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More Proteins, Less Profit: Why SomaLogic's Multiplexing Advantages Haven't Led to Greater Success


NEW YORK – With the launch this month of its SomaScan 11K platform, SomaLogic has expanded its lead in breadth of coverage for blood-based proteomics experiments.

The size of the company's platform — which now doubles that of Olink, its main competitor in the high-plex blood-based proteomics space — has not translated into the expected commercial success, however, as recently announced M&A deals for the two companies demonstrate.

While the two systems are based on different technologies, both of which have advantages and drawbacks versus the other, users and industry observers broadly agreed that the divergence in their paths has largely been driven by past business decisions rather than the performance of their platforms.

Mass spectrometry has recently narrowed the gap, but Olink’s antibody-based Explore platform and SomaLogic's SomaScan platform, which uses modified aptamers the company calls Somamers, have for years been the only feasible options for researchers looking to measure thousands of proteins in blood with throughput of hundreds of samples per week.

SomaLogic was the first to tackle this market. More than a decade ago, the company was offering an early version of SomaScan that measured roughly 1,300 proteins. It upped that to 5,000 proteins in 2017 and expanded it to 7,000 in 2020.

Olink, meanwhile, did not enter the high-plex market until June 2020 when it launched its Explore 1536 assay, which measured roughly 1,500 proteins in plasma or serum. This year, the company launched its Explore HT platform, which measures more than 5,300 proteins.

Yet, despite its multiyear head start and significantly larger assay multiplex, SomaLogic has substantially underperformed Olink in terms of both sales and market valuation. In 2021, SomaLogic went public via a business combination with a special purpose acquisition company (SPAC) that valued it at roughly $1.2 billion. On Sept. 2, 2021, the company's first day of trading on the Nasdaq, it opened at $11.69. It has declined more or less steadily since then and in recent months has been trading in the range of between $2.00 and $2.50 per share.

Olink also went public in 2021, pricing its initial public offering at $20 per share for gross proceeds of $264.7 million.

Recently announced deals for the two companies — with Thermo Fisher Scientific acquiring Olink and Standard BioTools merging with SomaLogic — provide a snapshot of the two firms' fortunes. When Thermo Fisher announced on Oct. 17 its plan to purchase Olink, it said it would acquire the company for $26 per share, or roughly $3.1 billion, a premium of roughly 74 percent to the closing price of the company's shares the prior day.

By comparison, the Standard BioTools-SomaLogic merger, which the companies announced on Oct. 4, calls for SomaLogic shareholders to receive 1.11 shares of Standard BioTools common stock for each share of SomaLogic common stock owned. At the time the deal was announced, this implied a valuation for SomaLogic of around $3 per share, or roughly $564 million, slightly more than the $474.1 million the company had in cash and investments at the end of the second quarter. Since then, that valuation has dropped as Standard BioTools' stock price has fallen. As of Thursday morning, Standard BioTools was trading on Nasdaq for $2.19 per share, implying a valuation for SomaLogic of roughly $457 million.

Meanwhile, recent third quarter results showed Olink doubling SomaLogic's sales of $22 million.

Many researchers contacted by GenomeWeb declined to speak on the record for the story, but none said that one company's platform clearly outperformed the other and most said they found both useful in their work.

Daniel Katz, an instructor of medicine and cardiologist at Stanford Medicine, said that his group has used both platforms "extensively for a lot of different work and has found them both to be useful and to produce really interesting and scientifically exciting results."

Katz observed that each platform has its own advantages. For instance, he said, with 11,000 targets, SomaScan offers far and away the broadest coverage available. On the other hand, he said that he and others have found that when comparing protein measurements head to head, Olink's assays are more likely to return cis protein quantitative trait loci, or cis pQTLs, a finding that he noted researchers have used to infer that Olink's Explore offers better target specificity. At the same time, Katz said his group has observed slightly higher precision in its measurements using SomaScan.

Daniela Hristova-Neeley, a partner at consulting firm Health Advances who covers the life science tools space, likewise said neither platform clearly offered better performance than the other.

"Determining the superiority of one particular technology over another is subjective, and it is challenging to make definitive claims at this time," she said.

Hristova-Neeley noted, though, that Olink has been more successful in making inroads with the pharma market.

"Olink has effectively implemented proactive marketing strategies to target biopharma researchers and CROs," she said. "We do a lot of work in the pharma services space, and many testing CROs we have interacted with use the Olink technology, and so I think that has given them the edge."

A proteomics researcher who requested anonymity to discuss his experience with the two systems said that SomaLogic's difficulties can in large part be traced back to the company's decision in 2018 to end its fee-for-service business and require that SomaScan users share data and intellectual property with the company.

This researcher, who said his lab has found both platforms to be useful in its work, said this decision made it impossible for many scientists to use SomaLogic's platform as they were not allowed by their institutions to share clinical data and intellectual property in the manner the company required. He also suggested that it made researchers wary of working with the company even after it resumed its fee-for-service business in 2020.

At the time, SomaLogic felt the move would help it establish SomaScan as a clinical diagnostics platform, for which it would need access to large patient cohorts. Discussing the decision in 2018, the firm Chief Medical Officer Stephen Williams said that under its fee-for-service model, the company "effectively sold [SomaScan] data for money, but we didn't get to see the data ourselves, and what we realized was that despite bringing in revenue, this wasn't actually advancing the key aims of the company."

SomaLogic was never able to achieve significant traction for its diagnostic business, however. The company developed more than 30 tests based on the SomaScan system, commercializing 16 of them as laboratory-developed tests, but none ever contributed meaningful revenues. At the beginning of this year, the company said it was exploring possibilities including selling or spinning off its diagnostics unit or partnering with an outside company on diagnostics development, but it did not ultimately make a move.

In a recent interview with GenomeWeb, SomaLogic interim CEO Adam Taich, who took over for Roy Smythe in March, said the company has decided to set its former diagnostic ambitions aside and focus "on the life sciences side of our business."

"Down the road, will someone choose to commercialize a diagnostic underpinned by SomaScan or Somamer technology? Potentially. But it isn't in our road map," he said.

Taich also cited SomaLogic's 2018 decision to end its fee-for-service business as something of a wrong turn for the company.

"The company was well on its way to having a distributed offering in addition to our services offering we have and then essentially pulled the plug on that and pushed customers in a way that made them uncomfortable," he said. "And even though that decision was reversed … many customers have long memories."

Taich said this focus on diagnostics also led the company to underinvest in its life sciences business.

"When I got to the company, which was a little less than two years ago, we had less than 10 sales reps around the globe," he said. "We just didn't have the coverage from a sales and commercial effort that we needed."

Taich also highlighted the company's reliance on a service-based, as opposed to kit-based, model as a major limitation.

"Greater than 90 percent of our revenue is through our services business, and that just really hinders you," he said.

For instance, he said, until recently, SomaLogic didn't have an authorized SomaScan service site in China. Because of regulatory restrictions on the export of biological samples outside the country, that meant the company was essentially locked out of that market.

In other cases, cold chain supply issues have limited potential customers' abilities to get their samples to SomaScan service sites, Taich said. He added that this has hampered SomaLogic's ability to win contracts with large biobank organizations and population health studies, which have emerged as major customers for high-plex proteomic platforms.

"We have really limited ourselves by having that services-only model," he said.

Olink was also largely a services-based company but has over the last two years very deliberately grown its kits business. In Q1 2021, service revenue accounted for 71 percent of its total revenue, while kits accounted for 21 percent. In Q3 2023, service revenue accounted for 38 percent of its total revenue, while kits accounted for 54 percent.

SomaLogic is also pursuing a kit-based strategy. The company has partnered with sequencing giant Illumina to develop SomaScan kits that can be run on Illumina's next-generation sequencing platforms. Taich said the company plans to begin offering them in 2024 on an early-access basis and move to broad commercial release in 2025.

A kit-based SomaScan will make for easier customer access as well as higher margins, Taich said, projecting that the kits will have 60 percent-plus gross margins, roughly 10 points higher than the margins for the company's services business.

The Illumina agreement also provides an opportunity for SomaLogic to leverage that firm's dominant position in the NGS space.

"There are a tremendous number of sites that have made significant investments in building up genomics core facilities [based on Illumina technology]," said Shane Bowen, SomaLogic's chief research and development officer. "To be able to go and become the bolt-on, de facto standard within all of those facilities is what I think this relationship is going to open up for us."

An Illumina-based readout won't be exclusive to SomaLogic. Olink's Explore platform also uses Illumina NGS instruments as one of its readout options. Taich noted, though, that under the terms of their agreement, Illumina will be responsible for driving sales of the Illumina-based SomaScan kits.

"The commercial responsibilities for the selling, the marketing, the distribution, etc., all sits with Illumina," he said. "Obviously, we're fully incentivized to help in any way we can."

That SomaLogic's lackluster performance appears driven primarily by past business decisions as opposed to its technology suggests substantial upside for the company if it — and, assuming the merger goes through, Standard BioTools — is able to get its kit and broader commercial strategy right.

It will be playing from behind, though. One factor influencing researchers' choices of platforms is the desire to make sure the data they are generating is compatible with data produced by other efforts they are interested in making comparisons to. The UK Biobank's decision to use Olink's Explore platform for proteomic measurements looms particularly large in this regard as that effort has produced one of the largest public proteomic resources, and one with which many researchers will likely want to integrate their data.

Taich said SomaLogic believes that going forward it will be in a better position to win this sort of business.

"Those types of collaborative public-private partnerships, those large-scale biobanking projects have been really difficult for us," he said. "But we're really confident, particularly because most of the genomics work [in these projects] has been done on Illumina, that in partnership with Illumina … we'll be able to get in and start doing our fair share of larger biobank opportunities."