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Rebranded GeneDx Bets Future on Whole-Exome, Whole-Genome Sequencing in Pediatric Rare Disease

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CHICAGO – In rebranding as GeneDx this week, the embattled company formerly known as Sema4 is making clear that its future is in whole-exome and whole-genome sequencing and related analysis to support precision medicine, particularly in pediatric rare diseases.

In conjunction with the name change, the Stamford, Connecticut-based company changed its stock ticker symbol from SMFR to WGS. President and CEO Katherine Stueland called the move "a nod to our pioneering work in ushering in whole-genome sequencing."

The original GeneDx was founded in 2000 by former US National Institutes of Health scientists Sherri Bale and John Compton. It was sold to BioReference Laboratories in 2006, a company that Opko Health acquired in 2015.

Sema4 acquired GeneDx from Opko Health in April of last year for $623 million, but has been in turmoil ever since. The firm has announced two restructurings and three rounds of job cuts since the deal closed. Sema4's stock tumbled immediately following the most recent restructuring announcement on Nov. 14 — the same day it reported its third quarter financial results — leading to some drastic news a month and a half later.

Of immediate concern for the rebranded GeneDx in the first half of 2023 is a Dec. 28 notification that the firm is out of compliance with Nasdaq rules. The company has 180 days from that date — until June 26 — to come back into compliance by having a closing bid price of at least $1 per share for 10 consecutive trading days. The rule applies despite the change of name, ticker, and even stock exchange.

Sema4 stock ceased trading on the Nasdaq Global Select Market after Monday, closing at $.245 per share. After a 1:1 share conversion, the new GeneDx started trading Tuesday on the Nasdaq Stock Market, and it has rallied. GeneDx stock closed Thursday at $.4895, essentially double Monday's close.

In a live-streamed presentation from the JP Morgan Healthcare Conference in San Francisco on Thursday and in a conversation with GenomeWeb earlier in the week, Stueland expressed optimism not only that the rebranded GeneDx would maintain its Nasdaq listing, but that the company was firmly on an upward trajectory after shedding unsustainable business lines.

"We have a clear path to profitability in 2025," Stueland said at JPM.

The company said Monday that it expects pro forma revenues for 2022 to range between $170 million and $173 million, excluding reproductive health and somatic tumor testing. That is at least 37 percent higher than 2021 pro forma revenues of $123.7 million. Stueland said that this "exceeded our expectations" in the surviving business segments.

GeneDx will report Q4 and full-year results in early March.

The company exited somatic tumor testing last year and is shutting down its reproductive health screening this quarter. Both were legacy Sema4 business lines. What remains are GeneDx's exome and genome screening operations as well as Sema4's Centrellis cloud-based health information software platform.

Pre-merger Sema4's former top executives are gone as well.

When the merger was announced in January 2022, the plan was to have two co-CEOs, with Sema4 Founder and then-CEO Eric Schadt leading the information side of the company and Stueland running diagnostics operations. By the time the deal closed three months later, Stueland had been named CEO and Schadt given the title of president and chief R&D officer, but he left the company in August.

Schadt spun Sema4 out of the Icahn School of Medicine at Mount Sinai in New York in 2016 and continues to serve as dean for precision medicine there.

Stueland was not the only legacy GeneDx executive to move up the organizational chart since the merger. Former BioReference CFO Kevin Feeley became CFO of Sema4 in August after the departure of Isaac Ro. Feeley carried that title over to the rebranded GeneDx.

Stueland told GenomeWeb that it is common for founding CEOs in the biotech world who have a scientific background to step aside as a company moves into a growth phase. "As we arrived at what the business needs were, it became clear that I could provide that sort of leadership for the company to ensure that we're able to maximize shareholder value while continuing to drive important patient care and drive innovation," she said.

Stueland joined GeneDx as CEO in June 2021 when the company was still part of Opko Health. She previously served as chief commercial officer of Invitae.

Following the Sema4-GeneDx merger and Stueland's appointment as CEO, company management examined each business line to see what was working and what was not. "We looked at somatic oncology, we looked at reproductive health [from Sema4], and we looked at our pediatric business from GeneDx," she said.

The somatic oncology line was "much in its nascency, it was subscale, and it was delivering materially negative gross margins to the tune of negative 833 percent," Stueland said. The company now known as GeneDx decided that it was not worth the investment to make that business segment sustainable.

That move resulted in the loss of 250 jobs. "It was in many ways really a hard decision on a human level but an easy decision from a business perspective that we would be shutting down that somatic oncology business," Stueland said.

She also said that the company had been investing about $30 million per quarter into the reproductive health segment, with poor prospects for a return on that investment. "It's a highly commoditized business," she noted, which has led to a decline in payor reimbursement.

"While we could invest more to scale up that business and compete with half a dozen other players in the space, where we really have a competitive advantage is both in the business that we built on the GeneDx side of things with our exome and genome [testing] and in rare disease," Stueland said.

Also, in terms of neonatal testing, "as we looked at all of the different business lines, that one was performing in a way that was delivering important growth," Stueland said. "The backbone of our business now really centers on one test, which is utilizing an exome or genome to be able to diagnose disease," Stueland said.

GeneDx has been recommending exome testing over gene panels since about 2013. The firm also built an interpretation platform to complement its sequencing.

"By pairing that backbone of an exome or genome with clinical data through Centrellis, what we're aiming to do is deliver more personalized help and insight to people," Stueland said.

Despite the new WGS ticker symbol, GeneDx will be focusing mostly on whole-exome sequencing in the near term. However, the firm is touting two neonatal collaborations in which it is providing WGS and interpretation services: the SeqFirst study with the University of Washington and the GUARDIAN (Genomic Uniform-screening Against Rare Diseases in All Newborns) study in New York City.

Stueland said that it was important to home in on the problem the company is trying to solve. GeneDx decided that it wants to bring together genomic and clinical data to shorten the "diagnostic odyssey" and identify effective treatments in pursuit of better patient outcomes.

"Our mission … is to deliver personalized insights to be able to diagnose disease more effectively and faster, be able to connect patients with treatments, and really accelerate drug discovery development and commercialization," Stueland said to open her JPM presentation.

GeneDx had its own genome interpretation software platform prior to the Sema4 merger. The legacy Sema4 Centrellis software allows the firm to bring in data from electronic medical records and other sources.

"We intend to sequence once, be able to continuously analyze a genome through our interpretation platform, be able to combine that with clinical data to deliver better health insights, and then generate genomic health insights over time," Stueland said.

She noted that the company will be delivering this information not only to healthcare providers but also to biopharmaceutical companies. The company counts Bayer and Pfizer as partners today but has its sights on growth in that segment.

Intelligence produced by Centrellis combining genomic and clinical data will help pharma firms design clinical trials in the future, according to Stueland.

"As we look to our future as GeneDx, the problem that we're trying to solve is very clear. It's very difficult to get diagnosed quickly and accurately, and we want to be a partner to providers to really put people's genomic information to work for them to get them diagnosed more rapidly," Stueland said. "We also want to make sure that we think more holistically about the future of health and personalized medicine."

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