Disclaimer: Not financial advice. The merger vote is tomorrow, and the minimum cash conditions are not being met by PIPE, which is why current warrant price is accounting for risk of potential failure if redemptions are as high as most deals lately. Buy at your own risk.

Full Disclosure: I have 35,000 HCCCW and it represents my 2nd largest position.

Alpha Tau is an Israeli medtech company with a novel, patented way to fight cancer and kill solid tumors, and is (hopefully) on the verge of merging with Healthcare Capital Corp (HCCC) - merger vote is tomorrow, February 15.

Traditionally cancer is fought using gamma or beta rays, which are strong enough to damage tumors but may not be strong enough to kill them in many cases. This leads to prolonged treatments and a chance of recurrence if the tumor can't be completely removed.

Alpha radiation, on the other hand, is stronger and destroys tumors with prejudice, rending the DNA apart. Unfortunately, alpha radiation also damages surrounding tissue and organs with prejudice, which is why it is has long been seen as impractical as a cancer treatment, while the weaker gamma or beta rays have comparatively lower risk to healthy tissue. Gamma and beta have been the "compromise solution" since alpha radiation has been too dangerous to use.

Alpha Tau was founded on a novel technology of using precision-injected alpha radiation developed in 2003 at the University of Tel Aviv. The Alpha DaRT system injects Ra-224 directly beneath the surface of the tumor using wires, with a diffusion range of a few millimeters, destroying only the tumor's DNA while keeping the surrounding tissue and organs safe. Dozens of clinical and pre-clinical publications backed up the technology's safety and effectiveness.

From Alpha Tau's website, the Alpha DaRT system is:

Highly potent and conformal - The Alpha DaRT seed releases short-lived Alpha emitting atoms. These atoms emit high-energy Alpha particles which destroy the tumor. Since the atoms hardly diffuse in healthy tissue, Alpha DaRT mainly affects the tumor, sparing the healthy tissue around it.
No negative systemic effects - Promising preliminary clinical results showed no systemic side effects and minimal damage to healthy tissue.
Proven efficacy for all solid tumors tested - Preclinical studies have found the technology to be effective and safe for various indications, including tumors considered to be resistant to standard radiotherapy. The size of Alpha DaRT seeds is similar to fiducial markers enabling the treatment of small tumors and metastatic lesions.
Effective regardless of tumor oxygen level – Alpha radiation has proven efficacy independently of cell cycle stage and oxygenation level of the tumor. Hence, the Alpha DaRT treatment can be applied to hypoxic tumors which show great resistance to gamma radiation.
Short half-life – quick clinical outcome - Thanks to the short half-life of Radium-224 (3.7 days), Alpha DaRT achieves quick clinical results within few days only.
Single-session treatment - Alpha DaRT can be applied under local anesthesia in a short single session.
Enables combination with other therapies – Proven in preclinical trials, efficacy and overall survival rate can be further improved by combination treatment of Alpha DaRT with other modalities such as chemotherapy and immunotherapy.
Stimulates systemic anti-tumor immunity – Tumor destruction by Alpha DaRT has shown to stimulate anti-tumor immunity which is responsible for the elimination of distant metastases.
Safer for caregivers – The level of exposure to gamma radiation during and after the treatment has proven to be negligible. This ensures higher safety for both the patient and the physicians.
Ultra-minimally invasive applicators – The company has developed ultra-minimally invasive applicators that can be utilized for various types of tumor within different anatomic areas.
Cost-effective - Since Alpha DaRT applicators are disposable and the treatment does not require capital equipment or special shielding, Alpha DaRT will be available to millions of patients worldwide.

The system is authorized for skin and oral cancers in Israel and is currently in clinical testing for a variety of cancers in several countries, and is building plants in Japan and the US.

Skin Cancer - US, Israel, Japan, Italy

Oral Cavity Cancer - Israel, Japan, Italy

Head and Neck Cancer - Japan

Breast Cancer - Japan, Russia, US (announced last month)

Pancreatic Cancer - Canada

Prostate Cancer - Israel

...as well as pre-clinical Trials for glioblastoma multiforme (GBM) (aggressive brain tumor), hepatic cell carcinoma and lung cancer. It has also been preliminarily studied on mice for many other types of cancer and response has consistently been observed on all types of solid tumors.

In the results announced last month regarding the initial skin cancer study in the US, all ten tumors treated were in complete response to the treatment with no serious related adverse events. Alpha Tau was given two Breakthrough Device Designations from the FDA last June (for skin cancer) and last October (for recurrent GBM).

Basically, this is an extremely exciting development in the field of cancer treatment, and the technology is mature and has been developed and studied for almost two decades, with a continuous track record of execution and positive clinical results.

Alpha DaRT complete response in a skin cancer tumor

How Alpha Tau was valued by HCCC

Investor Presentation: https://www.sec.gov/Archives/edgar/data/1822935/000121390021036059/ea143907ex99-2_healthcare.htm

HCCC valued Alpha Tau at $1B. The DEFM14A's "Background of the Business Combination" section (https://sec.report/Document/0001213900-22-002031/) is always an interesting read I would suggest for anyone holding a SPAC through merger, where they lay out the background of the business combination, and how they vetted and valued the company.

HCCC's Chairman David Milch had invested in Alpha Tau before the SPAC started (it was included in his bio) and he is sitting out the merger vote to avoid a conflict of interest.

Since many of these pre-commercial pharma/medtech companies don't have traditional financials and there's a risk it will not be approved, so it is hard for many people to gauge a good value. For this reason, pharma warrants tend to be underbought compared to more traditional targets.

HCCC valued the deal based on several comps:

The more commercially mature, device-based, widely applicable cancer treatment company Novocure is valued at $15.6B, 15.6x that of Alpha Tau. Alpha Tau hopes to follow Novocure's path to commercialization and wide applicability over the coming years.

When researching IPO potential, Alpha Tau was compared to Fusion Pharmaceuticals, an early stage pharma valued at $630M that also uses alpha radiation, but has a very different delivery system that may not be as universal or safe, so the directors believed Alpha Tau is more valuable.

Other comparisons using alpha radiation but different systems included Algeta, acquired in 2013 by Bayer for $2.9B, and Advanced Accelerator Applications, acquired by Novartis in 2017 for $3.9 billion. HCCC believes these systems have "much smaller" addressable markets than the Alpha DaRT.

Basically, if Alpha Tau can commercialize their system and achieve what is a large addressable market, the stock could be worth substantially more than this $1B valuation - with widespread adoption or acquisition, could end up being a ten-bagger in the coming years for patient investors.

Why warrants are an exciting (if risky) investment

As of last trade on Friday, HCCCW were trading at $0.31. These 1/2 warrant splits in units, and the average PRE-DA price for that split is $0.39. Indeed, HCCCW would be in the bottom 20th percentile of pre-DA 1/2 split warrants.

When post-DA warrants are cheaper than pre-DA warrants, the market is presuming a high probability of deal failure and warrants getting oversold. Alpha Tau has a minimum cash condition of $250M and the deal has PIPE of only $92m. Lately many deals have been getting over 90% redemptions, so the risk here is that HCCC will not come close to raising the minimum cash needed to complete the deal.

This is true for many deals that have still ended up being completed, however. The minimum cash condition is often waived by targets who want to go ahead with the merger. $92M from PIPE is at least an injection of cash now that can assist with their commercialization scheme and help the company sustain operations. They may unfortunately have to issue new stock or find other ways to raise more cash down the road, as many of these highly-redeemed SPACs do.

The executives of Alpha Tau has been doing the rounds on news media lately, including interviews with Maria Bartiromo on Fox Business News and a Youtube interview with Jon Najarian last week. The high redemption market conditions of the SPAC market are well known so I have to wonder what would be gained by making media rounds if you're about to cancel the deal at the last minute, but unfortunately the entire market is a crapshoot right now. I think cancelling a deal at the finish line is hard for many companies to do, especially given the risk that their IPO would be delayed and not necessarily raise much more cash in the current environment.

The silver lining for warrant holders? Even if the deal is cancelled, the SPAC still has til January 2023 to complete a new deal before their deadline. Having watched the warrants on many cancelled deals, I think if the deal is cancelled this may fall below .20 with panic selling for a bit before moving closer toward pre-DA average, which is higher than here. At these prices .31 to .19 is a massive % drop, but it could end up higher than now when it settles down. Some post-DA is pricing in a cancellation dropping warrants to the bottom of the price pile since they are starting over in a difficult market.

If the deal goes through, like many pharma SPAC deals, warrants are like a double lottery ticket. Pharma or tech approval by the FDA can lead to exponential gains on the commons stock, and warrants, being leveraged, can be far more exponential. Plus there is the possibility of a low float pump if redemptions are high. Given the upside of the company itself, a low-float pump on the commons could actually create long-term investor interest the way it did with SABS (another pharma company I was excited about pre-merger and continue to hold waiting for clinical results.)

Even more exciting for holders if the deal goes through, unlike many newer SPACs, HCCCW does not have a $10 cashless redemption condition. There is a potential of early cashless exercise, but only if the stock is over $18 for 20 of 30 days. This means the warrants have more upside and a longer window of potential to reach exponential upside than many others that will be called when the stock is over $10 for 20 of 30 days. If such an exciting technology as this gets approved, a double to $20 or more on the commons is completely believable. Current $0.31 warrants could be worth $6.50 or more at $18 a share, almost 2000% upside.

I am extremely excited about Alpha Tau and praying the deal goes through - ideally with less redemptions than I expect. Once it does these warrants will be a long term hold for me.