The following case studies demonstrate a variety of investment and exit models all conceived and executed within the HighCape investment structure.
Aziyo Biologics (Nasdaq: AZYO) has been constructed with a highly creative approach to building a Regenerative Medicine company from a group of disparate assets. In 2015, shortly after HighCape was formed, the opportunity was presented to create a new company by spinning out a group of regenerative medicine assets from the not-for-profit organization Tissue Banks International (now Keralink International). Based on strong relationships between leaders of both organizations, the idea, plan and transaction were completed. At the same time, HighCape brought Deerfield management to the table as both an investor in the deal and active member of the board of directors.
The HighCape team immediately took the lead in helping transition >100 employees from a not-for-profit organization into a for-profit, private enterprise. HighCape involvement not only included substantial capital investment, but also actively recruiting an entire leadership team (including the CEO), establishing updated employee compensation and benefit plans, fashioning a new business model and also designing a new governance structure (including the board of directors). Additionally, HighCape supported a significant investment in new product development efforts.
With the base business solidly established and growing, the HighCape team again provided important assistance in 2017 by leading, financing and closing an acquisition of eight marketed products to be added to the company’s commercial product portfolio. This single transaction accelerated the transition from a contract manufacturing model into a marketer of proprietary regenerative medicine products in cardiovascular and orthopedic medicine. This transaction not only included products but also manufacturing and sales organizations which required integration into Aziyo. The HighCape team once again provided significant leadership.
As the largest shareholder, HighCape has fueled the company’s growth through multiple rounds of investment to support product development, commercial expansion and an active business development effort. In 2019 the company completed an initial public offering (IPO) with continued financial and tactical support from the HighCape team including such areas as roadshow preparation, public investor relationship management, investment banker assistance and other tasks critical to the transition from a private to public company.
Cheetah Medical was the first HighCape Capital investment. In 2014, shortly after the close of fund I, HighCape invested in this highly innovative company commercializing a new, and novel, approach to non-invasive cardiac output and hemodynamic monitoring. At the time of the initial investment, the commercial results were not meeting expectations and existing investors believed change was needed.
As is typical, the HighCape team rolled up their sleeves and went to work. Over the next few years, our team was instrumental in helping reshape the leadership of the company, including both company management and the board of directors. HighCape also invested tremendous time and energy working with company leadership rethinking the entire commercial model from pricing to the sales organization to product development. These adjustments, combined with multiple rounds of capital investment, fundamentally changed the trajectory of the company. As the company continued to grow, HighCape strongly advocated for continued infusions of capital with the primary goal of driving topline revenue while also maintaining the dynamic research and development organization based in Tel Aviv, Israel.
In 2019, the company was acquired by Baxter International. Aside from the obvious acquisition of the innovative marketed products and associated revenue, Baxter also considered the Israeli based R&D organization a key component of the acquisition.
In September of 2020, HighCape Capital announced a $115M Initial Public Offering (IPO) of the fund’s first Special Purpose Acquisition Corporation (SPAC). The SPAC quickly garnered attention and interest based on the HighCape partners’ reputations as experienced investors and operators.
Just six months later, HighCape announced a definitive merger agreement with Quantum-Si (QSi). QSi invested more than seven years and $180M developing a ground-breaking platform technology poised to revolutionize the field of proteomic research and was preparing to commercialize the initial portfolio of products while continuing to develop and enhance the technology for future products and applications.
The HighCape team rapidly structured the transaction and efficiently completed diligence. The transaction included a $425M private investment in public equity (PIPE) financing, in addition to the HighCape SPAC cash of $115M. From negotiating the LOI to closing and announcing the merger agreement was less than 60 days, far quicker than typical transactions of this size and complexity.
From the beginning of the process the HighCape team quickly leveraged partner and advisor experience within the geonomics and Life Sciences tools markets. This content specific expertise allowed the HighCape team to provide significant insights on company messaging, investor relations, board composition, leadership development and capital requirements.