23andMe to go Public via VG Acquisition Corp. Merger

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23andMe has raised an additional $250 million in growth financing

Consumer genetic testing and research company 23andMe today announced it will go public via a merger with VG Acquisitions Corp., a special purpose acquisitions company (SPAC) formed by Richard Branson’s Virgin Group. Once the merger is completed, expected in the second quarter, the public-traded company will change its New York Stock Exchange ticker symbol from VGAC to ME.

“Of the hundreds of companies we reviewed for our SPAC, 23andMe stands head and shoulders above the rest,” said Sir Richard Branson, Virgin Group founder in a press release. “As an early investor, I have seen 23andMe develop into a company with enormous growth potential. Driven by Anne’s vision to empower consumers, and with our support, I’m excited to see 23andMe make a positive difference to many more people’s lives.”

Founded in 2006 by current CEO Anne Wojcicki, Linda Avey, and Paul Cusenza, the company catapulted to the top of the heap as a consumer genetics testing company over the ensuing decade. But the journey was not without its bumps, notably a warning letter the company received in 2013 from the FDA and a subsequent order by the agency that the company stop marketing its saliva collection kit and personal genome service (PGS).

According to Wojcicki, posting on the company’s blog at the time “This is new territory for both 23andMe and the FDA. This makes the regulatory process with the FDA important because the work we are doing with the agency will help lay the groundwork for what other companies in this new industry do in the future,” she wrote. “It will also provide important reassurance to the public that the process and science behind the service meet the rigorous standards required by those entrusted with the public’s safety.”

Since that time, the company has received FDA clearance for a number of its tests including one for carrier screening of Bloom Syndrome in early 2015, and in 2017 to test people for their risk of developing 10 other genetically driven diseases including Alzheimer’s disease, Parkinson’s disease, and celiac disease, among others.

The company has also spent the past five years diversifying from its consumer roots to include providing genetic data from its tests for its own drug development division, as well as in partnership with major pharmaceutical players—including a four-year collaboration with GSK to develop novel drug targets for therapies of progressive diseases.

According to 23andMe, more than 80% of its customers have provided consent to participate in medical research. Access to the valuable trove of data enables 23andMe to explore both genotypic and phenotypic data and to discover new genetic insights, with implications across health, therapeutics, and other areas. To date, the company has developed a pipeline of more than 30 therapeutic programs, including in oncology, respiratory, and cardiovascular diseases.

“As a fellow industry disruptor as well as an early investor in 23andMe, we are thrilled to partner with Sir Richard Branson and VG Acquisition Corp. as we approach the next phase of our business, which will create new opportunities to revolutionize personalized healthcare and medicine,” said Wojcicki in a statement announcing the merger. “We have always believed that healthcare needs to be driven by the consumer, and we have a huge opportunity to help personalize the entire experience at scale, allowing individuals to be more proactive about their health and wellness. Through a genetics-based approach, we fundamentally believe we can transform the continuum of healthcare.”

The transaction is expected to deliver up to $759 million of gross proceeds through the contribution of up to $509 million of cash held in VG Acquisition Corp’s trust account and a concurrent $250 million private placement (PIPE) of common stock, priced at $10.00 per share. Sir Richard Branson, Founder of the Virgin Group, and Anne Wojcicki, CEO and Co-Founder of 23andMe, are each investing $25 million in the PIPE and are joined by leading institutional investors, including funds managed by Fidelity Management & Research Company LLC, Altimeter Capital, Casdin Capital and Foresite Capital.

As part of the transaction, 23andMe’s existing equity holders will roll 100% of their equity into the combined company. Assuming no public shareholders of VG Acquisition Corp. exercise their redemption rights, 23andMe will be capitalized with up to $984 million in cash to fund operations and support new and existing growth initiatives.

The transaction, which has been unanimously approved by the Boards of Directors of each of 23andMe and VG Acquisition Corp., is subject to approval by VG Acquisition Corp.’s shareholders and other customary closing conditions.

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