Gene-testing company 23andMe (ME) filed for voluntary Chapter 11 bankruptcy protection in the U.S. on Sunday, March 23. At the same time, co-founder and CEO Anne Wojcicki resigned from her position, effective immediately, but will remain on 23andMe’s board. ME stock is trending lower in pre-market trading on the news, down 46% at the time of writing.
ME stock has lost more than 80% of its value over the past year, as the diagnostic company struggled to find a source of recurring revenue. The company’s saliva-based DNA tests are conducted only once in a person’s life, giving a detailed description of the customer’s genetic profile.
23andMe Goes Bankrupt After Failed Takeover Attempts
The bankruptcy protection has allowed for a 45-day bidding process to find suitable buyers for 23andMe’s assets, most of which include the personal data of millions of consumers who tested with the company. 23andME has also announced that any potential buyer will have to comply with the applicable laws regarding the treatment of customer data.
Importantly, Wojcicki has resigned to become eligible to bid independently for the company’s assets. Unfortunately, the CEO’s prior offers to buy the company were rejected by two different boards, one last year and another in early March. Wojcicki continues to have full faith in the company’s business and seeks to leverage the valuable customer data to develop new medicines and provide medical care.
Meanwhile, 23andMe will continue to operate its business as usual throughout the sale process. 23andMe has appointed its chief financial and accounting officer, Joe Selsavage, as the interim-CEO to navigate the company through the bankruptcy process. The company has also received a commitment for debtor-in-possession (DIP) financing of up to $35 million from JMB Capital Partners. The company will utilize the DIP, subject to court’s approval, and cash generated from the normal course of business to support its business operations until a suitable buyer is identified.
Under Wojcicki’s leadership, 23andMe took several measures to save the failing company, including mass layoffs, and cutting costs by stopping development of all drug therapies. She also tried to license the data to pharmaceutical companies, but could not find any interested parties.
Does 23andMe Have a Future?
The company reportedly has access to DNA samples of more than 15 million, providing in-depth insights into the person’s genetic ancestry. The data could be worth millions (if not billions) of dollars to potential buyers, who wish to use it in the same way as Wojcicki does. Prior to the bankruptcy filing, California’s Attorney General Rob Bonta issued a letter on Friday, alerting customers to their right to delete their personal information from the company’s database. It remains to be seen if Wojcicki is successful in buying the valuable assets of the distressed company under the court-assisted sale process.
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