DiaCarta, Ltd. (“DiaCarta” or the “Company”), a precision molecular diagnostics company and developer of novel oncology and infectious disease tests, and HH&L Acquisition Co. (NYSE: HHLA.U, HHLA, HHLA WS) (“HH&L”), a publicly traded special purpose acquisition company (“SPAC”), today announced that they entered into a definitive business combination agreement (the “Business Combination Agreement”) that is expected to result in DiaCarta becoming a publicly listed company (the “Transaction” or “Business Combination”). The Transaction is expected to provide DiaCarta with access to the approximately $414 million cash from HH&L’s IPO proceeds held in trust, assuming no redemptions by HH&L’s shareholders and prior to the payment of transaction expenses, and potential additional financing to catalyze DiaCarta’s growth. The Transaction implies a pre-money equity value of $460 million for DiaCarta on a fully diluted basis and is expected to close in the first quarter of 2023. The Transaction positions DiaCarta to capitalize on significant future growth within existing and new markets.
HH&L is led by Kenneth W. Hitchner, Richard Qi Li and a management team with significant experience in identifying and investing in attractive growth opportunities in the global healthcare industry, and Fenglai Fang, Chairman of HOPU Investments, serves as an adviser.
Upon closing of the Transaction, the combined company will be listed on the New York Stock Exchange. The combined company will continue to be based in Pleasanton, California, and led by Aiguo (Adam) Zhang, Founder and Chief Executive Officer of DiaCarta, and other key members of DiaCarta’s management team.
DiaCarta Overview
DiaCarta is a precision molecular diagnostics company that has developed innovative technologies that transform patient care by providing effective precision diagnostics using liquid biopsy. Underpinned by its proprietary XNA technology and SuperbDNA™ technology platforms, DiaCarta offers a range of products and testing services, including its early detection ColoScape™ Colorectal Cancer blood test, RadTox™ cfDNA test, its FDA EUA approved QuantiVirus™ SARS-CoV-2 Tests, its QClamp® qPCR tests and OptiSeq™ XNA-NGS panels. Its novel XNA technology provides a high level of sensitivity as it clamps the wild-type sequence and amplifies the mutant target sequence. Using this technology, the Company has developed its highly sensitive, early detection ColoScape™ Colorectal Cancer blood test. The Company’s revolutionary RadToxTM solution is powered by its SuperbDNA™ technology that provides a high level of sensitivity in detecting target DNA or RNA by amplifying the signal and requiring no RNA/DNA extraction or amplification. RadTox™ personalizes radiation and chemotherapy, serving to assess tumor response and enhance patient care. Based in Pleasanton, California, the Company is ISO certified, GMP-compliant and offers CLIA certified laboratory services to its customers.
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Since DiaCarta’s inception in 2012, the Company has exhibited strong growth. With over 80 patents across various jurisdictions, the Company has built a strong product pipeline with a clear and global growth strategy. DiaCarta expects to increase growth in the coming years, as it plans to expand its reach in international markets and acquire new customers in its existing markets.
Management Commentary
“We are thrilled to enter into this transaction with HH&L,” stated Aiguo (Adam) Zhang. “As a result of the transaction, DiaCarta will be well positioned to capitalize on significant future growth within our existing customer base and expand into compelling adjacent markets. This transaction represents a major milestone for DiaCarta, which will enable us to further invest in our technology and support pipeline growth,” he added.
“We are extremely pleased to partner with DiaCarta, as we believe it is a company poised for significant growth in an industry that can benefit greatly from its cutting-edge platform technology,” stated Kenneth Hitchner, Chairman of HH&L. “We are excited to see both patients and physicians reap the benefits of DiaCarta’s solutions applied in precision medicine.”
Transaction Overview
Pursuant to the terms of the Business Combination Agreement, the Business Combination will be effected in two steps. First, before the closing of the business combination, both HH&L and DiaCarta will deregister in the Cayman Islands and domesticate as Delaware corporations. Second, at the closing, a wholly-owned subsidiary of HH&L will merge with and into DiaCarta and DiaCarta will survive the merger as a wholly owned subsidiary of HH&L. HH&L will then change its name to “DiaCarta, Inc.”
The aggregate merger consideration paid to DiaCarta equityholders in connection with the Business Combination consists of 46 million shares of common stock of HH&L, after its domestication, which is calculated based on a pre-money equity valuation of DiaCarta at $460 million on a fully diluted basis.
HH&L has agreed, pursuant to the Business Combination Agreement, to seek additional investors through one or more private placements of its common stock. In connection with the Business Combination, HH&L Investment Co., the Sponsor of HH&L (the “Sponsor”), has agreed to contribute or forfeit certain Class B Ordinary Shares owned by itself to facilitate financing after signing of the Business Combination Agreement and if the total cash available to HH&L at closing is less than $40 million.
The description of the contemplated business combination contained herein is only a summary and is qualified in its entirety by reference to the definitive agreement relating to the business combination, a copy of which will be filed by HH&L with the Securities and Exchange Commission (“SEC”) as an exhibit to a Current Report on Form 8‑K, which will be accessible through the SEC’s website at www.sec.gov.
Advisors
Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC (“CCM”), is serving as exclusive financial advisor and capital markets advisor to HH&L. Revere Securities LLC is serving as exclusive financial advisor to DiaCarta. White & Case is serving as legal advisor to HH&L. Loeb & Loeb LLP is serving as legal advisors to DiaCarta. Morgan, Lewis & Bockius LLP is serving as legal counsel to CCM.
Source: Biospace