By Rolfe Winkler

All seven independent directors of DNA-testing company 23andMe resigned Tuesday, following a protracted negotiation with founder and Chief Executive Anne Wojcicki over her plan to take the company private.

It is the latest challenge for 23andMe, which has struggled to find a profitable business model. The stock price fell to $0.30 per share after hours on Tuesday. At that price the company is worth less than the cash on its balance sheet.

In a letter addressed to Wojcicki, the directors wrote that "after months of work, we have yet to receive from you a fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders."

It is very rare for a publicly traded company to see so many directors resign simultaneously. The board members wrote that they differ with Wojcicki on the "strategic direction for the company" and because of her voting power, it was best that they resign.

Wojcicki controls 49% of 23andMe votes, giving her a level of control that blocked board members from shopping the company to other potential bidders. She is the only remaining board member after the resignations.

"I am surprised and disappointed by the decision of the directors to resign," Wojcicki wrote in a late Tuesday memo to her employees. She wrote that taking 23andMe private, "outside of the short term pressures of the public markets," is still the best plan for the company and said she would find new independent directors.

23andMe has never made a profit and is burning cash so quickly it could run out next year. Customers only need to take its DNA test once, and Wojcicki's plan to sell subscriptions has foundered.

Another strategy to use its DNA database to develop drugs has also been a money loser.

In April, Wojcicki announced her intention to acquire all 23andMe shares she doesn't own, saying that she wouldn't support a bid by another buyer. In late July she proposed a price of $0.40 per share, but directors wrote in a letter a few days later that they were disappointed because it offered no share-price premium and lacked committed financing.

The directors threatened to engage a consultant to find a sustainable business model if she didn't revise her offer quickly.

Days later Wojcicki's sister Susan Wojcicki, the former chief executive of YouTube, died suddenly, delaying any action from the board.

Last month 23andMe said it would shutter its drug-development group, though it is continuing development of two drug candidates in clinical trials and hopes to develop other drugs with pharmaceutical company partners in the future. Its latest strategy: joining the rush of telehealth companies prescribing GLP-1 weight-loss drugs.

Write to Rolfe Winkler at Rolfe.Winkler@wsj.com

(END) Dow Jones Newswires

September 18, 2024 01:29 ET (05:29 GMT)

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