The bidding competition over 23andMe may not be over.
The founder of 23andMe, Anne Wojcicki, has asked a federal bankruptcy court judge to reopen an auction for the genetic testing company, saying she has the financial backing of a Fortune 500 company with a current market capitalization of more than $400 billion.
Wojcicki did not name the company in the court filing, but noted that the company has $17 billion of cash on hand and has a "bona fide interest" in participating in "and only with" Wojcicki's nonprofit group, TTAM Research Institute, in a topping bid.
The genetic testing company filed for Chapter 11 bankruptcy in March and moved forward with a court-managed sale.
Last month, drugmaker Regeneron has emerged as the winner of a bankruptcy auction for 23andMe and its DNA database, with plans to incorporate its findings within its own research while continuing to offer its consumer testing services.
The company signed up to pay $256 million for 23andMe and nearly all of its assets, including its R&D services operations as well as its biobank of collected samples. The deal, which is subject to court approval, does not cover 23andMe’s Lemonaid Health telemedicine and virtual pharmacy business.
With its winning offer, Regeneron topped a $146 million bid from Wojcicki, the company's former CEO, who has been angling to take the DNA tester private for over a year.
In the court filing dated May 31, Wojcicki is pushing the reopen the auction, arguing that the auction process unfairly excluded her nonprofit group, TTAM Research Institute. She claims that 23andMe's debtors attempted to tilt the sales process in favor of Regeneron.
In the May 31 court filing, Wojcicki argued that 23andMe's advisors unfairly capped TTAM's bid at $250 million over concerns about its "financial wherewithal." TTAM was prepared to bid over $280 million, she claimed in the court filing, also contending that the auction was prematurely concluded before TTAM had an opportunity to make a higher bid.
23andMe's debtors maintain that the process was conducted fairly and was overseen by a special committee of independent directors.
In a separate court filing, the company is seeking court approval to allow Wojcicki and Regeneron to submit final proposals by June 12. And 23andMe proposes a $10 million breakup fee for Regeneron if Wojcicki's bid is chosen.
23andMe went public in early 2021 through a $3.5 billion SPAC deal spearheaded by Sir Richard Branson’s Virgin Group, leaving Wojcicki with 49.99% of the voting power over the company. Its stock price has dropped by more than 97% in the time since, as consumer interest in at-home DNA and ancestry tests has declined.
The company’s plans to transition into a genetics-informed drugmaker have also not panned out: last November 23andMe laid off 40% of its staff, or about 200 people, and shuttered its cancer therapeutics R&D division, which was developing two immuno-oncology programs in early-phase clinical trials of various solid tumors. It has also obtained FDA clearances for DTC tests examining genetic cancer risks linked to prostate, breast and ovarian cancers.
The company disclosed in January that it would be seeking strategic alternatives. With the bankruptcy announcement, 23andMe’s share value was cut by more than half, to about 88 cents.
Wojcicki initially proposed paying 40 cents per share in July of last year, but that offer increased to $2.53 per share in February, with that rejected deal totaling about $74 million. In between, 23andMe completed a 1-for-20 reverse stock split last October.