A small genetic testing startup backed by Peter Thiel’s Founders Fund and Reddit co-founder Alexis Ohanian’s 776 Fund is “considering the possibility of making a public offer to acquire 23andMe, contingent on financing.”
Nucleus Genomics, based in New York, has not submitted a formal offer, it said Friday on Substack.
In a phone interview with Endpoints News on Friday afternoon, CEO Kian Sadeghi said Nucleus wants to emphasize the security of customer data, a point of concern with 23andMe after customer data were hacked last year. The company reached a $30 million settlement earlier this month.
Kian SadeghiBringing the two companies together would combine Nucleus’ “superior tech” and 23andMe’s “superior reach,” Sadeghi said.
23andMe didn’t immediately respond to a request for comment.
Nucleus has raised about $20 million since its founding in 2021, according to Sadeghi. He declined to comment on whether he has engaged in talks with 23andMe and said he will spend the “next several days” speaking with new and prospective investors, noting he’s heard from multiple in the hours since publishing the Substack.
The disclosure comes three days after all seven independent board members of 23andMe resigned over disagreements with the company’s CEO Anne Wojcicki, who is attempting to take the company private. The board rejected her initial proposal earlier this summer. In a letter made public on Tuesday evening, they said they did not want to go through a “protracted” battle with Wojcicki after not making any “notable progress over the last five months” of talks.
Wojcicki said last week in an SEC filing that she would be open to third-party proposals to take the company private. In a memo to employees following the board resignations, Wojcicki reiterated her stance that a private operation would be the preferred route forward for 23andMe. She also said the company would “immediately begin identifying independent directors to join the board.”
“I continue to believe that we will be better positioned to achieve our mission and goals outside of the short-term pressures of the public markets and that taking 23andMe private will be the best opportunity for long term success,” Wojcicki said in the memo, which is included in an SEC filing.
If Nucleus were to make a formal offer, Sadeghi declined to say whether it would be higher than the 40-cent-per-share $ME proposal that Wojcicki submitted earlier this summer. That proposal valued the company at about $230 million, or about 6% of the $3.5 billion valuation of 23andMe when it went public in 2021.
23andMe has seen its value crater since going public as it struggled to woo investors over its dual identity as a genetic testing operation and a therapeutics developer. The company shelved its discovery work this summer, though it has two clinical-stage assets, for which it presented more data last weekend at the European Society for Medical Oncology’s annual meeting.
Nucleus’ big claims
On its website, Nucleus directly compares itself to 23andMe, saying it gives you “dramatically better health insights by sequencing 1,000x more DNA than 23andMe.” The VC-backed company sells a whole-genome test kit for $499 and a membership for $45 per year.
Sadeghi did not make any mention of 23andMe’s drug discovery or drug development work on Substack. In the interview, he also declined to comment on whether Nucleus would continue 23andMe’s therapeutics work, if it were to ink a deal.
In addition to Founders Fund and 776 Fund, Nucleus’ investors also include Quiet Capital, Thiel Foundation, Forward CEO Adrian Aoun, Bausch + Lomb CEO Brent Saunders and Arc Institute co-founder Patrick Hsu, among others.
Ohanian, the 776 Fund founder and husband of Serena Williams, quoted Sadeghi’s post on X with the response, “Very interesting…”