OceanTech I (NASDAQA:OTEC) has entered into a definitive agreement to combine with regenerative medicine company Regentis at a $95 million valuation.

Or-Akiva, Israel-based Regentis has been working to commercialize its GelrinC orthopedic therapy to repair cartilage damage in knees and has already received a CE mark in Europe as a medical device.

The combined company is expected to trade on the Nasdaq once the deal is completed in the fourth quarter of 2023.

Transaction Overview

OceanTech I has an estimated $19.4 million in its current trust after experiencing 82.1% redemptions in earlier extension votes. Regentis shareholders are to receive $95 million in OceanTech I shares at $10 per share.

This payout is to be subject to certain adjustments that have not yet been made public. The parties have not yet filed their merger documents or an investor presentation, but OceanTech I’s profile page will be updated once additional information is available.

The SPAC is to acquire some Regentis options and warrants and its sponsor will also be subject to a contingent earnout. The sponsor may earn up to 1,750,000 shares if the combined company meets certain performance hurdles. This appears to be in addition to the sponsor’s 2,581,500 promote shares that will convert to Class A shares at close.

Quick Takes: The OceanTech I vehicle has seen many sights in its voyage across the SPAC seas.

It IPO’d in May 2021 with a different management team that entered into successive definitive agreements with Captura Biopharma and Majic Wheels (OTC:MJWL) in August and November 2022, both of which were terminated.

The latter of these transactions – with Indian crypto and fintech exchange Majic – appeared particularly strange. It had been issuing shares to plug a -$89.5 million hole in its finances and as a result had dropped to a $11 million market cap but garnered a $333 million proposed enterprise value in the deal.

But, with that deal terminated and a few more months left on its transaction clock, OceanTech I’s sponsor sold its sponsor economics to a new team in March. This new sponsor, Aspire Acquisition, is led by Suren Ajjarapu, who is quickly becoming a serial SPAC prince among the microcap rung.

He also served as Chairman and CEO of Aesther Healthcare, which completed a combination with Ocean Biomedical in February. Ajjarapu was also appointed Chairman and CEO of Kernel Group (NASDAQ:BIOT) in January after a similar sponsor takeover.

Kernel then turned around and announced a $847 million combination with air mobility firm AIRO in March. Therefore, this makes for the third SPAC deal Ajjarapu has either announced or closed since the start of the year and he also helmed the takeover of two SPACs during that time.

For now, OceanTech I has snared Ajjarapu’s second medical target of the year in Regentis. It has the potential to be a somewhat more mature investment play than many deals in the biotech and healthcare fields by virtue of the fact that it has already secured regulatory approval for its main product in the EU.

But, it has a pivotal trial going now, which could help it towards FDA approval  and the company may have already done some early legwork for the China market. Regentis’ $15M Series D in 2016 was led by Chinese pharmaceutical manufacturer Haisco, which has inked licensing and distribution deals with other SPAC targets, including one that announced a combination just last week.

Regentis’ GelrinC device injects a patented gel into damaged areas of cartilage that have caused gaps or tears. This gel then bonds the tissue together and dissolves as it heals naturally, providing a treatment that requires no incisions or stitching.

Despite being approved for treatment in Europe since 2017, the company has not made public any information of any revenue from sales in Europe or elsewhere yet.

If Regentis has not been treating knees in Europe during this time, it is unclear what the holdup has been exactly. If it has been a money question, Regentis Executive Chairman Dr. Ehud Geller noted in the parties’ press release that it is looking forward to having “greater access to the public capital markets” through the transaction.

The treatment market for cartilage repair is not estimated to be especially large. Markets and Markets put it at $787 million in 2020 and projected it to grow to about $1.6 billion in 2025. But, commercialization in even a niche market could help fund new avenues of clinical research and new products.

As for Ajjarapu, he’s a busy man, so we’ll see if he can keep up this pace. But, there are probably still more searching SPACs out there available and open to a sponsor change, so his is a name that SPACland could still be hearing more of in the months to come.

ADVISORS

• Company
  • Maxim Group LLC is serving as sole financial advisor to Regentis.
  • Greenberg Traurig, LLP and Doron Tikotzky Kantor Gutman Nass & Amit Gross & Co. are serving as legal advisors to Regentis.
• SPAC
  • Cohen & Company Capital Markets is serving as lead capital markets advisor to OceanTech.
  • Nelson Mullins Riley & Scarborough LLP and Goldfarb Gross Seligman & Co. are serving as legal advisors to OceanTech.