USA – Ligand Pharmaceuticals has entered into a definitive merger agreement with Avista Public Acquisition Corp. II (APAC), a special purpose acquisition company (SPAC).

Following the merger, Ligand will spin off its antibody discovery business, OmniAb, which will become a publicly traded company.

Matt Foehr, the current president of Ligand, will become CEO of the merged company, which will be renamed OmniAb.

The transaction will invest up to US$266 million in the combined company, which breaks down to US$236 million from the SPAC trust and US$15 million apiece from Avista Capital Partners and Ligand.

Avista Capital Partners, APAC’s sponsor and private equity firm, will invest up to US$115 million in the merged firm upon completion of the transaction.

Ligand will also invest US$15 million in the merged company, which will have an initial pre-money equity valuation of US$850 million.

The combined company will be known as OmniAb, and it will be led by Ligand’s president, Matt Foehr.

The merger comes at a time when traditional IPO activity has largely ceased due to financial markets being affected by investor concerns about supply chain issues, inflation, and the impact of Russia’s invasion of Ukraine.

Ligand, on the other hand, is making a longer-term bet on something else by spinning out its antibodies unit as an independent entity: the growing number of antibodies in development around the world.

Ligand intends to tax-free distribute 100 percent of its OmniAb ownership to the company’s stakeholders prior to closing the deal.

Diverse antibody repertoires

Ligand’s OmniAb antibody discovery platform provides pharmaceutical industry partners with access to diverse antibody repertoires and high-throughput screening technologies to aid in the discovery of next-generation medicines.

More than 55 partners are currently using OmniAb-derived antibodies, and over 250 programs are in the development or marketing stages.

Ligand believes OmniAb is well positioned to participate in a growing share of antibody development now, as well as capture royalties from these biological drugs as they reach the market in the future.

For instance, nine antibodies developed with the OmniAb platform entered clinical trials last year, and two royalty-bearing antibodies were approved by regulatory agencies.

APAC CEO David Burgstahler said: “OmniAb’s merger with APAC and its subsequent status as a standalone public company will help propel the company toward a new phase of growth and value creation.

The merger will empower OmniAb with access to the capital markets, strong cash reserves, the agility to drive innovation and a superb leadership team.”

The proposed deal was approved unanimously by APAC and Ligand’s boards of directors. The merger is expected to close in the second half of this year, subject to closing conditions and approvals.

Ligand signed a definitive agreement to acquire Pfenex for nearly US$516 million in August 2020.

Global partners

According to an OmniAb investor presentation, the company currently has more than 55 active partners worldwide. Amgen, Genmab, Pfizer, Seagen, and Takeda Pharmaceutical are among the unnamed collaborators.

OmniAb’s platform had resulted in two antibodies that are now approved in China, one antibody that is currently under FDA review, 23 antibodies that have reached clinical testing, and 252 in the discovery stage as of the end of 2021.

The vast majority of these antibodies are for oncology indications and are in various stages of development.

OmniAb’s main competitors in antibody discovery are two well-established companies, publicly traded AbCellera Biologics and privately held Adimab.

According to the investor presentation, AbCellera has 36 active partners across 78 programs, while Adimab has 95 active partners across 425 programs.

OmniAb observes that neither AbCellera nor Adimab disclose whether the programs or partnerships reflected in these totals are ongoing or terminated.

However, AbCellera reported revenue of US$375.2 million in 2021, a more than 60% increase over the previous year.

Ligand’s revenue in 2021 was US$277.1 million, a 49 percent increase from the previous year. The revenue for the OmniAb business is not broken out in the company’s annual report.

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