54gene valuation slashed by over $100M amid job cuts and CEO exit • TechCrunch

It’s been an amazing few months with the 54gene launch of African genomics. In August, he fired 95 employees, mainly contractors (in the laboratory and sales department) hired for the business line COVID 54gene launched in 2020. In September, the founder and VP of Engineering Ogochukwu Francis Osifo left the house the work. And this week, the founder and now former CEO Dr. Abasi Ene-Obong stepped down and was replaced by General Counsel Teresia L. Bost.

This news coincides with other job cuts. The company confirmed to TechCrunch that the second round of layoffs, which took place on Tuesday, affected 100 employees: 55% of the total number of employees remaining after the first round of layoffs. Biotech does not define jobs in regulated sectors.

The Washington- and Lagos-based genomics startup has been seen as a showcase of Africa’s biotech space since it entered Y Combinator in 2019. But when 54gene started to address the gap in the global genomics market, where Africans are less than 3% of genetics used for drug research, its growth in 2020 gathered elsewhere, with the COVID-19 epidemic, and took a strong role to meet the need to be one of the providers of COVID testing in Nigeria .

Its willingness to use its clinical research arm to take advantage of this opportunity is also the impetus for increasing its funding and raising two large growths in quick succession: a $15 million Series A that year and a $25 million Series B in 2021 from ‘hands investors like New York. -based Adjuvant Capital, Pan-African company Cathay AfricInvest Innovation Fund (CAIF), KdT Ventures and Endeavor Catalyst.

Regardless, 2022 will be a memorable year for biotech startups. Not only has revenue declined and nearly 200 workers have been laid off, but the company’s profits have been significantly reduced at a time when startup prices are hitting. According to sources, the value of 54gene has decreased by two-thirds, from $170 million saved when it raised Series B to about $50 million in the bridge that involved investors in – lead to the board of the company.

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Sources also said that the round was closed at 3x to 4x liquid interest, which means that investors – usually lead investors – will be repaid three or four times upfront. other stakeholders, including other investors, manufacturers and workers in the case of migration. . These measures, which transfer power to investors, were rare during the financial boom in the mid-2020s and last year but are now commonplace in the financing environment.

54gene does not confirm or deny the basis of this Agreement. Still, he said in an email response: “Investors are investing new money in the company in a way that reflects the current market conditions. We hope that This color not only supports the company during these difficult times but also sets it up for future success – whether it’s raising capital, attracting strategic partners, or other means. “future.”

Oftentimes, liquid interest indicates that investors want to protect themselves if a growing portfolio company exits at a lower price than originally expected. In some cases, investors believe that the startup may try to create a difficult exit due to the underlying problems affecting its business.

When news of the company’s first sacking broke out, accusations of financial impropriety were leveled against the then CEO and his leadership from the union. Although they are still unsubstantiated, these allegations have resurfaced after Ene-Obong’s resignation. The affected workers – who say they have not received their severance packages and spoke to TechCrunch on condition of anonymity – blame 54gene’s current woes on unfair wages, questionable expansion plans and cash cuts . The YC-backed biotech did not respond to TechCrunch’s request for comment about its former executives’ alleged mishandling of unpaid severance packages.

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54gene is strong on this issue and the appointment of Bost from his legal role as interim president raises questions and leaves room for explanations to come down to these allegations, especially since the two members resigned in ‘a few weeks. However, in an email to TechCrunch, the company slyly said that Osifo’s resignation had been in the works for some time and was unrelated to this month’s event, while Bost, hired last September, was 54gene’s request. – with support from COO Delali Attipoe – for. another part of it.

“Teresia is an accomplished executive with deep experience in the global pharmaceutical and technology industry, leading global teams and overseeing corporate governance,” the company said. “These skills, along with his extensive experience driving and interpreting complex regulations, will be invaluable to 54gene’s leadership in this company’s next phase. Delali and Teresia will make a great team that together will strengthen 54gene’s position as a genomics leader in the industry. “

Meanwhile, 54gene said its former CEO “will continue to support the company in its future initiatives such as strategic partnerships and fundraising” without explaining why. come down.

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However, according to several insiders in the industry, the terms of the new 54gene contract contributed to Ene-Obong’s departure. They say that Ene-Obong – retaining his position on the board of 54gene as he moves to the position of new adviser – may resign as CEO in protest of the new price of 54gene and the liquid interest of investors and – given around the bridge. There are explanations that some of the investors also tried to react to the expensive company in the past to get more shares and turn the founders and other investors. 54gene declined to comment on the matter.

The fact that 54gene had to organize a bridge in-house despite earning more than $45 million in the last three years is a reminder that biotech projects are very lucrative – for example, it -costs about $700 to sequence a human genome (one of them). 54 gene core sequence). Typically, biotechs send money to investors in research where they think about the money they will get later and the case is no different with 54gene. Still, the genome startup’s approach to reducing energy costs by laying off staff at two levels — and closing its clinical research arm — is troubling despite the clear impact of the disease. The current crisis, along with the difficult task ahead of the company, has also led many technology watchers to wonder if its current and past leaders can make the moonshot work. going on long enough to make a lot of money, let alone build a strong business.

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