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Fall from grace
Once worth $6B after its SPAC merger in 2021, 23andMe (ME) has filed for bankruptcy protection, with a current market valuation of just under $50M. The company led by Anne Wojcicki had promised to revolutionize the healthcare industry with its affordable DNA tests, which detailed genetic lineage and were set to develop drugs that were tailored from the company’s research. The FDA was also once on board, granting 23andMe approval to provide health information to customers based on their DNA, resulting in a surge of genotyped customers that reached into the millions.
Spit kit: The biggest issue facing the company is that it has never reported a net profit. No successful follow-up products or subscriptions were developed with pharma partner GSK (GSK), and the therapeutics development team was slashed in half by mid-2023 as interest rates rose and funding dried up. A massive data breach later that year also exposed the profile information of 6.9M users, nearly half of 23andMe’s reported customers. Trust in the firm was lost, with the stock continuing to slide, and the company eventually announced a restructuring last November that cut its workforce by 40% and stopped the development of all its therapies.
While Wojcicki has explored strategic alternatives, including attempts to take the company private, her bids were rejected by 23andMe’s board. Wojcicki is now out as CEO, but she hopes the move will put her in the “best position to pursue the company as an independent bidder.” In the meantime, 23andMe has secured up to $35M in debtor-in-possession financing to support ongoing operations, with CFO Joe Selsavage serving as interim CEO to help the struggling firm “maximize the value of its business” during the sale process. 23andMe (ME) -44% to $1.00/share in premarket trading.
Thought bubble: 23andMe was only one of the hundreds of SPAC mergers that rode the trading boom of the post-COVID era – only to later go bust. Some notable others include WeWork, Virgin Orbit, Nikola, and Lordstown Motors, and more have issued “going-concern” warnings. It’s a sign that many of these blank-check companies were not yet ready for prime time, with Investing Group Leader Dane Bowler warning of the risks during the height of the boom in Beware The SPAC: How They Work And Why They Are Bad.
Read the full article here
