Dive Brief:
- 23andMe said Monday it will lay off more than 200 employees, about 40% of its staff, and restructure the company amid its financial challenges.
- The genetic testing firm will discontinue the development of its therapeutics division and all therapeutics programs, as well as evaluate “strategic alternatives” for its clinical and preclinical assets. The firm expects to save more than $35 million in annualized costs through the restructuring.
- CEO Anne Wojcicki told investors on an earnings call Tuesday that the moves are “difficult but necessary actions that we believe begin putting 23andMe on a more sustainable path and positioning the company for the future.”
Dive Insight:
23andMe’s layoffs and business restructuring are the latest challenges for the once high-flying firm, which went public in 2021 through a deal valuing it at $3.5 billion. It has since faced several business issues and saw its stock price drop below $1.
Wojcicki attempted to take 23andMe private, proposing an official offer to the board of directors in late July. However, the board quickly rejected the offer, and seven independent directors resigned, citing differences of opinion over the company’s future.
“Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign from the Board rather than have a protracted and distracting difference of view with you as to the direction of the Company,” they wrote in September.
Wojcicki maintained in a memo to employees following the board resignations that taking the company private is the right decision, according to a CNBC report, and three new board members were added in October.
CFO Joe Selsavage told investors this week that the layoffs and discontinuation of the therapeutic business would “substantially reduce” operating expenses, adding that the company expects to spend about $12 million primarily on severance, transition and termination-related expenses.
23andMe announced in 2015 that it would launch a therapeutics division. At the time, Wojcicki wrote, “[W]e hope to transform the way we discover and develop novel therapies. By starting with genetic information and understanding the basics of disease, we hope we can make discoveries that will have a meaningful impact on society.”
In 2018, the company entered into a four-year partnership with the pharmaceutical company GSK to identify novel drug targets. GSK also made a $300 million equity investment in 23andMe. The partnership was extended in 2022 and in 2023 with a data licensing agreement, with payments of $50 million and $20 million, respectively.
When questioned on the earnings call about the company’s plan for recovery and a return to profitability, Wojcicki pointed to a subscription plan with features such as historical matches and opportunities in its database business.
Wojcicki did not mention taking the company private during the call.
23andMe reported revenue of about $44 million in the second quarter of its fiscal year 2025, a 12% decrease year over year, and a net loss of $59.1 million, compared with $75.3 million in the year-ago period.
In late October, the company regained compliance with Nasdaq after it risked being delisted by dropping below the minimum closing price of $1 per share.
Shares in the company were trading at about $4.40 Wednesday.
