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Genetic Testing Pioneer 23andMe Files for Bankruptcy
Genetic testing company 23andMe filed for bankruptcy late Sunday night following a dramatic decline from its $6 billion valuation to a penny stock. Co-founder and Chief Executive Officer Anne Wojcicki resigned by mutual agreement but will remain on the board. Chief Financial and Accounting Officer Joe Selsavage has been appointed interim CEO.
Shares dropped nearly 50 percent on Monday after the Chapter 11 filing in the U.S. Bankruptcy Court for the Eastern District of Missouri, a move the company called “the best path forward to maximize the value of the business.” Wojcicki, who has unsuccessfully attempted to buy back the company, still hopes to acquire its assets.
Wojcicki’s leadership came under increasing scrutiny as 23andMe struggled financially. She first attempted to privatize the company last April but failed to gain support from two different boards—one of which resigned in full, citing no actionable buyout offer and diverging plans for the company’s future. Now, with the bankruptcy filing, Wojcicki’s ownership is effectively eliminated, making her an independent bidder.
Once the pioneer in consumer DNA testing, 23andMe attracted more than 15 million customers eager to learn about their ancestry and health risks. However, its flagship DNA test kits only needed to be purchased once, and the company struggled to create products that generated recurring revenue. Attempts to introduce subscription services and license genetic data to pharmaceutical companies for drug development failed to offset financial losses.
At one point, 23andMe attempted to use its vast DNA database to develop its own custom pharmaceuticals, but rising interest rates and the high cost of drug development made the plan unsustainable. Multiple rounds of layoffs, including a 40 percent workforce reduction last November, also failed to stabilize the company. Its stock, once valued at more than $6 billion, plummeted further Monday, trading at just $0.91 per share early in the afternoon. The company had previously conducted a 20:1 reverse stock split in October in an attempt to maintain its Nasdaq listing.
Wojcicki co-founded 23andMe in 2006 and built it into a household name with affordable DNA tests that became popular holiday gifts. The company’s tagline, “Welcome to You,” resonated with consumers, and stories of life-altering discoveries, such as finding long-lost relatives, fueled widespread interest.
However, concerns are growing over what will happen to 23andMe’s vast genetic database, which remains one of the largest repositories of human DNA. Under U.S. bankruptcy laws, this data could be sold during proceedings, raising questions about who may ultimately own consumers’ personal genetic information.
On Friday, California Attorney General Rob Bonta issued a consumer alert reminding residents of their right to delete their genetic data. The company’s website experienced high traffic on Monday as customers attempted to remove their data, causing site issues and long customer service delays. In response, 23andMe assured customers that any potential buyer would be required to comply with data privacy laws. The company also stated that it plans to continue operations, including processing test kits and fulfilling existing orders.
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