Sema4 growth shows Connecticut biotech potential
Last year, genomic-testing startup Sema4 decided to move from Manhattan and open offices in Stamford’s South End. It is not second-guessing its decision.
To the contrary, Sema4 is doubling down on its commitment, seven months after setting up its headquarters at 333 Ludlow St. It announced last week that it would move its Manhattan lab work to Stamford and increase its headcount in the state by more than 400 within the next five years. Several million dollars in state funds are supporting the expansion, an investment that points to the increasing confidence in the public and private sectors in companies like Sema4 to spur innovation and job growth.
“It was really important to have the support of Connecticut,” Sema4 founder and CEO Eric Schadt said in an interview last week at the Stamford offices. “Not that the expansion wouldn’t have happened without that state support, but it would have definitely taken longer.”
Growing in Connecticut
Last year, Sema4 was spun out of the Mount Sinai Health System in Manhattan into its own company.
It zeroed in on Connecticut as an ideal location for its headquarters because it was looking for space for its growing operations that it could lease for a fraction of Manhattan rates, while still operating nearby.
“It’s gone better than expected,” Schadt said. “It’s more relaxed, with more space. It’s a better working environment and a better quality of life.”
Sema4 still bases most of its lab employees and support staff at the Mount Sinai campus next to Central Park. But the setup is a tight fit: Some 200 work in about 19,000 square feet.
“It’s almost like being in a closet there,” Schadt said. “All the equipment is crunched so closely together. A lot of the lab directors, they don’t have their own offices. It’s a constrained area. It’s what happens in Manhattan because space is so expensive.”
With the Stamford lab, Sema4 would take about 55,000 square feet for a building that would house DNA and RNA processing and sequencing and genetic-counseling operations.
Company officials have not disclosed the location, but they say it would be a property that formerly housed another lab facility. The hub is scheduled to open in the second quarter of 2019.
The new lab would complement Sema4’s approximately 28,000-square-foot headquarters at 333 Ludlow. Those offices now house 86 employees.
In addition, Sema4 has operated since 2014 a lab in Branford, where it employs 50.
About 75 percent of the approximately 400 new employees would be based in Stamford, according to Schadt.
To support the expansion, the state Department of Economic and Community Development has allocated a $6 million loan for Sema4 to purchase machinery and equipment, make capital improvements and move ahead with the new hires. The company would be eligible for up to $5 million of forgiveness if certain milestones were met.
In December 2015, DECD gave the company a $9.5 million loan to help create 145 positions.
“I do think providing incentives to attract high-growth health-information companies like Sema4 and over 400 new jobs is an effective investment for our state,” said state Rep. Caroline Simmons, D-Stamford, who is also co-chairwoman of the state Legislature’s Commerce Committee.
Other cornerstone biotech investments during Gov. Dannel P. Malloy’s tenure in the past seven years include the renovation of University of Connecticut health buildings in Farmington, the opening of the Jackson Laboratory for Genomic Medicine in Farmington and the launch of a $200 million bioscience innovation fund.
“In the General Assembly, we should be prepared to arrange for funding for promising and exciting potential financings of up-and-coming companies,” said state Sen. L. Scott Frantz, R-Greenwich, who is co-chairman of the Commerce Committee. “But we need to be incredibly smart and frugal about where we place our bets due to severe funding constraints.”
Connecticut Innovations, the agency that manages the bioscience investment fund, has so far invested about $98 million in life-sciences companies, helping to attract some $1.4 billion in outside investment into those firms. Biotech businesses account for about half of the companies in CI’s portfolio.
“Our sweet spot is earlier in the fundraising process where our check size makes a bigger difference, especially at a point when funding can be more difficult for companies,” said Dan Wagner, CI’s managing director of investments. “We’re trying to seed companies in the hope that they can reach their milestones and that some of them can grow into the next Sema4.”
With its biotech-focused expenditures, Connecticut ranks in the top 10 in a number of standings. It placed No. 4 among the states for private-sector R&D investment per capita — its total of $2,227 was more than twice the national average — according to a 2017 report by the nonprofit Connecticut Economic Resource Center. It came in No. 7 for state-funded R&D investments.
Foundation for growth
With Sema4 committed long term to Connecticut, Schadt said the company is keen to collaborate with other major players in the state’s biotech sector.
“With Jackson Labs and UConn Health, there are lots of really cool things going on there that we think complement what we’re doing,” Schadt said. “We’ve gotten more engaged with those guys. And we collaborate heavily with people at Yale.”
Elsewhere in the state, a number of programs aim to cultivate the industry’s growth. Accelerator for Biosciences in Connecticut, a six-month program for those interested in launching new bioscience ventures, kicked off last October with 12 companies in its first group.
Branford-based Design Technologies is running the program, which comprises a public-private partnership. The state business-development agency CTNext is backing the initiative, while corporate sponsors include three pharmaceutical companies with headquarters or major operations in Connecticut: Purdue Pharma, Pfizer and Boehringer Ingelheim.
“The commitment by Connecticut to life sciences is significant, and we’ve seen it at all levels within the state,” said Design Technologies Principal Mary Howard. “There’s a lot of belief that there are real commercial opportunities in this industry, and we’re seeing resources being put toward them.”
Statewide, bioscience accounts for more than 35,000 jobs across more than 2,000 companies, according to the CERC report.
“Connecticut is a great option for bioscience firms — especially with our proximity to New York and Boston — but we’ve got a lot of budget and fiscal problems that remain unresolved,” said Paul Pescatello, executive director and senior counsel for the Connecticut Business & Industry Association’s Connecticut Bioscience Growth Council. “They haven’t been fixed in a way that gives people confidence for the next 10 to 15 years. It still looks like a pretty uncertain future with the tax structure.”
firstname.lastname@example.org; 203-964-2236; Twitter: @paulschott