Sema4 goes public via SPAC merger

Sema4, a company focused on providing genomic and clinical data insights, has gone public through a blank-check acquisition.

The company struck an approximately $800 million deal to merge with CM Life Sciences, a special-purpose acquisition company sponsored by affiliates of Casdin Capital, LLC, and Corvex Management LP. The deal will inject about $500 million into Sema4’s coffers.

The resulting combined company will begin trading on the Nasdaq Global Select Market under the ticker symbols “SMFR” and “SMFRW” on Friday.

Sema4 aims to make precision medicine a standard of care, said Eric Schadt, founder and CEO of the Stamford, Connecticut-based company, in a phone interview. It provides tools that generate and aggregate big data centered on patients to provide insights into medical conditions and the interventions that could help prevent or treat them. The company combines genomic and clinical information and applies analytics to gain insights.

The company was spun out from New York City-based Mount Sinai Health System in 2017. Since then, it has entered into several major partnerships with health systems to develop genomics programs, including Evanston, Illinois-based NorthShore University HealthSystem and Altamonte Springs, Florida-based AdventHealth.

Now, with the influx of capital, the company plans to accelerate the uptake of its tools among providers and expand them to cover more treatments. For example, Schadt said the company’s platforms cover both heritable cancer and Symantec tumor profiling, but not liquid biopsy for minimal residual disease or surveillance type testing.

Acquisitions could help cover those gaps in Sema4’s offerings, he added.

The company began considering a path to go public in late last summer.

“We decided that to accelerate our rate of growth and our play into health systems [and] to deliver on a more holistic scale all of the many different areas of precision medicine that systems could benefit from…going into the public market was the best way to do that given the public markets are very forward-looking about where you are going to drive the business,” Schadt said.

At first, Sema4 was considering the initial public offering route, but the SPAC market was “crazy hot” last fall, he said. So, the company started exploring SPACs as well and ultimately decided that it was the right move for them for several reasons.

“Sema4 was a little early in its readiness to be a public company,” Schadt said. “So SPACs are a better vehicle in that kind of situation especially if you have a high-end, very credible, health-oriented investor like Eli Casdin [former CEO of CM Life Sciences]…The other reason was [SPACs] enable you to raise a lot more cash than you are likely to get from an IPO. That was attractive as well.”

Sema4 announced its proposed transaction with CM Life Sciences in February. At the time, it had an enterprise value of approximately $2 billion.

The precision medicine market is valued in the billions in North America. While Sema4 has several key competitors with regard to genomic testing, like Natera, Myriad Genetics and Tempus, the company sets itself apart by partnering with health systems to provide a comprehensive set of solutions, Schadt said.

“There aren’t many companies like Sema4 that have all the components — the genetic lab testing piece, the information platform piece, the engagement of patients through digital platforms to do genetic counseling and conveying of the test results — there are a lot of components that you need to wire together into a health system to deliver a more holistic solution,” he said. “There are lots of companies focused on the individual components…but very few focused on wiring those together.”

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