Sema4, Eric Schadt’s Genomics Startup, Spins Out of Sinai to Raise Cash

Xconomy New York — 

[Updated, 9:30 p.m. ET, see below] Eric Schadt has been incubating a genomic data project within the Icahn School of Medicine at Mount Sinai for more than five years. Today, the product of that work, a 300-plus employee startup called Sema4, has formally left the nest.

Sema4 today spun out of Mount Sinai as a for-profit company and will be led by Schadt, an ex-Merck (NYSE: MRK) and Pacific Biosciences (NASDAQ: PACB) executive and the founding director of the Icahn Institute for Genomics and Multiscale Biology. On its own and free from the non-profit world, the company now plans to raise cash to significantly boost its capabilities. Rose Lewis, Sema4’s director of public relations, said over the next 12 to 18 months the company will “evaluate the scale of investment and/or partnerships” it needs.

Schadt, a prolific computational geneticist, came to Mount Sinai from the West Coast in 2011, leaving a job as chief scientific officer at Menlo Park, CA-based PacBio to lead the newly created Icahn Institute with the help of a $150 million gift from Carl Icahn. Speaking at an Xconomy event on Wednesday, Schadt said the goal when he came to New York was to “transform Mount Sinai into a state of the art, big data center.” Over the next five years, he hired some 350 people and married supercomputing capabilities with genomics, using Mount Sinai’s wealth of patient samples within one of the biggest cities in the world to aggregate a massive amount of genomic data within a computer system. The question, Schadt said yesterday: How to translate that technology to patient care?

The answer is Sema4, and this profile in Wired last October captured the evolution of Schadt’s project, which ultimately led to the startup’s creation last year.

Sema4 is part diagnostics developer, part open-access database, and part digital health startup. It already has a test for expectant parents called the Sema4 Expanded Carrier Screen that looks for 281 different inherited diseases through blood or saliva samples, and plans to develop other non-prenatal tests, newborn screens, and cancer tests. But Sema4 is also raising cash to boost its ability to collect, analyze, and interpret more data—genetic, environmental, clinical, pharmaceutical, and device data—and share it with the biomedical community, academic centers, and researchers, Schadt said in a statement. The company also wants to use digital technologies—electronic genetic counseling, among them—that can help patients track and understand their longitudinal health data.

“We’re focused on expanding the genomic testing that we’re doing today, on a national and international scale, but the twist is more on the information side,” Schadt said yesterday. “How do we build a good enough data model around the individual patient to really bring precision medicine to the forefront? How do we integrate all the information, and engage patients along their journey?”

Carrying out this transition wasn’t easy. Schadt said yesterday that Sema4 makes in the “tens of millions” in revenue and he initially thought it was a “no brainer” to spin the company out of Mount Sinai. But Sema4 also wanted to maintain control and keep Mount Sinai as its sole investor. The problem: spinning a 300-person business out of a non-profit institution, in which the non-profit maintains ownership, Schadt said, has never been done. And Mount Sinai wasn’t about to risk its non-profit status on the deal. It took a slew of law firms, and a year and a half of legal wrangling, to formally spin the company out, Schadt said.

Though the two entities are now split, they will continue to have “a very deep collaboration,” work together on a variety of ongoing clinical and research projects, and Sema4 will provide genomic testing to patients across the Mount Sinai Health System, Lewis said. The company’s testing revenue has risen five-fold over the past four years, Lewis said, though she declined to give specifics.

Sema4 has an office in Union Square in Manhattan, but has leased a factory in Stamford, CT, to help scale up, Schadt said. It also has labs in Branford, CT, and Manhattan’s Upper East Side.

While running Sema4, meanwhile, Schadt will remain a genomics professor and the Dean of precision medicine at Mount Sinai, according to Lewis.