In a startling turn of events, genomics startup 54Gene has commenced the winding down of its operations, signalling a dramatic fall from grace after securing $45 million in funding across three funding rounds, as per TechCabal, who first reported the news.
Sources familiar with the matter confirmed this decision. The company started the process in July 2023 and by September 2023, the company’s website had vanished, while its former PR agency disassociated itself from 54gene.
Founded in 2019 by Dr Abasi Ene-Obong, 54gene embarked on a mission to provide essential genomic data on Africans, aiming to bolster drug discovery efforts by global pharmaceutical companies. With less than 3% of genetic material used in global pharmaceutical research sourced from Africa, 54gene aspired to bridge this significant gap in the global genomics market.
However, within four years of its inception, 54Gene found itself embroiled in turmoil. The company underwent three CEO changes within a year, with Ron Chiarello assuming the role in March 2023, only to leave in July. Chiarello candidly acknowledged the financial challenges that led to the company’s decision to initiate shutdown proceedings, marking the first official confirmation of 54Gene’s closure.
“Unfortunately, the company could not continue to operate financially, and it began to wind down in July,” he said at that time.
As part of its shutdown, 54Gene is actively seeking buyers to take over its assets, including a biobank containing invaluable biological samples for research. Although these assets are considered valuable by company insiders, the progress of the sale process remains uncertain and complicated by unresolved legal issues and unpaid creditors.
Read also: Ron Chiarello appointed as CEO of 54gene, Tobi Oke joins board of directors
Recent events leading to the shutdown
Teresia Bost, the former legal counsel and interim CEO of 54Gene, sued the company for alleged “discriminatory behaviour and creating a hostile work environment.” Bost’s appointment followed the dramatic exit of Dr. Abasi Ene-Obong in October 2022. Ene-Obong’s departure came on the heels of fundraising efforts despite the company’s significant revenue from its COVID-19 testing facilities and a $25 million funding round just a year prior.
Commenting on his stepping down, while being asked if the board had lost faith in his abilities to lead the company out of its challenges at that time, Dr Ene-Abasi, while describing it as a “difficult decision”, replied that the company is currently undergoing a transition which would be better served if he stepped down as its chief executive.
He said:
“As the Founder, I have invested my life in building the company over the past four years. It was a difficult decision, But the company is at a pivotal transition and new leadership will help the company get through this,” he said.
Despite initial excitement at Teresia Bost’s appointment in 2021, things changed quickly. “Teresia is a well-rounded executive with a depth of experience in the global pharmaceutical and biotech industry,” 54gene said in a statement at the time of her appointment. But Bost abdicated the position five months later.
According to Law360, a legal trade publication, Bost alleges that Tobi Oke, one of the company’s investors, “would scream at her on video and phone meetings, degrading and humiliating her, and falsely criticized both her work product and legal work.” Tobi Oke declined to comment. She is suing five company associates at a New Jersey court in the U.S.
“When companies fail, no matter how altruistic their purpose, disagreements arise,” Chiarello told TechCabal. “It’s my hope that when the dust settles, the idea behind 54gene continues in some way for the health benefit of Nigerians, all Africans, and people globally.”
Chiarello, who tookover from Bost, a defendant in the suit, said
What 54Gene’s shutdown mean
Amidst these tumultuous events, industry observers are concerned about the repercussions of 54gene’s downfall on the genomics and health tech sector. The abrupt collapse of a leading player that had attracted substantial funding may deter global investors from supporting similar ventures, creating uncertainty in a sector that was once promising.
54Gene’s story serves as a cautionary tale about the challenges and complexities of operating in capital-intensive industries like genomics. It also highlights the importance of financial prudence and strategic management in the face of rapid growth and evolving business dynamics.
Just recently, Abasi Ene-Obongn, the erstwhile co-founder and former CEO of 54gene launched Syndicate Bio, another genomics company.
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