CT-based Sema4 to cut another 500 jobs, close Stamford laboratory

Photo of Paul Schott

STAMFORD — Embattled genomic-testing company Sema4 announced Monday that it would close its Stamford laboratory and cut about 500 jobs, as it leaves reproductive-health testing — a decision made after the Stamford-based company explored several other options.    

About half of the layoffs will affect Connecticut-based employees, adding to a separate round of job cuts announced in August that affect about 240 workers in its home state. Combining Monday’s announcement with previous downsizing, Sema4 said that it expects its headcount to drop to about 1,100 from the approximately 1,700 people it had at the end of the third quarter. 

Sema4's third-quarter results announced Monday help explain the job cuts and decision to exit the reproductive-health business. While revenues nearly doubled year over year to about $83 million — reflecting the acquisition earlier this year of another genomic-testing provider, GeneDx — the company incurred a loss of nearly $78 million. For the first nine months of 2022, it sustained a loss of about $240 million.  

“This decision was not made lightly and was informed by deep analysis, deliberation and scrutiny by our management team, advisors and board,” Sema4 Chief Executive Officer and President Katherine Stueland, who formerly served as GeneDx’s CEO, said during an earnings call on Monday. “We considered every possible option to preserve the (reproductive-health) business.”

To continue reproductive-health testing, Sema4 had considering moving operations from Connecticut to GeneDx’s hometown of Gaithersburg, Md., “to improve lab efficiencies and reduce costs,” Stueland said. Among other possibilities, “we explored an outright sale of the business, yet others arrived at the same economic analysis.”  

By ultimately deciding to exit reproductive-health testing, the company “will eliminate at least $30 million in cash burn on a quarterly basis, and that will immediately and significantly grow our growth margin profile,” Stueland said. The company will now focus on its pediatric and rare-disease business, whose revenues grew more than 50 percent in the past quarter.

“In the end, we determined that the reproductive-health testing business was unsustainable and especially so in light of capital-market constraints and the macroeconomic environment,” Stueland added. 

The reproductive testing that will be discontinued includes carrier screening; non-invasive prenatal testing; “prenatal and POC diagnostic testing (including cytogenetics, biochemical),” as well as “reproductive biochemical and cytogenic testing (including CMA and karyotype),” according to Sema4’s website.  

Among related changes, the company said that it would no longer accept samples at the Stamford lab after Dec. 14. Testing must be ordered from another lab for samples that arrive after Dec. 14.

“The Stamford lab will remain up and running beyond Dec.14, 2022 while we properly wind down all testing that is performed in that lab, at which point, all lab operations and testing will be performed in our Gaithersburg lab,” a Sema4 spokesperson said in an email Monday, in response to an inquiry from Hearst Connecticut Media.  

Sema4 opened the lab at 62 Southfield Ave., in Stamford's Waterside section, about two years ago. 

In August, the company announced that its other lab in the state, in Branford, would close by Dec. 31, as result of its exit from the “somatic” tumor-testing business. 

Also in August, Sema4 announced that it would move its hereditary cancer-testing operations from the Stamford lab to its Gaithersburg lab to take advantage of “superior automatic capabilities.”

Among other changes, Sema4 announced in August the departure of founder and former CEO Eric Schadt. He had led the company since its 2017 spin-off from Mount Sinai Health System. He then briefly served as president and chief research and development officer following the of arrival of Stueland, who formerly served as GeneDx’s CEO.

Following the announcement of the downsizing and quarterly results, Sema4 shares closed Monday at 90 cents — sliding 12 percent from their closing total last Friday. The shares have reached a 52-week of high of $8.21 and hit a 52-week low of 80 cents.  

Many changes in 2022

Before it hit headwinds this year, Sema4 had often been hailed by elected officials and business leaders as one of the most-promising biotechnology companies headquartered in Connecticut.

The state had demonstrated its confidence in the company through subsidies awarded during the administration of former Gov. Dannel P. Malloy. Of the $15.5 million in loan funding awarded to Sema4, $4.5 million has been forgiven as a result of the company meeting job objectives. The company is still eligible to earn an additional $7.75 million in forgiveness if it meets other job targets.

In the meantime, the company is making monthly interest-only payments on the remaining $11 million principal, according to the state Department of Economic and Community Development.

Despite the job cuts and lab closings, Sema4 has said it will keep its headquarters in Stamford, but at a new address. In August, it announced it would vacate its headquarters space at 333 Ludlow St., in Stamford’s South End, and move the main offices to the lab building at 62 Southfield Ave. 

As of Monday, the company’s website still listed 333 Ludlow as the headquarters location. In response to a question about whether the main offices would still move to 62 Southfield, the company spokesperson said, “our headquarters remains in Connecticut.”

During the past year, Sema4 has curtailed operations in other areas. From April 2020 until early this year, it had been a state contractor for COVID-19 testing.  

Among the firm’s early investors was Oak HC/FT, the venture capital firm co-founded by Annie Lamont, Gov. Ned Lamont’s wife. That connection led Gov. Lamont to recuse himself from decisions concerning Sema4.

There has been no public evidence of wrongdoing by Lamont, a Democrat, or his administration. But Republicans including Bob Stefanowski, the GOP gubernatorial nominee whom Lamont beat in last week’s election, have said that Sema4 should have been barred from the state work. Lamont has asserted, however, that the state saved lives by quickly contracting with the companies available to test for COVID-19. 

Sema4’s backers also include Connecticut Innovations, the state-chartered venture capital organization, which has invested $2 million in the company. 

“It’s always difficult to see Connecticut lose jobs, but the goal now is to find a way to absorb the talent into our state’s ecosystem,” Lauren Carmody, a spokeswoman for Connecticut Innovations, said in an email. “There are companies in our portfolio that are hiring, and we hope the highly qualified talent from Sema4 will land at another biotech company in Connecticut.” 

Local officials in Stamford offered similar encouragement to employees affected by the job cuts. 

"No one is ever happy to see job reductions. As a city, we are committed to maintaining a robust business environment by attracting new corporate businesses to join the many major employers already operating here in Stamford," Loren Nadres, Stamford's director of director of economic development, said in a statement. "We feel confident that Sema4's former employees will be able to find new, high-paying jobs right here in Stamford. We will continue to support Sema4 in any way we can and work to attract new corporate employers, so our residents have plenty of employment opportunities." 

pschott@stamfordadvocate.com; twitter: @paulschott