WORKWEEK

Video game therapeutics company Akili Interactive plans to go public via SPAC in a deal valued at $1B (link). Chamath Palihapitiya, who’s no stranger to the SPAC landscape, is leading the deal through his company Social Capital. 

Company Profile 
Akili brings a new digital approach to cognitive medicine for conditions like pediatric ADHD and has the first FDA-cleared video game-based digital therapeutic called EndeavorRx (link). The latest data show that 6.1M children in the U.S. have ADHD, a large and lucrative market if insurance covers Akili’s digital therapy. The company also has three proprietary technologies that target different areas of the brain, each involved in executive function or memory (link). The plan is to build more digital therapeutics for multiple sclerosis, autism spectrum disorder, major depressive disorder and Covid-19-caused brain fog.

The Deets of the Deal 
The SPAC deal, valued at $1B, will provide up to $412M in gross cash proceeds: $165M from private investment in public equity raise, $100M from Palihapitiya’s Social Capital and the rest from new and existing investors.

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One hundred and seven companies went public via SPAC in 2021 (link). Overall, healthcare companies that went public last year aren’t doing so hot: 

• Average post-IPO performance was -12%. 
• Average de-SPAC (process of merging with a SPAC) performance was -32% (link).

Competition in healthcare is undoubtedly increasing, putting more pressure on SPACs to target companies and “get a deal done.” But, this pressure increases the risk of SPACs targeting companies not mature enough yet to go public, leading to poor decisions and, therefore, poor returns. It also seems SPACs will face more hurdles in 2022 with increased regulation. So my prediction is we see fewer companies go public via SPAC in 2022 and continued poor performance from companies that went public in 2021. Agree? Disagree?