Anne Wojcicki’s nonprofit reaches deal to acquire 23andMe

23andMe has agreed to be acquired by TTAM Research Institute, a nonprofit led by its co-founder Anne Wojcicki, for $305 million, after Regeneron declined to counter TTAM's unsolicited bid. The acquisition, intended to continue 23andMe's mission while adhering to its privacy policies, faces hurdles including bankruptcy court approval and a lawsuit from 28 state attorneys general objecting to the sale of consumer genetic data without consent, raising concerns about regaining consumer trust amid data deletion requests.

Analysis

Troubled genetic testing firm 23andMe has reached an agreement to be acquired by TTAM Research Institute, a nonprofit entity led by co-founder Anne Wojcicki, for $305 million, following a competitive bidding process where pharmaceutical company Regeneron (REGN) declined to raise its initial $256 million offer. This development occurs after 23andMe filed for bankruptcy in March 2024, a consequence of a significant 2023 cyberattack and ensuing lawsuit settlements. While TTAM aims to continue 23andMe's mission and has committed to upholding existing privacy policies, including customer data deletion rights and establishing a Consumer Privacy Advisory Board, the acquisition faces substantial obstacles. These include mandatory bankruptcy court approval and a significant legal challenge from 28 state attorneys general, led by New York, objecting to the sale of consumer genetic data without explicit consent. Further complicating matters, a court-appointed privacy ombudsman has questioned the legitimacy of selling genetic data under 23andMe's current privacy terms, and the company confronts a crisis of consumer confidence, as evidenced by 15% of its customers requesting data deletion since the bankruptcy filing. The overall situation is marked by uncertainty and carries a moderately negative sentiment, reflecting the legal, regulatory, and reputational risks involved despite the proposed acquisition.

Key Decisions for Investors

• For investors in Regeneron (REGN), its decision to withdraw from the bidding for 23andMe, rather than exceeding TTAM's $305 million offer, may be viewed as disciplined capital allocation, sidestepping an asset with considerable legal and data privacy encumbrances.
• The significant legal opposition to the 23andMe sale, including a lawsuit by numerous state attorneys general and scrutiny from a privacy ombudsman, underscores escalating regulatory and litigation risks for companies managing sensitive genetic information, necessitating increased due diligence on data governance practices across the sector.
• The notable 15% customer data deletion request rate at 23andMe post-bankruptcy highlights the critical impact of consumer trust and data security on the valuation and operational stability of data-intensive healthcare and biotech firms.