(Bloomberg) — 23andMe Holding Co.’s strategy is shifting as the struggling DNA-testing firm shuts down its in-house drug development effort and gets into weight-loss, one of the hottest markets in health care.
The Silicon Valley firm plans to launch a telehealth membership program by the end of the month for people trying to shed pounds, it said in a release Thursday. Users will be able to get brand name or compounded forms of semaglutide, the active ingredient in the blockbuster drugs from Novo Nordisk A/S, it said.
23andMe is focused on raising its stock price, to get back into regulatory compliance, and boosting sales, which declined in the company’s fiscal first quarter. Shutting down the money-losing drug development business and terminating 30 employees will cut costs, while the company continues external partnerships and programs.
The announcements came as the company reported sales of $40 million in the quarter, well below the $52.1 million analysts expected, and follow the rejection of Chief Executive Officer Anne Wojcicki’s offer to take the company private.
The stock has lost nearly 60% of its market value in 2024, closing at 37 cents a share on Thursday, as demand for DNA testing slows.
Weight loss could represent a lucrative new strategy for the company. It said Thursday that it will also launch a study, focused on the popular diabetes and weight-loss medications, to identify genetic variations associated with shedding pounds and experiencing side effects.
Wojcicki proposed buying the outstanding shares of the company last week for 40 cents each, according to a filing. In a letter, an independent committee formed to explore deals told her it was “disappointed” with the proposal because it didn’t offer a premium to the stock price and lacked financing commitments.
When 23andMe agreed to go public in 2021, it was valued at $3.5 billion. It has struggled since then, with the stock trading below the Nasdaq minimum of $1 for nearly a year. The company has until November to raise its stock price to stay compliant and remain listed.
It recently pivoted to offering subscription products in the hope of creating repeat customers for its consumer business. The approach hasn’t yet generated the number of sign-ups the company initially anticipated.
(Updates throughout to add details on the company’s weight-loss program and drug development cutbacks)
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