An introduction to the Frazier Lifesciences (NASDAQ:FLAC) Acquisition Corporation
The boom in the Medical and Technology sectors have had rippling effects all across the financial markets. The Life Sciences industry is a very lucrative marketplace with incredible growth potential and scalability. The FLAC SPAC aims to capitalize on this.
Initially seeking $100 million to enter the open markets, the company IPO’d with an upsized $120 million on the 9th December 2020. Ultimately raising $138 million in the Trust. Offering standard $10 units which compose of a standard share and a one-third share warrant.
Since the units split, the company has been performing commendably. But with an extremely narrow targeted sector and a moderately sized Blank Check, the Frazier Lifesciences Acquisition Corporation is yet to make big waves and return decent returns to investors.
Sponsor Analysis & Context
The listed sponsor is Frazier Lifesciences Sponsor LLC. The sole underwriter of the corporation is Credit Suisse. Although not a large sum, the involvement of such a credible book runner is a notable involvement. The primary deal network for the FLAC SPAC is expected to flow through its close relations with Frazier Healthcare Partners as well as its notable Board Members and influential CEO, Jamie Topper.
This is a Seattle-based healthcare investment firm that extends its influence over the pharmaceuticals, healthcare services, & medical products industry. Established in 1991, the company has had a major role with a number of Transformative Healthcare Companies since then.
The company prides itself on its ability to undertake growth buyouts. With its sizeable capital, the sheer amount of Limited Partnerships is staggering, totalling $2 Billion of equity invested across 36 platform investments. Having undertaken in excess of 120 acquisitions.
The firm invests in profitable, lower middle-market healthcare companies with $5-50 million in EBITDA and makes equity commitments ranging from $30-350 million.Frazier Healthcare Partners –Growth Buyouts – 2021
An equity commitment ranging from buyouts, recapitalizations and corporate carveouts that range to $350 million is a considerably smaller company valuation than the potential target of a $140 million Blank Check. Taking a closer look at the Life Sciences focus of Frazier Healthcare Partners reveals an equally impressive history.
Managing around 100 companies within its portfolio. The company has a wide range of experience within the sector. Having overseen over 60 M&A and IPOs as well as helping approve over 30 drugs through the FDA.
The FLAC SPAC could not find more capable hands!
Dr James N. Topper
Sitting as both CEO and Chairman of the FLAC SPAC, Dr Topper is the main figure behind the company. Also sitting as a Managing Partner at Frazier Life Sciences. Having joined the sponsor company in 2003, Dr Topper has pushed his career to new heights through the medical-focused VC.
In his 15 years as Managing Partner, Dr Topper has invested in a multitude of companies across the life science and biopharmaceutical field. His most notable current life science investments are the following:
- Allena Pharmaceuticals – NASDAQ: ALNA
- Alpine Immune Sciences – NASDAQ: ALPN
- Amunix Pharmaceuticals
- AnaptysBio – NASDAQ: ANAB
- Phathom Pharmaceuticals – NASDAQ: PHAT
The vast majority of Dr Topper’s investments have resulted in the selling or merging of the company. This is perhaps a quality hint to the future of the potential target of the FLAC SPAC. Combined with the FLAC SPAC highlighting the value of targeting the liquidity through M&A.
Robert F. Baltera
Sitting as the President and CEO of Cirius Pharmaceuticals since 2017. Mr Baltera also maintains a close relation with Frazier Healthcare Partners in the capacity of an Entrepreneur in Residence. At Frazier, he Co-Founded Hawkeye Therapeutics. This company is focused on in-licensing and developing high-quality assets from pharmaceutical companies.
The list of executive level experience that Mr Batlera offers the FLAC SPAC is certainly very impressive. Prio to his work at Cirius, Mr Baltera sat as the Executive Chairman of Mavupharma from 2015 till 2017. Also sitting as the CEO of Laguna Pharmaceuticals. As well as the CEO of Amira Pharmaceuticals (2007 to 2011), overseeing the company and its eventual sale to Bristol-Myers Squibb.
Mr Batlera also has a considerable amount of experience in many publically traded companies, having held a number of senior management positions. Spending over 17 years at Amgen (NASDAQ: AMGN), ultimately sitting as Senior VP. As well as sitting on the board of a number of Biotechnology development companies such as Organovo Holdings, Inc. (NASDAQ: ONVO) and Xencor, Inc. (NASDAQ: XNCR).
The most notable position of Mr Bigham is the number of high-level positions he maintains at Paratek Pharmaceuticals, Inc. (NASDAQ: PRTK). Since 2014, Mr Bigham has maintained a plethora of prominent positions ranging from Chairman to CEO.
His tenure at Paratek was the culmination of his extremely successful and impressive history. Maintaining more than 25 years of senior leadership experience within the biopharmaceutical industry in particular. One of his longest positions was as General Partner at Abingworth. This highly successful investment group maintains a clear focus on life science and healthcare and grew across 2003 to 2015 with the assistance of Mr Bigham.
Currentlyalso sitting on the board of a number of Life Sciences company both public and private. The following is a select list:
- Adamas Pharmaceuticals – NASDAQ: ADMS
- Inmediata – Board and Chairman
- Avila Therapeutics – Chairman and CEO
- Supernus Pharmaceuticals – NASDAQ: SUPN
- Coulter Pharmaceuticals – President and CEO
- Gilead Sciences – NASDAQ: GILD – Executive VP and CFO
A quality addition to the team at the FLAC SPAC. Dr Gallager has operated as a Venture Partner at New Enterprise Associates since 2014. With an impressive career history spanning 9 years as a director across both the public and private sector, compounded with over 30 years experience within biopharmaceutical companies in particular.
Although currently maintaining a number of roles across a wide array of publically traded companies. It should be noted that Dr Gallagher specialized and began her career through multiple commercial and drug development roles with highly prolific companies such as Amgen (NASDAQ: AMGN), Pfizer (NYSE: PFE) and Biogen (NASDAQ: BIIB).
Most recently holding a number of high-level positions at Equillium, Inc. (NASDAQ: EQ). Sitting as Executive VP since 2018 as well as Chief Medical Officer as of 2020. His other primary investment lays within Goldilocks Therapeutics within the capacity of a strategic advisor.
His ties with the sponsor, Frazier Healthcare Partners extends to the role of Entrepreneur in Residence from 2017 till 2018. Whereas he founded Expedition Therapeutics, a search company focused on identifying and in-licensing assets in the kidney and autoimmune therapeutic areas.
Mr Polu also maintains an impressive history within the public sector, holding the position of Chief Medical Officer at Raptor Pharmaceuticals, a then-public company focused on rare diseases. Having seen the company undergo the acquisition process by Horizon Pharmaceuticals for $800 million.
Other notable public sector history relates to his tenure at CytomX Therapeutics (NASDAQ: CTMX) as Chief Medical Officer. In this position he directed preclinical development and research efforts, even helping secure a number of Pharma partnerships.
Alongside his senior-level positions in Amgen (NASDAQ: AMGN), it is clear to see that Mr Polu maintains a thorough grasp of the corporate positions and multiple responsibilities required throughout both the public and private Life Sciences sector.
Targeted Sector & Market Criteria
The clear focus of the FLAC SPAC is the Life Sciences sector, this coincides perfectly with the scope of the affiliated sponsor. However, the company has been tending towards biopharmaceuticals in recent times, sensing a large gap in the marketplace.
Most recently, the company raised a $617 million Life Sciences fund, referred to as Frazier Life Sciences X. This fund is solely aimed at investments in therapeutics-focused companies developing and commercializing biopharmaceuticals. It seems apparent that the DD during this process has revealed likely targets for the FLAC SPAC.
The FLAC SPAC is seeking a therapeutics-focused business with an aim of advancing medical technologies that could potentially require FDA approval. Further seeking preclinical companies through commercial-stage assets (both pre and post-proof-of-concept stages).
Seeking a target with a clear product focus is certainly a desirable trait when investing in any company, due to the clear milestone in the future. The wide range of medical product speciality of the team extends to oncology, dermatology, orphan diseases and liver disease.
Driven by the strength of the private fundraising environment, we continue to see a profusion of high-quality private companies that forms a large pool of prospective targets.Form S1 – SEC Filings – 2020
The FLAC SPAC has also identified some clear value inflection points in biopharmaceutical focused life science companies. Stating the period of achieving clinical Proof-of-concept (Phase 2 data) or product approval within 3 years of initial investments as a critical characteristic of potential targets.
This highlights a clear opportunity for a SPAC of this valuation upon entering the sector. However, the FLAC SPAC further highlights the fact that a large part of the post-deal value generation is in the targeting of liquidity through M&A. Meaning the exit value of the targeted companies is highly attractive.
Companies backed by Frazier Life Sciences at the pre-IPO or IPO stage have grown to represent some of the largest exits and publicly traded companies in the biotech industry.FLAC SPAC – Press Release – 2020
This leads the FLAC SPAC team to speculate that the current biopharmaceutical market environment remains extremely attractive for our product-focused, designed-for-M&A approach. Although highly likely, not ideal for casual SPAC investors. Due to the potentially volatile post-combination value fluctuations.
Deal Flow Analysis
Frazier Healthcare Partners is one of the most successful Venture Capital firms in the Life Sciences sector. Operating since 1991 the company invests in a number of companies during various stages. Although the vast majority of investments tend towards Series A rounds.
Having maintained over 7 funds and 177 investments. Even a recorded 63 exits are certainly very impressive. A closer look at Frazier’s past investments reveals some interesting trends. Despite the huge upswing in the Medical sector, the company has reduced its Investment capital ranging from $30 to $50 million.
However, the most recent investment the company has made was a whopping Series B into Amunix of $117 million. Not even assuming the position of the lead investor. This particularly interesting company is geared towards discovering, designing, and developing novel biologics, protein, and peptide therapeutics. Primarily aimed at creating cancer medication through revolutionary means.
Although involved with a number of both publically and privately traded companies, the most notable Exits undertaken by Frazier Healthcare partners are the following:
- Iterum Therapeutics (NASDAQ:ITRM) – clinical-stage pharmaceutical company creating anti-infectives
- Gritstone Oncology (NASDAQ:GRTS) – clinical-stage biotech company developing tumour-specific cancer immunotherapies
- Rigel Pharmaceuticals (NASDAQ:RIGL) – small-molecule drugs for the treatment of autoimmune diseases, cancer and metabolic diseases.
FLAC SPAC In Summary…
The process leading to the FLAC SPAC seems to be one that is increasing in frequency. A highly successful and established VC that is looking to play a more intergral part of the IPO process of the company, looking to capitalize on companies set to explode onto the capital market.
There is very little to critisize in regards to the FLAC SPAC. It is clear to see how many potential deals could have already been identified. The oddly specific IPO value of $140 million and the recent involvement of Frazier Healthcare Partners and their $600 million Life Sciences fund heavily insinunates a target laying just underneath the surface.
The largest concern to investors should be the mention of a potential PIPE investment of an undervalued target as well as the “attractive” market quality reflecting the targeting of liquidity through M&A. These qualities are thoroughly assessed by those involved within the SPAC but many investors will be left scratching their heads.
Regardless, the assembled team and prospectus put forth by the Frazier Lifesciences Acquisition Corporation seems like a fantastic opportunity for most. Looking to enter the seriously overlooked Life Sciences sector with a well-established team and thoroughly networked sponsor.