The once pioneering DNA test company 23andMe is now a penny stock that has filed for bankruptcy. Its CEO Anne Wojcicki is also stepping down.
In 2018, the company was worth in the ballpark of $1.75 billion.
Its stock has fallen 99.64% since after it went public in 2021, dropping form $203.20 to about $0.70 today.
While best known for its DNA spit kits, the company also had a drug discovery play, having struck a high-profile partnership with pharma giant GlaxoSmithKline (now GSK) in 2018. The partnership centered around an agreement for GSK to use 23andMe’s test results from 5 million customers to design new drugs. The Big Pharma invested $300 million in the firm, and the partnership was extended in January 2022 to July 2023 with another $50 million payment.
Several factors are at play in 23andMe’s plight. Waning demand for DNA kits and a damaging data breach were immediate triggers. But a deeper factor was the collapse of 23andMe’s R&D and drug discovery strategy.
The GSK partnership
Officially announced on July 25, 2018, the GSK–23andMe partnership saw GSK make a $300 million equity investment, aiming to harness 23andMe’s extensive genetic data from over five million customers—over 80% of whom opted in to research. The draw? Genetically validated drug targets were touted to have “double the success rate” in becoming medicines, according to a 2015 press release. Initial enthusiasm ran high: GSK extended the deal in January 2022 with another $50 million, and its R&D head claimed the venture “continues to exceed expectations.” In its first few years, the partnership yielded numerous research leads but few tangible successes. By January 2022, 23andMe reported that the GSK collaboration had “identified over 40 therapeutic programs” and advanced one immuno-oncology antibody (targeting CD96) into a Phase I clinical trial. In 2022, GSK noted that more than 70% of its targets had genetic validation.
Initially, the plan was for a joint GSK-23andMe team to identify genetically validated targets and co-fund development with GSK 50/50.
Ideals vs. reality
In practice, only one immuno-oncology antibody reached Phase I trials. By late 2024, 23andMe scrapped its entire in-house drug development program and cut 40% of its workforce, as Reuters and PharmaVoice reported.
By mid-2023, the exclusive collaboration period ended without a breakthrough therapy or a blockbuster target to show for it. GSK chose not to continue co-developing new programs and instead shifted to a scaled-down, non-exclusive data licensing deal: it paid $20 million for a one-year license to 23andMe’s database insights, according to davispolk.com. Under this 2023 amendment, any new drugs arising would belong solely to GSK (with 23andMe eligible only for royalties). This effectively wound down the deep partnership. It was also a clear sign that GSK saw more value in simply accessing data than in joint R&D. In short, the collaboration produced plenty of genetic “leads” but no near-term products or revenue for 23andMe. As cash burn continued, 23andMe lacked the resources to push drug candidates further on its own. By late 2024, the company scrapped its in-house drug development program and slashed 40% of its workforce, citing the need to cut costs, as pharmavoice.com noted.
One of the biggest hurdles for 23and Me though was the fact that selling one-off DNA test kits rarely generates durable recurring income, leaving it with insufficient funds to support lengthy drug pipelines. After initial kit demand plateaued, the company could not reliably deepen its R&D activities, especially when most potential therapies were still preclinical. After an initial boom, demand for consumer genomics cooled. By 2021, 23andMe’s user base had swelled to roughly 12 million, but many early adopters were already tapped. Analysts noted the market for ancestry testing “might be close to tapped out,” as Reuters had noted, with little reason for past users to buy another kit.
Filed Under: Drug Discovery
