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Sema4 settles up with CT after relocating labs out of the state

The Branford offices of Sema4, now known as GeneDx, a health care testing startup.
YEHYUN KIM
/
CTMIRROR.ORG
The Branford offices of Sema4, now known as GeneDx, a health care testing startup.

The Connecticut Department of Economic and Community Development has renegotiated the terms of a $15.5 million incentive deal with biotechnology startup Sema4 after the company shuttered its laboratory operations in the state.

Sema4, now known by the name of the Maryland-based genomic testing company it acquired last year, GeneDx, has paid back $2 million of the loan and agreed to a $2 million reduction in how much of it the state would forgive if the company meets certain job targets.

Since 2015, a total of $15.5 million in state loans helped the former Sema4 establish its headquarters in Stamford and build out laboratory facilities in Branford and Stamford. Initially, $12.25 million of that loan was forgivable — in other words, it would convert to a grant — as long as the company created and maintained 553 jobs through the end of 2025.

But after going public in 2021, Sema4 underwent a broad corporate restructuring in 2022, first acquiring GeneDx then eliminating two of its Connecticut-based business lines — somatic tumor testing and reproductive health. That led to the shuttering of its Branford and Stamford labs along with roughly 700 layoffs company-wide. Half of the people who lost their jobs were based in Connecticut, according to notices the company filed with the state labor department.

The company changed its name to GeneDx at the start of this year, and its primary laboratory is now in Gaithersburg, Md.

The job losses in Connecticut meant the company was no longer in compliance with its incentive agreement with the state. DECD officials and lawyers have been working in the intervening months to renegotiate the terms of that deal.

On Dec. 30, the company agreed to immediately pay back $2 million of the loan it had received. It also signed a new agreement with the state that reduces the potentially forgivable portion of its loans to $10.25 million.

In order to remain eligible for that loan forgiveness, GeneDx must maintain its corporate headquarters in Connecticut along with its 148 current full-time in-state employees and an additional 50 jobs by early next year.

“We’re glad to have worked constructively with Sema4 on this amendment to their agreement,” DECD spokesman Jim Watson wrote in an emailed statement. “Our agreement strikes the right balance — protecting taxpayers and the state’s investment in Sema4 while affording the company the ability to complete its restructuring and return to growth in Connecticut.”

In an emailed statement, Stephanie Kahan, a spokeswoman for GeneDx, wrote: “The Company is committed to maintaining its headquarter position in Connecticut and intends to comply with requirements in the modification agreement.”

As a startup, Sema4 attracted investment and economic support from DECD as well as the state’s quasi-public venture capital outfit Connecticut Innovations. But Sema4’s highest-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 in Sema4 twice — first in August 2019 and a second time in July 2020, two months after Gov. Ned Lamont’s administration signed a $17.2 million contract with Sema4 to do COVID testing. Later that year, the state awarded Sema4 a second testing contract, worth an additional $8.4 million.

Annie Lamont has told the CT Mirror she and the governor “had no involvement with the decision to enter into a contract with Sema4 or the terms of its contract with the State of Connecticut.” She said she’d recused herself from any decisions related to Oak HC/FT’s investment in Sema4.

COVID-19 contracts buoyed Sema4’s 2020 testing volume by 131%, and the company continued providing COVID testing services to the state through 2021 before pulling back last year. In the company’s most recent quarterly earnings report, it recorded $0 in revenue from COVID testing.

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