BCAC SPAC – Why Cash out and Walk the (Brook)line?

life sciences

Introduction to the Brookline Capital (NASDAQ: BCAC) Acquisition Corporation

Brookline Capital and the BCAC SPAC entered the open markets with a humble offering of $50 million. Considerably smaller than the numbers that we are used to.

As of August 2020, the New York-based firms latest offering has gone reasonably undetected. But the decision to bring such a minuscule amount to the rapidly developing health sector is certainly questionable.

The units consisting of $10 shares and one half of a redeemable warrant are also somewhat concerning for most investors. And faith in the company since Unit splits have certainly reflected that.

BCAC Share Price versus Time

The seasoned investors out there will know that the biggest buys should be made during a dip. But is the Brookline Capital Acquisition Company set to rise? Or is this nosedive plummeting to the ground?

Sponsor Analysis & Background

The listed sponsor is Brookline Capital Holdings LLC, with the sole underwriter listed as Ladenburg Thalmann. For such a sum, joint-book runners would not even be considered. The incredibly close link with the sponsor is a great sign.

Brookline Capital Markets

This New York-based financial company has unbelievably entrenched roots within the American Investing sector. Founded by 3 Wall Street veterans and with incredible ties to some of the largest moneymakers in the industry (Bear Stearns, Citi, Cowen, Credit Suisse, Deutsche Bank etc.).

The company began as a life-sciences focused family office and aimed primarily at early-stage investments. However, the scope of Brookline’s has changed since them.

Having raised in excess of $3.2 Billion in capital across more than 100 transactions. Primarily an Investment bank that spreads across both public and private markets. Further so in Equity research as well as sales and trading operations.

BCAC SPAC Upper Management

Dr. Samuel P. Wertheimer

The Chairman and CEO of the BCAC SPAC. Dr Wertheimer is a well-rounded investor across the healthcare and life science industry. Not only is he an entrepreneur but also a scientist.

Sitting at the parent sponsor, Brookline Capital Markets since 2017 as the Senior Scientific Advisor. In this role, he is tasked with identifying potential investments across the sector. This impressive position requires an incredible resume.

From 2012 to 2016, Dr Wertheimer Co-Founded Poliwogg. The financial services company aimed to innovate the method of healthcare investing.

It was here that Dr Wertheimer created a revolutionary and highly profitable “Medical Breakthrough” index. But his understanding of the sector clearly stemmed from his experience within it.

Previous Health Care investment firm

Serving as a private equity partner at OrbiMed Advisors. This is one of the world’s largest healthcare-dedicated investment firms. Dr Wertheimer was personally tasked with the investing and raising of capital related to 4 separate venture capital funds, totalling $1.5 Billion.

His experience in the open markets is also extremely extensive and comprehensive.

Learn a bit more about Dr. Samuel P. Wertheimer

Scott A Katzmann

The President of the BCAC SPAC also sits as the Co-Founder of Brookline Capital Markets. At Brookline, Mr Katzmann heads the Private Capital Team.

Bringing with him many years of experience within the health and life sciences investing sector. Having previously served as the Senior Managing Director of Opus Point Partners.

As well as sitting as the Managing Director at Paramount BioCapital (1993 – 2011). Mr Katzmann’s experiences within relevant sectors as well as numerous investment banking positions prior to this make him a valuable addition.

Take a deeper look at Scott A Katzmann

Patrick A. Sturgeon

The CFO of the BCAC SPAC maintains more than 2 decaded of experience with mergers and acquisitions in primarily the healthcare as well as numerous other sectors.

Currently sitting as the Managing Director at Brookline Capital Markets. Mr Sturgeons role at the company regards mergers and acquisitions, public financing, private capital raising, secondary offerings, and capital markets.

The company has begun to enter the SPAC sector and Mr Sturgeon maintains a great deal of experience in relation to the acquisition viewpoint from within an SPAC.

His previous financial experience is nothing short of impressive. Serving as Managing Director at Axiom Capital Management (2013-2016). Focusing on mergers and acquisitions at Freeman & Co (2002-2011). And sitting as CFO of Alpha Healthcare Acquisition Corp (check out our article about the AHAC SPAC).

Further information about Patrick A. Sturgeon

BCAC SPAC Key Executives

James N. Hauslein

Mr Hauslein has operated as Managing Director of Hauslein & Company since 1990. However, his enduring experience with this private investment firm has Mr Hauslein in managerial positions across a multitude of companies and sectors.

Since 1987, Mr Hauslein oversaw the acquisition of Sunglass Hut. Leading to the buyout in 1991 and guided the company through the IPO process in 1993. Mr Hauslein actually sat as CEO of the world-renown company across 1997 to 1998 and in 2001.

An info-graphic of the continued success of Sunglass Hut under CEO James Hauslein

Under his leadership, the company grew from a revenue of $37 million in 1987 to $680 million in 2000. Leading to its sale to Luxottica Group.

The sheer amount of SPAC-related experience that Mr James N. Hauslein has been a part of is truly staggering.

  • Atlas Acquisition Holdings Corp – raised $200 million – failed combination
  • Easterly Acquisition Corp – raised $200 million- successful $2.196 billion combination Promotora de Informaciones
  • Freedom Acquisition Holdings Inc – raised $528 million- successful $3.4 billion combinations GLG partners
  • Liberty Acquisition Holdings Corp – raised $1.035 billion – successful $8.0 billion combination Sirius International Insurance Group

Check out James N. Hauslein in detail

Elgar Peerschke

A Chief level executive with a global array of experience that spreads across the US, Europe, and Latin America. Sitting in a variety of Senior Advisory positions as of late.

The most relevant of these positions were at IQVIA, a human data science company. As well as QuintilesIMS, technology services and research for the healthcare industry (later acquired by IQIVA).

Prior to these advisory roles, Mr Peerschke experienced over 20 years in the healthcare sector. Primarily the pharma and biotech subsectors, across a variety of responsibilities.

  • Clinical development strategy
  • Product launch
  • Corporate Merger & Acquisition
  • Growth opportunity
  • Post-merger integration

What else does Elgar Peerschke bring?

Dr Tito A. Serafini

One of the 3 founders of Atreca Inc (Nasdaq: BCEL). The company maintained a developmental stage biotech focus. Having sat as a CEO from 2010 to 2018. Dr Serafini is currently in a reduced capacity as Board Member and CSO.

Perhaps an indication of a likely target

Prior to Atreca, Dr Serafini was the Chief Scientific Officer of Nuon Therapeutics (2009-2011). Following the founding of Renov Inc. At Renov Dr Serafini maintained a very hands-on responsibility of the company. Not only leading scientific research but also overseeing the company’s merger & acquisition department.

Is Dr Tito A. Serafini a good addition?

Target Sector & Market Criteria

The incredibly close link between the BCAC SPAC and the Brookline Capital Markets sponsor ensures the selected target will operate within the health and life science industry.

Brookline has established a strong reputation for financing privately-held life science companies.

BCAC SPAC Press Release 2020

The previous year has seen huge growth across the medical and health-related sectors. The CMS (Centers for Medicare and Medicaid Services) revealed the 2019 spending of healthcare in the US reached $3.7 trillion. That number is set to rise.

Another major contributing factor to these increases is the ageing population. More than 10 000 people turn 65 each day in the US. Combined with the global life expectancy increase, healthcare consumption and spending is set to increase.

The above is standard reasoning for any health sector-related venture. However, the BCAC SPAC highlights the fact that the FDA has seen a 40% increase in the approval of novel drugs across the past 5 years. This trend is linked to the approval of medication in order to treat cancers, genetic disorders, and autoimmune diseases.

An increasing number of early-stage life sciences companies will be formed generating a significant number of acquisition targets

SEC Filings Form S1 2020

Life sciences focused SPACs are actually severely underrepresented. Less than 10% of the total SPAC marketplace. Of the total $9.9 Billion raised through SPAC IPOs, only $170 contributed to the Life Science industry.

This belief lends itself to the majority of high-quality private life science companies that are not looking to be absorbed by large multinationals but rather enter the public markets by themselves.

Don’t trust us? Check it out.

Deal Flow Analysis

Brookline Capital Markets has been a highly successful venture since its conception. Spread across a multitude of sectors, the company focuses on the health and life science industry in particular.

Across its illustrious history, the company has successfully partaken in excess of 100 transactions, raising more than $4 billion since its inception. As an investment bank, the clients have spread across both the public and private sector.

Strong repeat investor interest has translated into repeat corporate clients, which accounts for more than 50% of Brookline’s private capital business.

SEC Filings – Form S1 – 2020

Having successfully executed every step of the IPO process multiple times across its existence. Brookline is the perfect sponsor to support the fledgling BCAC SPAC.

The BCAC SPAC IPO gathering $50 million is especially strange considering the company’s past history with market caps in excess of $2 Billion (PIMCO, BlackRock).

Take a closer look for yourself

BCAC SPAC In Summary…

A solid deal flow through Brookline and an exceptional team with unbelievable experience within the sector. The stars definitely seem to align for the BCAC SPAC.

However, the incredibly reduced IPO (a mere $50 million in trust) for such a “delectable” sector can lead investors to speculate.

Is there a PIPE coming in the near future?

Also the involvement of a half-warrant per unit is never a great sign.

Regardless, the team behind the BCAC SPAC seems quality. The market sector seems to be on the upward trend and set to grow tremendously across the coming years.

Unfortunately, Brookline Capital Acquisition Company leaves a nagging sensation at the back of my mind.

A concerned thought, that I just can’t shake.

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