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SomaLogic Officials, Investors Oppose Standard BioTools Merger, Allege Conflict of Interest


NEW YORK – A current and a former SomaLogic official have filed a class action lawsuit against the firm's board, alleging a breach of fiduciary duty regarding the proposed merger with Standard BioTools and a conflict of interest on the part of Eli Casdin, a significant investor and board member for both firms who is also named in the suit.

In a complaint filed Dec. 13 in the Delaware Court of Chancery, SomaLogic Cofounder and former CEO Larry Gold and current Chief Technology Officer Jason Cleveland alleged that the firm's board approved the deal to merge with Standard BioTools "at the direction and behest of a controlling and conflicted fiduciary, Eli Casdin."

Casdin has allegedly long sought to merge the two firms. "After two prior unsuccessful attempts and resistance by the board and then-CEO of SomaLogic to a merger of the two companies, Casdin took matters into his own hands in March 2023," the complaint states, noting that through his investment firm Casdin Capital, he owns 12.3 percent of SomaLogic shares as well as 50.0002 percent of Standard BioTool's preferred stock and at least a third of the firm's common stock.

Casdin allegedly engineered the March departure of SomaLogic's then-CEO Roy Smythe and two independent directors who opposed the deal and "stacked the board with Casdin loyalists," the complaint said. "The new Casdin loyalist directors also joined the transaction committee overseeing the strategic process at SomaLogic. And Casdin himself simultaneously served on both the SomaLogic and Standard transaction committees charged with considering potential strategic transactions, including while the two companies were exploring a transaction with one another."

On Oct. 4, Standard BioTools and SomaLogic announced a deal to merge into a new company that would be worth approximately $1 billion, but valued SomaLogic at little more than its cash on hand. Under the terms of the all-stock deal, SomaLogic shareholders will receive 1.11 shares of Standard BioTools common stock for each share of SomaLogic and would own approximately 57 percent of the new company.

Gold and Cleveland are not the only shareholders who have scrutinized the deal and found it lacking. Madryn Asset Management, which says it owns 4.2 percent of SomaLogic, has issued an open letter stating that it opposes the deal. "The merger drastically undervalues SomaLogic … [and] appears to be the result of a flawed process, with unexplained gaps between key events and conflicts of interest that have not been sufficiently addressed," the firm wrote.

Tikvah Management, representing 3.1 percent of SomaLogic's shares outstanding, and Skye Fund III, representing just under 2 percent, have also issued public statements opposing the deal. "Considering that Olink sold for $3 billion, we believe that Standard BioTools' offer is absurdly low, manifestly unfair, and unjustified in many ways," Skye Fund manager James Dresher wrote in a Dec. 20 letter to fellow shareholders.

Standard BioTools investors have also sought to stall the deal. In late November, Alexandru Draganov, an Iowa-based Standard BioTools shareholder, filed a lawsuit in the US District Court for the Northern District of California alleging that the deal was the result of an "unfair process" and asked the court to enjoin the upcoming stockholder vote, now slated for Jan. 4. Earlier this month, shareholder Shawn Smith filed suit in the US District Court for the District of Delaware, alleging that the firm had filed "a materially incomplete and misleading prospectus with the US Securities and Exchange Commission."

On Dec. 21, SomaLogic issued an open letter to shareholders reiterating its case for the merger. It acknowledged the dissidents, saying "It is hard to decipher the specific motivation or agenda of the group. However, it is obvious that many of their concerns are misplaced and rely on factually incorrect or deliberately misleading data." It did not elaborate on those data. 

"Eli Casdin was recused from all board discussions regarding the strategic review process immediately once Standard BioTools emerged as a counterparty," SomaLogic wrote.

On Dec. 22, SomaLogic and Standard BioTools issued statements that said Institutional Shareholder Services, an independent research firm that advises shareholders on contested votes, recommended that the firms' respective shareholders vote for the deal.

Neither Casdin nor Casdin Capital responded to a request for comment about his involvement in the deal before deadline.

Standard BioTool's S4 proxy statement, filed Nov. 14 with the US Securities and Exchange Commission, said "Casdin did not participate in, and recused himself from, the board of directors processes at either company with respect to this merger."

However, Gold and Cleveland allege that this proxy statement was "materially false and misleading" and paint a different picture of Casdin's involvement in the deal.

They alleged that after Casdin removed the SomaLogic directors opposing his plan, he installed four new directors with whom he had longstanding relationships. "[Jason] Ryan — who served as SomaLogic's lead negotiator in the proposed merger — serves as executive chairman of two boards for companies of which Casdin is a director, investor, or both, and Ryan previously served as a chief executive at two additional Casdin-backed companies," the complaint alleges. "[Kathy] Hibbs and [Tycho] Peterson serve as chief executives and directors at other companies in which Casdin has significantly invested. And [Thomas] Carey's executive search firm receives material business from Casdin and Casdin affiliates," the complaint said. Hibbs, Carey, Peterson, and Ryan are all named as defendants in the suit.

In an amended proxy statement filed Nov. 30, Standard BioTools and SomaLogic added a section outlining the relationships between those board members and Casdin and Casdin capital. The firm said the board was "aware" of the relationships, but "did not consider [them] to represent a conflict of interest with respect to the merger."

While the SEC filing notes that Casin recused himself from Standard BioTool's side after July 7, Gold and Cleveland alleged that he recused himself from the SomaLogic side "only … at the insistence of the company's general counsel." Moreover, they allege he continued to communicate with his "loyalists" on the transaction committee in an "unauthorized manner."

The lawsuit goes on to allege that, during negotiations with Standard BioTools, the SomaLogic board allowed Casdin to retain "key consent rights over the most important decisions involving the merged entity and that — for the first time — Casdin's interests would take precedence over the interests of other current SomaLogic stockholders in a future liquidity event."

The lawsuit also alleges that the board improperly negotiated the deal, ending up at an offer that was almost 40 percent lower than Standard BioTool's original offer.

Gold and Cleveland have asked for a preliminary injunction that would force SomaLogic to update its SEC filing with one that "that corrects the material misstatements and omissions in the current [filing]"and a declaration that the directors have breached their fiduciary duties. They also seek unspecified damages and attorneys' fees.

Standard BioTools and SomaLogic declined to comment beyond their publicly issued materials. Gold, a professor at the University of Colorado, Boulder, did not respond to a request for additional comment.

Shares of SomaLogic have risen approximately 25 percent over the last week in trading on the Nasdaq, to $2.62. Shares of Standard BioTools, also trading on the Nasdaq, are up approximately 15 percent over the last week at $2.26.