A blank check company backed by Richard Branson’s Virgin Group is in talks to merge with 23andMe, in a deal that would allow the genetic testing startup to access public markets.
The merger with Sir Richard’s special-purpose acquisition company VG Acquisition could value 23andMe at around $ 4 billion, according to two people briefed on the talks. A deal could be done in a matter of weeks, people said, although talks could still collapse.
23andMe is said to be the latest high-profile company to go public via a Spac, as euphoria in U.S. markets has encouraged celebrities, politicians and traders to sponsor blank check vehicles.
Sir Richard has experience with the Spac agreement negotiation process after one of its companies, Virgin Galactic, went public in a deal with Social Capital Hedosophia, the vehicle set up by former Facebook executive Chamath Palihapitiya. The space tourism company is among the most successful Spac deals to date, with its shares trading at around $ 50.
VG Acquisition raised $ 480 million in October to acquire and publicly list a facing the consumer company that would develop the Virgin brand in the United States. Spac shares are trading at close to $ 14.
23andMe pioneer genetic testing directly intended for consumers, but has recently turned its attention to the possibility of using its genetic research database – the largest in the world – for drug discovery. People who have taken the tests often choose to share their data for research and to do evaluations so that their genes can be compared to their health.
Last year, the company began clinical trials of an anticancer drug as part of its Partnership with British drug maker GSK. It also authorized its first drug candidate to Spanish dermatology manufacturer Almirall in early 2020.
23andMe has a history of battles with U.S. regulators, who were initially concerned with allowing patients access to information they might not understand. He then pivoted to focus on genealogy, before reverting to genotyping for certain diseases, such as assessing whether people have genes that increase breast cancer risk.
Recent privacy concerns – especially after online DNA databases have been used for long unsolved crimes – appear to have held back sales of mainstream genetic testing kits. Last year, 23andMe laid off 100 employees, or around 14% of its staff.
Sequoia Capital, the venture capital group, is one of 23andMe’s largest investors, which has would have valued at over $ 2.5 billion by private donors.
23andMe and a representative for Sir Richard declined to comment. Bloomberg first reported on the discussions.