23andMe has been an industry leader in the at-home DNA testing industry for nearly 15 years. Soon enough, investors will be able to purchase more than just a DNA kit from the company. Via the use of a special purpose acquisition company (SPAC) that’s owned and operated by Richard Branson, the billionaire founder of Virgin Group, 23andMe will become a publicly traded company in 2021.
TL;DR
- The 23andMe IPO will proceed using the increasingly popular SPAC approach, and the deal is expected to be finalized in the Q2 of 2021.
- The company, as a result of going to market, will hold a $3.5 billion valuation. Meanwhile, 81% of the companys shares will be owned by current shareholders, and both Branson and 23andMe Co-Founder and CEO Anne Wojcicki have invested $25 million each of their own money.
- The stock will trade on the New York Stock Exchange (NYSE) under the two-letter ticker symbol ME.
- Wojcicki has said that the funds raised through the SPAC process will be used to help the company expand into developing therapeutics.
- The company maintains a strategic working partnership with drug manufacturer GlaxoSmithKline (GSK) as they seek to expand their work in the therapeutic space.
A quick company history of 23andMe
23andMe was founded in 2006 by Linda Avey, Paul Cusenza, and Anne Wojcicki. The next year brought along with it a $3.9 million investment from powerhouse company Google.
At the time of the investment, Wojcicki was married to Google co-founder Sergey Brin, so this partnership isn’t a surprise. By 2009, both Avey and Cusenza had left the company, leaving Wojcicki as the sole remaining founder, and the organization’s de facto leader. She remains in her position as CEO, and will be the second female head of a company to bring their organization to market this year, after Bumbles Whitney Wolfe Herd recently led her organization to being publicly traded.
Related: What to know about the 2021 Bumble IPO
Recently, the company has turned to an interest in expanding into the lucrative therapeutics market, partnering with GSK in the process. GSK is a company that focuses on oncology, vaccines, HIV, infectious diseases, and more. In 2020, they announced the GSK partnerships first clinical trial for a drug hoping to improve cancer treatment outcomes.
A rundown of 23andMe fundraising
Over the course of the companys existence, 23andMe fundraising has helped raise just under $869 billion throughout 15 rounds of funding. Most recently in December, they raised $82.5 million in a Series F round of fundraising.
The single largest investor in the company is its partner in therapeutic offerings, GSK. Other notable investors include Sequoia Capital and NewView Capital. Sequoia is known for tons of investments, including the jumbo-sized DoorDash IPO in 2020.
Related: What to know about the 2020 DoorDash IPO
Additionally, the company received investments of $25 million from both Branson and Wojcicki as they continue to move closer to going public. This type of personal injection shows how much confidence the pair has in the company’s sustainability.
When the company does eventually hit the market, its expected that roughly 80% of the company’s ownership will continue to lie with current investors and shareholders.
Path to the 23andMe IPO
Richard Bransons SPAC, VG Acquisition Corp. (NYSE:VGAC), will be contributing roughly $500 million of hard cash to the newly acquired 23andMes books. This money comes from the following sources:
- Shares sold at $10 each for a total of $250 million raised
- $25 million from Wojcicki and $25 million from Branson
- $200 million from institutional investors
The starting share price of $10 is typical for any SPAC, and it’s what makes so many investors really like when stocks decide to go public in this way.
When the time comes for the two companies to merge, a shareholder vote will result from the shareholders of VGAC. In most cases, this vote is largely a formality, as the whole reason behind VGACs existence is to be used to acquire another company. Once this vote passes, VGAC will be delisted from the NYSE, the two companies will merge, and then the newly formed company will begin trading under the ticker symbol ME.
When is the 23andMe IPO date?
Currently, we don’t know the exact market debut date for 23andMe. But both companies involved in the merger have said that they expect the deal to be finalized sometime in Q2 of 2021. This gives retail investors a good period of time to work with while keeping their eyes on the market.
What investors should know before the 23andMe IPO date
23andMe is a pioneer in the DNA industry. As such, theyve essentially created their own markets as theyve continued to grow as a company.
Like with any other innovation, the discovery of new techniques and findings as a result of the companys progress has also brought on new rules and regulations set by government agencies and other regulatory bodies.
The Food and Drug Administration (FDA) is the governmental agency charged with oversight of consumer-facing drugs, medical products, and food products. Since 2010, the agency has considered genetic tests to be medical devices. As such, federal approval has been required in order to market these products.
To get around these regulations, 23andMe started searching for alternative locations to base their operations out of. They even considered an international move to Canada or Australia, among other countries. This decision was ultimately unneeded, as in 2015, the company received the ability to market their tests domestically again.
The year 2017 brought on more approvals from the FDA, granting 23andMe approval for ten new tests, including Parkinsons disease, celiac disease, and Gauchers disease. With these approvals, the company was able to add the ability to not only inform customers on their heritage and lineage, but also if they were at higher risk for contracting any of these diseases as a result of their DNA patterns.
These tests have supplied 23andMe a treasure trove of data on those who have used their products. Think the way Facebook can track your demographic information, buying habits, and the like. Except with 23andMe, theyve got their hands on much more personal informationyour literal DNA.
This DNA is worth some serious cash to the right buyer. Namely, any and every pharmaceutical company in the world would pay big money to get their hands on it. And for GSK, thats exactly what theyve done.
This information can give these pharmaceutical companies incredibly valuable insight as to what diseases and other conditions may be due to increase in prevalence down the road, and would give them the ability to develop therapeutic drugs in anticipation of this. By GSK forming a partnership with 23andMe, theyve put themselves in a great position to have first dibs on this data.
As for the other side of the coin, Richard Branson is no stranger to growing successful businesses. The Founder of Virgin Group, Branson has over 400 companies under his purview, including Virgin Hotels, Virgin Galactic, and Virgin Mobile. For those interested in seeing 23andMe grow, this is great. For those concerned about the implications that this merger will have on the security of their DNA, the news is slightly less exciting.
Bottom line
DNA security is an entirely new thing for many to be concerned about, and 23andMe is well aware that their new merger will present concerns to many, including a handful of government agencies. With that in mind, transitioning to focusing on producing therapeutics ison the surfacea smart move.
Its important to realize, however, that the entire reason 23andMe can secure partnerships like their one with GSK is because they own the data that no other company has access to. When a consumer sends back their test kit, they can elect to have it made available to scientific research. 23andMe says that roughly 80% of their customers choose to do this, granting the company the ability to use data from their DNA for the development of new drugs and products.
Merging with a multi-industry titan like Virgin will certainly present opportunities to 23andMe that wouldnt have been available to them before. By gaining access to Bransons massive portfolio of assets and connections (including Virgin Galactic, which trades under the ticker symbol “SPCE” on the NYSE), its likely that the company will be able to take large strides towards turning their therapeutic arm profitable sooner rather than later. With these opportunities will come a fair share of risks, which means that 23andMe will have to begin taking extra precautions to protect their consumers private information.
For those who are considering investing in 23andMe when it goes public later this year, it would be wise to take a holistic approach to answering the question, Why Richard Branson?
By researching Virgin Groups interests and holdings, as well as GSKs, itll become much easier to spot potential opportunities and threats well beyond the 23andMe IPO.