Quinn Emanuel Secures an Unprecedented Win for Anne Wojcicki and TTAM Research Institute in 23andMe Bankruptcy Auction

Quinn Emanuel recently secured a major win for TTAM Research Institute and its founder Anne Wojcicki with TTAM’s successful bid to acquire the assets of 23andMe, Inc., the direct-to-consumer genetic testing and research company that Ms. Wojcicki co-founded in 2006. This result demanded an innovative strategy -- reopen a closed auction and then to overcome dozens of sale objections, including those from nearly all fifty states presenting novel legal issues regarding the transfer of genetic data and consumer privacy protections.  This remarkable outcome represents not just a legal triumph for TTAM, but also a pivotal moment in safeguarding the future of genetic research, which TTAM will continue to pursue alongside its commitment to protecting consumer privacy rights.

The stakes could not have been higher: 23andMe (the Debtor) was auctioning off the world’s largest database of genetic material, containing information from millions of consumers who had entrusted their most personal biological data to the company Ms. Wojcicki had co-founded. With this win, Quinn Emanuel, alongside co-counsel Skadden, Arps, Slate, Meagher & Flom LLP, ensured that the world’s largest database of genetic material will find its new home with TTAM, a nonprofit public benefit corporation spearheaded by the same visionary that co-founded and led 23andMe for nearly two decades and driven by its unwavering goal of democratizing access to genetic data for individuals and researchers. 

Reopening the Closed Auction

Committed to reacquiring the Debtor’s assets (the genetic data that serves as an incomparable platform for groundbreaking genetic research), Ms. Wojcicki participated in a complex bankruptcy auction in the Eastern District of Missouri before Judge Brian C. Walsh through her nonprofit research institute TTAM. The auction itself was unprecedented, as the asset at stake was the largest dataset of genetic material in the world built over nearly two decades with a direct-to-consumer model.  The sale thus had the potential to implicate not just the millions of 23andMe customers, but also the rest of the world, which is poised to benefit from the groundbreaking research enabled by researchers’ access to the dataset. But when Quinn Emanuel entered, Ms. Wojcicki had seemingly lost the final round of the Debtor’s auction to pharmaceutical giant Regeneron Pharmaceuticals, Inc. 

Quinn Emanuel quickly disrupted that status quo, and secured the opportunity to reopen the bidding—without imposing a significant delay on the sale process or requiring lengthy discovery into the Debtor’s auction process. To do so, Quinn Emanuel highlighted the unfairness of the Debtor’s bidding process and the resulting failure to maximize value for stakeholders. Indeed, TTAM made clear that its final offer would far exceed the supposedly winning bid from Regeneron.  After a hearing before the court, Quinn Emanuel helped TTAM secure a final bidding round that leveled the playing field between TTAM and Regeneron. Ultimately, this litigation strategy resulted in TTAM being named the successful bidder with its $305 million bid, but this was only half the battle. 

Overcoming Objections Implicating Novel Issues of State Law

Soon after its success in the auction phase, however, TTAM faced mounting objections to the sale including those from nearly all fifty states- offering arguments of novel issues of state law arising from dozens of different laws purportedly governing the sale of genetic material, along with a slew of other objections.  TTAM had committed to retain the Debtor’s privacy policies, implement additional consumer privacy protections, and broadly advertise the sale to existing customers alongside an unequivocal opportunity to opt-out of the transfer. Moreover, TTAM committed to largely retaining the 23andMe’s operational structure, including the existing employees, and implementing an independent consumer privacy advisory board to ensure compliance with the myriad of state privacy laws.  Even so, objecting states argued that various state laws prohibit the sale or transfer of genetic data without express consumer consent and urged the court to require the Debtor and TTAM to adopt an “opt-in” approach. Likewise, the court-appointed Consumer Privacy Ombudsman urged for an opt-in requirement in his report.

Alongside Skadden, Quinn Emanuel implemented a winning litigation and deal strategy involving the transfer of 23andMe’s data to a wholly owned, non-debtor subsidiary and the sale of that subsidiary to TTAM. This structure permitted the Debtor to transfer the interest in the assets to TTAM in a manner that was entirely consistent with the Debtor’s robust pre-chapter 11 privacy policies and with applicable state law regarding the transfer of genetic material.

Despite no applicable precedent regarding the transfer of genetic material in chapter 11 or otherwise, TTAM successfully overcame all objections. After a two-day evidentiary hearing and multiple rounds of briefing, Judge Walsh entered an opinion overruling the states’ objections and a separate order approving the proposed sale. Judge Walsh adopted TTAM’s argument that the deal structure did not involve a transfer of genetic material to a third-party, which would be regulated by certain states’ laws; rather, the sale as contemplated would involve a transfer of assets to non-debtor affiliate of 23andMe (not a third party) and the acquisition of that affiliate by TTAM.  The sale effectively permitted the operations of 23andMe to continue under new ownership, featuring the familiar leadership of Ms. Wojcicki.

In securing TTAM’s unprecedented success in the face of novel challenges, Quinn Emanuel ensured that Ms. Wojcicki will regain control over the genetic database she had built with consumer participation over decades; consumers are empowered to access to their personal genetic information and opt into participating in lifesaving research; and, crucially, researchers from qualifying institutions across the globe will continue to have access to the unparalleled dataset to facilitate groundbreaking research that will impact generations to come.