23andMe goes public

DNA Testing Deal

The personalized medicine and consumer genetic testing company, 23andMe, went public in June through a merger with Richard Branson’s blank check company and raised nearly $600 million, reported Heather Landi in Fierce Healthcare. The deal values the company at $3.5 billion.

Trading under the ticker symbol “ME,” 23andMe opened at $11.13 per share, increasing 20 percent to a peak of more than $13 as of midday. Shares were up 19 percent the next day.

The company announced its plans to go public in February by means of a merger with VG Acquisition Corp., a special purpose acquisition company founded by billionaire Richard Branson. This is the latest in a growing list of companies that have gone public through SPAC mergers.

Additionally, 23andMe raised about $592 million in gross proceeds to attain growth and expansion in its consumer health and therapeutics businesses. Capital will be invested in the company’s genetic and phenotypic database to help accelerate personalized healthcare.

Branson, who is also the founder of Virgin Group, said, “As one of the earliest investors in 23andMe, I’ve long believed in its vision to transform the future of healthcare. I’ve seen first-hand the transformative impact 23andMe has in paving the way for many more people to be proactive about their health and wellbeing. There are huge growth opportunities ahead, and I’m confident it will continue to innovate and disrupt the industry, creating a lasting impact on many people’s lives. We look forward to continuing our partnership as 23andMe begins life as a public company.”

The company, which was founded by Anne Wojcicki, began in 2006. It sells direct-to-consumer genetic testing kits that people can use to find out more about their own DNA and its bearing on their potential health issues and ancestry. More than 11 million people have used these genetic testing services.

Sales had slowed down, and company executives said it was because of a lack of repeat customers in the market and concerns about DNA privacy risks. The executives also said that the company was moving away from ancestry to focus on the health market.

Recently, 23andMe has expanded efforts to convert genetic data from its customers into therapies. It made a deal to collaborate on drug development with GlaxoSmithKline, which bought a $300 million stake in the company in 2018.

Furthermore, 23andMe is developing drug candidates itself. The company claims to have a broad pipeline of more than 30 therapeutic programs from oncology to respiratory and cardiovascular diseases.

According to its most recent financial report, 23andMe plans to make big investments in continued efforts to develop new therapies as part of its therapeutics business. However, the company acknowledges the risk involved. The report said, “Drug development is expensive, takes years to complete, and can have uncertain outcomes. 23andMe expects to incur significant expenses to advance 23andMe’s therapeutic development efforts, which may be unsuccessful.”

Annual revenue for the fiscal year ending March 31, 2020 was $306 million, down 31 percent year over year from $441 million. The company projects 2020 revenue to be between $240 and $247 million. The company lost $251 million in 2019, 36 percent worse than in the previous year.

According to 23andMe, investors can expect the company “to continue to incur significant expenses and operating losses for the foreseeable future” as it continues to expand therapeutic research and development efforts and works to develop drugs with collaborators or on its own, according to the financial filing.

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Dan Sfera

Dan Sfera

Entrepreneur. Clinical Trials. 👋🏻. Arizona Wildcat for life. http://www.TheClinicalTrialsGuru.com