Panacea Acquisition is a special type of holding company designed to acquire operating companies in the biotechnology space.
As a special purpose holding company (SPAC), the company has no operations other than a plan to go public with the intention of acquiring or merging with a company using the proceeds of its initial public offering (IPO). SPAC’s are sometimes referred to as “blank check” companies. In general, SPAC management has 18-24 months to identify a target and complete an acquisition.
The company’s sponsor is an affiliate of EcoR1 Capital, LLC (“EcoR1”), an investment firm with over $1.8 billion in regulatory assets under management as of January 1, 2020. EcoR1 was established in March 2013 by Oleg Nodelman and is focused on therapeutic companies within the biotechnology sector.
The World According to Panacea Acquisition
According to its public filings with the Securities & Exchange Commission (SEC), Panacea believes biotechnology companies have experienced a period of unprecedented innovation driven, in part, by a surge of novel therapeutics. From EcoR1’s launch in early 2013 through 2019, the Nasdaq Biotechnology Index has appreciated over 160%, just outpacing the strong period of growth of the S&P 500 at 125%. This continued growth has largely been driven by fundamental innovation that has advanced clinical practice and made a difference in the lives of patients. Since 2013, over 280 novel chemical entities have been approved by the FDA, some of which include the first time a treatment has been available for a particular disease or disorder.
As larger pharmaceutical companies have shed their internal research and development programs, smaller biotechnology companies continue to be a key driver of innovation and new drug development for the industry. In 2019, 28 biopharma companies were acquired by large pharma or big biotech for a total value of nearly $200 billion, up from $140 billion in 2018. In 2019, the global biotechnology market represented approximately $588 billion in revenue and is estimated to grow 5% annually to $749 billion in 2024. Disease evolves, and as such, the company believes that continued innovation and the introduction of new therapies will be the underlying driver of growth for the overall biotechnology sector.
Panacea believes that life sciences companies, at a certain stage in their development, will see material benefits from being publicly traded, including greater access to capital, more liquid securities and increased awareness. The U.S. public markets provide access to the largest global pool of institutional capital, funding innovation and ultimately new medicines for patients. In 2019, over $25 billion was raised in the U.S. public equity markets for biotechnology companies, including more than $5.8 billion in initial public offerings.
Compared to the more than $33 billion raised in over 330 IPOs by the biotechnology sector since 2013, there has been more than $80 billion raised in private offerings during the same period. As of December 2019, there were approximately 6,300 biotechnology companies globally, only 815 of which are currently publicly traded on a major U.S. stock exchange. Since 2013, over 1,400 biotechnology companies have obtained seed capital and/or Series A financing.
Acquisition Strategy
Panacea’s acquisition strategy is to identify and acquire an untapped opportunity within the biotechnology sector and build a public company. The company describes its management team is well positioned to identify unique biotech opportunities based on its strong networks and experience and its core investment philosophy of identifying companies that are downside protected with outsized potential upside. Its selection process will leverage the relationships of our management team with industry captains, key opinion leaders, respected peers, and our management team’s network of investment banking executives, attorneys, and accountants. Additionally, the company believes that EcoR1’s reputation, experience and track record of making investments in the biotechnology space will make us a preferred partner for potential targets.
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