Alpha Healthcare III (ALPA) Signs LOI with Post-Close Acquisition for Carmell Deal

Alpha Healthcare III (NASDAQ:ALPA) announced this morning that it has signed a non-binding LOI for its combination Carmell Therapeutics to acquire an unnamed commercial-stage biotech firm for about $65 million.

The consideration would come in the form of $8 million in cash and $57 million in combined Carmell stock at close plus $75 million in potential milestone payments paid out along the same split (12% cash and 88% shares). This target company’s shares would be locked for 12 months following close.

The $140 million total potential value of this acquisition comes close to doubling the scale of the initial combination with Carmell, which was struck at $188 million enterprise value. Pittsburgh-based Carmell is developing a treatment platform to accelerate healing in bone fractures and soft tissue wounds.

It could also provide Carmell with some cash flow nearer at hand post-close as the target generated about $5 million in EBITDA from $50 million in revenue during the 12 months ending March 31, 2023.

The target also has a sales contract in place with a purchasing organization with coverage in about 1,500 US hospitals. Carmell’s therapies on the other hand remain at the clinical stage with its most advanced candidates undergoing Phase II trials.

This acquisition agreement remains non-binding, however, and may not come to fruition. In the meantime, it may serve as an amuse-bouche for Alpha Healthcare III investors as they head into a completion vote for the Carmell deal on July 11.