Anne Wojcicki’s nonprofit wins bid for genetic testing company 23andMe

A nonprofit controlled by 23andMe's former CEO, Anne Wojcicki, won the bid to acquire the bankrupt genetic testing company for $305 million, potentially returning Wojcicki to leadership. The sale, approved by the U.S. Bankruptcy Court after Regeneron declined to make a higher bid, raises concerns regarding the privacy of over 11 million customers' genetic data, with multiple states filing lawsuits to block the sale of this data without explicit consent.

Analysis

TTAM Research Institute, a nonprofit controlled by Anne Wojcicki, 23andMe's former chief executive, has won the bidding process with a $305 million offer to acquire the bankrupt genetic testing company 23andMe and its assets, a transaction pending court approval. This development follows 23andMe's Chapter 11 bankruptcy declaration in March, a significant downturn for a company once valued at $6 billion that popularized at-home DNA test kits. The proposed acquisition places the sensitive genetic data of over 11 million customers at the forefront of concerns, prompting lawsuits from twenty-seven states and the District of Columbia seeking to block any sale of this data without explicit consent. While TTAM Research Institute has stated its agreement to comply with 23andMe’s existing privacy policy and committed to adopting additional consumer protections, the situation carries a 'moderately negative' sentiment and 'cautious' tone, underscored by the substantial legal and ethical challenges surrounding the stewardship of irreplaceable genetic information. Regeneron Pharmaceuticals, previously a contender, declined to make a higher bid, ceding the path to TTAM. The ultimate resolution of the privacy disputes and regulatory actions will be critical for the future operations under new ownership.

Key Decisions for Investors

• For Regeneron Pharmaceuticals (REGN), its decision to withdraw from bidding for 23andMe, resulting in a neutral sentiment for its stock, may be interpreted as a prudent move to avoid significant legal and data privacy entanglements.
• Investors in the broader healthcare, biotech, and direct-to-consumer genetic testing sectors should closely monitor the progression and outcomes of the state-led lawsuits against 23andMe, as these could establish important precedents for data privacy standards, regulatory requirements, and liabilities concerning genetic information.
• The ability of TTAM Research Institute to navigate the complex privacy issues, manage ongoing litigation, and maintain consumer trust post-acquisition will serve as a significant case study for the viability and risk assessment of business models reliant on large-scale personal genetic data.