The battle over 23andMe’s future has been ignited by the resignation of the entire firm’s unbiased administrators over disagreements with co-founder and CEO Anne Wojcicki. Wojcicki needs to retain management of the corporate and take it non-public, however has not but submitted a completely funded proposal to take action.

The layoffs introduced Tuesday go away Wojcicki because the genetic testing firm’s sole board member. In the meantime, the clock is ticking as deadlines loom for 23andMe to return to compliance to stay listed as a public firm.

When 23andMe went public by way of a SPAC merger in 2021, its $10-a-share inventory shortly rose greater than 20%. The corporate hasn’t seen such highs since. 23andMe is combating its imaginative and prescient as an organization. The corporate’s major income stays providing genetic testing providers to customers. A a lot smaller a part of the corporate’s enterprise is permitting pharmaceutical corporations to make use of 23andMe’s anonymized genetic knowledge to assist in drug growth.

23andMe has by no means made a revenue, and gross sales have fallen. Its inventory value has fallen accordingly. Final November, the Nasdaq warned 23andMe that it was prone to shedding its itemizing necessities as a result of its inventory value had fallen under a $1-per-share threshold.

Wojcicki’s possession stake in 23andMe is greater than 20%. However due to a dual-class construction through which some shares have extra voting energy, Wojcicki’s mixed holdings give her 49% of the voting energy of the corporate’s whole excellent shares. In April, 23andMe introduced that Wojcicki was contemplating a plan to amass the shares she doesn’t already personal and take the corporate non-public. In response to a regulatory submitting, she informed a board committee that she needs to retain management of the corporate and is unwilling to help an alternate transaction.

23andMe’s board of administrators fashioned a particular committee of unbiased administrators charged with evaluating strategic options for the corporate that may maximize shareholder worth — as is their job. This committee would evaluation future proposals, together with Wojcicki’s. Her supply got here in late July: 40 cents per share for the shares she doesn’t personal. The board’s letter of response famous that Wojcicki’s proposed value supplied no premium to shareholders and that she didn’t have dedicated financing. The board rejected the supply as “insufficient and never in the very best pursuits of non-affiliated shareholders.”

The letter went on to ask Wojcicki to rescind her beforehand acknowledged intention to oppose an alternate transaction in order that the board can totally consider potential third-party curiosity. However the particular committee additionally acknowledged that Wojcicki's financing sources could require further time for due diligence. The committee's Aug. 2 response gave her “a restricted quantity of further time” to submit a revised proposal with totally dedicated financing. Within the letter despatched to Wojcicki and made public on Tuesday, the unbiased board members resigned, noting that Wojcicki had did not submit a completely funded proposal.

“The dearth of serious progress over the previous 5 months leads us to consider that no such proposal is forthcoming,” the letter mentioned. “The Particular Committee is due to this fact not ready to think about additional extensions, and the Council agrees with the choice of the Particular Committee.”

The board members mentioned that whereas they consider within the personalised well being and wellness choices Wojcicki has formulated, they and the board differ on the corporate's strategic path. Due to that distinction and Wojcicki's concentrated voting energy, the board mentioned it’s in the very best pursuits of 23andMe shareholders for the board members to step down “moderately than have a chronic and distracting disagreement with you in regards to the path of the corporate.”

In an e mail despatched to workers and included in a regulatory submitting Wednesday, Wojcicki mentioned she was shocked and disillusioned by the board’s resignations however that she stays dedicated to taking 23andMe non-public. She added that the corporate will instantly start figuring out unbiased administrators to hitch the board.

“I proceed to consider that we’ll be higher positioned to realize our mission and objectives outdoors of the short-term pressures of the general public markets and that privatizing 23andMe will present the very best alternative for long-term success,” she mentioned within the e mail.

The November 2023 Nasdaq discover of the inventory value deficiency gave 23andMe 180 days to return into compliance. The corporate was unable to take action. In Could, Nasdaq granted an extension till November 4.

The mass resignations of the board of administrators prompted one other delisting discover from Nasdaq for numerous rule violations. One of many itemizing guidelines requires {that a} majority of an organization’s board of administrators be made up of unbiased administrators. 23andMe can be in violation of guidelines governing audit and compensation committees, every of which have to be made up of unbiased administrators. In a regulatory submitting Wednesday, 23andMe mentioned the Nasdaq letter states that the corporate has till Oct. 3 to submit a plan to return into compliance. If Nasdaq accepts that plan, it might give 23andMe as much as 180 days to offer proof of compliance.

Within the meantime, 23andMe inventory will proceed to commerce on the Nasdaq. It closed at 34 cents on Wednesday.

Photograph: baona, Getty Photos