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Social Capital Suvretta Holdings Corp. I

Social Capital Suvretta Holdings Corp. I

Jun 2, 2021 by Anthony Sozzi

SUBSEQUENT EVENT – 5/31/24 – LINK

  • Akili, Inc to be acquired by Virtual Therapeutics for $0.434/Share.

PROPOSED BUSINESS COMBINATION: Akili, Inc.

ENTERPRISE VALUE: $516 million (pre-money)
ANTICIPATED SYMBOL: AKLI

Social Capital Suvretta Holdings Corp. I proposes to combine with Akili Interactive (“Akili” or the “Company”), a leading digital medicine company developing cognitive treatments through game-changing technologies.

The Akili software platform was built on the belief that directly engaging brain function is the next frontier of science and medicine. Cognitive impairments – including poor concentration, memory loss, difficulties learning new skills, and difficulties with decision making – are in aggregate among the largest unmet medical needs, and are increasingly recognized as contributing to or associated with dozens of chronic diseases and acute illnesses, including attention-deficit/hyperactivity disorder (ADHD), major depressive disorder (MDD), multiple sclerosis (MS), and autism spectrum disorder (ASD), as well as postoperative cognitive dysfunction and COVID-19 “brain fog.”

Despite the rapidly growing prevalence of these conditions, the acute exacerbation of these issues by the pandemic’s impact, and the chronic, escalating cognitive overload from the proliferation of on-demand attention-capturing technology, there has been limited innovation of novel treatment options. Specifically, current treatment options are designed to focus on symptoms and coping strategies instead of directly targeting cognitive functioning. These therapeutic shortfalls are especially concerning for younger populations who are potentially facing a lifetime of managing these conditions.

  • Akili’s patented and clinically validated technology platform represents a new category of software-based medicine: advanced and proprietary digital therapeutics that are designed to directly target neural physiology to better serve the needs of patients and their families.
  • Akili’s core therapeutic engine, the Selective Stimulus Management Engine (SSMETM), is specifically designed to target and activate neural systems involved in attentional control.
  • This core platform has the potential to be applied across a diverse set of indications within psychiatry and neurology.
  • Backed by robust clinical research, Akili’s treatments are delivered to patients through engaging interactive mobile games, personalized to each individual and built to feel like high-end entertainment products.
  • The SSMETM technology has already demonstrated proof-of-concept in controlled trials targeting attention and cognitive dysfunction in ADHD, ASD, MS, and MDD. Built on the SSMETM technology, Akili developed EndeavorRx®, the first-ever FDA-cleared prescription video game and the first-ever FDA-cleared commercial product indicated to improve attention function in children between the ages of 8 to 12 years with primarily inattentive or combined-type ADHD.

TRANSACTION

  • Post-money equity value of the combined company of up to approximately $1 billion and is expected to deliver up to $412 million in gross cash proceeds to the Company, including the contribution of up to $250 million of cash held in SCS’s trust account and $162 million from PIPE investors at $10 per share.
  • All references to available cash from the trust account and retained transaction proceeds are subject to any redemptions by the public shareholders of SCS and payment of transaction expenses.
  • Akili plans to use the net proceeds to help fund the Company’s go-to-market strategy, to further advance its pipeline of prescription digital therapeutics targeting a range of chronic and acute cognitive disorders, and for other general corporate purposes.
  • Existing Akili shareholders will roll 100% of their equity into the combined company and will be eligible to receive additional SCS shares pursuant to an earnout based on the combined company’s future stock performance.
  • Chamath Palihapitiya is expected to join Akili’s board of directors as chair, upon the close of the transaction.

DNAA Transaction Overview

PIPE

  • 16,200,000 shares of SCS Common Stock for an aggregate purchase price of $162,000,000:
    • led by $100 million from Social Capital
    • remaining $62 million from new and existing investors including:
      • Suvretta Capital Management’s Averill strategy, Apeiron Investment Group, Temasek, co-founder PureTech Health, Polaris Partners, Evidity Health Capital, JAZZ Venture Partners and Omidyar Technology Ventures
        • $10.00 per share (the “Per Share Subscription Price”)

LOCK-UP

Company and Sponsor

  • 33% of the Lock-up Shares when the price equals $12.50 for 20/30 trading days
  • 50% of the Lock-up Shares when the price equals $15.00 for 20/30 trading days
  • 180 days following the Closing

EARNOUT

  • At the Closing, SCS will deposit into an escrow account for the benefit of the pre-Closing Akili stockholders, optionholders and warrantholders an aggregate number of shares of SCS Common Stock equal to 7.5% (4,500,000) of the fully diluted shares of SCS Common Stock determined as of immediately following the Closing (collectively, the “Earnout Shares”)
  • Earnout Shares will be subject to release from escrow to the pre-Closing Akili stockholders, optionholders and warrantholders in three equal tranches upon the daily volume-weighted average price of a share of SCS Common Stock reaching $15.00/share, $20.00/share and $30.00/share, respectively, over any 20 trading days within any 30 consecutive trading day period following the Closing and prior to the fifth anniversary of the Closing, in each case, on the terms set forth in the Merger Agreement.

NOTABLE CONDITIONS TO CLOSING

  • After accounting for redemptions, the minimum amount of cash, plus the PIPE investment, is equal to or greater than $150,000,000

NOTABLE CONDITIONS TO TERMINATION

  • September 26, 2022 (the “Outside Date”)

ADVISORS

  • Morgan Stanley & Co. LLC and Cowen and Company, LLC are serving as financial advisors to Akili.
  • Morgan Stanley, Credit Suisse, and Cowen are serving as co-placement agents to SCS with respect to the portion of the PIPE financing raised from non-insider qualified institutional buyers and institutional accredited investors.
  • Morgan Stanley, Credit Suisse, and Cowen are not acting as agents or participating in any role with respect to, and will not earn any fees from, the portion of the PIPE financing raised from insiders and individual investors.
  • Credit Suisse and Cowen are serving as capital markets advisors to Akili.
  • BofA Securities, Inc. is acting as capital markets advisor to SCS.
  • Goodwin Procter LLP is serving as legal counsel to Akili.
  • Wachtell, Lipton, Rosen & Katz is serving as legal counsel to SCS.
  • Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to the PIPE placement agents.

MANAGEMENT & BOARD

Executive Officers

Chamath Palihapitiya, 44
Chief Executive Officer and Chairman of the Board of Directors

Mr. Palihapitiya founded Social Capital in 2011 and has been its Managing Partner since its inception. Mr. Palihapitiya also serves as the Chief Executive Officer and the Chairman of the board of directors of DNAB, DNAC and DNAD. In addition, Mr. Palihapitiya currently serves as the Chief Executive Officer and the Chairman of the board of directors of each of the Hedosophia SPACs . Mr. Palihapitiya previously served as the Chief Executive Officer and the Chairman of the board of directors of Social Capital Hedosophia Holdings Corp. from May 2017 until the consummation of its business combination with Virgin Galactic in October 2019, and continues to serve as the Chairman of the board of directors of Virgin Galactic. Mr. Palihapitiya also previously served as the Chief Executive Officer and the Chairman of the board of directors of Social Capital Hedosophia Holdings Corp. II until the consummation of its business combination with Opendoor Labs Inc. in December 2020 and as the Chief Executive Officer and the Chairman of the board of directors of Social Capital Hedosophia Holdings Corp. III until the consummation of its business combination with Clover Health Investments, Corp. in January 2021. Mr. Palihapitiya also served as a director of Slack Technologies Inc. from April 2014 until October 2019. Prior to founding Social Capital in 2011, Mr. Palihapitiya served as Vice President of User Growth at Facebook, and is recognized as having been a major force in its launch and growth. Mr. Palihapitiya was responsible for overseeing Monetization Products and Facebook Platform, both of which were key factors driving the increase in Facebook’s user base to more than 750 million individuals worldwide. Prior to working for Facebook, Mr. Palihapitiya was a principal at the Mayfield Fund, one of the United States’ oldest venture firms, before which he headed the instant messaging division at AOL. Mr. Palihapitiya graduated from the University of Waterloo, Canada with a degree in electrical engineering.

Kishan (a/k/a Kishen) Mehta, 35
President and Director

Mr. Mehta also serves as the President and a member of the board of directors of DNAB, DNAC and DNAD. Prior to joining Suvretta as Portfolio Manager for the Averill strategy, Mr. Mehta served as a strategic advisor to Biohaven , where he advised the company on various business development, capital structure and communication strategies, including a $300 million secondary public offering and the $105 million purchase of a Priority Review Voucher from GW Pharmaceuticals plc, which included $200 million in financing from Royalty Pharma plc to fund the transaction. Prior to his advisory role at Biohaven, Mr. Mehta was a portfolio manager at Surveyor Capital, a Citadel LLC strategy, where he managed a portfolio focused on global small-, mid- and large-capitalization biotechnology, pharmaceutical, specialty pharmaceutical, medical device and healthcare services. Prior to Surveyor, Mr. Mehta was an analyst at Adage Capital where he evaluated and participated in numerous mezzanine and pre-IPO private healthcare investments. Mr. Mehta held a similar role at Apothecary Capital and started his career as a mergers and acquisitions analyst at Evercore Partners, where he focused on life sciences. Mr. Mehta graduated from New York University with a degree in finance and accounting.

James Ryans, 45
Chief Financial Officer

Mr. Ryans also serves as the Chief Financial Officer of DNAB, DNAC, DNAD, Social Capital Hedosophia Holdings Corp. IV and Social Capital Hedosophia Holdings Corp. VI. Mr. Ryans is a Partner at Social Capital since March 2021, and has been a professor of accounting at London Business School since 2016, teaching financial accounting at the graduate and postgraduate levels, and directs an executive education program on mergers and acquisitions. Mr. Ryans previously served as a member of the board of directors of Social Capital Hedosophia Holdings Corp. III from April 2020 until the consummation of its business combination with Clover Health Investments, Corp. in January 2021, as a director and the chairman of the audit committee of Social Capital Hedosophia Holdings Corp. from September 2017 until the consummation of its business combination with Virgin Galactic in October 2019, and as a member of Virgin Galactic’s board of directors through February 2021. From 2003 to 2011, Mr. Ryans oversaw investments and business development at Chelsea Rhone LLC and its affiliate HealthCap RRG, a mutual insurance company. From 1999 until 2001, Mr. Ryans was a consultant with Deloitte & Touche. Mr. Ryans is a CFA charterholder and holds a Ph.D. in business administration from the University of California Berkeley, an MBA from the University of Michigan and a BASc in electrical engineering from the University of Waterloo.

Board of Directors

Shoney Katz, 46
Director of Research

Mr. Katz also serves as the Director of Research of DNAB, DNAC and DNAD. Mr. Katz is a Managing Director and Senior Analyst at Suvretta, with extensive experience investing in public and private markets. Prior to joining Suvretta, Mr. Katz worked as a Portfolio Manager at Citadel LLC’s Surveyor Capital, where he managed a portfolio of industrial, consumer and financial-related ideas. From 2008 to 2014, Mr. Katz worked as a Senior Analyst at Point72 Asset Management, focused on fundamental and opportunistic ideas across various sectors. Mr. Katz also previously held positions at private equity firms, including The Carlyle Group and AEA Investors, and in management consulting as an analyst at Bain & Company. Mr. Katz holds an MBA from Harvard Business School and a Bachelor of Science in Mechanical Engineering and a Bachelor of Arts in Economics from Rice University.

Vladimir Coric, 50
Director Nominee

He currently serves as the Chief Executive Officer and Director of Biohaven Pharmaceuticals (NYSE: BHVN), a commercial-stage company focused on treating CNS disorders. He also serves as Director of Pyramid Bio and Vita Therapeutics. Dr. Coric has more than 20 years of drug discovery and clinical development experience at Yale School of Medicine and Bristol-Myers Squibb prior to leading Biohaven. Dr. Coric has expertise working across therapeutic areas including neuroscience, virology, oncology and immuno-oncology. He has been involved in multiple drug development programs, including marketed drugs such as NURTEC ODT (rimegepant; CGRP receptor antagonist), ABILIFY (aripiprazole; partial dopamine agonist), OPDIVO (nivolumab; anti-PD1), YERVOY (Ipilimumab; anti-CTLA-4), DAKLINZA (daclatasvir; NS5A inhibitor) and SUNVEPRA (asunaprevir; NS3 inhibitor). Dr. Coric has conducted numerous clinical trials in various illnesses, including obsessive compulsive disorder, generalized anxiety disorder, major depression, schizophrenia, schizoaffective disorder, migraine, Alzheimer’s disease, hepatocellular carcinoma and glioblastoma. Dr. Coric is an Associate Clinical Professor of Psychiatry at the Yale School of Medicine and has over 65 peer-reviewed publications. He previously served as Chief of the Yale Clinical Neuroscience Research Unit, Director of the Yale Obsessive-Compulsive Disorder Research Clinic, and President of the Connecticut Psychiatric Society (an 800 member district branch of the American Psychiatric Association). Dr. Coric completed his medical residency and fellowship training at Yale and earned his medical degree at Wake Forest University School of Medicine in North Carolina. Dr. Coric is well qualified to serve as a member of our board of directors because of his deep knowledge of the drug discovery and clinic development process and experience in the biotechnology industry.

Senthil Sundaram, TBD [Appointed 9/24/21]
Independent Director

TBD

 

ByAnthony Sozzi