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23AndMe is the bad genetic testing company that filed for bankruptcy this year and is receiving another potential lifeline.
The bankruptcy judge has approved the sale of the company’s assets and operations to a nonprofit organization led by 23AndMe co-founder and former CEO Anne Wojcicki. The nonprofit TTAM Research Institute will pay $305 million, perhaps part of a deal that will close in the coming weeks.
The South San Francisco company’s financial disruption has sparked privacy concerns about what will happen to genetic data for 13 million customers if sold. These concerns have led to 1.9 million users deleting their accounts. Several states, including California, have sued to block the sale of 23andMe data without user consent, claiming that customers have inherent rights to their genetic information. Unlike passwords, if it is breached, you cannot change a person’s genetic data.
“We may conclude that the sale of genetic data companies is a horrifying proposal and that reasonable people should not be allowed under any circumstances,” Judge Brian Walsh of the U.S. Bankruptcy Court in the Eastern District of Missouri in St. Louis, in an opinion filed Friday.
However, the proposed sale means Wojcicki will buy back the business she has started and led for years. And she “improves privacy practices while respecting the rights of our customers to delete accounts and data,” the judge said.
“The heart of my belief is that individuals should empower themselves to be able to be chosen and transparent about genetic data and have the opportunity to continue learning about their ancestors and health risks as they wish,” Wojcicki said in a statement.
The entrepreneur has tried to start moving forward with 23andMe several times in the past. Before 23Andme filed for bankruptcy, the company’s special committee rejected Wojcicki’s proposal to make the company private by acquiring all outstanding shares of the company. The company’s shares fell sharply before filing for bankruptcy. Wojcicki resigned from his role as CEO but remained on the board of 23andme.
Previously, drug maker Regeneron Pharmaceuticals was planning to buy 23andMe. The bankruptcy judge then resumed the bidding process to allow bids from TTAM, which offers a higher price.
Weighting the argument from states against sale said 23AndMe’s privacy statement states that users’ personal information can be sold as part of a merger, acquisition or sale of the company’s assets. Under this agreement, TTAM makes an employment offer to 23andMe workers and, according to court filings, genetic data will not be disclosed to the new parties.
23andMe, once valued at $6 billion, filed for Chapter 11 bankruptcy in March. Founded in 2006, the company sells DNA test kits that people use to learn about their ancestors and health.
The company struggled with repeated revenue growth as people had just had DNA tests. I also faced privacy concerns. In 2023, hackers obtained personal information from around 7 million customers. The data accessed includes ancestral trees, birth year and geographic location, highlighting the risks associated with handing over data to private companies.
In an email sent to customers after the sale was approved, 23andme said TTAM is committed to complying with the company’s privacy policy and that the customer has the right to opt-out of investigations or delete their account.
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