An introduction to the Locust Walk (NASDAQ:LWAC) Acquisition Corporation
An exciting entrant onto the SPAC scene looks to enter the Life Sciences and Biotech field. A particularly interesting field that is experiencing the positive ripple effects through the industry-wide Health upsurge. The LWAC SPAC looks to take advantage of the lack of competition with this latest offering.
Initially opting for a reasonably $130 million upon entering the market, the company ultimately IPO’d with a respectably upsized $153 million on the 7th January 2021. Ultimately closing with an impressive $175 million due to the underwriter exercising its over-allotment option.
A closer look at the standard $10 units reveals a highly attractive buy. Consisting of a single share and a one-third redeemable warrant. Since units split, the share price has been reasonably stable, operating near NAV until the eventual announcement.
Join us as we take a deeper look at the Locust Walk Acquisition Corporation.
Sponsor Analysis & Background
The listed sponsor is the Locus Walk Sponsor LLC with the sole underwriter as Cantor. Although the LWAC SPAC maintains close ties with Locust Walk. The deal flow is expected to enter through a combination of the firm, the upper management and select key members. The Life Sciences and Biotech sector is particularly narrow and networking is truly vital.
As a Global Life Science transaction firm, Locust Walk is extremely well-established and connected through all the key life science geographies. Established in 2008 and with a primary focus on both biopharma and Medtech, the company also maintains some extremely interesting predictions for the future of the sector.
With offices located in Boston, San Fransico, Tokyo and London. Locust Walk has a truly international network and deal flow across Life Sciences around the globe. The company is certainly no stranger to the multitude of transactions that various businesses require as outlined by the following:
It should be noted that there is an increasing trend of US-traded SPACs looking to fund foreign ventures. This is a fantastic opportunity for Investors of the LWAC SPAC. It goes without saying that Locust Walk is in the ideal position to identify perfectly suitable deals.
Sitting as the CEO of the LWAC SPAC, it comes as no surprise that Mr Ehrlich maintains the closest ties with the Locust Walk Partners’ Global Biopharma team. Serving at the sponsor as Senior Managing Director and Head of the department, Mr Ehrlich further compounds this experience with his previous career.
As Managing Director of InterWest Partners, Mr Ehlirch managed to successfully identify and guide a number of companies through the healthcare and information technology VC firm. The most notable involvements are as follows:
- KAI Pharmaceuticals – privately held pharmaceutical acquired by Amgen (NASDAQ:AMGN)
- Biomimetic Therapeutics – BioTech company acquired by Wright Medical Technologies
- InvuitY – MedTech company acquired by Stryker
- Xenon Pharmaceuticals (NASDAQ: XENE) – a biopharmaceutical company
His most notable work before his tenure at InterWest was his extended work at Purdue BioPharma, a private pharmaceutical firm. As the Director of Licensing and Business Development, Mr Ehrlich developed a biologic oncology franchise, establishing and managing collaborations with biotechnology companies, secured licensing for intellectual properties and even maintained commercial operations. v
Sitting as the CFO of the LWAC SPAC. Mr Geffken brings the experience of an executive in the life sciences industry since 1993. Last serving as a Founder and Managing Director at Danforth Advisors. This management consulting firm has operated primarily within the life sciences since 2011.
Through his firm, Mr Geffken has sat in high-level positions across a number of companies, primarily as CFO. Although mainly in the private sector he has operated as CFO of ProMIS Neurosciences (PMN.TO), a biotech company on antibody therapeutics for neurodegenerative diseases.
Since 2013, Mr Geffken has taken an active role in 10 IPO filings and thus assisted in raising around $1 Billion. Currently sitting on the board of a number of highly successful, publically traded biopharmaceutical companies including Windtree Therapeutics (NASDAQ: WINT) and Alcobra Ltd. At Alcobra (publically listed at the time), he oversaw the merger process with Arcturus Therapeutics (NASDAQ:ARCT).
Brian G. Atwood
Chairman of the Board is a suitable position for Mr Atwood. Currently sitting as the Managing Director of Versant Ventures. This highly successfully VC firm was founded by Mr Atwood in 1999 and maintains a strong focus on the healthcare sector. The sheer deal flow through this involvement is unparalleled and has seen Mr Atwood maintain strong connections through a number of companies.
Most recently Co-Founding Cell Design Labs as well as holding the position of President and CEO until the company was acquired by Gilead Sciences. Mr Atwood also sits on the board of a number of highly influential public companies, primarily Clovis Oncology(NASDAQ: CLVS), and Atreca(NASDAQ: BCEL).
Mr Atwood has also experienced a number of acquisitions and is certainly no stranger to the process. As CFO of Cadence Pharmaceuticals from 2006 until its acquisition in 2014. Pharmion Corporation from 2000 till 2008. As we as Trius Therapeutics from 2007 until its 2013 acquisition. His Business development and scalability value is clear through these repeat occurrences.
Elizabeth P. Bhatt
As of 2019, Ms Bhatt has served as the Chief Business and Strategy Officer at the publically traded, Applied Molecular Transport Inc. (NASDAQ: AMTI). This clinical-stage biopharmaceutical company is the beginning of a long list of similar MedTech experience. Previously sitting as the COO as well as Chief Business Officer of Achaogen.
Regardless of the controversy around the Achaogen bankruptcy, Ms Bhatt held multiple positions at the prestigious Gilead Sciences(NASDAQ: GILD). Most probably encountering the LWAC SPAC Chairman, Brian G. Atwood. Her positions at Gilead include VP as well as Senior Director.
Barbara A. Kosacz
Currently, Ms Kosacz serves as the COO and General Counsel of the publically traded Kronos Bio (NASDAQ: KRON), this clinical-stage biopharmaceutical company is clearly aligned with the intentions of the LWAC SPAC. Her focus across the sector is particularly unique, having operated at a Law firm, Cooley LLP, across two stints from 1997 till 200 and then 2002 till 2020.
This firm maintains a reach across both the American and European sector, with Ms Kosacz at the head of the International Life Sciences Practice. This is a culmination of more than 25 years of experience in the field. Assisting clients from early stage startups to larger public companies, venture funds, investment banks, and non-profit institutions.
An exceptional lawyer with a vast and deep understanding of the field. Especially in regards to International relations. Ms Kosacz seems more than just a great addition to the LWAC SPAC but a very specific indication of the potential target and deal flow.
Caroline M. Loewy
Operating primarily on a number of public company boards as well as offering quality strategic advisory services to a number of life sciences companies. Ms Loewy brings more than 25 years of experience within the biopharmaceutical industry.
Having Co-Founded and operated as both CFO and CBO of Achieve Life Sciences from 2015 till 2017. This speciality pharmaceutical company targets tobacco usage across the planet through chemical cessation aids. Her experience far extends past this, having sat as CFO to a number of Life Sciences companies.
- Tobira Therapeutics – 2012 to 2014
- Corcept Therapeutics – 2008 to 2011
- Poniard Pharmaceuticals – 2006 to 2008
Her understanding of the field stems from her extensive experience as a senior biotechnology equity research analyst at Morgan Stanley (2000-2004) and Prudential Securities (1996-1999).
Targeted Sector & Market Criteria
A clear veteran of the Life Sciences sector, Locust Walk is extremely well established across both the Biopharma and Medtech sectors. Having completed over 40 successful transactions, the company has some extremely interesting predictions regarding the future of the industries.
Regardless of the company’s influence across Asia, the LWAC SPAC is focused on U.S and European opportunities. The Life Sciences sector across both landmasses are incredibly large and surprisingly untapped. With positive growth forecast across the upcoming years.
Drivers of change in the healthcare industry include continued technological advancements, population ageing, increased prevalence of chronic disease, and a rise in demand for healthcare products and services due to improved access to healthcare.Deloitte Touche Tohmatsu Limited
Total healthcare spending is set to maintain 5.4% until the year 2028. Ultimately exceeding $4 trillion dollars in 2020. The Life Sciences subsector is the most lucrative within this umbrella. With average deal values growing at a rate of 12% per year.
As of Q4 2020, there were 5200 registered Life Sciences companies in the U.S alone, with a mere 900 publically traded. $60 billion has been privately raised across 2017 till 2020 towards these companies, as opposed to a mere $28 billion through the IPO process.
With an amazing 38% increase in the total amount of Phase 1 and Phase 2 clinical trials, these companies are set to explode in the coming years. And the LWAC SPAC aims to be right there with them!
Deal Flow Analysis
The inclusion of a highly capable company such as Locust Walk gives a lot of varied and impressive past deals to assess. However, it should be noted that the sponsor is fresh to the SPAC industry. Regardless, there exists a multitude of companies that it has assisted through a number of transactions.
Since 2008, Locust walk has assisted in excess of 50 companies. Through means of raising capital, strategic partnerships, equity financings. With a clear focus on growth-orientated companies, Locust Walk is clearly no stranger to the creation of Post Deal value.
A core aspect of both the SPAC and IPO process, Locust Walk is no stranger to concepts such as scalability and business development. As well as highly adept in the MedTech sector and the extremely technical and scientific process required through FDA approvals and Phase 1&2 testing.
Across the long list of previous transactions involving Locust Walk, the following are most applicable:
- Fabrus, Inc. and Senesco Technologies – facilitated a successful merger leading to NASDAQ listing
- Innocoll acquisition by Gurnet Point Capital – assessment process leading to acquisition of NASDAQ listed Innocoll
- Strongbridge Biopharma – multiple buys leading to IPO
- NanoCor and Bayer – valuations, merger negotiations resulting in a merger
- AskBio and Bayer – initial deal discussions, valuation and $4 billion acquisition
- C4 Therapeutics – IPO advisory resulting in successful $210 million NASDAQ listing
LWAC SPAC In Summary…
Although lacking any SPAC-related experience in particular. The LWAC SPAC brings all the necessary tools in order to execute a successful combination. Clearly a very accomplished and experienced team with a very capable sponsor. The deal flow through the LWAC SPAC seems quality.
With an international grasp on the Life Sciences sector, the decision to include both Europe and the U.S in their search is certainly commendable but the decision to disregard their Asian influence is somewhat questionable. One of the most attractive features of U.S-listed SPACs seeking foreign targets is the undervaluation of companies and foreign exchange advantage, this benefit is compounded further through the Asian region (due to generally weaker exchange rates).
Regardless, the Biopharma and Medtech sectors are reasonably available with little competition and multiple options for combination. The decision to approach a reasonably sized target (considering the $175 million trust), as opposed to outright seek a Unicorn, is also a respectable decision.
Instead of hopping across the U.S Marketplace, the Locust Walk Acquisition Corporation has made the intelligent decision to spread its wings and swarm the European Life Sciences industry.