New York, NY -- October 6, 2020 -- InvestorsHub NewsWire -- via
The Motley Fool -- Special Purpose Acquisition Companies
(SPACs) set the overall electric vehicle (EV) market on fire in
August and September the way dotcom IPOs set the overall tech
market on fire in the 90s. Not only did dotcom IPOs on NASDAQ
deliver life changing returns, the market momentum extended to OTC
quoted tech companies as well. Similarly, momentum from today’s
NYSE and NASDAQ SPAC mergers are driving momentum for OTC quoted
companies in the same sector.
The SPAC trend stands to ignite momentum in more than just the
EV. See The Motley Fool article below about biotech SPACs and look
for lower price investment entry opportunities in biotech’s quoted
on the OTC Markets.
Generex Biotechnology (GNBT)
is a OTC biotech worth some attention. GNBT is a Phoenix strategy
rising from the ashes of a NASDAQ crash. The company is loaded with
proven IP and big pharma relationships. With the SPAC buzz bringing
attention to the Biotech market, GNBT could deliver big returns at
any moment.
PAO Group (PAOG)
is an even lower entry price OTC potential high flyer. The company
has recently acquired a patented cannabis biotech asset, cleaned up
its financials and is now making some notable research
connections.
If you have the wherewithal to venture into NASDAQ and NYSE
investments, SPAC investments offer promising IPO like returns.
Lower entry price opportunities may be generated from similar OTC
companies getting attention in the wake of the growing SPAC market.
It happed in the EV sector and it can happen in other sectors as
well.
From The Motley Fool on biotech SPACs:
Why Some Biotech Companies Are Turning to
SPACs
Forget traditional IPOs! This blank check vehicle is proving to
be an effective tool for biotech companies to raise capital.
By: Luis Sanchez CFA
A special purpose acquisition
company (SPAC) is a shell company that raises money
through an initial public offering
(IPO) in order to take a company public through
acquisition. Companies that want to go public usually go the route
of an IPO; however, SPACs have risen in popularity recently due to
their ability to get to market faster and surging demand from
investors.
It can take months for a company to debut on the public markets
the old fashioned way. The IPO process requires that companies work
with underwriters and regulators to produce and approve a detailed
investor prospectus. Additionally, the companies need to go on an
"IPO roadshow" to pitch their shares to dozens of early
investors.
On the other hand, going public via SPAC enables a company to
get a deal done in weeks -- instead of months -- and only requires
the selling company to negotiate with a single investor that
controls the SPAC. Commonly referred to as a "blank-check company,"
a SPAC jumps through the pre-IPO hoops and goes public itself
instead of the target company, which is ultimately acquired with
the funds raised from the markets. More recently, biotech companies
have started to embrace the SPAC structure too.
Successful biotech SPACs
In 2019, only one biotech SPAC took a company public: Chardan
Healthcare Acquisition
and BiomX (NYSEMKT:PHGE). BiomX is a
clinical-stage microbiome product discovery company working to
produce treatments for inflammatory bowel disease. The success of
closing that deal inspired more companies to go this
route.
Five biotech SPACs have already taken companies public in 2020.
Earlier this year, SPAC RTW Health Sciences successfully took
public Immunovant (NASDAQ:IMVT), a clinical-stage biotech
company focused on developing treatments for autoimmune
diseases. Immunovant's stock has traded well, further proving that
the SPAC model can work for biotech companies.
Therapeutics Acquisition: A promising new biotech
SPAC
Therapeutics Acquisition (NASDAQ:TXAC) is one of
the most recent biotech SPACs to raise capital. The company raised
$118 million in its July 2020 IPO. This SPAC is gaining interest in
the market, trading more than 30% above its offering price of $10
per share.
One reason why investors may be excited about Therapeutics
Acquisition is its exceptional management team. Peter Kolchinsky,
the SPAC's founder, is a notable healthcare venture capitalist,
having founded RA Capital in 2002. RA Capital has invested over
$1.4 billion in over 124 businesses, including some well-known
public companies such
as Arvinas, Black Diamond
Therapeutics, and Eidos
Therapeutics.
Investors in Therapeutics Acquisition are not only betting on
the biotech industry but are also betting on Kolchinsky's ability
as an investor. Ideally, the SPAC will invest in an attractive
private company and enable the early investors in the SPAC to get
in on a hot IPO before the rest of the market does. The biotech
industry is abundant with opportunity and having a talented
investor like Kolchinsky on your side is invaluable.
SPACs are here to stay
2020 has been a record-breaking year for SPACs. More than 40
SPACs have gone public, raising more than $14 billion combined. For
companies looking to go public, SPACs are proving to be a good
option. SPACs are convenient and
efficient because they allow companies to reach the public
market quicker. SPACs have traded at good prices, demonstrating
investor demand and confidence.
From an investor's standpoint, SPACs are valuable because they
provide the opportunity to invest in small, growing companies that
would have otherwise remained private. The asset class has been a
moneymaker for investors as well, due to surging share prices.
Given the strong appetite, it only makes sense to expect
more biotech companies to
jump on this fundraising trend.
The Motley Fool Original
Article
pennymillions
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