Humacyte Inc., which develops universally implantable, bioengineered human tissue at commercial scale, has agreed to go public via a merger with Alpha Healthcare Acquisition Corp. (AHAC), a blank-check company led by Rajiv Shukla. Upon closing of the deal, AHAC will be renamed Humacyte Inc. and will be led by Humacyte’s current CEO, Laura Niklason. The combined company’s stock is expected to list on the Nasdaq Capital Market under the ticker symbol HUMA.

Announced Wednesday, the deal marks the third time this month that a med-tech startup has merged with a special purpose acquisition company (SPAC) to pull off an initial public offering (IPO). On Feb. 10, Stamford, Conn.-based Sema4 inked a merger agreement with CM Life Sciences aimed at further developing and scaling its artificial intelligence- and machine learning-powered, integrated genomic and clinical open-architecture data platform. And on Feb. 16, hand-held, single-probe, whole-body ultrasound company Butterfly Network Inc., of Guilford, Conn., reported the completion of its business combination with Longview Acquisition Corp.

Valuation, proceeds

The proposed transaction, which is expected to close in the second quarter of 2021, values Humacyte at $800 million today with a potential post-IPO valuation of $1.1 billion. It will provide the Durham, N.C.-based company with significant new capital to advance its pipeline of therapeutic solutions for conditions including end-stage renal disease and repair or replacement of arteries.

According to the companies, the deal is expected to generate cash proceeds of approximately $225 million, including a fully committed $175 million private investment in public equity (PIPE) loan and up to $100 million in cash from the AHAC trust account. A broad group of investors contributed to the PIPE, including Fresenius Medical Care, Orbimed, Monashee Investment Management, Alexandria Venture Investments, UBS O’Connor, Morgan Creek Capital and additional unnamed health care-focused funds.

“We are very pleased to have support from top-tier investors, and access to the U.S. capital markets following the closing of this proposed transaction, which will Leave Humacyte well-capitalized to provide first-in-class therapies to treat several life-threatening diseases,” said Niklason. “Our innovative platform has the potential to support tissue repair, reconstruction and replacement without the limitations of existing standards of care.”

In information accompanying a Form 8-K filed by AHAC with the U.S. Securities and Exchange Commission, Humacyte said it will use the proceeds from the merger to complete phase III trials, biologics license applications and U.S. FDA approval of its first two applications, in dialysis arteriovenous (AV) access and vascular repair, as well as U.S. commercialization and subsequent launches in key overseas markets. A portion of the proceeds will also go toward advancing new applications – specifically, phase III trials in peripheral artery disease (PAD) and clinical proof-of-concept studies in coronary artery bypass graft (CAPG) and biovascular pancreas for diabetes.

The remainder is earmarked to fund operations through 2024.

Universally implantable

Humacyte estimated the potential market for its products at more than $150 billion. The universally implantable tissue requires no tissue matching or long-term immunosuppression. Products can be used off the shelf and have a shelf life of 18 months. They are regenerative, self-healing and highly resistant to infection.

In 2014, the company received fast track designation from the FDA for its human acellular vessel (HAV) platform. It snagged the agency’s first regenerative medicine advanced therapy designation in 2017.

To date, more than 430 patients have been treated with HAVs, with no immunological rejections. The company has amassed more than 800 patient years of clinical data. In an ongoing phase II/III trial in vascular trauma repair, HAVs showed 100% patency at 30 days in 27 patients.

Humacyte envisions a steady timeline of product launches, beginning with trauma then AV access in 2023, PAD in early 2025, biovascular pancreas in mid-2026 and pediatric heart disease and CABG in 2027.

Founded in 2004 based on research conducted by Niklason and co-founder Shannon Dahl at Duke University, Humacyte previously raised nearly $480 million in financing, including a $150 million equity investment from Fresenius Medical Care. The companies have a commercial partnership for use of HAV in dialysis AV access and PAD, an agreement that includes vascular trauma markets outside the U.S.

Humacyte said its current manufacturing facility can be scaled, via modular expansion, to 40,000+ HAVs per year. The company employs 130 people.

As a special purpose acquisition company, AHAC is essentially a shell company established by its investors to raise money through an IPO for purposes of acquiring another company. It raised $100 million in its September 2020 IPO.