Introduction
We are an early stage blank check company incorporated as a Delaware corporation formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this Report as our initial business combination or our business combination.
While we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to focus on industries that complement our management team’s background, and to capitalize on the ability of our management team to identify and acquire a business, focusing on the healthcare or healthcare related industries in the United States and Europe. In particular, we intend to prioritize companies in the life sciences and pharmaceutical services sectors where our management team has extensive experience.
Our Founders and Directors
We were jointly founded by Metalmark and Avego, two leading investment firms with a focus on the healthcare industry. Metalmark and Avego (collectively our “Founders”) have a history of collaborating on and evaluating investment opportunities together and have successfully partnered within the healthcare space. Our management team is led by the respective founding partners of Metalmark and Avego, Howard Hoffen and Bala Venkataraman, who serve as our Chairman and Chief Executive Officer, respectively, and Kenneth Clifford, who serves as our Chief Financial Officer. We have hired a President named Vishal Kapoor who has significant life sciences and pharmaceutical services sectors experience to help us source, diligence and complete the acquisition of a prospective target business. In addition, we have assembled a team of industry experts with extensive executive and operational experience at pharmaceutical, life sciences as well as pharmaceutical services companies who will serve as our directors. We believe that the experience of our management team and our relationship with Metalmark and Avego will allow us to effectively source, identify and execute an attractive transaction for our shareholders.
Metalmark is a middle-market, growth oriented private investment firm with over two decades of investing experience in a broad range of industries, with healthcare representing one of its core focus areas. Metalmark was founded by Howard Hoffen, then Chairman and Chief Executive Officer of Morgan Stanley Capital Partners (“MSCP”) and Morgan Stanley Private Equity, to manage the MSCP funds and to employ the same successful investment strategies and approaches to the Metalmark Capital funds. Since 1992, the partners of Metalmark have invested approximately $5.5 billion in over 58 companies and have generated total value of approximately $11 billion on behalf of investment partners.
Avego is a healthcare-only, captive investment firm with $300 million of committed capital from its principals and more than $1.5 billion in value created in this decade. The principals of Avego have founded and backed multiple healthcare companies over the last fifteen years, generating significant returns for their principals and partners. Avego’s expertise and industry contacts allow it to source and evaluate undervalued and high-quality companies that it believes could be ideal acquisition candidates for our initial business combination. Avego’s principals and scientific advisors are passionate about applying their experiences as healthcare executives and investors to formulate long-term strategies for their investment companies that improve the lives of patients and physicians while achieving attractive investment outcomes. Avego’s investment activity is focused on partnering and working closely with management teams to achieve these objectives.
Metalmark and Avego have significant domain expertise within the life sciences industry, having investments in the pharmaceutical, specialty pharmaceutical, and pharmaceutical services verticals and having deep and extensive relationships that enable deal procurement, evaluation and execution. Additionally, they have extensive capital markets and mergers and acquisitions experience with a shared discipline regarding investments and capital prioritization, as well as a “true owners” approach with capital at risk.
Our Directors
Joining our Founders is a team of key opinion leaders and high level senior life sciences executives, who are currently serving on our Board of Directors. The team includes Fred Eshelman, former Chairman and Chief Executive Officer of Pharmaceutical Product Development; Ernest Mario, Chairman of Soleno Therapeutics and former Chief Executive Officer at Glaxo; Peter Dolan, former Chief Executive Officer of Bristol-Myers Squibb; and Glenn Reicin, the Chief Financial Officer at Sigilon Therapeutics, Inc. Our Board of Directors provide valuable guidance, extensive technical domain expertise, value added input regarding senior team leadership capabilities, and have access to differentiated ideas and opportunities through complementary networks to our Founders.
Acquisition Strategy
We believe our management team is well positioned to identify unique opportunities within the healthcare and healthcare-related industries. Certain members of our management team have spent significant portions of their careers working with businesses in the healthcare industry, and have developed a wide network of professional services contacts and business relationships in that industry. Our selection process leverages our relationships with venture capitalists and growth equity funds, executives of private and public companies, as well as investment banking firms, which we believe should provide us with a key competitive advantage in sourcing potential business combination targets. Given our profile and dedicated industry approach, target business candidates are brought to our attention from various unaffiliated sources, and in particular investors in other private and public companies in our networks. Our management team also proactively searches for unique opportunities that are best positioned for our initial business combination. We also believe that our management team’s reputation, experience and track record of making investments in the healthcare space make us a preferred partner for these potential targets.
Acquisition Criteria
We have identified the following criteria to evaluate prospective target businesses. We may however, decide to enter into our initial business combination with a target business that does not meet these criteria. We currently intend to seek to acquire companies that we believe:
We may use other criteria as well. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that from time to time our management team may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this Report, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
In evaluating a prospective acquisition candidate, we conduct a thorough due diligence review which encompasses, among other things, meetings with incumbent management, investors and employees, document reviews, inspection of facilities, as well as a review of scientific, regulatory, operational, financial, legal and other information which will be made available to us. We are not prohibited from pursuing an initial business combination with a company that is affiliated with our Founders, sponsor, officers, directors or advisors and their respective affiliates. In the event we seek to complete our initial business combination with a company that is affiliated with our Founders, sponsor, officers, directors or advisors and their respective affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or a qualified independent accounting firm that our initial business combination is fair to our company from a financial point of view.
Initial Business Combination
Our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or an independent accounting firm with respect to the satisfaction of such criteria. Our stockholders may not be provided with a copy of such opinion, nor will they be able to rely on such opinion.
We may, at our option, pursue an acquisition opportunity jointly with one or more entities or funds affiliated with our Founders, sponsor or management team or their respective affiliates, which we refer to as an “Affiliated Joint Acquisition.” Any such parties may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified future issuance” throughout this Report.
The amount and other terms and conditions of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so. Pursuant to the anti-dilution provisions of our Class B common stock, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all shares of common stock outstanding upon completion of our initial public offering plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B common stock agreed to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified future issuance would reduce the percentage ownership of holders of both classes of our common stock.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, including an Affiliated Joint Acquisition as described above. However, we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target or assets sufficient for the post-transaction company not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.