(CTN News) – 23andMe, a genetic testing company based in the United States, has filed for bankruptcy to enable its transfer.

The event transpired after the company’s chief executive resigned to examine a proposition that had been repeatedly attempted without success.

To “facilitate a sale process that optimises the value of its business,” 23andMe announced that it has filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Eastern District of Missouri late Sunday night.

The company, presently experiencing financial losses and offering saliva-based test kits for genealogical research, asserted that it was performing its regular business operations during the sales process of the product. The company has not altered its strategy on the management, preservation, or safeguarding of client data, as stated.

The San Francisco-based organisation stated that Anne Wojcicki, the company’s chief executive officer and co-founder, had resigned. Since April of the previous year, she has been campaigning for a buyout; however, the board of directors at 23andMe has dismissed her ideas.

The company is currently recuperating from a massive data breach that transpired in 2023. Data pertaining to around 7 million persons, or roughly half of the company’s customer base, was breached.

A significant number of the company’s 15 million clients have unsuccessfully sought the removal of their DNA information from the company’s records, resulting in a decline in income.

California Attorney General Rob Bonta urged the firm’s clients over the weekend to “eliminate your data and obliterate any genetic material samples retained by the company.”

Mark Jensen, the company’s chair, stated, “After a comprehensive evaluation of various strategic alternatives, we have concluded that the most effective strategy for maximising the company’s value is to initiate a sale process supervised by the court.”

“The organisation is committed to safeguarding client data and ensuring transparency in user data management.”

Any prospective transfer must protect data privacy.

In November, 23andMe, facing financial challenges, laid off 200 employees, representing forty percent of its workforce. Furthermore, the organisation ceased the development of all its treatments. Wojcicki has previously sought to transform the firm into a pharmaceutical manufacturing entity.

Wojcicki will remain on the 23andMe board of directors until a permanent successor is appointed. At that time, Joe Selsavage, the chief financial officer of the corporation, will undertake her responsibilities.

In 2006, she co-founded the enterprise alongside Linda Avey and Paul Cusenza. She articulated her “disappointment” on the bankruptcy filing and the unsuccessful endeavour to privatise the company in a post on X. She subsequently declared that she had relinquished her position to optimally position herself to independently bid for the company.

She asserted, “I will maintain my dedication to our long-term goal of achieving global leadership in genetics, even if I am fortunate enough to acquire the company’s assets during restructuring.”

Wojcicki’s recent offer of $0.41 (£0.32) per share was 84% lower than his February proposal.

Following the 23andMe board’s rejection, her private equity partner retracted.

23andMe’s latest valuation placed the firm at $11 million, juxtaposed with its present market value of just under $48 million and its apex valuation of $5.8 billion in February 2021, subsequent to its initial public offering on the Nasdaq exchange.

In the autumn of 2017, a lawsuit was resolved in which 23andMe was charged with inadequately protecting the privacy of 6.9 million users whose personal data was compromised due to a data breach. The contract included $30 million in payments and three years of security surveillance.

23andMe has announced that it has obtained a commitment from Los Angeles-based private equity company JMB Capital Partners for debtor-in-possession financing of up to $35 million to sustain its operations in the forthcoming months.

SOURCE: TG