The UK’s data protection watchdog plans to issue a £4.59m fine to a Californian DNA testing firm battling for survival.
23andMe – behind saliva-based test kits and once valued at $6bn – has filed for Chapter 11 bankruptcy protection in the US, which would allow for a court-supervised sale process.
Its co-founder and CEO Anne Wojcicki (pictured) has resigned with immediate effect amid reports that she plans to return to acquire the company and pivot it towards drug development.
The Information Commissioner’s Office has been jointly investigating a data breach with the Office of the Privacy Commissioner of Canada that 23andMe first reported to it in October 2023.
In September 23andMe settled a lawsuit alleging that it failed to protect the privacy of nearly 7m users in the breach, equating to around a half of its total customers.
Data accessed included family trees, birth years and geographic locations, but – according to the company – did not include DNA records.
On Friday, the California Attorney General advised customers to delete their data from the site as soon as possible due to its ‘reported financial distress’.
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“Genetic information is among the most sensitive personal data that a person can entrust to a company and organisations handling such data are required to uphold a very high standard of security and governance in accordance with the UK GDPR,” said Stephen Bonner, ICO deputy commissioner – regulatory supervision.
“Earlier this month, we issued 23andMe with our provisional findings, a notice of intent to fine £4.59m and a preliminary enforcement notice.”
The ICO said its findings are provisional and subject to representations from 23andMe including in relation to affordability considerations.
The ICO will carefully consider any representations made before taking a final decision.
Wojcicki remains on the company’s board. She has seen previous buyout attempts rebuffed by the board.
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Joe Selsavage, chief financial and accounting officer, has been named interim CEO. Matt Kvarda, a managing director at Alvarez & Marsal, has been appointed chief restructuring officer amid further board changes.
23andMe, which says it has received a commitment for debtor-in-possession financing of up to $35m from JMB Capital Partners, said it intends to continue operating its business in the ordinary course throughout the sale process.
It said there will be ‘no changes to the way the company stores, manages, or protects customer data’.
23andMe was founded in 2006 and went public in 2021, but remains a loss-making enterprise.
“After a thorough evaluation of strategic alternatives, we have determined that a court-supervised sale process is the best path forward to maximise the value of the business,” said Mark Jensen, chair.
“We expect the court-supervised process will advance our efforts to address the operational and financial challenges we face, including further cost reductions and the resolution of legal and leasehold liabilities.
“We believe in the value of our people and our assets and hope that this process allows our mission of helping people access, understand and benefit from the human genome to live on for the benefit of customers and patients.”