The wrestle to find out the way forward for 23andMe has taken a flip with all of its impartial administrators resigning over variations with co-founder and CEO Anne Wojcicki, who needs to take care of management of the corporate and take it non-public however has but to submit a completely financed proposal to take action.
The resignations introduced Tuesday depart Wojcicki because the genetic testing firm’s lone board member. In the meantime, the clock is ticking as deadlines loom for 23andMe to regain compliance with guidelines for sustaining an inventory as a publicly traded firm.
When 23andMe went public in 2021 through a SPAC merger, its $10 per share inventory worth quickly rose by greater than 20%. The corporate has not seen such highs since. 23andMe has struggled with its imaginative and prescient as a enterprise. The corporate’s important income continues to offer genetic testing companies to customers. A a lot smaller a part of the corporate’s enterprise is permitting pharmaceutical corporations to make use of 23andMe’s de-identified genetic knowledge to help in drug growth.
23andMe has by no means turned a revenue and gross sales have been in decline. Its inventory worth has fallen accordingly. Final November, the Nasdaq put 23andMe on discover that it risked dropping compliance with itemizing necessities as a result of a inventory worth that had fallen beneath the $1 per share threshold.
Wojcicki’s possession stake in 23andMe is greater than 20%. However because of a twin class construction through which some shares have extra voting energy, Wojcicki’s mixed stake offers her 49% of the voting energy of the corporate’s whole excellent shares. In April, 23andMe introduced that Wojcicki is contemplating a plan to amass the shares she doesn’t already personal and take the corporate non-public. In keeping with a regulatory submitting, she informed a board committee that she needs to take care of management of the corporate and is unwilling to help an alternate transaction.
23andMe’s board shaped a particular committee comprised of impartial administrators tasked with reviewing strategic options for the corporate that may maximize shareholder worth — as is their responsibility. This committee would evaluation forthcoming proposals, together with Wojcicki’s. Her supply got here on the finish of July: 40 cents per share for the shares she doesn’t personal. The board’s letter in response famous that Wojcicki’s proposed worth gives no premium to shareholders and it lacks dedicated financing. The board rejected the supply as “inadequate and never in one of the best curiosity of non-affiliated shareholders.”
The letter went on to ask Wojcicki to withdraw her beforehand acknowledged intent to oppose an alternate transaction so the board can totally assess potential curiosity from third events. However the particular committee additionally acknowledged that Wojcicki’s funding sources may have extra time for due diligence. The committee’s Aug. 2 response granted her “a restricted quantity of further time” to submit a revised proposal with totally dedicated financing. Within the letter despatched to Wojcicki and disclosed publicly on Tuesday, the impartial board members tendered their resignations, noting Wojcicki’s failure to submit a completely financed proposal.
“That we’ve not seen any notable progress over the past 5 months leads us to consider no such proposal is forthcoming,” the letter mentioned. “The Particular Committee is subsequently unwilling to contemplate additional extensions, and the Board agrees with the Particular Committee’s dedication.”
The board members mentioned that whereas they consider within the personalised well being and wellness providing that Wojcicki has articulated, she and the board differ on the strategic course of the corporate. Due to that distinction and Wojcicki’s concentrated voting energy, the board mentioned it believed it’s in one of the best curiosity of 23andMe shareholders that the board members resign “quite than have a protracted and distracting distinction of view with you as to the course of the Firm.”
In an e-mail despatched to staff and included in a Wednesday regulatory submitting, Wojcicki mentioned she was shocked and disenchanted by the board resignations however she stays dedicated to taking 23andMe non-public. She added that the corporate will instantly start figuring out impartial administrators to hitch the board.
“I proceed to consider that we’ll be higher positioned to attain our mission and targets exterior of the quick time period pressures of the general public markets and that taking 23andMe non-public would be the greatest alternative for long run success,” she mentioned within the e-mail.
The Nasdaq’s November 2023 discover concerning the poor inventory worth gave 23andMe 180 days to regain compliance. The corporate was unable to take action. In Might, the Nasdaq granted an extension to Nov. 4.
The mass board resignation triggered one other delisting discover from the Nasdaq for various guidelines violations. One of many itemizing guidelines requires that almost all of an organization’s board be comprised of impartial administrators. 23andMe can also be in violation of guidelines for audit and compensation committees, every of which have to be comprised of impartial administrators. In a Wednesday regulatory submitting, 23andMe mentioned the Nasdaq’s letter states the corporate has till Oct. 3 to submit a plan to regain compliance with these guidelines. If the Nasdaq accepts that plan, it could grant 23andMe as much as 180 days to supply proof of compliance.
Within the meantime, 23andMe’s inventory will proceed to commerce on the Nasdaq. Its closing inventory worth on Wednesday was 34 cents.
Photograph: baona, Getty Photos