The sales of genetic testing companies raise privacy concerns for 23andme’s 15 million customers.
Regeneron Pharmaceuticals purchased genetic testing company 23AndMe, a former $6 billion chemistry company, for $256 million through bankruptcy auctions.
Regeneron said in a statement Monday that it aims to enhance the capabilities of genomics-driven drug discovery using customer DNA profiles collected via the popular consumer saliva testing kit.
He added that it will prioritize the ethical use of clients’ DNA data.
However, this transaction has put a spotlight on data privacy issues, particularly in light of recent challenges at 23andMe. Founded in 2006, 23AndMe has collected genetic information for around 15 million people.
Genomics companies, once pioneering ancestral DNA testing, are facing a decline in demand for core services since the 2023 data breaches that revealed sensitive genetic and personal information from millions of users.
Huck and subsequent bankruptcy filings drew scrutiny from lawmakers who warned that genetic data from millions of customers could be sold to uncruel buyers.
After the company filed for bankruptcy in March, several congressional committees and federal agencies, including the Senate Health, Education, Labor and Pensions Committee and the Federal Trade Commission, wrote letters expressing concern that the company’s data could fall into the hands of malicious parties.
The House of Representatives’ Subcommittee on Oversight and Accountability has begun an investigation into the issue.
In recognition of the increased scrutiny, Regeneron supported 23andMe’s existing privacy policy and said it complies with all applicable data protection laws.
The drugmaker has also assessed the impact of the transaction on consumer privacy and has pledged to work transparently with court-appointed independent oversights that are expected to file a report with the court by June 10th.
The court is expected to consider approving the transaction on June 17th.
Investing in genomics “has strategic implications” for Regeneron, but it could take more than a decade to see return, Bernstein analyst William Pickering told news agency Reuters.
“We also believe that 23AndMe customers are in good hands from a privacy standpoint, given Regeneron’s track record,” Pickering added.
As part of the agreement, Regeneron will acquire all units of 23andMe, except for the company’s on-demand TeleHealth Service Lemonaid Health, which is closed.
After a transaction scheduled to close in the third quarter, 23AndMe will act as a fully owned Regeneron unit.
Despite the news of the purchase, Regeneron shares fell 0.6% from the market that opened from the Wall Street market at 12pm (16:00 GMT) in New York, but rose 2.86% over the past five days.