23andMe DNA-Testing Firm Goes Public Following Branson Deal
(Bloomberg) -- DNA-testing company 23andMe Inc., which has doubled down on its effort to prove consumer genetics offers more than entertainment value, began publicly trading on Nasdaq Thursday under the ticker “ME.”
The stock rose 7.2% to $11.78 at 11:52 a.m. in New York trading following a deal to merge with VG Acquisition Corp., a special-purpose acquisition company founded by billionaire Richard Branson. The agreement valued the company at $3.5 billion, with Chief Executive Officer Anne Wojcicki and Branson each investing $25 million.
Current shareholders of 23andMe will own 81% of the combined company. The merger with Branson’s SPAC allows 23andMe to go public without the uncertainty of holding an initial public offering.
“It’s kind of an ideal time for us,” Wojcicki said in an interview Thursday.
Wojcicki had long been hesitant to take her company public, often telling the media and investors she didn’t plan to do so any time soon. But the pandemic, she said, changed the calculus. It created more consumer interest in genomics, with sequencing the virus playing a major role in developing vaccines and in tracking its spread, Wojcicki said.
It also created more interest in novel modes of health care, with many Americans using things like telehealth for the first time. This, she said, gives 23andMe new avenues moving forward to play a more direct role in its customers’ health care.
And with the company’s therapeutics business rapidly expanding, the added cash will help the company further expand its drug-development efforts. “I want to be a therapeutics company that people love,” Wojcicki said.
Co-founded in 2006 by Wojcicki to sell direct-to-consumer genetic testing kits, the company recently has been expanding its drive to turn its trove of data into therapeutics with more than 40 such programs underway. Last year, 23andMe licensed its first drug developed in-house to another company.
23andMe was launched with the aim of using genetics to kick start a personalized health-care revolution, with a $1,000 test that could alert customers to potential health risks. But it was forced to pull the product from market when the U.S. Food and Drug Administration decided to exercise oversight of health-related DNA tests forcing 23andMe to seek agency approval.
The company pivoted to ancestry testing before re-launching a health-care test once it made it through the FDA’s approval process.
Sales of genetic testing kits slowed as early adopters have thinned out and consumers concerned over privacy have shied away. 23andMe cut jobs last year, as did rival Ancestry.com Inc. Ancestry also this year pulled its own health test from the market and cut more jobs.
Moving forward, 23andMe has a deal in place to collaborate on drug development with GlaxoSmithKline Plc, which took a $300 million stake in the company in 2018. And in October, it launched a subscription product that gives consumers more detailed information about their health.
The company has also sought to leverage its database to aid in the fight against the global pandemic, with a million-person study to look at how genomics and other factors contribute to how severely ill those who contract the virus become.
“It’s like we shifted into fifth gear,” Wojcicki said. “We were always going fast. But now were racing.”
Other investors beyond Branson and Wojcicki in the SPAC deal included Fidelity Management & Research Company LLC, Altimeter Capital, Casdin Capital and Foresite Capital.
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