other expenses through close, and the newcomers were allowed to pick a new management.

Leading the new team as of a June 7 8-K is CEO Surendra Ajjarapu who has been busy having helmed SPACs towards four deals so far this year.

First, Aesther Healthcare, which he chaired since its IPO, closed its combination with Ocean Biomedical (NASDAQ:OCEA) in February. He was then appointed as CEO to both OceanTech I (NASDAQ:OTEC) and Kernel Group (NASDAQ:BIOT) following sponsor takeovers similar to this one.

Both of these swiftly announced deals after the management transitions, OceanTech I with biotech firm Regentis and Kernel with air mobility firm AIRO. The latter of these seemed somewhat outside of Ajjarapu’s expertise, but AIRO is run by the same executive chairman and co-founder as Ocean Biomedical, Chirinjeev Kathuria, so the connections were there.

Connections or not, Ajjarapu accomplished another quick turnaround with Semper Paratus since landing in the captain’s chair three to seven weeks ago. Although he didn’t choose this latest SPAC’s name, the shoe does seem to fit as Semper Paratus is Latin for “Always Ready”.

In Tevogen Bio, Ajjarapu seems to have found a heavily discounted asset in the bargain aisle. Just last year, Tevogen locked in a $4.25 billion valuation in a March 2022 Series B led by HMP Partners, according to a May 2023 investor presentation.

Critics of SPACs frequently cite some eye-watering valuations in deals as an evidence of some excesses in the cycle. But, it’s hard to shake a stick at a -71% valuation slash from the outset.

One thing likely contributing to this drop, however, is the timeliness of Tevogen’s realm of study. The company’s main drug candidate TVGN-489 uses the body’s T cells to boost its immune response for high-risk patients potentially or already infected with COVID-19.

It believes this therapy can mitigate symptoms, prevent reinfection and ward off Long COVID. So far, clinical trials have merely demonstrated that TVGN-489 has no toxic side effects, but trial patients have also thus far reported no COVID re-infections or Long COVID symptoms.

Tevogen plans to initially study the TVGN-489’s effectiveness as a direct treatment for COVID and Long COVID among those with compromised immune systems, advanced age or genetic predispositions. But, it plans to also study a slightly different formulation’s  effectiveness in boosting the body’s immune system for sufferers of multiple sclerosis and several cancer types.

Its existing funding has gotten it to the doorstep of further trials, but it expects it will need public and or private funding to proceed with further trials. And, while the sense of urgency around COVID may have dissipated, the financial opportunity for Tevogen has not.

This is particularly the case if the company could be found to have a go-to treatment for COVID infections among the vulnerable and an ongoing treatment for Long COVID sufferers.

ADVISORS

• Tevogen Advisors:
  • Hogan Lovells US LLP is serving as legal counsel
  • KPMG LLP is serving as auditor
• Semper Paratus Advisors:
  • Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC is serving as lead capital markets advisor
  • Nelson Mullins Riley & Scarborough LLP is serving as legal counsel
  • Marcum LLP is serving as auditor