Humacyte Set to Go Public, Raise $175 Million from Top-tier Investors
Durham-based Humacyte, a regenerative medicine company that received start-up support from the North Carolina Biotechnology Center 15 years ago, is going public in a novel deal that will give it a market capitalization of $1.1 billion.
Humacyte and Alpha Healthcare Acquisition Corp., a special purpose acquisition company (SPAC) based in New York, have signed a business-combination agreement to take Humacyte public, along with a $175M PIPE financing agreement.
“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,” Laura Niklason, M.D., Ph.D., founder and chief executive officer of Humacyte, said in a prepared statement.
Niklason will lead the combined company, to be listed on the Nasdaq Capital Market under the ticker symbol “HUMA.” The transaction has been approved by both companies’ board of directors and is expected to close in the second quarter, subject to shareholder approval.
The deal will give Humacyte a valuation of about $800 million and up to $255 million in cash proceeds, including a fully committed $175 million PIPE financing, priced at $10 per share, and up to $100 million of cash held in trust.
The PIPE offering was raised from a broad group of health care investors including Fresenius Medical Care, OrbiMed, Monashee Investment Management, Alexandria Venture Investments, UBS O’Connor, Morgan Creek Capital and a number of unnamed health care-focused funds. Most of the company’s existing investors participated in the PIPE.
PIPE, or private investment in public equity, is the practice of private investors buying a publicly traded stock at a preferred price. PIPE deals are often offered by companies looking to raise a large amount of capital quickly.
Key partnership with Fresenius
Humacyte was founded in 2004, and the Biotechnology Center provided it a $150,000 Small Business Research Loan in 2006.
Since then Humacyte has raised nearly $480 million, including a $150 million equity investment from Fresenius Medical Care, the world's leading provider of products and services for patients with renal diseases and for surgical care centers.
“Humacyte is a world-class regenerative medicine company developing bioengineered tissues to treat unmet medical needs,” said Vivian Doelling, Ph.D., NCBiotech’s vice president of Emerging Company Development. “The company has been a trailblazer in these advanced and readily available technologies. It's one of the best examples of North Carolina-based ingenuity and medical advancement.”
Humacyte’s platform technology allows it to create engineered, off-the-shelf replacement tissue that can be implanted in anyone.
“Humacyte’s innovative biotechnology platform is aimed at solving intractable medical problems,” said Rajiv Shukla, chairman and chief executive officer of Alpha Healthcare Acquisition Corp. The technology has the potential to help patients, physicians and insurers, he said.
Patients can benefit from lower risk of amputation and tissue rejection, elimination of waiting times, and reduced need for immunosuppression and additional surgeries. Physicians can achieve better clinical outcomes and ease of use. And payors can save costs by avoiding amputations and infections, additional surgeries, medication and re-hospitalizations.
Humacyte’s most advanced product candidate, Human Acellular Vessels (HAVs), is in late-stage clinical trials targeting vascular trauma repair, arteriovenous access for hemodialysis and peripheral arterial disease.
To date, more than 430 patients have been treated with HAVs in clinical trials, and the company has collected more than 800 patient-years of clinical data. So far there have been no immunological rejections of the HAVs.
Humacyte is on track to have its first commercial product within two years, a timeline helped by Fast Track and Regenerative Medicine Advanced Therapy designations from the U.S. Food and Drug Administration.
Humacyte has a commercial partnership with Fresenius for the use of its HAVs in dialysis and peripheral arterial disease, along with vascular trauma in markets outside the United States.
Longer term, Humacyte’s technology could create solutions for complex organ disease, including bioengineered replacement tissues and organs for coronary artery bypass grafts, pediatric heart surgery and treatment of type 1 diabetes.
The markets for the company’s potential products is estimated at $150 billion. If its products are approved, Humacyte projects annual peak sales of more than $12 billion.
Technology developed at Duke, MIT
Humacyte’s technology is based on research by Niklason, a leader in tissue engineering, and scientists Shannon Dahl and Juliana Blum, at Duke University, and on Niklason’s prior research at the Massachusetts Institute of Technology in the laboratory of Robert Langer.
The proprietary technology is protected by 87 granted patents and 21 pending patents.
The technology does not rely on direct transplantation of human cells or tissues as therapies or products. Instead, it uses banked human vascular cells as seeds to create extracellular, matrix-based tissues that can be formed into tubes, sheets or other shapes with properties similar to native tissues. The vascular cells are then removed to avoid triggering an immune response or infection in patients receiving the engineered tissue.
“Our innovative platform has the potential to support tissue repair, reconstruction and replacement without the limitations of existing standards of care,” Niklason said. “Humacyte’s bioengineered tissues can be produced at commercial scale and, after regulatory approval, are designed to be stored in hospitals and other surgical centers, and immediately available to surgeons whenever needed.”
The company’s workforce has grown to 130 employees including scientists, clinical, manufacturing, regulatory and commercial experts. They work in a state-of-the-art research and development and biomanufacturing facility in Durham that was built in 2018.
The facility can be expanded to produce up to 40,000 HAVs per year.