The Company Buying 23andMe Is a Pharmaceutical Giant. Here's How Investors Can Benefit From the Move.

Core Insights - 23andMe filed for bankruptcy earlier this year due to unsustainable business losses despite the popularity of its DNA testing kits [1] - Regeneron Pharmaceuticals announced it would acquire substantially all of 23andMe's assets for $256 million, pending approval, with the deal expected to close in Q3 [2] - The acquisition provides Regeneron access to DNA data from 15 million customers, with 84% of them consenting to data use for research, presenting significant opportunities for drug development [5] Financial Overview - Regeneron's acquisition price of $256 million is modest compared to its nearly $3 billion free cash flow over the past four quarters, indicating financial stability [4] - Regeneron's first-quarter sales declined by 4% year over year, totaling just over $3 billion, with a 26% drop in sales of its leading drug, Eylea [7][8] - Despite recent stock performance challenges, with shares down 17% as of May 28, Regeneron trades at a modest 15 times trailing earnings compared to the S&P 500 average of just under 24 [12] Strategic Implications - The acquisition aligns with Regeneron's growth strategy focused on genetics, which is seen as critical for improving healthcare outcomes [6] - Regeneron has numerous therapeutic trials underway that could lead to future product launches, and the acquisition of 23andMe may enhance its drug candidate pipeline [9] - While Regeneron plans to continue offering 23andMe's consumer genome services, these services are not viewed as the primary reason for the acquisition and may eventually be discontinued if they hinder overall operations [11]