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Celmatix Sues 23andMe for $100M Alleging Breach of Contract

NEW YORK – Celmatix on Tuesday sued 23andMe for $100 million in New York State Supreme Court, accusing the consumer genomics firm of breach of agreement and of wilfully blocking its ability to raise capital.

Celmatix is focused on using genomics and big data to improve fertility treatments. In its complaint, Celmatix said it approached 23andMe proposing to pay for access to its customers' data with which it would develop diagnostics that could be marketed more broadly than its Fertilome test, which was limited to a population of women with family history, existing risk factors, or symptoms of a reproductive condition or infertility.

"This deal held out the promise of advancing both parties’ commercial interests simultaneously: 23andMe had a vast cache of genetic data, but lacked the expertise to analyze it, while Celmatix had the relevant expertise, but lacked 23andMe’s vast population-scale dataset," Celmatix states in its complaint.

The two firms entered into a partnership in 2015 which Celmatix says granted it exclusive rights to 23andMe data. Subsequently, the firms also teamed up to launch a fertility research community with the goal of collecting genetic and other data from women trying to conceive, or who have recently conceived, and assess how these different factors relate to fertility outcomes.

According to Celmatix, more than 4,000 women participated and shared their information for the project. "However, because 23andMe breached its contractual obligations, Celmatix was unable to bring the intended new products to the market," the company said in a statement. The firm added that the results of the study "are in limbo" because of this dispute and cannot be used by Celmatix as it should have been allowed to under its exclusive agreement with 23andMe.  

Celmatix claims that it has spent $10 million while trying to meet its contractual obligations to 23andMe, in the form of direct payments to the consumer genomics firm and additional investments and expenditures. However, 23andMe wanted out of the exclusive arrangement, Celmatix claims.

In the complaint, Celmatix alleges that during a 2017 meeting of 23andMe's board of directors, 23andMe CEO Anne Wojcicki "was furious" when reminded that Celmatix had exclusivity rights under their agreement, and that this meant 23andMe couldn't pursue partnerships with other companies in the fertility and infertility space. Wojcicki allegedly told her team to make this problem "go away."

A spokesperson for 23andMe stated that the company doesn't comment on pending litigation. Celmatix CEO Piraye Yurttas Beim stated that although she would have preferred to avoid litigation, she has a responsibility to the company's investors and to all the women who trusted 23andMe with their personal data within the fertility study.

In its complaint, Celmatix also accuses 23andMe of "malicious interference with [its] relationship with a prominent investment bank" which the firm had retained to raise $50 million. Celmatix alleges that as a result of 23andMe’s "wrongful, pernicious conduct" it has incurred more than $100 million in damages. The firm is specifically seeking relief from 23andMe for unjustified breaches of contract, for bad faith conduct and refusal to meet its contractual obligations, and for tortious interference with its efforts to raise additional capital.

To date, Celmatix has raised more than $80 million in capital. 23andMe has raised nearly $800 million by one estimate, is valued at $2.5 billion, and claims to have more than 10 million customers.

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