Dive Brief:
- A bankruptcy judge approved the sale of 23andMe to a nonprofit led by Anne Wojcicki, co-founder and former CEO of the genetic testing company.
- U.S. Bankruptcy Judge Brian Walsh issued an order on June 27 approving the sale to the nonprofit TTAM Research Institute, adding that all objections to the sale are denied unless otherwise noted. In June, TTAM won a bid to buy the company for $305 million.
- States that have filed privacy objections, saying the sale does not comply with their state’s privacy laws, have until July 7 to be granted a stay to appeal the case, Walsh ruled. California, Kentucky, Tennessee, Texas and Utah have said that the proposed sale would violate their genetic privacy statutes because 23andMe does not propose to seek opt-in consent from every customer in their states.
Dive Insight:
23andMe filed for bankruptcy protection in March. During an auction in May, Regeneron was initially the highest bidder at $256 million. After the auction closed, TTAM’s bid for the company was ultimately awarded.
One issue at the crux of the sale is what the buyer would do with the trove of data amassed by 23andMe. The company currently has about 13 million customers, more than 80% of whom have agreed to participate in 23andMe’s medical research programs, according to Walsh’s memorandum opinion.
More than 30 states had initially objected to the sale over privacy concerns. Several states have since resolved their objections, but five states remain actively opposed to the sale because it violates their genetic privacy statutes. Those states have specific protections that require companies to get opt-in consent from customers before selling their data to a third party. California Attorney General Rob Bonta’s office said on Monday that the sale does not comply with the state’s genetic privacy law, according to Politico.
Walsh approved the sale because customers are likely to have similar privacy protections under TTAM as they do currently under 23andMe.
“If the sale is approved and consummated, TTAM will essentially operate in the same
manner and serve the same functions as the Debtors do currently,” Walsh wrote, adding that the same people will have access to customers’ genetic data.
The court could impose an opt-in requirement, but there is no reason to believe 23andMe or TTAM would follow through with that requirement, Walsh wrote. It’s likely that the companies would choose to instead proceed with the transaction under a Chapter 11 plan rather than the proposed sale, which would cost more money but “requires no consent at all,” he said.
In a statement on Monday, TTAM said all customers will be emailed in advance of the transaction closing with a notice of the sale, and people will still have the option to change their decision on whether to participate in research.
“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.
23andMe customers will be notified about the sale at least two days prior to closing, along with a reminder that customers may delete their data, according to a voluntary term sheet from TTAM.
After closing, TTAM will not sell or transfer customers’ genetic data in connection with any merger, acquisition, bankruptcy, reorganization or sale unless there is another domestic nonprofit research institution or a domestic for-profit entity that satisfies all regulatory requirements and agrees to adopt TTAM’s privacy statements, according to the term sheet.
