In a deal that reshapes the landscape of consumer genetics, pharmaceutical giant Regeneron has agreed to purchase the troubled DNA testing company 23andMe for $256 million. The acquisition puts an end to months of financial uncertainty for 23andMe, which had filed for bankruptcy earlier this year.
The once-celebrated consumer genetics pioneer had fallen on hard times. After reaching a peak valuation of $6 billion following its 2021 public debut, 23andMe struggled with declining sales, privacy concerns, and mounting debt. The company’s stock had plummeted by more than 90% before trading was suspended.
Regeneron plans to acquire substantially all of 23andMe’s assets, including its massive genetic database containing information from over 14 million customers. This database, one of the largest private collections of human genetic information in the world, represents the crown jewel of the acquisition.
“This transaction will preserve and extend 23andMe’s unique research platform,” said Dr. George Yancopoulos, Regeneron’s President and Chief Scientific Officer. “We believe that combining 23andMe’s data with our drug development expertise will accelerate the discovery of new treatments for patients with serious diseases.”
The deal raises important questions about data privacy for millions of consumers who submitted DNA samples to 23andMe. Regeneron has pledged to honor existing privacy commitments, but consumer advocates remain concerned about how this sensitive genetic information might be used in the future.
Industry analysts suggest Regeneron’s primary interest lies in leveraging 23andMe’s database for drug discovery rather than continuing its direct-to-consumer testing business. The pharmaceutical company has already collaborated with 23andMe on research projects since 2018.
“This is about the data, not the spit kits,” said Mary Eaton, a biotechnology analyst at Morgan Stanley. “Regeneron sees tremendous value in these genetic profiles for identifying drug targets and understanding disease mechanisms.”
For 23andMe co-founder and CEO Anne Wojcicki, the sale marks the end of a pioneering but ultimately troubled venture. Wojcicki launched 23andMe in 2006 with the ambitious goal of democratizing genetic information, allowing consumers to access insights about their ancestry, health risks, and traits.
The company initially faced regulatory challenges from the Food and Drug Administration, which temporarily halted its health reports in 2013. Though 23andMe eventually won FDA approval to provide certain genetic health risk assessments, it struggled to expand its customer base beyond early adopters.
Recent years brought additional challenges. A massive data breach in 2023 exposed information from 6.9 million customers, damaging consumer trust. The company also faced criticism for its data-sharing practices with pharmaceutical partners, despite user consent agreements.
Financial troubles mounted as 23andMe reported widening losses quarter after quarter. The company attempted various strategic pivots, including launching a telehealth service and developing its own drugs, but couldn’t stem the financial bleeding.
The bankruptcy filing earlier this year acknowledged what industry observers had long suspected: 23andMe’s business model was unsustainable despite its valuable data assets. The company had accumulated over $500 million in debt while seeing revenues steadily decline.
Under the terms of the acquisition, which requires approval from bankruptcy court and regulatory authorities, Regeneron will acquire 23andMe’s research platform, genetic database, and intellectual property. The deal is expected to close in the third quarter of 2024.
Consumer genetic testing competitors like Ancestry.com and MyHeritage may benefit from 23andMe’s exit from the market. These companies have diversified their offerings beyond DNA testing to include subscription services and family history research tools.
For consumers who previously submitted DNA samples to 23andMe, the company has established a dedicated support line to address questions about the transition. Regeneron officials have stated that existing 23andMe customers will continue to have access to their genetic information through a transitional period.
The acquisition highlights broader questions about the value and ownership of genetic data in an era of personalized medicine. As pharmaceutical companies increasingly rely on genetic insights for drug development, the boundaries between consumer services and medical research continue to blur.
“This deal demonstrates the incredible value of large-scale genetic data,” said Dr. Eric Topol, founder of the Scripps Research Translational Institute. “But it also raises important ethical questions about consent and how these deeply personal biological insights should be controlled.”
The 23andMe story serves as a cautionary tale about the challenges of building a sustainable business around consumer genetics. While the company succeeded in creating an unprecedented research resource, it ultimately couldn’t translate that into a profitable enterprise.
For Regeneron, the acquisition represents a strategic opportunity to enhance its drug discovery capabilities at a fraction of 23andMe’s previous valuation. The company plans to integrate the genetic database into its existing research programs while maintaining commitments to data privacy and ethical use.
