Since the pandemic began, the biopharmaceutical industry has experienced an eruption of activity around special purpose acquisition companies (SPACs). For example, in 2020 some 237 SPACs raised roughly $83 billion. But in just the first two months of this year we saw SPACs raise nearly $70 billion, making 2021 perhaps the year of the life science SPAC. So, we thought gaining the perspective of a biopharma CFO on the topic would be time well spent, as SPACs weren’t always a life science favorite. In the upcoming October and November issues of Life Science Leader, there will be a two-part Q&A with Michael Byrnes, CFO at eFFECTOR Therapeutics, a company (as of this writing in late-August) currently in the process of de-SPAC-ing a May 2021 announced SPAC with Locust Walk Acquisition Corp. (LWAC). Here’s the last question posed accompanied by Byrnes’s response, an appetizer for the educational conversation to come that you will not want to miss by subscribing today.
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Don’t think that a SPAC is an easy process just because you are combining two steps into one. You are combining two tough steps into one, and you have to make sure that the company and the culture is public-company ready. Fortunately for us, the leadership team had held operating roles at other public companies, so we were well equipped and ready to go. It is also helpful to have an executive team that has gone through the M&A process, because there is diligence, there are data rooms, there are lots of discussions, and it can be a lot of work compressed into a short period of time. Doing a de-SPAC (i.e., the process of merging the companies, changing the ticker symbol, and going public) is not for the faint of heart, because there aren’t any tried-and-true playbooks. But when you are pioneering the process, it can be a lot of fun. For executive teams considering a SPAC, beyond making sure your teams are public ready, make sure your board is educated on the process and fully committed. You can dual-track for so long, but once you’ve made the decision to go, you need to be fully committed, because you’re trying to announce the transaction, do a concurrent PIPE financing, file your S-4, respond to SEC comments, and close, all within about four months.