23andMe Files for Bankruptcy

23andMe, the consumer genetics company, has filed for Chapter 11 bankruptcy protection and initiated a sale process. The filing comes just weeks after the company rejected a takeover offer from co-founder and CEO Anne Wojcicki.

According to a report by Axios, 23andMe listed $277 million in assets and $215 million in liabilities in the filing. The company also secured $35 million in debtor-in-possession (DIP) financing from JMB Capital Partners to support operations during the restructuring process. 23andMe went public via a SPAC (special purpose acquisition company) in 2021 at a $3.5 billion valuation. Its shares closed at $1.79 on Friday, over four times the price of Wojcicki’s offer, though Axios noted that shares were declining as of this morning.

Wojcicki resigned as CEO last night but remains on the board and has expressed ongoing interest in acquiring the company. In a LinkedIn post, she conveyed disappointment over her rejected bid while highlighting 23andMe’s achievements since its founding in 2006—including a customer base of over 15 million (with 85% consenting to research), a drug discovery partnership with GSK that produced 50 drug programs, and more than 250 research publications. “I equally take accountability for the challenges we have today,” she wrote, acknowledging the difficulties posed by the company’s evolving business model, yet reaffirming her commitment to empowering consumers with greater control over their health data.

The bankruptcy follows a series of strategic shifts at 23andMe, including the August 2024 announcement to close its drug discovery division and focus on telehealth services for GLP-1 medications—such as semaglutide (marketed as Ozempic and Wegovy)—through Lemonaid Health. This move, coupled with the departure of its independent directors last fall (a development Axios described as a warning sign of deeper structural issues), set the stage for the current restructuring.

As part of its strategic realignment, 23andMe launched a large-scale genetic research study to explore how genetic factors influence responses to GLP-1 drugs. The study aimed to recruit 10,000 participants to identify genetic predictors of drug efficacy and side effects—including gastrointestinal issues and complications such as pancreatitis and kidney problems—by leveraging its extensive genetic and phenotypic database.

The company’s business model, based on selling genetic testing kits and monetizing data through partnerships with drug developers, has faced challenges: In 2023, 23andMe experienced a five-month-long data breach that exposed the personal data of nearly 7 million customers, later resulting in a $30 million settlement. Facing financial pressures, the company laid off 200 employees and halted development of all its therapeutic programs, while market demand for repeat DNA testing remained limited and the data from these tests reportedly failed to provide sufficient value to drug developers.

Cover: JasonDoiy

Topics: Startups & Deals