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Persistence is in Anne Wojcicki’s DNA. The co-founder of 23andMe, an innovative at-home genetic testing service, has watched her company go from hotshot Silicon Valley start-up to $6bn unicorn to penny stock. As 23andMe slid into financial distress, Wojcicki made repeated attempts to take it private. Now she finally has a chance to get it all for herself.
On Monday, 23andMe filed for Chapter 11 bankruptcy protection with a plan to auction its assets in court. Wojcicki hopes, true to form, to be the winning bidder. She already owns 20 per cent of the company, but in a reorganisation anybody with courage and a cheque book can potentially win the chance to make DIY genetic testing commercially viable.
That is no simple task. While 23andMe created a revolutionary technology — customers simply ship a saliva sample back to the company’s lab — it never hit on a sustainable business. The core genetic testing business has 15mn users in its database but has failed to durably deliver recurring customer revenue.
Other initiatives have also floundered, including a telehealth business that 23andMe spent $400mn in cash and stock to acquire. A drug development division, using customer genetic data, has been plagued by high costs and scant results, despite a high-profile partnership with GSK. The $600mn of funding 23andMe raised in its 2021 merger with a Richard Branson-backed blank-cheque vehicle had dwindled to less than $40mn by Monday.
Unusually for a company seeking bankruptcy protection, 23andMe has no financial debt. What it does have is the liability resulting from a 2023 data breach. That has so far led to a $30mn settlement, and could produce further outflows. It is also a big blow for a company that trades in sensitive health information. Annual revenue has stagnated at about $200mn even as operating costs have only increased.
Chapter 11 could be a useful tool. Bankruptcy powers can be used to force a final settlement with the remaining victims. Other companies have used the courts that way too. Drugmaker Mallinckrodt, cleansed of its opioid-related legacy, recently merged with rival Endo in a $6.7bn deal.
Wojcicki still has some hurdles to clear, though. She lost a bid to make a senior loan to fund the bankruptcy; instead, a financial firm wrote the $35mn cheque. Now she will have to face a wide-open auction involving any parties who show up in court. If users are deleting data as a result of the uncertainty, the value of what is at stake could be eroding in real time.
At least Wojcicki’s position as chief executive and large shareholder — one reason her previous bids met with resistance — is no longer such a conflict. She has resigned from the former; the latter does not matter since 23andMe’s equity could be wiped out. If persistence pays off, a company that started out as little more than an intriguing idea and a heap of enthusiasm may end up going back to its roots.
sujeet.indap@ft.com
