23andMe went public Thursday through a merger with Richard Branson's blank check company and raised nearly $600 million.
The deal values the personalized medicine and consumer genetic testing company at $3.5 billion.
23andMe, which is trading under the ticker symbol "ME," opened at $11.13 per share Thursday, rising 20% to a peak of more than $13 as of midday. Shares were up 19% on Friday.
The company announced in February plans to go public via a merger with VG Acquisition Corp., a special purpose acquisition company founded by billionaire Richard Branson. It's the latest in a growing list of companies that have gone public through SPAC mergers.
23andMe reported that it raised approximately $592 million in gross proceeds to fuel growth and expansion in the company’s consumer health and therapeutics businesses. Capital from the transaction will also be used to invest in the company's genetic and phenotypic database to help accelerate personalized healthcare at scale.
“As one of the earliest investors in 23andMe, I’ve long believed in its vision to transform the future of healthcare,” said Branson, who is also the founder of Virgin Group. “I’ve seen first-hand the transformative impact 23andMe has in paving the way for many more people to be proactive about their health and wellbeing. There are huge growth opportunities ahead, and with Anne and the rest of the incredible management team at the helm, I’m confident they will continue to innovate and disrupt the industry, creating a lasting impact on many people’s lives. We look forward to continuing our partnership as 23andMe begins life as a public company.”
RELATED: 23andMe going public at $3.5B via merger with Branson's blank check company
Founded by Anne Wojcicki, 23andMe launched in 2006 and sells direct-to-consumer genetic testing kits that people can use to find out more about their own DNA and what it says about their potential health issues and ancestry. The company reports that 11 million people have used its genetic testing services.
But sales have since slowed, and executives have attributed the slowdown to a lack of repeat customers in the space and concerns about DNA privacy risks.
Company executives have signaled that the company was shifting away from ancestry to focus on the health market.
In recent years, 23andMe has expanded efforts to turn genetic data from its more than 10 million customers into therapies. It struck a deal to collaborate on drug development with GlaxoSmithKline, which took a $300 million stake in the company in 2018.
23andMe is also developing drug candidates on its own. The company says it has a broad pipeline of more than 30 therapeutic programs spanning oncology as well as respiratory and cardiovascular diseases.
RELATED: Has home DNA testing hit its high-water mark? 23andMe to lay off 100 as sales turn: CNBC
According to its most recent financial report, 23andMe expects to make significant investments in continued efforts to develop new therapies as part of its therapeutics business but warned investors it's a risky move.
"Drug development is expensive, takes years to complete, and can have uncertain outcomes. 23andMe expects to incur significant expenses to advance 23andMe’s therapeutic development efforts, which may be unsuccessful," the company said in the report.
The company reported annual revenue for the fiscal year ending March 31, 2020, of $306 million, down 31% year over year from $441 million. The company projects 2020 revenue to decline by around 20%, coming in between $240 million and $247 million.
The company lost $251 million in 2019, a loss 36% worse than in the previous year.
As of Dec. 31, 2020, and March 31, 2020, 23andMe had an accumulated deficit of $910 million and $794 million, respectively.
23andMe said investors can expect the company "to continue to incur significant expenses and operating losses for the foreseeable future" as it continues to expand therapeutic research and development efforts and works to develop drugs with collaborators or on its own, according to the financial filing.
Citi served as lead financial adviser, capital markets adviser and placement agent to 23andMe in the deal.