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23andMe Offers Few Details of Genomic Health Service as Fiscal Q4 Revenues Dip 8 Percent


NEW YORK – 23andMe appears to be slowing the rollout of its planned genomic health service and related move into primary care.

Following its acquisition of telehealth and telepharmacy services company Lemonaid Health in 2021, 23andMe promised earlier this year that it would provide an update on the Lemonaid integration by mid-2023.

The company made no references to a "genomic health service" in its Form 10-K filed Thursday with the US Securities and Exchange Commission and provided few details on progress of its rollout on a conference call to discuss its fiscal year 2023 fourth quarter financial results.

During the call, CEO and Cofounder Anne Wojcicki spoke in generalities about progress integrating the Lemonaid platform with its legacy genotyping services.

"We're excited about the ongoing successful integration as we continue our journey of transforming the traditional primary care experience and making personalized healthcare a reality," Wojcicki said.

She added that the firm is working on integrating Lemonaid into the 23andMe app, without offering specifics.

She also said that there would be "more rollouts" in the second half of the calendar year regarding online physician consultations following genetic tests as well as regarding pharmacogenomics. Both of those areas rely on the Lemonaid Health infrastructure.

Interim CFO Joseph Selsavage said he did not expect any material contribution to revenues in fiscal 2024 from therapeutics or the genomic health service. The former is the result of the July expiration of a five-year exclusive partnership with drugmaker GSK.

Fiscal 2023 fourth quarter revenues for the South San Francisco, California-based consumer genomics and biopharma firm declined 8 percent to $92.4 million from $100.6 million in the same period a year earlier.

Approximately 88 percent of the Q4 total came from consumer services, including genetic testing, telehealth, and subscription services, with the balance attributed to research services, mostly related to the GSK partnership that is winding down.

For the three months ended March 31, 23andMe reported a net loss of $64.1 million, or $.14 per share, compared to a 2022 fiscal Q4 net loss of $69.5 million, or $.16 per share. 

R&D expenses totaled $60.7 million in fiscal Q4, up 21 percent from $50.3 million a year earlier. The company's SG&A expenses fell 27 percent in fiscal Q4 to $48.6 million from $66.2 million the previous year.

Selsavage attributed the lower quarterly operating expenses to "timing differences in seasonal marketing campaigns" as well as a reduced need to offer promotional pricing for 23andMe products. He also noted that the company made a one-time payment in Q4 2022 to settle litigation with Celmatix.

For the full fiscal year, revenues increased 10 percent to $299.5 million from $271.9 million in FY2022, driven by "an increase in consumer services revenue attributable to a full year of telehealth services revenue from the Lemonaid Health acquisition, whereas the prior year included only five months, and an increase in subscription services revenue, partially offset by a decrease in [personal genome service] kit revenue," the firm said.

23andMe has genotyped about 14 million customers in its history, representing growth of 11 percent year over year.

Its 23andMe+ premium service now has more than 640,000 members, a number that grew 51 percent in the recently completed fiscal year. The company raised annual subscription rates to $69 this month "to account for the additional benefits we provide members," Wojcicki said. 

The firm added three new reports to 23andMe+ last quarter, identifying risk of preeclampsia, attention deficit hyperactivity disorder, and HOXB13-related hereditary prostate cancer. In fiscal year 2023, it added a total of 11 new reports for premium subscribers.

At the American Association for Cancer Research (AACR) annual meeting in April, 23andMe reported its first clinical data from a Phase I/IIa study of its 23ME-00610 monoclonal antibody targeting CD200R1 in patients with advanced solid tumors. Wojcicki said that the data showed the compound "had an acceptable safety and tolerability profile with favorable pharmacokinetics and peripheral CD200R1 saturation in patients with advanced solid malignancies."

She said that no decisions have been made on which GSK programs to continue. The firm is looking for new collaborations to replace the expiring contract, and in March announced a joint lipoprotein research program with Novartis.

Kenneth Hillan, head of therapeutics, said that new therapeutic partnerships are a "top priority" for 23andMe.

Net loss for the year widened to $311.7 million, or $.69 per share, compared to a net loss of $217.5 million, or $.60 per share, a year earlier. 23andMe calculated fiscal 2023 loss on the basis of 451.5 million weighted-average shares, versus 361.5 million in fiscal 2022.

The firm had expected full-year revenues of $290 million to $300 million and a net loss of $325 million to $335 million.

R&D expenses for the fiscal year totaled $222.6 million, up 18 percent from $189.4 million in FY2022. Annual SG&A costs rose 19 percent to $236.0 million from $197.7 million a year earlier.

The firm attributed the higher 2023 expenses to increased personnel costs, including salaries and related taxes, due to inflation as well as growth in headcount.

For fiscal year 2024, 23andMe expects revenues of $255 million to $280 million and a net loss of $340 million to $365 million. Selsavage called this a "conservative approach" and said the firm would be prioritizing margin growth and slowing cash burn in FY2024.

As of March 31, 23andMe had $386.8 million in cash and equivalents plus $1.4 million in restricted cash.

When asked whether 23andMe would need to raise more capital in the foreseeable future, Selsavage pointed to the company's "strong cash position." He also said the firm would be "opportunistic" regarding any future investment options.