New York
CNN
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Simply three years in the past, DNA testing firm 23andMe was the golden youngster of Wall Avenue and Silicon Valley. At this time, the agency is prone to being delisted from the Nasdaq.
However 23andMe’s CEO, Anne Wojcicki, tells CNN that Wall Avenue shouldn’t rely her out but.
Regardless of the agency’s preliminary recognition, the previous tech unicorn’s funds have dried up and its worth has dropped a surprising 96% since its peak share worth of $17.65 in February 2021.
Shares of 23andMe at the moment are priced at about $0.70, and in November the corporate was knowledgeable that it was in violation of Nasdaq guidelines that require an organization to take care of a inventory worth above $1. Which means it has about three months to carry the worth up or danger being delisted.
“We’re very conscious of this,” Wojcicki informed CNN on Thursday night. “We’re making the required adjustments to make the enterprise sustainable, after which it’s going to be about rising it once more.”
23andMe broke limitations when it first launched in 2006. On the time, scientists estimated that it will value about $14 million to sequence a human genome.
Wojcicki has Silicon Valley in her DNA. She grew up on the campus of Stanford the place her father taught physics. Her mom is called the “Godmother of Silicon Valley” for instructing the youngsters of tech titans at Palo Alto Excessive Faculty for many years and publishing Easy methods to Elevate Profitable Individuals, based mostly on her personal daughters. Susan Wojcicki, Anne’s sister, is the previous CEO of YouTube. Her ex-husband, Sergey Brin, co-founded Google.
When she noticed a chance to alter the enterprise of genetics, she took it. Wojcicki and her co-founders wager that they may present shoppers with well being and ancestry information by sequencing simply a few of their genome for underneath $1000 (they finally introduced the worth right down to underneath $100).
Their wager paid off. The corporate’s retail DNA check was named “Invention of the Year” by Time Journal in 2008, and their DNA database blew up with greater than 100,000 prospects by 2011.
They went public in 2021, and their market capitalization quickly soared to $6 billion.
After hovering early, a pointy and painful descent
However 23andMe’s fortunes have shifted.
The corporate lately got here underneath hearth for safety breaches that impacted 6.9 million customers and has struggled to discover a option to hold prospects engaged with its merchandise after they’ve used the one-time DNA package. Wojcicki says she and 23andMe at the moment are closely centered on drug growth, however that’s an costly and dangerous endeavor that would take a long time to repay.
Of extra speedy concern: The corporate has but to show a revenue, and 23andMe may run out of cash as early as subsequent 12 months.
Wojcicki says the issue has extra to do with a downturn within the biotech sector than inner points.
“We did layoffs final 12 months,” mentioned Wojcicki, referring to the three rounds of cuts and the sale of a subsidiary that diminished her workers by a couple of quarter. “However we’re not alone on this biotech downturn. And so what you must do is you must in the reduction of and you must prioritize on the applications that you just assume are a very powerful.”
“We’ve been caught within the downturn together with your complete trade,” mentioned Wojcicki. “We’re completely exploring what our choices are to prioritize our greatest belongings…we will’t do every thing we’ve executed. That’s what occurs in this type of market.”
However the firm’s drop isn’t monitoring with the sector. The SPDR S&P Biotech ETF, which tracks the biotech sector, has fallen by about 5.2% over the previous 12 months. Shares of 23andMe are down 75.4% over the identical interval.
Nonetheless, Steven Mah, a managing director at TD Cowen who tracks 23andMe, says that he nonetheless charges the inventory a “purchase.” He believes that adverse headlines and poor sentiment have led the corporate to commerce effectively under its truthful worth.
There’s nonetheless untapped worth in its pharmaceutical discovery arm, he informed CNN, and excellent news in that sector may shortly catalyze the inventory upward.
Wojcicki says that the way forward for 23andMe is in harnessing their DNA database to search out cures or remedies for most cancers and autoimmune ailments like rheumatoid arthritis, lupus and Crohn’s illness.
In 2018, 23andMe agreed to a five-year unique drug growth partnership with GSK (previously GlaxoSmithKline). The London-based pharmaceutical and biotechnology firm additionally invested $300 million within the firm. In 2022, GSK exercised an choice to pay $50 million and lengthen the unique contract for an additional 12 months. Final October, GSK paid the corporate one other $20 million for a nonexclusive information license.
A lot of the information 23andMe has collected isn’t obtainable to the general public. That makes it exhausting to investigate the corporate’s worth, mentioned Mah. However these offers give essential hints in regards to the firm’s viability as a DNA information supplier.
“GSK can see [the data] however I can’t see it, and traders can’t see it,” he mentioned. “However the truth that GSK is doubling down and lengthening their partnership means that they’re getting a worth add from the platform.”
Up to now, the partnership between GSK and 23andMe has produced greater than 50 new drug targets. Two have already made their means to early-stage trials. Only about one in every thousand potential drugs makes it to human trials in the USA.
The payoff for a profitable drug could possibly be enormous, however profitable growth can take a long time and prices tons of of tens of millions of {dollars}.
However loads of what the corporate has achieved has been ignored, mentioned Wojcicki.
“As a result of we can not [contractually] converse a lot about what has come from [our partnership with] GSK, individuals simply give it zero worth,” she mentioned. “There’s loads of actually thrilling issues that got here out of it.”
Six years of ongoing partnership between the 2 firms ought to point out that “there was unbelievable worth,” she mentioned. “It’s actually reworked [GSK’s] complete drug discovery course of.”
Nonetheless, the deal between the 2 firms is now not unique, and 23andMe has but to announce partnerships with some other pharmaceutical firms. Mah sees that as a regarding signal that’s contributing to weak spot within the inventory, however he stays hopeful.
“It’s one thing 23andMe is concentrated on. They mentioned they’re in discussions with Large Pharma and it’s simply taking a while…I do consider that they will join new companions,” he mentioned.
GSK didn’t instantly reply to requests for remark.
23andMe is on the appropriate path, mentioned Wojcicki. “The imaginative and prescient and the place we’re going is stable, however the path to get there may be extra turbulent.”
Wojcicki is for certain that genetic sequencing will rework healthcare and drug discovery, and that 23andMe is able to take full benefit of that when it occurs.
However drug discovery is a really lengthy course of and it may be wherever from 10 to fifteen years on common from goal discovery to an FDA-approved drug.
The query is whether or not traders are keen to attend that lengthy.