23andMe just dropped some major news in a tough year for the genetic testing company. After months of financial challenges, data breaches, and leadership shakeups, the company has announced that it’s laying off 40 percent of its workforce—about 200 employees.
The company says the layoffs will save it $35 million and come as it pivots to focus on its DNA testing services and research partnerships. But it’s not just staffing changes: 23andMe is also shutting down its entire therapeutics division, which had been working on using its genetic data to develop new drugs.
CEO Anne Wojcicki described the layoffs as “difficult but necessary” to ensure 23andMe’s long-term survival. The cuts, announced on Monday, came just a day before the company reported a drop in revenue for its latest quarter. Revenue fell to $44.1 million from $50 million last year, and while the net loss narrowed to $59.1 million from $75.27 million, the company’s value has taken a huge hit this year. Shares are down 75 percent, adding to last year’s 50 percent drop, which has cut 23andMe’s market cap down to around $100 million.
Therapeutics Division Shuts Down
The shutdown of the therapeutics division marks a big strategic shift. This division housed promising immuno-oncology projects aimed at creating antibodies to help the body’s immune cells target cancer. Now, 23andMe says it’s exploring potential asset sales or licensing agreements for this research as it winds down its clinical trials.
A Year of Setbacks
All this comes after a pretty chaotic period for 23andMe. Last year, a major data breach exposed information from 6.9 million customers, leading to a $30 million settlement in a class-action lawsuit. Then, in September, all seven independent directors on the company’s board abruptly resigned over differences with Wojcicki on the company’s strategy. Wojcicki responded by reconstituting the board with three new independent directors and securing a 1-for-20 reverse stock split in October to stay listed on the Nasdaq.
Wojcicki, who co-founded 23andMe in 2006, has repeatedly said she aims to take the company private, though she didn’t mention any specific plans in this week’s earnings call. In a recent SEC filing, however, she emphasized that privatization remains “the best path forward.”
For now, 23andMe is looking to raise additional capital as it turns its attention back to consumer DNA testing and away from drug development.
Featured Image courtesy of JasonDoiy/Getty Images
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