Human tissue developer Humacyte is scheduled to go public through a reverse merger with the Alpha Healthcare Acquisition (AHAC) SPAC. The merger was approved by AHAC shareholders on Aug. 24. What’s the forecast for Humacyte stock, and will it rise or fall after the merger?
Humacyte will receive nearly $275 million in gross cash proceeds, including $100 million in cash held by AHAC in trust and an additional $175 million in PIPE (private investment in public equity) at $10 per share. OrbiMed, Alexandria Venture Investments, UBS O’Connor, and Fresenius Medical Care participated as PIPE investors.
The Humacyte-AHAC merger date
The merger is expected to be completed on Aug. 26. Humacyte’s common stock and warrants will start trading on the Nasdaq under the ticker symbols “HUMA” and “HUMAW”, respectively, on Aug. 27.
Humacyte’s stock forecast
According to MarketBeat, analysts' average target price for AHAC stock is $19, which is 88 percent above its current price. Both Wall Street analysts tracking AHAC recommend "buy."
Will Humacyte stock rise or fall after merger?
Humacyte stock should go up after the merger closes, given the company's robust growth outlook. Founded in 2004, Humacyte is a leader in the field of regenerative medicine. The company focuses on developing off-the-shelf universally implantable bioengineered human tissues and organs. It specializes in human acellular vessels, which are highly resistant to infection. The company believes that its total addressable market is worth more than $150 billion, including $90 billion for potential vascular products.
The AHAC SPAC is headed by CEO Rajiv Shukla, who led the blank-check company that took molecular dermatology company DermTech public in 2019. DermTech’s stock price has surged by 275 percent since the merger. For the AHAC SPAC, Shukla looked at nearly 95 businesses before settling on Humacyte.
Humacyte is a good buy now
AHAC stock’s 40 percent pullback from its peak has opened a discount entry opportunity to Humacyte, which has bright growth prospects. The transaction comes as Humacyte transitions from a late-stage clinical company to a commercial scale.
Humacyte has completed five phase 2 clinical trials and has three phase 3 studies ongoing. These trials are anticipated to be completed in 2023. That’s when Humacyte intends to introduce its first product targeting vascular trauma. Hemodialysis, diabetes, peripheral arterial disease, and coronary artery bypass grafts are some of the other real-world uses for the company's HAV technology.
Humacyte believes that its pipeline products will generate $12 billion in annual sales, assuming clearance by the FDA. The company’s chances look good at this point. More than 430 patients have been treated with its HAVs so far in trials, providing over 800 patient-years of clinical information. There have been no cases of immunological rejection. Humacyte said it expects hospitals to stock its implants for use as needed.
Upon deal closure, Humacyte is anticipated to have a market capitalization of $1.1 billion. In comparison, DNA-testing company 23andMe has a market capitalization of $3.7 billion. 23andMe went public through a reverse merger in Jun. 2021, and is currently trading below its SPAC's IPO price of $10.