Biotech startup Ocean pivots from IPO to SPAC merger

Ocean Biomedical, a small Rhode Island-based biotechnology company, will go public through a SPAC merger with Aesther Healthcare Acquisition Corp, pivoting from plans to list shares through a traditional initial public offering. 

Ocean Biomedical focuses on oncology, infectious diseases and fibrosis. The company filed paperwork for an IPO in June 2021, initially expecting to offer shares between $14 and $17, which would equate to funding of between $45 to $54 million. As time went on, however, Ocean marked down its target range and number of shares on offer, regulatory filings show.

Ocean is no exception, however. Many biotechs have struggled in their attempts to go public. Only 5 biotech companies priced IPOs in the second quarter of 2022, compared to 30 in the second quarter of 2021. And of the companies that did go public, most have since lost value in market trading. 

SPACs, or special purpose acquisition companies, provide an alternative to IPOs, giving companies another route to go public. While SPAC deals have been around for a long time, they started gaining considerable traction within the tech and biotech industries in recent years. 

But that trend seems to be slowing down as some biotech SPACs have performed poorly. Additionally, in 2021, SPACs came under scrutiny from shareholders and the Securities and Exchange Commission

The merger between Ocean and Aesther is expected to close in the fourth quarter this year with the new company holding an enterprise value of $345 million. The company name will be “Ocean Biomedical, Inc.” and shares will be listed on Nasdaq as “OCEA” and “OCEAW.”

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