Regeneron Pharmaceuticals announced on Monday that it will buy genomics startup 23andMe Holding for $256 million in a bankruptcy auction, pledging to emphasize the ethical use of DNA data from customers who utilize ancestry testing and other services.
Through the transaction, Tarrytown, New York-based Regeneron seeks to strengthen its capabilities in genomics-driven drug discovery by merging with 23andMe’s library of over 15 million customer DNA profiles, collected through its popular direct-to-consumer saliva-testing kits.
23andMe, based in South San Francisco, California, filed for bankruptcy last month, seeking to sell the company at auction following a drop in consumer demand and a 2023 data breach that exposed millions of customers’ private genetic and personal information.
According to court filings, the second-highest bid, at $146 million, came from a nonprofit research center led by 23andMe’s former CEO and co-founder, Anne Wojcicki.
The purchase, expected to finalize in the third quarter, brings renewed focus to data privacy concerns triggered by the breach. Once a pioneer in ancestry DNA testing, 23andMe has experienced declining demand for its core services.
The acquisition “starts to bring about a good conclusion to what otherwise could have been a difficult bankruptcy case,” said trial attorney Daniel Gielchinsky, co-founder and partner at DGIM Law.
Gielchinsky believes that Regeneron, with its strong track record, will do a better job of preserving consumer data under existing privacy regulations.
The cyberattack and subsequent bankruptcy have raised alarms among U.S. lawmakers, who fear that genetic data from millions of users might fall into the hands of unethical buyers.
Acknowledging the heightened scrutiny, Regeneron stated on Monday that it will maintain 23andMe’s existing privacy policies and comply fully with all relevant data protection laws.
The company has also committed to working transparently with a court-appointed independent supervisor who will evaluate the privacy implications of the deal. The supervisor is scheduled to submit a report to the bankruptcy court by June 10, with the court set to consider final approval on June 17.
William Pickering, an analyst at Bernstein, noted that Regeneron’s push into genomics “makes good strategic sense,” but added that it may take a decade or more to realize a return on investment.
As part of the acquisition, Regeneron will take over all of 23andMe’s business operations, except for Lemonaid Health—the company’s on-demand telemedicine service—which is being shut down.
Following the transaction, 23andMe will operate as a wholly owned subsidiary of Regeneron.
Reported by Dietrich Knauth in New York and Mariam Sunny, Sriparna Roy, and Siddhi Mahatole in Bengaluru; Edited by Will Dunham and Leroy Leo.
