On Thursday, consumer genetic testing company 23andMe announced it would merge with VG Acquisition Corp., a special purpose acquisition corporation (SPAC) under the umbrella of Richard Branson’s Virgin Group.
Virgin Group is a corporate behemoth that spans continents and industrial sectors as diverse as healthcare, travel, real estate, and telecoms. The merger deal values the company’s outstanding shares at $3.5 billion, according to a press release, and will leave it with a projected $900 million in cash to spend on operations and expansion, as well as allowing it to go public. SPACs are corporations that are spun up specifically to merge with or acquire a privately-held company and take them public, and after the merger, VG Acquisition Corp.’s stock ticker will change to “ME.”
An investor presentation viewed by Motherboard fleshes out Virgin’s “investment thesis” for 23andMe as well future targets and projects. The slide presentation notes that 23andMe is “disrupting the healthcare experience” and mentions its “vast proprietary dataset” of DNA that will allow it to “unlock revenue streams across digital health, therapeutics, and more.” The company estimates it has nearly 11 million “genotyped customers,” well over 4 billion “phenotypic data points,” developing 30 therapeutic programs.
The presentation also takes note of 23andMe’s “ancestry service” (whose accuracy has been called into question) and its “personalized genetic insights” that look for specific genes that might increase your risk factor for a disease. Some of those tests have also been accused of giving customers a false sense of security.
These slides make clear that 23andMe’s core value proposition as a company is to collect as much genetic information as is possible, and to then analyze and sell that data in some fashion, whether it be back to users as fun facts or health information via subscription services, to big pharma, or indeed to use it as a play for, say, a merger with a Virgin company. This should be a reminder that 23andMe is a big data company masquerading as a genetics company. 23andMe regularly insists this data is de-identified and shared only in aggregate to “minimize” the risk of re-identification.
Even if 23andMe and its database are now under the Virgin umbrella, it’s not clear if Virgin will actually make use of 23andMe’s data trove in any of its many diverse operations. It’s worth noting, though, that in 2018, the company received a $300 million investment from GlaxoSmithKline and gave the pharmaceutical giant access to its DNA data to fuel drug discovery in a deal that set off privacy klaxons.
Virgin Group spokespeople were not immediately available to comment.
This is not the first time that a genetics company, and its database, have ended up in unexpected hands. Last year, private equity firm Blackstone purchased Ancestry from a group of other firms for $4.7 billion; at the time Blackstone said it will not have access to people’s genetic data.
Regardless, the slides makes clear that 23andMe’s gambit is collecting as much genetic information as is possible, and then selling that data in some fashion, whether it be back to users as fun facts or health information via subscription services, to big pharma, to scientists, etc, which should be a reminder that 23andMe is a big data company masquerading as a genetics company. 23andMe regularly insists this data is anonymized before it is shared.
All in all, 23andMe’s merger with an SPAC under the Virgin umbrella is yet another reminder that once you hand over your DNA to a company, you never know in whose hands it might end up.
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