Nigeria-based genomics startup 54gene, once touted as a promising venture to improve global pharmaceutical research through valuable genome information on Africans, is on the brink of closure after a tumultuous four-year journey.
The company, founded in 2019 by Dr. Abasi Ene-Obong, initially raised an impressive $45 million across three funding rounds. However, it has been marred by frequent changes in leadership. In the past year alone, 54gene witnessed three CEO changes, culminating in the departure of Ron Chiarello in July 2023.
Report affirms that Chiarello confirmed the financial struggles that have led to the company’s winding down, stating that 54gene could not continue to operate financially, and it began to wind down in July.
As part of its winding-down process, 54gene is reportedly exploring options to find buyers for its assets, including a valuable biobank containing biological samples essential for research. While these assets are considered valuable, the progress of the sale remains uncertain.
However, legal troubles are complicating the closure further. Teresia Bost, the company’s former legal counsel and one-time interim CEO, has sued 54gene, alleging discriminatory behavior and a hostile work environment. These legal issues, along with claims of unpaid creditors, add a layer of complexity to the company’s already challenging situation.
Operating in the field of genomics is inherently capital-intensive, and the costs associated with sequencing equipment, data storage, and other expenses can quickly accumulate. Insiders with knowledge of 54gene’s operations have noted that the company still owes money to vendors who supplied medical equipment.
The startup expanded into diagnostics and established Seven River Labs in 2021, leveraging its success with COVID-19 testing. While it generated substantial revenue from COVID-19 testing, reports indicate that the company embarked on aggressive spending in the diagnostics space without considering market dynamics. By mid-2022, 54gene was grappling with financial difficulties, leading to salary cuts and layoffs.
The collapse of 54gene, once a flagship company in the genomics sector, is expected to have repercussions. Industry observers warn that this setback may cause global investors to hesitate when considering funding similar ventures in the future. The abrupt fall of a major player in the sector raises concerns about the sustainability of genomics startups and underscores the challenges inherent in this field.
As 54gene approaches closure amid controversy and financial woes, the industry will be closely watching its aftermath and its potential impact on the broader genomics and health tech landscape.