How Sema4 can disrupt the healthcare system
- Andrew Yeow
- Mar 7, 2021
- 3 min read
Updated: May 2, 2021
Sema4 High Conviction (CMLF)
What’s does Sema4 do?
Sema4 is a health intelligence company that provides data-driven insights (powered by their artificial intelligence platform Centrellis) to provide actionable, personalized insights. Sema4 believes that currently, healthcare views patients in a binary manner leading to unidentified risk across the spectrum of disease. To address this issue, Sema4’s AI platform curates data and provides “insight on disease and wellness on a molecular, physiologic, and pathophysiologic level” allowing them to identify the heterogeneity within groups.
How is the leadership at Sema4?
The founder and CEO of Sema4, Eric Schadt has experience working at Merck, Rosetta, Sage Bionetworks, Pacific Biosciences, and Ichan Institute. Additionally, Schadt holds 450 peer-reviewed papers in leading scientific journals that have led to discoveries relating to the genetic basis of common human diseases such as diabetes, obesity, and Alzheimer’s. It is also significant to recognize that leadership at Sema4 took the Ichan School of Medicine at Mt. Sinai from 31st to 3rd in the country for medical research in genetics.
Financials
In 2020, Sema4 did 190M in revenue which is projected to grow at a 38% CAGR over the next 3 years to 500M in 2023. More significantly, however, is the fact that Sema4 expects to double gross margins from 22% currently to 54% in 2023.
SPAC Deal
Sema4 has entered a business deal to combine with CMLF which has 443M cash to be deployed and PIPE investments of 350M led by Casdin Capital and Corvex Management.
The deal values Sema4 at 2.1B (at $10.00 a share) and public investors will own 17% of the company post-transaction.
CEO of Invitae, Sean George, is on the board of CM Life Sciences
CEO of Twist Biosciences, Emily Leproust, is on the board of CM Life Sciences
Sema4, a patient-centered health intelligence company in the fields of artificial intelligence and genetics, is situated for substantial growth as they look to disrupt the current healthcare system by building predictive models that provide personalized and actionable insights useful in identifying risk across the spectrum of disease.
Bullish Reasoning
The use of artificial intelligence (which also improves scalability) and diversification of their revenue stream (focusing more on partnerships) will allow them to double gross margins from now to 2023. Sema4’s database has more than than 10 million genomic profiles and de-identified clinical records (basically, they already have a lot of data that they can use to train their machine learning algorithms which will only get more accurate AND PROFITABLE over time).
Sema4 is disrupting the healthcare sector by building predictive models via Centrellis allowing them to identify the heterogeneity between patients. They are changing the way the current healthcare system view patients in a binary manner and identifying disease risk on a molecular, physiologic, and pathophysiologic level.
Their machine learning platform called Traversa is exome based which basing means that it relies on proteins to create its models (proteins are constantly changing within your body and therefore are more useful to gain an understanding of your current health rather than future disease risk). The insights provided via Traversa were identified by medical experts as clinically actionable and potentially useful in pregnancy planning and adult disease treatment.
The two main competitors of Sema4 are Natera (a genetic testing company that develops and commercializes non-invasive methods for analyzing DNA) and Invitae (a genetic information company that aims to bring genetic information into mainstream medical practice to improve the quality of healthcare) currently have about a 10B and 7B market cap, respectively. This would imply that CMLF should be at about $35.
Sema4’s TAM
Scale
Sema4’s current TAM is >100B in auto-immune, 2B in pregnancy, 171B in oncology, 176B in diabetes, and 194B in cardiovascular disease
Sema4 has over 1000 employees with 150 at an MD / Ph.D. level
Sema4 is establishing 20,000 new direct connections with patients every month and
10 million+ patients
Recent Projects:
Sanofi:
Five-year collaborative study with Sanofi to provide new insight into the biological mechanisms implicated by asthma
The study includes many factors such as traditional clinical data, genomics, immunological, environmental, and sensor data from mobile devices
Drug Repositioning (Icahn School of Medicine and Eli Lilly):
A recently published study conducted by scientists from Sema4, Icahn School of Medicine, and Eli Lilly demonstrated that patient-derived cells offer a more effective approach for assessing drug response than conventional methods
Implications: streamline drug discovery for schizophrenia specifically
What is Centrellis?
The five main aspects of Centrellis are machine learning, oncology, data processing / intuitive UI to describe complex data, population-health insights, and predictive modeling.
Conclusion
Sema4, a company positioned in genetics and artificial intelligence should be able to capitalize on the current flaws of the healthcare system by disrupting the binary view of patient health and bringing personalized and clinically actionable insight across the spectrum of disease.
Sources
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