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23andMe, the iconic DNA-testing company that helped people learn about their ancestors and aimed to improve their medical care using genetic data, agreed to be purchased out of bankruptcy on Monday for $256 million, a steep fall from the $6 billion peak it achieved in 2021.
The company would live on inside biotech Regeneron, which said it would continue operating 23andMe’s DNA-testing business and use its database of roughly 15 million DNA samples to help discover new drugs.
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Regeneron said it would “ensure compliance” with 23andMe’s privacy policy, which will be reviewed by a court-appointed ombudsman.
For a few years last decade, 23andMe had been one of the best known consumer-technology brands. Life-altering stories of people finding new relatives inspired others to scoop up their own $99 kit—and spit into test tubes—to learn about their own genealogical roots.
But the firm, which was co-founded by Anne Wojcicki, struggled to turn its genealogical business into a bigger, more lucrative health enterprise.
One idea had been to use DNA data to provide better medical care. 23andMe paid $400 million to acquire telemedicine company Lemonaid Health. But it wasn’t clear how genetic information would help doctors make different recommendations for most patients.
Ultimately Lemonaid stuck to its core business selling drugs for erectile dysfunction and other conditions.
In 2018, 23andMe partnered with British drugmaker GlaxoSmithKline to use 23andMe’s DNA database to discover drugs, with GSK investing $300 million. Yet under the deal, 23andMe was on the hook for a big chunk of drug-development costs and it bled cash.
A Regeneron spokeswoman declined to provide further comment, citing ongoing bankruptcy proceedings. Wojcicki didn’t respond to a request for comment.
Regeneron said it had won the bidding during a bankruptcy auction for 23andMe. After a bankruptcy court and regulators sign off, Regeneron would acquire 23andMe’s signature Personal Genome Service, its Total Health and Research Services business lines and its biobank of customers’ genetic samples and data.
The deal doesn’t include Lemonaid. Regeneron said it expects the deal to close in the third quarter.
For Regeneron, the purchase would provide access to genetic data that could help the biotech’s researchers look for the molecular roots of disease, identify targets for new medicines and design studies to test the drug candidates.