Officials, including the California Attorney General, have questioned what will happen to the data collected by the company.
Genetic testing company 23AndMe filed for Chapter 11 bankruptcy protection in the United States amid weakness and loss of demand from a 2023 data breaches. Its co-founder and CEO has resigned.
San Francisco-based 23Andme announced on Sunday that it would consider selling “virtually all assets” through a court-approved restructuring plan.
The company’s shares fell 88 cents, down 50% in Monday’s trading after co-founder Anne Wojcicki, who had made multiple failed purchase bids, stepped down as CEO. 23Andme did not say whether there are other bidders of interest. It continued to operate during the sales process, securing $305 million in funding over the weekend.
Wojcicki still intends to bid on 23andMe as the company pursues divestment through the bankruptcy process. In a statement on social media, Wojcicki said she has stepped down as CEO and “in the highest position” as an independent bidder.
“While there is no doubt that the challenges 23andme faces through its evolving business model are real, my belief in the company and its future is unshakable,” she added.
Officials, including California Attorney General Rob Bonta, have questioned what will happen with genetic data collected by 23andMe, but the company’s privacy policy says it can sell the data to other companies. The company said the bankruptcy process will not affect the way customer data is stored, managed and protected.
23Andme attracted a lot of attention from investors in 2021 when billionaire Richard Branson was first revealed via a special purpose acquisition vehicle (SPAC) run by billionaire Richard Branson at a valuation of $3.5 billion.
Consumer kit sales have been featured frequently during the annual holidays, but 23AndMe has struggled to keep customers up, mainly because people use the kit once and have little reason to order another one. According to research analysts at Bernstein, the market for ancestor test kits may be nearing tap-out.
In 2023, hackers exposed the personal data of around 7 million 23andme customers for five months, causing a major blow to the company’s reputation and exacerbated growth issues. The violation has raised alarms among customers who are concerned about privacy and how DNA testing companies process their data.
23Andme agreed to a $30 million settlement in a lawsuit relating to the violation late last year.
Founded on promise
23AndMe was founded in 2006 with the promise to revolutionize the future of genetics and medicine. The company became known for its saliva-based DNA test kits, and was purchased by millions of customers eager to learn more about its ancestors, and later dived further into health research and drug development.
However, in recent years it has been far from a smooth voyage for it. And then there was a few months of disruption on Sunday’s voluntary bankruptcy filing cap.
In September, all of its independent directors resigned in a rare move after negotiations with Wojcicki.
The company then announced in November that it would fire 40% of its workforce, or more than 200 employees, and cancel the treatment department. And in January, the board’s special committee said it was exploring strategic alternatives, including potential sales.
Beyond data breaches, uncertainty about the overall overall future of the company has recently been pushing 23AndMe customers to delete their data.
On the Friday, days before 23AndMe’s bankruptcy filing, Bonta issued an urgent warning to 23AndMe clients reminding them of their legal rights under state law, calling for them to consider deleting and destroying genetic data held by the company. Bonta’s office pointed to 23andme’s continued financial distress and “trove of sensitive consumer data.”