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SPAC Mergers Are Viable Funding Tools, But The Test Is Yet To Come

Performance Has Been Subpar For Most That Have Taken SPAC Route

 
• By Mandy Jackson

Dozens of health care-focused special purpose acquisition corporations have gone public during the past two years but many biopharma firms that have merged with SPACs have not performed well to date, raising the question of how long the SPAC boom will last.

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• Source: Alamy

Mergers with special purpose acquisition corporations (SPACs) have become lucrative financial transactions for biopharmaceutical firms because they can raise significant capital and become publicly traded companies in a single transaction, bypassing the traditional initial public offering path. However, the performance of drug developers that have taken the SPAC route to date has been largely negative, raising the question of how much longer these transactions will be viable financing options.

There also is the question of whether there are enough biopharma firms available to meet SPAC demands. Dozens of SPACs...

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