Health tech Spacs drift downwards

2021 has seen a startling rise in the number of deals between special-purpose acquisition companies and medical technology, digital health and diagnostics groups seeking a fast and easy way to go public. A flurry of these deals in February was followed this week by Somalogic reversing into CM Life Sciences II in a transaction worth $651m, including a $375m Pipe investment. Somalogic specialises in protein analysis, and plays in three industries: clinical diagnostics, with its SomaSignal assays for cardiovascular disease, diabetes and cancer; aiding drug development; and basic research. Its revenues in 2020 were just $55m, but the Spac deal will bring Somalogic’s pro forma enterprise value to $1.2bn. News of the deal pushed CM’s share price up 10%, but this is an outlier among the class of 2021 – most have seen their valuation fall since announcing deals. Indeed the shine is perhaps coming off Spacs, at least in the health tech space. VG Acquisition Corp, the blank-cheque company backed by Virgin, has lost nearly a quarter of its value since announcing its intent to buy 23andMe – a fall rendered all the steeper by the fact that its value had soared 31% on the day of the announcement.