DNA Testing Firm 23andMe Board Resigns As Firm Survival In Doubt

The once popular company, whose test kits allow consumers to learn more about their DNA, health and ancestry is in danger of going out of business as its attempts to leverage its testing data to help find cures for various diseases appear to have failed. 

The board resigned yesterday to signal differences with the CEO about how to proceed. JL

Daniel Gilbert reports in the Washington Post:

DNA testing firm 23andMe is in turmoil as seven of the company’s eight-person board resigned Tuesday, concluding that despite co-founder and CEO Anne Wojcicki’s expressed intention to take the company private, “no such proposal is forthcoming.” They also cited a difference on the “strategic direction” of the company as revenue has shriveled over the past year and its share price has sunk to about 30 cents. Revenue fell 34% in the second quarter compared with a year ago due to the end of a collaboration with drugmaker GlaxoSmithKline, but revenue also decreased in each of 23andMe’s main business lines

The pioneering DNA testing firm 23andMe is in turmoil.

Seven independent members of the company’s eight-person board resigned Tuesday, concluding that despite co-founder and CEO Anne Wojcicki’s expressed intention to take the company private, “no such proposal is forthcoming.” They also cited a difference on the “strategic direction” of the company.

 

23andMe’s revenue has shriveled over the past year and its share price has sunk to about 30 cents, jeopardizing its ability to remain listed on the Nasdaq index.

Wojcicki, a prominent Silicon Valley founder, said she was surprised and disappointed at the resignations, according to an email to staff members disclosed in a securities filing Tuesday. The 51-year-old executive affirmed that taking the company private “will be the best opportunity for long term success.” A 23andMe spokesperson offered no comment beyond the securities filings.

 

23andMe has amassed a vast trove of DNA from its popular test kits and pioneered using genetic information to determine risks for an array of diseases. It became the first firm, in 2017, to win clearance from the U.S. Food and Drug Administration to market such tests directly to consumers. After filing to go public in 2021, 23andMe’s stock briefly reached a nearly $6 billion value. Wojcicki’s profile rose with the company, with Mattel modeling a doll on her as part of its “Barbie Role Models” line.

Today 23andMe’s stock market value is less than $200 million, according to S&P Global Market Intelligence, just 3 percent of what it was worth at its peak. And Wojcicki, who controls nearly half the company’s votes, is for now the lone member of its board.

“I have been committed to the mission of 23andMe for the last 18 years and believe strongly in the potential for genetic information to transform healthcare and the therapeutic discovery process,” Wojcicki wrote in her email to staff members.

 

Wojcicki had been a health-care analyst for investment firms before co-founding 23andMe in 2006. She married Google co-founder Sergey Brin the following year and built her company into a powerhouse of genetic testing. It has sold more than 12 million test kits to consumers, who collect a saliva sample and mail it to a lab for testing.

The company has tried to leverage its vast trove of DNA from its popular genetic tests. It has a research arm, mining its DNA repository to study the role of genes in diseases such as Parkinson’s. It is trying to develop drugs to treat cancer. It has added novel tests for consumers such as a “biological age” feature. And last month, the company joined the weight-loss drug gold rush by launching a service to prescribe GLP-1 drugs such as Ozempic and Wegovy, as well as controversial off-brand versions made by compounding pharmacies.

But these ventures haven’t yet put the company on a sustainable financial footing. Its revenue fell 34 percent in the second quarter compared with a year ago. That was largely due to the end of a collaboration with drugmaker GlaxoSmithKline, but revenue also decreased in each of 23andMe’s main business lines, a securities filing shows.

 

The company ended the quarter with about $170 million in cash, which it said will be enough to fund its operations for at least 12 months. Last week, it endorsed a proposed settlement to a class-action lawsuit over a data breach last year for $30 million, acknowledging its “extremely uncertain financial condition.”

23andMe also faces the prospect of being removed from the Nasdaq stock exchange, after failing to meet the requirement of a maintaining a stock price at or above $1 a share, which could make it harder for the company to raise new funds from investors, according to a securities filing. It has until Nov. 4 to comply with the requirements.

After the company formed a special committee of board members in March to evaluate “strategic alternatives,” Wojcicki said she was considering making a bid to acquire all the shares of the company she doesn’t own and wouldn’t support a transaction that meant giving up control, according to securities filings. In August, she made a nonbinding proposal to purchase the company for 40 cents a share in cash. But the board committee panned the proposal the next day, saying it offered no premium to the share price and lacked committed financial backing.

On Tuesday, the resigning board members said there had been a lack of progress on a new proposal. “It is also clear we differ on the strategic direction for the Company,” they wrote.