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CM Life Sciences II: SomaLogic Is Great, But Post-Merger SPAC Dilution Should Frighten Investors

Apr. 01, 2021 3:59 AM ETSomaLogic, Inc. (SLGC), SLGCW10 Comments
Gunner Laine profile picture
Gunner Laine


  • CM Life Sciences II, Inc. is the second life-sciences-focused special purpose acquisition company from the Casdin-Meisters team launched in Feb 2021.
  • CM Life Sciences II has announced its acquisition target as SomaLogic, a pioneer in proteomics technology, with the $651M transaction expected to close by Q3 2021.
  • SomaLogic is a commercial-stage leader in proteomics technology with over 300+ established industrial partnerships and customers and revenues of $55M (2020).
  • CM Life Sciences II SPAC shareholders are significantly disadvantaged with only 14% of SomaLogic ownership allocated post-merger.
  • In summary, the author does not project CM Life Sciences II, Inc. as a buy for short- to medium-term investors.

Graphic Source: CM Life Sciences, Inc./SomaLogic

Introduction: What is CM Life Sciences II?

CM Life Sciences II, Inc. (NASDAQ: CMIIU) is the second life-sciences-focused special purpose acquisition company from the Casdin-Meisters team launched in Feb 2021. CM Life Sciences II was founded to take advantage of the fragmentation of the innovative life sciences industry where many companies are "under-resourced" and "under-scaled". In March 2021, CM Life Sciences II announced its acquisition target as SomaLogic, a leader in AI proteomics technology.

They completed the definitive business combination agreement in March 2021 with closing expected by Q3 2021. This transaction carries a lot of optimism as the science behind SomaLogic's proteonomics platform is seemingly quite strong, but the SPAC ownership dilution post-merger makes the upside too unlikely in the short term.

SPAC's Target Company: SomaLogic

SomaLogic is a commercial-stage leader in proteomics technology with over 300+ established industrial partnerships and customers. SomaLogic has developed an exceptional technology platform that is uniquely-positioned to becoming a universal proteonomics solution. SomaLogic is currently targeting three industries (basic research, translational research/biopharma development, and clinical diagnostics) worth a combined $90B. SomaLogic is quite far from tapping the potential of this market but has proven itself, albeit to small-extent, with revenues of $55M (2020).

SPAC's and SomaLogic's Management

CM Life Sciences II brings together two unique leadership forms and a variety of experience from Eli Casdin's expertise in Life Sciences (from Casdin Capital) and Keith Meisters' business expertise (from Corvex Capital and Ichan Enterprises). They launched their first SPAC successfully in 2020, CM Life Sciences I (CMLF), and are now doing it again, but in partnership with ex-surgeon, veteran-CMO, and CEO of SomaLogic, Roy Smythe, M.D.

Eli Casdin, MBA, is the CEO of CM Life Sciences II and founder / CIO of Casdin Capital, a life sciences investment fund founded in 2011. Casdin brings

This article was written by

Gunner Laine profile picture
Biotechnology researcher focused on unique under-followed small-market positions with short-term catalysts utilizing fundamental analysis and event-based modeling.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (10)

Out_on_a_limb profile picture
@Gunner Laine Hardy, this article has aged well. SLGC is at $3 now.
''the 14% ownership outcome puts existing SPAC shareholders in a tricky position whereby the earlier they enter the more premium must be paid by follow-on investors to compensate for any worthwhile return. ''

5, 8 , 10 , 14%..of ownership is completely irrelevant. What's more relevant is E/V or P/S....at 14 USD as of today, they are highly undervalued right now compared to direct competitors, and the leader in their field.
@Brian Dermo apparently not.
bazooooka profile picture
Thirty percent premium to Spac/Pipe entry and over a two billion dollar market cap. If you think twenty times sales is appropriate then your betting on a hundred million in Sales sooner than later and I'd avoid unless you had high confidence that FY22 will exceed that. Then again these hot one never seem to fall back to far so I don't see the five dollars the author mentions as a price range unless these guys start missing their projections and timeframes by a wide margin.
bluescorpion0 profile picture
@bazooooka They are better than OLINK and OLINK is trading at 4-5 billion. By comparison, somalogic is cheap. However I am not happy they do not have protein sequencing although in the presentation they do have a placeholder for it as a possible future opportunity. protein sequencing is not very high resolution or profitable yet digitally without MS. somalogic is focusing more on the workhorse of the field which is great.
bluescorpion0 profile picture
good paper on the various methods - escholarship.org/...
i am not sure all of them live up to expectations yet.
Good Overview. Would you mind expounding a bit more on this 14% allocated to shareholders and why that's an issue? I don't understand why that matters if the company grows and the technology is good.
any thoughts on relative tech of soma, seer, quantsi, nautilus.. whic one is likely leader/ loser ?
bluescorpion0 profile picture
14% of a great business is better than 100% of a bad business. think about that !
Nevertheless we have a multi bagger
here folks !! No worries 😉
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