Humacyte takes the SPAC track to Wall Street, raising $275M

Regenerative tissue developer Humacyte is going public through a special purpose acquisition company, or SPAC, and raising $275 million in the process.

The SPAC, Alpha Healthcare Acquisition Corp. (AHAC), will snap up Humacyte in a transaction slated to close in the second quarter. Under the all-stock deal, the combined company will receive up to $100 million from the SPAC as well as $175 million through a private round. The company will trade on the Nasdaq Capital Market under the ticker “HUMA.”

The SPAC looked at 95 deals before settling on Humacyte, said Rajiv Shukla, CEO of AHAC. It was “by far the best option,” with three phase 3 trials in progress, lots of late-stage data, a platform with various potential applications and in-house manufacturing that can operate at a commercial scale.

The deal comes as Humacyte looks to transition from a late-stage clinical company to a commercial one.

“We had a loyal group of private investors over the years who have also come into this deal, but we felt that now was the time to really tell our story to the rest of the world,” CEO Laura Niklason, M.D., Ph.D., said.

It chose to go the SPAC route rather than carry out a traditional IPO because the process gave the company more time to pitch its technology to investors, she said.Humacyte is developing regenerative human tissues that can be implanted off the shelf in any patient without the need for immunossupressive drugs. Fresenius Medical Care bought into one of its leading programs in 2018, ponying up $150 million for a 19% ownership stake in the company in return for exclusive global rights to Humacyte’s investigational acellular vessel, Humacyl.

The companies hope the Humacyl implants will provide safer and more effective access ports for hemodialysis than current methods using synthetic grafts and catheters that may be prone to infection, or surgical fistulas, which connect an artery to a vein to boost blood flow during dialysis but may fail to mature.

The company is also pursuing work with the Department of Defense to study the vessel’s use in battlefield trauma care. It expects this program to finish phase 3 evaluation ahead of the dialysis program and hopes to file both for FDA approval in 2022. The proceeds from the SPAC private investment in public equity financing will bankroll those phase 3 programs as well as build out several earlier-stage prospects in congenital heart defects, heart bypass surgery and diabetes, Niklason said.

“Because of that differentiated story, we do well when we can talk to investors and explain to them the technology and its potential,” she said. “If we consider the current era with an IPO roadshow that lasts two, three, four, five days where we get one 45-minute meeting with each investor, it really doesn’t do the technology and the company justice.”

Niklason and Shukla think more life sciences companies will follow Humacyte and 23andMe down the SPAC track. Niklason thinks traditional IPOs may be better for companies with stories that can be distilled for those 45-minute investor meetings, while Shukla sees SPAC deals as a way to change up the way companies access the public markets.

“The typical path for some of these companies has been a crossover round followed by an IPO,” Shukla said. “The SPAC process allows companies to skip the crossover and go directly public; it’s more efficient and can save on dilution.”