Genetic testing firm 23andMe has filed for Chapter 11 bankruptcy protection in the United States amid weak demand and losses from a 2023 data breach. Its co-founder and CEO has resigned.
San Francisco-based 23andMe announced on Sunday that it will look to sell “substantially all of its assets” through a court-approved reorganisation plan.
The company’s shares fell 50 percent to 88 cents in Monday trading after co-founder Anne Wojcicki, who made multiple failed takeover bids, resigned as CEO. 23andMe did not say whether there are other interested bidders. It will continue to operate during the sale process, having secured $35m in financing over the weekend.
Wojcicki intends to still bid on 23andMe as the company pursues a sale through the bankruptcy process. In a statement on social media, Wojcicki said she resigned as CEO to be “in the best position” as an independent bidder.
“There is no doubt that the challenges faced by 23andMe through an evolving business model have been real, but my belief in the company and its future is unwavering,” she later added.
Officials, including California Attorney General Rob Bonta, have questioned what would happen to the genetic data collected by 23andMe although the company’s privacy policies say the data could be sold to other firms. The company said the bankruptcy process will not affect how it stores, manages or protects customer data.
23andMe garnered lots of attention from investors when it was first taken public via a special-purpose acquisition vehicle (SPAC) run by billionaire Richard Branson at a $3.5bn valuation in 2021. Its market value peaked later that year at nearly $6bn due to booming interest in DNA testing kits, but demand has waned since, hurting 23andMe and its Blackstone-owned rival, AncestryDNA.
Sales of the consumer kits frequently picked up during the yearend holidays, but 23andMe has struggled to retain customers mainly because people would use the kits once and see little reason to order another one. Bernstein Research analysts said the market for ancestry testing kits might be close to tapped out.
In 2023, hackers exposed the personal data of nearly seven million 23andMe customers over a five-month period, dealing a major blow to the company’s reputation and compounding its growth problems. The breach raised alarm among customers concerned about their privacy and how DNA-testing firms handle their data.
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