When Ligand Pharmaceuticals executives first announced plans to spin off the company’s antibody unit as a separate entity, they suggested the company would go for a traditional IPO, but said no. left the door open to other options. The antibody business that Ligand has built goes public, but it will be through a merger.
Ligand’s OmniAb business unit merges with Avista Public Acquisition Company II (APAC), a special purpose acquisition company (SPAC). The agreement announcement After market close Wednesday will inject up to $266 million into the combined company, which will be led by Ligand chairman Matt Foehr. The combined company will be called OmniAb.
The merger comes as traditional IPO activity has mostly ground to a halt due to financial markets affected by investor concerns over supply chain issues, inflation and the impact of the coronavirus pandemic. Russian invasion of Ukraine. But by turning its antibody unit into an independent entity, Ligand is making a longer-term bet on something else: the growing number of antibodies in development around the world. Ligand believes OmniAb is well positioned to participate in a growing share of this antibody development now and collect royalties from these biologic drugs as they come to market in the future.
Ligand, based in San Diego, provides a range of technologies and services that its customers in the pharmaceutical industry use for drug discovery and development. Among these offerings is an antibody discovery platform, provided by Ligand’s OmniAb business, headquartered in Emeryville, California. Ligand added antibodies to its product offering through the 2016 acquisition of Open Monoclonal Technology. OmniAb’s business has grown through additional acquisitions as well as Ligand’s investment in its technologies. The economic model is not that of a service provider. In return for access to its technology platform, OmniAb receives collaboration service fees, milestone payments linked to an antibody’s development progress, and royalties on sales of antibody-based drugs that come to market.
“We have made iterative improvements to our antibody discovery engine and technology stack over time, and this has generally allowed us to increase royalty rates and market share,” Foehr said, according to a transcription of a registration made for investors. “We believe the long-term value of the business is driven by downstream royalty payments as programs progress through development and are approved and launched.”
According to a OmniAb investor presentation, the company currently has more than 55 active partners worldwide. Disclosed partners include Amgen, Genmab, Pfizer, Seagen and Takeda Pharmaceutical. By the end of 2021, OmniAb’s platform had led to two antibodies that are now approved in China, one antibody currently under review by the FDA, 23 that have reached clinical testing and 252 that are in the development stage. discovery. The vast majority of these antibodies, at all stages of development, are intended for indications in oncology.
OmniAb’s main competitor comes from two established antibody discovery players, publicly traded AbCellera and privately held Adimab. The investor presentation shows that AbCellera has 36 active partners covering 78 programs, while Adimab has 95 active partners with 425 programs. OmniAb notes that AbCellera and Adimab do not disclose whether the programs or partnerships reflected in these totals are ongoing or terminated agreements.
Under the merger plan, Ligand will distribute 100% of OmniAb’s equity to Ligand shareholders immediately prior to the combination of this business with APAC. When the transaction closes, Ligand shareholders will own between 75% and 84% of the combined company, depending on the number of shares sold back to the company.
The newly independent OmniAb will receive up to $266 million, including $236 million from the SPAC trust and $15 million each from Avista Capital Partners and Ligand. This total assumes that there are no redemptions of trust shares by ACPA shareholders. The minimum OmniAb will receive is $130 million. Avista agreed to provide up to $100 million to secure SPAC shareholder buyouts; that money will be combined with the $15 million each from Ligand and Avista.
The boards of APAC and Ligand have approved the merger, which is expected to be finalized in the second half of this year. When it does, OmniAb will trade on the Nasdaq under the ticker symbol “OABI.”
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