Nigerian genomic firm 54gene, has had a tumultuous few months. Dr. Abasi Ene-Obong, the co-founder and CEO, resigned less than two months after cutting 30% of its personnel, and Teresia Bost, the general counsel who joined the company in September of last year, took over as CEO.
In October, there was yet another round of layoffs; this time, 100 individuals, or around 55% of the workforce, were let go. TechCabal reports that in just two months, the company’s workforce has decreased from over 300 to just 39.
The company’s runway was said to have virtually run out, and new funding was required immediately to keep the platform. Due to this, the company’s valuation was reduced from the $170 million it reached in its $25 million series B funding 14 months ago to $50 million in a down round.
According to TechCrunch, the down round closed at a 3x to 4x liquidation preference. Sources revealed that the investment round and valuation cut are probably the reasons the CEO resigned.
The company’s shrinking valuation
The acceptance of a down round indicates that the business is in trouble and needs financial assistance.
Dr. Ene-Obong launched genomics firm 54gene in 2019 with the goal of studying the molecular components of Africans and building a biogenetics data bank to support medication development and medical advancements aimed at Africa.
The COVID-19 outbreak brought the business to public attention, and it recognised a potential to take the lead in fighting the pandemic in Nigeria.
It started building resources for COVID-19 testing right away, establishing a lab in Lagos and a mobile lab—a truck—in Ogun, and soon became the first accredited private organisation to provide COVID testing in Nigeria.
In addition to closely collaborating with the government, it hired a large number of people, created supporting positions for the vertical, and received $500,000 in funding from corporate partners to accelerate testing.
The significant income COVID-19 brought in for 54gene could have been used to subsidise that company’s already pricey genomic activities.
The launch of 7RL
The revenue from COVID-19 was fleeting. It was clear that the COVID business could not survive by the end of 2021. The business then established 7RL as another testing subsidiary.
This new company would provide healthcare professionals and patients with access to top-notch, affordable, quick, trustworthy, and sophisticated molecular tests.
You would think nothing would go wrong if a facility that is already engaged in molecular research began providing molecular diagnostic and advisory services. But everything did.
One source claims that 7RL marked the start of the company’s financial problems. The company had raised its $25 million series B investment and acquired top pharmaceutical talent from around the world, including Teresia Bost, its current CEO, around three months before establishing a new vertical.
There were sufficient funds to start this new business, which was anticipated to generate cash flow similar to COVID-19. Prior to its demise, 7RL operated for less than eight months, yet according to two sources, it lost the most money overall.
The company said on October 25 that it is returning to a lean structure and laying off over 90% of its workforce in order to stay solvent. Additionally, it has made a U-turn to return to its main value proposition, which is to perform genomic research and compile biodata for Africans to benefit from precision medicine.
“Going forward, the primary focus will be on the unique genomic research the firm has started by further leveraging its genomic datasets derived from 54gene’s state-of-the-art biobank, that currently houses over 130,000 unique patient samples and corresponding genomic data, all with the objective of positioning the company to make contributions to precision medicine and drug discovery.,” the statement read. “This continues the meaningful work the company has invested in, whilst de-emphasising the clinical diagnostic business line at this time.”
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