Singular Genomics Systems, Inc. to Be Acquired for $46.88 Million in All-Cash Deal Led by Deerfield Management

On December 23, U.S. sequencing instrument upstart Singular Genomics Systems, Inc. (NASDAQ: OMIC) announced that it had entered into a definitive merger agreement with Deerfield Management Company, L.P., under which an affiliate of Deerfield Management will acquire Singular Genomics in an all-cash transaction at $20 per share.

It is understood that upon completion of the transaction, Singular Genomics will become a privately held company. The Board of Directors of Singular believes this will provide greater flexibility for Singular Genomics to continue advancing its business strategy.

On September 12, healthcare investment firm Deerfield extended an acquisition offer to Singular Genomics, proposing a price of $10 per share—nearly double the company’s market value at the time. Notably, Deerfield was already a shareholder in Singular Genomics; including the 6.66% stake held by its affiliates, the total transaction value is estimated at $23.44 million.

Following the announcement of the acquisition, Singular’s stock price rose immediately. On September 13, Singular closed at $5.65 per share, up $0.15 from the previous day, representing a gain of 2.73%. In after-hours trading, its share price surged by an additional $3.81, marking a 67.43% increase.

One week later, Singular Genomics issued another announcement, revealing that the company had received a joint acquisition offer from Concentra Biosciences and Tang Capital. The two companies proposed an acquisition price of $12 per share, which is 20% higher than Deerfield’s initial offer.

Tang Capital, an investment firm founded by Chinese-American entrepreneur Kelvin Tang in 2002, specializes in precise bottom-fishing. It is reported that Tang Capital currently holds approximately 14.9% of Singular Genomics’ shares and has demonstrated a strong intention to take the company private. In its acquisition offer, Tang Capital also provided an alternative for Singular shareholders unwilling to sell their equity at $12 per share: holding Contingent Value Rights (CVRs) to continue participating in the company’s operational decision-making.

Tang Capital’s aggressive entry placed significant pressure on Deerfield, compelling it to raise its bid to remain competitive in the acquisition. Within just three months, Deerfield finalized a definitive agreement to acquire Singular Genomics at $20 per share, with the total transaction value estimated at $46.88 million. The renewed announcement of the acquisition directly drove Singular Genomics’ stock price soaring by 52%.

Singular Genomics completed its IPO in May 2021, becoming the first Illumina challenger in the short-read sequencing sector to go public. In December of the same year, it commercially launched its G4 desktop mid-throughput sequencer, highlighting advantages in output, speed, and flexibility, thereby gaining a competitive edge in the short-read sequencing market.

In terms of product performance, the G4 is powered by a novel sequencing engine and employs four-color SBS (Sequencing by Synthesis) chemistry to ensure high-accuracy sequencing. Its four-flow-cell design offers flexibility in sample processing, while high-resolution imaging combined with rapid fluidics reduces sequencing time to just a few hours. With data output three times that of typical benchtop instruments, it enables sequencing of four human genomes within 16–19 hours.

Despite the G4’s earlier launch compared to other similar products, Singular’s market performance fell short of expectations. When preparing for shipment in Q2 2022, Singular encountered component supply disruptions, and revenue from G4 sales was not recognized until Q4 2022.

Since then, G4’s quarterly shipment volume has remained at a low level. To date, Singular Genomics has deployed only 32 sequencing instruments. This also resulted in total revenue of $2.91 million and a net loss of $94.8 million in 2023 (a net loss of $90.9 million in 2022).

In the face of this financial pressure, Singular has implemented a 20% workforce reduction and strategic adjustments to reduce operating expenses and extend its cash runway.

In February 2024, Singular launched the G4X. This upgrade to the G4 platform shares the same foundation as the existing G4 sequencer, enabling sequencing of DNA and RNA from formalin-fixed, paraffin-embedded (FFPE) tissue sections, as well as applications such as protein analysis and digital H&E staining.

However, the G4 platform’s initial foray into the upstream NGS market failed to yield significant results, compelling the company to strategically pivot toward spatial biology in search of a breakthrough. It continued the development of the PX instrument, adopting a well-plate approach that processes 10,000 to 100,000 cells per well in a single run on a 96-well plate, thereby achieving a throughput of 1 million to 10 million cells.

Persistent underperformance has driven Singular’s stock price below the $1 threshold, pushing it to the brink of delisting. To address this predicament, Singular implemented a 30-for-1 reverse stock split in June 2024, sharply reducing its outstanding shares to 2.5 million. Following the split, the share price stabilized at approximately $5, valuing the company at around $12.5 million. Despite these measures, Singular continues to face financial pressure; with estimated cash reserves of $130 million, its current burn rate suggests it can sustain operations for only about one year.

Against this backdrop, Deerfield’s increased offer of $20 per share to acquire Singular Genomics—which boasts mature NGS and spatial multi-omics platforms, along with $130 million in cash and only $10 million in debt—can be viewed as an attractive deal.

As a veteran in healthcare investment, Deerfield’s portfolio already includes various types of NGS companies such as PacBio, GeneDx, Encodia (protein sequencing), and Pleno (multi-omics testing), demonstrating its significant footprint and strength in this sector. From an internal development perspective, Deerfield has long served on the board of directors of Singular Genomics, giving it ample insight into the company’s growth bottlenecks. Following the acquisition, Deerfield will not only have sufficient resources and patience to address these challenges but also comprehensively streamline and clarify the company’s strategic direction and underlying business logic.

Overall, Deerfield’s acquisition of Singular is not merely a financial investment but a strategic move aimed at driving Singular’s continued innovation and development in the life sciences sector through resource integration and business restructuring.