Shares in genetic testing company 23andMe Holding Co. surged on their first day of trading today following its merger with Richard Branson’s special-purpose acquisition company VG Acquisition Corp.

The shares of the merged company closed regular trading at $13.32, up 21% on a day the Nasdaq itself rose less than a percentage point. Under the terms of the SPAC deal, 23andMe was valued at $3.5 billion.

The company raised $592 million in gross proceeds from the merger to fuel growth and expansion in the company’s consumer health and therapeutics businesses. Capital from the SPAC listing will also be used to invest in 23andMe’s genetic and phenotypic data to help accelerate personalized healthcare at large scale.

Founded in 2006, 23andMe has been a leader in popularizing recreational DNA testing. Customers pay $99 to obtain a saliva testing kit, which they then use to provide a saliva sample that’s mailed back to 23andme. The company then provides a DNA analysis that offers details such as ancestry and other traits.

As noted when the SPAC deal was announced in February, 23andMe makes most of its money from the development of new drugs based on the genetic information provided by customers, primarily through a deal signed in 2018 with GlaxoSmithKline plc.

23andMe has also been involved in COVID-19 research, publishing a study in September that found an association between severe respiratory complications and a specific variant in the gene cluster in chromosome 3. Researchers at 23andMe also discovered strong evidence that certain blood types affect the severity of COVID-19 infection.

“Over 11 million people have joined 23andMe and are part of the community that is using genetics to transform how we diagnose, treat and prevent human disease,” Anne Wojcicki, co-founder and chief executive of 23andMe, said in a statement. “As we enter the next phase as a public company, we have the opportunity to expand our impact by bringing personalized healthcare directly to everyone.”

23andMe’s successful SPAC debut comes as using SPACs to go public has started to decline in popularity. In April, a note from JP Morgan claimed that the SPAC boom had peaked because of a decline in retail traders pouring money into the new deals, along with increasing regulatory scrutiny from the U.S. Securities and Exchange Commission.

Although the use of SPACs may be declining, companies that use the method to go public are still finding success. For example, financial technology company SoFi closed up 12% on its first day of trading through a SPAC merger on June 1.

Coming into its SPAC listing, 23andMe had raised $868.6 million, according to Crunchbase, including $82.5 million from Sequoia Capital and NewView Capital in December.

Photo: scalleja/Flickr