Files Preliminary Proxy Statement to Solicit
Shareholders to Oppose the Merger
Intends to Vote AGAINST the Conflict-Plagued and Excessively
Dilutive Transaction, Which Stands to Unduly Benefit Certain
Investors and Standard BioTools at the Expense of SomaLogic’s
Shareholders
Notes the Current Premium for SomaLogic
Shareholders, Based on the Deal’s Exchange Ratio and Standard
BioTools’ Trading Price, is Only ~4.3%
Underscores That SomaLogic Has Superior
Alternatives to a Flawed Combination, Including a Standalone Path
Leveraging its Considerable Cash Position and Strong Balance
Sheet
Madryn Asset Management, LP (collectively with its affiliates,
“Madryn”), a holder of approximately 4.2% of the outstanding common
stock of SomaLogic, Inc. (“SomaLogic” or the “Company”) (Nasdaq:
SLGC), today issued an open letter to fellow shareholders regarding
its opposition to the Company’s proposed merger (the “Merger” or
the “Combination”) with Standard BioTools Inc. (“Standard”)
(Nasdaq: LAB). Additionally, Madryn announced it has filed a
preliminary proxy statement with the Securities and Exchange
Commission (“SEC”) in order to solicit proxies in opposition to the
Merger. Madryn urges shareholders to wait to
receive its definitive proxy statement and GREEN proxy card in the
mail prior to determining how to vote at the Special Meeting of
Stockholders (the “Special Meeting”) slated for January 4,
2024.
***
December 12, 2023
Dear Fellow Shareholders,
Madryn has been an institutional investor in SomaLogic for the
last seven years and has an intimate understanding of the Company’s
scientific know-how, total addressable market and innovative
platform. We strongly believe these attributes will underpin
significant value creation in the quarters and years ahead.
Notwithstanding the Company’s ample cash position and strong
potential, the SomaLogic Board of Directors (the “Board”) has
recommended that shareholders support an inherently flawed and
one-sided combination with Standard. There are several troubling
aspects of the Merger that the Company is using to drive
shareholders to make an irreversible decision that would
crystallize its depressed valuation. Specifically, we intend to
show in the weeks ahead that:
- The Merger drastically undervalues SomaLogic based on
industry-standard valuation methodologies;
- The Merger 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 Merger subordinates SomaLogic shareholders to several
layers of debt and preferred equity; and,
- SomaLogic has far superior alternatives, including as a
standalone entity with significant cash on the balance sheet, no
debt and tangible near-term commercial opportunities.
That is why we intend to vote AGAINST the Merger at the upcoming Special Meeting
on January 4, 2024. Additionally, we have taken steps to soon be in
a position to actively solicit your votes AGAINST the Merger. In the meantime, we urge you
to make your views known to us and the Company.
Please consider the following:
The Merger Drastically Undervalues SomaLogic Based on
Industry-Standard Valuation Methodologies
SomaLogic is a global leader in drug research and the
development of biomarker identification in proteomics. Today, using
only 55 μL of Plasma, serum or other matrices, SomaLogic’s platform
is capable of running 11,000 protein measurements, twice as many
protein measurements as any other proteomics platform. Furthermore,
the Company possesses an extensive and valuable proteomics database
that contains over 4.2 billion protein measurements and a clinical
database that contains over 675,000 participant-years of clinical
follow-up. SomaLogic also recently began a collaboration with
Illumina, Inc. (“Illumina”) (Nasdaq: ILMN) to develop co-branded,
distributable, next-generation sequencing proteomics products. The
collaboration will leverage Illumina’s broad installed base across
academic research institutions, medical centers and biopharma
companies to help access the proteomics total addressable market,
which is estimated to be valued at approximately $90 billion,
according to publicly available Company materials. SomaLogic’s
differentiated, high-plex platform is uniquely positioned to assist
customers globally in the development of next generation drugs and
diagnostics, and the future remains incredibly bright for the
Company.
Unfortunately, the Merger consideration is anything but a
premium. The deal was struck shortly after SomaLogic’s share price
fell to a historic low of $1.99 per share on August 22, 2023, a
month and a half before the deal announcement. On October 3, 2023,
the day before the Merger was announced, SomaLogic’s enterprise
value, based on basic common shares outstanding and September 30,
2023 financials, was -0.2x consensus revenue forecasts, well below
the 14.6x enterprise value / 2022E revenue multiple presented in
SomaLogic’s initial SPAC presentation. The deal value, at
announcement and since, is plainly insufficient in light of recent
SomaLogic trading prices and the Company’s historical valuation
relative to peers.
Further, the Merger consideration implies a valuation of
SomaLogic that is significantly lower than the value implied by a
recent – and we believe highly relevant – comparable transaction:
the acquisition of Olink Holding AB (publ) (“Olink”) (Nasdaq: OLK)
by Thermo Fisher Scientific Inc. (NYSE: TMO) on October 17,
2023.
Finally, as an all-stock transaction, the value accruing to
SomaLogic shareholders depends on the price of Standard stock,
which has fluctuated significantly since the Merger announcement.
At the Merger’s ratio of 1.11 Standard shares per SomaLogic share,
SomaLogic was valued at $3.00 per share at the time of the
announcement, and $2.40 per share as of December 11, 2023. Given
SomaLogic’s unaffected share price of $2.30 the day before the
announcement, the current value of the Merger represents just
around a 4.3% premium to SomaLogic’s unaffected share price and a
major discount to the probable value of SomaLogic shares without
the Merger. This is an absurdly meager premium when taking into
account the Company’s large cash position, platform and near-term
opportunities.
The Merger is the Result of a Flawed Process and is Rife with
Conflicts
The Company’s account in its proxy statement (the “Merger
proxy”) of how the Merger was negotiated contains several confusing
gaps that are not adequately explained. For example, the Merger
proxy states that Standard engaged with SomaLogic several times
prior to the 2023 discussions, but it does not make clear what
became of those discussions or why they were terminated.
Furthermore, the Company seemed to generate interest from multiple
parties with respect to a minority investment. The Merger proxy
does not contain adequate disclosure around whether minority
investment transactions were fulsomely considered by the SomaLogic
transaction committee. For example, did the SomaLogic transaction
committee instruct representatives of Perella Weinberg Partners
L.P., SomaLogic’s financial advisor, to further explore those
minority investment transactions or expand the universe of parties
who may be interested in such a transaction? If that could have
resulted in a well-capitalized potential acquirer making an
investment in SomaLogic, it could substantially de-risk SomaLogic’s
commercial pathway and lay the groundwork for a future
acquisition.
Additionally, we are troubled by the fact that the Merger
benefits constituents who are on both sides of the transaction, as
they have significant equity and preferred equity positions in, and
board representation at, both SomaLogic and Standard. For example,
Eli Casdin and Casdin Capital, LLC (“Casdin Capital”) are
significant shareholders in both SomaLogic and Standard and have
retained their valuable Series B Preferred Put-Right in the pro
forma combined entity, despite the fact that SomaLogic shareholders
are fourth in line to be paid in a future acquisition scenario
(i.e., behind senior debt, convertible debt and preferred equity,
all of which are legacy instruments from Standard’s messy balance
sheet).
We also note that Mr. Casdin remained a part of the Standard
transaction committee throughout 2022 and up to and through the
initial proposal to SomaLogic by Standard. Because he could have
had substantive discussions around a potential deal prior to his
recusal from both transaction committees, disclosure should be
added to provide SomaLogic shareholders with visibility into
whether any discussions occurred.
On top of this conflict, we also note that a majority of the
members of the SomaLogic transaction committee worked with or for
Mr. Casdin at other companies and in other capacities. A cursory
review of publicly available information reveals a web of
connections:
- Jason Ryan became CFO at Magenta Therapeutics, Inc. shortly
after entities affiliated with Casdin Capital led that company’s
Series C financing. Messrs. Ryan and Casdin currently serve as
members of the board of directors of GeneDx Holdings Corp. (Nasdaq:
WGS), which was acquired by CM Life Sciences, Inc., a SPAC formed
by Mr. Casdin and Casdin Capital.
- Casdin Capital is an investor client of Perspective Group, LLC,
which was founded by Tom Carey and of which he was a Managing
Partner until 2022. Messrs. Carey and Casdin both served on the
board of directors of Exact Sciences Corporation (Nasdaq: EXAS)
from 2017 to 2020.
- Troy Cox is one of the initial directors of CM Life Sciences,
II, a SPAC formed by Mr. Casdin and Casdin Capital, which
ultimately acquired SomaLogic in 2021.
We expect that a more in-depth review will reveal additional
connections and believe that SomaLogic shareholders should be
highly suspicious of the process that was undertaken to arrive at
this Merger.
Further, Mr. Casdin will have significant representation on the
board of directors of the pro forma combined entity following the
Merger. From SomaLogic, Kathy Hibbs and Messrs. Casdin and Cox will
be members of the board of directors of the combined company, which
constitutes only three out of seven seats. In addition to having a
pre-existing relationship with Mr. Cox, entities affiliated with
Casdin Capital participated in a PIPE investment for 23andMe
Holding Co. (Nasdaq: ME) when Ms. Hibbs served as the Chief Legal
and Regulatory Officer there.
The Merger Subordinates SomaLogic Shareholders to Several
Layers of Debt and Preferred Equity
The Merger proxy does not explain how the SomaLogic transaction
committee gained comfort with subordinating SomaLogic common
shareholders to three additional layers of Standard securities.
Specifically, and in stark contrast to SomaLogic’s current
cash-rich, debt-free balance sheet, Standard will burden the pro
forma combined entity with $9.6 million of term debt, $55.0 million
of convertible debt and $250 million of Series B Preferred Equity
(held by Casdin Capital and Viking Global Investors LP).
The Merger proxy clearly explains that the SomaLogic transaction
committee initially was not comfortable burdening the pro forma
combined company with the Series B Preferred put-right but suddenly
became comfortable – what caused this change? We also question how
the SomaLogic transaction committee accepted the outsized voting
and consent rights afforded to Series B Preferred Equity holders
and gained comfort with the assumption of Standard’s more than $60
million in soon-to-mature debt. Clearly, meaningful benefits exist
for Standard at the expense of current SomaLogic shareholders.
There Are Far Superior Paths Forward, Including as a
Standalone Company
SomaLogic has significant growth potential as a standalone
entity and does not need to transact at this time. Given the
headwinds facing all growth-stage life science tools companies,
transacting in this environment would result in SomaLogic
shareholders solidifying consideration at all-time low trading
prices. If SomaLogic had a weak balance sheet, perhaps transacting
would be necessary, but the Company is uniquely positioned with its
strong, cash-rich balance sheet that we believe provides several
years of runway to weather the current cycle’s headwinds.
Furthermore, if necessary, and as clearly outlined in the Merger
proxy, several parties could be interested in investing in
standalone SomaLogic should that be a worthwhile strategy to extend
runway or provide strategic future partnership opportunities.
Additionally, SomaLogic has yet to launch its pilot with
Illumina, which has an opportunity to materially increase its
revenue going forward via a distributed kit model. This pilot is
set to commence in 2024 with a full commercial launch set in 2025.
Given SomaLogic’s extensive cash runway, management should execute
on the Illumina partnership to realize value on a standalone basis
that will inure solely to the benefit of SomaLogic shareholders
(vs. also to Standard shareholders). As the distributed kit model
continues to demonstrate commercial success in tandem with
SomaLogic’s core business, outcomes similar to the proposed Olink
acquisition for $3.1 billion become increasingly likely.
The Merger proxy spends very little time on how the Board
evaluated SomaLogic potentially continuing as a standalone entity.
The Merger proxy discloses multiple presentations exploring
SomaLogic’s standalone business but only provides vague details
around the key risks of remaining a standalone company, namely (1)
R&D investment (which is typical for a life science tools
company at this stage and with this size of market opportunity) and
(2) potential need for financing (which this transaction could
further complicate). Shareholders deserve additional disclosure as
to why a standalone SomaLogic, with more than approximately $450
million in cash, cash equivalents and short-term investments, does
not have the capacity to invest prudently in R&D and continue
to grow its commercial footprint on a standalone basis.
Among the alternative paths that we believe could deliver
superior value relative to the proposed Merger, we point to the
following (which we will expand on in subsequent materials):
- A shareholder-driven refresh of the Board (which we are
prepared to pursue) at or before the next Annual Meeting of
Stockholders and the subsequent appointment of a qualified
permanent management team;
- A credible and independently run strategic alternatives process
that results in an acquisition or merger by a strategic market
participant at a price greater than the one implied by the
Combination and in line with SomaLogic’s historical valuation;
- The continued standalone development of SomaLogic’s key
proteomic assets as use cases for proteomics continue to increase;
and,
- The standalone establishment of additional strategic commercial
partnerships to capitalize on SomaLogic’s rich intellectual
property estate and scientific know-how in the field of
proteomics.
In closing, we look forward to communicating further with you in
the coming weeks. In the meantime, we urge you to reach out to
SomaLogic to express your views on the Merger. If the Board hears
from enough shareholders with concerns, hopefully, it will
reconsider trying to cram through the Merger in a seemingly rushed
manner over the holiday season.
Sincerely,
Avinash Amin, MD
Managing Partner, Madryn Asset Management, LP
***
About Madryn Asset Management
Madryn Asset Management is a leading alternative asset
management firm that invests in innovative healthcare companies
specializing in unique and transformative products, technologies,
and services. The firm draws on its extensive and diverse
experience spanning the investment management and healthcare
industries and employs an independent research process based on
original insights to target attractive economic opportunities that
deliver strong risk-adjusted and absolute returns for its limited
partners while creating long-term value in support of its portfolio
companies.
IMPORTANT ADDITIONAL INFORMATION
Madryn Asset Management, LP, Madryn Health Partners, LP, Madryn
Health Partners (Cayman Master), LP, Madryn Health Advisors, LP,
Madryn Health Advisors GP, LLC, Madryn Select Opportunities, LP,
Madryn Select Advisors, LP, Madryn Select Advisors GP, LLC and
Avinash Amin (collectively, the “Participants”) are participants in
the solicitation of proxies from the stockholders of SomaLogic in
connection with the special meeting of stockholders (the “Special
Meeting”). The Participants intend to file with the U.S. Securities
and Exchange Commission (the “SEC”) a definitive proxy statement
and accompanying GREEN Proxy Card to be used in connection
with any such solicitation of proxies from SomaLogic’s stockholders
for the Special Meeting. MADRYN STRONGLY ADVISES ALL
STOCKHOLDERS OF SOMALOGIC TO READ THE DEFINITIVE PROXY STATEMENT,
THE ACCOMPANYING GREEN PROXY CARD AND
OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY THE
PARTICIPANTS WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN
IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION RELATED TO
THE PARTICIPANTS AND THEIR DIRECT OR INDIRECT INTERESTS IN
SOMALOGIC, BY SECURITY HOLDINGS OR OTHERWISE. The definitive
proxy statement and an accompanying GREEN Proxy Card will be
furnished to some or all SomaLogic stockholders and will be, along
with other relevant documents, available at no charge on the SEC’s
website at htp://www.sec.gov/. In addition, the Participants will
provide copies of the definitive proxy statement without charge,
when available, upon request. Requests for copies should be
directed to Madryn Asset Management, LP.
Certain Information Regarding the Participants
In accordance with Rule 14a-12(a)(1)(i) under the Securities
Exchange Act of 1934, as amended, the Participants in the proxy
solicitation of SomaLogic’s stockholders are: Madryn Asset
Management, LP, Madryn Health Partners, LP, Madryn Health Partners
(Cayman Master), LP, Madryn Health Advisors, LP, Madryn Health
Advisors GP, LLC, Madryn Select Opportunities, LP, Madryn Select
Advisors, LP, Madryn Select Advisors GP, LLC and Avinash Amin.
As of the date hereof, Madryn Asset Management, LP beneficially
owns an aggregate of 7,879,073 shares of common stock, $0.0001 par
value per share of SomaLogic (“Common Stock”), Madryn Health
Partners, LP beneficially owns an aggregate of 2,763,604 shares of
Common Stock, Madryn Health Partners (Cayman Master), LP
beneficially owns an aggregate of 4,705,598 shares of Common Stock,
Madryn Health Advisors, LP beneficially owns an aggregate of
7,469,202 shares of Common Stock, Madryn Health Advisors GP, LLC
beneficially owns an aggregate of 7,469,202 shares of Common Stock,
Madryn Select Opportunities, LP beneficially owns an aggregate of
409,871 shares of Common Stock, Madryn Select Advisors, LP
beneficially owns beneficially owns an aggregate of 409,871 shares
of Common Stock, Madryn Select Advisors GP, LLC beneficially owns
an aggregate of 409,871 shares of Common Stock and Avinash Amin
beneficially owns an aggregate of 7,879,073 shares of Common Stock.
Collectively, the Participants own an aggregate of 7,879,073 shares
of Common Stock.
Disclaimer
This material does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities described
herein in any state to any person. In addition, the discussions and
opinions in this press release are for general information only,
and are not intended to provide investment advice. All statements
contained in this release that are not clearly historical in nature
or that necessarily depend on future events are “forward-looking
statements,” which are not guarantees of future performance or
results, and the words “anticipate,” “believe,” “expect,”
“potential,” “could,” “opportunity,” “estimate,” and similar
expressions are generally intended to identify forward-looking
statements. The projected results and statements contained in this
press release that are not historical facts are based on current
expectations, speak only as of the date of this press release and
involve risks that may cause the actual results to be materially
different. Certain information included in this material is based
on data obtained from sources considered to be reliable. No
representation is made with respect to the accuracy or completeness
of such data, and any analyses provided to assist the recipient of
this presentation in evaluating the matters described herein may be
based on subjective assessments and assumptions and may use one
among alternative methodologies that produce different results.
Accordingly, any analyses should also not be viewed as factual and
also should not be relied upon as an accurate prediction of future
results. All figures are unaudited estimates and subject to
revision without notice. Madryn disclaims any obligation to update
the information herein and reserves the right to change any of its
opinions expressed herein at any time as it deems appropriate. Past
performance is not indicative of future results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231212451769/en/
John Ferguson / Joseph Mills Saratoga Proxy Consulting (212)
257-1311 info@saratogaproxy.com
Greg Marose / Joe Germani Longacre Square Partners, 646-386-0091
Madryn@LongacreSquare.com
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