23andMe, the leading human genetics and biopharmaceutical company, announced its financial results for the third quarter of its fiscal year 2023, ending December 31, 2022. With multiple U.S. Food and Drug Administration (FDA) authorizations for over-the-counter genetic health risk reports, 23andMe is the only company to provide, without physician involvement, genetic cancer risk reports and medication insights based on genetics. Furthermore, 23andMe has created the world’s largest crowdsourced platform for genetic research, which it is using to pursue drug discovery programs across a range of diseases. This exciting news marks a major milestone for 23andMe as it continues to revolutionize the genetics industry.
23andMe had a successful quarter, with major progress made in both their consumer and therapeutics businesses. 23andMe received a new FDA clearance to provide additional pharmacogenetic information to customers and launched two new genetic health reports for 23andMe+ subscribers. The 23andMe Therapeutics group also made strides in their drug development efforts, announcing the expansion phase of their clinical trial for 23ME-00610, an immunotherapy antibody targeting CD200R1. This trial will test the antibody’s anticancer activity in specific tumor indications.
At the Society for Immunotherapy of Cancer (SITC) 37th Annual Meeting, 23andMe presented a trials-in-progress poster detailing the five expansion cohorts to be evaluated with 23ME-00610, which were specifically tailored to five different tumor indications. Following the meeting, 23andMe further refined their research to introduce separate neuroendocrine cancer and small cell lung cancer cohorts. This reflects their dedication to achieving breakthroughs in the field of cancer immunotherapy.
Recent Highlights
At the American Society of Human Genetics (ASHG) meeting, I presented seven scientific posters showcasing cutting-edge science in all areas of human genetics. It was an incredible experience to be part of such a dynamic forum, and to share my work with the world-leading experts in the field.
At the American Society of Hematology (ASH) annual meeting, we presented preliminary data from the largest and most diverse genetic study of sickle cell trait ever conducted. This groundbreaking research was conducted in collaboration with Johns Hopkins and the National Human Genome Research Institute (NHGRI), and promises to provide invaluable insights into this debilitating condition.
We have just received FDA clearance to provide interpretive drug information for simvastatin, a widely prescribed cholesterol medication used to effectively treat high cholesterol and triglyceride levels. This drug provides a safe and reliable solution to help individuals lower their cholesterol levels, allowing them to lead a healthier lifestyle.
This quarter, 23andMe+ members can access two new state-of-the-art health reports. Developed by 23andMe scientists, these reports are informed by data and insights from thousands of customers who consented to participate in our research. Using machine learning and a statistical model, the reports offer an estimation of a person’s likelihood of developing a specific condition based on their genetic markers, ethnicity, and birth sex. Whether you’re looking to stay ahead of your health or take charge of your well-being, these reports are here to help you live a healthier life.
Asthma can be a troubling condition, but with the right knowledge, sufferers can manage their symptoms and lead a high-quality life. With an understanding of the triggers and treatments available, those with asthma can create a personalized plan to reduce flare-ups and breathe easier. By taking the initiative to learn about their condition, those who struggle with asthma can make a positive difference in their lives.
Hashimoto’s disease is a condition that affects millions of people around the world. It is an autoimmune disorder that can cause a wide range of symptoms, from fatigue and depression to aching joints and weight gain. Unfortunately, medical research on this condition is still in its infancy, yet the number of sufferers continues to rise. As a result, it is important to understand what Hashimoto’s disease is, how it is diagnosed, and what treatments are available. This report will provide an overview of the condition, its symptoms, diagnosis, treatment options, and prognosis. By understanding Hashimoto’s disease, we can work together to help those affected by it and improve their quality of life.
People of Ashkenazi Jewish ancestry can now trace their family connections back to seven distinct genetic groups, each corresponding to a region of Eastern and Central Europe. With this new ancestry composition detail, individuals can explore their family histories and uncover their unique roots.
The Company recently launched an “at-the-market” offering program (ATM Program) that gives it the flexibility to sell up to $150 million of Class A common stock at its discretion. This innovative program provides the Company with a unique opportunity to strategically grow its cash reserves as well as strengthen its financial position.
23andMe’s third quarter results defied macro-economic headwinds, with solid revenue growth in the consumer business, and we’re pleased to report customer demand from holiday sales was strong. We’re also raising our full year financial guidance and are pleased with the improved PGS profit margins. With our current cash levels and the option of utilizing our ATM Program, we’re continuing to invest in our therapeutics programs as well as a new customer experience with our genetic health service and telemedicine platform Lemonaid Health.
FY2023 Third Quarter Financial Results
The third and nine month periods ending December 31, 2022 saw a substantial increase in revenue, with $67 million and $207 million respectively, compared to the same periods in the prior year at $57 million and $171 million, respectively. This marked an 18% and 21% increase respectively. The increase in Consumer Services revenue was due to the Lemonaid Acquisition, as well as an increase in subscription services and PGS revenue. Research Services revenue saw an increase due to the GSK collaboration being extended for a fifth year, as well as research contracts with third parties achieving certain non-recurring milestones.
Consumer Services, encompassing PGS, telehealth, and subscription services, drove the lion’s share of revenue during the three and nine months ended December 31, 2022 – accounting for around 80% of the total. Research Services, mainly thanks to the collaboration with GSK, represented the remaining 20%.
Operating expenses for the three and nine months ended December 31, 2022 experienced a noticeable uptick to $128 million and $349 million, respectively, compared to the prior year’s $124 million and $271 million. This was largely due to the addition of personnel-related expenses driven by inflation and growth in headcount, as well as a non-cash impairment charge for certain intangible assets and the addition of sales and marketing expenses from the previously acquired telehealth business.
For the three and nine months ended December 31, 2022, our net loss increased from $89 million and $148 million, respectively, to $92 million and $248 million, respectively, from the same periods in the prior year. This was largely due to increased operating expenses and a $3 million and $33 million benefit from changes in fair value of warrant liabilities for the three and nine-month period, respectively.
For the three and nine months ended December 31, 2022, Adjusted EBITDA deficit dropped significantly year-over-year. The three-month period saw a decrease of $21 million due to reduced advertising and brand-related spend for PGS marketing programs. Conversely, the nine-month period saw an increase of $2 million, primarily resulting from higher operating expenses.
Balance Sheet
At the end of 2022, 23andMe had $433 million in cash and cash equivalents, a decrease of $120 million from the start of the year. This marked a significant shift in the company’s financial status, as it had held $553 million in cash and cash equivalents at the beginning of 2022.
FY2023 Financial Guidance
23andMe is excited to announce that for the current fiscal year ending March 31, 2023, it is increasing its guidance for total revenue to between $290 and $300 million, along with a net loss between $325 and $335 million. Additionally, the Adjusted EBITDA deficit is projected to be between $170 and $180 million for the same period. This outlook includes the full-year impact of the consolidation of its acquired telehealth business into its consumer business, as well as the effects of inflation on certain costs.
About 23andMe
23andMe is pioneering the way to a healthier future through their genetics-driven consumer healthcare and therapeutics services. By using the power of genetics, they are offering people the opportunity to make informed decisions about their health, and enabling them to take control of their own wellbeing.