23andMe is shutting down its internal drug discovery group and getting into prescription weight loss drugs in an effort to turn the struggling consumer genetic testing company around.
The company said Thursday that it ceased operations of its therapeutics discovery group, effective Aug. 9, and terminated 30 employees.
It also plans to launch a membership program through its telehealth platform Lemonaid that will offer customers brand-name and compounded GLP-1 weight loss medications — a move that’s been lucrative for other digital health companies. As part of that initiative, the company said it’s launching a genetic research study to determine what drives the efficacy and potential side effects related to GLP-1s.
“The addition of weight loss management for our customers fits directly within our strategy of delivering services to improve an individual’s health through preventive actions,” 23andMe CEO Anne Wojcicki said on a call with investors Thursday to discuss the company’s earnings in the first quarter of the 2025 fiscal year.
The moves come as Wojcicki seeks to take 23andMe private in a transaction that would value the company at about $230 million, a far cry from its $3.5 billion valuation when it went public in 2021. Last week, the company’s board of directors rejected her pitch, but left the door open for a deal. On the earnings call, executives declined to answer questions about the plans to take the company private.
23andMe, founded by Wojcicki in 2006, has struggled with its dual business model of selling direct-to-consumer DNA testing kits and using that data to develop drugs. The company’s revenue dropped 34% to $40.4 million compared with the same first-quarter period last year, driven by lower sales of testing kits and fewer telehealth visits, and the end of an exclusive research partnership with GSK in 2023. Its net loss was $69.4 million, compared with $104.6 million a year ago.
Wojcicki said Thursday that winding down the therapeutics discovery group won’t affect the development of 23andMe’s two clinical programs, which are cancer drugs 23ME-00610 and 23ME-01473. The company will also continue to look for ways to grow its immuno-oncology portfolio, she said.
“It is an area we’ve been pretty committed to saying what we are going to fund, and we’re committed to funding these now through the Phase 2 and the Phase 1, and continuing to look at opportunities for us to fund these programs and potentially grow it,” she said.
It also won’t affect 23andMe’s ability to collaborate with other companies leveraging its data for discovery, she said.
With its share price hovering at about $0.37, 23andMe $ME is in danger of being delisted from the Nasdaq. CFO Joe Selsavage said Thursday that the company received an extension to become compliant by November 4 and is seeking shareholder approval for a reverse stock split.
Editor’s note: This story has been updated to correct that 23andMe is shutting down its drug discovery group and not drug development.