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The Regeneron Pharmaceuticals company logo is seen on a building at the company's Westchester campus in Tarrytown, New York, U.S. September 17, 2020. Picture taken September 17, 2020. REUTERS/Brendan McDermid Purchase Licensing Rights, opens new tab
May 19 (Reuters) - Regeneron Pharmaceuticals
(REGN.O), opens new tabsaid on Monday it will buy genetic testing firm 23andMe Holding for $256 million through a bankruptcy auction, and promised to prioritize the ethical use of customers' DNA data.
Through the deal, Regeneron aims to bolster its capabilities in genomics-driven drug discovery by integrating 23andMe's trove of over 15 million customer DNA profiles, collected via its popular direct-to-consumer saliva testing kits.
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The transaction will, however, put the spotlight back on data privacy issues, especially in light of 23andMe's recent challenges.
The genomics firm, once a trailblazer in ancestry DNA testing, has faced dwindling demand for its core services and reputational damage from a 2023 data breach that exposed sensitive genetic and personal information of millions of users.
The hack and subsequent bankruptcy filing has drawn scrutiny from lawmakers who warned that millions of customers' genetic data could be sold to unscrupulous buyers.
Acknowledging the heightened scrutiny, Regeneron on Monday said it will uphold 23andMe's existing privacy policies and comply with all applicable data protection laws.
The drugmaker also committed to working transparently with a court-appointed independent overseer, who will assess the implications of the deal for consumer privacy and is expected to deliver a report to the court by June 10.
The court is scheduled to consider approval of the transaction on June 17.
The investments in genomics "make good strategic sense" for Regeneron, but might take a decade or more to see a return, Bernstein analyst William Pickering said.
"Given Regeneron's track record, we also believe 23andme customers are in good hands from a privacy perspective," Pickering added.
As part of the agreement, Regeneron will acquire all units of 23andMe, except the company's on-demand telehealth service Lemonaid Health, which is being shuttered.
After the transaction, expected to complete in the third quarter, 23andMe will operate as a wholly-owned unit of Regeneron.
Reporting by Mariam Sunny and Sriparna Roy in Bengaluru; Editing by Leroy Leo
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