23andMe files for bankruptcy as CEO resigns amid sales process

USA – Human genetics and biotechnology company 23andMe has filed for Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Eastern District of Missouri to facilitate a structured sales process.

The move, aimed at maximizing the business’s value, marks a significant turning point for the company.

According to a press release, 23andMe intends to continue operating throughout the sales process without altering the way it stores, manages, or protects customer data.

In an unexpected leadership shakeup, co-founder and CEO Anne Wojcicki has resigned, while Joe Selsavage, the company’s chief financial and accounting officer, has been appointed as the interim CEO by the board.

Wojcicki will remain on the board, ensuring that her expertise continues to guide the company as she pursues an independent bidding opportunity.

“After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximize the value of the business,” said Mark Jensen, chair and member of the special committee of the board of directors.

The bankruptcy filing follows the special committee’s rejection on March 10 of the final non-bidding acquisition proposals submitted by Wojcicki and her affiliates.

In a LinkedIn post, Wojcicki expressed her disappointment over the rejection but affirmed her commitment to the company.

“While I am disappointed that we have come to this conclusion and my bid was rejected, I am supportive of the company and I intend to be a bidder,” she stated, highlighting the evolution of the direct-to-consumer industry since 23andMe was founded 19 years ago.

With over 15 million customers now using its genetic testing services, 23andMe has become a household name in personal genomics.

FTC concerned about privacy protections

The bankruptcy filing has raised concerns at the highest levels of U.S. regulatory bodies. The U.S. Federal Trade Commission (FTC) has expressed worries about the potential sale or transfer of Americans’ personal genetic information.

FTC Chairman Andrew Ferguson emphasized that any purchaser of 23andMe’s assets must adhere to the company’s existing privacy policy to protect customer data.

This concern is particularly relevant in light of a significant data breach in 2023, when nearly 7 million customers’ personal data were exposed, severely impacting the company’s reputation.

California Attorney General Rob Bonta has also issued a consumer alert, urging Californians to exercise their rights under robust state privacy laws.

Bonta reminded residents that they can request the deletion of their genetic data and the destruction of any genetic samples held by the company, a move that reflects growing public concerns over data privacy amid financial instability.

23andMe, which went public via a SPAC backed by Richard Branson in 2021, has seen its stock price plummet from a high of US $320.80 per share in 2021 to a mere US $0.90 per share.

In addition, the company’s past partnerships, including a notable US $300 million collaboration with GSK from 2018 to 2023 and FDA clearance for a prostate cancer risk test in 2022, have not been enough to stem the financial challenges that have led to this bankruptcy filing.