23andMe, once a $6 billion pioneer in the genetic testing market, now finds itself on the brink of being delisted from Nasdaq. The company's stock has plummeted by 98% from its peak, and in September, all of its independent board members resigned, citing strategic differences with CEO Anne Wojcicki. So, what led to this drastic downturn for a company that once held such promise?
Founded in 2006, 23andMe disrupted the genetic testing industry with its direct-to-consumer model, making at-home DNA kits accessible to the masses. Backed by big-name investors and celebrity endorsements, the company gained attention by offering affordable test kits that allowed consumers to unlock insights about their ancestry and health. However, 23andMe wasn't content with just being a testing company. It had ambitions of leveraging its vast genetic database to make breakthroughs in drug discovery—a bold strategy that set it apart from competitors like Ancestry.com.
Going public in 2021, 23andMe was valued at $3.5 billion, and the influx of capital allowed it to expand its drug research efforts and form partnerships with pharmaceutical giants. At the time, Wojcicki was confident in the company’s future. In an interview with CNBC, she expressed excitement about the vast opportunities in therapeutics and the company's consumer business.
However, soon after its Nasdaq debut, the tides turned. Rising interest rates made it challenging for the company to secure additional funding, and sales from its test kits began to decline. In an attempt to create more recurring revenue, 23andMe launched a premium subscription in 2020, but it failed to gain significant traction. By the end of the 2023 fiscal year, the company reported a staggering net loss of $312 million, with its stock price sinking below $1 by September.
Financial woes weren’t the only issue. The company's vast genetic database, once its crown jewel, became a source of privacy concerns. In October 2023, hackers accessed the genetic information of nearly 7 million customers, sparking public outcry and increasing scrutiny of the company's data practices.
Despite these challenges, Wojcicki remains committed to keeping 23andMe independent. She submitted a proposal in July 2023 to take the company private, but it was rejected by a special committee, as the offer didn’t provide a premium to the then 40-cent per share price. The resignations of the company’s independent directors in September only added to the turmoil, with their departure attributed to frustrations over Wojcicki’s vision for the company's future.
With a looming November 4 deadline to raise its stock price above $1 and find new board members, the future of 23andMe hangs in the balance. Whether Wojcicki can steer the company through this critical period or whether the brand will become a cautionary tale of ambition and missteps remains to be seen.
