Clinical trial platform Science 37 is going public via a SPAC merger

Steven Loeb · May 7, 2021 · Short URL:

The transaction will value the company at $1.05 billion

One of big trends of 2021 has been the emergence of special-purpose acquisition companies. or SPACs, which act as an alternative way for companies to enter the public market without needing to go through a traditional IPO. Basically, a shell company is formed which goes through an IPO; it then acquires an established company so it can take over the stock. This allows companies to go public faster, bypassing the need for a months-long roadshow. 

A number of high profile companies have taken this route recently, including DraftKings and Nikola. These vehicles have become especially popular with companies in the healthtech space, with Clover Health, Sharecare, and HIMS already going public, while Talkspace and 23&Me have announced plans to go public via SPAC.

The latest healthtech company to announce a SPAC merger is decentralized trial platform Science 37. On Friday, the company revealed that it is merging with LifeSci Acquisition II, a blank check company targeting the biopharma, medical technology, digital health and healthcare services sectors. The combined company will operate as Science 37 and is expected to be listed on the NASDAQ under the ticker symbol “SNCE.”

The transaction is expected to value Science 37 at approximately $1.05 billion and will provide the combined company with approximately $250 million of cash.

The deal also includes a $200 private investment in public equity (PIPE) from institutional and strategic investors including Redmile Group; funds and accounts managed by BlackRock; Casdin Capital; dRx Capital; LifeSci Venture Partners; Lux Capital; Mubadala Capital, the asset management arm of Mubadala Investment Company; Perceptive Advisors; PPD; Pura Vida Investments; RS Investments; RTW Investments, LP; Samsara BioCapital; and Surveyor Capital.

LifeSci, whas has already done a number of SPAC mergers, including with with oncology biotech Vincera Pharma last year, is also a previous investor in Science 37, which had raised a total of $147.5 million in venture funding. 

"We're blessed to have an insider actually be the sponsor of the trust; within the trust, there's also a lot of biotech and biopharma companies and investment companies that are participating in the PIPE. The PIPE is considerably larger than the SPAC and that's given us the ability to be confident in the market price that we're bringing the company out at, which is the $1 billion," David Coman, Chief Executive Officer of Science 37, told me.

"From a proceeds standpoint, we're really just looking at taking that and pouring gasoline and taking this to the next level." 

The reason for going through a SPAC, rather than a traditional IPO, or even a direct listing, was the speed at which the company could go public, but also the immediate validation of the value of Science 37, he explained.

"By shopping around, we've got, not just speculation, but real orders, and that gives us a good, concrete clarity as to what we think the valuation of the company is going to be," said Coman.

"The great thing about a SPAC is that you can have a conversation about the future of the company, what that looks like, what you think your projections are. We are able to tell the full story, and be really transparent about the company, in a SPAC-based environment versus going through the traditional route."

Taking clinical trials to the patient

Founded in 2014, Science 37's operating system includes a technology platform and network capabilities, which are designed to accelerate clinical research studies. The company is able to enroll patients faster, retain patients longer, and also get underserved patients into those studies.

The company is solving for inefficiencies in the clinical trial space: there's current'y $60 billion dollars being invested in clinical research, but there haven't been many advancement in nearly a century, Coman explained. Pharma companies are still setting up networks of research hospitals around the world and then flying research associates from site to site in order to implement the study, and to recruit patients.

That means studies need to recruit people in the immediate area, so only about 8% of all patients are ever even approached about joining a clinical research study; that causes 80% of trials to be delayed, 20% of patients to drop out, and only 14% of the underserved patient populations to be asked to join.

Science 37 is designed to go directly to where patient already are, rather than going to those individual sites. It serves them through telemedicine investigators, mobile nurses and remote coordinators.

"This gives us the ability to provide universal access to any patient or any provider, anywhere, regardless of geography. As a result, we've been able to recruit patients 15 times faster into the clinical studies, we've been able to retain patients 28% longer, and we have a three time greater participation rate amongst the more underserved populations that are being ignored in a traditional research setting," said Coman

For example, in one instance, a biotech company had a blood test to predict colorectal cancer. They hired a contract research organization (CRO) to set up a network of hospital sites around the US and enroll patients; after two months, they had only enrolled about 100 patients out of the 14,000 they needed. After Science 37 got involved, they split the number up, meaning that the CRO would do 7,000 and Science 37 would do 7,000. After the first full month of enrollment, Science 37 had enrolled 2,000 patients; after the halfway point, the company had enrolled 5,400 patients. At that point, the CRO had not enrolled even 1,000 patients.  

In another instance, there was a study being done on lung cancer, which required targeting a very finite population that actually specific characteristics. Science 37 went to a genetics company to identify the patients that would fit this study and then asked the providers themselves to become an investigator for their patient.

"Those investigators ultimately become users of our platform to be able to take the patient through. So, we onboard patients, but we also onboard providers because, like patients, only 5% of providers today become investigators into clinical trials. If we can provide universal access to patients and providers, then we're solving an incredible unmet need for pharmaceutical companies."

Of course, Science 37 isn't the only company that is looking to decentralize clinical trials; the other notable company in this space is Medable, which recently raised a $78 million round of funding. The differentiation for Science 37, Coman explained, is that its operating system includes both the technology platform and its network capabilities, while a company like Medable only has the first part.

"Our technology platform takes you through workflow orchestration to the evidence generation and data harmonization, and then we have network capabilities, including the patient communities, telemedicine investigators, nurses, remote coordinators, and connected devices. So, what makes us unique is that we're really the only provider that is substantial, that is doing both the technology and the network capabilities in order to be able to execute these decentralized clinical trials," he said.

The future is agile clinical trials

Thanks to COVID forcing healthcare to go virtual, 2020 was a great year for companies that provide an alternative to in-person care; Science 37 was no exception, and that is partially what made this the right moment for the company to go public.

"Our business has had some extraordinary growth over the last 18 months. We’ve got a fantastic management team now put in place, quarter over quarter over quarter we have accelerating bookings, revenue, margins. One of the things that helped catalyze the company was the onset of COVID," said Coman.

"Now the sites are all up and running around the world, and the first quarter of 2021 was a record quarter for Science 37. So, we continue to accelerate beyond what was a catalyzing event to really solidify decentralization in the hearts and minds of our sponsors."

It also positions the company to go beyond decentralized clinical trials, and to prepare for the future, of the space which he calls the “agile clinical trial.” That means that there is going to be a mix of both traditional and decentralized.

"There are going to be traditional investigators, and there are also going to be telemedicine investigators connecting with patients. Some of those patients are going to be at home. Some of those patients are going to be at the site, some of those patients are going to get the care done at a facility nearby," he said.

"Ultimately, in order to be successful in the next wave of clinical research, you're going to have to have the ability to work with traditional investigators, remote investigators, mobile nurses, connected devices, remote coordinators. But, most importantly, you'll have to have an operating system that enables the flexibility between an on-premise environment and off-premise environment. Science 37 I believe is the only one that's doing that on the scale that we are."

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