Top 3 SPAC Targets – Late-Stage Biotech

Biotech is big in the world of SPACs once again.

Half of the SPACs that have managed to IPO in the second half of October are specifically targeting the industry and three biotech deals have been announced since the start of the month. One interesting detail about these deals is that they have been with more mature targets at the later stage of their clinical process, which hasn’t always been the norm among SPACs.

Overall, getting a drug all of the way through the clinical process generally takes 10 to 15 years with only 1 in 250 of those at the preclinical stage ever reaching market. Phase II is considered to be the toughest clinical hurdle with only 28% of programs advancing beyond it, according to Intuition Labs. Drug candidates that reach Phase III, however, wind up being approved 55% to 60% of the time.

This is why many biotech firms are acquired or go public once positive Phase II data is in hand. Because, after that stage, what might otherwise be a highly speculative investment draws a lot closer to 50-50 with an obvious inflection point on the horizon.

But, that pull also creates considerable competition for SPACs looking for an attractive target at this stage, given that the pharma majors especially are all too happy to snatch up largely de-risked drug candidates outside of their organic pipelines.

As a result, many SPACs are left to hunt for what they consider to be the most promising group of targets at the preclinical stage. But, doing so can be doubly speculative, because preclinical biotechs seeking such deals are generally those that have not yet secured the capital necessary to pursue the next stages of its clinical process. So, leaning on SPAC trusts and public capital to close that gap can add one more layer of risk.

All of these factors mean that any biotech firm that has been able to fund itself up to Phase III while remaining independent has been able to consistently fundraise while continuing to bet on itself to appreciate in value down the road.

Cerevance

Boston-based Cerevance appears to be at an ideal moment to cash in on that bet.

Originally formed as a joint venture between Japanese drug developer Takeda (TYO:4502) and Lighthouse Ventures in 2016, it has spent the last 10 years investigating novel therapies for neurological and psychiatric disorders.

The most advanced of these, Solengepras, just generated positive topline results from its Phase III trials earlier this month. Solengepras has shown in its clinical journey to be able to ease certain symptoms of Parkinson’s disease, in particular the amount of time that patients suffer from involuntary movements.

The company’s Phase III study showed that increased doses could not only reduce the incidence of these involuntary movements but also improve quality of life and motor function more broadly in conjunction with other therapeutics.

Though not a cure, Solengepras could become another tool in improving the quality and length of life for nearly 1 million Parkinson’s sufferers in the US alone. This treatment market is currently estimated at about $6.3 billion, but it is expected to more than double to $14.2 billion by 2023 as the population ages, according to Grand View Research.

This is far from Cerevance’s only asset. It also has another Parkinson’s candidate, CD38, in Phase I trials and CVN293, which has just completed Phase I, targeting other neurodegenerative disorders. One more Parkinson’s candidate and three potential therapies aimed at Alzheimer’s remain it its preclinical pipeline.

The company’s last capital raise was a $20 million Series C in May 2027, which was designed to fund the company’s runway through mid-2027. And, although the company has been able to consistently raise private capital, this timeframe would also match up well with a de-SPACing process if a team were to engage in the near term.

Genascence

Palo Alto-based Genascence is attacking an even larger treatment market among the aging.

About 32 million Americans suffer from Osteoarthritis (OA) and the company estimates that treatments for the condition stack up to about $100 billion in costs to the healthcare system.

Genascence has been advancing technology licensed from the Mayo Clinic and the University of Florida to seek out gene therapies that could not only prevent or slow, but actually reverse bone and joint damage caused by OA.

Its primary drug candidate, GNSC-001, has only passed through Phase I and Phase Ib studies, but, crucially, it was granted a Regenerative Medicine Advanced Therapy (RMAT) designation by the FDA in July 2025.

An RMAT designation does not necessarily remove steps in the clinical process, but it guarantees earlier and more frequent meetings with the FDA and a lower evidentiary trigger for advancement. While this does not in and of itself ensure a shorter process, much of the long duration in clinical processes comes from the multi-month waits in between stages, which stack up to years in the aggregate.

So far, Genascence has been funded through a relatively meager amount of outside capital, including a $10.5 million Series A in 2022 and a $11.6 million grant from the California Institute for Regenerative Medicine in 2023.

Now that it has had time to chart its expedited course through Phases II and III, it could be a mutually beneficial time to let public market investors hop on board.

Nectero Therapeutics

Tempe, Arizona-based Nectero has a clinical approach that involves both medication and medical devices to treat abdominal aortic aneurisms (AAA).

An AAA is a bulge in the portion of the aorta vascular system that extends into the abdomen. This can result in blood flow disruptions, or, in the most dangerous instance, ruptures that can cause life-threatening internal bleeding. These often go undetected as they frequently present no symptoms until a dramatic intervention may be necessary.

Nectero’s endovascular aneurysm stabilization treatment (EAST) delivers a pentagalloylglucose (PGG) drug solution to the wall of the aorta via a catheter. It would be the only approved the therapy to halt the progression of the disease should it make it through the full clinical process.

This would be a significant medical achievement considering that about 250,000 new cases of AAA are diagnosed each year and AAA remains a top 10 cause of death for men over 55.

Nectero presented positive results from its Phase I trials for EAST, which included 46 patients over two years. It is now enrolling for a 400-patient Phase II/III trial examining results that use EAST to treat AAA against the standard-of-care, which remains a simple surveillance approach.

It raised a $96 million Series D in 2024 to fund it through this Phase II/III trial and up to a potential approval by the FDA. But, engaging with a SPAC now could give it much more capital flexibility and an opportunity for the market to bring it real-time value as it meets its next milestones.