Liquid biopsy company Freenome finds path to public markets with $330M SPAC merger
Freenome, a developer of tests that identify early signs of cancer from small patient blood samples, is going public in a merger deal that will inject $330 million into the company to support a pipeline that could launch its first commercial test in 2026.
The early cancer detection company is merging with Perceptive Capital Solutions Corp, a special purpose acquisition company (SPAC) sponsored by an affiliate of Perceptive Advisors, the companies announced Friday. The combined company will adopt the name Freenome. Upon completion of the transaction, Freenome's shares are expected to trade on Nasdaq under the ticker symbol “FRNM.”
Freenome, based in Brisbane, California, is part of a group of companies that develop tests that detect biological and genetic signs of cancer by analyzing a small sample of a patient's blood, a so-called liquid biopsy. Freenome's platform technology leverages artificial intelligence and machine learning technology to analyze samples and identify cancer signals. Such tests are designed to detect cancer in the earliest stages of the disease, when treatment has a greater chance of success. Freenome said in an investor presentation that early cancer detection represents a $50 billion market opportunity.
Colorectal cancer testing is Freenome's most advanced product candidate. The test, called SimpleScreen, is currently under FDA review, with a regulatory decision expected in mid-2026. Freenome's main competitor in colorectal cancer testing will be Guardant Health, whose Shield test is the first FDA-approved liquid biopsy for this type of cancer. Exact Sciences was expected to compete with its own test, but clinical trial results from a pivotal study were disappointing. Subsequently, Exact reached an agreement with Freenome in August to pay $75 million upfront to purchase the U.S. rights to SimpleScreen for the single indication of colorectal cancer screening.
The Exact Sciences agreement allows Freenome to retain rights to colorectal cancer screening as part of a multi-cancer detection test it is developing that is designed to screen for more than 10 cancers from patient blood samples. Roche already has an existing relationship with Freenome as an investor, having struck a deal last month to secure the rights to commercialize the company's “kit” multi-cancer early detection test outside the United States. Kitted tests package detection methods and software together to process and analyze samples without the need for a centralized laboratory. The deal comes with an upfront equity investment of $75 million in Freenome; an additional $134 million will be used to achieve milestones. Freenome retains U.S. rights to multiple cancer early detection tests and U.S. rights to companion tests.
Freenome is pursuing a “versioning strategy” in which improvements to analytics and algorithms will be incorporated into subsequent versions of its tests. The regulatory submission currently under FDA review is for Version 1 of SimpleScreen. The company expects regulatory submissions for Version 2 to be ready by the middle of next year. The data, presented in an investor presentation, showed a sensitivity of 75% for detecting stage I colorectal cancer; sensitivities for advanced adenoma and high-grade dysplasia were 22% and 44%, respectively. While these scores are higher than those reported for Guardant's Shield Version 2, William Blair analyst Andrew Brackmann said in a research note that the SimpleScreen Version 2 data is final clinical validation data and not critical data expected to be submitted to the FDA.
“Not surprisingly, we have questions about how the study was conducted, where the cancer came from, etc., but even so, the results do show some nice improvements over v1,” Brackmann said.
Leerink Partners analyst Puneet Souda said in a research note that Guardant's Shield has a first-mover advantage in the market and is expected to conduct more than 80,000 tests this year. Since version 2 of SimpleScreen isn't expected to be submitted until late next year, Guardant has time to improve its next test, Shield version 3. But Leerink believes the market for liquid biopsies is large, with about 11 million average-risk individuals willing to be screened with a blood test rather than a colonoscopy. That leaves room for multiple competitors, Sudha said.
Freenome has raised more than $1.3 billion since its founding in 2014, the company said in an investor presentation. The SPAC merger is expected to inject about $330 million into the company. Of that amount, $90 million came from a trust account held by Perceptive Capital Solutions and a $240 million private equity investment (PIPE) led by Perceptive Advisors and RA Capital. Investors in PIPE will purchase 24 million Freenome shares at a price of $10 per share.
Combined with Freenome's own funding, which includes payments from the Exact Sciences and Roche transactions, the company expects total funding after the merger will exceed $1.3 billion, according to the presentation. Proceeds from the transaction and cash on hand will be used for product development, clinical testing and commercialization activities.
The boards of directors of Freenome and Perceptive Capital Solutions have approved the merger, which is expected to close in the first half of 2026. The deal still requires approval from shareholders of both companies.
Photo: Milos Jokic, Getty Images
