‘A great outcome’
Sema4, other Conn. biotech companies growing amid pandemic
About four years ago, a nascent health care information firm was spun out of the Mount Sinai Health System into a new company.
Today, that business is worth approximately $2 billion and about to become a publicly traded enterprise.
The rise of the Stamford-headquartered Sema4 attests to the potential of Connecticut’s biotechnology sector. Powered by large-scale investment, Sema4 and other companies in the industry are growing quickly and developing a range of testing services and treatments to respond to COVID-19 and many other conditions. While other parts of Connecticut’s economy have long struggled to grow, biotech offers the potential of major job creation as the state tries to rebound from the pandemic-sparked downturn.
“For Sema4 to go public is a great outcome for Connecticut biotech. It shows the value of what we’ve got in Connecticut — the ‘human capital’ we have here,” Paul Pescatello, executive director and senior counsel for the Connecticut Business & Industry Association’s Connecticut Bioscience Growth Council, said. “It speaks really well for Connecticut, and I think a lot of other companies will be looking at them.”
Attracting investors
Through a plan that will result in Sema4 shares trading on the Nasdaq Global Market, the company expects to accumulate up to $500 million in available cash. The total would include $450 million from the transaction, as well as existing cash on the firm’s balance sheet.
Institutional investors who are providing $350 million of “private investment in public equity” to support Sema4’s conversion into a public company include Greenwich-based Viking Global Investors.
“What it means is we’re going to double down and invest even more aggressively in growth in Connecticut,” Sema4 founder and CEO Eric Schadt said in an interview.
Among earlier investments, the company received $121 million of funding from a group of backers that included the statechartered investment agency Connecticut Innovations and Greenwich-based Oak HC/FT.
Also in the past week, HyperFine, one of the companies created through the Guilford-headquartered startup accelerator 4Catalyzer, announced $90 million in “Series D” financing. The funding will support
the commercial expansion of Swoop, the company’s portable magnetic resonance imaging system.
Public offerings and acquisitions in the past couple of years have reinforced other firms’ ability to forge ahead with new initiatives during the pandemic.
In 2019, Stamford-based SpringWorks Therapeutics, which was spun out of Pfizer, held a $186 million initial public offering.
In the same year, New Havenbased Biohaven Pharmaceuticals and Stamford-based Cara Therapeutic held public offerings of $300 million and $146 million, respectively.
Also in 2019, Stamford-based Loxo Oncology was acquired for $8 billion by pharmaceutical giant Eli Lilly & Co.
The state Department of Economic and Community Development also figures as a key industry supporter. It has awarded about $16 million in loans to Sema4.
“Investing in Sema4 was a home run for state economic development,” Pescatello said. “There are all sorts of reasons why they came here, but that definitely helped in sealing the deal.”
Responding to COVID-19
Sema4 and many other biotech firms in the state have mobilized to tackle the pandemic.
At its lab in Branford, Sema4 has built out a testing program that recently has been processing about 20,000 to 25,000 viral tests each week.
The nearby 4Catalyzer is another hub of testing innovation.
“Our goal is to bring greater accuracy to fast COVID-19 testing, so people, employers, schools and health providers can make real-time decisions using trusted science,” says an excerpt on the website of Detect, another of the 4Catalyzer-backed companies.
4Catalyzer was founded by Jonathan Rothberg, a recipient of the National Medal of Technology and Innovation.
At the same time, biotech businesses across the state are working on coronavirus-focused medicines.
Pfizer’s 2.8 million-square-foot center in Groton has played a key role in the development of its coronavirus vaccine. Last December, Pfizer became the first company to gain FDA emergency-use authorization for a COVID-19 vaccine.
French pharmaceutical firm Sanofi — whose Protein Sciences subsidiary operates a laboratory in Meriden — is developing two coronavirus vaccines.
Among other initiatives, Biohaven last year secured FDA approval to study an under-development nasal spray for migraine headaches for an additional use as a coronavirus treatment.
Work in other areas is also advancing. Cara Therapeutics submitted last December a new drug application to the FDA for an injectable treatment for the itch condition pruritus.
Connecticut ranked fourth in the nation at the end of 2018 for bioscience patents per 1,000 people, according to Connecticut Innovations.
Growing in Connecticut
The state Department of Labor’s monthly job statistics do not include a designated category for biotech. But the industry likely dropped jobs — at least temporarily — as employment shrunk in every sector in Connecticut amid a record-breaking loss last spring of nearly 300,000 jobs in the state.
But the pandemic has not halted the expansion plans of the likes of Sema4.
Last December, Sema4 announced the opening of an 70,000-square-foot lab in Stamford’s Waterside section. It has the capacity to process thousands of genomic tests per day — critical to Sema4’s mission to provide information related to thousands of genetically identifiable diseases to patients across the U.S.
It replaced the firm’s old laboratory at the Mount Sinai campus in Manhattan and complements its Branford lab.
In total, Sema4 employs approximately 560 in Connecticut. About 200 of them work at the Stamford lab, alongside about 110 based in Branford and around 250 based at its main offices in Stamford.
“Stamford continues to be nicely located along this biotech corridor between New York City and New Haven,” Schadt said. “There’s lots of talent to recruit from, so we’re doing really well in being able to fill out the roles that we have here.”
Among efforts to spur further industry growth, Connecticut Innovations, biotech-focused nonprofit BioCT and nonprofit economicdevelopment corporation AdvanceCT announced this past week the launch of their “Connecticut: Where Science Lives” initiative.
Designed by the Farmingtonbased digital-experience agency Primacy, the integrated marketing campaign includes a dedicated website, advertising across a number of platforms and social media outreach. The new venture was facilitated by state legislation passed in 2018 aimed at positioning Connecticut as a leader in the life-sciences fields.
“Connecticut has become a nucleus of life-science advancement, and companies of all sizes are taking maximum advantage of intellectual capital, talent and practical expertise to be found here,” BioCT CEO and President Dawn Hocevar said in a statement. “Startup activity is at a high. We are seeing record investment and expansion within the ecosystem, and several new commercial developments are underway to deliver increased lab space and resources in the near future.”
Biotech advocates also cite the importance of initiatives such as strong research-and-development tax-credit programs and mass-transit improvements.
“The No. 1 thing that comes up from Bioscience Growth Council members is transportation,” Pescatello said. “Whether it’s Stamford or New Haven, it’s a great geographic location. But going between those locations and to Boston and New York is not anywhere as easy as the companies think it should be. They’re always disappointed in terms of how much congestion there is. Anything to improve that transportation proposition is really helpful for recruiting companies here.”