When Ligand Pharmaceuticals executives first proposed Plans to spin off the company’s antibody division into a separate entity, they suggested the company would conduct a traditional IPO but leave the door open to other options. The antibody business Ligand built is going public, but will be through a merger.
Ligand’s OmniAb business unit is in the process of merging with Avista Public Acquisition Company II (APAC), a special purpose acquisition company (SPAC).trade Announce The combined company, which will be led by Ligand President Matt Foehr, will inject as much as $266 million after the market closes on Wednesday. The combined business will take on the OmniAb name.
Traditional IPO activity has largely ground to a halt as investor concerns over supply chain issues, inflation and the impact of Russia’s invasion of Ukraine have weighed on financial markets. But by splitting its antibody division into a separate entity, Ligand is making a long-term bet on something else: the growing number of antibodies being developed around the world. Ligand believes that OmniAb is well-positioned to participate in a growing number of antibody development now and earn royalties from these biologics as they enter the market in the future.
San Diego-based Ligand provides a range of technologies and services used by its pharmaceutical industry clients for drug discovery and development. Among these products is an antibody discovery platform provided by Ligand’s OmniAb business headquartered in Emeryville, California. Ligand added antibodies to its products through its 2016 acquisition of Open Monoclonal Technology. OmniAb’s business expanded through additional acquisitions and Ligand’s investments in its technology. The business model is not the model of the service provider. In exchange for providing access to its technology platform, OmniAb receives collaborative service fees, milestone payments related to the progress of amantibody’s development, and royalties on sales of antibody drugs that enter the market.
“Over time, we have made iterative improvements to the antibody discovery engine and technology stack, which often allow us to increase royalty rates and market share,” Foehr said, according to a company Transcript Audio recordings made for investors. “We believe downstream royalties will drive long-term value for the business as projects progress through the development process and are approved and launched.”
according to a OmniAb Investor Presentation, the business currently has more than 55 active partners worldwide. Disclosed partners include Amgen, Genmab, Pfizer, Seagen and Takeda Pharmaceuticals. As of the end of 2021, the OmniAb platform has contributed to the current approval of 2 antibodies in China, 1 antibody is under FDA review, 23 antibodies have entered clinical trials, and 252 antibodies are in the discovery stage. The vast majority of these antibodies, at all stages of development, are used in oncology indications.
OmniAb’s main competitors come from two established players in the antibody discovery space, publicly traded AbCelera and privately held Adimab. The investor presentation shows that AbCelera has 36 active partners covering 78 projects, while Adimab has 95 active partners covering 425 projects. OmniAb noted that neither AbCelera nor Adimab has disclosed whether plans or partnerships reflected in these totals are ongoing or terminated deals.
Under the merger plan, Ligand will distribute all of OmniAb’s equity interest to Ligand shareholders immediately prior to the business being combined with APAC. After the deal closes, Ligand shareholders will own between 75% and 84% of the combined company, depending on how many shares are sold back.
The newly independent OmniAb will receive up to $266 million in funding, which will be split to $236 million from the SPAC trust fund and $15 million each from Avista Capital Partners and Ligand. This total assumes that Asia Pacific shareholders have not redeemed shares from the trust. OmniAb will receive at least $130 million. Avista has agreed to provide up to $100 million in funding to support the redemption of SPAC shareholders; this cash will be combined with $15 million each from Ligand and Avista.
The boards of both Asia Pacific and Ligand have approved the merger, which is expected to close in the second half of this year. At that time, OmniAb will trade on the Nasdaq under the ticker symbol “OABI.”
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