Major biotech company acquired after Chapter 11 bankruptcy

It has become oddly normal for people to put their DNA in a tube and mail it off to some unknown place so that they can find out what percentage of an ethnicity they are. 

For those who grew up watching crime shows, that sounds like a potential crime framing waiting to happen; for others, it sounds like a cool experiment. 

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Although it was once used to alert people about genetic predispositions to reduce health risks or for paternity tests, DNA testing has become a new way for humans to entertain their ancestral curiosity. 

Related: Major healthcare company files for Chapter 11 bankruptcy

Genetic testing companies have risen to fame over the last decade due to their ability to provide customers with in-depth insights about their ancestry and ethnicity profile, even helping some reconnect with long-lost relatives through shared matches. 

As cool as that may sound, mailing your saliva or blood samples to be analyzed by a company other than a typical medical lab comes with significant risks because it now has access to your sensitive information.

23andMe finds a new owner after filing for Chapter 11 bankruptcy

23andMe  (ME)  filed for Chapter 11 bankruptcy in the Missouri federal court in March amid a series of struggles, including continuous revenue declines due to low demand for DNA testing kits and a massive data breach.

This tumultuous time led 23andMe’s Co-founder and CEO Anne Wojcicki to resign from her executive role immediately, although she remained on the company’s board. 

As part of the filing, 23andMe secured a $35 million financial commitment, as it had between $100 million and $500 million in estimated assets and liabilities. This allowed it to continue operations while it looked for a new owner.

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After a few months of uncertainty, 23andMe has entered into an agreement in which the biotechnology company Regeneron Pharmaceuticals  (REGN)  will acquire 23andMe for $256 million after winning a bankruptcy court auction.  

Once the deal is finalized, Regeneron will own all company assets, including the Personal Genome Service and Total Health and Research Services business lines, allowing 23andMe to continue providing its DNA testing services. 

The agreement doesn’t include Lemonaid Health’s subsidiary, 23andMe’s telehealth platform, pharmacy fulfillment business, and lab and test ordering services.

Regeneron has also agreed to prioritize keeping all customer data safe and working with a court-appointed official to review security practices, ending millions of users’ concerns.

“We are pleased to have reached a transaction that maximizes the value of the business and enables the mission of 23andMe to live on, while maintaining critical protections around customer privacy, choice, and consent with respect to their genetic data,” said 23andMe Chair and Member of the Special Committee of the Board of Directors Mark Jensen in the announcement. 

23andMe’s new owner eases customers’ privacy concerns  

These privacy concerns arose after 23andMe suffered a massive data breach in 2023. The hacker offered to sell nearly 7 million people’s data on the dark web, putting their information at risk of public exposure.

At the time, 23andMe addressed the hacking by emailing customers, stating that this unfortunate event wasn’t due to the company’s failure to provide proper security measures but rather its users’ failure to update their passwords.

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This blaming battle ignited multiple class action lawsuits by 23andMe users against the company over the lack of security measures, ultimately leading to a $30 million settlement and a free three-year enrollment in the Privacy & Medical Shield + Genetic Monitoring program for those affected. 

The acquisition is expected to be finalized in the third quarter of fiscal 2025. However, 23andMe users may remain uneasy about the future of their private data until the deal is fully sealed.

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