Skye Fund III Issues Letter Regarding Opposition to SomaLogic’s Proposed Merger with Standard BioTools
20 Dicembre 2023 - 3:00PM
Skye Fund III, which together with its affiliates, owns
approximately 3.4 million shares of SomaLogic, Inc., (NASDAQ: SLGC)
(the “Company”) and has been an investor in the Company for 20
years, today issued an open letter to the Company’s shareholders
regarding its opposition to the Company’s proposed merger (the
“Proposed Merger”) with Standard BioTools Inc. (NASDAQ: LAB) and
its intention to vote AGAINST the Proposed Merger at the upcoming
special meeting of shareholders scheduled for January 4, 2024.
The full text of the letter is set forth below:
December 20, 2023
Dear Fellow Shareholders,
Skye Fund III and its affiliates (collectively,
“Skye”) own approximately 3.4 million shares of Common Stock,
$0.0001 par value, of SomaLogic, Inc. (NASDAQ: SLGC) (“SomaLogic”
or the “Company”). After reviewing both the Company’s and Madryn
Asset Management, LP’s (“Madryn”) proxy materials with respect to
the proposed merger (the “Proposed Merger”) between the Company and
Standard BioTools, Inc. (NASDAQ: LAB) (“Standard BioTools”), as
well as other publicly available information, we conclude that the
Proposed Merger is antithetical to the interests of SomaLogic
shareholders. For this reason, explained in further detail below,
we intend to vote AGAINST the Proposed Merger at the upcoming
special meeting of shareholders scheduled for January 4, 2023 (the
“Special Meeting”). Please note that we are not activist
shareholders and have never engaged in any proxy solicitation – but
feel strongly that it is our duty to speak up in this instance in
the interest of the Company’s shareholders.
For 20 years I have been a Trustee at a major
academic medical institution. There, I’ve engaged with several
physicians, researchers, and leaders. All of them agree that
proteomics is a critical part of medicine’s future and many are
familiar with SomaLogic and understand its science. Further, as
evidenced by our investment in SomaLogic for 20 years, we are
familiar with the Company and are true believers in SomaLogic’s
potential. We believe that its technology has wide application in
research, drug development, and diagnostics and that much of its
potential is only just now beginning to be understood.
Which brings us to our principal objection to
the Proposed Merger – it grossly undervalues the potential of
SomaLogic. An essential comparison is Olink Holding AB (“Olink”), a
competitor that emerged a few years ago. Olink deployed technology
originally developed by SomaLogic, and began introducing into
European markets products similar to SomaLogic’s. While the two
companies were neck-and-neck in financial results in 2021, Olink
was better managed and executed better thereafter, resulting in its
current revenue exceeding SomaLogic’s by more than 50%. In October
of this year, Thermo Fisher Scientific Inc. announced its
acquisition of Olink for $3 billion. This is all the more shocking
considering customers indicated that SomaLogic’s technology is
better than and preferable to Olink’s. This has been validated by
Illumina, Inc. (“Illumina”), the market-dominant player in DNA
assay. Illumina selected SomaLogic as its partner to bring
proteomics and genomics platforms together in a major commercial
partnership.
However, it isn’t just SomaLogic’s revolutionary
technology but the fact that SomaLogic has a strong, debt-free
balance sheet with ample cash reserves of $450 million. We believe
that SomaLogic’s cash reserves are more than sufficient to develop
the market for its products and pursue major commercial success. In
addition, management has told shareholders that the Company can
successfully operate for the next three to five years as the market
develops. With that in mind, we have no doubt that SomaLogic can be
successful as a standalone enterprise and that its potential to do
so should, at the very least, be accounted for in SomaLogic’s
valuation.
Yet, inexplicably, the Proposed Merger values
SomaLogic at approximately $500 million. With cash reserves of $450
million, this means SomaLogic’s revenue stream, technology, patent
portfolio, customer base, industry reputation, commercial
partnerships and knowledge are being valued at around $50 million.
Considering that Olink sold for $3 billion, we believe that
Standard BioTools’s offer is absurdly low, manifestly unfair, and
unjustified in many ways.
We also agree with Madryn that there are several
other concerning issues with the Proposed Merger. These include the
Company’s board of directors’ (the “Board”) questionable
deliberation process, which included the involvement of current
SomaLogic director Mr. Eli Casdin, who is a major shareholder of
both SomaLogic and Standard BioTools, in the transaction committees
of both SomaLogic and Standard BioTools until June 2023 (we also
note the various ties between Mr. Casdin and other members of the
Board as described in Madryn’s proxy statement).
Finally, it would be one matter if Standard
BioTools was an exemplary company with a spotless balance sheet and
great prospects, but Standard BioTools’ published results show flat
revenue and net losses over eight years – no reason for optimism.
More concerning yet, Standard BioTools brings problems that
SomaLogic lacks: the burden of several layers of debt and $250
million of preferred equity (held, in part, by Mr. Casdin no less)
that will take priority over our interests in a merged company. We
cannot fathom how the Board seemingly reconciled both the
significant upside of SomaLogic’s continuance as a standalone
enterprise and the significant downsides presented by Standard
BioTools balance sheet, lack of promising prospects, and lack of
progress over eight years as a public company.
For all of these reasons, Skye will be voting
AGAINST the Proposed Merger. We believe that it offers no
operational, strategic, or financial benefit to SomaLogic
shareholders. Instead, we believe that the Board should focus on
enhancing shareholder value, taking advantage of the ample
opportunities SomaLogic currently has as a standalone company, and
evaluating any corporate combinations with the interests of all of
its shareholders foremost in mind.
Sincerely,
/s/ James T. Dresher, Jr. James T. Dresher, Jr.
Manager
About Skye Fund III
Skye Fund III is a family investment firm that takes a
long-term, value-oriented approach to investing.
Media Contact
Harold Nussenfeld, Manager
Skye Fund III
(410) 931-9050
haroldn@skyeasset.com
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