23andme files for bankruptcy protection
Officials, including California’s attorney general, question what will happen to the data collected by the firm.
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.
23andMe eventually agreed late last year to a $30m settlement in a lawsuit related to the breach.
Founded on a promise
23andMe was founded in 2006 with a promise to revolutionise the future of genetics and healthcare. The company became known for its saliva-based DNA testing kits, purchased by millions of customers eager to learn more about their ancestry, and later dived further into health research and drug development.
But recent years have been far from smooth sailing for it. And Sunday’s voluntary bankruptcy filing caps months of turmoil.
In September, all of its independent directors resigned in a rare move after acquisition negotiations with Wojcicki.
The company then announced in November that it would lay off 40 percent of its workforce, or more than 200 employees, and discontinue its therapeutics division. And in January, the board’s special committee said it was exploring strategic alternatives, including a possible sale.
Beyond the data breach, uncertainty about the company’s future overall has also led some to recently urge 23andMe customers to delete their data.
On Friday, days before 23andMe’s bankruptcy filing, Bonta issued an urgent alert reminding 23andMe customers of their legal rights under state law and called on them to consider deleting and destroying any genetic data held by the company. Bonta’s office pointed to 23andMe’s ongoing financial distress and “trove of sensitive consumer data” the company has amassed.
Posts
No comments:
Post a Comment
Please: Share your reaction, your thoughts, and your opinions. Be passionate, be unapologetic. Offensive remarks will not be published. We are getting more and more spam. Comments will be monitored.
Use the comment form at the bottom of this website which is private and sent direct to Trace.