23andMe files for bankruptcy and will try to find a buyer
23andMe, a formerly high-flying genetic testing company, announced Sunday that it was declaring bankruptcy and that it would seek a buyer.
The company also said CEO and co-founder Anne Wojcicki is resigning immediately and will be replaced by Chief Financial and Accounting Officer Joe Selsavage as interim chief executive.
23andMe moved in November to slash 40% of its workforce as part of a restructuring plan, a step that came roughly two months after its entire board resigned.
"We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities," 23andMe Chair Mark Jensen said in a statement. "We believe in the value of our people and our assets and hope that this process allows our mission of helping people access, understand and benefit from the human genome to live on for the benefit of customers and patients."
23andMe offers two basic kinds of services — consumer and therapeutics. The former provides people with information on their ancestry and genetic health profile, including the risk of passing on certain conditions to their children, according to S&P Capital IQ. The therapeutics unit works to develop treatments and conducts research into cancer, immune diseases and other conditions.
Data privacy concerns
23andMe's struggles have raised concerns about the privacy of its customers' genetic data, which is used to trace people's ancestry, among other purposes. In filing for bankruptcy protection, the company said there will be no changes to how it manages and protects people's data.
23andMe users must explicitly affirm that the company may share their personal data, although people's data could be included as part of a sale of the company. Some states have passed privacy laws that would require a person's consent before their genetic data is transferred from one entity to another.
In its bankruptcy announcement, 23andMe said any buyer of its assets would have to observe applicable privacy laws for customer data. The company has also previously said that any customer data it shares with other parties is anonymous and can't be traced to individual users.
23andMe also allows customers to delete their accounts. To do that, users must log in to their account and submit a request. The company will send an email confirming the request to delete the data, which the user must then verify.
23andMe's stock, which once traded for more than $300 a share, fell to 79 cents before the start of trade Monday. In January, 23andMe reported a third-quarter net loss of $26.8 million on revenue of $60.3 million, an improvement over its loss of $259.7 million on revenue of $44.7 million in the year-ago period.
The company filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Eastern District of Missouri. 23andMe said that, if granted approval in bankruptcy court, the company would solicit bids from potential acquirers over a 45-day period and potentially conduct an auction.
One possible buyer is Wojcicki herself. The executive, who recently submitted an acquisition offer that 23andMe rejected earlier this month, said in a social media post Monday that she may again bid for 23andMe.
"I have resigned as CEO of the company so I can be in the best position to pursue the company as an independent bidder," she wrote, adding that continues to believe in the company's brand and business.
"We have had many successes but I equally take accountability for the challenges we have today. There is no doubt that the challenges faced by 23andMe through an evolving business model have been real, but my belief in the company and its future is unwavering," she said.
