Avista Public Acquisition Corp. II
PROPOSED BUSINESS COMBINATION: Ligand Pharmaceuticals Incorporated
ENTERPRISE VALUE: $884 million
ANTICIPATED SYMBOL: OABI
Avista Public Acquisition Corp. II proposes to combine Ligand Pharmaceuticals Incorporated, providing for the spin-off of OmniAb, Inc. (OmniAb), Ligand’s antibody discovery business, immediately followed by a merger with a newly formed subsidiary of APAC.
- Ligand’s OmniAb antibody discovery platform provides pharmaceutical industry partners with access to diverse antibody repertoires and high-throughput screening technologies to enable discovery of next-generation therapeutics.
- At the heart of the OmniAb platform is the Biological Intelligence™ (BI) of its proprietary transgenic animals including OmniRat, OmniChicken, and OmniMouse, which have been genetically modified to generate antibodies with human sequences to facilitate the development of human therapeutic candidates.
- Over 55 partners currently have access to OmniAb-derived antibodies and more than 250 programs are being actively developed or commercialized.
- In 2021, nine antibodies derived from the OmniAb platform entered clinical testing and two royalty-bearing antibodies received regulatory approvals.
Following the completion of this transaction, OmniAb will consist of the OmniAb discovery platform featuring transgenic animals that have been genetically modified to generate antibodies with human sequences to facilitate the development of human therapeutic candidates, as well as the Icagen ion channel technology. Ligand Pharmaceuticals’ platform technologies will consist of the Captisol® technology, a patent-protected, chemically modified cyclodextrin with a structure designed to optimize the solubility and stability of drugs, and the Pelican Expression Technology®, a robust, validated, cost-effective and scalable platform for recombinant protein production that is especially well-suited for complex, large-scale protein production.
TRANSACTION
- The combination of OmniAb and AHPA is structured to guarantee a minimum of $130 million in gross cash to the combined company at the time of closing, and up to $266 million in the event of no redemptions by APAC shareholders. APAC’s shareholders will be eligible to participate in the transaction or to elect redemption of their shares.
- Avista has agreed to guarantee that Avista and AHPA will provide at least $115 million of gross cash to the combined company through a $15 million PIPE investment and a $100 million facility to backstop potential redemptions.
- Ligand’s $15 million contribution to OmniAb will be made irrespective of the number of redemptions or the Avista contributions.
- Ligand intends to distribute 100% of the equity in OmniAb to Ligand shareholders immediately prior to the business combination with APAC.
- The transaction will be effected through a “Reverse Morris Trust” transaction pursuant to which OmniAb will be spun-off to Ligand’s shareholders and simultaneously merged as a subsidiary of APAC.
- The transaction is expected to be tax-free to Ligand and its shareholders for U.S. federal income tax purposes, except for cash received in lieu of fractional shares.
PIPE
- Ligand will invest in a $15 million PIPE at $10.00/share, plus 1,666,667 warrants with an $11.50 exercise price.
- Ligand’s $15 million contribution to OmniAb will be made irrespective of the number of redemptions or the Avista contributions.
FORWARD PURCHASE AGREEMENT
- The Sponsor has agreed to purchase up to an additional 10,000,000 shares of APAC Common Stock (the “Redemption Backstop”) and up to an additional 1,666,667 APAC warrants, for an aggregate additional purchase price of up to $100.0 million, in order to backstop shareholder redemptions to the extent such redemptions would result in the cash proceeds being less than $100.0 million.
LOCK-UP
Company Lock-Up
- With respect to the shares of Domesticated Parent Common Stock issued to the New Holders in connection with the consummation of the Merger, the period ending on the earliest of:
- (A) three months after the date hereof
Sponsor Lock-Up
- The period ending on the earliest of:
- (A) one year after the date hereof
- (B) the first date on which the last reported sales price of a share of Domesticated Parent Common Stock equals or exceeds $12.00 per share for any 20 trading days within any 30 trading day period commencing at least 150 days after the date hereof
EARNOUT
Company Earnout
At any time during the period following the Closing and expiring on the fifth anniversary of the Closing Date (the “Earn-Out Period”)
- At the Closing, holders of OmniAb Common Stock and equity awards will also receive earnout consideration in the form of an additional 15 million shares of APAC Common Stock (the “OmniAb Earnout Shares”) with the following vesting milestones:
- 7,500,000 shares payable to existing Ligand shareholders will vest at $12.50 VWAP for 20 out of 30 consecutive trading days
- 7,500,000 shares payable to existing Ligand shareholders will vest at $15.00 VWAP for 20 out of 30 consecutive trading days
Sponsor Earnout
At any time during the period following the Closing and expiring on the fifth anniversary of the Closing Date (the “Earn-Out Period”)
- The Sponsor agreed to subject up to 1,916,667 Earnout Founder Shares with the following vesting milestones:
- 958,333 of Avista’s sponsor shares to vest at $12.50 VWAP for 20 out of 30 consecutive trading days
- 958,333 of Avista’s sponsor shares to vest at $15.00 VWAP for 20 out of 30 consecutive trading days
- Up to 37.5% of Avista earnout shares are immediately vested pro-rata to any utilization of the $100M backstop facility
- All or 50% of sponsor earnout shares shall be automatically forfeited for no consideration if an applicable Triggering Event has not occurred during the Earnout Period.
NOTABLE CONDITIONS TO CLOSING
- The consummation of the Business Combination is subject to APAC having at least $5,000,001 of net tangible assets as of the Closing.
NOTABLE CONDITIONS TO TERMINATION
- The Merger Agreement may be terminated at any time prior to the Closing by APAC or Ligand if the Closing has not occurred on or before the nine-month anniversary of the signing date.
- By the mutual written consent of APAC and Ligand,
- By APAC or Ligand, if the Closing shall not have occurred on or before the nine-month anniversary of the signing date
- By APAC or Ligand, if any law is passed that would make the transaction illegal
- By APAC or Ligand, if APAC has not obtained the requisite approval from its shareholders
- By APAC or Ligand if the other party breaches certain representations, warranties, or covenants, as specified in the Merger Agreement, and that breach is unable to be cured, or is not cured, within 30 days
- By Ligand if the Forward Purchase and the Redemption Backstop are not consummated or
- By Ligand on or prior to the earlier of
- (i) 180 days after the date of the Merger Agreement or
- (ii) the date on which the APAC registration statement on Form S-4 in respect of the Business Combination is declared effective, in order to enter into a business combination agreement in respect of at least 75% of Ligand in a transaction conditioned on the termination of the Merger Agreement, provided that Ligand has paid APAC a termination fee of between $40.0 million and $70.0 million, dependent upon when termination occurs (the “Termination Fee”), reimbursed APAC for its transaction expenses in an amount up to $7.5 million and paid the Sponsor a termination fee in an amount up to $12.5 million in connection with the termination of the A&R FPA.
ADVISORS
- Credit Suisse is acting as lead capital markets and financial advisor to OmniAb.
- Cowen, Stifel, SVB Leerink and Truist Securities are also acting as capital markets and financial advisors to OmniAb.
- CJS Securities, Craig-Hallum Capital Group LLC, H.C. Wainwright & Co. and Roth Capital Partners are acting as advisors to OmniAb.
- Weil, Gotshal & Manges LLP is legal advisor to APAC.
- Latham & Watkins LLP is legal advisor to Ligand.
MANAGEMENT & BOARD
Executive Officers
David Burgstahler, 52
President, Chief Executive Officer and Director
Mr. Burgstahler is a Managing Partner and Co-Chief Executive Officer of Avista and has served in various capacities at Avista since its founding in 2005. Prior to forming Avista, he was a Partner of DLJMB from 2004 to 2005 and served in various capacities at DLJMB and its affiliates from 1995 to 2005. Prior to DLJMB, Mr. Burgstahler worked at Andersen Consulting (now known as Accenture) and McDonnell Douglas (now known as Boeing). He currently serves as on the board of directors of Arcadia Consumer Healthcare, Cosette Pharmaceuticals, Inform Diagnostics, Osmotica Pharmaceuticals (NASDAQ: OSMT), United BioSource Corporation, XIFIN and other private company boards. Mr. Burgstahler also previously served on the board of directors of AngioDynamics (NASDAQ: ANGO), Armored AutoGroup, BioReliance Corp., ConvaTec Group, Focus Diagnostics, Inc., INC Research Holdings (NASDAQ: INCR), Lantheus Holdings, MPI Research, Inc., Strategic Partners, LLC, Visant Corp., WideOpenWest (NYSE: WOW) and Warner Chilcott PLC (NASDAQ: WCRX). Mr. Burgstahler received a B.S. in Aerospace Engineering from the University of Kansas and an M.B.A. from Harvard Business School.
Sriram Venkataraman, 49
Executive Vice President
Mr. Venkataraman is currently a Partner at Avista and originally joined Avista in 2007. Prior to joining Avista, Mr. Venkataraman was a Vice President in the Healthcare Investment Banking group at Credit Suisse which he joined in 2001. Prior to Credit Suisse, Mr. Venkataraman worked at GE Healthcare (formerly known as GE Medical Systems). Mr. Venkataraman currently serves on the board of directors of Cosette Pharmaceuticals, Inform Diagnostics, National Spine & Pain Centers, Osmotica Pharmaceuticals (NASDAQ: OSMT), Solmetex and XIFIN and has previously served as s director of AngioDynamics (NASDAQ: ANGO), Lantheus Holdings (NASDAQ: LNTH), OptiNose (NASDAQ: OPTN) and Zest Dental Solutions. Mr. Venkataraman received a M.S. in Electrical Engineering from the University of Illinois, Urbana-Champaign and an M.B.A. with honors from The Wharton School at the University of Pennsylvania.
Robert Girardi, 39
Executive Vice President
Mr. Girardi is currently a Partner at Avista and originally joined Avista in 2010. Prior to joining Avista, Mr. Girardi was a Senior Associate at Quadrangle Group where he focused on private equity investments in the media and communications industries. Prior to joining Quadrangle, Mr. Girardi was an Associate at Bear Stearns Merchant Banking where he focused on private equity investments across a range of industries. Mr. Girardi also worked as an Analyst in the investment banking division at J.P. Morgan. Mr. Girardi currently serves on the board of directors of Arcadia Consumer Healthcare, GCM Holding Corporation and United BioSource Corporation and previously served on the board of directors of DataBank Holdings, MPI Research, Inc. and Telular Corporation. Mr. Girardi received a B.S. with highest distinction in business administration from the University of North Carolina at Chapel Hill and an M.B.A. with honors from The Wharton School at the University of Pennsylvania, where he was a Palmer Scholar.
Amanda Heravi, 46
Investor Relations Officer
Ms. Heravi is the Head of Investor Relations at Avista and was one of the founding members of Avista in 2005. Prior to Avista, Ms. Heravi was the Director of Finance and Administration at Dorset Capital Management, which she joined in 1999, where she was responsible for investor relations and the financial, operational and administrative aspects of the fund. Prior to Dorset, Ms. Heravi worked at Montgomery Securities. Ms. Heravi received a B.A. from the University of California, Berkeley.
John Cafasso, 48
Chief Financial Officer
Mr. Cafasso joined Avista in May 2011. Prior to joining Avista, Mr. Cafasso was in the asset management division of Credit Suisse from 2001 to May 2011, where he was responsible for the accounting and reporting for Credit Suisse’s direct private equity funds. Prior to joining Credit Suisse, Mr. Cafasso was a Manager at KPMG, LLP in the financial services practice. Mr. Cafasso is a Certified Public Accountant and received a B.B.A. degree from Hofstra University.
Benjamin Silbert, 50
General Counsel
Mr. Silbert is the Chief Administrative Officer and General Counsel at Avista and was one of the founding members of Avista in 2005. Prior to joining Avista, Mr. Silbert was at DLJMB from 2001 to 2005. While at DLJMB, Mr. Silbert acted as internal counsel on a number of investments and divestitures, in addition to fund and partnership matters. Prior to joining DLJMB, Mr. Silbert was a lawyer in the private equity and mergers and acquisitions practice groups of Morgan, Lewis & Bockius LLP, which he joined in 1996. Mr. Silbert received a B.A. from Haverford College and a J.D. from Columbia Law School.
Board of Directors
Thompson Dean, 63
Executive Chairman and Director
Mr. Dean is a Managing Partner and Co-Chief Executive Officer of Avista and has served in various capacities at Avista since its founding in 2005. From 1995 to 2005, Mr. Dean served as Co-Managing Partner of DLJMB and was Chairman of the investment committees of DLJMB I, DLJMB II, DLJMB III and DLJ Growth Capital Partners. Mr. Dean currently serves on the board of directors of Acino International AG, National Spine & Pain Centers and Vision Healthcare. Mr. Dean previously served on the board of directors of Charles River Laboratories, ConvaTec Group, Fisher Scientific, Nycomed, Trimb Healthcare, VWR and Zest Dental Solutions. Mr. Dean is a former trustee of Choate Rosemary Hall and The Eaglebrook School. Mr. Dean received a B.A. from the University of Virginia, where he was an Echols Scholar, and an M.B.A. with high distinction from Harvard Business School, where he was a Baker Scholar.
William E. Klitgaard, 68
Director Nominee
Mr. Klitgaard is an operating executive at Avista, where was retained in 2020. Mr. Klitgaard has over two decades of experience leading and advising healthcare businesses in the Healthcare IT and outsourced pharma services space. Mr. Klitgaard most recently served as President of Enlighten Health, a division of LabCorp (NYSE:LH) that focuses on innovation and creation of new information-based services utilizing core assets of LabCorp and Covance, Inc. Previously, he spent 19 years at Covance, one of the world’s largest contract research organizations, where he served for three years as Corporate Senior Vice President and Chief Information Officer, and nearly twelve years as Corporate Senior Vice President and Chief Financial Officer. Prior to his time at Covance, Mr. Klitgaard held finance leadership positions at Kenetech Corporation, a wind turbine manufacturer, and Consolidated Freightways, Inc., a freight service and logistics company. Mr. Klitgaard currently serves as a director and chairman of the audit committee of Syneos Health, Inc. (NASDAQ: SYNH), since March 2017, as a director of Inform Diagnostics, since December 2019 and as a director of XIFIN, Inc. (“XIFIN”) since January 2020. Mr. Klitgaard previously served as a director of Liaison Technologies, Bioclinica, Inc. and Certara, L.P. Mr. Klitgaard earned a B.A. in economics from the University of California at Berkeley, and a Master’s degree from the Sloan Management School, Massachusetts Institute of Technology.
Lâle White, 66
Director Nominee
Ms. White is the Executive Chairman, Chief Executive Officer and founder of XIFIN, a health information technology company that leverages diagnostic information to improve the quality and economics of healthcare. Ms. White founded XIFIN in 1997 and has over 25 years of experience in information systems development and medical billing. Ms. White lectures extensively on these topics and has consulted for major laboratories and laboratory associations throughout the U.S. Ms. White worked with HCFA and the U.S. Office of the Inspector General to develop the first OIG Model Compliance Program. She has chaired the state and federal contractor committees for California Clinical Laboratory Association for years, maintaining a working relationship with the Medicare Administrative Contractors and Department of Health and Human Services. Ms. White was previously Vice President of Finance of Laboratory Corporation of America, one of the largest clinical reference laboratories in the United States, and its predecessor National Health Laboratories, where she led the software development of several accounts receivable, inventory, cost accounting and financial management systems for the laboratory industry. Ms. White currently serves as a director of Cardiff Oncology, Inc. (NASDAQ: CRDF) and previously served as a director of bioTheranostics while it was a BioMerieux subsidiary and CombiMatrix Corporation, until its acquisition by Invitae Corporation in 2017. Ms. White has a B.A. in finance and an M.B.A. from Florida International University.
Wendel Barr, 59
Director Nominee
Mr. Barr has over 25 years of experience on the leading edge in the medical devices and life sciences industries. From September 2017 through November 2019, Mr. Barr was the Chief Executive Officer, President and director of Vium, Inc., a translational medicine and biotechnology company focused on improving the success of drug development through the creation of more precise and reproducible disease models. Prior to Vium, Mr. Barr was the Chief Executive Officer and director of Synteract, Inc., a full service, global contract research organization dedicated to the clinical research needs of biotechnology, medical device and pharmaceutical companies. Prior to Synteract, Mr. Barr was at Covance from 2000 through 2011, where he had multiple roles, including Chief Operating Officer and Executive Vice President. Prior to Covance, Wendel Barr was Vice President and General Manager at Marconi Medical Systems and also held several positions of increasing responsibility with GE Healthcare including General Manager from 1984 to 1999. Mr. Barr earned a B.S. in Electronics Engineering from DeVry University and a M.B.A. from the National University.