Sale of genetic testing company raises concerns about privacy of 23andMe’s 15 million customers.
Regeneron Pharmaceuticals has bought the genetic testing company 23andMe, a company once valued at $6bn, for $256m through a bankruptcy auction.
Regeneron said in a statement on Monday that it aims to bolster its capabilities in genomics-driven drug discovery by using customer DNA profiles, collected via its popular direct-to-consumer saliva testing kits.
It added it would prioritise the ethical use of customers’ DNA data.
However, the transaction has put the spotlight back on data privacy issues, especially in light of 23andMe’s recent challenges. Founded in 2006, 23andMe has collected the genetic information of roughly 15 million people.
The genomics firm, once a trailblazer in ancestry DNA testing, has faced dwindling demand for its core services and reputational damage from a 2023 data breach that exposed sensitive genetic and personal information of millions of users.
The hack and subsequent bankruptcy filing have drawn scrutiny from lawmakers who warned that millions of customers’ genetic data could be sold to unscrupulous buyers.
After the company’s bankruptcy filing in March, several congressional committees and federal agencies, including the Senate Health, Education, Labor and Pensions Committee and the Federal Trade Commission, penned letters voicing concerns that the company’s data could end up in the hands of malicious parties.
The Subcommittee on Oversight and Accountability in the House of Representatives launched an investigation into the matter.
Acknowledging the heightened scrutiny, Regeneron said it will uphold 23andMe’s existing privacy policies and comply with all applicable data protection laws.
The drugmaker also committed to working transparently with a court-appointed independent overseer who will assess the implications of the deal for consumer privacy and is expected to deliver a report to the court by June 10.
The court is scheduled to consider approval of the transaction on June 17.
Investments in genomics “make good strategic sense” for Regeneron but might take a decade or more to see a return, Bernstein analyst William Pickering told the news agency Reuters.
“Given Regeneron’s track record, we also believe 23andMe customers are in good hands from a privacy perspective,” Pickering added.
As part of the agreement, Regeneron will acquire all units of 23andMe except the company’s on-demand telehealth service Lemonaid Health, which is being shuttered.
After the transaction, expected to be completed in the third quarter, 23andMe will operate as a wholly owned unit of Regeneron.
Despite the news of the purchase, Regeneron’s stock was down 0.6 percent from the market open on Wall Street as of 12pm in New York (16:00 GMT) although it had gone up 2.86 percent over the previous five days.