The stock of DNA testing company 23andMe (ME) dropped 59% Monday after filing for federal bankruptcy protection and the exit of its CEO, a dramatic collapse for a biotech company that once dazzled Silicon Valley and attracted 15 million consumers.

23andMe filed for reorganization under Chapter 11 of the US Bankruptcy Code after it failed to find a buyer. The company announced in January that it would seek a sale of its assets.

Its petition seeks court authorization to pursue a structured sale of its assets through an auction.

The 23andMe board rejected a nonbinding acquisition offer from co-founder and CEO Anne Wojcicki, who stepped down on Friday. 

Wojcicki has been trying to take the company private since April. 

ASSOCIATED PRESS

In September, all of 23andMe's independent board members resigned, citing differences with Wojcicki concerning the company's direction.

Wojcicki posted on X Monday that she was disappointed the board rejected her bid but intended to continue to pursue an acquisition.

"I have resigned as CEO of the company so I can be in the best position to pursue the company as an independent bidder," Wojcicki wrote.

23andMe made its public debut with an initial public offering in 2006.

It has since struggled with litigation, including a data privacy breach in 2023 that raised concerns that hackers tapped into customers' genetic information.

A consumer class action lawsuit followed, and the company settled with complaining customers for $30 million.

The UK and Canada also launched investigations into 23andMe after the 2023 breach.

In its early days, 23andMe was ordered by the FDA to immediately discontinue marketing its widely publicized cheek swab tests after making unsubstantiated claims that the company could identify risk levels for a number of diseases.

Justin Sullivan via Getty Images

California Attorney General Rob Bonta warned 23andMe's California customers on Friday that they are legally entitled to scrub their genetic data from the company's systems, including their DNA, identity, and biological samples — saliva test samples submitted to the company.

"Due to the trove of sensitive consumer data 23andMe has amassed ... Californians who want to invoke these rights can do so by going to 23andMe's website," the attorney general's office said in a statement that outlines the steps consumers can take.

"Given 23andMe's reported financial distress, I remind Californians to consider invoking their rights and directing 23andMe to delete their data and destroy any samples of genetic material held by the company," Bonta said.

23andMe filed its voluntary petition for reorganization in the bankruptcy court for the Eastern District of Missouri.

The filing reported $277 million in assets as of the end of 2024 and debts of $215 million.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance