Anne Wojcicki’s nonprofit reaches deal to acquire 23andMe

23andMe has agreed to be acquired by TTAM Research Institute, a nonprofit led by co-founder Anne Wojcicki, for $305 million after Regeneron declined to counter TTAM's unsolicited bid. The acquisition, which follows a bankruptcy filing and a cyberattack in 2023, is intended to continue 23andMe's mission while adhering to its privacy policies, including establishing a Consumer Privacy Advisory Board. However, the deal faces legal challenges, including a lawsuit from 28 state attorneys general objecting to the sale of consumer genetic data without consent, and uncertainty remains regarding consumer trust and the interpretation of 23andMe's privacy policies.

Analysis

Genetic testing company 23andMe, following its March bankruptcy filing precipitated by a 2023 cyberattack and subsequent lawsuit settlement, has agreed to be acquired by TTAM Research Institute, a nonprofit led by co-founder Anne Wojcicki, for $305 million. This offer surpassed a $256 million bid from Regeneron Pharmaceuticals (REGN), which declined to counter TTAM's unsolicited proposal. TTAM has pledged to maintain 23andMe's privacy policies, allowing customer data deletion and research opt-outs, and plans to establish a Consumer Privacy Advisory Board within 90 days of closing, aligning with Wojcicki's stated goal of continuing 23andMe's mission to empower individuals with their genetic data. However, the acquisition faces considerable headwinds: it requires bankruptcy court approval and is contested by a lawsuit from 28 state attorneys general, led by New York, arguing that 23andMe cannot sell personal genetic information without explicit consent. Furthermore, a court-appointed privacy ombudsman has questioned whether 23andMe's existing policies permit such a data sale, and the company's ability to regain consumer trust is uncertain, highlighted by 15% of customers requesting data deletion since the bankruptcy filing, as stated by interim CEO Joseph Selsavage to a House Oversight Committee.

Key Decisions for Investors

• Investors in Regeneron (REGN) should view its decision to withdraw from the bidding for 23andMe as a potentially risk-averse move, avoiding entanglement with significant legal challenges and data privacy liabilities associated with 23andMe's assets.
• The legal actions by state attorneys general against the sale of 23andMe's data underscore escalating regulatory scrutiny over consumer genetic information; investors in the broader biotech and data-centric healthcare sectors should monitor these proceedings for precedents on data consent and transfer.
• The viability of TTAM Research Institute's acquisition and its ability to operate 23andMe's business model effectively remains highly uncertain due to pending court approvals, ongoing litigation, and demonstrated consumer mistrust, warranting caution for any parties considering exposure to this situation.
• The 15% customer data deletion rate post-bankruptcy highlights a significant reputational and operational risk, suggesting that even if the acquisition proceeds, rebuilding trust and retaining a viable customer base will be a substantial challenge for the new entity.