Court approves sale of 23andMe to nonprofit led by co-founder Anne Wojcicki

23andMe, a distressed genetic testing company that filed for bankruptcy this year, has received another potential lifeline.

A bankruptcy judge approved the sale of the company’s assets and business operations to a nonprofit led by 23andMe’s co-founder and former chief executive, Anne Wojcicki. The nonprofit, TTAM Research Institute, will pay $305 million as part of the deal that will likely close in the coming weeks.

The South San Francisco-based company’s financial turmoil sparked privacy concerns over what happens to the genetic data of its 13 million customers if it’s sold. These worries prompted 1.9 million users to delete their accounts. Several states, including California, sued to block the sale of 23andMe’s data without user consent, arguing that customers have an inherent right to their own genetic information. Unlike a password, a person’s genetic data can’t be changed if compromised.

Judge Brian Walsh, a judge for the U.S. Bankruptcy Court in the Eastern District of Missouri, in St. Louis, said in an opinion filed Friday that “a company’s sale of genetic data is a scary proposition, and reasonable people might conclude that it should not be permitted in any circumstances.”

But the proposed sale means that Wojcicki would repurchase a business that she helped start and led for years. And she “will improve privacy practices while honoring customers’ rights to delete their accounts and data,” the judge said.

“Core to my beliefs is that individuals should be empowered to have choice and transparency with respect to their genetic data and have the opportunity to continue to learn about their ancestry and health risks as they wish,” Wojcicki said in a statement.

The entrepreneur has tried to pave the way forward for 23andMe several times in the past. Before 23andMe filed for bankruptcy, the company’s special committee rejected Wojcicki’s proposal to take the company private by acquiring all of the company’s outstanding shares. The company’s stock plunged before it filed for bankruptcy. Wojcicki stepped down from her role as chief executive but remained on 23andMe’s board.

Earlier, drug maker Regeneron Pharmaceuticals was set to buy 23andMe. Then a bankruptcy judge reopened the bidding process to allow for a bid from TTAM, which offered a higher price.

Weighing arguments from states opposed to the sale, Walsh noted that 23andMe’s privacy statement says that their users’ personal information could be sold as part of a merger, acquisition or sale of the company’s assets. Under the deal, TTAM would make employment offers to 23andMe workers and genetic data wouldn’t be disclosed to new parties, according to the court filing.

Once valued at $6 billion, 23andMe filed for Chapter 11 bankruptcy in March. Founded in 2006, the company sells DNA testing kits that people use to learn about their ancestry and health.

The company struggled with recurring revenue growth because people just took the DNA test once. It also faced privacy concerns. In 2023, hackers obtained personal information of roughly 7 million 23andMe customers. Some of the data accessed included ancestry trees, birth years and geographic locations, highlighting the risks that come with handing over data to private companies.

In an email sent to customers after the sale was approved, 23andMe said that TTAM is committed to adhering to the company’s privacy policy and customers have the right to opt out of research or delete their accounts.