Pfizer Spinoff Cerevel to Merge with Another Company to Raise $445 Million Funds

The Boston-based biotech firm, Cerevel Therapeutics, which spun out of Pfizer in 2018 has announced that it will go into a merger with another company, and also go public.

The merger deal was announced on Thursday. It is expected to raise $445 million for the biotech company, which will lead to the further development of treatments for diseases like Parkinson’s, schizophrenia, and other neurological diseases. Currently, five of Cerevel’s drugs are in undergoing clinical testing, with one already in the late-stage phase.

“Over the next 12 months, we expect to have initiated at least six clinical programs across multiple indications, including schizophrenia, anxiety, epilepsy, and Parkinson’s disease.” Cerevel CEO Tony Coles said. “Today’s announcement ensures that we have access to the capital we will need to advance our clinical programs through to several key milestones in our quest to bring these therapies to patients.”

Cerevel’s merger is with special purpose acquisition company (SPAC) Arya Sciences Acquisition Corp II, sponsored by Perceptive Advisors. The goal of SPACs is to raise funds for other companies with the aim of acquiring those companies or merge with them. Once both companies reach favorable agreements on the deal, Arya Sciences will be renamed Cerevel Therapeutics Holdings.

The merger is expected to close in the fourth quarter, and it will result in a combined company worth of $1.3 billion, thereabout. The new firm will trade on the Nasdaq stock exchange using the ticker CERE. Cerevel will also maintain its management team including the current CEO Tony Coles, which will lead the new firm.

“Cerevel is using novel approaches in its quest to bring new treatments to patients living with neuroscience diseases, and today we are bringing that same spirit of innovation to our plans for becoming a public company,” Coles said. “Since our funding as a joint collaboration between Bain Capital and Pfizer, Cerevel has pushed the boundaries to tackle some of the most vexing questions in neuroscience, using science to target the specific receptor sub-types involved in causing these devastating diseases.”

Arya Sciences is sponsored by hedge fund Perceptive Advisors, which have so far raised $150 million, and plans to raise another $320 million from more healthcare investors to close the Cerevel merger deal. Some of the investors include T. Rowe Price, Fidelity, RA Capital, as well as Pfizer and Bain which are existing Cerevel shareholders.

With the emergence of the coronavirus pandemic, investors have been flocking the biotech industry to support researchers’ ambitions. So far in the year, 41 biotech companies have launched initial public offerings (IPOs), one-third of the number this same time in 2019.

In addition, over 50 SPACs have been created in 2020, hitting a $21 billion record for private company take-outs. Some of the deals include big names like sports-betting company DraftKings, electric-truck maker Nikola, and health services firm Multiplan.