23andMe Holding Co. announced on Monday that it will be reducing its workforce by approximately 40%, or 200 employees, as part of a restructuring initiative. Additionally, the company will halt all further development of its therapies. This move, though significant, is expected to result in annual savings of $35 million, which will help offset the one-time costs of about $12 million for severance and transition-related expenses.
This major strategic shift effectively transforms 23andMe from a high-risk/high-reward biotech play into a more stable but lower-growth consumer genetics business. The company’s therapeutic programs—including 23ME-00610, with CD200R checkpoint inhibition, and 23ME-01473, with novel NK cell activation mechanisms—had shown early promise, but the long, expensive process of drug development proved unsustainable for the money-losing firm. However, the company’s focus on its consumer genetics business, which has been its core strength, provides a promising future direction. The company is exploring strategic alternatives for the in-development assets, though fire-sale conditions may limit potential returns.
The latest cuts are the second this year at the firm, which saw its shares plummet following a costly data breach last year when hackers stole ancestry and personal information from its 6.9 million customers. The company lost about $1 million in onetime expenses related to the breach last year as it was battling to establish a legal foothold in Europe.
The stock is down more than 75% this year. However, the company is taking significant steps to lower costs and improve its financial standing. Other big tech companies have been cutting jobs recently, including US logistics startup Flexport, which cut 2% of its staff this week. The company was forced to reduce its workforce as it reorganized its fulfillment center operations, the first of several moves it has taken to lower costs. Also this week, Okta announced it will be laying off about 500 positions, mainly from its professional services team. The Silicon Valley-based software maker seeks to slash costs amid a slowing global economy and a shift to subscription-based services.
