23andMe’s founder wins bid to regain control of bankrupt DNA testing firm

Anne Wojcicki, 23andMe's former CEO, is poised to regain control of the bankrupt genetic testing company with a $305 million bid from her non-profit TTAM Research Institute, surpassing Regeneron Pharmaceuticals' $256 million offer. The deal, expected to close after a June 17th court hearing, follows a decline in demand and a 2023 data breach that led to significant customer attrition, with approximately 15% requesting account closures; TTAM has pledged to uphold existing privacy policies amid ongoing legal challenges from multiple states concerning the potential sale of customer data.

Analysis

Anne Wojcicki, 23andMe's former CEO, is poised to reclaim control of the genetic testing company through her non-profit, TTAM Research Institute, with a $305 million bid in a bankruptcy auction. This offer surpassed Regeneron Pharmaceuticals' $256 million bid, following an initial $146 million offer from Wojcicki and TTAM. Wojcicki reportedly secured backing from an unnamed Fortune 500 company to increase her bid. The company's path to bankruptcy in March was precipitated by a significant decline in demand and a critical 2023 data breach that exposed the sensitive genetic and personal information of millions, leading to approximately 15% of existing customers requesting account closures due to privacy concerns over a potential sale. This situation is further complicated by Wojcicki's prior unsuccessful attempts to take the company private while CEO, which led to the resignation of all independent directors in response to her takeover efforts. Despite TTAM's assurance to uphold existing privacy policies, 23andMe faces lawsuits from New York and over two dozen other US states challenging the sale of customer data. The deal awaits a court hearing scheduled for June 17th, with Regeneron having expressed potential interest in a new bid contingent on a $10 million breakup fee if Wojcicki's offer ultimately succeeds. The overall situation reflects severe operational distress, significant customer distrust, and substantial legal and governance overhang for 23andMe.

Key Decisions for Investors

• Investors in Regeneron (REGN) should note the company's unsuccessful bid for 23andMe, which averts direct exposure to 23andMe's substantial data privacy liabilities, customer attrition, and ongoing legal battles, though the attempt signals strategic interest in genetic data assets that may lead to future M&A activity in the sector.
• The 23andMe bankruptcy and subsequent auction underscore the critical financial and reputational risks associated with data security breaches and governance failures in companies handling sensitive personal information, particularly genetic data, warranting heightened due diligence in this sector.
• Monitor the outcome of the June 17th court hearing and the handling of customer data under new ownership, as this case may set precedents for data privacy in bankruptcy proceedings and influence regulatory scrutiny on companies with similar business models, especially given the active lawsuits from multiple states.