Allergan's former CEO, Brent Saunders, is back in the aesthetics business after Vesper Healthcare Acquisition Corp.'s $975 million purchase of The HydraFacial Co.

Pfizer Inc. and Bain Capital LP's neuroscience spin off Cerevel Therapeutics Holdings Inc. is picked up by ARYA Sciences Acquisition Corp II.

These are just two major deals signed in 2020 through blank-check companies, also called special purpose acquisition company transactions. The biotech sector has seen an uptick in these deals as an alternative to the traditional IPO following pandemic-related market uncertainties.

SPACs have been around for decades but experienced a renaissance in 2020 given a changed U.S. economy. A SPAC is a public shell company created for the purpose of raising money to acquire smaller private companies and take them public. The shell company will raise money through an IPO — sometimes with a big name investor, firm or company attached that draws interest — then buy a private company, essentially bringing them public without the smaller company having to sell itself to unfamiliar investors.

"One of the things that people like about SPACs is the fact that there's greater use of forward-looking information and projections and that the companies put that information into the marketplace," Glenn Pollner, partner at law firm WilmerHale, said in an interview with S&P Global Market Intelligence. "As opposed to a traditional IPO where the information presented as part of the offering is historically oriented."

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SPAC IPOs accounted for more than half of all IPOs in the U.S. across all sectors in the third quarter, up from 26% the year before, according to S&P Global Market Intelligence data.

Since SPACs first started to appear in their current form in the 1990s, these businesses have undergone an evolution of respectability. In the beginning, SPACs were seen as a back door to going public and they lacked credibility, according to PwC U.S. Pharma and Life Science Leader Glenn Hunzinger.

As big banks and private equity firms have moved into the SPAC business, however, the deals have become more attractive to investors. The pandemic in particular has caused the number of SPAC deals to "explode," due to an excess in capital available to invest at the moment, Hunzinger said.

A speedier roadshow

To a more entrenched group of biotech investors, the SPAC could be a speedier investment, Hunzinger said.

"If you're a normal IPO candidate, you're hiring a bank, you're going on a roadshow, you've got to go sell the store and sell the business — banks are trying to bet on which businesses are worth their time," Hunzinger said. "If you have a company that maybe doesn't have that full history, but they're able to sell the upside to a sophisticated bunch of investors more quickly, then that's when you end up down that SPAC route because you can more quickly get the capital you need."

Biotech IPOs have surged 58% in 2020 compared to the year prior; meanwhile, SPAC deal volume has risen 250% from 2019, according to GlobalData, which tracks healthcare industry trends.

In the first nine months of the year, 118 SPAC IPOs raised $41 billion, according to data firm Refinitiv. Some of the SPACs formed in 2020, including Deerfield Healthcare Technology Acquisitions Corp. and CM Life Sciences Inc., are focused on merging with businesses in the healthcare and life sciences sector.

Hunzinger said biotech IPOs and SPAC deals have seen growth due to hot areas like oncology and cell and gene therapy and companies' abilities to use big data.

Healthcare-focused SPAC Arya Sciences Acquisition Corp. completed a business combination with cancer-therapy maker Immatics Biotechnologies to form Immatics NV. Previous investors in the target included pharmaceutical giant Amgen Inc. Immatics netted $253 million in gross proceeds from the deal.

"Our goal when we formed Arya was to identify a unique company with disruptive potential. Immatics' expertise in identifying cancer targets and developing the right TCRs for immunotherapies provided exactly that opportunity for this investment vehicle," Adam Stone, CEO of Arya, said in a March 17 statement.

Arya is one of three SPACs formed by executives from Perceptive Advisors LLC, a hedge fund with leaders with experience in science and the biotechnology world. One of the fund's portfolio managers, Chris Garabedian, previously served with Gilead Sciences Inc. and Celgene and as president and CEO of Sarepta Therapeutics Inc. Arya and Arya Sciences Acquisition Corp II have already executed deals, while a third — Arya Sciences Acquisition Corp III — remains in the hunt.

The Cerevel Therapeutics and Arya II deal included investors like Pfizer, Bain Capital and Perceptive Advisors, which participated in a $320 million common stock private investment in public equity at $10 per share. Cerevel's net proceeds from the transaction totaled $440 million by the time the company went public in October.

New York-based Nuvation Bio Inc., another oncology biotech, signed a deal with the SPAC Panacea Acquisition Corp. in October. Upon completion, the combined company expects to have over $850 million in cash resources, according to a press release. Nuvation CEO David Hung said the financing from the merger will allow the company to develop new generations of oncology medicines.

Pollner said digital health has been a major target of SPACs this year. One of the most high-profile combinations was Hims Inc. and Oaktree Acquisition Corp., a deal that would value the merged beauty and wellness company at $1.6 billion.

In early October, Medicare Advantage company Clover Health Inc. announced plans to merge with Social Capital Hedosophia Holdings Corp. III in a deal valuing Clover at about $3.7 billion, according to a company press release.

Former Livongo Health Inc. executives, including founder and chairman Glen Tullman, started their own SPAC called Health Assurance Acquisition Corp. backed by venture capitalist firm General Catalyst Group Management LLC after their former company was sold to Teladoc Health Inc. According to SEC filings, the company does not have a specific industry target, but in the filings, the founders said they are looking to partner with healthcare businesses that use technology.