23andMe's Bankruptcy Turn: A Genetic Gamble for Investors

The delisting of 23andMe from Nasdaq and its pivot toward SEC deregistration mark a pivotal moment for the once-celebrated biotech firm. Amid its Chapter 11 restructuring, the company's fate hinges on the $256 million sale of its core genetic data assets to Regeneron Pharmaceuticals. For investors, this is a high-stakes scenario where strategic risks and opportunities collide. Let's dissect whether this represents a distressed bargain or a looming liquidation trap.

The Delisting Dilemma: Strategic Retreat or Last Resort?

On June 6, 2025, 23andMe will voluntarily delist from Nasdaq after its stock was suspended in March. This move, followed by SEC deregistration via Form 15, is not merely procedural—it's a calculated step to reduce regulatory burdens and streamline its path to a Regeneron-led exit. Delisting removes the overhead of SEC filings and investor disclosures, but it also strips the company of public market liquidity. The stock now trades on the OTC Pink Market, where volumes are thin and volatility is high.

The decline from its 2023 peak underscores investor skepticism about its ability to survive. Yet, deregistration could be a blessing in disguise: without the compliance costs of being a public company, 23andMe can focus on executing its bankruptcy plan.

The Regeneron Deal: A Lifeline or a Discounted Exit?

The $256 million asset sale to Regeneron includes 23andMe's crown jewels: its Personal Genome Service (PGS), Total Health, and Research Services. Regeneron's interest lies in leveraging the 10+ million genetic data points in 23andMe's Biobank—a treasure trove for drug discovery and personalized medicine.

But the deal faces hurdles:
1. Privacy Scrutiny: A court-appointed Consumer Privacy Ombudsman must verify Regeneron's compliance with 23andMe's privacy policies by June 10. A negative report could delay or derail the sale.
2. Regulatory Approvals: Hart-Scott-Rodino antitrust clearance is still pending, and any objection from regulators could complicate the $256M valuation.
3. Liquidity Pressures: 23andMe's DIP financing of $35 million must last until the sale closes in Q3. If the Regeneron deal fails, the company's only option may be liquidation.

Valuing the Genetic Goldmine

The Biobank's value is hard to quantify but potentially immense. Regeneron's willingness to pay $256 million suggests it sees a multi-billion-dollar upside in pharmaceutical applications. For context, Illumina's acquisition of Grail for $8 billion in 2020 highlights the premium placed on genetic data. If Regeneron successfully monetizes this asset, 23andMe's sale could look like a bargain in hindsight.

Investor Playbook: Act Now—or Wait for a Bottom?

The clock is ticking. Three critical dates loom:
- June 10: Privacy Ombudsman's report.
- June 17: Bankruptcy court hearing to approve the sale.
- July 14: Deadline for creditors to file claims.

If the Regeneron deal clears these hurdles, 23andMe's stock could rally as uncertainty lifts. However, a rejection would likely trigger a freefall toward liquidation.

Current OTC Pink prices (circa May 2025) trade at a fraction of the company's 2023 valuation, implying investors already price in a high risk of failure. Yet, the sale's success would create an asymmetry: limited downside if the deal closes, but significant upside if Regeneron's integration unlocks the Biobank's potential.

The Bottom Line: A High-Reward, High-Risk Gamble

23andMe's bankruptcy is a test of both its genetic data's value and investors' risk appetite. The Regeneron deal represents a lifeline—but only if it survives regulatory and operational scrutiny. For contrarians, the current OTC valuation may understate the Biobank's long-term worth. For others, the risks of regulatory rejection or liquidation are too great.

Investors should act swiftly: buy now if you believe Regeneron's deal will proceed smoothly, or wait for further clarity after June 17. The window for a distressed bargain is closing—and so is the chance to own a piece of one of biotech's most compelling datasets.

Act by June 17—or miss the genetic revolution.