Regeneron Acquires 23andMe for $256M: 23andMe Stock Soars 200%
On May 19, in Tarrytown, New York, Regeneron (NASDAQ: REGN) announced it had been named the winning bidder in the bankruptcy auction of 23andMe Holding Co., a leading human genetics and biotechnology firm.
Regeneron plans to acquire 23andMe’s Personal Genome Service® (PGS), comprehensive health and research services, and its biobank—along with related assets—for $256 million, ensuring uninterrupted consumer genomics services.
23andMe will operate as a wholly-owned subsidiary of Regeneron, continuing its personal genomics business. The acquisition excludes 23andMe’s Lemonaid Health telehealth unit, with operational details to be disclosed upon deal closure.
As of yesterday’s close, 23andMe’s stock price surged over 200% , and REGN rose 3%.
In my view, this is a rather curious transaction.
From Star Unicorn to Bankruptcy Quagmire
Nineteen years ago, 23andMe was founded by Anne Wojcicki, dubbed the “female Steve Jobs,” who popularized DNA testing.
The company’s fundraising journey was remarkable, securing Series F financing with backers like Google, Sequoia Capital, Johnson & Johnson, and WuXi AppTec, eventually going public via SPAC with a peak valuation of $6 billion.
However, 23andMe’s financial reports paint a dire picture. From fiscal 2022 to 2024, its total revenues were $272 million, $299 million, and $220 million, with net losses reaching $254 million, $314 million, and $667 million, respectively—cumulative losses exceeding $2 billion.
Its downfall was baked into the business model: genetic testing as a one-time $99 novelty, not a recurring need. “Once users get their DNA results, there’s no reason to return,” notes industry analyst John Smith. By 2024, specialized competitors captured 85% of the market, leaving 23andMe with under 1 million kits sold—down from 4.5 million at its peak.
Regulatory hurdles compounded issues: The FDA’s 2013 ban on health-risk genetic reports (lifted in 2018) undermined consumer trust in its science.
23andMe’s pivot to a Google-like model—collecting data for drug R&D—faced insurmountable delays. Partnerships with Genentech and GSK promised 50 drugs in the pipeline, but the cash-burning nature of biotech R&D forced it to shutter its lab in 2024. Its $400 million Lemonaid Health acquisition became a liability due to runaway operational costs.
The final collapse came in 2023, when a data breach exposed 7 million users’ genetic data, triggering class-action lawsuits and a $30 million settlement. By 2024, layoffs hit 40%, and Wojcicki’s privatization bids were repeatedly rejected.
Why Did Regeneron Take the Plunge?
23andMe’s crown jewel is its 15-million-user genetic database.
Regeneron, advancing its gene therapy portfolio, relies on its VelociSuite platform to identify precise genetic targets. “This biobank could accelerate Regeneron’s CRISPR collaborations with Mammoth Biosciences by years,” says biotech analyst Sarah Chen.
At just 4% of its peak valuation, the acquisition is a bargain. Regeneron can retain core assets, shed Lemonaid, and avoid 23andMe’s $1.2 billion debt through bankruptcy proceedings. For a company with $5.2 billion in free cash flow last year, the cost is manageable.
Yet the timing puzzles investors. Regeneron’s stock has fallen 50% in six months, pressured by Amgen’s rival drug Pavblu eroding Eylea sales and pending patent expirations for Eylea and Dupixent. “This feels like a Hail Mary to diversify beyond their blockbuster drugs,” Chen adds.
Closing Thoughts
The deal is perplexing. Regeneron is acquiring a money-losing firm amid its own stock struggles, with unclear synergies.
That said, if 23andMe’s data unlocks a major genetic breakthrough, the gamble could pay off.
Regeneron, facing a year of declining stock prices, appears eager to pivot. For now, it’s a high-stakes bet on genomics-driven R&D.
As for 23andMe, the acquisition is a lifeline, However, I rarely get involved in stock price surges driven by hot news, I’ll stay on the sidelines.