Genetic data was on the auction block, and a U.S. biotech company ponied up the cash.
New York-based Regeneron Pharmaceuticals announced on Monday that it has purchased DNA testing company 23andMe through a bankruptcy auction for a total of $256 million.
The deal includes most of the company’s assets, including, notably, user and customer data. Regeneron’s announcement emphasizes that the company will comply with existing privacy laws and 23andMe’s policies, which were conditions of the sale. Privacy experts have said that any such sale presents special challenges given the sensitive nature of the genetic data that 23andMe collects.
“The agreement includes Regeneron’s commitment to comply with the Company’s privacy policies and applicable law, process all customer personal data in accordance with the consents, privacy policies and statements, terms of service, and notices currently in effect and have security controls in place designed to protect such data,” the announcement reads.
Regeneron says that 23andMe required any bidders to “guarantee” that they would comply with its existing privacy policies. A third-party consumer privacy ombudsman, or CPO, will be appointed by the court to examine the transaction, which is still subject to court approval.
Such court-appointed ombudsman are often required in bankruptcy cases where sensitive data is involved, although 23andMe had initially tried to argue that one wasn’t necessary.
Company leadership also doubled-down on the promises to protect the integrity of 23andMe’s customers’ data.
“We are pleased to have reached a transaction that maximizes the value of the business and enables the mission of 23andMe to live on, while maintaining critical protections around customer privacy, choice and consent with respect to their genetic data,” said Mark Jensen, chair and member of the special committee of the board of directors of 23andMe, per the statement.
A stellar rise and steep fall
Founded in 2006, 23andMe gained popularity for its DNA testing kits, which were used to collect saliva samples and provide customers with a readout of their genetic ancestry and history.
At one time, it had 15 million customers, but a data breach in 2023 hammered demand after seven million customer records were accessed, and 23andMe never recovered.
The company went public by merging with a special purpose acquisition company in 2021, the height of the so-called SPAC craze. It briefly hit a valuation of $6 billion, but profits were elusive. By the middle of 2024, it was trading in penny-stock territory.
Following the breach and the company’s subsequent Chapter 11 filing in March of this year, some policymakers—such as California Attorney General Rob Bonta—recommended that users delete their information, which could be done through a user’s profile on the 23andMe website.
As for what’s next, the deal should close sometime later this year, and 23andMe is expected to continue to operate as a unit of Regeneron.
Shares of Regeneron Pharmaceuticals (Nasda: REGN) were down about 1.1% in late-morning trading.