For the second time in as many years, 23andMe CEO Anne Wojcicki is trying to buy back the DNA testing company she founded. But if the sale goes through, it’s bound to be controversial.
Wojcicki has teamed up with New Mountain Capital, a venture capital firm, to propose buying out the struggling company’s shareholders at $2.53 per share, valuing the company at $74.7 million—a surprising price for a biotech firm that was worth $6 billion just four years ago.
“We believe the best course of action is for the company to go private, which will enable it to focus on executing long-term value creation initiatives,” Wojcicki and New Mountain Capital wrote in their letter to the company’s small board of independent directors in late February. Both the board and a majority of minority shareholders will need to approve the deal.
23andMe declined to comment for this story. A spokesperson for Anne Wojcicki declined to comment on the record. New Mountain Capital did not respond to a request for comment.
Board experts say the bid will likely attract scrutiny from investors, and raises red flags about what happens when a founder is given too much power. Wojcicki has 49% of the company’s voting power, and hand-picked the company’s current three directors after her former seven-person board famously resigned on the same day. That raises questions about the board’s loyalties and whether shareholders would be getting a fair price.
As Charles Elson, the founding director of the John L. Weinberg Center for Corporate Governance puts it, this type of deal is “a classic conflict of interest transaction.”
A fall from great heights
Wojcicki cofounded 23andMe in 2006, with Linda Avey, a genetics expert who had the idea for the company, and Paul Cusenza, an engineer and executive. By 2009, Wojcicki was running 23andMe without her cofounders, and the company quickly became the best-recognized brand among DNA testers. Wojcicki emerged as a Silicon Valley who’s-who, joining her sister Susan Wojcicki, the former longtime head of YouTube, who died last year. Anne Wojcicki was also previously married to Google cofounder Sergey Brin, with whom she shares two children.
Initially, 23andMe focused on gaining customers who would pay a steep fee to have their spit analyzed for information about their ancestry and a few health signals. In time, it built what’s now one of the world’s largest DNA databases, including data for 15 million people, a majority of who agreed to have their information used for research. In 2015, it began leveraging that data: 23andMe moved into the staggeringly expensive business of drug development. It partnered with major pharmaceutical companies, but also set up its own in-house drug discovery unit. Then, in 2021, 23andMe bought telehealth company Lemonaid for $400 million, with the intention of marrying genomic testing with clinical practice. Through the years, it also continued adding new health reports for DNA testing subscribers.
But as 23andMe grew and gained prominence, then went public through a SPAC deal in 2021, the flaws in its business model began to show. By 2024, it was valued at $80 million, down 98% from its 2021 high. It was partly a victim of dramatic changes in the life sciences market, and a major data breach that scarred its retail business, though others have pointed to Wojcicki’s so-called “founders mode” leadership style and her commitment to drug research to explain the company’s steep fall. The retail side of the business wasn’t enough to cover the costs of drug development—which can take years, cost hundreds of millions, and can’t guarantee viable products.
Wojcicki responded to the pressure by offering to buy the company herself in mid 2024, while declaring that she would not entertain outside bids for the firm. The 23andMe board rejected her bid to take the company private because her proposal, at 40 cents per share, didn’t offer shareholders enough of a premium, and didn’t include detailed financing plans, according to a letter the board sent to Wojcicki. (The first bid predates a 1-for-20 reverse stock split last fall. The post-stock split equivalent would be $8 per share.) The board, which included noted figures in venture capital and tech like Neal Mohan, CEO of YouTube, and Roelof Botha, head of Sequoia Capital, resigned en masse in September of last year, after giving up on ever getting an improved bid from Wojcicki, as the directors explained in a public letter.
It was a spectacle that briefly made Wojcicki the sole member of her board, while her company faced possible delisting from Nasdaq as its stock fell to under $1 a share.
Wojcicki did not waver in her convictions, as described in her first proposal letter sent to the special committee of the board of directors and included in an SEC filing. “I continue to be excited about our mission of improving the health of millions of people worldwide through the power of genetics,” she said in that July missive. “As CEO, I remain as committed as ever to our long-term vision of becoming a global leader in genetics and establishing genetics as a mainstay of healthcare ecosystems worldwide.”
In mid-October, Wojcicki told Fortune, “I still think we can navigate and land this plane, but it is absolutely complicated.”
Trying to land the plane
To avoid being delisted, the company completed a reverse stock split and shored up its share price. Wojcicki also rebuilt 23andMe’s board by appointing three former CFOs as independent directors. Soon thereafter, the company said it would lay off 40% of workers and close its drug discovery unit. In November, it was also widely reported that the company was looking to sell Lemonaid.
An analyst who previously covered 23andMe for a major financial services company, and who asked not to be identified because he’s no longer following the company, recently told Fortune that they believed there’s still a lot of value in the company, and that the new bid’s low price simply reflects the current market conditions. It’s a tough environment for raising money, especially in genomic medicine, they said, and those who can make acquisitions in the health sciences space are “extracting a pound of flesh.”
23andMe remains an attractive property, the analyst noted, because it still has one of the world’s largest genomic databases, and some of that health data is longitudinal, as some subscribers agreed to have health markers tracked over time, making it even more useful for drug companies. Moreover, in 2018, 23andMe signed a $300-million, four-year partnership with drugmaker GlaxoSmithKline, which then signed to partner with the company for an additional year, this time in an all-cash deal instead of cash and equity. The fact that GSK re-upped its partnership was a clear signal that 23andMe’s data held value, the analyst argued. (GSK told Fortune last year that the partnership with 23andMe was “strong and productive.”) Before closing its drug unit, 23andMe also developed two potential cancer therapies that are in clinical phase trials, the analyst noted, and could end up becoming revenue-generating products.
But the uncertainty around the company because of recent board drama, the analyst said, made it unlikely that another large pharmaceutical would enter into the same type of lucrative agreement with 23andMe. (It did launch a limited partnership with a small drugmaker in November.)
Given the lack of other options, the analyst said, Wojcicki’s offer will likely be approved.
Fears and possible lawsuits
Wojcicki and New Mountain’s proposal now sits with 23andMe’s board, who are tasked with evaluating whether it’s the right deal for shareholders. It’s still possible that the board will force Wojcicki and New Mountain to go higher, especially if enough minority stakeholders push back against the current price. There’s also a chance a rival bid could emerge; Wojcicki has recently indicated she would be open to third-party offers, reversing her previous stance. But if the sale goes through, Elson said, you can expect some lawsuits.
Management take-private sales are “always invitations for disgruntled shareholders who feel they're getting an unfair price,” Elson said. “You would hope the threat of it happening would cause serious introspection on the part of the controlling shareholder.”
This situation should also give investors pause before gambling on a company with a founder who is given outsized control of the voting rights, he says. That practice has left several boards in Silicon Valley, including those of Tesla and Meta, beholden to their CEOs.
An independent investor in 23andMe who spoke with Fortune and asked not to be identified to protect their privacy expressed disbelief that Wojcicki, whom he holds responsible for allowing 23andMe’s valuation to plunge, could turn around and buy the company at a low price.
“I can’t understand why there aren’t other bids,” the investor told Fortune.
His concerns echo the sentiment of some Reddit users who claim to be investors in 23andMe and have cried foul over the current situation.
Victor Zhang, a retail investor who is one of those Reddit users, says he understands why sentiment among shareholders like him is negative. He first bought shares in 23andMe believing that its data holds invaluable information for medical breakthroughs. Now he sees this sale as the only option to avoid losing all of the money he put into the stock.
He calls Wojcicki’s offer “very disappointing” and says he believes the board will push back. “I'm assuming they also don't want to look bad and just approve the first offer,” he says.
Asked if he had a message for the CEO and board, he replied: "Some of us still have hope for the company, and we hope that everyone's acting in the shareholders' best interest."
