23andMe, the once-prominent DNA testing company, has entered into an agreement to be acquired by Regeneron Pharmaceuticals for a sum of $256 million (£192 million). This development comes as a significant turnaround following 23andMe’s recent filing for bankruptcy protection in the United States just two months prior to this announcement. The acquisition signals a substantial shift in the landscape for 23andMe, which has faced a series of operational challenges and financial setbacks over recent years.
Under the terms of the acquisition, Regeneron has assured that it will adhere to 23andMe’s privacy policies. This is a crucial point considering the intense scrutiny the company has faced regarding its data protection practices. In response to concerns raised by various state attorneys general in the United States, 23andMe agreed last month to appoint an ombudsman tasked with overseeing user data protection. The state officials raised worries about the potential misuse of customer data by future owners of the company, emphasizing the importance of robust security measures to safeguard sensitive information.
Regeneron’s acquisition of 23andMe will enable it to gain control of nearly all of the company’s assets. However, it is noteworthy that under this deal, we will see the cessation of 23andMe’s subsidiary, Lemonaid Health. Going forward, 23andMe will operate as a wholly-owned unit of Regeneron, which has indicated plans to harness the vast trove of genetic data collected by 23andMe to drive its drug development initiatives.
Mark Jensen, the Chairman of 23andMe’s board, expressed optimism about the transaction. In his statements, he highlighted that this deal not only maximizes the value of 23andMe but also ensures that the company’s mission continues while instituting critical controls concerning customer privacy, choice, and consent regarding genetic data.
The acquisition emerged following an auction conducted as part of the bankruptcy proceedings for 23andMe. Despite the significant upheaval, the exact implications of this acquisition for 23andMe’s existing customer base and their data remain to be fully understood.
Founded in 2006 by Anne Wojcicki, who was at the helm as CEO until her resignation in March, 23andMe gained early momentum and popularity, receiving endorsements from notable personalities such as Oprah Winfrey, Eva Longoria, and Snoop Dogg. The company went public in 2021, reaching a valuation of approximately $6 billion at its peak. However, this growth was not sustainable, as the company struggled to maintain profitability and failed to adapt its business model effectively.
In a series of missteps, a subscription service launched by the company could not attract a sufficient customer base, and attempts to leverage its extensive genetic database for drug development faced several obstacles. This downward trajectory was exacerbated in 2023 when 23andMe experienced a significant data breach compromising the personal information of millions of users. Subsequently, the company faced legal ramifications and settled a lawsuit that accused it of failing to adequately protect the privacy of those affected.
Efforts to encourage users to delete their sensitive data became more prominent after the bankruptcy filing, which was also a direct response to advice from state attorneys general. Furthermore, tensions surrounding data security intensified as the company agreed to appoint an overseer to ensure that privacy issues were adequately addressed in light of various states’ allegations that 23andMe neglected proper data protection measures.
As 23andMe approaches this new chapter under Regeneron’s ownership, the sentiment surrounding consumer trust and data integrity will be critical to navigate in rebuilding its reputation. The commitment to adhere to stringent privacy standards and maintain user data security will likely be pivotal as 23andMe aims to regain the confidence of its customer base and rebuild its business model effectively amidst a competitive landscape in the DNA testing and health tech domain.
