Market Hyperactivity: Bane of Biotech Dealmakers?

To SPAC or not to SPAC, that is the question

There’s an unprecedented amount of capital available for biotechs and entrepreneurs in the biopharma industry today. The question is less whether a company can get funding and more what kind of funding they should pursue.

This session was moderated by Rachna Khosla, Vice President Business Development at Amgen, and included speakers from Bain Capital, Jasper Therapeutics, Goldman Sachs and Abingworth Management.

The panel spent most of their discussion teasing out the differences between going public via an IPO or via SPAC. Key differences include speed, shareholder base size, disclosure and diligence requirements, complexity, and marketing. Before choosing, companies must carefully evaluate the risks and benefits of each outcome.

For example, a SPAC goes faster, involves less risk on price and, if it is a well-regarded SPAC, can be a big vote of confidence. However, for the biotech management team, a SPAC is a more detailed and complicated process than an IPO and requires a great deal of reactivity. It’s also important to decide if a broad or more concentrated shareholder base is better.

That said, as Adam Koppel, Managing Director, Life Sciences at Bain Capital, commented, “Once you’re six months to a year in, I can’t really tell the difference between a company, once they’re public, that has gone through the SPAC vs IPO process.”

As for the future of SPACs, the panel’s conclusion was that they’re here to stay, though the numbers will likely come down some – and that’s a good thing.

Koppel summed it up well, adding,

Source: BIO Digital 2021