Weekend reading: 23andMe’s exploding plastic inevitable fate–and what might have been

April 20, 2024 | by | No Comments

23andMe may go private, break up, or go bankrupt. Not many other options. A major end-of-week news item in healthcare was that 23andMe, the beleaguered genetic testing company, may be taken private by its CEO and founder Anne Wojcicki per an SEC 8-K filing on 18 April and a press release issued the same day. Currently, she is a major shareholder controlling more than 20% of the total outstanding shares with ‘supervoting’ rights that entitle her to approximately 49% voting power. She filed a Schedule 13D the prior day indicating her intent to buy all outstanding shares. No offer value nor timing was specified. Bloomberg, LinkedIn

23andMe shares closed Friday at $0.48 on the Nasdaq Global Select Market. On Wednesday, they closed at an all-time low of $0.36. It has not had a close above $1.00 since 29 September 2023. In November, Nasdaq notified them that the company had 180 days to bring the share price above $1.00 or face delisting–and there is little time remaining on the clock. CNBC

In February, after a disastrous fiscal Q3 with net loss tripling and revenue down 32%, Wojcicki floated the idea of separating the consumer genomics/virtual care and the commercial genomic database/drug discovery businesses but has turned now to taking the company private and fully under her control. Its market cap is now about $200 million with $200 million cash on hand, creating a zero-sum situation. The release states that on 28 March, the board of directors formed a special committee to evaluate alternatives to maximizing shareholder value. But when ‘shareholder value’ has to be approved by one shareholder with 49% of the votes, the BOD’s options may be constrained.  

What a difference in three years. In February 2021 after much anticipation, 23andMe went public in a SPAC founded by Richard Branson and soared to a $3.5 billion valuation. It achieved a $4.8 billion market capitalization after buying in October 2021 Lemonaid, a quick-diagnosis/quick-prescription telehealth company for minor but troublesome conditions that was touted, but never became, a nexus of, to quote the announcement, “healthcare that is based on the combination of your genes, your environment, and your lifestyle.”  At the time, its future seemed unlimited between consumer genetic testing (genotyping, not diagnostic) for health and ancestry, building up Lemonaid into a full-featured virtual diagnostics and health service, while taking the deidentified data and marketing it for commercial research to Big Pharma, initially via a five-year exclusive deal with GSK.

That commercial use proved to be a sticky wicket with consumers concerned about how their data was being protected, with opting out made (deliberately?) opaque and difficult. Other than Lemonaid, 23andMe failed to successfully diversify beyond the core ‘one and done’ genotype testing until very late last year. Last February, after their disastrous 6.9 million record data breach turned the spotlights on, the Wall Street Journal revealed that a pricey subscription program for lifestyle counseling that included clinical exome sequencing plus Lemonaid called Total Health failed to gain traction after its late 2023 debut and their in-house drug discovery moved only two out of 50 into early-stage human trials. The GSK deal expired and was not renewed. 23andMe was also torching through cash. [TTA 2 Feb]. The thick and sticky icing on the cake was 23andMe’s antagonistic response to the breached customers, blaming them for recycling passwords and using multiple features they offered [TTA 19 Jan]. This was rightfully blasted in the industry and the subject of multiple consumer class-action lawsuits.

In this Editor’s opinion, 23andMe’s ship must pass between the Scylla and Charybdis of financial choices. Splitting up a near-worthless company into three money-losing parts, like Gaul, is rearranging deck chairs on the sinking ship (to really scramble our metaphors). In either a Chapter 7 (closure) or Chapter 11 (reorganization) option, Wojcicki would lose control and her spot as CEO, wiping out the shareholders, but she might retain some value in Chapter 11 in the IP, depending on how it is structured. Then finally, there is Wojcicki’s buying out the other shareholders. That is dependent on her having or being able to access the cash from investors. None of this solves the failure of the business model, which was for most customers ‘one and done’ testing, not subscribing to additional services, and unsubscribing from any further data use. They saw nothing attractive or useful in the other services.

Chapter 7s are usually forced situations where there is little value left in the company other than intellectual property (as in Pear) and equipment (if applicable), zero confidence in management and product delivery (Olive AI), withdrawal of key client business, collapsing in a heap of litigation (Theranos), and any of the above coupled with overwhelming debt that lenders will no longer carry (Babylon Health).

A Must Read for your weekend is Arundhati Parmar’s gem of an essay on 23andMe in MedCityNews–the company’s current dilemma contrasted with what if co-founder Linda Avey had not been ousted in 2009. She expertly sets off interviews with Avey and Wojcicki into an illuminating virtual debate that should be part of an MBA candidate’s case study. Parmar sets them off with analyst views, the experience of a referred 23andMe customer who illuminates the life-changing nature of genetic testing as well as 23andMe’s service drawbacks, and a sparkling view from an empty 23andMe cocktail reception at this past January’s JPM.

Is the bloom off the consumer DNA business? It’s past time for a Genomic Bill of Rights. (updated)

February 13, 2020 | by

Perhaps a bit of sanity enters. Ancestry, the largest vendor of home-based tests for genetic testing to trace ancestry and seek health information, announced layoffs of 6 percent, or about 100 people, from its Utah and California offices. This follows on post-New Year layoffs at chief rival 23andMe of 14 percent of its staff, also about 100 people.

The slowdown in the consumer appeal of genetic testing is apparently across the board. While one hears of genetic tests being given for holidays and birthdays, there is little repeat need. The market was easily saturated: the early adopters have done their testing; the second wave of consumers which normalize a technology now are increasingly aware of and have privacy concerns about their genetic information being misused. This Editor would add a lingering wave of silly TV and online commercials with wide-eyed folks imagining their connection to ancient royalty or swapping out lederhosen for kilts after their testing report comes back. 

The bright spot for both companies is where they were really heading–healthcare data. AncestryHealth is not being cut back. As previously noted, GSK owns half of 23andme.

This Editor in 2018 advocated a Genomic Bill of Rights where before testing, a genetics testing client would be told how their genomic data is being used and being protected, informed about de-identification, and easily able to opt-out of commercial use. And the revelations about matching to others in the database or health revelations should be done not only with circumspection and respect for the disruption which may happen in the client’s life, but also held to the highest standard of testing. Sometimes that discovery is the equivalent of tossing a hand grenade into a person’s life. There also hasn’t been a lot said about making de-identifiable data identifiable through the ‘nefarious use’ of genomic data sets available through research networks.

DNA is being used for so much advanced medicine and even home testing (example–Cologuard in the US for colon cancer). It’s regrettable that the most public face of genetic testing rests with two companies whose main sell on your past and health has had unintended consequences, and whose main chance lies in the sale of their consumer data. The Verge, CNBC

23andMe returns to direct-to-consumer genetic testing marketing

October 23, 2015 | by

Nearly two years after the FDA shut the door on 23andMe‘s direct marketing of genetic testing, it is now back in the market with FDA clearance. The new Personal Genome Service (PGS) now meets FDA standards–and is now $199 where it was previously $99. It is as before a saliva-based test that in about two months, provides that person with an online report. There are multiple types, for instance the carrier status test on 36 inherited conditions, including cystic fibrosis and sickle cell anemia. The company is also bolstered by closing a $115 million round this month and in January a partnership with Pfizer to sell the company its Research Portal aggregated, anonymized data. Earlier this year, FDA cleared in Class II their Bloom Syndrome test [TTA 20 Feb] and late last year resumed DTC test marketing in the UK. Mobihealthnews also includes a helpful timeline of 23andMe’s troubles and recovery.

23andMe finally gets a nod from FDA

February 20, 2015 | by

Breaking news: Foot in door? Crack in the wall? This week’s Big News among the genomics enthusiasts among the healthdigerati is that 23andMe finally got one test through FDA, for Bloom Syndrome where the gene is carried by both parents, and now can freely sell the kits. Much is being made of wording in the press release from a major FDA executive as opening the door:

“The FDA believes that in many circumstances it is not necessary for consumers to go through a licensed practitioner to have direct access to their personal genetic information. Today’s authorization and accompanying classification, along with FDA’s intent to exempt these devices from FDA premarket review, supports innovation and will ultimately benefit consumers,” said Alberto Gutierrez, Ph.D., director of the Office of In Vitro Diagnostics and Radiological Health in the FDA’s Center for Devices and Radiological Health. “These tests have the potential to provide people with information about possible mutations in their genes that could be passed on to their children.”

But far more of a startling admission by FDA is that 1) these genetic screening kits are now classified as Class II and 2) they intend to exempt them from the arduous pre-market review that is in Class III:

Along with this authorization, the FDA is also classifying carrier screening tests as class II. In addition, the FDA intends to exempt these devices from FDA premarket review. The agency plans to issue a notice that announces the intent to exempt these tests and that provides a 30-day period for public comment. This action creates the least burdensome regulatory path for autosomal recessive carrier screening tests with similar uses to enter the market.

There will be much more; this article by Chris Seper in MedCityNews is an excellent recap. Our articles previously in TTA.

Would one of our UK readers expand our knowledge on these kits’ regulatory status in the UK and EU? According to the MedCityNews article, the UK permits 23andMe’s genetic testing, but is vague on the details (CE approval?)

23andme and FDA: making nice?

July 2, 2014 | by

In a reversal from the ‘¡No pasarán!’ (‘They shall not pass!’) position 23andme and its QS fans famously took back in the winter and spring [TTA 2 Apr, with prior links] vis-a-vis FDA on interpretation of genetic tests, this report from VentureBeat indicates that 23andme is holding out an olive branch. It’s not your usual cutting. It’s an application for Bloom’s Syndrome, a rare inherited genetic disorder, which FDA just accepted. Adding to it is that CEO Anne Wojcicki is a carrier of this disorder. VentureBeat’s speculation is that if successful, the Bloom’s Syndrome application would be the template for future test applications. The tone on both sides has grown conciliatory. For example: sitting on the same Congressional panel on healthcare last Tuesday was an FDA physician directly involved in the approval situation and Ms Wojcicki. There was a well-timed, quite emollient interview with Ms Wojcicki in the Wall Street Journal this past weekend. Certainly a factor is that 23andme is still growing, but less quickly–up 150,000 from its pre-FDA contretemps level of 550,000. And its funders, even though closely related to Ms Wojcicki, hate to wait on numbers which are certainly below projections.

Picture murky: 23andMe and the FDA

April 2, 2014 | by | 2 Comments

Genetic testing company 23andMe seems to be in no rush to resolve its differences with the FDA, and the digitalhealtherati a/k/a D3H (Digital Health Hypester Horde) are wondering why. In late November, 23andMe executives undoubtedly had a depressing Thanksgiving when the FDA ordered them to stop providing health reports (interpretation of genetic results) and marketing kits. Four months later, 23andMe continues to sell its kits for $99, providing only raw genetic data and ancestry reports–and according to its 31 March blog posting, will do so for the foreseeable future as they complete the regulatory review process. The blog quoted CEO and co-founder Anne Wojcicki, “My main priority is resolution with the FDA,” but actions speak louder than words–and the FDA isn’t talking. The FDA standard is still validation–the company has to analytically and clinically validate 23andMe for its intended uses, which is why the FDA took action against them in the first place.

  • Is the lack of urgency more about continuing to gather raw genetic and health data unimpeded? Ms Wojcicki had widely stated her real aim was to build a 25-million-strong database (Fast Company).
  • Is the real revenue stream of the company not the kits but in monetizing a massive database, selling it to researchers and others (Matthew Herper in Forbes)–the Google model which Ms Wojcicki is quite familiar with? Consider that there’s $126 million into the company, that is a lot of $99 kits.

Most companies in this situation would be imploding. This one is not. Interestingly. FierceMedicalDevices, The Verge

Previously in TTA: all you ever wanted to know about the 23andMe kerfuffle in FDA tells 23andMe genomic test to stop marketing (including this Editor’s analysis of their pre-FDA website with copy breathlessly expressing potentially life-saving or critical lifestyle changing claims, countered by legal ‘educational use’ boilerplate) and The inevitable: class action lawsuit against 23andMe (a check of the Ankcorn blog has no updates)

FDA tells 23andMe genomic test to stop marketing (US)

November 27, 2013 | by | 2 Comments

Quantified Selfers and the D3H (Digital Health Hypester Horde) are in a swivet. This past Friday, FDA slammed the door shut on the 23andMe Personal Genome Service (PGS) saliva test. This past summer, the company broadly marketed to US consumers, including a TV campaign [Charles Lowe, TTA 7 Aug]. The FDA cease-and-desist letter cites that 23andMe never provided requested data on their July and September 510(k) filings, which are now ‘considered withdrawn’, and cites that “after these many interactions with 23andMe, we still do not have any assurance that the firm has analytically or clinically validated the PGS for its intended uses, which have expanded from the uses that the firm identified in its submissions.” The danger is that people will make medical decisions based on the testing information and that the results produced may be faulty. It appears from FierceHealthcare that the kit has actually been marketed for five years. According to MedCityNews, it is backed by Google Ventures (the CEO/co-founder is the estranged wife of Google head Sergey Brin), New Enterprise Associates, MPM Capital and the Moscow billionaire Yuri Milner. A private citizen is petitioning the White House to overrule the FDA (as if that extra-legal move would be possible, but who knows with the influence of the Googlesphere?) and states that the agency ‘grossly overstates the risks’ (also MedCityNews). As of 2 Dec there are 3,306 signatures of the 100,000 needed; one suspects this administration has bigger slices of uncooked turkey on its plate such as Obamacare and a kind-of-achieved 30 Nov deadline on Healthcare.gov, which is now clearly seen as just one problem.

The 23andMe website is still fully up and still selling kits.

Editor Donna sorts through the noise for possible reasons why:  (more…)