Can 23andMe Survive?
23andMe’s stock price since late 2020
23andMe, the first-off-the-blocks personal genomics company, has been struggling lately. In October, there were reports of a massive data breach focusing on 999,999 people with Ashkenazi heritage. The company eventually admitted that hackers had gained at least some access to 6.9 million profiles, and suggested that this was due to customers who had reused passwords. Even before news of the huge leak and the PR faux pas that followed, the company’s stock had lost more than 90% of its value, from a peak of $16 in 2021. Many people have noticed. Could this really be the end?
The company was founded in 2006 by three Silicon Valley luminaries. One of them, Anne Wojcicki, still runs it though the others were pushed out by 2009. 23andMe got a big boost in 2007 from a $3.9 million investment by Google (Wojcicki was married to Google co-founder Sergei Brin at the time); Genentech and other high-tech companies also provided capital.
The company name was an inspired choice for a business based on selling analysis of individual human DNA: Most of us have 23 pairs of chromosomes, but the key was focusing explicitly on “Me” — that was marketing genius. So was giving away test kits to people who would now be called “influencers,” as 23andMe did in 2008 at the Davos World Economic Forum. That move inspired a wave of free and mostly fawning publicity in the New Yorker and New York Times. Marcy Darnovsky, CGS co-founder and now Executive Director, came up with a great title for her post at Biopolitical Times (soon elaborated into a two-part Mother Jones article) on September 17, 2008:
The Spitterati and Trickle-Down Genomics
… The direct-to-consumer genetic testing industry is harnessing its plans to high-tech glitter and Google’s clout, and hurtling ahead with little consideration of the social policies and oversight we need.
So for now, we’d best be careful where we spit.
The public and marketing focus of 23andMe was on the benefits to individual customers. Privacy issues and echoes of biocolonialsm were rarely addressed. The message was simple and clear: Send in your spit sample and the cash, and you too (and we) can learn about some of your disease risks and ancestry. The price per test started at $999, was soon reduced to $399, then to $99. 23andMe now offers a variety of options, up to the Total HealthTM package at $99/month, billed as one annual payment of $1,188.
In the company’s early years, its announced goal was delivering meaningful results about the risks of gene-related diseases, which led to a long struggle with the FDA. But as the company’s database grew, so did the possibilities for exploiting it. By 2015, more than a million genotypes were on file and 23andMe Therapeutics was launched. In 2018, Wojcicki made a controversial deal with GlaxoSmithKline, who invested $300 million to use the 23andMe database to help design novel drugs, or as STAT called it, “building a clinical trial recruitment business.” By the end of 2020, the company had raised more than $850 million and Wojcicki, long divorced from Brin, was personally said to be worth $440 million. They were approaching the big time.
On June 17, 2021, 23andMe went public, valued at $3.5 billion. Instead of a traditional public offering, which generally involves close scrutiny of the company’s prospects, Wojcicki chose to use a Special-Purpose Acquisition Company (SPAC), a controversial but fashionable financial process, currently being abused by ex-President Trump. 23andMe officially merged with VG Acquisition Corp., founded by billionaire Richard Branson. Since then SPAC investors in general have been losing a lot of money, and the Securities and Exchange Commission is moving to tighten the relevant regulations.
23andMe’s stock rose 20% from its opening price to $13.32 at the close of New York trading, and pretty much held its value through October 2021. Then began its long and disastrous slide. Its stock price, as of March 1, 2024, is 54 cents a share, and the company is at risk of being delisted if it does not reach $1 per share by early summer. On January 31, 2024, The Wall Street Journal wrote a devastating analysis titled:
23andMe’s Fall From $6 Billion to Nearly $0
From celebrity ‘spit parties’ to a drop in the bucket: The once-hot DNA-testing company is struggling to profit
Indeed, the company’s revenue was down 33% in the last reported quarter. The database hack certainly hurt 23andMe, and the company’s response was a long way short of ideal. This has led to lawsuits, which in turn encourage questioning the company’s right to sell data for research purposes, and that remains essentially 23andMe’s only route back to financial stability.
One possible solution floated by Wojcicki is for the company to split up its consumer and therapeutics businesses. That, she suggested in the February quarterly earnings call with investors, might help expand its investor base.
The company has a fairly large database, which it is trying to exploit, but is the database likely to get much bigger? Even critics of 23andMe’s reliance on sales of genetic tests and exploitation of their results rarely seem to mention one additional — and rather obvious — elephant in the mud pool: Buy it once, why buy it again? How many people are still out there waiting to send in their spit?
Wojcicki remains upbeat as always, and more focused than ever on drug development deals. In a long interview with Wired in February, she revealed that GlaxoSmithKline had renewed their partnership for another year, and called this “a really exciting time.” But there are signs that she may be exhibiting pernicious euphoria. Neoscope concluded a recent summary:
The consumer genome sequencing company 23andMe is a sinking ship – and its CEO is conducting the orchestra. … There is, of course, no doubt that genomic medicine is going to continue to grow — but whether 23andMe will be part of it, or even continue to exist at all, remains to be seen.