23andMe reduces headcount by 40% and stops drug research work

Genetic testing company 23andMe announced on Monday that this would be the case stop developing new therapiesbut instead focuses on its genetic testing services and products.

This strategic shift is part of a broader restructuring of the company to streamline its operations and reduce costs. The company is also laying off more than 200 employees, representing about 40% of its workforce, which will cost it up to $12 million in severance, transition and termination costs. In return, 23andMe expects annual savings of over $35 million.

23andMe said the company is “actively exploring” strategic opportunities for its therapeutic pipelines as it winds down its drug discovery and development activities. This may include licensing agreements, asset sales or other transactions. In the meantime, the company is working to end its clinical trials “as quickly as possible.”

In the company's statement, CEO Anne Wojcicki called Monday's restructuring “difficult but necessary actions” that will enable the “long-term success of our core consumer businesses and our research partnerships.” Regarding the discontinued assets, Wojcicki said, “We continue to believe in the promise of our clinical and preclinical pipeline and will continue to pursue strategic opportunities to continue their development.”

23andMe has two clinical-stage assets that it is looking to offload. The more sophisticated of the two, 23ME-00610, is an anti-CD200R1 antibody that binds to the receptor and prevents it from interacting with its corresponding ligand. This mechanism disrupts an important signaling cascade responsible for the risk of cancer and immune diseases.

23ME-00610 is in Phase I/IIa development and has shown in early studies to have therapeutic potential against neuroendocrine tumors and clear cell renal cell carcinoma.

The direct-to-consumer genetic testing company also worked on Phase I 23ME-01473, which targets the ULBP6 protein and restores the body's antitumor activity through natural killer and T cells. ULBP6 is a stress-induced ligand found on cancer cells and binds to the NKG2D receptor found on immune cells. This interaction helps cancer cells evade the immune system, and 23ME-01473's mode of action could potentially restore immune recognition.

Monday's restructuring comes as 23andMe weathers months of trouble. Since going public in 2021, the company's stock has plunged nearly 98%, from a high of nearly $259 to $4.6 at the most recent close.

In September 2024, all independent directors will join the Company's Board of Directors resignedciting dissatisfaction with Wojcicki's leadership. “After months of work, we have not yet received from you a fully funded, carefully vetted and actionable proposal that is in the best interests of unaffiliated shareholders,” the directors wrote in their resignation letter to Wojcicki.

Leaving 23andMe's board put the company at risk of delisting from Nasdaq, but the company announced in late October 2024 that it had narrowly missed that outcome regained compliance with listing requirements.