After completing acquisition, Sema4 names new CEO
STAMFORD — Genomic-testing provider Sema4 announced this week the completion of its acquisition of another testing provider, GeneDx, whose chief executive officer will now lead Sema4.
The new leadership structure differs from the plan outlined in January when the companies announced the acquisition deal. At that point, they said Eric Schadt, Stamfordbased Sema4’s founder and its CEO since its 2017 launch, would serve as co-CEO of the expanded company alongside Katherine Stueland, who was then GeneDx’s CEO and president.
But in a news release and filings this week to the Securities and Exchange Commission, Sema4 said Stueland had started at the company as the sole CEO, while Schadt had become president and chief research and development officer, and would report to Stueland. Additionally, Stueland has been elected to Sema4’s Board of Directors, while Schadt has kept his seat on the board.
“Sema4’s acquisition of GeneDx and the announced leadership changes make us a stronger company today and better positions us to deliver a future where precision medicine is the standard of care,” Sema4 said in a statement provided by a company spokesperson, in response to an inquiry from Hearst Connecticut Media. “Both Sema4 and GeneDx have established legacies in innovation, strong technical capabilities and bestin-class datasets. We will continue to develop and scale our innovative health intelligence platform and further establish the organization as a transformative health care company.”
The company declined to comment further on the reasons for Stueland becoming the sole CEO. The company said it would share more information during a first-quarter earnings call on May 12.
In a statement included in this week’s news release, Stueland said, “I am delighted to have the opportunity to lead Sema4 as we embark on this next chapter for the combined company, with a focus on growth, operating efficiency, scaling toward profitability and transformational partnerships.”
In his own statement, Schadt said, “we are very excited to add GeneDx’s complementary capabilities and are equally thrilled to welcome Katherine as our new CEO, given her extensive leadership, commercial and operational experience.”
At the same time, the acquisition’s total price has decreased from the amount originally announced in January — apparently as a result of a recent decline in Sema4’s stock price.
The acquisition involved an upfront payment of $150 million in cash, plus 80 million shares of Sema4’s Class A common stock, with up to an additional $150 million in revenuebased “milestones” during the next two years. Based on Sema4’s closing stock price as of April 29, the trading date on the closing of the transaction, the “total upfront consideration” is approximately $322 million. The “total aggregate consideration,” including potential milestones, is about $472 million.
When the acquisition agreement was announced, Sema4 said the total upfront consideration would be about $473 million and the total aggregate consideration, with possible milestones, would be about $623 million. Those numbers were based on Sema4’s closing stock price as of Jan. 14.
The company declined to comment on the change in the acquisition price.
Sema4 shares closed Wednesday at $2.44, up 13 percent from Tuesday. In the past 52 weeks, they have reached a high of $15.21 and a low of $2.10.
Related to the acquisition, the company also reported this week that it had issued and sold, in private placements, $200 million worth of stock to institutional investors, including pharmaceutical giant Pfizer. The operations of Pfizer include a research-and-development center in Groton.
A growing force in genomic testing
Founded in 2000 by two scientists from the National Institutes of Health, Gaithersburg, Md.-based GeneDx had operated as a
subsidiary of pharmaceutical-and-diagnostics provider OPKO Health.
GeneDx’s data will bolster Sema4’s approximately 12 million clinical records — genomic information that is crucial to detecting and treating many diseases such as cancer. In January, Sema4 said that by acquiring GeneDx it would become “one of the largest and most advanced providers of genomic clinical testing in the U.S.,” with projected pro forma revenues of $350 million in 2022.
Sema4 was one of the largest providers of COVID-19 testing in Connecticut during the first two years of the pandemic, but it announced last December that it would discontinue those operations by March 31.
Schadt said in January that the decision reflected Sema4’s desire to solidify the focus on its traditional areas of expertise — and not because of the controversy about investment in the company from the Greenwich-based venture capital firm co-founded by Annie Lamont, who is married to Gov. Ned Lamont. The state’s ethics office did not find a conflict of interest with Connecticut’s contract with Sema4 regarding Ned or Annie Lamont.
Along with Stueland, GeneDx’s approximately 700 employees would join Sema4, company officials said in January. At that point, Sema4 already employed about 1,200 — the resounding majority of whom are based in Connecticut. Sema4’s main offices are at 333 Ludlow St., in Stamford’s South End, while it operates laboratories in Stamford and Branford.
The company declined to provide this week an updated headcount.
As CEO, Stueland will receive an annual base salary of $675,000 and also be eligible to receive an annual performance bonus with a “target amount” equal to 100 percent of her base salary, according to the company’s filings to the SEC. In addition, Stueland’s employment agreement includes an initial grant of stock options and restricted stock units with an “aggregate grant-date value” of $9 million.