23andMe: Decline in sales and announcement of job cuts
In order to cut costs, the faltering gene analysis start-up wants to lay off two-fifths of its employees and discontinue all therapeutic programs.
(Image: nevodka/Shutterstock.com)
US-based genetic analysis start-up 23andMe reported a drop in revenue in its latest quarter – on Tuesday, a day after the company announced it was laying off forty percent of its workforce and closing its therapeutics division. According to a report by US news channel CNBC, 23andMe's revenue in the second quarter of the financial year was 44.1 million US dollars, down from 50 million US dollars in the same period last year.
On Monday, the struggling provider of genetic tests announced "a restructuring of the company" as part of a restructuring plan "to streamline operations and reduce costs", as the company puts it. In plain language: more than 200 jobs will be cut, which corresponds to around 40 percent of the workforce, all therapeutic programs will be discontinued and ongoing clinical trials will be terminated "as quickly as possible". In parallel, the company is reviewing strategic alternatives for its clinical and preclinical assets, including "all strategic options to maximize the value of the therapeutic programs, including licensing agreements, asset sales or other transactions".
According to 23andMe, the measures are expected to significantly reduce operating costs and generate annual cost savings of more than 35 million US dollars. "We are taking these difficult but necessary actions to restructure 23andMe and focus on the long-term success of our core consumer business and research partnerships," said Anne Wojcicki, CEO, co-founder and chairman of 23andMe, in Monday's announcement. According to CNBC, the company is considering possibly raising additional capital.
A series of problems
23andMe had recently run into increasingly troubled waters. Last year, cyber criminals captured the data of almost seven million users following a so-called credential stuffing attack and offered it for sale on the darknet. A class action lawsuit brought by the victims against 23andMe ended in a settlement. The affected customers are to be compensated with a total of 30 million US dollars.
Videos by heise
As a result, 23andMe lost much of its value. The company's shares have fallen by 75 percent this year, having lost more than half their value in 2023. In September, all seven board members, with the exception of CEO Anne Wojcicki, resigned, stating in a letter that they disagreed with the company's "strategic direction", according to CNBC. Wojcicki planned to delist the company from the stock exchange. Meanwhile, users who would like to have their sensitive genetic data removed from the hands of the company also encountered unexpected hurdles.
However, Wojcicki does not want to admit defeat. "We continue to believe in the potential of our clinical and preclinical pipeline and will continue to pursue strategic opportunities to continue its development. We are very grateful to the patients, investigators and study staff for their participation in our clinical trials," she said on Monday.
(akn)
