Believes that the Proposed Merger Grossly Undervalues SomaLogic and Ignores its Revolutionary Products, Considerable Cash Position, and Strong Balance Sheet
Iterates that SomaLogic can Thrive as a Standalone Enterprise and Does Not Need Standard BioTools to Thrive
Expresses Serious Concerns with Other Aspects of the Proposed Merger, including Potential Conflicts of Interest
BALTIMORE, Dec. 20, 2023 (GLOBE NEWSWIRE) -- 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.
