Sema4 closes CT labs and cuts hundreds of jobs in Stamford, Branford

Sema4, a biotech company that received millions of dollars in state loans to open labs in Branford and Stamford – and then served as the state’s main COVID testing contractor in the first two years of the pandemic – is closing its Connecticut lab operations.

During a conference call with analysts on Monday announcing Sema4’s third quarter results, Chief Executive Katherine Stueland said the company was cutting its reproductive health business, cutting 500 jobs and closing its 70,000 square foot lab in Stamford. , which she opened less than two years ago. .

A company spokesperson said about half of the employees who will be affected are based in Connecticut. Sema4’s main lab will be its facility in Gaithersburg, Maryland, and the company will still employ about 1,100 people after the cuts, a spokesperson said.

The news comes just three months after Sema4 announced plans to exit another line of business – somatic oncology – and close its first Connecticut lab in Branford. The move cut more than 200 jobs, about half of which were located in the state, according to a letter that the company filed with the Ministry of Labor. It also coincided with the resignation of the company’s former CEO, Eric Schadt.

Sema4 spokesperson Radley Moss said in an emailed statement that Sema4 would maintain its headquarters in Stamford. “These changes better align Sema4 to achieve these goals and allow us to focus and accelerate other areas of our business that enable us to have a more powerful impact on patients,” the statement read.

These “other areas” appear to focus on the business areas the company entered when it acquired another genomics testing company GeneDx for over $600 million this spring, namely pediatric and rare disease sequencing and data analysis.

Stueland, who served as CEO of GeneDx before the acquisition and now leads the combined company, said increased competition among providers of reproductive health tests is increasing the cost of offering this type of test.

“What has become clear is that we have an incredible opportunity in areas of distinct strength,” she said.

Once a warm start

Before going public last year, Sema4 attracted investment and economic support from several state sources, including the Department of Economic and Community Development and quasi-public venture capital firm Connecticut Innovations.

In 2015, Governor Dannell Malloy’s DECD agreed to loan $9.5 million to the Icahn School of Medicine at Mount Sinai in New York City, where Sema4 was created. The first part of this loan, $9.5 million, was released in two stages: first, $5 million to build the Branford lab, and second, $4.5 million, which was released when Sema4 established its headquarters in Stamford. Sema4 secured another $6 million loan in 2018 to support construction of the Stamford lab.

Up to $12.5 million of these loans were repayable, provided the company maintained a number of Connecticut-based employees: 35 at end-2017; a total of 269 by December 31, 2021; and around 280 more before the end of 2025.

So far, the state has canceled $4.5 million of Sema4 loans. Sema4 still owes $11 million in principal and currently only pays interest on loans.

According to the state’s agreement with Sema4, if the company fails to maintain those numbers, it owes a penalty of $36,166.37 per job. And if the company relocates its operations out of state, “the full amount of financial assistance received, including any state rebates, will become immediately due and payable, plus a one-time penalty of 7.5 % on the initial amount of financial assistance provided.

Since August, when Sema4 announced the closure of the Branford lab, the DECD has not provided any details on how the state aims to hold the company accountable for the terms of its loan contracts. The second closure, that of the Stamford lab, appears to have come as a surprise to the department.

In an email Monday, DECD Commissioner David Lehman said “lines of communication” with Sema4 remain open and active. “We are internally reviewing the impact of today’s announcement on the financial contract between DECD and the company,” Lehman said.

Connecticut Innovations, the state’s quasi-public venture capital arm, invested a total of approximately $2 million in Sema4 over two seed funding rounds in 2019 and 2020, before the company became public in the summer of 2021.

On Monday, a CI spokeswoman said the company remained a “de minimis” investor in Sema4.

“We never want to see Connecticut lose jobs, but these are tough times in the public markets and Sema4 is making changes to become more profitable, which we understand. We know our portfolio companies are actively looking to hire and hope the ecosystem can absorb some of this talent,” spokeswoman Lauren Camody wrote in an email.

Carmody added, “Our mission operates with a dual purpose: to create jobs and generate returns. A home run for us is when a company offers both.

Political controversy

But Sema4’s most high-profile and perhaps most controversial investor was Oak HC/FT, the venture capital firm that counts Connecticut First Lady Annie Lamont as a partner.

Oak HC/FT invested twice in Sema4 – a first time in August 2019, after the Malloy administration granted the company two start-up loans, and a second time, in July 2020, two months after the Lamont administration signed a 17.2 contract million with Sema4 to perform COVID testing. Later that year, the state awarded Sema4 a second testing contract, worth an additional $8.4 million.

When Sema4 signed its first contract with the state to perform COVID testing, an attorney in the governor’s office told state ethics officials in an email that the couple wanted to donate “any benefits that he could get out of the contract” to charity.

In a statement provided to the Mirror late last year, Annie Lamont said she and the governor “had no involvement in the decision to enter into a contract with Sema4 or the terms of its contract with the state. of Connecticut”. She added that she recused herself from any decision related to Oak HC/FT’s investment in Sema4.

COVID-19 contracts supported Sema4’s 2020 testing volume by 131%, and the company continued to provide COVID testing services to the state through 2021 before pull back earlier this year. In a statement late last year, a spokesperson described COVID testing as “an ancillary and non-essential part of our business.”

In Monday’s quarterly report, Sema4 recorded $0.0 in revenue from COVID testing.