- Cerevel Therapeutics, a biotech firm spun out from Pfizer two years ago, will go public through an unorthodox and high-value merger with a blank-check company, taking advantage of a boom in such deals over the first half of this year.
- The merger, announced Thursday, is expected to raise $445 million for Cerevel, which is developing an ambitious slate of medicines for neurological diseases like Parkinson's, schizophrenia and epilepsy. Five of its drugs are in clinical testing, with one already in late-stage development.
- Led by well-known biotech executive Tony Coles, Cerevel was built around Pfizer's neuroscience research, which the pharmaceutical giant wound down in early 2018. Funding from Bain Capital got Cerevel off the ground, while Pfizer retained a 25% stake.
Biotech companies have found investors to be eager backers of their research ambitions this year, even amid the economic fallout of the coronavirus pandemic. Forty-one biotechs have launched initial public offerings in 2020, one-third more than had done so by the same point in 2019.
Seeking cash to fund its drug development plans, Cerevel took a more unusual approach, turning instead to a special purpose acquisition company, Arya Sciences Acquisition Corp II. As the name suggests, these so-called SPACs raise funds specifically with the aim to acquire or merge with another company, at which point the combined firm takes the place of the SPAC on a public stock exchange.
More than 50 SPACs have been created this year, raising a record $21 billion for private company takeouts, including deals involving electric truck-maker Nikola, sports-betting company DraftKings and the health services firm Multiplan.
Arya Sciences, which is sponsored by the hedge fund Perceptive Advisors, has already raised $150 million, and expects proceeds of some $320 million from a wide range of healthcare investors as a result of the Cerevel deal.
Investors include Fidelity, T. Rowe Price and RA Capital, as well as existing Cerevel shareholders Pfizer and Bain.
The merger, expected to close in the fourth quarter, will result in a combined company that's expected to be worth around $1.3 billion. Cerevel's management team, including CEO Coles, will continue to lead the new firm, which will trade on the Nasdaq stock exchange under the ticker CERE.
At a value of $445 million, the deal is among the largest go-public transactions for biotech in recent years, behind the IPOs of companies like Moderna, Genmab and Legend Biotech.
Cerevel's lead drug is an experimental treatment for early- and late-stage Parkinson's disease. This January, Cerevel launched a Phase 3 development program for the drug, which will include three trials and is expected to yield results by 2023.
Nearer term are two earlier-stage drugs for schizophrenia and epilepsy, for which Cerevel anticipates data next year and in 2022.
While development of those three compounds will account for much of the money Cerevel is raising, the biotech is also advancing drugs for substance use disorder and apathy related to Alzheimer's disease.