Research Alliance III, a blank-check entity designed by investment firm RA Capital Management, has raised $75 million in an initial public offering for the purposes of merging into an existing biotechnology company.
The special-purpose acquisition company is eyeing a combination with a China-based company in the “drug development and commercialization, diagnostic and healthcare technology and service sectors,” according to its prospectus.
RA Capital has previously raised funds for two SPACs. The first of those, Research Alliance I, merged with Point Biopharma in 2021. Eli Lilly later bought the biotech firm for $1.4 billion in 2023. The second Research Alliance company, funded in 2021, did not find an acquisition partner and liquidated.
Research Alliance III, which sold 7.5 million shares at $10 apiece, began trading Thursday on Nasdaq under the ticker symbol “RACC.” Leading the third blank-check company is RA Capital’s Matthew Hammond, a partner at the investment firm.
The SPAC hiked the number of shares it was offering from the 5 million it originally set out to sell.
SPACs grew in popularity after biotech sector IPOs swelled in 2020 and 2021. Seen by some investors and analysts as a path to the public markets that required less scrutiny but could be completed faster than a traditional IPO, they’ve become less appealing as returns disappointed.
However, the slow pace of biotech IPOs in recent years have brought them back into favor.
“We believe that the current state of the biotechnology IPO market may enhance our ability to locate an attractive target,” the SPAC wrote in its filing.
Nearly a dozen biotechs have priced new offerings since January, but those that have gotten out in a tough market have all had clinical data and raised multiple rounds of venture financing.
Fellow investment firm Cormorant Asset Management priced a $150 million IPO for its third blank-check entity in January. In the past, Cormorant has merged two SPACs into BridgeBio Oncology Therapeutics and Moonlake Therapeutics.
