Humacyte, a Durham biotech firm with Duke ties, valued at $1.1B after going public
Humacyte, a Durham-based biotechnology company trying to make universally implantable bioengineered human tissue, is going public at a valuation of $1.1 billion.
The biotech company, however, is not going public via the traditional initial public offering model.
Instead, the company is entering into an agreement with Alpha Healthcare Acquisition Corp., a special acquisition company, or SPAC.
SPACs, which are sometimes referred to as blank-check companies, have become one of the trendiest financial vehicles on Wall Street in recent months.
Essentially, a SPAC is a pool of money raised by investors to be used to buy a private company and take it public. Nearly 300 of these companies are on the prowl, with about $90 billion in cash to use, according to a recent analysis by The Wall Street Journal.
The model allows private companies to earn a big pay day for their investors, while skipping some of the rigorous scrutiny that comes from a traditional IPO model.
Other companies that have gone public using this method include the DNA-testing company 23andMe and the financial technology company SoFi.
Humacyte’s SPAC deal will also include $175 million in committed financing.
Company with Duke connections
Humacyte was founded in 2004 by a Duke University researcher, Laura Niklason, and two of her former Duke students, Juliana Blum and Shannon Dahl.
The company now has 130 employees, and one of its most promising products are bioengineered blood vessels that could be used in patients with end-stage renal disease.
The biotech company was the seventh most valuable startup in North Carolina in 2020, according to a News & Observer analysis. The company had previously raised more than $400 million from investors, and it sported a valuation of $450 million after its last investment round in 2018, according to PitchBook.
Niklason, who is an adjunct professor at Yale University, took over the helm of the company last November, having previously been its chief science officer. She said she splits her time between the Triangle and Connecticut.
She will remain the company’s CEO after the SPAC, and the company will trade on the Nasdaq Capital Market exchange under the ticker “HUMA.”
Shares of the now-combined companies started at $10, but had gone up to $12.85 per share by the end of the day’s trading.
Niklason said in an interview that after raising so much money from investors, Humacyte had been weighing whether to file for an IPO or explore a merger with a SPAC.
“Humacyte has been very fortunate. We have had a really committed group of sophisticated investors, and we have raised nearly half a billion dollars in private capital,” she said.
That large investment had driven the company’s science forward and allowed it to build its own manufacturing team, she said.
“But given all that, we felt it was time to take the next step as we prepare for commercialization to access public markets,” she added. “We had considered both routes simultaneously.”
The company talked with several different SPACs before ultimately deciding on working with the Alpha Healthcare team, which Niklason liked because of its previous work taking the dermatology-focused biotech company DermTech public via a SPAC.
Ultimately, Niklason believed the SPAC route would help it build clearer expectations with the people who would own equity in the company.
“Humacyte is a transformational tech company. There’s nothing else out there like us,” she said. “We benefit from speaking with investors for a long period of time. During an IPO road show, those conversations are highly compressed. ... You can have more thorough conversations with a SPAC.”
Ongoing trials
Humacyte plans to use its new capital to bring its most advanced products to the market.
The company has two Phase 3 trials ongoing, one related to vascular repair in trauma patients and another using its blood vessels to help patients with end-stage renal disease receive hemodialysis.
Niklason said her company would have the results of those trials next year and could potentially file applications for use with the U.S. Food and Drug Administration in 2023.
Humacyte also has some early-stage trials looking at the effectiveness of its regenerative tissues in heart bypasses and pediatric heart surgeries.
That will require Humacyte to expand its operations in the Triangle.
“I do think we are going to grow the team,” she said, both on the manufacturing side of things as well as other areas, like finance, sales and engineering.
She added that the Triangle’s access to talent and low cost of doing business will aid the company’s growth.
“There is so much expertise here and it is broad. It is not just in niche-y areas,” she said. “The cost of doing business is also a lot more attractive than Boston or the Bay Area.”
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published February 17, 2021 at 11:30 AM.
