S-4/A
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As filed with the Securities and Exchange Commission on May 5, 2021

 

No. 333-254772

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

VG ACQUISITION CORP.*

(Exact name of registrant as specified in its charter)

 

 

 

Cayman Islands*   6770   N/A

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

65 Bleecker Street

6th Floor

New York, New York 10012

Tel.: (212) 497-9050

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

 

Josh Bayliss   Evan Lovell
Chief Executive Officer   Chief Financial Officer

 

 

Copies of all communications, including communications sent to agent for service, should be sent to:

 

William H. Aaronson

Derek J. Dostal

Lee Hochbaum

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

Tel: (212) 450-4000

 

Marlee S. Myers

Howard A. Kenny

Celia A. Soehner

Morgan, Lewis & Bockius, LLP

One Oxford Centre, Thirty-Second Floor

Pittsburgh, PA 15219

Tel: (412) 560-3300

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  


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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border  Issuer Tender Offer)  ☐

Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)  ☐

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of
Securities to be Registered
  Amount
to be
Registered(7)
  Proposed
Maximum
Offering Price
Per Share
  Proposed
Maximum
Aggregate
Offering Price
  Amount of
Registration Fee

New 23andMe Class A Common Stock(1)

  63,568,750   $10.35(8)   $657,936,562.50   $71,780.88(11)

Warrants to purchase New 23andMe Class A Common Stock(2)

  25,065,665   $2.15(10)   $53,891,179.75   $5,879.53(11)

New 23andMe Class A Common Stock(3)

  25,065,665   $11.50(9)   $288,255,147.50   $31,448.64(11)

New 23andMe Class A Common Stock(4)

  20,430,501   $10.35(8)   $211,455,685.35   $23,069.82(11)

New 23andMe Class B Common Stock(5)

  313,297,248   $10.35(8)   $3,242,626,516.80   $353,770.55(11)

New 23andMe Class A Common Stock(6)

  313,297,248           —  

Total

              $485,949.41(12)

 

 

(1)

The number of shares of Class A common stock, par value $0.0001 per share, of New 23andMe (as defined below) (the “New 23andMe Class A Common Stock”) to be issued in respect of (i) 50,855,000 Class A ordinary shares underlying units issued in VGAC’s initial public offering and (ii) 12,713,750 Class B ordinary shares held by VG Acquisition Sponsor LLC.

(2)

The number of warrants to acquire shares of New 23andMe Class A Common Stock being registered represents (i) 16,951,666 public warrants and (ii) 8,113,999 private placement warrants.

(3)

The number of shares of New 23andMe Class A Common Stock to be issued upon the exercise of (i) 16,951,666 warrants to purchase Class A ordinary shares underlying units issued in VGAC’s initial public offering (“public warrants”) and (ii) 8,113,999 warrants to purchase Class A ordinary shares issued to VG Acquisition Sponsor LLC in a private placement simultaneously with the closing of VGAC’s initial public offering (“private placement warrants” and, together with the public warrants, the “warrants”). The warrants will convert into warrants to acquire shares of New 23andMe Class A Common Stock in the Domestication (as defined below).

(4)

Includes: 20,430,501 shares of New 23andMe Class A Common Stock to be issued in respect of 8,878,966 shares of 23andMe Class A common stock that will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of New 23andMe Class A Common Stock, as determined pursuant to the Merger Agreement (as defined below) (the “Share Conversion Ratio”).

(5)

The number of shares of Class B common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class B Common Stock”) to be issued in respect of 136,156,996 shares of 23andMe Class B common stock that will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio. Includes 91,198,378 shares of 23andMe Class B common stock to be issued upon the conversion of 23andMe preferred stock immediately prior to the consummation of the merger.

(6)

Represents shares of New 23andMe Class A Common Stock issuable upon conversion (on a one-for-one basis) of shares of New 23andMe Class B Common Stock to be issued as part of the merger consideration.

(7)

Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “Securities Act”), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions.

(8)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A ordinary shares of VGAC on the New York Stock Exchange (“NYSE”) on March 23, 2021 ($10.35 per Class A ordinary share). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.

(9)

Represents the exercise price of the warrants.

(10)

Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the VGAC public warrants on the NYSE on March 23, 2021 ($2.15 per warrant). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.

(11)

Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $109.10 per $1,000,000 of the proposed maximum aggregate offering price.

(12)

Previously paid.

*

Immediately prior to the consummation of the Business Combination, VG Acquisition Corp., a Cayman Islands exempted company (“VGAC”), intends to effect a deregistration and a transfer by way of continuation to Delaware pursuant to Part XII of the Companies Act (As Revised) of the Cayman Islands and Section 388 of the Delaware General Corporation Law, pursuant to which VGAC’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “Domestication”). All securities being registered will be issued by the continuing entity following the Domestication, which will be renamed “23andMe Holding Co.” upon the consummation of the Domestication. As used herein, “New 23andMe” refers to VGAC after giving effect to the Domestication.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

 

 

 


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The information in this preliminary proxy statement/consent solicitation statement/prospectus is not complete and may be changed. The registrant may not sell the securities described in this preliminary proxy statement/consent solicitation statement/prospectus until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary proxy statement/consent solicitation statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION, DATED MAY 5, 2021

PROXY STATEMENT FOR

EXTRAORDINARY GENERAL MEETING OF VG ACQUISITION CORP.

CONSENT SOLICITATION STATEMENT FOR

23ANDME, INC.

PROSPECTUS FOR

422,362,164 SHARES OF CLASS A COMMON STOCK, 313,297,248 SHARES OF CLASS B COMMON STOCK AND 25,065,665 WARRANTS OF VG ACQUISITION CORP. (AFTER ITS DOMESTICATION AS A CORPORATION INCORPORATED IN THE STATE OF DELAWARE, WHICH WILL BE RENAMED 23ANDME HOLDING CO. IN CONNECTION WITH THE DOMESTICATION DESCRIBED HEREIN)

The board of directors of VG Acquisition Corp., a Cayman Islands exempted company (“VGAC”), has unanimously approved the transactions (collectively, the “Business Combination”) contemplated by that certain Agreement and Plan of Merger, dated February 4, 2021, as amended February 13, 2021 and March 25, 2021 (as may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC, Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (“VGAC Merger Sub”), and 23andMe, Inc., a Delaware corporation (“23andMe”), a copy of which is attached to this proxy statement/consent solicitation statement/prospectus as Annex A, including the domestication of VGAC as a Delaware corporation (the “Domestication”). Copies of the First Amendment to the Merger Agreement, dated as of February 13, 2021 and the Second Amendment to the Merger Agreement, dated as of March 25, 2021 are attached to this proxy statement/consent solicitation statement/prospectus as Annex B and Annex C, respectively. As described in this proxy statement/consent solicitation statement/prospectus, VGAC shareholders are being asked to consider a vote upon, among other items, each of the Domestication and the Business Combination. As used in this proxy statement/consent solicitation statement/prospectus, “New 23andMe” refers to VGAC after giving effect to the consummation of the Domestication and the Business Combination.

In connection with the Domestication, on the Closing Date prior to the Effective Time (as defined below): (i) each issued and outstanding Class A ordinary share, par value $0.0001 per share (the “Class A ordinary shares”), and each issued and outstanding Class B ordinary share, par value $0.0001 per share (the “Class B ordinary shares”), of VGAC will be converted into one share of Class A common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class A Common Stock”); (ii) each issued and outstanding whole warrant to purchase Class A ordinary shares of VGAC will automatically represent the right to purchase one share of New 23andMe Class A Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the warrant agreement, dated October 1, 2020, between VGAC and Continental Stock Transfer & Trust Company, as warrant agent (the “VGAC Warrant Agreement”); (iii) the governing documents of VGAC will be amended and restated and become the certificate of incorporation and the bylaws of New 23andMe, copies of which are attached to this proxy statement/consent solicitation statement/prospectus as Annex E and Annex F, respectively; and (iv) VGAC’s name will change to “23andMe Holding Co.” In connection with clauses (i) and (ii) of this paragraph, each issued and outstanding unit of VGAC that has not been previously separated into the underlying Class A ordinary shares of VGAC and the underlying warrants of VGAC prior to the Domestication will be canceled and will entitle the holder thereof to one share of New 23andMe Class A Common Stock and one-third of one warrant representing the right to purchase one share of New 23andMe Class A Common Stock at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the VGAC Warrant Agreement.

At the closing of the Business Combination (the “Closing”), promptly following the consummation of the Domestication, VGAC Merger Sub will merge with and into 23andMe (the “Merger”), with 23andMe as the surviving company in the Merger and, after giving effect to the Merger, 23andMe will be a wholly owned direct subsidiary of New 23andMe (the time at which the Merger becomes effective being referred to as the “Effective Time”).

In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class A Common Stock, as determined in the Merger Agreement (the “Share Conversion Ratio”), (ii) each share of 23andMe Class B common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of Class B common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class B Common Stock”), as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe preferred stock will be converted into shares of 23andMe Class B common stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B common stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B Common


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Stock, as determined pursuant to the Share Conversion Ratio, and (iv) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

Subject to approval by VGAC shareholders of the proposal to approve and adopt the Merger Agreement, the proposal to approve the change of VGAC’s jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware, and the proposals to approve material differences between VGAC’s existing amended and restated memorandum and articles of association and the proposed new certificate of incorporation of New 23andMe and the proposed new bylaws of New 23andMe upon the Domestication, New 23andMe will adopt a dual-class stock structure comparable to the one that is currently in effect at 23andMe, comprised of New 23andMe Class A Common Stock, which will carry one vote per share, and New 23andMe Class B common stock, which will carry ten votes per share. Upon the Closing, all stockholders of 23andMe will hold only shares of New 23andMe Class A Common Stock, except for the current holders of 23andMe class B common stock and preferred stock, who will hold shares of New 23andMe Class B Common Stock. The New 23andMe Class B Common Stock will be entitled to the same dividends as and will rank equally to the New 23andMe Class A Common Stock upon any liquidation. Each share of New 23andMe Class B Common Stock may be converted into one share of New 23andMe Class A Common Stock. See “Description of New 23andMe Securities—Common Stock—New 23andMe Class B Common Stock—Mandatory Conversion.

This prospectus covers 422,362,164 shares of New 23andMe Class A Common Stock, 313,297,248 shares of New 23andMe Class B Common Stock, and 25,065,665 warrants to acquire shares of New 23andMe Class A Common Stock to be issued in connection with the Domestication and the Business Combination to the existing shareholders and warrantholders of VGAC and the existing shareholders of 23andMe.

VGAC’s units, public shares, and public warrants are currently listed on the New York Stock Exchange (“NYSE”) under the symbols “VGAC.U,” “VGAC,” and “VGAC WS,” respectively. VGAC will apply for listing, to be effective at the Effective Time, of New 23andMe Class A Common Stock and warrants to purchase New 23andMe Class A Common Stock on The Nasdaq Global Select Market (“Nasdaq”) under the proposed symbols “ME” and “ME WS, respectively. It is a condition of the consummation of the Business Combination that VGAC receive confirmation from Nasdaq that New 23andMe Class A Common Stock has been conditionally approved for listing on the Nasdaq, but there can be no assurance that such listing condition will be met or that VGAC will obtain such confirmation from Nasdaq. If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the Nasdaq condition set forth in the Merger Agreement is waived by the requisite parties.

The accompanying proxy statement/consent solicitation statement/prospectus provides shareholders of VGAC and 23andMe with detailed information about the Business Combination and other matters to be considered at the extraordinary general meeting of VGAC. We encourage you to read the entire accompanying proxy statement/consent solicitation statement/prospectus, including the Annexes thereto and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 26 of the accompanying proxy statement/consent solicitation statement/prospectus.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/consent solicitation statement/prospectus is dated                , 2021, and

is first being mailed to VGAC shareholders and 23andMe stockholders on or about                , 2021.


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VG ACQUISITION CORP.

65 Bleecker Street

6th Floor

New York, New York 10012

Dear VG Acquisition Corp. Shareholders:

You are cordially invited to attend the extraordinary general meeting (the “extraordinary general meeting”) of VG Acquisition Corp., a Cayman Islands exempted company (“VGAC”), to be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at [●], Eastern Time, on [●], 2021, or at such other time, on such other date and at such other place to which the meeting may be adjourned. Due to public health concerns regarding the COVID-19 pandemic, and the importance of ensuring the health and safety of VGAC directors, officers, employees and shareholders, VGAC shareholders are encouraged to attend the extraordinary general meeting virtually via the Internet. To attend and participate in the extraordinary general meeting virtually, you must register at www.proxydocs.com/VGAC, which is referred to in the accompanying joint proxy statement/consent solicitation statement/prospectus as the VGAC meeting website. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the extraordinary general meeting and to vote and submit questions during the extraordinary general meeting.

As further described in the accompanying proxy statement/consent solicitation statement/prospectus, in connection with the Domestication (as defined below), on the date of the closing of the Business Combination (as defined below) (the “Closing Date”) prior to the Effective Time (as defined below), among other things, (i) VGAC will change its name to “23andMe Holding Co.,” (ii) all of the outstanding shares of VGAC will be converted into common stock of a new Delaware corporation and all of the outstanding VGAC warrants will be converted into warrants to purchase common stock of a new Delaware corporation, and (iii) the governing documents of VGAC will be amended and restated. As used in the accompanying proxy statement/consent solicitation statement/prospectus, “New 23andMe” refers to VGAC after giving effect to the Domestication and the transactions contemplated by that certain Merger Agreement (as defined below) (collectively, the “Business Combination”).

At the extraordinary general meeting, VGAC shareholders will be asked to consider and vote upon a proposal, which is referred to herein as the “Business Combination Proposal,” to approve and adopt that certain Agreement and Plan of Merger, dated as of February 4, 2021, as amended February 13, 2021 and March 25, 2021 (as may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC, Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (“VGAC Merger Sub”), and 23andMe, Inc., a Delaware corporation (“23andMe”), including the transactions contemplated thereby. Copies of the Merger Agreement, the First Amendment to the Merger Agreement, dated as of February 13, 2021 and the Second Amendment to the Merger Agreement, dated as of March 25, 2021 are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex A, Annex B and Annex C, respectively.

As further described in the accompanying proxy statement/consent solicitation statement/prospectus, subject to the terms and conditions of the Merger Agreement, the following transactions will occur:

 

  (a)

On the Closing Date, prior to the time at which the Merger (as defined below) becomes effective (the “Effective Time”), VGAC will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”), upon which VGAC will change its name to “23andMe Holding Co.” (“New 23andMe”) (for further details, see “Proposal No. 2—The Domestication Proposal”).

 

  (b)

At the Effective Time, VGAC Merger Sub will merge with and into 23andMe (the “Merger”), with 23andMe as the surviving company and, after giving effect to such Merger, 23andMe shall be a wholly


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  owned direct subsidiary of New 23andMe. In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of Class A common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class A Common Stock”), as determined in the Merger Agreement (the “Share Conversion Ratio”), (ii) each share of 23andMe Class B common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of Class B common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class B common stock”), as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe preferred stock will be converted into shares of 23andMe Class B common stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B common stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B common stock, as determined pursuant to the Share Conversion Ratio, and (iv) each outstanding option to purchase 23andMe Class A common stock and 23andMe Class B common stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A common stock that are issued in respect of vested options to purchase 23andMe Class A common stock and 23andMe Class B common stock but excludes the value of the options exercisable for shares of New 23andMe Class A common stock that are issued in respect of unvested options to purchase 23andMe Class A common stock and 23andMe Class B common stock.

In connection with the foregoing and concurrently with the execution of the Merger Agreement, VGAC entered into Subscription Agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to subscribe for and purchase, and VGAC agreed to issue and sell to the PIPE Investors, following the Domestication, an aggregate of 25,000,000 shares of New 23andMe Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $250,000,000 (the “PIPE Financing”). One of the PIPE Investors is an affiliate of the Sponsor (as defined below) that has agreed to subscribe for 2,500,000 shares of New 23andMe Class A Common Stock and one of the PIPE Investors is an affiliate of 23andMe that has agreed to subscribe for 2,500,000 shares of New 23andMe Class A Common Stock. The shares of New 23andMe Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. VGAC will grant the PIPE Investors certain customary registration rights in connection with the PIPE Financing. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination.

You will also be asked to consider and vote upon: (a) a proposal to approve the Domestication, which is referred to herein as the “Domestication Proposal;” (b) a proposal to approve by special resolution the adoption and approval of the proposed new certificate of incorporation (the “Proposed Charter”) and bylaws (the “Proposed Bylaws,” and together with the Proposed Charter, the “Proposed Governing Documents”) of New 23andMe (the “Charter Amendment Proposal”) copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annexes D and E, respectively; (c) five separate proposals to approve material differences between VGAC’s existing amended and restated memorandum and articles of association (together, the “Existing Governing Documents”) and Proposed Governing Documents upon the Domestication, respectively (together, the “Governing Documents Proposals”), and each of such Governing Documents Proposals are required in order to consummate the Business Combination; (d) a proposal to approve, for purpose of complying with New York Stock Exchange (“NYSE”) Listing Rule 312.03, the issuance of New 23andMe Class A Common Stock and New 23andMe Class B Common Stock in connection with the Business Combination and the PIPE Financing, which is referred to herein as the “NYSE Proposal;” (e) a proposal to approve and adopt the 23andMe Holding Co. 2021 Incentive Equity Plan, a copy of which is attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex K, and which is referred to


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herein as the “Incentive Equity Plan Proposal;” (f) a proposal to approve and adopt the 23andMe Holding Co. Employee Stock Purchase Plan, a copy of which is attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex L, and which is referred to herein as the “ESPP Proposal;” (g) a proposal to elect the directors constituting the New 23andMe board of directors, which is referred to herein as the “Director Election Proposal;” and (h) a proposal to adjourn the extraordinary general meeting to a later date or dates, if necessary, for one or more of the Adjournment Purposes (as defined below), which is referred to herein as the “Adjournment Proposal.”

The Business Combination will be consummated only if the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the NYSE Proposal (collectively, the “Condition Precedent Proposals”) are approved at the extraordinary general meeting. The Adjournment Proposal is not conditioned upon the approval of any other proposal. Each of these proposals is more fully described in the accompanying proxy statement/consent solicitation statement/prospectus, which each shareholder is encouraged to read carefully and in its entirety.

The Adjournment Proposal provides for a vote to adjourn the extraordinary general meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to the accompanying proxy statement/consent solicitation statement/prospectus is provided to VGAC shareholders, (B) in order to solicit additional proxies from VGAC shareholders in favor of one or more of the proposals at the extraordinary general meeting, or (C) if VGAC shareholders redeem an amount of the public shares such that the condition to consummation of the Business Combination that the aggregate cash in the trust account, together with the aggregate gross proceeds from the PIPE Financing, equal no less than $500,000,000 after deducting any amounts paid to VGAC shareholders that exercise their redemption rights in connection with the Business Combination, would not be satisfied (such aggregate cash, the “Available Cash,” and such condition to the consummation of the Business Combination, the “Minimum Available Cash Condition”) ((a), (b), and (c), collectively the “Adjournment Purposes”).

In connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to the Closing, including the Sponsor Agreement, Subscription Agreements, 23andMe Stockholder Support Agreements and the Amended and Restated Registration Rights Agreement (each as defined in the accompanying proxy statement/consent solicitation statement/prospectus). See “Business Combination Proposal—Related Agreements” in the accompanying proxy statement/consent solicitation statement/prospectus for more information.

Subject to approval by VGAC shareholders of the Business Combination Proposal, the Domestication Proposal, and the Governing Documents Proposals, New 23andMe will adopt a dual-class stock structure comparable to the one currently in effect at 23andMe, comprised of New 23andMe Class A Common Stock, which will carry one vote per share, and New 23andMe Class B Common Stock, which will carry ten votes per share. Upon the closing of the Business Combination (the “Closing”), all stockholders of New 23andMe will hold only shares of New 23andMe Class A Common Stock, except for the current holders of 23andMe Class B common stock and preferred stock, who will hold shares of New 23andMe Class B Common Stock. The New 23andMe Class B Common Stock will be entitled to the same dividends as and will rank equally to the New 23andMe Class A Common Stock upon any liquidation. The New 23andMe Class B Common Stock may be converted into one share of New 23andMe Class A Common Stock. See “Description of New 23andMe Securities—Common Stock—New 23andMe Class B Common Stock—Conversion.

Pursuant to the Existing Governing Documents, a holder of VGAC’s public shares (a “public shareholder”) may request that VGAC redeem all or a portion of such public shares for cash if the Business Combination is consummated. Holders of units must elect to separate the units into the underlying public shares and warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and warrants, or if a holder holds units registered in its own name, the holder must contact Continental Stock Transfer & Trust Company (“Continental”), VGAC’s transfer agent, directly and instruct it to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly


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redeem its shares. Public shareholders may elect to redeem their public shares even if they vote “FOR” the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker, or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its share certificates (if any) and other redemption forms to Continental, New 23andMe will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of VGAC’s initial public offering, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of                , 2021, this would have amounted to approximately $        per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption will take place following the Domestication and, accordingly, it is shares of New 23andMe Class A Common Stock that will be redeemed immediately after the Closing. See “Extraordinary General Meeting of VGAC—Redemption Rights” in the accompanying proxy statement/consent solicitation statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

VG Acquisition Sponsor LLC (the “Sponsor”) has, pursuant to the Sponsor Agreement, agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Merger) and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC held by the Sponsor, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement. In addition, the Sponsor has agreed that 30% of the Class B ordinary shares held by the Sponsor as of the date of the Sponsor Agreement (the “Earn-Out Shares”) will be subject to a lockup of seven years. The lockup has an early release effective (i) with respect to 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $12.50 per share for any 20 trading days within any 30-trading-day period and (ii) with respect to the other 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $15.00 per share for any 20 trading days within any 30-trading-day period. As of the date of the accompanying proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

Pursuant to the Merger Agreement, certain stockholders of 23andMe each entered into a Support Agreement with VGAC, pursuant to which such stockholders have agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby, and (ii) be bound by certain other covenants and agreements related to the Business Combination. The vote of such stockholders of 23andMe will be sufficient to approve the Business Combination on behalf of 23andMe.

The Merger Agreement is subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/consent solicitation statement/prospectus. There can be no assurance that the closing conditions will be satisfied or that the parties to the Merger Agreement would waive any such provision of the Merger Agreement. In addition, in no event will VGAC redeem public shares in an amount that would cause New 23andMe’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.


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VGAC is providing the accompanying proxy statement/consent solicitation statement/prospectus and accompanying proxy card to VGAC shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournments of the extraordinary general meeting. Information about the extraordinary general meeting, the Business Combination, and other related business to be considered by VGAC shareholders at the extraordinary general meeting is included in the accompanying proxy statement/consent solicitation statement/prospectus. Whether or not you plan to attend the extraordinary general meeting, all of VGAC shareholders are urged to read the accompanying proxy statement/consent solicitation statement/prospectus, including the Annexes thereto and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors beginning on page 26 of the accompanying proxy statement/consent solicitation statement/prospectus.

After careful consideration, the board of directors of VGAC has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and unanimously recommends that shareholders vote “FOR” the adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Merger, and “FOR” all other proposals presented to VGAC shareholders in the accompanying proxy statement/consent solicitation statement/prospectus. When you consider the recommendation of these proposals by the board of directors of VGAC, you should keep in mind that VGAC’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/consent solicitation statement/prospectus for a further discussion of these considerations.

The approval of each of the Domestication Proposal and the Charter Amendment Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least a two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/consent solicitation statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker, or other nominee, you will need to follow the instructions provided to you by your bank, broker, or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The Business Combination will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/consent solicitation statement/prospectus.

If you sign, date, and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker, or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST


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ACCOUNT AND TENDER YOUR SHARES TO CONTINENTAL, VGAC’S TRANSFER AGENT, AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER, AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CONTINENTAL OR BY DELIVERING YOUR SHARES

ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.

On behalf of VGAC’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.

 

Sincerely,
 

 

Josh Bayliss
Chief Executive Officer and Director

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

The accompanying proxy statement/consent solicitation statement/prospectus is dated                , 2021 and is first being mailed to shareholders on or about                , 2021.


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LOGO

23 N. Mathilda Avenue

Sunnyvale, California 94086

NOTICE OF SOLICITATION OF WRITTEN CONSENT

To Stockholders of 23andMe, Inc.:

Pursuant to that certain Agreement and Plan of Merger, dated February 4, 2021, as amended February 13, 2021 and March 25, 2021 (as may be further amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC, Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (“VGAC Merger Sub”), and 23andMe, Inc., a Delaware corporation (“23andMe”), VGAC Merger Sub will merge with and into 23andMe, with 23andMe surviving the merger as a wholly owned direct subsidiary of VGAC (the “Merger”).

This proxy statement/consent solicitation statement/prospectus is being delivered to you on behalf of the board of directors of 23andMe (the “23andMe Board”) to request that holders of 23andMe common stock or preferred stock (with respect to the common stock you will hold upon conversion of preferred stock) execute and return written consents to adopt and approve the Merger Agreement and the Merger and the ancillary documents thereto and consent to certain other actions specified therein.

Concurrent with the execution of the Merger Agreement, certain holders of 23andMe Preferred Stock (determined on an as-converted basis) representing the requisite vote required under the certificate of incorporation of 23andMe executed a written consent pursuant to which all of 23andMe’s issued and outstanding preferred stock will be converted immediately prior to the Merger into shares of 23andMe common stock in accordance with 23andMe’s certificate of incorporation. The written consents solicited via this proxy statement/consent solicitation statement/prospectus will become effective upon such conversion of the 23andMe preferred stock.

This proxy statement/consent solicitation statement/prospectus describes the proposed Merger and the actions to be taken in connection with the Merger and provides additional information about the parties involved. Please give this information your careful attention. Copies of the Merger Agreement and Merger Agreement Amendment are attached as Annex A and Annex B to this proxy statement/consent solicitation statement/prospectus.

The 23andMe Board has considered the Merger and the terms of the Merger Agreement and the ancillary documents and has unanimously determined that the Merger and the Merger Agreement are advisable, fair to and in the best interests of 23andMe and its stockholders and recommends that 23andMe stockholders adopt the Merger Agreement and the ancillary documents by submitting a written consent.

Please complete, date, and sign the written consent furnished with this proxy statement/consent solicitation statement/prospectus and return it promptly to 23andMe by one of the means described in “23andMe’s Solicitation of Written Consents.


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VG ACQUISITION CORP.

65 Bleecker Street

6th Floor

New York, New York 10012

NOTICE OF EXTRAORDINARY GENERAL MEETING

TO BE HELD ON [], 2021

TO THE SHAREHOLDERS OF VG ACQUISITION CORP.:

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “extraordinary general meeting”) of VG Acquisition Corp., a Cayman Islands exempted company (“VGAC”), will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at [●], Eastern Time, on [●], 2021. Due to public health concerns regarding the COVID-19 pandemic, and the importance of ensuring the health and safety of VGAC directors, officers, employees and shareholders, VGAC shareholders are encouraged to attend the extraordinary general meeting virtually via the Internet. To attend and participate in the extraordinary general meeting virtually, VGAC shareholders must register at www.proxydocs.com/VGAC, which is referred to in the accompanying joint proxy statement/consent solicitation statement/prospectus as the VGAC meeting website. Upon completing their registration, VGAC shareholders will receive further instructions via email, including a unique link that will allow VGAC shareholders access to the extraordinary general meeting and to vote and submit questions during the extraordinary general meeting. You are cordially invited to attend the extraordinary general meeting, which will be held for the following purposes:

 

   

Proposal No. 1—The Business Combination ProposalRESOLVED, as an ordinary resolution, that VGAC’s entry into that certain Agreement and Plan of Merger, dated as of February 4, 2021, as amended February 13, 2021 and March 25, 2021 (as may be amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among VGAC, Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (“VGAC Merger Sub”), and 23andMe, Inc., a Delaware corporation (“23andMe”), a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex A, pursuant to which, among other things, following the de-registration of VGAC as an exempted company in the Cayman Islands and the continuation and domestication of VGAC as a corporation in the State of Delaware with the name “23andMe Holding Co.,” (a) VGAC Merger Sub will merge with and into 23andMe (the “Merger”), with 23andMe as the surviving company in the Merger and, after giving effect to such Merger, 23andMe shall be a wholly owned direct subsidiary of VGAC, and (b) in accordance with the terms and subject to the conditions of the Merger Agreement, at the time at which the Merger becomes effective (the “Effective Time”), based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of Class A common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class A Common Stock”), as determined in the Merger Agreement (the “Share Conversion Ratio”), (ii) each share of 23andMe Class B common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of Class B common stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Class B Common Stock”), as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe preferred stock will be converted into shares of 23andMe Class B common stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B common stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, and (iv) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for


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shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

 

   

Proposal No. 2—The Domestication ProposalRESOLVED, as a special resolution, that VGAC be transferred by way of continuation to Delaware pursuant to Part XII of the Companies Act (As Revised) of the Cayman Islands and Section 388 of the General Corporation Law of the State of Delaware (“DGCL”) and, immediately upon being de-registered in the Cayman Islands, VGAC be continued and domesticated as a corporation under the laws of the State of Delaware and, conditioned upon, and with effect from, the registration of VGAC as a corporation in the State of Delaware, the name of VGAC be changed from “VG Acquisition Corp.” to “23andMe Holding Co.” be approved.

 

   

Proposal No. 3—Charter Amendment Proposal—RESOLVED, as a special resolution, that the existing amended and restated memorandum and articles of association of VGAC (together, the “Existing Governing Documents”) be amended and restated by the deletion in their entirety and the substitution in their place of the proposed new certificate of incorporation, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex E (the “Proposed Certificate of Incorporation”) and the proposed new bylaws, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex F (the “Proposed Bylaws”) of “23andMe Holding Co.” upon the Domestication, be approved as the certificate of incorporation and bylaws, respectively, of 23andMe Holding Co., effective upon the effectiveness of the Domestication.

 

   

Governing Documents Proposals—to consider and vote upon the following five separate non-binding, advisory resolutions to approve certain features of the Proposed Certificate of Incorporation and Proposed Bylaws (such proposals, collectively, the “Governing Documents Proposals”):

 

   

Proposal No. 4—Governing Documents Proposal A—RESOLVED, as a non-binding, advisory resolution, that the change in the authorized share capital of VGAC from (i) US$22,100 divided into 200,000,000 Class A ordinary shares, par value $0.0001 per share, (ii) 20,000,000 Class B ordinary shares, par value $0.0001 per share, and (iii) 1,000,000 preference shares, par value $0.0001 per share, to (a) [●] shares of New 23andMe Class A Common Stock, (b) [●] shares of New 23andMe Class B Common Stock, and (c) 10,000,000 shares of preferred stock, par value $0.0001 per share, of New 23andMe (the “New 23andMe Preferred Stock”).

 

   

Proposal No. 5—Governing Documents Proposal B—RESOLVED, as a non-binding, advisory resolution, that the authorization to the board of directors of New 23andMe (the “New 23andMe Board”) to issue any or all shares of New 23andMe Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by the New 23andMe Board and as may be permitted by the DGCL be approved.

 

   

Proposal No. 6—Governing Documents Proposal C—RESOLVED, as a non-binding, advisory resolution, that the amendment and restatement of the Existing Governing Documents be approved and that all other immaterial changes necessary or, as mutually agreed in good faith by VGAC and 23andMe, desirable in connection with the replacement of the Existing Governing Documents with the Proposed Certificate of Incorporation and Proposed Bylaws as part of the Domestication (copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annex E and Annex F, respectively), including (i) changing the post-Business Combination corporate name from “VG Acquisition Corp.” to “23andMe Holding Co.” (which is expected to occur upon the consummation of the Domestication), (ii) making New 23andMe’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act of 1933, as amended and (iv) removing certain provisions related to our status as a blank check company that will no longer be applicable upon consummation of the Business Combination be approved.


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Proposal No. 7—Governing Documents Proposal D—RESOLVED, as a non-binding, advisory resolution, that the issuance of shares of New 23andMe Class B Common Stock, which will allow holders of New 23andMe Class B Common Stock to cast ten votes per share of New 23andMe Class B Common Stock be approved.

 

   

Proposal No. 8—Governing Documents Proposal E—RESOLVED, as a non-binding, advisory resolution, that the election of New 23andMe to not be governed by Section 203 of the DGCL and limiting certain corporate takeovers by interested stockholders be approved.

 

   

Proposal No. 9—The NYSE ProposalRESOLVED, as an ordinary resolution, that for the purposes of complying with the applicable provisions of New York Stock Exchange (“NYSE”) Listing Rule 312.03, the issuance of shares of New 23andMe Class A Common Stock and shares of New 23andMe Class B Common Stock be approved.

 

   

Proposal No. 10—The Incentive Equity Plan ProposalRESOLVED, as an ordinary resolution, that the 23andMe Holding Co. 2021 Incentive Equity Plan, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex K, be adopted and approved.

 

   

Proposal No. 11—The ESPP ProposalRESOLVED, as an ordinary resolution, that the 23andMe Holding Co. Employee Stock Purchase Plan, a copy of which is attached to the proxy statement/consent solicitation statement/prospectus as Annex L, be adopted and approved.

 

   

Proposal No. 12—The Director Election ProposalRESOLVED, as an ordinary resolution, that the proposal to elect Roelof Botha, Patrick Chung, Richard Scheller, Neal Mohan, Anne Wojcicki, and Evan Lovell, in each case, to serve as directors of New 23andMe until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal, be adopted and approved.

 

   

Proposal No. 13—The Adjournment ProposalRESOLVED, as an ordinary resolution, that the adjournment of the extraordinary general meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to the accompanying proxy statement/consent solicitation statement/prospectus is provided to VGAC shareholders, (B) in order to solicit additional proxies from VGAC shareholders in favor of one or more of the proposals at the extraordinary general meeting, or (C) if VGAC shareholders redeem an amount of the public shares such that the condition to consummation of the Business Combination that the aggregate cash in the trust account, together with the aggregate gross proceeds from the issuance and sale of an aggregate of 25,000,000 shares of New 23andMe Class A Common Stock at a price of $10.00 per share pursuant to the Subscription Agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), for aggregate gross proceeds of $250,000,000 (the “PIPE Financing”), equal no less than $500,000,000 after deducting any amounts paid to VGAC shareholders that exercise their redemption rights in connection with the Business Combination would not be satisfied, at the extraordinary general meeting be approved.

Each of the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal and the Director Election Proposal (collectively, the “Condition Precedent Proposals”) is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal.

These items of business are described in the accompanying proxy statement/consent solicitation statement/prospectus, which we encourage you to read carefully and in its entirety before voting.

Only holders of record of ordinary shares at the close of business on [●], 2021 are entitled to notice of and to vote and have their votes counted at the extraordinary general meeting and any adjournment of the extraordinary general meeting.

The accompanying proxy statement/consent solicitation statement/prospectus and accompanying proxy card is being provided to VGAC shareholders in connection with the solicitation of proxies to be voted at the extraordinary general meeting and at any adjournment of the extraordinary general meeting. Whether or not you


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plan to attend the extraordinary general meeting, all VGAC shareholders are urged to read the accompanying proxy statement/consent solicitation statement/prospectus, including the Annexes thereto and the documents referred to herein carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factorsbeginning on page 26 of the accompanying proxy statement/consent solicitation statement/prospectus.

After careful consideration, the board of directors of VGAC has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and unanimously recommends that shareholders vote “FOR” the adoption of the Merger Agreement and approval of the transactions contemplated thereby, including the Merger, and “FOR” all other proposals presented to VGAC shareholders in the accompanying proxy statement/consent solicitation statement/prospectus. When you consider the recommendation of these proposals by the board of directors of VGAC, you should keep in mind that VGAC’s directors and officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC’s Directors and Executive Officers in the Business Combination” in this proxy statement/consent solicitation statement/prospectus for a further discussion of these considerations.

Pursuant to the Existing Governing Documents, a public shareholder of VGAC may request that New 23andMe redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental Stock Transfer & Trust Company (“Continental”), VGAC’s transfer agent, in which you (a) request that New 23andMe redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and

 

  (iii)

deliver your share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through The Depository Trust Company.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 P.M., Eastern Time, on [], 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Holders of units must elect to separate the units into the underlying public shares and warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. Public shareholders may elect to redeem public shares regardless of if or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker, or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, New 23andMe will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of VGAC’s initial public offering (the “trust account”), calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of                , 2021, this would have amounted to approximately $        per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption will take place following the Domestication and, accordingly, it is shares of New 23andMe Class A Common Stock that will be redeemed immediately after


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consummation of the Business Combination. See “Extraordinary General Meeting of VGAC—Redemption Rights” in this proxy statement/consent solicitation statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

VG Acquisition Sponsor LLC (the “Sponsor”) has, pursuant to the Sponsor Letter Agreement, dated as of February 4, 2021, entered into by 23andMe, the Sponsor, VGAC, Credit Suisse Securities (USA) LLC as representative of the several Underwriters named therein, the Insiders (as defined therein) and the Holders (as defined therein) (the “Sponsor Agreement”), agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Merger), (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC held by the Sponsor, and (iii) be bound by certain transfer restrictions with respect to its shares in VGAC following the closing of the Business Combination, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

The Merger Agreement is subject to the satisfaction or waiver of certain other closing conditions as described in the accompanying proxy statement/consent solicitation statement/prospectus. There can be no assurance that the closing conditions will be satisfied or that the parties to the Merger Agreement would waive any such provision of the Merger Agreement. In addition, in no event will VGAC redeem public shares in an amount that would cause New 23andMe’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

The approval of each of the Domestication Proposal and the Charter Amendment Proposal require a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Your vote is very important. Whether or not you plan to attend the extraordinary general meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/consent solicitation statement/prospectus to make sure that your shares are represented at the extraordinary general meeting. If you hold your shares in “street name” through a bank, broker, or other nominee, you will need to follow the instructions provided to you by your bank, broker, or other nominee to ensure that your shares are represented and voted at the extraordinary general meeting. The Business Combination will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in the accompanying proxy statement/consent solicitation statement/prospectus.


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If you sign, date, and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the extraordinary general meeting. If you fail to return your proxy card or fail to instruct your bank, broker, or other nominee how to vote, and do not attend the extraordinary general meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the extraordinary general meeting. If you are a shareholder of record and you attend the extraordinary general meeting and wish to vote in person, you may withdraw your proxy and vote in person.

Your attention is directed to the remainder of the accompanying proxy statement/consent solicitation statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read the accompanying proxy statement/consent solicitation statement/prospectus carefully and in its entirety, including the Annexes hereto and other documents referred to herein. If you have any questions or need assistance voting your ordinary shares, please contact Morrow Sodali LLC, our proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing vgac.info@investor.morrowsodali.com.

Thank you for your participation. We look forward to your continued support.

By Order of the Board of Directors of VG Acquisition Corp.

Josh Bayliss

Chief Executive Officer and Director

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CONTINENTAL, VGAC’S TRANSFER AGENT, AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE EXTRAORDINARY GENERAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER, AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CONTINENTAL OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.


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TABLE OF CONTENTS

 

     Page  

ADDITIONAL INFORMATION

     iii  

TRADEMARKS

     iii  

SELECTED DEFINITIONS

     iv  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     viii  

QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF VGAC

     x  

SUMMARY OF THE PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS

     1  

RISK FACTORS

     26  

EXTRAORDINARY GENERAL MEETING OF VGAC

     82  

BUSINESS COMBINATION PROPOSAL

     89  

DOMESTICATION PROPOSAL

     115  

GOVERNING DOCUMENTS PROPOSALS

     119  

GOVERNING DOCUMENTS PROPOSAL A—APPROVAL OF AUTHORIZATION OF CHANGE TO AUTHORIZED SHARE CAPITAL, AS SET FORTH IN THE PROPOSED GOVERNING DOCUMENTS

     122  

GOVERNING DOCUMENTS PROPOSAL B—APPROVAL OF PROPOSAL REGARDING ISSUANCE OF PREFERRED STOCK OF NEW 23ANDME AT THE BOARD OF DIRECTOR’S SOLE DISCRETION, AS SET FORTH IN THE PROPOSED GOVERNING DOCUMENTS

     124  

GOVERNING DOCUMENTS PROPOSAL C—APPROVAL OF OTHER CHANGES IN CONNECTION WITH ADOPTION OF THE PROPOSED GOVERNING DOCUMENTS

     126  

GOVERNING DOCUMENTS PROPOSAL D—APPROVAL OF DUAL-CLASS STRUCTURE

     130  

GOVERNING DOCUMENTS PROPOSAL E—APPROVAL OF THE ELECTION NOT BE GOVERNED BY SECTION 203 OF THE DGCL

     132  

NYSE PROPOSAL

     134  

INCENTIVE EQUITY PLAN PROPOSAL

     136  

ESPP PROPOSAL

     147  

DIRECTOR ELECTION PROPOSAL

     151  

ADJOURNMENT PROPOSAL

     153  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     155  

23ANDME’S SOLICITATION OF WRITTEN CONSENTS

     171  

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

     173  

INFORMATION ABOUT VGAC

     188  

VGAC’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     204  

INFORMATION ABOUT 23ANDME

     209  

23ANDME’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     251  

EXECUTIVE COMPENSATION

     275  

DIRECTOR COMPENSATION

     275  

MANAGEMENT OF NEW 23ANDME FOLLOWING THE BUSINESS COMBINATION

     282  

BENEFICIAL OWNERSHIP OF SECURITIES

     291  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     296  

COMPARISON OF CORPORATE GOVERNANCE AND SHAREHOLDER RIGHTS

     301  

DESCRIPTION OF NEW 23ANDME SECURITIES

     304  

SECURITIES ACT RESTRICTIONS ON RESALE OF NEW 23ANDME CLASS A COMMON STOCK

     319  

STOCKHOLDER PROPOSALS AND NOMINATIONS

     320  

SHAREHOLDER COMMUNICATIONS

     321  

LEGAL MATTERS

     322  

APPRAISAL RIGHTS

     322  

EXPERTS

     326  

HOUSEHOLDING; DELIVERY OF DOCUMENTS TO SHAREHOLDERS

     326  

ENFORCEABILITY OF CIVIL LIABILITY

     327  

TRANSFER AGENT AND REGISTRAR

     327  

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

     327  

INDEX TO FINANCIAL STATEMENTS

     F-1  


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ANNEXES

  

Annex A—Agreement and Plan of Merger

  

Annex B—First Amendment to the Merger Agreement

  

Annex C—Second Amendment to the Merger Agreement

  

Annex D—Amended and Restated Memorandum and Articles of Association of VGAC

  

Annex E—Form of Certificate of Incorporation of New 23andMe

  

Annex F—Form of Bylaws of New 23andMe

  

Annex G—Sponsor Agreement

  

Annex H—Form of Subscription Agreement

  

Annex I—Form of Registration Rights Agreement

  

Annex J—Form of 23andMe Stockholder Support Agreement

  

Annex K—Form of 23andMe Holding Co. 2021 Incentive Equity Plan

  

Annex L—Form of 23andMe Holding Co. Employee Stock Purchase Plan

  

Annex M—Section 262 of the Delaware General Corporation Law

  

 

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ADDITIONAL INFORMATION

You may request copies of the accompanying proxy statement/consent solicitation statement/prospectus and any other publicly available information concerning VGAC, without charge, by written request to VG Acquisition Corp., 65 Bleecker Street, 6th Floor, New York, New York 10012, or by telephone request at [●]; or Morrow Sodali LLC, VGAC’s proxy solicitor, by calling (800) 662-5200, or banks and brokers can call collect at (203) 658-9400, or by emailing vgac.info@investor.morrowsodali.com or from the SEC through the SEC website at www.sec.gov.

In order for VGAC shareholders to receive timely delivery of the documents in advance of the extraordinary general meeting of VGAC to be held on [●], 2021, you must request the information by [●], 2021 (five business days prior to the date of the extraordinary general meeting).

TRADEMARKS

This document contains references to trademarks, trade names, and service marks belonging to other entities. Solely for convenience, trademarks, trade names, and service marks referred to in this proxy statement/consent solicitation statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. VGAC does not intend VGAC’s use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us, by any other companies.

 

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SELECTED DEFINITIONS

Unless otherwise stated in this proxy statement/consent solicitation statement/prospectus or the context otherwise requires, references to:

 

   

“23andMe” are to 23andMe, Inc., a Delaware corporation, prior to the consummation of the Business Combination;

 

   

“23andMe Board” are to the Board of Directors of 23andMe;

 

   

“23andMe Class A Common Stock” are to the shares of Class A common stock, par value $0.00001 per share, of 23andMe;

 

   

“23andMe Class B Common Stock” are to the shares of Class B common stock, par value $0.00001 per share, of 23andMe;

 

   

“23andMe Common Stock” are the shares of 23andMe Class A Common Stock and the shares of 23andMe Class B Common Stock;

 

   

“23andMe Equityholders” are to the holders of 23andMe equity interests;

 

   

“23andMe Preferred Stock” are the shares of (i) Series A preferred stock, par value $0.00001 per share, of 23andMe, (ii) Series B preferred stock, par value $0.00001 per share, of 23andMe, (iii) Series C preferred stock, par value $0.00001 per share, of 23andMe, (iv) Series D preferred stock, par value $0.00001 per share, of 23andMe, (v) Series E preferred stock, par value $0.00001 per share, of 23andMe, (vi) Series F preferred stock, par value $0.00001 per share, of 23andMe, and (vii) Series F-1 preferred stock, par value $0.00001 per share, of 23andMe;

 

   

“23andMe Stockholders” are to holders of 23andMe Common Stock and 23andMe Preferred Stock;

 

   

“Articles of Association” are to the amended and restated articles of association of VGAC;

 

   

“Available Cash” are an amount equal to the sum of, immediately prior to the Closing, (i) the amount of cash available to be released from the trust account (after giving effect to all payments to VGAC shareholders that exercise their redemption rights in connection with the Business Combination), plus (ii) the net amount of proceeds actually received by VGAC pursuant to the PIPE Financing.

 

   

“Business Combination” are to the Domestication, the Merger and other transactions contemplated by the Merger Agreement, collectively, including the PIPE Financing;

 

   

“Cayman Islands Companies Act” are to the Companies Act (As Revised) of the Cayman Islands;

 

   

“Class A ordinary shares” are to the Class A ordinary shares, par value $0.0001 per share, of VGAC prior to the Domestication, which will automatically convert, on a one-for-one basis, into shares of New 23andMe Class A Common Stock in connection with the Domestication, authorized pursuant to the Existing Governing Documents;

 

   

“Class B ordinary shares” or “founder shares” are to the 12,713,750 Class B ordinary shares, par value $0.0001 per share, of VGAC outstanding as of the date of this proxy statement/consent solicitation statement/prospectus that were issued to the Sponsor in a private placement prior to the initial public offering (as defined below), and, in connection with the Domestication, will automatically convert, on a one-for-one basis, into shares of New 23andMe Class A Common Stock;

 

   

“Closing” are to the closing of the Business Combination;

 

   

“Closing Date” are to that date that is in no event later than the third (3rd) business day, following the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions described under the section entitled “Business Combination Proposal—Conditions to Closing of the Business Combination,” (other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions) or at such other date as VGAC and 23andMe may agree in writing;

 

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“Condition Precedent Proposals” are to the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, and the Director Election Proposal, collectively;

 

   

“Continental” are to Continental Stock Transfer & Trust Company;

 

   

“COVID-19” or the “COVID-19 pandemic” are to the novel coronavirus (SARS-CoV-2 or COVID-19), and any evolutions, mutations, or variations thereof or any other related or associated public health condition, emergency, epidemics, pandemics, or disease outbreaks;

 

   

“Domestication” are to VGAC’s domestication, prior to the Closing, upon the terms and subject to the conditions of the Merger Agreement, as a Delaware corporation in accordance with the DGCL and the Cayman Islands Companies Act;

 

   

“Effective Time” are to the time at which the Merger becomes effective;

 

   

“ESPP” are to the 23andMe Holding Co. Employee Stock Purchase Plan to be considered for adoption and approval by VGAC shareholders pursuant to the ESPP Proposal;

 

   

“Existing Governing Documents” are to the Memorandum of Association and the Articles of Association;

 

   

“extraordinary general meeting” are to the extraordinary general meeting of VGAC to be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at [●], Eastern Time, on [●], 2021, or at such other time, on such other date and at such other place to which the meeting may be adjourned;

 

   

“Governing Documents Proposals” are to Governing Documents Proposal A, Governing Documents Proposal B, Governing Documents Proposal C, Governing Documents Proposal D, and Governing Documents Proposal E;

 

   

“Incentive Equity Plan” are to the 23andMe Holding Co. 2021 Incentive Equity Plan to be considered for adoption and approval by VGAC shareholders pursuant to the Incentive Equity Plan Proposal;

 

   

“initial public offering” are to VGAC’s initial public offering that was consummated on October 6, 2020;

 

   

“Memorandum of Association” are to the amended and restated memorandum of association of VGAC;

 

   

“Merger” are to the merger of VGAC Merger Sub with and into 23andMe pursuant to the Merger Agreement, with 23andMe as the surviving company in the Merger and, after giving effect to such Merger, 23andMe becoming a wholly owned direct subsidiary of VGAC;

 

   

“Merger Agreement” are to that certain Agreement and Plan of Merger, dated February 4, 2021, as amended February 13, 2021 and March 25, 2021, by and among VGAC, VGAC Merger Sub, and 23andMe;

 

   

“Merger Agreement Amendment” are to the First Amendment to the Merger Agreement, dated as of February 13, 2021, between VGAC, VGAC Merger Sub, and 23andMe;

 

   

“Minimum Available Cash Condition” are to the condition that Available Cash shall be greater than or equal to $500,000,000;

 

   

“Nasdaq” are to the Nasdaq Global Select Market;

 

   

“New 23andMe” are to 23andMe Holding Co. (f.k.a. VG Acquisition Corp.) upon and after the Domestication;

 

   

“New 23andMe Board” are to the board of directors of New 23andMe;

 

   

“New 23andMe Class A Common Stock” are to the shares of Class A common stock, par value $0.0001 per share, of New 23andMe;

 

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“New 23andMe Class B Common Stock” are to the shares of Class B common stock, par value $0.0001 per share, of New 23andMe;

 

   

“New 23andMe Common Stock” are to the shares New 23andMe Class A Common Stock and New 23andMe Class B Common Stock;

 

   

“New 23andMe Preferred Stock” are to the shares of preferred stock, par value $0.0001 per share, of New 23andMe;

 

   

“New 23andMe Public Warrants” are to warrants included in the public units issued in the initial public offering that will be exercisable for shares of New 23andMe Class A Common Stock after the Closing;

 

   

“NYSE” are to the New York Stock Exchange;

 

   

“ordinary shares” are to VGAC Class A ordinary shares and Class B ordinary shares;

 

   

“PIPE Financing” are to the transactions contemplated by the Subscription Agreements, pursuant to which the PIPE Investors have collectively committed to subscribe for an aggregate of 25,000,000 shares of New 23andMe Class A Common Stock for an aggregate purchase price of $250,000,000 to be consummated in connection with the Closing;

 

   

“PIPE Investors” are to the investors participating in the PIPE Financing, collectively;

 

   

“private placement warrants” are to the 8,113,999 private placement warrants outstanding as of the date of this proxy statement/consent solicitation statement/prospectus that were issued to and held by the Sponsor in private placements simultaneously with the closing of the initial public offering, which are substantially identical to the public warrants sold as part of the units in the initial public offering, subject to certain limited exceptions;

 

   

“pro forma” are to giving pro forma effect to the Business Combination, including the Merger and the PIPE Financing;

 

   

“Proposed Bylaws” are to the proposed bylaws of New 23andMe to be effective upon the Domestication attached to this proxy statement/consent solicitation statement/prospectus as Annex F;

 

   

“Proposed Certificate of Incorporation” are to the proposed certificate of incorporation of New 23andMe to be effective upon the Domestication attached to this proxy statement/consent solicitation statement/prospectus as Annex D;

 

   

“Proposed Governing Documents” are to the Proposed Certificate of Incorporation and the Proposed Bylaws;

 

   

“public shareholders” are to holders of public shares, whether acquired in the initial public offering or acquired in the secondary market;

 

   

“public shares” are to the currently outstanding 50,855,000 Class A ordinary shares of VGAC, whether acquired in VGAC’s initial public offering or acquired in the secondary market;

 

   

“public warrants” are to the currently outstanding 16,951,666 redeemable warrants to purchase Class A ordinary shares of VGAC that were issued by VGAC in the initial public offering;

 

   

“redemption” are to each redemption of public shares for cash pursuant to the Existing Governing Documents;

 

   

“SEC” are to the U.S. Securities and Exchange Commission;

 

   

“Securities Act” are to the Securities Act of 1933, as amended;

 

   

“Sponsor” are to VG Acquisition Sponsor LLC, a Cayman Islands limited liability company;

 

   

“Sponsor Agreement” are to the Sponsor Letter Agreement, dated as of February 4, 2021, entered into by 23andMe, the Sponsor, VGAC, Credit Suisse Securities (USA) LLC as representative of the several Underwriters named therein, the Insiders (as defined therein) and the Holders (as defined therein);

 

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“Subscription Agreements” are to the subscription agreements, entered into by VGAC and each of the PIPE Investors in connection with the PIPE Financing;

 

   

“transfer agent” are to Continental, VGAC’s transfer agent;

 

   

“trust account” are to the account established by VGAC for the benefit of its public shareholders pursuant to the Investment Management Trust Agreement, dated as of October 2, 2020, by and between VGAC and Continental;

 

   

“units” are to the units of VGAC, each unit representing one Class A ordinary share and one-third of one warrant to acquire one Class A ordinary share, that were offered and sold by VGAC in the initial public offering;

 

   

“VGAC” are to VG Acquisition Corp., a Cayman Islands exempted company, prior to the consummation of the Business Combination;

 

   

“VGAC Board” are to VGAC’s board of directors;

 

   

“VGAC meeting website” are to www.proxydocs.com/VGAC, the Internet address of the extraordinary general meeting;

 

   

“VGAC Merger Sub” are to Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC prior to the consummation of the Business Combination;

 

   

“VGAC Parties” are to VGAC and VGAC Merger Sub;

 

   

“VGAC shareholders” are to holders of VGAC ordinary shares;

 

   

“VGAC warrantholders” are to holders of VGAC warrants (as defined below);

 

   

“VGAC Warrant Agreement” are to the warrant agreement, dated October 1, 2020, between VGAC and Continental, as warrant agent;

 

   

“Virgin Group” are to the Virgin Group, an affiliate of the Sponsor, and its affiliates where applicable; and

 

   

“warrants” are to the public warrants and the private placement warrants.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this proxy statement/consent solicitation statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding VGAC or VGAC’s management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including, without limitation, those relating to the Business Combination. The information included in this proxy statement/consent solicitation statement/prospectus in relation to 23andMe has been provided by 23andMe and its respective management, and forward-looking statements include statements relating to VGAC’s and 23andMe’s respective management team’s expectations, hopes, beliefs, intentions, or strategies regarding the future, including, without limitation, those relating to the Business Combination. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/consent solicitation statement/prospectus may include, for example and without limitation, statements about:

 

   

VGAC’s ability to complete the Business Combination with 23andMe and the timing thereof or, if VGAC does not consummate such Business Combination, any other initial business combination;

 

   

satisfaction or waiver of the conditions to the Business Combination including, among others: (i) the approval by VGAC shareholders of the Condition Precedent Proposals being obtained; (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act of 1976 (the “HSR Act”) relating to the Merger Agreement; (iii) VGAC having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; and (v) the approval by Nasdaq of VGAC’s initial listing application in connection with the Business Combination;

 

   

New 23andMe’s financial and business performance following the Business Combination, including financial projections and business metrics;

 

   

developments and projections relating to the market for personal genetics products and services, and competition in the personal genetics market;

 

   

the receipt of Food and Drug Administration marketing approval for in vitro diagnostic products by 23andMe’s competitors;

 

   

the anticipated growth rates and market opportunities of 23andMe, including the continual enhancement of 23andMe’s database with the addition of new data from consenting customers;

 

   

23andMe’s reliance on key sole suppliers and other third parties on which its business depends;

 

   

23andMe’s inability to maintain and enhance its brand or expand its customer base;

 

   

the extent to which 23andMe is able to protect 23andMe’s intellectual property and not infringe on the intellectual property rights of others;

 

   

significant disruptions in service on 23andMe’s website, mobile applications, or in 23andMe’s computer or logistics systems, whether due to a failure with 23andMe’s information technology systems or that of a third-party vendor;

 

   

the ability of 23andMe to develop and successfully commercialize drugs as part of 23andMe’s Therapeutics business;

 

   

23andMe’s dependence on its collaboration agreement with GlaxoSmithKline plc and 23andMe’s ability to enter into other collaboration agreements;

 

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23andMe’s ability to comply with the extensive, complex, and evolving regulatory requirements applicable to the healthcare industry;

 

   

23andMe’s use, and other processing of personally identifiable information, including health information, and its ability to comply with applicable federal, state, and foreign privacy and security regulations;

 

   

new or adverse regulatory developments affecting the use of genetic data or other aspects of the healthcare industry;

 

   

the effect of COVID-19 on the foregoing, including VGAC’s ability to consummate the Business Combination due to the uncertainty resulting from the recent COVID-19 pandemic; and

 

   

other factors detailed under the section entitled “Risk Factors.”

The forward-looking statements contained in this proxy statement/consent solicitation statement/prospectus are based on VGAC’s current expectations and beliefs concerning future developments and their potential effects on VGAC and/or 23andMe. There can be no assurance that future developments affecting VGAC and/or 23andMe will be those that VGAC has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of VGAC or 23andMe), or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described herein under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of VGAC’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that VGAC considers immaterial or which are unknown. It is not possible to predict or identify all such risks. VGAC undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.

Before any VGAC shareholder grants its proxy or instructs how its vote should be cast or vote on the proposals to be put to the extraordinary general meeting, such VGAC shareholder should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/consent solicitation statement/prospectus may adversely affect VGAC and/or 23andMe.

 

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QUESTIONS AND ANSWERS FOR SHAREHOLDERS OF VGAC

The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the extraordinary general meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to VGAC shareholders. VGAC urges VGAC shareholders to read this proxy statement/consent solicitation statement/prospectus, including the Annexes hereto and the other documents referred to herein, carefully and in their entirety to fully understand the proposed Business Combination and the voting procedures for the extraordinary general meeting, which will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at [], Eastern Time, on [], 2021.

 

Q:

Why am I receiving this proxy statement/consent solicitation statement/prospectus?

 

A:

VGAC shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination. In accordance with the terms and subject to the conditions of the Merger Agreement, among other things, in connection with the Domestication and based on an implied equity value of $3.6 billion, on the Closing Date prior to the Effective Time, (i) VGAC will be renamed “23andMe Holding Co.,” (ii) each share of 23andMe Class A Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of the New 23andMe Class A Common Stock, as determined in the Merger Agreement (the “Share Conversion Ratio”), (iii) each share of 23andMe Class B common stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of the New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, (iv) each share of 23andMe Preferred Stock will be converted into shares of 23andMe Class B common stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B common stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, and (v) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). See “Business Combination Proposal.” The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

A copy of the Merger Agreement is attached to this proxy statement/consent solicitation statement/prospectus as Annex A and you are encouraged to read the Merger Agreement in its entirety. This proxy statement/consent solicitation statement/prospectus includes descriptions of the Merger Agreement and particular provisions therein. These descriptions do not purport to be complete and are qualified in their entirety by reference to the full text of the Merger Agreement.

The approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, and each of the Domestication Proposal and the Charter Amendment Proposal require a special resolution

 

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under Cayman Islands law, being the affirmative vote of holders of a majority of at least a two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

In connection with the Domestication, on the Closing Date prior to the Effective Time, (i) each issued and outstanding Class A ordinary share and each issued and outstanding Class B ordinary share of VGAC will convert automatically, on a one-for-one basis, into shares of New 23andMe Class A Common Stock, (ii) each issued and outstanding warrant to purchase Class A ordinary shares of VGAC will convert automatically into a warrant to acquire New 23andMe Class A Common Stock in the same form and on the same terms and conditions as the converted VGAC warrant, and (iii) each issued and outstanding unit of VGAC that has not been previously separated into the underlying Class A ordinary share of VGAC and underlying VGAC warrant upon the request of the holder thereof prior to the Domestication will be canceled and will entitle the holder thereof to one share of New 23andMe Class A Common Stock and one-third of one warrant representing the right to purchase one share of New 23andMe Class A Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the VGAC Warrant Agreement. See “Domestication Proposal.”

The provisions of the Proposed Governing Documents will differ in certain material respects from the Existing Governing Documents. Please see “What amendments will be made to the current constitutional documents of VGAC?” below.

THE VOTE OF SHAREHOLDERS IS IMPORTANT. SHAREHOLDERS ARE ENCOURAGED TO VOTE AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/CONSENT SOLICITATION STATEMENT/PROSPECTUS.

 

Q:

What proposals are shareholders of VGAC being asked to vote upon?

 

A:

At the extraordinary general meeting, VGAC is asking holders of its ordinary shares to consider and vote upon eleven separate proposals:

 

   

a proposal to approve and adopt by ordinary resolution the Merger Agreement, including the Merger, and the transactions contemplated thereby;

 

   

a proposal to approve by special resolution the Domestication;

 

   

a proposal to approve by special resolution the adoption and approval of the proposed new certificate of incorporation (the “Proposed Charter”) and bylaws (the “Proposed Bylaws,” and together with the Proposed Charter, the “Proposed Governing Documents”) of New 23andMe (the “Charter Amendment Proposal”) copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annexes D and E, respectively;

 

   

the following five separate proposals to approve by non-binding, advisory resolution the following material differences between the Existing Governing Documents and the Proposed Governing Documents:

 

   

to authorize the change in the authorized share capital of VGAC from (i) US$22,100 divided into 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, to (ii) [●] shares of New 23andMe Class A Common Stock, [●] shares of New 23andMe Class B Common Stock, and 10,000,000 shares of New 23andMe Preferred Stock;

 

   

to authorize the New 23andMe Board to issue any and all shares of New 23andMe Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by the New 23andMe Board and as may be permitted by the DGCL;

 

   

to amend and restate the Existing Governing Documents and authorize all other immaterial changes necessary or, as mutually agreed in good faith by VGAC and 23andMe, desirable in

 

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connection with the replacement of the Existing Governing Documents with the Proposed Governing Documents as part of the Domestication;

 

   

to authorize the issuance of shares of New 23andMe Class B Common Stock, which will allow holders of New 23andMe Class B Common Stock to cast ten votes per share of New 23andMe Class B Common Stock; and

 

   

to authorize the election of New 23andMe to not be governed by Section 203 of the DGCL and limiting certain corporate takeovers by interested stockholders.

 

   

a proposal to approve by ordinary resolution the issuance of shares of New 23andMe Class A Common Stock and shares of New 23andMe Class B Common Stock in connection with the Business Combination and the PIPE Financing in compliance with the NYSE Listing Rules;

 

   

a proposal to approve and adopt by ordinary resolution the Incentive Equity Plan;

 

   

a proposal to approve and adopt by ordinary resolution the ESPP;

 

   

a proposal to elect the directors to the New 23andMe Board; and

 

   

a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.

If VGAC shareholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Merger Agreement are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated.

For more information, please see “Business Combination Proposal,” “Domestication Proposal,” “Governing Documents Proposals,” “NYSE Proposal,” “Incentive Equity Plan Proposal,” “ESPP Proposal,” “Director Election Proposal,” and “Adjournment Proposal.”

VGAC will hold the extraordinary general meeting to consider and vote upon these proposals. This proxy statement/consent solicitation statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the extraordinary general meeting. Shareholders of VGAC should read it carefully and in its entirety.

After careful consideration, the VGAC Board has determined that the Business Combination Proposal, the Domestication Proposal, each of the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal are in the best interests of VGAC and VGAC shareholders and unanimously recommends that VGAC shareholders vote or give instruction to vote “FOR” each of those proposals.

The existence of financial and personal interests of one or more of VGAC’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC and VGAC shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC’s officers have interests in the Business Combination that may conflict with your interests as a VGAC shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

Why is VGAC proposing the Business Combination?

 

A:

VGAC is a blank check company incorporated on February 19, 2020 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,

 

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  reorganization, or similar business combination with one or more businesses. Although VGAC may pursue an acquisition opportunity in any business, industry, sector, or geographical location for purposes of consummating an initial business combination, VGAC has focused on companies in the travel & leisure, financial services, health & wellness, music & entertainment, media & mobile, and renewable energy/resource efficiency sectors. VGAC is not permitted under the Existing Governing Documents to effect a business combination with a blank check company or a similar type of company with nominal operations.

VGAC has identified several criteria and guidelines it believes are important for evaluating acquisition opportunities. VGAC has sought targets that it believes: will perform well in the public markets over the long term and offer attractive returns to VGAC shareholders; would uniquely benefit from an association with a trusted name like the Virgin Group through brand enhancement and improved operational performance; can be sourced through VGAC’s extensive proprietary networks so as to avoid broadly marketed processes; generate stable free cashflows or that have a clear near-term path to produce healthy free cashflows; have the ability to provide a strong consumer experience that is meaningfully differentiated from competitors; have a strong and experienced management team that VGAC can work alongside and augment as the company scales; and are prepared from a management, corporate governance, and reporting perspective to become a publicly traded company and can benefit from the access to the broader capital markets that this will provide.

Based on its due diligence investigations of 23andMe and the industry in which it operates, including the financial and other information provided by 23andMe in the course of negotiations, the VGAC Board believes that 23andMe meets the criteria and guidelines listed above. However, there is no assurance of this. See “Business Combination Proposal—The VGAC Board’s Reasons for the Business Combination.”

Although the VGAC Board believes that the Business Combination with 23andMe presents an attractive business combination opportunity and is in the best interests of VGAC and VGAC shareholders, the VGAC Board did consider certain potentially material negative factors in arriving at that conclusion. These factors are discussed in greater detail in the sections entitled “Business Combination Proposal—The VGAC Board’s Reasons for the Business Combination” and “Risk Factors—Risks Related to 23andMe and New 23andMe Business Following the Business Combination.”

 

Q:

Did the VGAC Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

No. The VGAC Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. However, VGAC’s management, the members of the VGAC Board, and the other representatives of VGAC have substantial experience in evaluating the operating and financial merits of companies similar to 23andMe and reviewed certain financial information of 23andMe and compared it to certain publicly traded companies, selected based on the experience and the professional judgment of VGAC’s management team, which enabled them to make the necessary analyses and determinations regarding the Business Combination. Accordingly, investors will be relying solely on the judgment of the VGAC Board in valuing 23andMe’s business and assuming the risk that the VGAC Board may not have properly valued such business.

 

Q:

What will 23andMe’s equityholders receive in return for the Business Combination with VGAC?

 

A:

On the date of Closing, promptly following the consummation of the Domestication, VGAC Merger Sub will merge with and into 23andMe, with 23andMe as the surviving company in the Merger and, after giving effect to such Merger, 23andMe shall be a wholly owned direct subsidiary of VGAC. In accordance with the terms and subject to the conditions of the Merger Agreement, based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of the New 23andMe Class A Common Stock, as determined pursuant to the Share

 

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  Conversion Ratio, (ii) each share of 23andMe Class B Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of the New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe Preferred Stock will be converted into shares of 23andMe Class B Common Stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B Common Stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B Common Stock, as determined in the Merger Agreement, and (iv) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

 

Q:

How will the combined company be managed following the Business Combination?

 

A:

Following the Closing, it is expected that the current management of 23andMe will become the management of New 23andMe, and the New 23andMe Board will consist of six directors. If the Director Election Proposal is approved, the New 23andMe Board will consist of Roelof Botha, Patrick Chung, Richard Scheller, Neal Mohan, Anne Wojcicki, and Evan Lovell. Please see the section entitled “Management of New 23andMe Following the Business Combination” and “Director Election Proposal” for further information.

 

Q:

What equity stake will current VGAC shareholders and current equityholders of 23andMe hold in New 23andMe immediately after the consummation of the Business Combination?

 

A:

As of the date of this proxy statement/consent solicitation statement/prospectus, there are (i) 50,855,000 Class A ordinary shares outstanding underlying units issued in the initial public offering and (ii) 12,713,750 Class B ordinary shares outstanding held by the Sponsor. As of the date of this proxy statement/consent solicitation statement/prospectus, there are 8,113,999 private placement warrants outstanding and held by the Sponsor and 16,951,666 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of New 23andMe Class A Common Stock. Therefore, as of the date of this proxy statement/consent solicitation statement/prospectus (without giving effect to the Business Combination and assuming that none of VGAC’s outstanding public shares are redeemed in connection with the Business Combination), VGAC’s fully diluted share capital, giving effect to the exercise of all of the private placement warrants and public warrants, would be 88,634,415 ordinary shares.

The following table illustrates varying estimated ownership levels in New 23andMe immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

     Share Ownership in New 23andMe  
     No Redemptions     Maximum redemptions(1)  
     Percentage of
Outstanding Shares
    Percentage of
Outstanding Shares
 

VGAC Shareholders

     12.04     6.30

VGAC Sponsor(2)

     3.01     3.21

PIPE Investors

     5.92     6.31

23andMe Shareholders(3)

     79.03     84.18

 

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(1)

As of February 28, 2021. Percentages may not add to 100% due to rounding.

(2)

Assumes that 25,864,535 outstanding public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the Minimum Available Cash Condition based on a per share redemption price of $10.00 per share) are redeemed in connection to the Business Combination.

(3)

Excludes equity awards issued at Closing upon rollover of vested and unvested 23andMe equity awards under the proposed New 23andMe Incentive Equity Plan.

For further details, see “Business Combination Proposal—Consideration to 23andMe Equityholders in the Business Combination.”

Furthermore, subject to approval by VGAC shareholders, the Business Combination Proposal, the Domestication Proposal, and the Governing Documents Proposals, New 23andMe will adopt a dual-class stock structure comparable to the one currently in effect at 23andMe, comprising of New 23andMe Class A Common Stock, which will carry one vote per share, and New 23andMe Class B Common Stock, which will carry ten votes per share. Upon the Closing, all stockholders of 23andMe will hold only shares of New 23andMe Class A Common Stock, except for current holders of 23andMe Class B Common Stock and 23andMe Preferred Stock, who will hold shares of New 23andMe Class B Common Stock. The New 23andMe Class B Common Stock will be entitled to the same dividends as and will rank equally to the New 23andMe Class B Common Stock upon any liquidation. The New 23andMe Class B Common Stock is also subject to conversion to New 23andMe Class A Common Stock upon transfers of any shares of New 23andMe Class B Common Stock (except for permitted transfers). Upon conversion, each share of New 23andMe Class B Common Stock will convert into one share of New 23andMe Class A Common Stock. See “Description of New 23andMe Securities—Common Stock—New 23andMe Class B Common Stock—Mandatory Conversion.

 

Q:

What percentage of voting power will current VGAC shareholders and current equityholders of 23andMe hold in New 23andMe immediately after the consummation of the Business Combination?

 

A:

The following table illustrates the estimated voting power in New 23andMe immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

     Voting Power in New 23andMe(1)  
     No Redemptions     Maximum redemptions(2)  
     Percentage of
Outstanding Shares
    Percentage of
Outstanding Shares
 

VGAC Shareholders

     1.57     0.78

Sponsor

     0.39     0.40

PIPE Investors

     0.77     0.78

23andMe A Stockholders(3)

     0.63     0.64

23andMe Class B Stockholders(3)(4)

 

     96.64     97.42

 

 

(1)

As of February 28, 2021. Percentages may not add to 100% due to rounding.

(2)

Assumes that 25,864,535 outstanding public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the Minimum Available Cash Condition based on a per share redemption price of $10.00 per share) are redeemed in connection to the Business Combination.

(3)

Excludes equity awards issued at Closing upon rollover of vested and unvested 23andMe equity awards under the proposed New 23andMe’s Incentive Equity Plan.

(4)

Each share of New 23andMe Class B Common Stock will have ten votes per share, while each share of New 23andMe Class A Common Stock will have one vote per share.

 

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Q:

Why is VGAC proposing the Domestication?

 

A:

The VGAC Board believes that there are significant advantages to VGAC that will arise as a result of a change of its domicile to Delaware. Further, the VGAC Board believes that any direct benefit that the Delaware General Corporation Law (the “DGCL”) provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The VGAC Board believes that there are several reasons why transfer by way of continuation to Delaware is in the best interests of VGAC and the VGAC shareholders, including, (i) the prominence, predictability, and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance, and (iii) the increased ability for Delaware corporations to attract and retain qualified directors, each of the foregoing are discussed in greater detail in the section entitled “Domestication Proposal—Reasons for the Domestication.”

To effect the Domestication, VGAC will file an application for deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and file a certificate of corporate domestication and a certificate of incorporation with the Secretary of State of the State of Delaware, under which VGAC will be domesticated and continue as a Delaware corporation.

The approval of the Domestication Proposal is a condition to the Closing under the Merger Agreement. The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of at least a two-thirds (2/3) majority of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter. Abstentions and broker nonvotes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal.

 

Q:

What amendments will be made to the current constitutional documents of VGAC?

 

A:

The Closing is conditional, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, VGAC shareholders also are being asked to consider and vote upon a proposal to approve the Domestication, and replace the Existing Governing Documents, in each case, under Cayman Islands law with the Proposed Governing Documents, in each case, under the DGCL, which differ from the Existing Governing Documents in the following material respects:

 

    

Existing Governing Documents

  

Proposed Governing Documents

Authorized Shares

(Governing Documents

Proposal A)

   The share capital under the Existing Governing Documents is US$22,100 divided into 200,000,000 Class A ordinary shares of par value US$0.0001 per share, 20,000,000 Class B ordinary shares of par value US$0.0001 per share, and 1,000,000 preference shares of par value US$0.0001 per share.    The Proposed Governing Documents authorize [●] shares of New 23andMe Class A Common Stock, [●] shares of New 23andMe Class B Common Stock, and 10,000,000 shares of New 23andMe Preferred Stock.
   See paragraph 5 of the Memorandum of Association.    See Article IV of the Proposed Certificate of Incorporation.
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent
(Governing Documents
Proposal B)
   The Existing Governing Documents authorize the issuance of 1,000,000 preference shares with such designation, rights, and preferences as may be determined from time to time by the VGAC    The Proposed Governing Documents authorize the New 23andMe Board to issue any or all shares of preferred stock in one or more series and to fix for each such series such voting

 

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Existing Governing Documents

  

Proposed Governing Documents

   Board. Accordingly, the VGAC Board is empowered under the Existing Governing Documents, without shareholder approval, to issue preference shares with dividend, liquidation, redemption, voting, or other rights, provided that the issuance of such preference shares does not materially adversely affect the rights attached to the other shareholders of VGAC.    powers, full or limited, and such designations, preferences and relative, participating, optional, or other special rights and such qualifications, limitations, or restrictions thereof, as the New 23andMe Board may determine.
   See paragraph 5 of the Memorandum of Association and Articles 3 and 10 of the Articles of Association.    See Article IV subsection 2 of the Proposed Certificate of Incorporation.
Corporate Name
(Governing Documents
Proposal C)
   The Existing Governing Documents provide the name of the company is “VG Acquisition Corp.”    The Proposed Governing Documents will provide that the name of the corporation will be “23andMe Holding Co.”
  

See paragraph 1 of VGAC’s Memorandum of Association.

   See Article I of the Proposed Certificate of Incorporation.
Perpetual Existence
(Governing Documents
Proposal C)
   The Existing Governing Documents provide that if VGAC does not consummate a business combination (as defined in the Existing Governing Documents) by October 6, 2022 (twenty-four months after the closing of the initial public offering), VGAC will cease all operations except for the purposes of winding up and will redeem the shares issued in the initial public offering and liquidate its trust account.    The Proposed Governing Documents do not include any provisions relating to New 23andMe’s ongoing existence; the default under the DGCL will make New 23andMe’s existence perpetual.
   See Article 49 of VGAC’s Articles of Association.    This is the default rule under the DGCL.
Exclusive Forum
(Governing Documents
Proposal C)
   The Existing Governing Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation.    The Proposed Governing Documents adopt Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act.

 

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Existing Governing Documents

  

Proposed Governing Documents

      See Article XI of the Proposed Certificate of Incorporation.
Provisions Related to Status as Blank Check Company
(Governing Documents
Proposal C)
   The Existing Governing Documents set forth various provisions related to VGAC’s status as a blank check company prior to the consummation of a business combination.    The Proposed Governing Documents do not include such provisions related to VGAC’s status as a blank check company, which no longer will apply upon consummation of the Business Combination, as VGAC will cease to be a blank check company at such time.
   See Article 49 of VGAC’s Amended and Restated Articles of Association.   

Voting Rights of Common Stock

(Governing Documents
Proposal D)

   The Existing Governing Documents provide that the holders of each ordinary share of VGAC is entitled to one vote for each share on each matter properly submitted to the VGAC shareholders entitled to vote.    The Proposed Governing Documents provide that holders of shares of New 23andMe Class A Common Stock will be entitled to cast one vote per share of New 23andMe Class A Common Stock, and holders of shares of New 23andMe Class B Common Stock will be entitled to cast ten votes per share of New 23andMe Class B Common Stock on each matter properly submitted to the stockholders entitled to vote.
   See Article 23 of VGAC’s Articles of Association.    See Article IV subsection 3 of the Proposed Certificate of Incorporation.

Takeovers by Interested Stockholders

(Governing Documents
Proposal E)

   The Existing Governing Documents do not provide restrictions on takeovers of VGAC by a related shareholder following a business combination.    The Proposed Governing Documents will have New 23andMe elect not to be governed by Section 203 of the DGCL relating to takeovers by interested stockholders, but will provide other restrictions regarding takeovers by interested stockholders.
      See Article IX of the Proposed Certificate of Incorporation.

 

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Q:

How will the Domestication affect my ordinary shares, warrants, and units?

 

A:

In connection with the Domestication, on the Closing Date prior to the Effective Time, (i) each issued and outstanding Class A ordinary share and each issued and outstanding Class B ordinary share of VGAC will convert automatically, on a one-for-one basis, into shares of New 23andMe Class A Common Stock, (ii) each issued and outstanding warrant to purchase Class A ordinary shares of VGAC will convert automatically into a warrant to acquire New 23andMe Class A Common Stock in the same form and on the same terms and conditions as the converted VGAC warrant, and (iii) each issued and outstanding unit of VGAC that has not been previously separated into the underlying Class A ordinary share of VGAC and underlying VGAC warrant upon the request of the holder thereof prior to the Domestication will be canceled and will entitle the holder thereof to one share of New 23andMe Class A Common Stock and one-third of one warrant representing the right to purchase one share of New 23andMe Class A Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the VGAC Warrant Agreement. See “Domestication Proposal.

In accordance with the terms and subject to the conditions of the Merger Agreement, based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprising of shares of the New 23andMe Class A Common Stock, as determined pursuant to the Share Conversion Ratio, (ii) each share of 23andMe Class B Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprising of the New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe Preferred Stock will be converted into shares of 23andMe Class B Common Stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B Common Stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprising of New 23andMe Class B Common Stock, as determined in the Merger Agreement, and (iv) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

 

Q:

What are the U.S. federal income tax consequences of the Domestication Proposal?

 

A:

The Domestication will constitute a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986 (the “Code”). Accordingly, the following summarizes the consequences to U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) of the Domestication:

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of Class A ordinary shares whose ordinary shares have a fair market value of less than $50,000 on the date of the Domestication and who does not own actually and/or constructively 10% or more of the total combined voting power of all classes of VGAC shares entitled to vote or 10% or more of the total value of all classes of VGAC shares (a “10% shareholder”) will not recognize any gain or loss and will not be required to include any part of VGAC’s earnings in income.

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of Class A ordinary shares whose ordinary shares have a fair market value of $50,000 or more, but who is not a 10% shareholder will generally recognize gain (but not loss) on the deemed receipt of New 23andMe Class A Common Stock in the Domestication. As an alternative to recognizing gain as a result of the Domestication, such

 

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U.S. Holder may file an election to include in income, as a dividend, the “all earnings and profits amount” (as defined in the regulations promulgated under the Code (the “Treasury Regulations”) under Section 367) attributable to its Class A ordinary shares provided certain other requirements are satisfied.

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of Class A ordinary shares who on the date of the Domestication is a 10% shareholder will generally be required to include in income, as a dividend, the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367) attributable to its Class A ordinary shares provided certain other requirements are satisfied.

 

   

As discussed further under “U.S. Federal Income Tax Considerations” below, VGAC believes that it is (and has been) treated as a PFIC for U.S. federal income tax purposes. In the event that VGAC is (or in some cases has been) treated as a PFIC, notwithstanding the foregoing, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain as a result of the Domestication unless the U.S. Holder makes (or has made) certain elections discussed further under “U.S. Federal Income Tax Considerations—The Domestication.” The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. It is difficult to predict whether such proposed regulations will be finalized and whether, in what form, and with what effective date, other final Treasury Regulations under Section 1291(f) of the Code will be adopted. Further, it is not clear how any such regulations would apply to the warrants. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see the section entitled “U.S. Federal Income Tax Considerations.” Each U.S. Holder of Class A ordinary shares or warrants is urged to consult its own tax advisor concerning the application of the PFIC rules to the exchange of VGAC Class A ordinary shares for New 23andMe Class A Common Stock and VGAC warrants for New 23andMe warrants pursuant to the Domestication.

Additionally, the Domestication may cause Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) to become subject to U.S. federal income withholding taxes on any dividends in respect of such Non-U.S. Holder’s New 23andMe Class A Common Stock subsequent to the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisor for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see the section entitled “U.S. Federal Income Tax Considerations.”

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you have the right to request that VGAC redeems all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/consent solicitation statement/prospectus. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal. If you wish to exercise your redemption rights, please see the answer to the next question: “How do I exercise my redemption rights?

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

 

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The Sponsor has agreed to waive its redemption rights with respect to all of its ordinary shares in connection with the consummation of the Business Combination. Such shares will be excluded from the pro rata calculation used to determine the per share redemption price.

 

Q:

How do I exercise my redemption rights?

 

A:

If you are a public shareholder and wish to exercise your right to redeem the public shares, you must:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental, VGAC’s transfer agent, in which you (a) request that VGAC redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number, and address; and

 

  (iii)

deliver your share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through The Depository Trust Company (“DTC”).

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 P.M., Eastern Time, on [], 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

The address of Continental is listed under the question “Who can help answer my questions?” below.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so.

Public shareholders will be entitled to request that their public shares be redeemed for a pro rata portion of the amount then on deposit in the trust account as of two business days prior to the Closing including interest earned on the funds held in the trust account and not previously released to VGAC (net of taxes payable). For illustrative purposes, as of                , 2021, this would have amounted to approximately $        per issued and outstanding public share. However, the proceeds deposited in the trust account could become subject to the claims of VGAC’s creditors, if any, which could have priority over the claims of VGAC shareholders, regardless of whether such public shareholders vote or, if they do vote, irrespective of if they vote for or against the Business Combination Proposal. Therefore, the per share distribution from the trust account in such a situation may be less than originally expected due to such claims. Whether any particular VGAC shareholder votes, and if any particular VGAC shareholder does vote irrespective of how such VGAC shareholder votes, on any proposal, including the Business Combination Proposal, will have no impact on the amount such VGAC shareholder will receive upon exercise of your redemption rights. It is expected that the funds to be distributed to public shareholders electing to redeem their public shares will be distributed promptly after the consummation of the Business Combination.

Any request for redemption, once made by a holder of public ordinary shares, may not be withdrawn once submitted to VGAC unless the VGAC Board determines (in its sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part). If you deliver your share certificates (if any) and other redemption forms (as applicable) to Continental, VGAC’s transfer agent, and later decide prior to the extraordinary general meeting not to elect redemption, you may request that Continental return the share certificates (if any) and the shares (physically or electronically) to you. You may make such request by contacting Continental at the phone number or address listed at the end of this section.

Any corrected or changed written exercise of redemption rights must be received by Continental prior to the vote taken on the Business Combination Proposal at the extraordinary general meeting. No request for

 

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redemption will be honored unless the holder’s public shares have been delivered (either physically or electronically) to Continental at least two business days prior to the vote at the extraordinary general meeting.

If a holder of public shares properly makes a request for redemption and the public shares are delivered as described above, then, if the Business Combination is consummated, VGAC will redeem the public shares for a pro rata portion of funds deposited in the trust account, calculated as of two business days prior to the consummation of the Business Combination. The redemption takes place following the Domestication and, accordingly, it is shares of New 23andMe Class A Common Stock that will be redeemed immediately after consummation of the Business Combination.

If you are a holder of public shares and you exercise your redemption rights, such exercise will not result in the loss of any warrants that you may hold.

 

Q:

If I am a holder of units, can I exercise redemption rights with respect to my units?

 

A:

No. Holders of issued and outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. You are requested to cause your public shares to be separated and delivered to Continental by [●], Eastern Time, on [●], 2021 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your public shares.

 

Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

The treatment of a redemption for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale under Section 302 of the Code. A U.S. Holder (as defined in “U.S. Federal Income Tax Considerations” below) of Class A ordinary shares (if the Domestication does not occur) or New 23andMe Class A Common Stock (if the Domestication occurs) as the case may be, that exercises its redemption rights to receive cash from the trust account in exchange for such ordinary shares or common stock may (subject to the application of the PFIC rules) be treated as selling such ordinary shares or common stock, resulting in the recognition of capital gain or capital loss. There may be certain circumstances in which the redemption does not qualify as a sale under Section 302 of the Code and is instead treated as a distribution for U.S. federal income tax purposes, depending on the amount of ordinary shares or common stock, as the case may be, that a U.S. Holder owns or is deemed to own (including through the ownership of warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights by a U.S. Holder, see the sections entitled “U.S. Federal Income Tax Considerations – Tax Consequences of the Ownership and Disposition of Class A Ordinary Shares and Warrants if the Domestication Does Not Occur – U.S. Holders – Redemption of Class A Ordinary Shares” and “U.S. Federal Income Tax Considerations – The Domestication – Tax Consequences of a Redemption of New 23andMe Class A Common Stock.”

Additionally, because the Domestication will occur (if it is approved) prior to the redemption of U.S. Holders that exercise redemption rights, U.S. Holders exercising redemption rights will be subject to the potential tax consequences of Section 367 of the Code and the PFIC rules as a result of the Domestication. The tax consequences of Section 367 of the Code and the PFIC rules are discussed more fully below under “U.S. Federal Income Tax Considerations.” VGAC urges you to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

If the Domestication occurs, a Non-U.S. Holder (as defined in “U.S. Federal Income Tax Considerations” below) of New 23andMe Class A Common Stock that exercises its redemption rights to receive cash from

 

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the trust account in exchange for such common stock, like a U.S. Holder, will also generally be treated as selling such common stock. Gain recognized by a Non-U.S. Holder in connection with a redemption generally will not be subject to U.S. federal income tax unless certain exceptions apply. However, as with U.S. Holders, a redemption by a Non-U.S. Holder may be treated as a distribution for U.S. federal income tax purposes, depending on the amount of common stock that a Non-U.S. Holder owns or is deemed to own (including through the ownership of warrants). Any portion of such distribution that constitutes a dividend for U.S. federal income tax purposes will generally be subject to withholding tax at a rate of 30% of the gross amount of the dividend (unless such Non-U.S. Holder establishes that it is eligible for a reduced rate of withholding tax under an applicable income tax treaty or certain other exceptions apply).

Because the determination as to whether a redemption is treated as a sale or a distribution is dependent on matters of fact, withholding agents may presume, for withholding purposes, that all amounts paid to Non-U.S. Holders in connection with a redemption are treated as distributions in respect of such Non-U.S. Holder’s shares of New 23andMe Class A Common Stock. Accordingly, a Non-U.S. Holder should expect that a withholding agent will likely withhold U.S. federal income tax on the gross proceeds payable to a Non-U.S. Holder pursuant to a redemption at a rate of 30% unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, or other applicable IRS Form W-8). For a more complete discussion of the U.S. federal income tax considerations of an exercise of redemption rights by a Non- U.S. Holder, see the section entitled “U.S. Federal Income Tax Considerations—The Domestication—Tax Consequences of a Redemption of New 23andMe Class A Common Stock.”

 

Q:

What happens to the funds deposited in the trust account after consummation of the Business Combination?

 

A:

Following the closing of the initial public offering, an amount equal to $508,550,000 ($10.00 per unit) of the net proceeds from the initial public offering and the sale of the private placement warrants was placed in the trust account. As of                , 2021, funds in the trust account totaled approximately $        and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of a business combination (including the Closing) or (ii) the redemption of all of the public shares if VGAC is unable to complete a business combination by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents), subject to applicable law.

If VGAC’s initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with VGAC’s initial business combination or used for redemptions or purchases of the public shares, New 23andMe may apply the balance of the cash released to it from the trust account for general corporate purposes, including for maintenance or expansion of operations of New 23andMe, the payment of principal or interest due on indebtedness incurred in the Business Combination, to fund the purchase of other companies, or for working capital. See “Summary of the Proxy Statement/Prospectus—Sources and Uses of Funds for the Business Combination.”

 

Q:

What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

 

A:

VGAC’s public shareholders are not required to vote in respect of the Business Combination in order to exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders.

The Merger Agreement provides that the obligations of 23andMe to consummate the Business Combination are conditioned on, among other things, that as of immediately prior to the Closing, the Available Cash

 

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equal no less than $500,000,000. If such condition is not met, and such condition is not or cannot be waived under the terms of the Merger Agreement, then the Merger Agreement could terminate and the proposed Business Combination may not be consummated.

In no event will VGAC redeem public shares in an amount that would cause VGAC’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

Additionally, as a result of redemptions, the trading market for the New 23andMe Class A Common Stock may be less liquid than the market for the public shares was prior to consummation of the Business Combination and VGAC may not be able to meet the listing standards for Nasdaq or another national securities exchange.

 

Q:

What conditions must be satisfied to complete the Business Combination?

 

A:

The consummation of the Business Combination is conditioned upon, among other things: (i) the approval by VGAC shareholders of the Condition Precedent Proposals; (ii) the expiration or termination of the applicable waiting period under the HSR Act relating to the Merger Agreement; (iii) VGAC having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; (v) the approval by Nasdaq of VGAC’s initial listing application in connection with the Business Combination; and (vi) the consummation of the Domestication. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated.

For more information about conditions to the consummation of the Business Combination, see “Business Combination Proposal—Conditions to Closing of the Business Combination.”

 

Q:

When do you expect the Business Combination to be completed?

 

A:

It is currently expected that the Business Combination will be consummated in mid-2021. This date depends on, among other things, the approval of the proposals to be voted on by VGAC shareholders at the extraordinary general meeting. However, such extraordinary general meeting could be adjourned if the Adjournment Proposal is adopted by VGAC shareholders at the extraordinary general meeting and VGAC elects to adjourn the extraordinary general meeting to a later date or dates (i) to the extent necessary to ensure that any required supplement or amendment to the accompanying proxy statement/consent solicitation statement/prospectus is provided to VGAC shareholders, (ii) in order to solicit additional proxies from VGAC shareholders in favor of one or more of the proposals at the extraordinary general meeting, or (iii) if VGAC shareholders redeem an amount of public shares such that the Minimum Available Cash Condition would not be satisfied. For a description of the conditions for the completion of the Business Combination, see “Business Combination Proposal—Conditions to Closing of the Business Combination.”

 

Q:

What happens if the Business Combination is not consummated?

 

A:

VGAC will not complete the Domestication unless all other conditions to the Closing have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If VGAC is not able to consummate the Business Combination with 23andMe nor able to complete another business combination by October 6, 2022, in each case, as such date may be extended pursuant to the Existing Governing Documents, VGAC will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest income to pay dissolution expenses), divided by the number of then-outstanding public shares, which redemption will

 

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  completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of VGAC’s remaining shareholders and the VGAC Board, liquidate and dissolve, subject in each case to VGAC’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable laws.

 

Q:

Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication?

 

A:

Neither VGAC shareholders nor VGAC warrantholders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.

 

Q:

What do I need to do now?

 

A:

VGAC urges you to read this proxy statement/consent solicitation statement/prospectus, including the Annexes hereto and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a VGAC shareholder and/or a VGAC warrantholder. VGAC shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/consent solicitation statement/prospectus and on the enclosed proxy card.

 

Q:

What do I need in order to vote and ask questions at the extraordinary general meeting via the Internet?

 

A:

To attend the extraordinary general meeting via the Internet, you must register at www.proxydocs.com/VGAC. Upon completing your registration, you will receive further instructions via email, including a unique link that will allow you access to the extraordinary general meeting and to vote and submit questions during the extraordinary general meeting. As part of the registration process, you must enter the control number located on your proxy card or voting instruction form. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank, or nominee, you will also need to provide the registered name on your account and the name of your broker, bank or other nominee as part of the registration process. On the day of the extraordinary general meeting, you may begin to log in to the extraordinary general meeting 15 minutes prior to the extraordinary general meeting. We will have technicians ready to assist you with any technical difficulties you may have accessing the extraordinary general meeting. If you encounter any difficulties accessing the extraordinary general meeting platform, including any difficulties voting or submitting questions, you may call the technical support number that will be posted in your instructional email.

 

Q:

How do I vote my shares at the extraordinary general meeting?

 

A:

Shares Held of Record

If you hold shares directly in your name as a stockholder of record, you may submit your proxy to vote such shares via the Internet, by telephone or by mail.

To submit your proxy via Internet or by telephone, follow the instructions provided on your enclosed proxy card. If you vote via the Internet or by telephone, you must do so by no later than [●], Eastern Time, on [●].

As an alternative to submitting your proxy via the Internet or by telephone, you may submit your proxy by mail. To submit your proxy by mail, you will need to complete, sign and date your proxy card and return it in the enclosed, postage-paid envelope. If you vote by mail, your proxy card must be received by no later than [●].

If you have registered in advance to attend the extraordinary general meeting at the VGAC meeting website, you may also vote at the extraordinary general meeting via the VGAC meeting website.

You can also attend the extraordinary general meeting and vote in person. You will receive a ballot when you arrive.

 

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Shares Held in Street Name

If you hold your shares in “street name”, which means your shares are held of record by a broker, bank, or nominee, you will receive instructions from your broker, bank or nominee that you must follow in order to submit your voting instructions and have your shares voted at the extraordinary general meeting.

If you want to vote in person virtually at the extraordinary general meeting, you must register in advance at the VGAC meeting website. You can also attend the extraordinary general meeting and vote in person. You will receive a ballot when you arrive. However, you may be instructed to obtain a legal proxy from your broker, bank or other nominee and to submit a copy in advance of the extraordinary general meeting. Further instructions will be provided to you as part of your registration process.

Please carefully consider the information contained in this proxy statement/consent solicitation statement/prospectus and, whether or not you plan to attend the extraordinary general meeting, submit your proxy via the Internet, by telephone or by mail so that your shares will be voted in accordance with your wishes even if you decide not to attend the extraordinary general meeting.

 

Q:

If my shares are held in “street name,” will my broker, bank, or nominee automatically vote my shares for me?

 

A:

No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/consent solicitation statement/prospectus may have been forwarded to you by your brokerage firm, bank, or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank, or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal. If you decide to vote, you should provide instructions to your broker, bank, or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank, or other nominee.

 

Q:

When and where will the extraordinary general meeting be held?

 

A:

The extraordinary general meeting will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at [●], Eastern Time, on [●], 2021, unless the extraordinary general meeting is adjourned.

 

Q:

How will the COVID-19 pandemic impact in-person voting at the General Meeting?

 

A:

VGAC intends to hold the extraordinary general meeting both in person and virtually via the Internet. Because VGAC is sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials may issue in light of the evolving nature of COVID-19 situation, VGAC encourages VGAC shareholders to attend the extraordinary general meeting virtually via the Internet. Additionally, VGAC may impose additional procedures or limitations on VGAC shareholders who wish to attend the extraordinary general meeting in person. VGAC plans to announce any such updates in a press release filed with the SEC and on its proxy website, www.proxydocs.com/VGAC, and VGAC encourages VGAC shareholders to check this website prior to the meeting if they plan to attend.

 

Q:

What impact will the COVID-19 pandemic have on the Business Combination?

 

A:

Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of COVID-19 on the businesses of VGAC and 23andMe, and there is no guarantee that efforts by VGAC and 23andMe to address the adverse impacts of COVID-19 will be effective. The extent of such impact will

 

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  depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or its impact, among others. If VGAC or 23andMe are unable to recover from a business disruption on a timely basis, the Business Combination and/or New 23andMe’s business, financial condition, and results of operations following the completion of the Business Combination, would be adversely affected. The Business Combination may also be delayed and adversely affected by COVID-19 and become more costly. Each of VGAC and 23andMe may also incur additional costs to remedy damages caused by any such disruptions, which could adversely affect their respective financial condition and results of operations.

 

Q:

Who is entitled to vote at the extraordinary general meeting?

 

A:

VGAC has fixed [●] 2021 as the record date for the extraordinary general meeting. If you were a shareholder of VGAC at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a VGAC shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting.

 

Q:

How many votes do I have?

 

A:

VGAC shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 63,568,750 ordinary shares issued and outstanding, of which 50,855,000 were issued and outstanding public shares.

 

Q:

What constitutes a quorum?

 

A:

A quorum of VGAC shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if one or more VGAC shareholders who together hold not less than a majority of the issued and outstanding ordinary shares as of the record date entitled to vote at the extraordinary general meeting are represented in person or by proxy at the extraordinary general meeting. As of the record date for the extraordinary general meeting, 31,784,376 ordinary shares would be required to achieve a quorum.

 

Q:

What vote is required to approve each proposal at the extraordinary general meeting?

 

A:

The following votes are required for each proposal at the extraordinary general meeting:

 

  (i)

Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iii)

Charter Amendment Proposal: The approval of the Charter Amendment Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iv)

Governing Documents Proposals: The approval of the Governing Documents Proposals requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the

 

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  extraordinary general meeting, vote at the extraordinary general meeting. Because the votes on the Governing Documents Proposals are advisory only, they will not be binding on the VGAC Board or New 23andMe.

 

  (v)

NYSE Proposal: The approval of the NYSE Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vi)

Incentive Equity Plan Proposal: The approval of the Incentive Equity Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vii)

ESPP Proposal: The approval of the ESPP Proposal requires an ordinate resolution under Cayman Islands Law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (viii)

Director Election Proposal: Pursuant to the Existing Governing Documents, until the Closing, only holders of Class B ordinary shares can appoint or remove directors. Therefore, only holders of Class B ordinary shares will vote on the Director Election Proposal. The approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of Class B ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ix)

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

Q:

What are the recommendations of the VGAC Board?

 

A:

The VGAC Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of VGAC and VGAC shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Governing Documents Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Equity Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Director Election Proposal, and “FOR” the Adjournment Proposal, in each case, if presented at the extraordinary general meeting.

The existence of financial and personal interests of one or more of VGAC’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC and VGAC shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC’s officers have interests in the Business Combination that may conflict with your interests as a VGAC shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

 

Q:

How does the Sponsor intend to vote its shares?

 

A:

The Sponsor has agreed to vote all its shares in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares.

 

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At any time at or prior to the Business Combination, during a period when it is not then aware of any material nonpublic information regarding VGAC or its securities, the Sponsor, 23andMe, and/or their directors, officers, advisors, or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record or beneficial holder of VGAC shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, 23andMe, and/or their directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (i) the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal are approved by the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, (ii) the Domestication Proposal and the Charter Amendment Proposal are approved by the affirmative vote of holders of a majority of at least a two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting (iii) the Minimum Available Cash Condition is satisfied and/or otherwise limit the number of public shares electing to redeem, and (iv) New 23andMe’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

Entering into any such arrangements may have a depressive effect on the ordinary shares. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he or she owns, either at or prior to the Business Combination.

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved. VGAC will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be presented at the extraordinary general meeting or the redemption threshold.

Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

 

Q:

What happens if I sell my VGAC ordinary shares before the extraordinary general meeting?

 

A:

The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the extraordinary general meeting.

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. Shareholders may send a later-dated, signed proxy card to VGAC’s Chief Financial Officer at VGAC’s address set forth below so that it is received by VGAC’s Chief Financial Officer prior to the vote at the extraordinary general meeting (which is scheduled to take place on [●], 2021) or attend the extraordinary

 

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  general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to VGAC’s Chief Financial Officer, which must be received by VGAC’s Chief Financial Officer prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank, or another nominee, you must contact your broker, bank, or other nominee to change your vote.

 

Q:

What happens if I fail to take any action with respect to the extraordinary general meeting?

 

A:

If you fail to vote with respect to the extraordinary general meeting and the Business Combination is approved by VGAC shareholders and the Business Combination is consummated, you will become a stockholder and/or warrantholder of New 23andMe. If you fail to vote with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder and/or warrantholder of VGAC. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/consent solicitation statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date, and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?

 

A:

VGAC will pay the cost of soliciting proxies for the extraordinary general meeting. VGAC has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies for the extraordinary general meeting. VGAC has agreed to pay Morrow a fee of $40,000, plus disbursements, and will reimburse Morrow for its reasonable out-of-pocket expenses and indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages, and expenses. VGAC will also reimburse banks, brokers and other custodians, nominees, and fiduciaries representing beneficial owners of Class A ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of Class A ordinary shares and in obtaining voting instructions from those owners. VGAC’s directors and officers may also solicit proxies by telephone, by text message, by facsimile, by mail, on the Internet, or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:

Where can I find the voting results of the extraordinary general meeting?

 

A:

The preliminary voting results will be announced at the extraordinary general meeting. VGAC will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the Business Combination or if you need additional copies of the proxy statement/consent solicitation statement/prospectus or the enclosed proxy card you should contact:

Morrow Sodali LLC

470 West Avenue, 3rd Floor

Stamford, Connecticut 06902

Individuals call toll-free: (800) 662-5200

Banks and brokers call collect: (203) 658-9400

E-mail: VGAC.info@investor.morrowsodali.com

 

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You also may obtain additional information about VGAC from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information; Incorporation by Reference.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your share certificates (if any) and other redemption forms (as applicable) (either physically or electronically) to Continental, VGAC’s transfer agent, at the address below prior to the extraordinary general meeting. Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 P.M., Eastern Time, on [], 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

One State Street Plaza, 30th Floor

New York, New York 10004

Attention: Mark Zimkind

E-mail: mzimkind@continentalstock.com

QUESTIONS AND ANSWERS ABOUT 23ANDME’S CONSENT SOLICITATION

 

Q:

Who is entitled to give a written consent for 23andMe?

 

A:

The holders representing a majority of the outstanding 23andMe Common Stock and 23andMe Preferred Stock (on an as-converted basis) will be entitled to give consent using the form of written consent furnished with this proxy statement/consent solicitation statement/prospectus.

Concurrent with the execution of the Merger Agreement, certain holders of 23andMe Preferred Stock (determined on an as-converted basis) representing the requisite vote required under the certificate of incorporation of 23andMe executed a written consent pursuant to which all of 23andMe’s issued and outstanding 23andMe Preferred Stock will be converted immediately prior to the Merger into shares of 23andMe Common Stock in accordance with 23andMe’s certificate of incorporation. The written consents solicited via this proxy statement/consent solicitation statement/prospectus will become effective upon such conversion of the 23andMe Preferred Stock.

 

Q:

What approval is required by the 23andMe Stockholders to adopt the Merger Agreement?

 

A:

The Merger cannot be completed unless stockholders of 23andMe adopt the Merger Agreement and thereby approve the Business Combination and the other transactions contemplated by the Merger Agreement. Adoption of the Merger Agreement requires the approval of the written consent of the holders of a majority of the outstanding shares of 23andMe Common Stock entitled to vote (including common stock issuable upon conversion of 23andMe Preferred Stock). As of the close of business on                , 2021, there were approximately                shares of 23andMe Common Stock (including the shares of 23andMe Preferred Stock on an as-converted basis) outstanding and entitled to vote.

Concurrent with the execution of the Merger Agreement, certain 23andMe stockholders each entered into Support Agreements with VGAC. Under the Support Agreements, such 23andMe stockholders agreed, among other things, to (i) vote in favor of the Merger Agreement and the transactions contemplated thereby, and (ii) be bound by certain other covenants and agreements related to the Business Combination. For a more detailed description of the support agreement, see the section titled “Other Agreements—Support Agreements” of this proxy statement/consent solicitation statement/prospectus.

 

Q:

Do any of 23andMe’s directors or officers have interests in the Merger that may differ from or be in addition to the interests of 23andMe stockholders?

 

A:

23andMe’s executive officers and certain non-employee directors may have interests in the Merger that may be different from, or in addition to, the interests of 23andMe stockholders generally, including (i) the fact that a director of 23andMe will become a director of New 23andMe after the closing of the Merger and, as

 

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  such, in the future such director will receive any cash fees, stock options or stock awards that the New 23andMe Board determines to pay to its non-executive directors; (ii) the fact that 23andMe has entered into employment agreements with certain of its named executive officers (please see “23andMe—Executive Compensation”); (iii) the fact that each holder of New 23andMe Class B Common Stock, including Ms. Wojcicki, will be entitled to ten votes per share on all matters voted upon by New 23andMe’s stockholders; and (iv) the continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance. The 23andMe Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Merger Agreement be approved by the 23andMe stockholders.

 

Q:

I am an employee of 23andMe who holds equity awards of 23andMe. How will my equity awards be treated in the Merger?

 

A:

As of the effective time of the Merger, each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code).

 

Q:

How can I return my written consent?

 

A:

If you hold shares of 23andMe Common Stock and you wish to submit your consent, you must fill out the enclosed written consent, date, and sign it, and promptly return it to 23andMe. Once you have completed, dated and signed your written consent, deliver it to 23andMe by emailing a .pdf copy of your written consent to equity@23andme.com or by mailing your written consent to 23andMe at 223 N. Mathilda Ave., Sunnyvale, CA 94086, Attention: Kathy Hibbs. 23andMe does not intend to hold a stockholders’ meeting to consider the Business Combination Proposal, and, unless 23andMe decides to hold a stockholders’ meeting for such purposes, you will be unable to vote in person or virtually by attending a stockholders’ meeting.

 

Q:

What is the deadline for returning my written consent?

 

A:

The 23andMe Board has set                Eastern Time, on                , 2021 as the targeted final date for the receipt of written consents. 23andMe reserves the right to extend the final date for the receipt of written consents beyond                , 2021. Any such extension may be made without notice to 23andMe stockholders. Once a sufficient number of consents to adopt the Merger Agreement have been received, the consent solicitation will conclude.

 

Q:

What options do I have with respect to the proposed Merger?

 

A:

With respect to the shares of 23andMe Common Stock and 23andMe Preferred Stock that you hold, you may execute a written consent to approve the Business Combination Proposal. If you fail to execute and return your written consent, or otherwise withhold your written consent, it has the same effect as voting against the Business Combination Proposal. You may also dissent and demand appraisal of your shares. See “—Can I Dissent and Require Appraisal of My Shares?

 

Q:

Can I dissent and require appraisal of my shares?

 

A:

If you are a 23andMe stockholder who does not approve the Merger by delivering a written consent adopting the Merger Agreement, you will, by complying with Section 262 of the DGCL, be entitled to appraisal rights. Section 262 of the DGCL is attached to this proxy statement/consent solicitation statement/prospectus as Annex M. Failure to follow any of the statutory procedures set forth in Annex M may result in the loss or waiver of appraisal rights under Delaware law. Delaware law requires that, among other things, you send a written demand for appraisal to 23andMe after receiving a notice that appraisal rights are

 

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  available to you, which notice will be sent to non-consenting 23andMe stockholders in the future. This proxy statement/consent solicitation statement/prospectus is not intended to constitute such a notice. Do not send in your demand before the date of such notice because any demand for appraisal made prior to your receipt of such notice may not be effective to perfect your rights. See the section titled “Appraisal Rights” beginning in this proxy statement/consent solicitation statement/prospectus.

 

Q:

What are the material U.S. Federal Income Tax Consequences of the Merger to 23andMe stockholders?

 

A:

The parties intend for the merger to be treated as a “reorganization” for U.S. federal income tax purposes within the meaning of Section 368(a) of the Code. The obligations of 23andMe and VGAC to complete the merger are not conditioned on the receipt of opinions from Morgan, Lewis & Bockius LLP or Davis Polk & Wardwell LLP to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes and the merger will occur even if it does not so qualify. Neither Morgan, Lewis & Bockius LLP or Davis Polk & Wardwell LLP have been requested or intend to deliver any such opinion.

Neither 23andMe nor VGAC has requested, and neither intends to request, a ruling from the IRS as to the U.S. federal income tax consequences of the merger. Consequently, no assurance can be given that the IRS will not assert, or that a court would not sustain, a position contrary to any of those set forth below. If the merger failed to qualify as a “reorganization” under Section 368(a) of the Code, U.S. Holders (as defined below) of 23andMe common stock who receive shares of New 23andMe Class A Common Stock in exchange for shares of 23andMe common stock would be treated as if they sold their shares of 23andMe common stock in a fully taxable transaction.

Assuming the merger qualifies as a “reorganization” under Section 368(a) of the Code, the U.S. Holders of 23andMe common stock who receive shares of New 23andMe Common Stock in exchange for shares of 23andMe common stock will not recognize gain or loss on the exchange.

The tax consequences of the merger will depend on your particular facts and circumstances. Please consult your own tax advisor as to the tax consequences of the merger in your particular circumstance, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws.

 

Q:

Should 23andMe stockholders send in their stock certificates now?

 

A:

No. 23andMe stockholders SHOULD NOT send in any stock certificates now. If the Merger Agreement is adopted and the Merger is consummated, transmittal materials, with instructions for their completion, will be provided under separate cover to 23andMe stockholders who hold physical stock certificates and the stock certificates should be sent at that time in accordance with such instructions.

 

Q:

Whom should I contact if I have any questions about the consent solicitation?

 

A:

If you have any questions about the merger or how to return your written consent or letter of transmittal, or if you need additional copies of this proxy statement/consent solicitation statement/prospectus or a replacement written consent or letter of transmittal, you should contact Kathy Hibbs at legal@23andme.com.

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/consent solicitation statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the extraordinary general meeting, including the Business Combination, you should read this proxy statement/consent solicitation statement/prospectus, including the Annexes hereto and other documents referred to herein, carefully and in their entirety. The Merger Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. The Merger Agreement is also described in detail in this proxy statement/consent solicitation statement/prospectus in the section entitled “Business Combination Proposal—The Merger Agreement.”

Overview of 23andMe

23andMe is a mission-driven company dedicated to empowering consumers to live healthier lives. 23andMe believes that its premier database of genetic and phenotypic information crowdsourced from its millions of customers can revolutionize healthcare by providing insights into the origins and treatment of diseases and by speeding the discovery and development of novel therapies. 23andMe is committed to rigorous scientific, ethical, and privacy standards and to being the most trusted source of genetic information.

23andMe pioneered direct-to-consumer genetic testing, giving consumers unique, personalized information about their genetic health risks, ancestry, and traits. 23andMe was the first direct-to-consumer genetic testing company to offer reports authorized by the Food and Drug Administration (“FDA”) on genetic health risks, carrier status, and pharmacogenetics, and it is the only company to have FDA authorization, clearance, or pre-market exemption for all of the carrier status, genetic health risk, cancer predisposition, and pharmacogenetics reports offered to consumers. As of March 21, 2021, over 55 health reports that meet FDA requirements were available to customers in the U.S. 23andMe’s competitors had previously released products that were not cleared or approved by the FDA and required partnership with independent physicians, but in August 2020, one such competitor received premarket notification, also called 510(k) clearance, for their saliva collection kit and one of their genetic health risk reports, and in December 2020 another competitor received a 510(k) clearance for one of their health risk reports.

23andMe’s Consumer & Research Services business comprises its Personal Genome Service® (“PGS”) and research services. PGS provides customers with a full suite of genetic reports, including information on genetic ancestral origins, personal genetic health risks, and chances of passing on certain rare carrier conditions to their children, as well as reports on how genetics can impact responses to medications. PGS offers customers an engaging experience, including access to frequent updates to reports and product features, the ability to connect with genetic relatives, and opportunities to participate in research. 23andMe performs research services, using our vast database to discover insights into the genetic origins of disease and to identify promising drug targets. These services are performed under collaboration agreements with universities, research institutions and pharmaceutical companies, including our exclusive collaboration with GlaxoSmithKline (“GSK”).

23andMe’s Therapeutics business focuses on drug development, with a team committed to discovering and developing novel therapies to improve patient lives, and also includes out-licensing of intellectual property. 23andMe currently has development programs across several therapeutic areas, including oncology, immunology, neurology, metabolic and cardiovascular diseases, many of which are within 23andMe’s collaboration with GSK. As of March 21, 2021, 39 novel drug targets are in the early stages of development by 23andMe in collaboration with GSK.

For more information about 23andMe, see “Information About 23andMe” and “23andMe’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.



 

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The Parties to the Business Combination

VGAC

VGAC is a blank check company incorporated on February 19, 2020 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. VGAC has neither engaged in any operations nor generated any revenue to date. Based on VGAC’s business activities, it is a “shell company” as defined under the Exchange Act because it has no operations and nominal assets consisting almost entirely of cash.

On October 6, 2020, VGAC consummated an initial public offering of 48,000,000 units at an offering price of $10.00 per unit, and a private placement with Sponsor of 7,733,333 private placement warrants at an offering price of $1.50 per private placement warrant. Each unit sold in the initial public offering and private placement consists of one Class A ordinary share and one-third of one redeemable warrant.

On October 14, 2020, the underwriters of the initial public offering notified VGAC of their intent to partially exercise their over-allotment option. As such, on October 16, 2020, VGAC sold an additional 2,855,000 units, at a price of $10.00 per unit, and the sale of an additional 380,666 private placement warrants to the Sponsor, at $1.50 per private placement warrant. A total of $28,550,000 of the net proceeds was deposited into the trust account, bringing the aggregate proceeds held in the trust account to $508,550,000.

Following the closing of the initial public offering, an amount equal to $508,550,000 of the net proceeds from the initial public offering and the sale of the private placement warrants was placed in the trust account. The trust account may be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government obligations. As of                , 2021, funds in the trust account totaled approximately $        and were held in money market funds. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of VGAC’s initial business combination, (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Existing Governing Documents to modify the substance and timing of VGAC’s obligation to redeem 100% of the public shares if VGAC does not complete a business combination by October 6, 2022, or (iii) the redemption of all of the public shares if VGAC is unable to complete a business combination by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents), subject to applicable law.

VGAC’s units, public shares, and public warrants are currently listed on NYSE under the symbols “VGAC.U,” “VGAC,” and “VGAC WS,” respectively.

VGAC’s principal executive office is located at 65 Bleecker Street, 6th Floor, New York, New York 10012, and its telephone number is (212) 497-9050. VGAC’s corporate website address is https://www.vgacquisition.com/. VGAC’s website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/consent solicitation statement/prospectus. The website address is included as an inactive textual reference only.

23andMe

23andMe is a Delaware corporation.

23andMe’s principal executive office is located at 223 North Matilda Avenue, Sunnyvale, California 94086, and its telephone number is (650) 938-6300. 23andMe’s corporate website address is https://www.23andme.com/. The information on, or that can be accessed through, 23andMe’s website is not part of this proxy statement/consent solicitation statement/prospectus. The website address is included as an inactive textual reference only.



 

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VGAC Merger Sub

VGAC Merger Sub is a Delaware corporation and wholly owned direct subsidiary of VGAC formed for the purpose of effecting the Business Combination. VGAC Merger Sub owns no material assets and does not operate any business.

VGAC Merger Sub’s principal executive office is located at 65 Bleecker Street, 6th Floor, New York, New York 10012, and its telephone number is (212) 497-9050.

Proposals to be Put to the Shareholders of VGAC at the Extraordinary General Meeting

The following is a summary of the proposals to be presented at the extraordinary general meeting and certain transactions contemplated by the Merger Agreement. Each of the Business Combination Proposal, the Domestication Proposal, the Charter Amendment Proposal, the Governing Documents Proposals, NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal and the Director Election Proposal is conditioned on the approval and adoption of each of the other Condition Precedent Proposals. The Adjournment Proposal is not conditioned on any other proposal. The transactions contemplated by the Merger Agreement will be consummated only if the Condition Precedent Proposals are approved at the extraordinary general meeting.

As discussed in this proxy statement/consent solicitation statement/prospectus, VGAC is asking its shareholders to approve by ordinary resolution the Merger Agreement, pursuant to which, among other things, on the date of Closing, promptly following the consummation of the Domestication, VGAC Merger Sub will merge with and into 23andMe, with 23andMe as the surviving company in the Merger and, after giving effect to such Merger, 23andMe shall be a wholly owned direct subsidiary of VGAC. In accordance with the terms and subject to the conditions of the Merger Agreement, based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of the New 23andMe Class A Common Stock, as determined pursuant to the Share Conversion Ratio, (ii) each share of 23andMe Class B Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of the New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe Preferred Stock will be converted into shares of 23andMe Class B Common Stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B Common Stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B Common Stock, as determined in the Merger Agreement, and (iv) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

In addition, in connection with the Domestication, New 23andMe will amend and restate the Existing Governing Documents to be the Proposed Governing Documents and adopt a dual-class structure, as described in the section of this proxy statement/consent solicitation statement/prospectus titled “Description of New 23andMe Securities.”

After consideration of the factors identified and discussed in the section entitled “Business Combination Proposal—The VGAC Board’s Reasons for the Business Combination,” the VGAC Board concluded that the



 

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Business Combination met all of the requirements disclosed in the prospectus for the initial public offering, including that the businesses of 23andMe had a fair market value of at least 80% of the balance of the funds in the trust account at the time of execution of the Merger Agreement. For more information about the transactions contemplated by the Merger Agreement, see “Business Combination Proposal.”

Conditions to Closing of the Business Combination

The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by VGAC shareholders of the Condition Precedent Proposals; (ii) the expiration or termination of the applicable waiting period under the HSR Act relating to the Merger Agreement; (iii) VGAC having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing; (iv) the Minimum Available Cash Condition; (v) the approval by Nasdaq of VGAC’s initial listing application in connection with the Business Combination; and (vi) the consummation of the Domestication. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated. For further details, see “Business Combination Proposal—Conditions to Closing of the Business Combination.”

Domestication Proposal

As discussed in this proxy statement/consent solicitation statement/prospectus, VGAC will ask its shareholders to approve by special resolution the Domestication Proposal. As a condition to closing the Business Combination pursuant to the terms of the Merger Agreement, the VGAC Board has unanimously approved the Domestication Proposal. The Domestication Proposal, if approved, will authorize a change of VGAC’s jurisdiction of incorporation from the Cayman Islands to the State of Delaware. Accordingly, while VGAC is currently incorporated as an exempted company under the Cayman Islands Companies Act, upon Domestication, New 23andMe will be governed by the DGCL. There are differences between Cayman Islands corporate law and Delaware corporate law, as well as the Existing Governing Documents and the Proposed Governing Documents. The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Accordingly, VGAC encourages shareholders to carefully consult the information set out below under “Comparison of Corporate Governance and Shareholder Rights.”

For further details, see “Domestication Proposal” and “Governing Documents Proposals.”

Charter Amendment and Governing Documents Proposals

VGAC will ask its shareholders to approve a proposal to approve by special resolution Charter Amendment Proposal and in addition Governing Documents Proposals in connection with the replacement of the Existing Governing Documents, under Cayman Islands law, with the Proposed Governing Documents, under the DGCL.

The approval of the Charter Amendment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. The approval of the Governing Documents Proposals requires the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Because the votes on the Governing Documents Proposals are advisory only, they will not be binding on the VGAC Board or New 23andMe.



 

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The VGAC Board has unanimously approved each of the Charter Amendment Proposal and the Governing Documents Proposals and believes such proposals are necessary to adequately address the needs of New 23andMe after the Business Combination. Approval of each of the Governing Documents Proposals is a condition to the consummation of the Business Combination. A brief summary of each of the Governing Documents Proposals is set forth below. These summaries are qualified in their entirety by reference to the complete text of the Proposed Governing Documents.

 

   

Charter Amendment Proposal—to approve by special resolution the adoption and approval of the proposed new certificate of incorporation and bylaws of New 23andMe copies of which are attached to the accompanying proxy statement/consent solicitation statement/prospectus as Annexes D and E, respectively.

 

   

Governing Documents Proposal A—to authorize the change in the authorized share capital of VGAC from (i) US$22,100 divided into 200,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 1,000,000 preference shares, par value $0.0001 per share, to (ii) [●] shares of New 23andMe Class A Common Stock, [●] shares of New 23andMe Class B Common Stock, and 10,000,000 shares of New 23andMe Preferred Stock.

 

   

Governing Documents Proposal B—to authorize the New 23andMe Board to issue any or all shares of New 23andMe Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by the New 23andMe Board and as may be permitted by the DGCL.

 

   

Governing Documents Proposal C—to amend and restate the Existing Governing Documents and authorize all other immaterial changes necessary or, as mutually agreed in good faith by VGAC and 23andMe, desirable in connection with the replacement of the Existing Governing Documents with the Proposed Governing Documents as part of the Domestication, including (i) changing the post-Business Combination corporate name from “VG Acquisition Corp.” to “23andMe Holding Co.” (which is expected to occur after the consummation of the Domestication in connection with the Business Combination), (ii) making New 23andMe’s corporate existence perpetual, (iii) adopting Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act and (iv) removing certain provisions related to VGAC’s status as a blank check company that will no longer be applicable upon consummation of the Business Combination, all of which the VGAC Board believes is necessary to adequately address the needs of New 23andMe after the Business Combination.

 

   

Governing Documents Proposal D—to authorize the issuance of shares of New 23andMe Class B Common Stock, which will allow holders of New 23andMe Class B Common Stock to cast ten votes per share of New 23andMe Class B Common Stock.

 

   

Governing Documents Proposal E—to authorize the election of New 23andMe to not be governed by Section 203 of the DGCL and limiting certain corporate takeovers by interested stockholders.

The Proposed Governing Documents differ in certain material respects from the Existing Governing Documents, and VGAC encourages VGAC shareholders to carefully consult the information set out in the section entitled “Governing Documents Proposals” and the full text of the Proposed Governing Documents of New 23andMe, attached hereto as Annexes D and E.

NYSE Proposal

VGAC shareholders are being asked to approve, by ordinary resolution, the NYSE Proposal. VGAC units, public shares, and public warrants are listed on NYSE and, as such, VGAC is seeking shareholder approval for issuance of shares of New 23andMe Class A Common Stock and shares of New 23andMe Class B Common Stock in connection with the Business Combination and the PIPE Financing pursuant to NYSE Listing Rule 312.03.



 

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For additional information, see “NYSE Proposal.”

Incentive Equity Plan Proposal

VGAC shareholders are being asked to approve, by ordinary resolution, the Incentive Equity Plan Proposal. A total of [●] shares of New 23andMe Class A Common Stock will be reserved for issuance under the Incentive Equity Plan. The Incentive Equity Plan provides that the number of shares reserved and available for issuance under the Incentive Equity Plan will automatically increase each January 1, beginning on January 1, 2022, by 4.0% of the outstanding number of shares of New 23andMe Class A Common Stock and New 23andMe Class B Common Stock on the immediately preceding December 31, or such lesser amount as determined by the New 23andMe Board. For additional information, see “Incentive Equity Plan Proposal.” The full text of the Incentive Equity Plan is attached hereto as Annex K.

ESPP Proposal

VGAC shareholders are being asked to approve, by ordinary resolution, the ESPP Proposal. The number of shares of New 23andMe Class A Common Stock reserved for issuance under the ESPP will initially be limited to 2% of the number of shares of New 23andMe Class A Common Stock and New 23andMe Class B Common Stock, taken together, outstanding as of the effective date of the ESPP. The ESPP provides that the number of shares reserved and available for issuance thereunder will automatically increase on January 1, 2023 and each January 1 thereafter by an amount equal to 1% of the aggregate number of shares of New 23andMe Class A Common Stock and New 23andMe Class B Common Stock outstanding on the immediately preceding December 31; provided, however, in no event will any annual increase exceed 5,000,000 shares or such lesser number of shares determined by the New 23andMe Board in its discretion. For additional information, see “ESPP Proposal.” The full text of the ESPP is attached hereto as Annex L.

Director Election Proposal

VGAC shareholders are being asked to approve, by ordinary resolution, the Director Election Proposal, which would elect Roelof Botha, Patrick Chung, Richard Scheller, Neal Mohan, Anne Wojcicki, and Evan Lovell, to serve as directors of the New 23andMe Board until their respective successors are duly elected and qualified, or until their earlier death, disqualification, resignation, or removal. The New 23andMe Board will consist of three classes, with only one class of directors being elected in each year. Each class of directors will generally serve for a three-year term. For additional information, see “Director Election Proposal.”

Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the extraordinary general meeting to authorize VGAC to consummate the Business Combination, the VGAC Board may submit a proposal to adjourn the extraordinary general meeting to a later date or dates. For additional information, see “Adjournment Proposal.”

The VGAC Board’s Reasons for the Business Combination

VGAC was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Although VGAC may pursue an acquisition opportunity in any business, industry, sector, or geographical location for purposes of consummating an initial business combination, VGAC has focused on companies in the travel & leisure, financial services, health & wellness, music & entertainment, media & mobile, and renewable energy/resource efficiency sectors.



 

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Before reaching its decision to approve the Merger Agreement and the Business Combination, the VGAC Board considered the following positive factors:

 

   

the fact that 23andMe owns the world’s premier re-contactable genetic database;

 

   

the strength of 23andMe’s brand and personalized health and wellness platform;

 

   

positive tailwinds in the personal health and wellness and therapeutics sectors;

 

   

the strength of 23andMe’s platform, which has enabled 23andMe to engage with millions of customers and has ample room for growth both domestically and internationally;

 

   

the financial condition of 23andMe;

 

   

the proven track record of 23andMe’s management team, which will remain in place following the Business Combination;

 

   

the continued ownership of 23andMe equity holders and the significant investments from PIPE Investors in the PIPE Financing;

 

   

the terms of the Merger Agreement;

 

   

the results of its review of several alternative transactions;

 

   

the results of due diligence conducted by VGAC’s management and its legal and financial advisors; and

 

   

23andMe’s attractive valuation.

The VGAC Board also considered a variety of uncertainties, risks and other potentially negative reasons relevant to the transaction, including, among others, the following:

 

   

risks associated with the Business Combination, including the possibility that the Business Combination may not be completed;

 

   

risks associated with the successful implementation of the New 23andMe’s long term business plan and strategy, 23andMe realizing the anticipated benefits of the Business Combination on the timeline expected or at all;

 

   

risks related to government regulation of New 23andMe, including the fact that New 23andMe will face legal, reputational, and financial risks if it fails to protect its customer data from security breaches or cyberattacks;

 

   

risks related to the post-Business Combination corporate governance of New 23andMe;

 

   

the limited review undertaken by the VGAC Board; and

 

   

the interests of the VGAC Board and VGAC’s executive officers.

For more information about the VGAC Board’s decision-making process concerning the Business Combination, please see the section entitled “The Business Combination Proposal—the VGAC Board’s Reasons for the Business Combination.”

Related Agreements

This section describes certain additional agreements entered into or to be entered into in connection with the Merger Agreement. For additional information, see “Business Combination Proposal—Related Agreements.”



 

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PIPE Financing

VGAC entered into Subscription Agreements with the PIPE Investors to consummate the PIPE Financing, pursuant to which the PIPE Investors agreed to subscribe for and purchase, and VGAC agreed to issue and sell to the PIPE Investors, following the Domestication, an aggregate of 25,000,000 shares of New 23andMe Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $250,000,000. One of the PIPE Investors is an affiliate of the Sponsor that has agreed to subscribe for 2,500,000 shares of New 23andMe Class A Common Stock and one of the PIPE Investors is an affiliate of 23andMe that has agreed to subscribe for 2,500,000 shares of New 23andMe Class A Common Stock. The shares of New 23andMe Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. VGAC will grant the PIPE Investors certain customary registration rights in connection with the PIPE Financing. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination. For additional information, see “Business Combination Proposal—Related Agreements—PIPE Financing.”

Amended and Restated Registration Rights Agreement

At the Closing, VGAC and the Sponsor will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), which will terminate and replace the existing registration rights agreement between VGAC and the Sponsor, dated October 1, 2020 (the “VGAC Registration Rights Agreement”), and pursuant to which, among other things, the Sponsor will be granted certain customary registration rights with respect to its shares of New 23andMe Class A Common Stock. For additional information, see “Business Combination Proposal—Related Agreements—Sponsor Registration Rights Agreement.”

23andMe Stockholder Support Agreements

Pursuant to the Merger Agreement, certain 23andMe Stockholders each entered into a Support Agreement (collectively, the “23andMe Stockholder Support Agreements”) with VGAC, pursuant to which such 23andMe Stockholders have agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby, and (ii) be bound by certain other covenants and agreements related to the Business Combination. For additional information, see “Business Combination Proposal—Related Agreements—Support Agreements.”

Sponsor Agreement

Pursuant to the Merger Agreement, 23andMe, the Sponsor, VGAC, Credit Suisse Securities (USA) LLC as representative of the several Underwriters named therein, the Insiders (as defined therein), and the Holders (as defined therein) entered into a Sponsor Letter Agreement (the “Sponsor Agreement”) pursuant to which the Sponsor has agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Merger) and (ii) waive any adjustment to the conversion ratio set forth in the Existing Governing Documents with respect to the Class B ordinary shares of VGAC held by the Sponsor, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement.

In addition, the Sponsor has agreed that 30% of the Class B ordinary shares held by the Sponsor as of the date of the Sponsor Agreement (the “Earn-Out Shares”) will be subject to a lockup of seven years. The lockup has an early release effective (i) with respect to 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $12.50 per share for any 20 trading days within any 30-trading-day period and (ii) with respect to the other 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $15.00 per share for any 20 trading days within any 30-trading-day period. For additional information, see “Business Combination Proposal—Related Agreements—Sponsor Agreement.”



 

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Ownership and Voting Power of New 23andMe

As of the date of this proxy statement/consent solicitation statement/prospectus, there are 63,568,750 ordinary shares issued and outstanding, which includes an aggregate of 12,713,750 Class B ordinary shares. As of the date of this proxy statement/consent solicitation statement/prospectus, there is outstanding an aggregate of 25,065,665 warrants, comprised of 8,113,999 private placement warrants held by Sponsor and 16,951,666 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of New 23andMe Class A Common Stock.

The following table illustrates varying estimated ownership levels and voting power in New 23andMe immediately following the consummation of the Business Combination, based on the varying levels of redemptions by the public shareholders and the following additional assumptions:

 

    Share Ownership in New 23andMe(1)     Voting Power in New 23andMe  
    No Redemptions     Maximum redemptions(2)     No Redemptions     Maximum redemptions(2)  
    Percentage of
Outstanding Shares
    Percentage of
Outstanding Shares
    Percentage of
Outstanding Shares
    Percentage of
Outstanding Shares
 

VGAC Shareholders

    12.04     6.30     1.57     0.78

Sponsor

    3.01     3.21     0.39     0.40

PIPE Investors

    5.92     6.31     0.77     0.78

23andMe Class A Stockholders(3)

    4.84     5.15     0.63     0.64

23andMe Class B Stockholders(3)

    74.19     79.03     96.64     97.42

 

 

(1)

As of February 28, 2021. Percentages may not add to 100% due to rounding.

(2)

Assumes that 25,864,535 outstanding public shares (being our estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the Minimum Available Cash Condition based on a per share redemption price of $10.00 per share) are redeemed in connection to the Business Combination.

(3)

Excludes equity awards issued at Closing upon rollover of vested and unvested 23andMe equity awards under the proposed New 23andMe Incentive Equity Plan.

(4)

Each share of New 23andMe Class B Common Stock will have ten votes per share, while each share of New 23andMe Class A Common Stock will have one vote per share.

For further details, see “Business Combination Proposal—Consideration to 23andMe Equityholders in the Business Combination.”

Date, Time, and Place of Extraordinary General Meeting of VGAC Shareholders

The extraordinary general meeting will be held at the offices of Davis Polk & Wardwell LLP located at 450 Lexington Avenue, New York, New York 10017 and virtually via the Internet at [●], Eastern Time, on [●], 2021, to consider and vote upon the proposals to be put to the extraordinary general meeting, including if necessary, the Adjournment Proposal, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the extraordinary general meeting, each of the Condition Precedent Proposals have not been approved.

Voting Power; Record Date

VGAC shareholders will be entitled to vote or direct votes to be cast at the extraordinary general meeting if they owned ordinary shares at the close of business on [●], 2021, which is the “record date” for the extraordinary general meeting. Shareholders will have one vote for each ordinary share owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. VGAC warrants do not have voting rights. As of the close of business on the record date, there were 63,568,750 ordinary shares issued and outstanding, of which 50,855,000 were issued and outstanding public shares.



 

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Quorum and Vote of VGAC Shareholders

A quorum of VGAC shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if one or more VGAC shareholders who together hold not less than a majority of the issued and outstanding ordinary shares as of the record date entitled to vote at the extraordinary general meeting are represented in person or by proxy at the extraordinary general meeting. As of the record date for the extraordinary general meeting, 31,784,376 ordinary shares would be required to achieve a quorum.

The Sponsor has, pursuant to the Sponsor Agreement, agreed to, among other things, vote all of its ordinary shares in favor of the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

The proposals presented at the extraordinary general meeting require the following votes:

 

  (i)

Business Combination Proposal: The approval of the Business Combination Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (ii)

Domestication Proposal: The approval of the Domestication Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iii)

Charter Amendment Proposal: The approval of the Charter Amendment Proposal requires a special resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (iv)

Governing Documents Proposals: The approval of the Governing Documents Proposals requires the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. Because the votes on the Governing Documents Proposals are advisory only, they will not be binding on the VGAC Board or New 23andMe.

 

  (v)

NYSE Proposal: The approval of the NYSE Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vi)

Incentive Equity Plan Proposal: The approval of the Incentive Equity Plan Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (vii)

ESPP Proposal: The approval of the ESPP Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

 

  (viii)

Director Election Proposal: The approval of the Director Election Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.



 

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  (ix)

Adjournment Proposal: The approval of the Adjournment Proposal requires an ordinary resolution under Cayman Islands law, being the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting.

Redemption Rights

Pursuant to the Existing Governing Documents, a public shareholder may request of VGAC that New 23andMe redeem all or a portion of its public shares for cash if the Business Combination is consummated. As a holder of public shares, you will be entitled to receive cash for any public shares to be redeemed only if you:

 

  (i)

(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;

 

  (ii)

submit a written request to Continental, VGAC’s transfer agent, in which you (a) request that New 23andMe redeem all or a portion of your public shares for cash, and (b) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number, and address; and

 

  (iii)

deliver your share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through DTC.

Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 P.M., Eastern Time, on [], 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed.

Holders of units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying public shares and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number, and address to Continental in order to validly redeem its shares. Public shareholders may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal. If the Business Combination is not consummated, the public shares will be returned to the respective holder, broker, or bank. If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its shares to Continental, New 23andMe will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account, calculated as of two business days prior to the consummation of the Business Combination. For illustrative purposes, as of                , 2021, this would have amounted to approximately $         per issued and outstanding public share. If a public shareholder exercises its redemption rights in full, then it will be electing to exchange its public shares for cash and will no longer own public shares. The redemption takes place following the Domestication and accordingly, it is shares of New 23andMe Class A Common Stock that will be redeemed immediately after consummation of the Business Combination. See “Extraordinary General Meeting of VGAC—Redemption Rights” in this proxy statement/consent solicitation statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your public shares for cash.

Notwithstanding the foregoing, a public shareholder, together with any affiliate of such public shareholder or any other person with whom such public shareholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming its public shares with respect to more than an aggregate of 15% of the public shares. Accordingly, if a public shareholder, alone or acting in concert or



 

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as a group, seeks to redeem more than 15% of the public shares, then any such shares in excess of that 15% limit would not be redeemed for cash and such excess public shares would be converted into the merger consideration in connection with the Business Combination.

The Sponsor has, pursuant to the Sponsor Agreement, agreed to, among other things, vote all of its ordinary shares in favor of the proposals being presented at the extraordinary general meeting and waive its anti-dilution rights with respect to its Class B ordinary shares in connection with the consummation of the Business Combination. Such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

Holders of the warrants will not have redemption rights with respect to the warrants.

Appraisal Rights

Neither VGAC shareholders nor VGAC warrantholders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone, or in person. VGAC has engaged Morrow to assist in the solicitation of proxies.

If a shareholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the extraordinary general meeting. A shareholder also may change its vote by submitting a later-dated proxy as described in the section entitled “Extraordinary General Meeting of VGAC—Revoking Your Proxy.”

Interests of VGAC Directors and Executive Officers in the Business Combination

When you consider the recommendation of the VGAC Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor, VGAC’s directors, and executive officers, have interests in such proposal that are different from, or in addition to, those of VGAC shareholders and VGAC warrantholders generally. These interests include, among other things, the interests listed below:

 

   

the fact that the Sponsor has agreed not to redeem any Class A ordinary shares held by it in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the fact that the Sponsor paid an aggregate of $25,000 for the 12,713,750 Class B ordinary shares it currently owns and such securities will have a significantly higher value at the time of the Business Combination;

 

   

the fact that Sponsor paid $12,171,000 for its private placement warrants, and such securities would be worthless if a business combination is not consummated by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the fact that the Sponsor and VGAC’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if VGAC fails to complete an initial business combination by October 6, 2022;

 

   

the fact that the Registration Rights Agreement will be entered into by the Sponsor;



 

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the fact that the Sponsor transferred 30,000 Class B ordinary shares to each of VGAC’s three independent directors prior to the initial public offering, and such securities would be worthless if a business combination is not consummated by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the fact that each of Mr. Bayliss and Mr. Lovell invested $300,000 in the Sponsor and hold interests in the Sponsor that represent an indirect interest in 1,667,581 Class B ordinary shares and 197,814 private placement warrants, and the fact that Mr. Brown, Mr. Lockhart III and Ms. Briggs invested $1,000,000, $500,000 and $250,000, respectively, in the Sponsor indirectly through an investment in VG Acquisition Holdings LLC, an affiliate of the Sponsor, and hold interests in VG Acquisition Holdings LLC that represent an indirect interest in 706,819, 353,409 and 176,705 Class B ordinary shares, respectively, and 665,740, 332,870, and 166,435 private placement warrants, respectively, and all of such securities would be worthless if a business combination is not consummated by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the continued indemnification of VGAC’s directors and officers and the continuation of VGAC’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”);

 

   

the fact that the Sponsor and VGAC’s officers and directors will lose their entire investment in VGAC and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by October 6, 2022;

 

   

the fact that if the trust account is liquidated, including in the event VGAC is unable to complete an initial business combination by October 6, 2022, the Sponsor has agreed to indemnify VGAC to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which VGAC has entered into an acquisition agreement or claims of any third party for services rendered or products sold to VGAC, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;

 

   

the fact that the Virgin Group owns 39,760 shares of 23andMe Class A Preferred Stock, for which it invested $50,000, which shares will be converted to shares of 23andMe Class B Common Stock immediately prior to the Closing and canceled in exchange for the right to receive approximately 91,487 shares of New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, which shares of New 23andMe Class B Common Stock will represent approximately 0.02% of outstanding shares of New 23andMe Common Stock and approximately 0.03% of the voting power of New 23andMe Common Stock and have a value of approximately $914,870 based on an implied value of $10.00 per shares of New 23andMe Class B Common Stock; and

 

   

the fact that the Virgin Group and the Sponsor will collectively own 12,713,750 shares of New 23andMe Class A Common Stock and approximately 91,487 shares of New 23andMe Class B Common Stock, which collectively will represent approximately 3.23% of outstanding shares of New 23andMe Common Stock and approximately 0.42% of the voting power of New 23andMe Common Stock and have a value of approximately $914,870 based on an implied value of $10.00 per shares of New 23andMe Class B Common Stock and assuming that the maximum number of VGAC Class A ordinary shares are redeemed such that the remaining funds held in the trust account after the payment of the redeeming shares’ pro-rata allocation are sufficient to satisfy the Minimum Available Cash Condition of $500.0 million, less transaction expenses, estimated at $64.1 million.

The Sponsor has, pursuant to the Sponsor Agreement, agreed to, among other things, vote all of its ordinary shares in favor of the proposals being presented at the extraordinary general meeting and waive its anti-dilution rights with respect to its Class B ordinary shares in connection with the consummation of the Business Combination. Such shares will be excluded from the pro rata calculation used to determine the per-share



 

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redemption price. As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares. See “Business Combination Proposal—Related Agreements—Sponsor Agreement” in the accompanying proxy statement/consent solicitation statement/prospectus for more information related to the Sponsor Agreement.

Approval of each of the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal, requires the affirmative vote of the holders of a majority of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. As a result, approval of each of the foregoing proposals would require 19,070,626, or 37.5%, of the 50,855,000 public shares sold in the initial public offering would need to be voted in favor of each of the foregoing proposals in addition to the founder shares held by the Sponsor (assuming all outstanding shares are voted).

Approval of each of the Domestication Proposal and the Charter Amendment Proposal requires the affirmative vote of the holders of a majority of not less than two-thirds of the ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. As a result, approval of each of the foregoing proposals would require 29,665,418, or 58.3%, of the 50,855,000 public shares sold in the initial public offering would need to be voted in favor of each of the foregoing proposals in addition to the founder shares held by the Sponsor (assuming all outstanding shares are voted).

At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding VGAC or its securities, the Sponsor, 23andMe, and/or their directors, officers, advisors, or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record or beneficial holder of VGAC shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, 23andMe, and/or their directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfying the requirements that (i) the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal are approved by being the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, (ii) the Domestication Proposal and the Charter Amendment Proposal are approved by the affirmative vote of holders of a majority of at least two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, (iii) the Minimum Available Cash Condition is met and/or otherwise limit the number of public shares electing to redeem, and (iv) New 23andMe’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would



 

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be approved. VGAC will file or submit a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the proposals to be presented at the extraordinary general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

The existence of financial and personal interests of one or more of VGAC’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC and VGAC shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC’s officers have interests in the Business Combination that may conflict with your interests as a shareholder.

Recommendation to Shareholders of VGAC

The VGAC Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of VGAC and VGAC shareholders and unanimously recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the Governing Documents Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Equity Plan Proposal, “FOR” the ESPP Proposal, “FOR” the Director Election Proposal, and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting.

The existence of financial and personal interests of one or more of VGAC’s directors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is in the best interests of VGAC and VGAC shareholders and what he or she or they may believe is best for himself or herself or themselves in determining to recommend that shareholders vote for the proposals. In addition, VGAC’s officers have interests in the Business Combination that may conflict with your interests as a shareholder. See the section entitled “Business Combination Proposal—Interests of VGAC’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.

Sources and Uses of Funds for the Business Combination

The following tables summarize the sources and uses for funding the Business Combination assuming a Closing Date of December 31, 2020, and (i) assuming that none of VGAC’s outstanding public shares are redeemed in connection with the Business Combination and (ii) assuming 25,864,535 Class A ordinary shares (being VGAC’s estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the Minimum Available Cash Condition based on a per share redemption price of $10.00 per share) are redeemed in connection with the Business Combination.

No Redemption

 

Source of Funds(1)

(in thousands)

   Uses(1)
(in thousands)
 

Existing Cash held in trust account(2)

   $ 508,645     

Merger Consideration to 23andMe Equityholders(3)

   $ 3,600,000  

Merger Consideration to 23andMe Equityholders(3)

   $ 3,600,000     

Transaction Fees and Expenses

   $ 64,100  

PIPE Financing(3)

   $ 250,000     

Remaining Cash to Balance Sheet

   $ 694,545  
  

 

 

       

 

 

 

Total Sources

   $ 4,358,645      Total Uses    $ 4,358,645  
  

 

 

       

 

 

 

 

(1)

Totals might be affected by rounding.



 

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(2)

As of December 31, 2020.

(3)

Shares issued to 23andMe Equityholders and PIPE Investors are at a deemed value of $10.00 per share.

Maximum Redemption

 

Source of Funds(1)

(in thousands)

  Uses(1)
(in thousands)
 

Existing Cash held in trust account(2)

  $ 508,645    

Merger Consideration to 23andMe Equityholders(3)

  $ 3,600,000  

Merger Consideration to 23andMe Equityholders(3)

  $ 3,600,000    

Transaction Fees and Expenses

  $ 64,100  
 

VGAC public shareholder redemptions

  $ 258,645  

Pipe Financing(3)

  $ 250,000    

Remaining Cash to Balance Sheet

  $ 435,900  
 

 

 

   

 

 

 

 

 

Total Sources

  $ 4,358,645     Total Uses   $ 4,358,645  
 

 

 

   

 

 

 

 

 

 

(1)

Totals might be affected by rounding.

(2)

As of December 31, 2020.

(3)

Shares issued to 23andMe Equityholders and PIPE Investors are at a deemed value of $10.00 per share.

U.S. Federal Income Tax Considerations

For a discussion summarizing the U.S. federal income tax considerations of the Domestication and exercise of redemption rights, please see “U.S. Federal Income Tax Considerations.”

Expected Accounting Treatment

The Domestication

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of VGAC as a result of the Domestication. The business, capitalization, assets and liabilities, and financial statements of New 23andMe immediately following the Domestication will be the same as those of VGAC immediately prior to the Domestication.

The Business Combination

The Business Combination will be accounted for as a reverse recapitalization in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under this method of accounting, VGAC has been treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the following factors: (i) the business of 23andMe will comprise the ongoing operations of New 23andMe; (ii) 23andMe’s senior management will comprise the senior management of New 23andMe; (iii) the pre-Business Combination stockholders of 23andMe will have the largest ownership of New 23andMe and the right to appoint the highest number of board members relative to other stockholders; and (iv) the headquarters of 23andMe will be that of New 23andMe. Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of 23andMe with the Business Combination being treated as the equivalent of 23andMe issuing stock for the net assets of VGAC, accompanied by a recapitalization. The net assets of VGAC will be stated at historical costs, with no goodwill or other intangible assets recorded.

Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the U.S. Federal Trade Commission (“FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the FTC and certain waiting period



 

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requirements have been satisfied. The VGAC portion of the Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted.

At any time before or after consummation of the Business Combination, notwithstanding termination of the waiting period under the HSR Act, the applicable competition authorities in the United States or any other applicable jurisdiction could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of New 23andMe’s assets, subjecting the completion of the Business Combination to regulatory conditions, or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. VGAC cannot assure you that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, VGAC cannot assure you as to its result.

None of VGAC and 23andMe are aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Litigation Relating to the Business Combination

On April 11, 2021, a complaint was filed in the Supreme Court of the State of New York, County of New York, by a purported VGAC shareholder in connection with the Business Combination, captioned DeStefano v. VG Acquisition Corp., et al. (the “Complaint”). The Complaint names VGAC and members of the VGAC Board as defendants. The Complaint alleges breaches of fiduciary duties by members of the VGAC Board and aiding and abetting the VGAC Board’s breaches of fiduciary duties by VGAC. The Complaint also alleges that the registration statement of which this proxy statement/prospectus forms a part is materially deficient and omits and/or misrepresents material information including, among other things, certain financial information, details regarding VGAC’s financial advisors, and other information relating to the background of the Business Combination. In addition to costs and attorneys’ fees, the Complaint seeks to enjoin the closing of the Business Combination; and in the event the Business Combination is consummated, to set aside the Business Combination and/or obtain recessionary or other damages. Defendants believe that the Complaint is without merit.

There can be no assurances that additional complaints or demands will not be filed or made with respect to the Business Combination. If additional similar complaints or demands are filed or made, absent new or different allegations that are material, VGAC will not necessarily announce them.

Emerging Growth Company

VGAC is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in VGAC’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation, and stockholder approval of any golden parachute payments not previously approved.



 

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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. VGAC has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, VGAC, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of VGAC’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

New 23andMe will qualify as an “emerging growth company.” New 23andMe will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the initial public offering, (b) in which New 23andMe has total annual gross revenue of at least $1.07 billion, or (c) in which New 23andMe is deemed to be a large accelerated filer, which means the market value of the common equity of New 23andMe that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which New 23andMe has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act. Following the Business Combination, VGAC expects that New 23andMe will remain an emerging growth company until March 31, 2022.

Smaller Reporting Company

Additionally, VGAC is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced or scaled disclosure obligations, including, among other things, providing only two years of audited financial statements. Following the Business Combination, VGAC expects that New 23andMe will no longer be a smaller reporting company.

Risk Factors

In evaluating the proposals to be presented at the VGAC extraordinary general meeting, a VGAC shareholder should carefully read this proxy statement/consent solicitation statement/prospectus in its entirety and especially consider the factors discussed in the section entitled “Risk Factors.”

Recent Developments

Preliminary Financial Results for the Fiscal Year Ended March 31, 2021

23andMe expects to report total revenue for the fiscal year ended March 31, 2021 in the range of $240 million to $247 million, compared to projected revenue of $218 million provided by 23andMe to VGAC in December 2020 for use as a component of its overall evaluation of 23andMe as described herein under Business Combination Proposal—Certain Company Projected Financial Information. For the fiscal year ended March 31, 2020, revenue was $305.5 million. Revenue for fiscal 2021 was positively impacted in comparison to the forecast by PGS revenues recognized in the fourth quarter of fiscal 2021 following stronger than expected holiday sales performance. As discussed below under “23andMe’s Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations,” historically 23andMe has experienced higher PGS revenue in the fourth quarter of the fiscal year, which includes PGS revenue recognized with respect to the holiday period, compared to other quarters, and in fiscal 2020 and 2019, the fourth quarter revenue represented 31% and 35% of PGS revenue, respectively. In fiscal 2021, 23andMe expects reported fourth quarter PGS revenue to represent approximately 38% to 41% of PGS revenue for the fiscal year.



 

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For the fiscal year ended March 31, 2021, 23andMe expects to report positive Adjusted EBITDA for its Consumer & Research Services segment in the range of $5 million to 15 million, compared to $(65.8) million for the fiscal year ended March 31, 2020. The increase in Adjusted EBITDA was driven by improved operational performance in the Consumer & Research Services segment driven by strong sales of PGS kits during the holiday period and cost controls implemented as part of restructuring activities in fiscal 2020. 23andMe expects to report negative Adjusted EBITDA for the Therapeutics segment in the range of $(55) million to $(65) million, compared to $(52.9) million for the fiscal year ended March 31, 2020. Adjusted EBITDA is the measure of segment profitability reported to 23andMe’s Chief Executive Officer, its chief operating decision-maker. See “23andMe’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and 23andMe’s consolidated financial statements and the related notes included elsewhere in this proxy statement/consent solicitation statement/prospectus for more information with respect to Adjusted EBITDA.

The foregoing preliminary financial results for fiscal 2021 should be read together with the sections of this proxy statement/consent solicitation statement/prospectus entitled “Information About 23andMe” and “23andMe’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and 23andMe’s audited consolidated financial statements and related notes that are included elsewhere in this proxy statement/consent solicitation statement/prospectus. The foregoing contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, as described under the heading “Forward-Looking Statements.” Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” or elsewhere in this proxy statement/consent solicitation statement/prospectus.

Note Regarding Preliminary Financial Results. The foregoing preliminary financial results for fiscal 2021 are preliminary and unaudited and are based solely on information available to 23andMe as of the date of this proxy statement/consent solicitation statement/prospectus. Reported results for fiscal 2021 remain subject to the completion of management’s final reviews and 23andMe’s other financial closing procedures and may differ from these estimated preliminary results due to the completion of such financial closing procedures, final adjustments, and other developments that may arise during the review process. The foregoing preliminary financial results for fiscal 2021 included in this proxy statement/consent solicitation statement/prospectus have been prepared by and are the responsibility of 23andMe’s management. 23andMe’s independent registered public accountants have not audited, reviewed, compiled, or performed any procedures with respect to these estimated financial results and, accordingly, do not express an opinion or any other form of assurance with respect to these preliminary estimates.



 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF VGAC

VGAC is providing the following selected historical financial data to assist you in your analysis of the financial aspects of the Business Combination. VGAC’s condensed balance sheet data as of December 31, 2020 and the statement of operations data and cash flow data for the period from February 19, 2020 (inception) through December 31, 2020 are derived from VGAC’s audited financial statements included elsewhere in this proxy statement/consent solicitation statement/prospectus.

The information is only a summary and should be read in conjunction with VGAC’s consolidated financial statements and related notes and “VGAC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement/consent solicitation statement/prospectus. VGAC’s historical results are not necessarily indicative of future results, and the results for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

 

     For the Period from
February 19, 2020
to
December 31, 2020
 

Statement of Operations Data

  

Formation and operating costs

   $ 971,032  
  

 

 

 

Loss from operations

     (971,032

Other income (expense):

  

Interest earned on marketable securities held in Trust Account

     95,349  

Change in fair value of warranty liability

     (47,727,542
  

 

 

 

Total other income (expense)

     (47,632,193
  

 

 

 

Net Loss

   $ (48,603,225
  

 

 

 

Weighted average shares outstanding of Class A redeemable ordinary shares

     50,526,839  
  

 

 

 

Basic and diluted net income per share, Class A

   $ 0.00  
  

 

 

 

Weighted average shares outstanding of Class B non-redeemable ordinary shares

     12,032,668  
  

 

 

 

Basic and diluted net loss per share, Class B

   $ (4.05
  

 

 

 

 

     For the Period from
February 19, 2020
to
December 31, 2020
 

Balance Sheet Data

  

Total Current Assets

   $ 1,236,636  

Cash and marketable securities held in Trust Account

     508,645,349  
  

 

 

 

Total Assets

     509,881,985  

Total Liabilities

     88,115,661  

Class A ordinary shares subject to possible redemption, 41,676,632 shares at $10.00 per share

     416,766,320  

Class A ordinary shares, $0.0001 par value; 200,000,000 authorized; 9,178,368 shares issued and outstanding (excluding 41,676,632 shares subject to possible redemption)

     918  

Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 12,713,750 shares issued and outstanding

     1,271  

Additional paid-in capital

     53,601,040  

Accumulated deficit

     (48,603,225


 

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SELECTED HISTORICAL FINANCIAL INFORMATION OF 23ANDME

You should read the following summary historical financial data of 23andMe together with 23andMe’s consolidated financial statements and the related notes included elsewhere in this proxy statement/consent solicitation statement/prospectus and the information in the section entitled “23andMes Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 23andMe has derived the consolidated statements of operations data for the nine months ended December 31, 2020 and the fiscal years ended March 31, 2020 and March 31, 2019, and the balance sheet data as of December 31, 2020 and March 31, 2020 from 23andMe’s consolidated financial statements included elsewhere in this proxy statement/consent solicitation statement/prospectus. 23andMe’s historical results are not necessarily indicative of the results that may be expected in the future. In accordance with Item 3-06(a)(3) of Regulation S-X, 23andMe’s audited financial statements included herein consist of audited financial statements as of December 31, 2020 and March 31, 2020 and for the nine months ended December 31, 2020 and the fiscal years ended March 31, 2020 and March 31, 2019.

The following tables set forth 23andMe’s historical financial information as of, and for the periods ended on, the dates indicated (in thousands, except per share data).

 

     For the Nine
Months
Ended
December 31,
2020
    For the Year
Ended

March 31,
2020
    For the Year
Ended

March 31,
2019
 

Consolidated Statements of Operations Data

 

Revenue

   $ 155,338     $ 305,463     $ 440,900  

Cost of revenue

     82,861       168,031       248,010  

Gross profit

     72,477       137,432       192,890  

Operating expenses

      

Research and development

     114,260       181,276       140,532  

Sales and marketing

     31,242       110,519       190,848  

General and administrative

     45,094       59,392       50,293  

Restructuring and other charges

     —         44,692       —    

Total operating expenses

     190,596       395,879       381,673  

Loss from operations

     (118,119     (258,447     (188,783

Interest and other income, net

     1,513       7,584       5,250  

Net and comprehensive loss

   $ (116,606   $ (250,863   $ (183,533

Net loss per share attributable to common stockholders, basic and diluted

   $ (2.81   $ (6.52   $ (5.32

Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted

     41,498,560       38,453,767       34,482,458  
     For the Nine
Months
Ended
December 31,
2020
    For the Year
Ended
March 31,

2020
       

Consolidated Balance Sheet Data

 

 

Cash

   $ 288,687     $ 207,942    

Inventories

     16,249       14,122    

Total assets

   $ 476,539     $ 404,630    

Total liabilities

     320,560       270,430    

Redeemable convertible preferred stock

     837,351       755,083    

Accumulated deficit

     (910,225     (793,619  

Total stockholders’ deficit

     (681,372     (620,883  


 

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SUMMARY UNAUDITED PRO FORMA

CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial information has been derived from the unaudited pro forma condensed combined balance sheet as of December 31, 2020, which combines the historical consolidated balance sheet of VGAC as of December 31, 2020 with the historical consolidated balance sheet of 23andMe as of December 31, 2020 on a pro forma basis as if the Business Combination and the other events contemplated by the Merger Agreement had been consummated on December 31, 2020.

VGAC and 23andMe have different fiscal years. VGAC’s fiscal year ends on December 31, whereas 23andMe’s fiscal year ends on March 31. The following summary unaudited pro forma condensed combined financial information has been derived from then unaudited pro forma combined statement of operations for the twelve months ended December 31, 2020, which combines the historical statement of operations of VGAC for the period from February 19, 2020 (inception) through December 31, 2020 with the unaudited historical consolidated statement of operations of 23andMe for the twelve months ended December 31, 2020. 23andMe’s financial results for the twelve months ended December 31, 2020 have been derived by adding its unaudited results of operations for the three months ended March 31, 2020 to its audited results of operations for the nine months ended December 31, 2020. The unaudited pro forma combined statement of operations for the twelve months ended December 31, 2020 has been prepared utilizing period ends that differ by less than 93 days, as permitted by Rule 11-02 Regulation S-X. The unaudited pro forma combined consolidated statement of operations are presented on a pro forma basis as if the Business Combination and the other events contemplated by the Merger Agreement had been consummated on January 1, 2020.

The pro forma combined information contained herein assumes VGAC’s shareholders approve the proposed Merger. VGAC’s public shareholders may elect to redeem their Class A ordinary shares even if they approve the proposed Business Combination. VGAC cannot predict how many of its public shareholders will elect to redeem their Class A ordinary shares for cash. As a result, VGAC has provided pro forma combined financial statements under two different redemption scenarios:

 

   

Assuming no redemptions: This presentation assumes that no Class A ordinary shares are redeemed.

 

   

Assuming maximum redemptions: This presentation assumes that the maximum number of VGAC Class A ordinary shares are redeemed such that the remaining funds held in the trust account after the payment of the redeeming shares’ pro-rata allocation are sufficient to satisfy the Minimum Available Cash Condition of $500.0 million less transaction expenses, estimated at $64.1 million. This is based on the amount of $758.65 million in the trust account as of December 31, 2020, inclusive of accrued dividends and PIPE Financing of $250.0 million in connection with the Business Combination. Under this scenario, approximately 25,864,535 Class A ordinary shares may be redeemed and still enable VGAC to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement.

The actual redemptions will likely be within the scenarios described above; however, there can be no assurance regarding which scenario will be closest to the actual results. Under both scenarios, 23andMe is considered the accounting acquirer.

The unaudited pro forma combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what New 23andMe’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. Further, the unaudited pro forma combined financial information also may not be useful in predicting the future financial condition and results of operations of New 23andMe. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma combined



 

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financial statements and are subject to change as additional information becomes available and analyses are performed.

The unaudited pro forma combined financial information should also be read together with “VGAC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “23andMe’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/consent solicitation statement/prospectus.

 

     Unaudited Combined Pro Forma  
     Pro Forma Combined
(Assuming No
Redemptions)
     Pro Forma Combined
(Assuming Maximum
Redemptions)
 
     (in thousands, except share and per share data)  

Summary Unaudited Pro Forma Condensed Combined

     

Statement of Operations Data

     

Twelve Months Ended December 31, 2020

     

Revenue

   $ 249,627      $ 249,627  

Basic and diluted net loss per share(1)

   $ (0.56    $ (0.60

Summary Unaudited Pro Forma Condensed Combined

     

Balance Sheet Data as of December 31, 2020

     

Total assets

   $ 1,172,310      $ 913,665  

Total liabilities

   $ 390,845      $ 390,845  

Total stockholders’ equity

   $ 781,465      $ 522,820  

 

(1)

The basic and diluted net loss per share for (a) New 23andMe Class A Common Stock and (b) New 23andMe Class B Common Stock is the same for the respective periods. Thus, net loss per share is not presented separately for the different classes of New 23andMe Common Stock in the table above. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information.”



 

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COMPARATIVE PER SHARE DATA

The following table sets forth summary historical comparative share information for VGAC and 23andMe and unaudited pro forma combined per share information after giving effect to the Business Combination, assuming two redemption scenarios as follows:

 

   

Assuming no redemptions: This presentation assumes that no VGAC Class A ordinary shares are redeemed.

 

   

Assuming maximum redemptions: This presentation assumes that the maximum number of VGAC Class A ordinary shares are redeemed such that the remaining funds held in the trust account after the payment of the redeeming shares’ pro-rata allocation are sufficient to satisfy the Minimum Available Cash Condition of $500.0 million, less transaction expenses, estimated at $64.1 million. This is based on the amount of $758.6 million in the trust account as of December 31, 2020, inclusive of accrued dividends and PIPE Financing of $250.0 million in connection with the Business Combination, and a redemption price of $10.00 per share. Under this scenario, approximately 25,864,535 VGAC Class A ordinary shares may be redeemed and still enable VGAC to have sufficient cash to satisfy the cash closing conditions in the Merger Agreement.

The pro forma book value information reflects the Business Combination as if it had occurred on December 31, 2020. The weighted average shares outstanding and net earnings per share information reflect the Business Combination as if they had occurred on January 1, 2020.

This information is only a summary and should be read together with the summary historical financial information summary included elsewhere in this proxy statement/prospectus/consent solicitation, and the historical financial statements of VGAC and 23andMe and related notes. The unaudited pro forma combined per share information of VGAC and 23andMe is derived from, and should be read in conjunction with, the unaudited pro forma combined financial statements and related notes included elsewhere in this proxy statement/consent solicitation statement/prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share that would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of VGAC and 23andMe would have been had the companies been combined during the periods presented.

 

     Historical     Pro Forma  
     VGAC      23andMe     No
Redemption
    Maximum
Redemption
 
As of and for the twelve months ended December 31, 2020(1)          

Book value per share(2)

   $ 0.08      $ (0.02   $ 1.85     $ 1.32  

Net loss per share – basic and diluted(2)(3)

   $ 0.00      $ (4.56   $ (0.56   $ (0.60

 

(1)

The book value per share and net loss per share for (a) VGAC Class A ordinary shares and (b) VGAC Class B ordinary shares and (x) 23andMe Class A Common Stock and (y) 23andMe Class B Common Stock is the same for the respective periods. Thus, the book value per share and net loss per share are not presented separately for the different classes of VGAC ordinary shares and 23andMe common stock in the table above. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)

Book value per share is calculated as (a) total permanent equity at December 31, 2020 divided by (b) the total number of shares of common stock outstanding classified in permanent equity.



 

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(3)

At December 31, 2020, VGAC had outstanding warrants to purchase up to 25,065,666 shares of New 23andMe Class A Common Stock. One whole warrant entitles the holder thereof to purchase one share of New 23andMe Class A Common Stock at a price of $11.50 per share. New 23andMe’s warrants are anti-dilutive on a pro forma basis and have been excluded from the diluted number of the New 23andMe’s shares outstanding at the time of closing.



 

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RISK FACTORS

You should carefully review and consider the following risk factors and the other information contained in this proxy statement/consent solicitation statement/prospectus, including the Annexes and the accompanying consolidated financial statements of 23andMe and VGAC, in evaluating the Business Combination and the proposals to be voted on at the extraordinary general meeting. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” 23andMe or VGAC may face additional risks and uncertainties that are not presently known to 23andMe or VGAC, or that 23andMe or VGAC currently deems immaterial, which may also impair 23andMe’s or VGAC’s business or financial condition.

Risks Related to 23andMe and New 23andMe’s Business Following the Business Combination

Risks Related to 23andMe’s Business

Consumer and Research Services Business Risks

The market for personal genetics products and services has experienced a recent overall decline, which corresponds with 23andMe’s recent and significant decreases in revenues. If this trend continues or worsens, it would adversely affect 23andMe’s business and results of operations.

The 23andMe revenue model has historically been derived principally from customers who purchase its Personal Genome Service® (“PGS”). For the nine months ended December 31, 2020, the fiscal year ended March 31, 2020, and the fiscal year ended March 31, 2019, PGS revenue accounted for 77%, 89% and 96% percentage of revenues, respectively. 23andMe has recently experienced significant decreases in revenues. In fiscal 2020, 23andMe’s total revenues decreased by over 30% as compared to fiscal year 2019. There is no assurance that 23andMe’s business model will be successful or that it will generate increased revenues or become profitable as a result of marketing its current PGS products or any future products or services. 23andMe may be forced to make significant changes to its anticipated pricing, sales and revenue model to compete with its competitors’ offerings, and even if such changes are implemented, there is no guarantee that they will be successful. If the current market trend continues or worsens, or 23andMe is unable to adjust its approach to meet market demands, its revenues and results of operations will be adversely affected.

Competition in the personal genetics market presents an ongoing threat to the success of 23andMe’s business.

The number of companies entering the personal genetics market with offerings similar to 23andMe’s PGS continues to increase. 23andMe believes that its ability to compete depends upon many factors both within and beyond 23andMe’s control, including the following:

 

   

the size of 23andMe’s customer base;

 

   

the timing and market acceptance of products and services, including the developments and enhancements to those products and services, offered by 23andMe or its competitors;

 

   

customer service and support efforts;

 

   

selling and marketing efforts;

 

   

ease of use, performance, price and reliability of solutions developed either by 23andMe or its competitors; and

 

   

23andMe’s brand strength relative to its competitors.

23andMe also faces competition from other companies attempting to capitalize on the same, or similar, opportunities as it is, including from existing diagnostic, laboratory services and other companies entering the

 

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personal genetics market with new offerings such as direct access and/or consumer self-pay tests and genetic interpretation services. Some of 23andMe’s current and potential competitors have longer operating histories and greater financial, technical, marketing and other resources than it does. These factors may allow 23andMe’s competitors to respond more quickly or efficiently than it can to new or emerging technologies. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to build larger customer bases than 23andMe has. 23andMe’s competitors may develop products or services that are similar to its products and services or that achieve greater market acceptance than its products and services. This could attract customers away from 23andMe’s services and reduce its market share.

If 23andMe’s competitors receive further Food and Drug Administration (“FDA”) marketing approval for in vitro diagnostic products, 23andMe’s business could be adversely affected.

23andMe was the first direct-to-consumer genetic testing company to include FDA-authorized genetic health risk, carrier status and pharmacogenetic reports. 23andMe’s competitors had previously released products that were not cleared or approved by the FDA and required partnership with independent physicians, but in August 2020, one of its competitors received premarket notification, also called 510(k) clearance, for their saliva collection kit and one of their genetic health risk reports, and in December 2020 another competitor received a 510(k) clearance for one of their health risk reports. Following these FDA clearances, 23andMe’s competitors can now market those cleared reports directly to consumers rather than relying on clinician network partners. If 23andMe’s competitors receive further FDA approvals, 23andMe’s business could be adversely affected.

The sizes of the markets and forecasts of market growth for the demand of 23andMe’s products and services, including its research services and other key potential success factors are based on a number of complex assumptions and estimates, and may be inaccurate.

23andMe estimates annual total addressable markets and forecasts of market growth for its PGS. 23andMe has also developed a standard set of key performance indicators in order to enable it to assess the performance of its business in and across multiple markets, and to forecast future revenue. These estimates, forecasts and key performance indicators are based on a number of complex assumptions, internal and third-party estimates and other business data, including assumptions and estimates relating to 23andMe’s ability to generate revenue from the development of new workflows. While 23andMe believes its assumptions and the data underlying its estimates and key performance indicators are reasonable, there are inherent challenges in measuring or forecasting such information. As a result, these assumptions and estimates may not be correct and the conditions supporting 23andMe’s assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors and indicators. Consequently, 23andMe’s estimates of the annual total addressable market and its forecasts of market growth and future revenue from its products and services, including its research services may prove to be incorrect, and its key business metrics may not reflect 23andMe’s actual performance. For example, if the annual total addressable market or the potential market growth for 23andMe’s products and services is smaller than 23andMe has estimated or if the key business metrics 23andMe utilizes to forecast revenue are inaccurate, it may impair 23andMe’s sales growth and have an adverse impact on 23andMe’s business, financial condition, results of operations and prospects.

23andMe relies on key sole suppliers to manufacture and perform services used by customers who purchase 23andMe’s PGS. 23andMe’s reliance on limited contracted manufacturing and supply chain capacity could adversely affect 23andMe’s ability to meet customer demand.

23andMe does not have manufacturing capabilities and does not plan to develop such capacity in the foreseeable future. Accordingly, 23andMe relies on third-party suppliers to provide materials (such as 23andMe’s saliva collection kits, bead chips, reagents or other materials and equipment used in 23andMe’s laboratory operations) and services (such as 23andMe’s laboratory processing services). Currently, 23andMe relies on a sole supplier to manufacture 23andMe’s saliva collection kits used by customers who purchase

 

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23andMe’s PGS. Change in the supplier or design of certain of the materials which 23andMe relies on, in particular the bead chip and saliva collection kit, could result in a requirement that 23andMe seek additional premarket review from the FDA before making such a change. 23andMe also is required to validate any new laboratory or laboratories in accordance with FDA standards prior to utilizing their services for 23andMe’s U.S. customers. 23andMe cannot be certain that 23andMe will be able to secure alternative laboratory processing services, materials and equipment, and bring such alternative materials and equipment on line and revalidate them without experiencing interruptions in 23andMe’s workflow, or that any alternative materials will meet 23andMe’s quality control and performance requirements of 23andMe’s contracted laboratory.

Although 23andMe maintains relationships with suppliers with the objective of ensuring that 23andMe has adequate supply for the delivery of 23andMe’s services, increases in demand for such items can result in shortages and higher costs. 23andMe’s suppliers may not be able to meet 23andMe’s delivery schedules, 23andMe may lose a significant or sole supplier, a supplier may not be able to meet performance and quality specifications and 23andMe may not be able to purchase such items at a competitive cost. Further, 23andMe may experience shortages in certain items as a result of limited availability, increased demand, pandemics (such as the COVID-19 pandemic) or other outbreaks of contagious diseases, weather conditions and natural disasters, as well as other factors outside of 23andMe’s control. 23andMe’s freight costs may increase due to factors such as limited carrier availability, increased fuel costs, increased compliance costs associated with new or changing government regulations, pandemics (such as the COVID-19 pandemic) or other outbreaks of contagious diseases and inflation. Higher prices for natural gas, propane, electricity and fuel also may increase 23andMe’s production and delivery costs. The prices charged for 23andMe’s products may not reflect changes in its packaging material, freight, tariff and energy costs at the time they occur, or at all.

In order for other parties to perform manufacturing and participate in our supply chain, 23andMe sometimes must transfer technology to the other party, which can be time consuming and may not be successfully accomplished without considerable cost and expense, or at all. 23andMe will have to depend on these other parties to perform effectively on a timely basis and to comply with regulatory requirements. If for any reason they are unable to do so, and as a result 23andMe is unable to manufacture and supply sufficient quantities of 23andMe’s products on acceptable terms, or if 23andMe should encounter delays or other difficulties with the third parties on which 23andMe relies for its supply chain, its business, prospects, operating results, and financial condition may be materially harmed.

23andMe’s business significantly depends upon the strength of 23andMe’s brand, and if 23andMe is not able to maintain and enhance its brand, its ability to expand its customer base may be impaired and 23andMe’s business and operating results may be harmed.

23andMe believes that the brand identity that 23andMe has developed has significantly contributed to the success of 23andMe’s business. 23andMe also believes that maintaining and enhancing the “23andMe” brand is a significant factor in expanding 23andMe’s customer base and current and future business opportunities. Maintaining and enhancing 23andMe’s brand may require 23andMe to make substantial investments and these investments may not be successful. If 23andMe fails to promote and maintain the “23andMe” brand, or if 23andMe incurs excessive expenses in this effort, 23andMe’s business, operating results and financial condition may be materially and adversely affected. 23andMe anticipates that, as its market becomes increasingly competitive, maintaining and enhancing 23andMe’s brand may become increasingly difficult and expensive.

23andMe has a limited history introducing new products and services to 23andMe’s customers. If 23andMe’s efforts to attract new customers and engage existing customers with enhanced products and services, including 23andMe’s subscription service released in late 2020, are unsuccessful or if such efforts are more costly than 23andMe expects, its business may be harmed.

23andMe’s success depends on 23andMe’s ability to attract new customers and engage existing customers in a cost-effective manner. In order to acquire and engage customers, 23andMe must, among other things,

 

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promote and sustain its platform and provide high-quality products, user experiences, and service. If customers do not perceive 23andMe’s PGS and PGS reports to be reliable and of high quality, if 23andMe fails to introduce new and improved products and services, or if 23andMe introduces new products or services that are not favorably received by the market, 23andMe may not be able to attract or retain customers. For example, the increased growth of 23andMe’s subscription service, 23andMe+, depends upon how compelling this offering is to customers. Many of 23andMe’s 23andMe+ subscribers may initially access the subscription service for a discount. While 23andMe strives to demonstrate the value of 23andMe’s subscription service to its customers, and encourages eligible customers to become a paid subscriber of 23andMe+, these customers may not convert to a fully paid subscription to 23andMe+ after they take advantage of 23andMe’s promotions. Moreover, if 23andMe is unable to keep existing customers engaged, including by their participation in research and responses to questionnaires, 23andMe’s ability to grow its database and discover new insights about the relationship between genetics and disease will be compromised. If 23andMe is unable to attract new customers or engage existing customers, including as subscribers of 23andMe+, 23andMe’s revenue and 23andMe’s operating results may grow slower than expected or decline.

23andMe’s marketing efforts currently include various initiatives and consist primarily of digital marketing on a variety of social media channels, such as Facebook, search engine optimization on websites, such as Google, Bing, and Yahoo!, various branding strategies, and mobile “push” notifications and email. During the nine month period ended December 31, 2020, the fiscal year ended March 31, 2020, and the fiscal year ended March 31, 2019, 23andMe spent $31.2 million, $110.5 million, and $190.8 million on sales and marketing, representing 20%, 36% and 43% of 23andMe’s revenue, respectively. 23andMe anticipates that sales and marketing expenses will continue to represent a significant percentage of 23andMe’s overall operating costs for the foreseeable future. 23andMe has historically acquired a significant number of 23andMe’s users through digital advertising on platforms and websites owned by Facebook and Google, which may terminate their agreements with 23andMe at any time. 23andMe’s investments in sales and marketing may not effectively reach potential customers, potential customers may decide not to buy 23andMe’s products or services, or customer spend for 23andMe’s products and services may not yield the intended return on investment, any of which could negatively affect 23andMe’s financial results.

Many factors, some of which are beyond 23andMe’s control, may reduce 23andMe’s ability to acquire, maintain and further engage with customers, including those described in this “Risk Factors” section and the following:

 

   

system updates to app stores and advertising platforms such as Facebook and Google, including adjustments to algorithms that may decrease user engagement or negatively affect 23andMe’s ability to reach a broad audience;

 

   

changes in advertising platforms’ pricing, which could result in higher advertising costs;

 

   

changes in digital advertising platforms’ policies, such as those of Facebook and Google, that may delay or prevent 23andMe from advertising through these channels, which could result in reduced traffic to and sales on 23andMe’s platform;

 

   

changes in search algorithms by search engines;

 

   

inability of 23andMe’s email marketing messages to reach the intended recipients’ inbox;

 

   

ineffectiveness of 23andMe’s marketing efforts and other spend to continue to acquire new customers and maintain and increase engagement with existing customers;

 

   

decline in popularity of, or governmental restrictions on, social media platforms where 23andMe advertises;

 

   

the development of new search engines or social media sites that reduce traffic on existing search engines and social media sites; and

 

   

consumer behavior changes as a result of COVID-19.

 

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In addition, 23andMe believes that many of its new customers originate from word-of-mouth and other non-paid referrals from existing customers, including purchases of kits for gift giving, so 23andMe must ensure that its existing customers remain loyal and continue to derive value from its service in order to continue receiving those referrals. If 23andMe’s efforts to satisfy its existing customers are not successful, 23andMe may not be able to attract new customers. Further, if 23andMe’s customer base does not continue to grow, 23andMe may be required to incur significantly higher marketing expenses than 23andMe currently anticipates in order to attract new customers. A significant decline in 23andMe’s customer base would have an adverse effect on 23andMe’s business, financial condition and results of operations.

Revenue derived from 23andMe’s kit sales is dependent on seasonal holiday demand and the timing of Amazon Prime Day, which could lead to significant quarterly fluctuations in revenue and results of operations.

23andMe’s kit sales are dependent on seasonal holiday demand, as well as the timing of Amazon Prime Day, which has varied in recent years. 23andMe generates a significant amount of its PGS revenue during the fourth quarter of its fiscal year, due to seasonal holiday demand and to the fact that kits that are ordered during the holiday season (which occurs during the third quarter of its fiscal year) are recognized as revenue when the customer sends in their kit to the laboratory to be processed and genetic reports are delivered to the customer, which typically for holiday purchases tends to occur in the fourth fiscal quarter. For example, in fiscal 2020 and 2019, fourth quarter revenue represented 31% and 35% of 23andMe’s total revenue, respectively. 23andMe’s promotional activity is also higher in the third fiscal quarter, which may reduce gross margin during this period. Purchasing patterns of kit sales also are aligned with other gift-giving and family-oriented holidays such as Mother’s Day and Father’s Day, as well as with Amazon Prime Day, which may change from year to year.

This seasonality causes 23andMe’s operating results to vary considerably from quarter to quarter. Additionally, any decrease in sales or profitability during the fourth quarter of the fiscal year could have a disproportionately adverse effect on 23andMe’s results of operations, which could, in turn, cause the value of 23andMe’s Class A common stock to fluctuate or decrease. This seasonality also could become more pronounced and may cause 23andMe’s operating results to fluctuate more widely.

23andMe also may experience an increase in lab processing times and costs associated with shipping orders due to freight surcharges due to peak capacity constraints and additional long-zone shipments necessary to ensure timely delivery for the holiday season. Such delays could lead to an inability to meet advertised estimated lab processing times, resulting in customer dissatisfaction or reputational damage. If too many customers access 23andMe’s website within a short period of time, 23andMe may experience system interruptions that make its website unavailable or prevent 23andMe from efficiently fulfilling orders, which may reduce the volume of kits sold. Also, third-party delivery and direct ship vendors may be unable to deliver merchandise on a timely basis.

23andMe plans to expand operations abroad where 23andMe has limited operating experience and may be subject to increased business and economic risks that could impact 23andMe’s financial results.

23andMe’s PGS is available in the U.S., Canada, the United Kingdom (the “UK”), and in certain other markets globally. 23andMe plans to pursue international expansion of its business operations and 23andMe may expand its offering in existing international markets or enter new international markets where 23andMe has limited or no experience in marketing, selling and deploying 23andMe’s product and services. If 23andMe’s fail to deploy or manage 23andMe’s operations in these countries successfully, 23andMe’s business and operations may suffer. In addition, 23andMe is subject to a variety of risks inherent in doing business internationally, including:

 

   

political, social and/or economic instability;

 

   

risks related to governmental regulations in foreign jurisdictions and unexpected changes in regulatory requirements and enforcement;

 

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fluctuations in currency exchange rates;

 

   

higher levels of credit risk and payment fraud;

 

   

enhanced difficulties of integrating any foreign acquisitions;

 

   

burdens of complying with a variety of foreign laws;

 

   

reduced protection for intellectual property rights in some countries;

 

   

difficulties in staffing and managing global operations and the increased travel, infrastructure and legal compliance costs associated with multiple international locations and subsidiaries;

 

   

different regulations and practices with respect to employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain international jurisdictions;

 

   

compliance with statutory equity requirements; and

 

   

management of tax consequences and compliance.

If 23andMe is unable to manage the complexity of global operations successfully, 23andMe’s financial performance and operating results could suffer.

23andMe’s pricing strategies may not meet customers’ price expectations or may adversely affect 23andMe’s revenues.

23andMe’s pricing strategies have had, and may continue to have, a significant impact on 23andMe’s revenue. From time to time, 23andMe offers discounted prices as a means of attracting customers. Such offers and discounts, however, may reduce 23andMe’s revenue and margins. In addition, 23andMe’s competitors’ pricing and marketing strategies are beyond its control and can significantly affect the results of 23andMe’s pricing strategies. If 23andMe’s pricing strategies, which may evolve over time, fail to meet its customers’ price expectations or fail to result in increased margins, or if 23andMe is unable to compete effectively with its competitors if they engage in aggressive pricing strategies or other competitive activities, it could have a material adverse effect on 23andMe’s business.

Any significant disruption in service on 23andMe’s website, mobile applications, or in 23andMe’s computer or logistics systems, whether due to a failure with 23andMe’s information technology systems or that of a third-party vendor, could harm 23andMe’s reputation and may result in a loss of customers.

Customers purchase 23andMe’s PGS and access its services through 23andMe’s website or 23andMe’s mobile applications. 23andMe’s reputation and ability to attract, retain and serve 23andMe’s customers is dependent upon the reliable performance of its website, mobile applications, network infrastructure and content delivery processes. Interruptions in any of these systems, whether due to system failures, computer viruses or physical or electronic break-ins, could affect the security or availability of 23andMe’s website or mobile applications, including 23andMe’s databases, and prevent 23andMe’s customers from accessing and using 23andMe’s services.

23andMe’s systems and operations are also vulnerable to damage or interruption from fire, flood, power loss, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, earthquake and similar events. In addition, 23andMe’s headquarters are located in the San Francisco Bay Area which over the past several years has been subject to planned power outages to reduce the risk of wildfire, and these power outages can last for several days, which may limit or curtail certain operations. In the event of any catastrophic failure involving 23andMe’s website, 23andMe may be unable to serve its web traffic. The occurrence of any of the foregoing risks could result in damage to 23andMe’s systems or could cause them to fail completely, and 23andMe’s insurance may not cover such risks or may be insufficient to compensate 23andMe for losses that may occur.

 

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Additionally, 23andMe’s business model is dependent on 23andMe’s ability to deliver kits to customers and have kits processed and returned to 23andMe. This requires coordination between 23andMe’s logistics providers and third-party shipping services. Operational disruptions may be caused by factors outside of 23andMe’s control such as hostilities, political unrest, terrorist attacks, natural disasters, pandemics and public health emergencies, such as COVID-19, affecting the geographies where 23andMe’s operations and customers are located. 23andMe may not be effective at preventing or mitigating the effects of such disruptions, particularly in the case of a catastrophic event. In addition, operational disruptions may occur during the holiday season, causing delays or failures in deliveries of PGS kits. Any such disruption may result in lost revenues, a loss of customers and reputational damage, which would have an adverse effect on 23andMe business, results of operations and financial condition.

Use of social media and email may adversely affect 23andMe’s reputation or subject 23andMe to fines or other penalties.

23andMe uses social media and email as part of its approach to marketing. As laws and regulations rapidly evolve to govern the use of these channels, the failure by 23andMe, 23andMe’s employees or third parties acting on its behalf or at its direction to abide by applicable laws and regulations in the use of these channels could adversely affect 23andMe’s reputation or subject 23andMe to fines, other penalties, or lawsuits. Although 23andMe continues to update 23andMe’s practices as these laws change over time, 23andMe may be subject to lawsuits alleging 23andMe’s failure to comply with such laws. In addition, 23andMe’s employees or third parties acting on 23andMe’s behalf or at 23andMe’s direction may knowingly or inadvertently use social media, including through advertisements, in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential, or sensitive personal information of 23andMe’s business, employees, users, or others. Any such inappropriate use of social media and emails could also cause reputational damage.

23andMe’s customers may engage with 23andMe online through social media platforms, including Facebook, Instagram, and Twitter, by providing feedback and public commentary about all aspects of 23andMe’s business. Information concerning 23andMe, whether accurate or not, may be posted on social media platforms at any time and may have a disproportionately adverse impact on 23andMe’s brand, reputation, or business. The harm may be immediate without affording 23andMe an opportunity for redress or correction and could have a material adverse effect on 23andMe’s business, results of operations, financial condition, and prospects.

23andMe’s success depends, in large part, on 23andMe’s ability to extend its presence in the personal genetics market, provide customers with a high level of service at a competitive price, achieve sufficient sales volume to realize economies of scale, and create innovative new features, products, and services to offer to 23andMe’s customers. 23andMe’s failure to achieve any of these outcomes would adversely affect 23andMe’s business.

23andMe’s success depends, in large part, on 23andMe’s ability to extend its presence in the personal genetics market, provide customers with a high level of service at a competitive price, achieve sufficient sales volume to realize economies of scale, and create innovative new features, products and services to offer to 23andMe’s customers. The growth and expansion of 23andMe’s business and service offerings places a continuous significant strain on its management, operational and financial resources. 23andMe is required to manage multiple relationships with various strategic suppliers, customers and other third parties, including 23andMe’s collaborator, GSK, and regulatory agencies and advisors. To effectively manage 23andMe’s growth, 23andMe must continue to implement and improve 23andMe’s operational, financial and management information systems and to expand, train and manage 23andMe’s employee base. 23andMe further must continue to work to scale its own operations and its supplier operations to meet increases in demand for 23andMe’s services. In the event of further growth of 23andMe’s operations or in the number of 23andMe’s third-party relationships, 23andMe’s supply, systems, procedures or internal controls may not be adequate to support 23andMe’s operations and 23andMe’s management may not be able to manage any such growth effectively.

 

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23andMe’s current and future expense levels are, to a large extent, fixed and are largely based on 23andMe’s investment plans and 23andMe’s estimates of future revenue. Because the timing and amount of revenue from 23andMe’s PGS is difficult to forecast when revenue does not meet 23andMe’s expectations 23andMe may not be able to adjust 23andMe’s spending promptly or reduce its spending to levels commensurate with 23andMe’s revenue.

Even if 23andMe is able to successfully scale its infrastructure and operations, 23andMe cannot ensure that demand for its services will increase at levels consistent with the growth of its infrastructure. If 23andMe fails to generate demand commensurate with this growth or if 23andMe fails to scale its infrastructure sufficiently in advance to meet such demand, 23andMe’s business, financial condition and results of operations could be adversely affected, which may affect 23andMe’s ability to attract personnel or retain or motivate existing personnel.

23andMe’s Consumer and Research Services business relies on the continual growth of its database of information provided by customers who consent to participate in its research. If the number of 23andMe’s consenting customers declines or fails to grow, its research services revenue may be adversely affected, and its database may become less effective in facilitating its ability to identify new drug targets and to create new features, products and services to offer to its customers.

23andMe’s Consumer and Research Services business is based on its ongoing analysis of the continually growing quantity of data in its proprietary database of genotypic and phenotypic information provided by customers who have consented to participate in its research programs. To date, more than 80% of 23andMe’s customers have consented to participate in its research programs. If this percentage were to decline, or if consenting customers were to decide to opt out of 23andMe’s research programs, such that it cannot continue to grow its database, the utility and value of its database would be adversely affected.

23andMe’s Consumer and Research Services business will require it to continue to improve and develop new data mining technologies and innovations in the use of genotypic and phenotypic data.

23andMe’s research services business uses its database and data mining tools and technologies to analyze the impacts of genetics on the sources and risks of disease, and to identify potential promising drug targets. If 23andMe does not continue to improve and develop new data mining technologies and innovations in its use of genotypic and phenotypic data, and to attract and retain skilled scientists to analyze our data, its business would be adversely affected.

Although 23andMe believes that its genetics-powered target discovery platform has the potential to identify more promising drugs than traditional methods, its focus on using its genetics-powered platform to discover targets with therapeutic potential may not result in the discovery of commercially viable drug targets for 23andMe or its collaborators.

23andMe’s scientific approach focuses on using its propriety genotypic and phenotypic database to identify potential drug targets and predict their key properties without conducting time-consuming and expensive physical experiments. 23andMe’s proprietary data mining techniques underpin, its target identification collaborations and its own internal target identification programs. While 23andMe believes that its research platform has been successful to date in identifying promising drug targets, it has no assurance that its early success will continue or lead to future success in identifying such targets.

Media reports have in the past reported on consumer privacy concerns and the use of genetic information accessed from other genetic databases by law enforcement and governmental agencies. These reports may decrease the overall consumer demand for personal genetic products and services, including 23andMe’s.

23andMe receives a high degree of media coverage. Unfavorable publicity or consumer perception of 23andMe’s product and service offerings, including consumer privacy concerns related to any of its past, existing

 

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or future collaborations or the Transaction, could adversely affect its reputation, resulting in a negative impact on the size of its customer base, the loyalty of its customers, the percentage of its customers that consent to participate in its research program, and its ability to attract new customers.

Therapeutics Business Risks

23andMe expects to make significant investments in 23andMe’s continued efforts to develop new therapies as part of 23andMe’s Therapeutics business; these efforts may not be successful. As an organization, 23andMe do not have any experience in successful drug development or commercialization and its failure to execute on successful drug development or commercialization would adversely affect 23andMe’s business and results of operations.

Drug development is expensive, takes years to complete, and can have uncertain outcomes. Failure can occur at any stage of the development. 23andMe expects to incur significant expenses to advance 23andMe’s therapeutic development efforts, which may be unsuccessful. Developing new drugs is a speculative, risky and highly competitive endeavor. Drugs which may initially show promise may fail to achieve the desired results in development and clinical studies and may ultimately not prove to be safe and effective or meet expectations for clinical utility. 23andMe may need to alter its offerings in development and repeat clinical studies before 23andMe develops a potentially successful drug. If, after development, a drug appears successful, 23andMe or 23andMe’s collaborators will still need to obtain FDA and other regulatory approvals before 23andMe can market it. The FDA’s approval pathways are likely to involve significant time, as well as additional research, development and clinical study expenditures. The FDA may not clear, authorize or approve any drug 23andMe develops. Even if 23andMe develops a drug that receives regulatory clearance, authorization or approval, 23andMe or 23andMe’s collaborators would need to commit substantial resources to commercialize, sell and market it before it could be profitable, and the drug may never be commercially successful. Additionally, development of any product or service may be disrupted or made less viable by the development of competing products or services. Because of the numerous risks and uncertainties associated with developing drugs, 23andMe is unable to predict whether or when 23andMe’s Therapeutics business may successfully commercialize a drug target.

New potential products and services may fail at any stage of development or commercialization and if 23andMe determines that any of 23andMe’s current or future products or services are unlikely to succeed, 23andMe may abandon them without any return on 23andMe’s investment. If 23andMe is unsuccessful in developing additional products or services, 23andMe’s potential for growth may be impaired.

Even if 23andMe or 23andMe’s drug discovery collaborators are able to develop drugs that demonstrate potential in preclinical studies, 23andMe or they may not succeed in demonstrating safety and efficacy of drugs in human clinical trials.

Even if 23andMe or 23andMe’s drug discovery collaborators are able to develop drugs that demonstrate potential in preclinical studies, 23andMe or they may not succeed in demonstrating safety and efficacy of drugs in human clinical trials. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their drugs performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their drugs.

If 23andMe fails to succeed in 23andMe’s drug development efforts, or to develop and commercialize additional products and services, 23andMe’s ability to expand its business and achieve its strategic objectives would be impaired.

23andMe’s Therapeutics business is focused on leveraging 23andMe’s proprietary genotypic and phenotypic database in order to speed the development of successful new drugs. However, 23andMe may never succeed in developing a viable drug target. There are many lengthy and complex processes that all must yield

 

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successful results in order for 23andMe to ultimately succeed in developing and commercializing a drug. There are numerous stages of the drug development process, from initial target identification and validation, through various stages of rigorous preclinical research, to the selection of a lead drug which is suitable for human clinical testing. Once a clinical drug is selected, there are several stages of clinical testing it must undergo, each dependent upon success in the prior stage. This is a long and costly process that will require significant time and resources and, if not successful, for any number of reasons that 23andMe cannot anticipate, would have an adverse effect on 23andMe’s business, financial condition and results of operations. In addition, external competition by other therapeutic companies can adversely affect 23andMe’s expected market share and revenues of 23andMe’s drugs.

Developing new products and services requires substantial technical, financial and human resources, whether or not any products or services are ultimately commercialized. 23andMe may pursue what 23andMe believes is a promising opportunity only to discover that certain of 23andMe’s risk or resource allocation decisions were incorrect or insufficient, or that individual products, services or 23andMe’s science in general has technology or biology risks that were previously unknown or underappreciated. In the event material decisions in any of these areas turn out to be incorrect or sub-optimal, 23andMe may experience a material adverse impact on 23andMe’s business and ability to fund 23andMe’s operations.

23andMe’s Therapeutics business faces substantial competition, which may result in others discovering, developing or commercializing drugs before or more successfully than 23andMe can.

23andMe has not yet developed and commercialized, and may never successfully develop or commercialize, a drug target. 23andMe’s Therapeutics business faces substantial competition from larger, more established pharmaceutical and biotechnology companies with marketed products that have been accepted by the medical community, patients, and third-party payors, as well as smaller companies in 23andMe’s industry that have successfully identified and developed drugs. 23andMe’s ability to compete in this industry may be affected by the previous adoption of such products by the medical community, patients, and third-party payors.

23andMe recognizes that other companies, including larger pharmaceutical and biotechnology companies, may be developing or have plans to develop drugs and therapies that may compete with ours. Many of 23andMe’s competitors have substantially greater financial, technical, and human resources than 23andMe has. In addition, many of 23andMe’s competitors have significantly greater experience than 23andMe has in undertaking preclinical studies and human clinical trials of drugs, obtaining FDA and other regulatory approvals of drugs for use in healthcare and manufacturing, and marketing and selling approved drugs. 23andMe’s competitors may discover, develop or commercialize drugs or other novel technologies that are more effective, safer or less costly than any that 23andMe is developing. 23andMe’s competitors may also obtain FDA or other regulatory approval for their drugs more rapidly than 23andMe may obtain approval for any drug that 23andMe develops.

23andMe anticipates that the competition with 23andMe’s drugs and therapies will be based on a number of factors, including product efficacy, safety, availability, and price. The timing of market introduction of any successful drug and competitive drugs will also affect competition among products. 23andMe expects the relative speed with which 23andMe can develop drugs, complete the clinical trials and approval processes, and supply commercial quantities of such drugs to the market to be important competitive factors. 23andMe’s competitive position will also depend upon 23andMe’s ability to attract and retain qualified personnel, to obtain patent protection or otherwise develop proprietary products or processes, and protect 23andMe’s intellectual property, and to secure sufficient capital resources for the period between target identification and commercial sales of the resulting drug product.

23andMe’s long-term success will depend, in part, upon 23andMe’s ability to develop, receive regulatory approval for, and commercialize 23andMe’s drugs.

In the U.S., 23andMe’s drugs and the activities associated with their development, including testing, manufacture, recordkeeping, storage and approval, are subject to comprehensive regulation by the FDA.

 

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Generally, failure to obtain regulatory approval for a drug will prevent 23andMe from commercializing such target. 23andMe has limited resources for use in preparing, filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party contract research organizations and consultants to assist 23andMe in this process. The FDA and other comparable regulatory agencies in foreign countries impose substantial and rigorous requirements for the development, production, marketing authorization and commercial introduction of drugs. These requirements include pre-clinical, laboratory and clinical testing procedures, sampling activities, clinical trials and other costly and time-consuming procedures. In addition, regulation is not static, and regulatory authorities, including the FDA evolve in their staff interpretations and practices and may impose more stringent or different requirements than currently in effect, which may adversely affect 23andMe’s planned and ongoing development and/or 23andMe’s sales and marketing efforts.

Developing and obtaining regulatory approval for drugs is a lengthy process, often taking a number of years, is uncertain and is expensive. All of the drugs that 23andMe is developing, or may develop in the future, require research and development, pre-clinical studies, nonclinical testing and clinical trials prior to seeking regulatory approval and commencing commercial sales. In addition, 23andMe may need to address a number of technological challenges in order to complete development of 23andMe’s drugs. As a result, the development of drugs may take longer than anticipated or not be successful at all. There can be no assurance that the FDA will ever permit 23andMe to market any new drug that 23andMe develops. Even if regulatory approval is granted, such approval may include significant limitations on indicated uses, which could materially and adversely affect the prospects of any new therapeutic.

In order to market any drugs outside of the U.S., 23andMe must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and effectiveness. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional drug testing and validation and additional or different administrative review periods from those in the U.S., including additional preclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions.

Seeking foreign regulatory approval could result in difficulties and costs and require additional nonclinical studies or clinical trials, which could be costly and time-consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of 23andMe’s drugs in those countries. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. 23andMe does not have any drugs approved for sale in any jurisdiction, including international markets, and 23andMe does not have experience in obtaining regulatory approval in international markets. If 23andMe fails to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approval in international markets is delayed, 23andMe’s target market will be reduced and 23andMe’s ability to realize the full market potential of 23andMe’s drugs will be harmed.

23andMe’s drugs are in preclinical or clinical development, which is a lengthy and expensive process with uncertain outcomes and the potential for substantial delays. 23andMe cannot give any assurance that any of 23andMe’s drugs will receive regulatory approval, which is necessary before they can be commercialized.

Before obtaining marketing approval from regulatory authorities for the sale of 23andMe’s drugs, 23andMe must conduct extensive clinical trials to demonstrate the safety and efficacy of the drugs in humans. To date, 23andMe has focused 23andMe’s collaborative efforts and significant financial resources on developing new drugs. 23andMe cannot be certain that any clinical trials will be conducted as planned or completed on schedule, if at all. 23andMe’s inability to successfully complete preclinical and clinical development could result in additional costs to 23andMe and negatively impact 23andMe’s ability to generate revenue. 23andMe’s future success is dependent on 23andMe’s ability to successfully develop, obtain regulatory approval for, and then successfully commercialize drugs. 23andMe currently has no drugs approved for sale and have not generated any revenue from sales of drugs, and 23andMe may never be able to develop or successfully commercialize a

 

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marketable drug. The results of early-stage clinical trials and preclinical studies may not be predictive of future results. Initial data in clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.

All of 23andMe’s identified drugs require additional development, management of preclinical, clinical, and manufacturing activities, and regulatory approval. In addition, 23andMe will need to obtain adequate manufacturing supply, build a commercial organization, commence marketing efforts, and obtain reimbursement before 23andMe generates any significant revenue from commercial product sales, if ever. Many of 23andMe’s drugs are in early-stage research or translational phases of development, and the risk of failure for these programs is high. 23andMe cannot be certain that any of 23andMe’s drugs will be successful in clinical trials or receive regulatory approval. Further, 23andMe’s drugs may not receive regulatory approval even if they are successful in clinical trials. If 23andMe does not receive regulatory approvals for 23andMe’s drugs, 23andMe and its subsidiaries may not be able to continue operations.

If 23andMe encounters difficulties enrolling patients in clinical trials, 23andMe’s clinical development activities could be delayed or otherwise adversely affected.

While 23andMe’s proprietary database is 23andMe’s primary source for identifying and qualifying trial participants to participate in clinical studies, such identification and qualification is critical to 23andMe’s success. The timing of 23andMe’s clinical studies depends on the speed at which 23andMe can recruit trial participants to participate in testing 23andMe’s drugs. Delays in enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect 23andMe’s ability to advance the development of 23andMe’s drugs. If trial participants are unwilling to participate in 23andMe’s studies because of negative publicity of 23andMe’s trials or other trials of similar drugs, or those related to a specific therapeutic area, or for other reasons, including competitive clinical studies for similar patient populations, the timeline for recruiting trial participants, conducting studies, and obtaining regulatory approval of potential drugs may be delayed. 23andMe also may face delays as a result of unforeseen global circumstances as a result of the COVID-19 pandemic. Any delays could result in increased costs, delays in advancing 23andMe’s drug development, delays in testing the effectiveness of 23andMe’s drugs, or termination of the clinical studies altogether.

Use of 23andMe’s therapeutic drugs could be associated with side effects, adverse events or other properties or safety risks, which could delay or halt their clinical development, prevent their regulatory approval, cause 23andMe to suspend or discontinue clinical trials, abandon a drug, limit their commercial potential, if approved, or result in other significant negative consequences that could severely harm 23andMe’s business, prospects, financial condition and results of operations.

Undesirable or unacceptable side effects caused by 23andMe’s drugs, including drugs that are part of 23andMe’s collaboration with GSK, could cause 23andMe or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Results of clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Even if any of 23andMe’s current or future therapeutic drugs receive regulatory approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, in which case 23andMe may not generate significant revenues or become profitable.

23andMe’s use of third parties to manufacture and develop 23andMe’s drugs for preclinical studies and clinical trials may increase the risk that 23andMe will not have sufficient quantities of 23andMe’s drugs, products, or necessary quantities of such materials on time or at an acceptable cost.

23andMe has no experience in drug formulation or manufacturing and 23andMe lacks the resources and expertise to formulate or manufacture 23andMe’s own therapeutic drugs internally. Therefore, 23andMe relies on

 

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third-party expertise to support it in this area. 23andMe has entered into a contract with a third-party manufacturer to manufacture 23andMe’s drug, and 23andMe intends to enter into contracts with third-party manufacturers to supply, store and distribute supplies of 23andMe’s drugs for 23andMe’s clinical trials. If any of 23andMe’s drugs receives FDA approval, 23andMe expects to rely on third-party contractors to manufacture 23andMe’s drugs. 23andMe has no current plans to build internal manufacturing capacity for any drug, and 23andMe has no long-term supply arrangements.

23andMe’s reliance on third-party manufacturers exposes 23andMe to potential risks, such as the following:

 

   

23andMe may be unable to contract with third-party manufacturers on acceptable terms, or at all, because the number of potential manufacturers is limited. Potential manufacturers of any drug that is approved will be subject to FDA compliance inspections and any new manufacturer would have to be qualified to produce 23andMe’s drugs;

 

   

23andMe’s third-party manufacturers might be unable to formulate and manufacture 23andMe’s drugs in the volume and of the quality required to meet 23andMe’s clinical and commercial needs, if any;

 

   

23andMe’s third-party manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply 23andMe’s clinical trials through completion or to successfully produce, store and distribute 23andMe’s commercial products, if approved;

 

   

Drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA and other government agencies to ensure compliance with current good manufacturing practices (“cGMP”) and other government regulations and corresponding foreign standards. 23andMe does not have direct control over third-party manufacturers’ compliance with these regulations and standards, but 23andMe may ultimately be responsible for any of their failures;

 

   

If any third-party manufacturer makes improvements in the manufacturing process for 23andMe’s products, 23andMe may not own, or may have to share, the intellectual property rights to such improvements; and

 

   

A third-party manufacturer may gain knowledge from working with 23andMe that could be used to supply one of 23andMe’s competitors with a product that competes with 23andMe’s.

If 23andMe’s contract manufacturers or other third parties fail to deliver 23andMe’s drugs for clinical investigation and, if approved, for commercial sale on a timely basis, with sufficient quality, and at commercially reasonable prices, 23andMe may be required to delay or suspend development and commercialization of 23andMe’s drugs. For example, 23andMe’s clinical trials must be conducted with product that complies with cGMP. Failure to comply may require 23andMe to repeat or conduct additional preclinical and/or clinical trials, which would increase 23andMe’s development costs and delay the regulatory approval process and 23andMe’s ability to generate and grow revenues.

In addition, any significant disruption in 23andMe’s supplier relationships could harm 23andMe’s business. 23andMe sources key materials from third parties, either directly through agreements with suppliers or indirectly through 23andMe’s manufacturers who have agreements with suppliers. There are a small number of suppliers for certain capital equipment and key materials that are used to manufacture 23andMe’s drugs. Such suppliers may not sell these key materials to 23andMe’s manufacturers at the times 23andMe needs them or on commercially reasonable terms. 23andMe does not have any control over the process or timing of the acquisition of these key materials by 23andMe’s manufacturers. Moreover, 23andMe currently does not have agreements for the commercial production of a number of these key materials which are used in the manufacture of 23andMe’s drugs. Any significant delay in the supply of a drug or its key materials for an ongoing clinical study could considerably delay completion of 23andMe’s clinical studies, drug testing and potential regulatory approval of 23andMe’s drugs. If 23andMe’s manufacturers or 23andMe are unable to purchase these key materials for 23andMe’s drugs after regulatory approval, the commercial launch of 23andMe’s drugs could be delayed or there could be a shortage in supply, which would impair 23andMe’s ability to generate revenues from the sale of 23andMe’s drugs, if approved.

 

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Each of these risks, if realized, could delay or have other adverse impacts on 23andMe’s clinical trials and the approval and commercialization of 23andMe’s drugs, potentially resulting in higher costs, reduced revenues or both.

As an organization, 23andMe has no experience designing or implementing clinical trials. Failure to adequately design a trial, or incorrect assumptions about the design of the trial, could adversely affect 23andMe’s ability to initiate the trial, enroll patients, complete the trial, or obtain regulatory approval on the basis of the trial results, as well as lead to increased or unexpected costs.

The design and implementation of clinical trials is a complex process. 23andMe has no experience implementing or designing clinical trials, and 23andMe may not successfully or cost-effectively design and implement clinical trials that achieve 23andMe’s desired clinical endpoints efficiently, or at all. A clinical trial that is not well-designed may delay or even prevent initiation of the trial, can lead to increased difficulty in enrolling patients, may make it more difficult to obtain regulatory approval for the drug on the basis of the study results, or, even if a drug is approved, could make it more difficult to commercialize the product successfully or obtain reimbursement from third-party payors. Additionally, a trial that is not well-designed could be inefficient or more expensive than it otherwise would have been, or 23andMe may incorrectly estimate the costs to implement the clinical trial, which could lead to a shortfall in funding.

If, in the future, 23andMe is unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any approved drug by a regulatory agency, 23andMe may not be successful in commercializing those drugs if and when they are approved.

23andMe currently has no sales, marketing or distribution capabilities and has no experience in marketing drugs. 23andMe does not currently have an in-house marketing organization or sales force, but may develop such organization and sales force in the future, which will require significant capital expenditures, management resources and time. 23andMe will have to compete with other healthcare companies to recruit, hire, train and retain marketing and sales personnel.

In addition to establishing internal sales, marketing and distribution capabilities, 23andMe intends to optimistically pursue collaborative arrangements regarding the sales and marketing of its products, however, there can be no assurance that 23andMe will be able to establish or maintain such collaborative arrangements, or if 23andMe is able to do so, that it will have effective sales forces. Any revenue 23andMe receives will depend upon the efforts of such third parties, which may not be successful. 23andMe may have little or no control over the marketing and sales efforts of such third parties and its revenue from product sales may be lower than if 23andMe had commercialized its drug ourselves. 23andMe also faces competition in its search for third parties to assist it with the sales and marketing efforts of its drugs.

There can be no assurance that 23andMe will be able to develop in-house sales and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any product in the U.S. or overseas.

General Business Risks

23andMe has identified a material weakness in 23andMe’s internal control over financial reporting and, if 23andMe’s remediation of this material weakness is not effective, or if New 23andMe fails to maintain effective internal control over financial reporting in the future, 23andMe’s ability to produce accurate and timely consolidated financial statements could be impaired. This could adversely affect investor confidence in 23andMe’s company and, as a result, the value of New 23andMe’s common stock.

In connection with the audit of 23andMe’s consolidated financial statements included elsewhere in this proxy statement/consent solicitation statement/prospectus, 23andMe identified a material weakness in 23andMe’s internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material

 

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misstatement of 23andMe’s consolidated financial statements will not be prevented or detected on a timely basis. The material weakness identified was a lack of sufficient resources in 23andMe’s finance function to meet 23andMe’s financial reporting requirements. This material weakness resulted in insufficient management review of journal entries, account reconciliations, and review of financial statements. 23andMe has taken steps to enhance 23andMe’s internal control environment, including dedicating additional resources to 23andMe’s finance function in anticipation of the closing of the Business Combination. Although 23andMe plans to complete this remediation process as quickly as possible, 23andMe cannot estimate at this time how long it will take.

Following the closing of the Business Combination, failure to maintain effective internal control over financial reporting at New 23andMe could have a material and adverse effect. Starting with fiscal year 2022, Section 404 of the Sarbanes-Oxley Act will require New 23andMe to include in its annual reports on Form 10-K an assessment by management of the effectiveness of its internal control over financial reporting. In addition, also starting with fiscal year 2022, New 23andMe will be required to have its independent registered public accounting firm attest to and report on management’s assessment of the effectiveness of internal control over financial reporting when it ceases qualifying as an “emerging growth company,” pursuant to the JOBS Act. If New 23andMe is unable to conclude that it has effective internal control over financial reporting, or its independent registered public accounting firm is unable to provide an attestation and an unqualified report as to the effectiveness of internal control over financial reporting, investors might lose confidence in the reliability of New 23andMe’s financial statements, which could result in a decrease in the value of its securities.

23andMe may be subject to legal proceedings and litigation, which are costly to defend and could materially harm its business and results of operations.

23andMe may be party to lawsuits and legal proceedings in the normal course of business. These matters are often expensive and disruptive to normal business operations. 23andMe may face allegations, lawsuits, and regulatory inquiries, audits, and investigations regarding data privacy, security, labor and employment, consumer protection, practice of medicine, and intellectual property infringement, including claims related to privacy, patents, publicity, trademarks, copyrights, and other rights. A portion of the technologies 23andMe uses incorporates open source software, and 23andMe may face claims claiming ownership of open source software or patents related to that software, rights to its intellectual property or breach of open source license terms, including a demand to release material portions of its source code or otherwise seeking to enforce the terms of the applicable open source license. 23andMe may also face allegations or litigation related to its acquisitions, securities issuances or business practices, including public disclosures about its business. Litigation and regulatory proceedings, and particularly the healthcare regulatory and class action matters 23andMe could face, may be protracted and expensive, and the results are difficult to predict. Certain of these matters may include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, 23andMe’s litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require 23andMe to modify 23andMe’s solution or require 23andMe to stop offering certain features, all of which could negatively impact 23andMe’s acquisition of customers and revenue growth. 23andMe may also become subject to periodic audits, which could likely increase 23andMe’s regulatory compliance costs and may require 23andMe to change 23andMe’s business practices, which could negatively impact 23andMe’s revenue growth. Managing legal proceedings, litigation and audits, even if 23andMe achieve favorable outcomes, is time-consuming and diverts management’s attention from 23andMe’s business.

The results of regulatory proceedings, litigation, claims, and audits cannot be predicted with certainty, and determining reserves for pending litigation and other legal, regulatory and audit matters requires significant judgment. There can be no assurance that 23andMe’s expectations will prove correct, and even if these matters are resolved in 23andMe’s favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm 23andMe’s reputation, business, financial condition and results of operations.

 

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Ongoing litigation could have a significant negative impact on 23andMe.

On December 10, 2019, Celmatix Inc. (“Celmatix”) filed a complaint in New York state court against 23andMe alleging that 23andMe breached the research agreement entered into by Celmatix and 23andMe in 2015 and tortiously interfered with Celmatix’s fundraising efforts and alleging that it believed it incurred damages of $100 million. On February 14, 2020, 23andMe filed its answer and counterclaims against Celmatix, among other things, for failure to make payments due to 23andMe. 23andMe believes the claims made against it to be without merit and is defending this lawsuit vigorously.

Regardless of the outcome of any litigation, the litigation itself can have an adverse impact on 23andMe because of legal costs, diversion of management resources and other factors. The ultimate resolution of the litigation with Celmatix could also adversely affect 23andMe’s business and financial position.

23andMe’s reported financial results may be adversely affected by changes in accounting principles generally accepted in the U.S.

Generally accepted accounting principles in the U.S. are subject to interpretation by the Financial Accounting Standards Board (“FASB”), the American Institute of Certified Public Accountants, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. Any change in these principles or interpretations could have a significant effect on 23andMe’s reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

23andMe has incurred significant losses since inception, 23andMe expects to incur losses in the future, and 23andMe may not be able to generate sufficient revenue to achieve and maintain profitability.

23andMe has incurred significant losses since 23andMe’s inception. For the nine-month period ended December 31, 2020 and for the fiscal years ended March 31, 2020 and March 31, 2019, 23andMe incurred net losses of $116.6 million, $250.9 million and $183.5 million, respectively. As of December 31, 2020 and March 31, 2020, 23andMe had an accumulated deficit of $910.2 million and $793.6 million, respectively. 23andMe expects to incur substantial operating losses in future periods.

23andMe expects to continue to incur significant expenses and operating losses for the foreseeable future as 23andMe continues to expand therapeutic research and development efforts, develop drugs with collaborators or on 23andMe’s own, enhance 23andMe’s existing consumer products, services and business model, broaden 23andMe’s customer base, work with the FDA and other regulatory agencies, and hire additional employees to support 23andMe’s growth. Historically, 23andMe has devoted most of 23andMe’s financial resources to the research and development of 23andMe’s PGS, as well as its Therapeutics business, which 23andMe launched in April 2015. The discovery and development of safe and effective therapies is a complex and uncertain process, which takes many years and involves significant costs. 23andMe may not succeed in increasing 23andMe’s revenues, which historically have been reliant on sales of 23andMe’s PGS, in a manner that will be sufficient to offset these higher expenses. Any failure to increase 23andMe’s revenues as 23andMe implements initiatives to grow 23andMe’s business could prevent 23andMe from achieving profitability. 23andMe cannot be certain that 23andMe will be able to achieve profitability on a quarterly or annual basis. If 23andMe is unable to address these risks and difficulties as 23andMe encounters them, 23andMe’s business, financial condition and results of operations may suffer.

23andMe’s ability to use its net operating loss carryforwards may be subject to limitations.

As of December 31, 2020, 23andMe had approximately $750.9 million of federal net operating loss carryforwards available to reduce future taxable income, which will begin to expire in 2026. Realization of any tax benefit from 23andMe’s carryforwards is dependent on 23andMe’s ability to generate future taxable income and the absence of certain “ownership changes” of 23andMe’s common stock. An “ownership change,” as

 

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defined in the applicable federal income tax rules, could place significant limitations, on an annual basis, on the amount of 23andMe’s future taxable income that may be offset by 23andMe’s carryforwards. Such limitations, in conjunction with the net operating loss expiration provisions, could effectively eliminate 23andMe’s ability to utilize a substantial portion of 23andMe’s carryforwards. 23andMe has not conducted a study to determine whether an “ownership change” has occurred since March 31, 2020 or if: (i) the Merger will result in an “ownership change,” (ii) 23andMe has incurred one or more “ownership changes,” or (iii) the issuance of shares of New 23andMe common stock results in an “ownership change.” Other issuances of shares of 23andMe’s common stock which could cause an “ownership change” include the issuance of shares of common stock upon future conversion or exercise of outstanding options and warrants or future common stock offerings. If 23andMe has experienced or does experience an ownership change at any time since its formation, use of its net operating loss carryforwards would be subject to an annual limitation under Section 382 or 383 of the Internal Revenue Code. Such a limitation would be determined by first multiplying the value of the outstanding shares of 23andMe at the time of the ownership change by the applicable long-term, tax-exempt rate. A current estimate of the applicable long-term tax-exempt rate is 1%. In addition, the Internal Revenue Code regulations allow the annual limitation to be increased by certain adjustments, which, for 23andMe, would primarily relate to recognized built-in gains on appreciated assets during the five-year recognition period beginning on the ownership change date.

23andMe may incur debt or assume contingent or other liabilities or dilute 23andMe’s shareholders in connection with acquisitions or strategic alliances.

23andMe may issue equity securities to pay for future acquisitions or strategic alliances, which could be dilutive to existing shareholders. 23andMe may also incur debt or assume contingent or other liabilities in connection with acquisitions and strategic alliances, which could impose restrictions on 23andMe’s business operations and harm 23andMe’s operating results. Further, any additional equity financing, debt financing, or credit facility used for such acquisitions may not be on favorable terms, and any such financing or facility may place restrictions on 23andMe’s business. In addition, to the extent that the economic benefits associated with any of 23andMe’s acquisitions diminish in the future, 23andMe may incur incremental operating losses, and 23andMe may be required to record additional write downs of goodwill, intangible assets or other assets associated with such acquisitions, which would adversely affect 23andMe’s operating results.

The United Kingdom’s withdrawal from the European Union could have an adverse impact on 23andMe’s business.

The changes to the trading relationship between the UK and European Union (“EU”) resulting from the UK’s exit from the EU on January 31, 2020 (commonly referred to as “Brexit”) may result in additional regulatory requirements for 23andMe to market 23andMe’s products and services in the UK and an increased cost of goods imported into and exported from the UK. Additional currency volatility could result in a weaker British pound, which increases the cost of goods imported into the UK from sales to UK-based customers. Agreements regarding tariff, trade, regulatory and other aspects of the UK’s future relationship with the EU and its member status were reached on December 24, 2021. The UK parliament approved the agreements on December 30, 2020 and the European Parliament will approve the agreement in 2021. As such, on January 1, 2021 provisional application of the agreement took effect and the new rules entered into force. 23andMe’s business in the UK may be adversely impacted by ongoing uncertainty, fluctuations in currency exchange rates, changes in trade policies, or changes in tax, data privacy or other laws. Any of these effects, among others, could materially and adversely affect 23andMe’s business, results of operations, and financial condition.

23andMe’s business and future operating results may be adversely affected by catastrophic or other events outside of 23andMe’s control.

23andMe conducts its research and development in 23andMe’s facilities located in South San Francisco, California and Sunnyvale, California. Any damage to 23andMe’s facilities or the servers 23andMe relies on for 23andMe’s database would be costly and could require substantial lead-time to repair or replace. 23andMe’s

 

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business and operating results may be harmed due to interruption of 23andMe’s research and development by events outside of 23andMe’s control, including earthquakes and fires. Other possible disruptions may include power loss and telecommunications failures. In the event of a prolonged disruption, 23andMe may lose customers and 23andMe may be unable to regain those customers thereafter. 23andMe’s insurance may not be sufficient to cover all of 23andMe’s potential losses and may not continue to be available to 23andMe on acceptable terms, or at all.

23andMe may need additional capital, and 23andMe cannot be sure that additional financing will be available at acceptable terms or at all.

As of December 31, 2020, 23andMe’s principal source of liquidity was cash of $288.7 million, which was held for working capital purposes. Since 23andMe’s inception, 23andMe has generated significant operating losses as reflected in its accumulated deficit and negative cash flows from operations. 23andMe had an accumulated deficit of $910.2 million as of December 31, 2020. 23andMe’s negative cash flows from operations were $34.0 million for the nine months ended December 31, 2020.

Although 23andMe currently anticipates that its available funds and cash flows from operations will be sufficient to meet its near-term cash needs, 23andMe may require additional financing. 23andMe’s ability to obtain financing may depend on, among other things, 23andMe’s development efforts, business plans, operating performance and condition of the capital markets at the time 23andMe seeks financing. 23andMe cannot assure you that additional financing will be available to 23andMe on favorable terms when required, or at all. If 23andMe raises additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of 23andMe’s Class A common stock, and 23andMe’s stockholders may experience dilution.

23andMe’s research and development initiatives and business depend on 23andMe’s ability to attract and retain highly-skilled scientists and other specialized individuals. 23andMe may not be able to attract or retain qualified scientists and other specialized individuals in the future due to the competition for qualified personnel among life science and technology businesses.

23andMe currently depends on the continued services and performance of 23andMe’s highly qualified key personnel, and, in particular, Anne Wojcicki, 23andMe’s CEO and co-founder. The loss of Ms. Wojcicki or other key personnel, including key members of management as well as 23andMe’s research, therapeutics, regulatory, product development and other personnel, could disrupt 23andMe’s operations and have an adverse effect on 23andMe’s ability to continue operating or grow 23andMe’s business.

23andMe’s research and development initiatives and Therapeutics business depend on 23andMe’s ability to attract and retain highly-skilled scientists and other specialized individuals. 23andMe may not be able to attract or retain qualified scientists and other specialized individuals in the future due to the competition for qualified personnel among life science and technology businesses, particularly near 23andMe’s therapeutics laboratory facilities located in South San Francisco, California. 23andMe also faces competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel. Recruiting, training and retention difficulties can limit 23andMe’s ability to support its research and development and commercialization efforts. All of 23andMe’s employees are at-will, which means that either 23andMe or the employee may terminate their employment at any time. In addition, 23andMe relies on consultants, contractors and advisors, including scientific and clinical advisors, to assist it in formulating 23andMe’s research and development, regulatory and commercialization strategy. 23andMe’s consultants and advisors may provide services to other organizations and may have commitments under consulting or advisory contracts with other entities that may limit their availability to 23andMe. The loss of the services of one or more of 23andMe’s current consultants or advisors could impede the achievement of 23andMe’s research, development, regulatory and commercialization objectives.

 

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Certain other areas of 23andMe’s operations require employing highly specialized individuals, which makes 23andMe’s recruiting efforts more challenging. If 23andMe does not succeed in attracting excellent personnel or retaining or motivating existing personnel, 23andMe may be unable to grow effectively.

23andMe faces risks related to epidemics and other outbreaks of communicable diseases, including the current coronavirus (COVID-19) pandemic, which could significantly disrupt 23andMe’s operations and adversely affect 23andMe’s business and financial condition.

23andMe’s operations, business and financial condition could be materially and adversely affected by epidemics and other outbreaks of communicable diseases, including the current COVID-19 pandemic, and by the economic and operational disruptions caused by the attempts of governmental entities to contain or flatten the spread of the disease. The continued spread of COVID-19 in the U.S. and in California, where 23andMe is headquartered, could materially and adversely affect 23andMe’s operations, including without limitation, disruptions of 23andMe’s ability to test and process DNA samples, reduced consumer demand for 23andMe’s personal genetic testing services, disruptions in the operations of 23andMe’s suppliers and partners, negative effects on 23andMe’s research and development initiatives and on 23andMe’s recruitment and retention efforts, the continued productivity and health of 23andMe’s employees, and curtailment of business travel and other business activities that may be necessary or helpful to 23andMe’s operations. These factors and resultant uncertainties may have a material adverse effect on 23andMe’s revenue, liquidity and any financing activities that 23andMe may undertake. The duration of the COVID-19 pandemic and the impact of the efforts being made to contain it or to flatten the spread of the disease cannot be predicted with any accuracy, and this uncertainty creates additional risk factors affecting the economy generally, as well as 23andMe’s business. Additionally, the presence or absence of government stimulus funding programs has had and may continue to have an impact on consumer discretionary spending and, consequently, purchases of PGS kits. Without timely and robust government stimulus funding programs, consumers may have less money to spend on discretionary items such as our PGS products, which could harm 23andMe’s business and results of operations. Furthermore, 23andMe’s operations, business and financial condition could be materially and adversely affected by a continued economic downturn and its effects on financial markets as well as by the direct impacts of the pandemic on 23andMe’s employees, customers, suppliers and other third parties on which 23andMe relies.

23andMe may enter new business areas, such as primary care and diagnostics/behavior modification, where 23andMe does not have any experience. If 23andMe were to enter new business areas, 23andMe would likely face competition from entities more familiar with those businesses, and 23andMe’s efforts may not succeed.

In the future, 23andMe may expand its operations into business areas such as primary care and diagnostics/behavior modification, where 23andMe does not have any experience. These areas would be new to 23andMe’s product development, sales and marketing personnel, and 23andMe cannot be assured that the markets for these products and services will develop or that 23andMe will be able to compete effectively or will generate significant revenues in these new areas making 23andMe’s success in this area difficult to predict. Many companies of all sizes, including major pharmaceutical companies and specialized biotechnology companies, are engaged in redesigning approaches to medical care and diagnostic medicine. Competitors operating in these potential new business areas may have substantially greater financial and other resources, larger research and development staff and more experience in these business areas. There can be no assurances that if 23andMe undertakes new business areas, that the market will accept 23andMe’s offerings, or that such offerings will generate significant revenues for 23andMe.

23andMe may make acquisitions to expand 23andMe’s business, and if any of those acquisitions are unsuccessful, 23andMe’s business may be harmed.

23andMe may choose to expand 23andMe’s current business through the acquisition of other businesses, products or technologies, or through strategic alliances. Acquisitions involve numerous risks, including the following:

 

   

The possibility that 23andMe will pay more than the value 23andMe derives from the acquisition which could result in future non-cash impairment charges, and incremental operating losses;

 

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Difficulties in integration of the operations, technologies and products of the acquired companies, which may require significant attention of 23andMe’s management that otherwise would be available for the ongoing development of 23andMe’s business;

 

   

The assumption of certain known and unknown liabilities of the acquired companies;

 

   

Difficulties in retaining key relationships with employees, customers, collaborators, vendors and suppliers of the acquired company; and

 

   

In the case of acquisitions outside of the jurisdictions 23andMe currently operates in, the need to address the particular economic, currency, political, and regulatory risks associated with specific countries, particularly those related to 23andMe’s collection of sensitive data, regulatory approvals, and tax management, which may result in significant additional costs or management overhead for 23andMe’s business.

Any of these factors could have a negative impact on 23andMe’s business, results of operations or financial position.

Risks Related to 23andMe’s Collaborations

23andMe’s Therapeutics business is substantially dependent on 23andMe’s collaboration with GlaxoSmithKline plc (“GSK”) for the development and commercialization of any drugs discovered during the discovery term of the agreement. If 23andMe, GSK and any future collaborators are unable to successfully complete clinical development, obtain regulatory approval for, or commercialize any drugs, or experience delays in doing so, 23andMe’s business may be materially harmed. 23andMe may engage and depend on other third parties for the development and commercialization of drugs and therapeutic programs discovered following the expiration of the GSK agreement or outside its scope. If those collaborations are not successful, 23andMe may not be able to capitalize on 23andMe’s investment in 23andMe’s Therapeutic business.

In July 2018, 23andMe entered into a collaboration agreement with GSK focused on the discovery, development and commercialization of drugs that are identified utilizing 23andMe’s proprietary databases and data mining technologies (the “GSK Agreement”). Under the GSK Agreement, GSK is 23andMe’s exclusive collaborator for drug discovery programs for a four-year period, which may be extended for a fifth year by GSK. Under the GSK Agreement, 23andMe and GSK jointly research potential drugs based on reports generated from 23andMe’s proprietary databases and using 23andMe’s proprietary data mining technologies. Once promising drugs are identified through these joint efforts, 23andMe and GSK share equally in the costs of discovery, development, and commercialization of any resultant drugs. Both parties have the right to opt out or reduce their share of the funding upon the occurrence of certain specified development milestones, in which case such party would no longer be entitled to share equally in the results of a successful collaboration, but instead would receive certain royalty payments on sales of the resultant drugs, depending on the timing and extent to which such party has reduced its funding or opted out. If GSK were to exercise any of the rights described in the prior sentence, and 23andMe elected to continue development, 23andMe would be required to supply any necessary funding to continue the development of the applicable drug. In addition, if 23andMe were to opt out of a program, GSK has the right to unilaterally decide to terminate the program or fail to develop a drug product, in which case 23andMe would not receive any royalty payments. In addition, if 23andMe were to opt out of a program, GSK has the right to unilaterally decide to terminate the program or fail to develop a drug product, in which case 23andMe would not receive any royalty payments. In addition, substantially all of 23andMe’s research services revenue is derived from the required payments for research services under the GSK Agreement. When the discovery term of the GSK Agreement terminates, there can be no assurance that 23andMe will be able to generate research services revenue from other sources. While the GSK Agreement may not be terminated for convenience, GSK has the ability to terminate the GSK Agreement if certain conditions are met. If GSK were to terminate the GSK Agreement, to reduce its funding or opt out of any drugs thereunder, or to shift its research and development focus so as to deemphasize any programs under the GSK Agreement, 23andMe’s revenues, operating results and 23andMe’s ability to fund and advance drug programs and conduct 23andMe’s Therapeutics business would be

 

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adversely affected. 23andMe cannot provide any assurance with respect to the success of any research, development or commercialization efforts pursuant to the GSK Agreement.

23andMe’s current collaboration with GSK poses, and potential additional collaborations involving drug development activities outside of the GSK Agreement with GSK pose, the following risks to 23andMe:

 

   

collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;

 

   

collaborators may not perform their obligations as expected;

 

   

collaborators may not pursue development and commercialization of any drugs that achieve regulatory approval or may elect not to continue or renew development or commercialization programs or license arrangements based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities;

 

   

collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug, repeat or conduct new clinical trials or require a new formulation of a drug for clinical testing;

 

   

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with 23andMe’s drugs;

 

   

drugs discovered in collaboration with 23andMe may be viewed by 23andMe’s collaborators as competitive with their own drugs, which may cause collaborators to cease to devote resources to the commercialization of 23andMe’s drug;

 

   

collaborators may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a drug candidate or product;

 

   

collaborators may not properly enforce, maintain or defend 23andMe’s intellectual property rights or may use 23andMe’s proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate 23andMe’s intellectual property or proprietary information or expose 23andMe to potential litigation, or other intellectual property proceedings;

 

   

collaborators may infringe the intellectual property rights of third parties, which may expose 23andMe to litigation and potential liability;

 

   

disputes may arise between a collaborator and 23andMe that cause the delay or termination of the research, development or commercialization of the drug, or that result in costly litigation or arbitration that diverts management attention and resources;

 

   

if a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on 23andMe’s drug development or commercialization program under such collaboration could be delayed, diminished or terminated;

 

   

collaboration agreements may restrict 23andMe’s right to independently pursue new drugs. For example, under the GSK Agreement, 23andMe is prohibited from, directly or indirectly, identifying, developing, manufacturing or commercializing drugs, unless GSK has opted-out of the program or the program pre-existed the date of the Collaboration; and

 

   

collaborations may be terminated by the collaborator, and, if terminated, 23andMe may suffer reputational harm, find it more difficult to attract new collaborators and be required to raise additional capital to pursue further development or commercialization of the applicable drugs.

 

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GSK and any other potential drug discovery collaborators will have significant discretion in determining when to make announcements, if any, about the status of 23andMe’s collaborations, including results from clinical trials, and timelines for advancing collaborative programs. As a consequence, the price of the common stock of the surviving public company may decline as a result of announcements of unexpected clinical trial results or data relative to 23andMe’s research and development programs.

23andMe’s drug discovery collaborators have significant discretion in determining when to make announcements about the status of 23andMe’s collaborations, including about preclinical and clinical developments and timelines for advancing the collaborative programs. While as a general matter 23andMe intends to periodically report on the status of 23andMe’s collaborations, 23andMe’s drug discovery collaborators, and in particular, 23andMe’s privately-held collaborators, may wish to report such information more or less frequently than 23andMe intends to or may not wish to report such information at all. The price of 23andMe’s common stock may decline as a result of the public announcement of unexpected results or developments in 23andMe’s collaborations, or as a result of 23andMe’s collaborators withholding such information.

23andMe may seek to establish additional collaborations in the future, and, if 23andMe is not able to establish them on commercially reasonable terms, 23andMe may have to alter its development and commercialization plans.

23andMe’s Therapeutics business and the potential commercialization of any drugs will require substantial additional cash to fund expenses. If the GSK Agreement is terminated, or following its expiration, 23andMe may decide to collaborate with other pharmaceutical and biotechnology companies for drug development, manufacture and commercialization activities. These collaborations may not be successful, which would adversely impact 23andMe’s business and results of operations.

Under the GSK Agreement, 23andMe has granted exclusive rights to GSK with respect to the identification, development and commercialization of drugs until 2022 and, if GSK exercises its option to extend, until 2023, subject to certain limited exceptions. During the discovery term of the GSK Agreement, 23andMe is restricted from granting similar rights to other parties. This exclusivity currently limits 23andMe’s ability to enter into strategic drug discovery collaborations with other third parties. To the extent 23andMe seeks additional collaboration opportunities in the future, 23andMe will face significant competition. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. Whether 23andMe reaches a definitive agreement for a collaboration will depend, among other things, upon 23andMe’s assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. 23andMe may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If 23andMe is unable to successfully enter into collaborations in the future, 23andMe may have to curtail 23andMe’s drug discovery and development activities including reducing or delaying individual development programs, potential commercialization plans, or any sales or marketing activities for a drug. 23andMe may also have to increase 23andMe’s expenditures and undertake development or commercialization activities at 23andMe’s own expense. If 23andMe elects to increase its expenditures to fund development or commercialization activities on its own, 23andMe may need to obtain additional capital, which may not be available to 23andMe on acceptable terms, or at all. If 23andMe does not have sufficient funds, 23andMe may not be able to further develop 23andMe’s drugs or bring them to market and generate product revenue.

 

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23andMe’s collaborators may not achieve projected discovery and development milestones and other anticipated key events in the expected timelines or at all, which could have an adverse impact on 23andMe’s business.

23andMe’s current drug discovery collaborators, from whom 23andMe is entitled to receive milestone payments upon achievement of various development, regulatory, and commercial milestones as well as royalties on commercial sales, if any, under the collaboration agreements that 23andMe has entered into with them, face numerous risks in the development of drugs, including the conduct of preclinical and clinical testing, obtaining regulatory approval, and achieving product sales. In addition, the amounts 23andMe is entitled to receive upon the achievement of such milestones tend to be smaller for near-term development milestones and increase if and as a collaborative drug advances through regulatory development to commercialization and will vary depending on the level of commercial success achieved, if any. 23andMe does not anticipate receiving significant milestone payments from many of 23andMe’s drug discovery collaborators for several years, if at all, and 23andMe’s drug discovery collaborators may never achieve milestones that result in significant cash payments to 23andMe. Accordingly, 23andMe’s business could be adversely affected if projected discovery and development milestones are not achieved.

Risks Related to Governmental Regulation

23andMe’s products and services are subject to extensive regulation by various U.S. federal and state agencies and compliance with existing or future regulations could result in unanticipated expenses, or limit 23andMe’s ability to offer 23andMe’s products and services.

On November 22, 2013, 23andMe received a warning letter from the FDA to discontinue marketing 23andMe’s health-related genetic test in the U.S. until 23andMe received FDA marketing authorization for the device. 23andMe was allowed to continue to offer genetic ancestry services in the U.S.

In June 2014, 23andMe submitted a 510(k) seeking premarket clearance for 23andMe’s Bloom Syndrome carrier test. On February 19, 2015, FDA granted marketing authorization pursuant to its de novo review standard for 23andMe’s Bloom Syndrome carrier test. FDA also determined that certain of 23andMe’s other similar autosomal recessive carrier reports were exempt moderate risk reports, which subject to special controls, could be marketed by 23andMe without further premarket review. In October 2015, 23andMe began marketing its new Personal Genome Service in the U.S., which includes detailed reports on carrier status, pursuant to 23andMe’s FDA authorization and exemption, as well as research reports and reports on wellness, traits and ancestry, which 23andMe believes do not require premarket authorization.

23andMe continued to submit additional requests to the FDA seeking authorization to market certain Genetic Health Risk (“GHR”) reports. On April 6, 2017, FDA granted marketing authorization pursuant to its de novo review standard for 23andMe’s GHR reports for ten disease conditions. FDA also determined that certain of 23andMe’s other similar genetic health risk reports were exempt low-to-moderate risk reports, which subject to certain special controls, could be marketed by 23andMe without further premarket review. On March 6, 2018, FDA granted marketing authorization pursuant to its de novo review standard for 23andMe’s Genetic Health Risk report for BRCA1/BRCA2 (Selected Variants). On January 22, 2019, 23andMe received FDA clearance for a Genetic Health Risk report for MUTYH-associated polyposis (MAP), a hereditary colorectal cancer syndrome. On October 31, 2018, FDA granted marketing authorization pursuant to its de novo review standard for 23andMe’s Pharmacogenetic reports, including 23andMe’s Pharmacogenetics report for CYP2C19. On August 17, 2020, FDA granted a 510(k) clearance for 23andMe’s Pharmacogenetics report for CYP2C19, modifying the labeling of the report authorized in 2018 to remove the need for confirmatory testing, allowing 23andMe to report interpretive drug information for two medications.

23andMe may be required to seek FDA premarket review of other products and services, including reports that 23andMe does not currently believe require premarket authorization. For any such review, 23andMe is required to conduct extensive analytical validation and user comprehension studies to demonstrate the accuracy of 23andMe’s test results and that they are appropriate for sale directly to consumers. This process will likely be costly, time-consuming and uncertain. Delays in receipt of, or failure to obtain, authorizations or clearances

 

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could materially delay or prevent 23andMe from commercializing new products and services or result in substantial additional costs. 23andMe may not be able to obtain FDA authorization for all of 23andMe’s products and services.

23andMe will face legal, reputational, and financial risks if 23andMe fails to protect 23andMe’s customer data from security breaches or cyberattacks. Changes in laws or regulations relating to privacy or the protection or transfer of data relating to individuals, or any actual or perceived failure by 23andMe to comply with such laws and regulations or any other obligations relating to privacy or the protection or transfer of data relating to individuals, could adversely affect 23andMe’s business.

23andMe receives and stores a large volume of personally identifiable information, genetic information, and other data relating to 23andMe’s customers, as well as other personally identifiable information and other data relating to individuals such as 23andMe’s employees. Security breaches, employee malfeasance, or human or technological error could lead to potential unauthorized disclosure of 23andMe’s customers’ personal information. Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of 23andMe’s solutions and any failure to comply with such laws and regulations could lead to significant fines, penalties or other liabilities.

A security compromise of 23andMe’s information systems or of those of businesses with whom 23andMe interacts that results in confidential information being accessed by unauthorized or improper persons could harm 23andMe’s reputation and expose 23andMe to regulatory actions, customer attrition, remediation expenses, disruption of 23andMe’s business, and claims brought by 23andMe’s customers or others for breaching contractual confidentiality and security provisions or data protection laws. Monetary damages imposed on 23andMe could be significant and not covered by 23andMe’s liability insurance. Techniques used by bad actors to obtain unauthorized access, disable or degrade service, or sabotage systems evolve frequently and may not immediately produce signs of intrusion, and 23andMe may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, a security breach could require that 23andMe expends substantial additional resources related to the security of 23andMe’s information systems and providing required breach notifications, diverting resources from other projects and disrupting 23andMe’s businesses. If 23andMe experiences a data security breach, its reputation could be damaged and 23andMe could be subject to additional litigation, regulatory risks and business losses.

Numerous local, municipal, state, federal, and international laws and regulations address privacy and the collection, storing, sharing, use, disclosure, and protection of certain types of data, including the California Online Privacy Protection Act, the Personal Information Protection and Electronic Documents Act, the Telephone Consumer Protection Act of 1991, or the TCPA, Section 5 of the Federal Trade Commission Act, and effective as of January 1, 2020, the California Consumer Privacy Act (the “CCPA”). These laws, rules, and regulations evolve frequently and their scope may continually change, through new legislation, amendments to existing legislation, and changes in enforcement, and may be inconsistent from one jurisdiction to another. For example, the CCPA, which went into effect on January 1, 2020, among other things, requires new disclosures to California consumers and affords such consumers new abilities to opt out of certain sales of personal information. The CCPA provides for fines of up to $7,500 per violation. Aspects of the CCPA and its interpretation and enforcement remain uncertain. The effects of this legislation potentially are far-reaching and may require 23andMe to modify 23andMe’s data processing practices and policies and incur substantial compliance-related costs and expenses. The CCPA has been amended on multiple occasions. For example, the California Privacy Rights Act (“CPRA”) recently was approved by California voters and significantly modifies the CCPA, potentially resulting in further uncertainty and requiring 23andMe to incur additional costs and expenses in an effort to comply. The CPRA does not become operative until January 1, 2023 (and then applies only to consumer data collected on or after January 1, 2022, (the “lookback period”), with enforcement beginning July 1, 2023. While the CCPA will remain operative and enforceable from now until July 1, 2023, 23andMe will continue to monitor developments related to the CPRA. The effects of this legislation potentially are far-reaching, however, and may require 23andMe to modify 23andMe’s data processing practices and policies

 

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and incur substantial compliance-related costs and expenses. Additionally, many laws and regulations relating to privacy and the collection, storing, sharing, use, disclosure, and protection of certain types of data are subject to varying degrees of enforcement and new and changing interpretations by courts. The CCPA and other changes in laws or regulations relating to privacy, data protection, breach notifications, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of such laws or regulations, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could greatly increase the cost of providing 23andMe’s platform, require significant changes to 23andMe’s operations, or even prevent 23andMe from providing 23andMe’s platform in jurisdictions in which 23andMe currently operates and in which 23andMe may operate in the future.

23andMe also is required to comply with increasingly complex and changing data security and privacy regulations in the UK, the EU and in other jurisdictions in which 23andMe conducts business that regulate the collection, use and transfer of personal data, including the transfer of personal data between or among countries. For example, the European Union’s General Data Protection Regulation (“GDPR”), now also enacted in the UK (“UK GDPR”), has imposed stringent compliance obligations regarding the handling of personal data and has resulted in the issuance of significant financial penalties for noncompliance. Further, in July 2020, the Court of Justice of the European Union released a decision in the Schrems II case (Data Protection Commission v. Facebook Ireland, Schrems), declaring the EU-US Privacy Shield invalid and calling into question data transfers carried out under the European Commission’s Standard Contractual Clauses. As a result of the decision, 23andMe may face additional scrutiny from EU regulators in relation to the transfer of personal data from the EU to the US. Noncompliance with the GDPR can trigger fines of up to the greater of €20 million or 4% of global annual revenues. In the U.S., there have been proposals for federal privacy legislation and many new state privacy laws proposed, including laws specific to genetic testing companies. Other countries have enacted or are considering enacting data localization laws that require certain data to stay within their borders. 23andMe may also face audits or investigations by one or more domestic or foreign government agencies or 23andMe’s customers pursuant to 23andMe’s contractual obligations relating to 23andMe’s compliance with these regulations. Complying with changing regulatory requirements requires 23andMe to incur substantial costs, exposes 23andMe to potential regulatory action or litigation, and may require changes to 23andMe’s business practices in certain jurisdictions, any of which could materially adversely affect 23andMe’s business operations and operating results.

Despite 23andMe’s efforts to comply with applicable laws, regulations, and other obligations relating to privacy, data protection, and information security, it is possible that 23andMe’s interpretations of the law, practices, or platform could be inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or obligations. 23andMe’s failure, or the failure by 23andMe’s third-party providers on 23andMe’s platform, to comply with applicable laws or regulations or any other obligations relating to privacy, data protection, or information security, or any compromise of security that results in unauthorized access to, or use or release of personally identifiable information or other data relating to 23andMe’s customers, or other individuals, or the perception that any of the foregoing types of failure or compromise has occurred, could damage 23andMe’s reputation, discourage new and existing customers from using 23andMe’s platform, or result in fines, investigations, or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect 23andMe’s business, financial condition, and results of operations. Even if not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm 23andMe’s reputation and brand and adversely affect 23andMe’s business, financial condition, and results of operations.

23andMe plans to expand operations abroad where 23andMe has limited operating experience where 23andMe may be subject to increased regulatory risks and local competition. If 23andMe is unsuccessful in any efforts to expand internationally, 23andMe’s business may be harmed.

Regulations exist or are under consideration in countries outside the U.S., which limit or prevent the sale of direct to consumer genetic tests. Some countries, including Australia, require premarket review by their regulatory body similar to that required in the U.S. by FDA. Some countries, including Australia, Germany,

 

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France and Switzerland require a physician prescription for genetic tests providing health information, thus limiting 23andMe’s offering in those countries to an ancestry-only test. Other countries require mandatory genetic counseling prior to genetic testing. These regulations limit the available market for 23andMe’s products and services and increase the costs associated with marketing the products and services where 23andMe is able to offer its products. Legal developments in the EU have created a range of new compliance obligations regarding transfers of personal data from the European Union to the U.S., including GDPR and UK GDPR, which applies to certain of 23andMe’s activities related to services that 23andMe offers or may offer to individuals located in the EU. Significant effort and expense will continue to be required to ensure compliance with the GDPR and UK GDPR, and could cause 23andMe to change 23andMe’s business practices. Moreover, requirements under the GDPR and UK GDPR may change periodically or may be modified by the EU/UK and/or national law. The GDPR and UK GDPR impose stringent compliance obligations regarding the handling of personal data and has resulted in the issuance of significant financial penalties for noncompliance, including possible fines of up to 4% of global annual turnover for the preceding financial year or €20 million/£17.5 million (whichever is higher) for the most serious violations.

The EU adopted the IVD Directive Regulation (“IVDR”) which increased the regulatory requirements applicable to IVDs in the EU and requires that 23andMe classify and obtain pre-market approval from an independent certified notified body for 23andMe’s Personal Genome Service health reports, which will be subject to the IVDR as of May 25, 2022. 23andMe must also achieve and maintain International Standards Organization (ISO) certification of 23andMe’s Quality Management Systems. If 23andMe is not able to achieve or maintain regulatory compliance, 23andMe may not be permitted to market 23andMe’s health reports and/or may be subject to enforcement by EU Competent Authorities, bodies with authority to act on behalf of the government of the applicable EU Member State, or other nations which adopt IVDR standards, to ensure that the requirements of the directive or regulation are met.

Additionally, in September 2020 the United Kingdom Medicines and Healthcare products Regulatory Agency (“MHRA”) announced regulations requiring a new United Kingdom Conformity Assessed mark (“UKCA”) applicable to medical devices, including testing products and services like 23andMe’s Personal Genome Service health reports, to be placed on the market beginning January 1, 2021 or for products already on the market, to be maintained on the market after June 30, 2023 which requires that a Declaration of Conformity be obtained based on technical files for all products to which the UKCA applies. Aspects of the UKCA take effect January 1, 2021 and require that medical devices be registered with MHRA. In addition to registration requirements, manufacturers of medical devices based outside of the United Kingdom, including 23andMe, must designate a United Kingdom Responsible Person to maintain documents supporting the UKCA and Declaration of Conformity and respond to inquiries from MHRA. If 23andMe is not able to achieve or maintain regulatory compliance 23andMe may not be permitted to market its health reports and/or may be subject to enforcement action by MHRA.

If 23andMe fails to comply with any of these regulations, 23andMe could become subject to enforcement actions or the imposition of significant monetary fines, other penalties, or claims, which could harm its operating results or 23andMe’s ability to conduct its business.

Risks Related to Intellectual Property and Legal Proceedings

If 23andMe is unable to protect 23andMe’s intellectual property, the value of 23andMe’s brand and other intangible assets may be diminished, and 23andMe’s business may be adversely affected.

23andMe depends on its proprietary technology, intellectual property and services for 23andMe’s success and ability to compete. 23andMe relies and expects to continue to rely on a combination of confidentiality and other agreements with 23andMe’s employees, consultants and third parties with whom 23andMe has relationships and who may have access to confidential or patentable aspects of 23andMe’s research and development output, as well as trademark, copyright, patent and trade secret protection laws, to protect 23andMe’s proprietary rights. Although 23andMe enters into these confidentiality and other agreements, any of

 

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these parties may breach the agreements and disclose information before a patent application is filed, and jeopardize 23andMe’s ability to seek patent protection. In addition, 23andMe’s ability to obtain and maintain valid and enforceable patents depends on whether the differences between 23andMe’s inventions and the prior art allow 23andMe’s inventions to be patentable over the prior art. Since publications in the scientific literature often lag behind the actual discoveries, and patent applications do not publish until 18 months after filing, 23andMe is never certain that 23andMe is the first to make the inventions claimed in any of its patents or that 23andMe is the first to file for patent protection of such patents. 23andMe has filed various applications for certain aspects of 23andMe’s intellectual property in the U.S. and other countries. However, third parties may knowingly or unknowingly infringe 23andMe’s proprietary rights, third parties may challenge proprietary rights held by 23andMe, pending and future patent, copyright, trademark and other applications may not be approved and 23andMe may not be able to prevent infringement without incurring substantial expense. In addition, the laws of some foreign countries do not protect proprietary rights to the same extent, as do the laws of the U.S.

If the protection of 23andMe’s proprietary rights is inadequate to prevent use or appropriation by third parties, the value of 23andMe’s brand and other intangible assets may be diminished and competitors may be able to more effectively mimic 23andMe’s service and methods of operations. Despite 23andMe’s efforts to protect its proprietary rights, attempts may be made to copy or reverse engineer aspects of 23andMe’s products or services, or to obtain and use information that 23andMe regards as proprietary. Accordingly, 23andMe may be unable to protect 23andMe’s proprietary rights against unauthorized third party copying or use. Furthermore, policing the unauthorized use of 23andMe’s intellectual property would be difficult for 23andMe. Litigation may be necessary in the future to enforce 23andMe’s intellectual property rights, to protect 23andMe’s trade secrets or to determine the validity and scope of the proprietary rights of others. Litigation and/or any of the events above could result in substantial costs and diversion of resources and could have a material adverse effect on 23andMe’s business, consolidated financial condition and consolidated results of operations.

23andMe may be unable to obtain and maintain patent protection for therapeutic drugs 23andMe develops.

23andMe’s success depends in large part on 23andMe’s ability to obtain and maintain patent protection in the U.S. and other countries for 23andMe’s proprietary therapeutic drugs and other technologies. Since the development of 23andMe’s therapeutic drugs is at an early stage, 23andMe’s intellectual property portfolio is also at an early stage. 23andMe has filed and intends to file patent applications. However, there are no assurances that any such patent application will issue as a granted patent. Any failure to file a non-provisional application within one year of a provisional patent application may cause 23andMe to lose the ability to obtain patent protection for the inventions disclosed in the provisional patent application.

In addition, in some cases, 23andMe may not be able to obtain issued claims covering compositions relating to 23andMe’s programs and therapeutic drugs, as well as other technologies important to 23andMe’s business. Instead, 23andMe may rely on patent applications covering a method of use and/or method of manufacture for protection of such programs and therapeutic drugs. There is no assurance that any such patent application will issue as a granted patent, and even if they are granted, the claims may not be sufficient to prevent third parties from utilizing 23andMe’s technology. Any failure to obtain or maintain patent protection with respect to 23andMe’s programs and therapeutic drugs could have a material adverse effect on 23andMe’s business, financial condition, results of operations, and prospects.

23andMe may be unable to obtain sufficiently broad protection, or 23andMe may lose patent protection.

As patent prosecution of biotechnology and pharmaceutical companies is highly uncertain, involves complex legal and factual questions, and has been the subject of litigation in recent years, the issuance, scope, validity, enforceability and commercial value of 23andMe’s patent rights are highly uncertain. 23andMe’s pending and future patent applications may not result in granted patents that protect 23andMe’s drugs which would render 23andMe unable to prevent others from commercializing 23andMe’s drugs. The coverage of patent claims may be significantly reduced during patent prosecution before the patent is granted and the scope can also

 

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be reinterpreted after grant, which may not provide 23andMe meaningful protection, may not allow 23andMe to exclude competitors or may not provide 23andMe with any competitive advantage.

Litigation with respect to 23andMe’s intellectual property rights or 23andMe’s commercial activities could result in unanticipated expenses and, if resolved unfavorably, could harm 23andMe’s business.

Companies in the genetics, pharmaceutical, medical device, Internet, technology and online payment industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. 23andMe has, in the past, received notice from patent holders and other parties alleging that 23andMe has infringed their intellectual property rights. As 23andMe faces increasing competition and become increasingly high profile, the possibility of intellectual property rights claims against 23andMe grows. 23andMe’s technologies and services may not be able to withstand any third-party claims or rights against their use. 23andMe may in the future be subject to litigation on the foregoing grounds or other grounds. The costs of supporting such litigation are considerable, and there can be no assurances that a favorable outcome will be obtained. 23andMe may be required to settle such litigation on terms that are unfavorable to 23andMe. Similarly, if any litigation to which 23andMe may be a party fails to settle and 23andMe goes to trial, 23andMe may be subject to an unfavorable judgment, which may not be reversible upon appeal. The terms of such a settlement or judgment may require 23andMe to cease some or all of 23andMe’s operations or require the payment of substantial amounts to the other party.

With respect to any intellectual property rights claim, 23andMe may have to seek a license to continue practices found to be in violation of a third parties rights, which may not be available on reasonable terms and may significantly increase 23andMe’s operating expenses. A license to continue such practices may not be available to 23andMe at all. As a result, 23andMe may also be required to develop alternative non-infringing technology or practices or discontinue the practices. The development of alternative non-infringing technology or practices could require significant effort and expense. 23andMe’s business and results of operations could be materially and adversely affected as a result.

23andMe may not be able to protect 23andMe’s intellectual property rights throughout the world.

Filing, prosecuting and defending patents on 23andMe’s products and services in all countries throughout the world would be prohibitively expensive. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the U.S., and 23andMe may encounter difficulties in protecting and defending such rights in foreign jurisdictions. Consequently, 23andMe may not be able to prevent third parties from practicing 23andMe’s inventions in all countries outside the U.S., or from selling or importing products made using 23andMe’s inventions in and into the U.S. or other jurisdictions. Competitors may use 23andMe’s technologies in jurisdictions where 23andMe has not obtained patent protection to develop their own products and may also export infringing products to territories where 23andMe has patent protection, but enforcement is not as strong as that in the U.S. These products may compete with 23andMe’s products and 23andMe’s patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of many other countries do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, which could make it difficult for 23andMe to stop the infringement of 23andMe’s patents in such countries. Proceedings to enforce 23andMe’s patent rights in foreign jurisdictions could result in substantial cost and divert 23andMe’s efforts and attention from other aspects of 23andMe’s business, could put 23andMe’s patents at risk of being invalidated or interpreted narrowly and 23andMe’s patent applications at risk of not issuing, and could provoke third parties to assert claims against 23andMe. 23andMe may not prevail in any lawsuits that 23andMe initiates and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, 23andMe’s efforts to enforce 23andMe’s intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that 23andMe develops or licenses.

 

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Changes in patent law in the U.S. and other jurisdictions could diminish the value of patents in general, thereby impairing 23andMe’s ability to protect 23andMe’s products and services.

Changes in either the patent laws or in interpretations of patent laws in the U.S. or other countries or regions may diminish the value of 23andMe’s intellectual property. 23andMe cannot predict the breadth of claims that may be allowed or enforced in 23andMe’s patents or in third-party patents. In the U.S., prior to March 16, 2013, assuming that other requirements for patentability were satisfied, the first to invent the claimed invention was entitled to the patent, while outside the U.S., the first to file a patent application was entitled to the patent. On or after March 16, 2013, under the Leahy-Smith America Invents Act (“America Invents Act”), enacted in September 16, 2011, the U.S. transitioned to a first inventor to file system in which, assuming that other requirements for patentability are satisfied, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. As such, a third party that files a patent application in the USPTO before 23andMe could be awarded a patent covering an invention of ours even if 23andMe had made the invention before it was made by such third party. This will require 23andMe to be cognizant of the time from invention to filing of a patent application. Since patent applications in the U.S. and most other countries are confidential for a period of time after filing or until issuance, 23andMe cannot be certain that 23andMe or 23andMe’s licensors were the first to either file any patent application related to 23andMe’s products or services or invent any of the inventions claimed in 23andMe’s or 23andMe’s licensor’s patents or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate 23andMe’s patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of 23andMe’s owned or in-licensed patent applications and the enforcement or defense of 23andMe’s owned or in-licensed issued patents, all of which could have a material adverse effect on 23andMe’s business.

Recent U.S. Supreme Court rulings have also narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to 23andMe’s ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken 23andMe’s ability to obtain new patents or to enforce 23andMe’s existing patents and patents that 23andMe might obtain in the future.

Issued patents covering 23andMe’s products and services could be found invalid or unenforceable if challenged.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability and some of 23andMe’s patents or patent applications, including licensed patents, may be challenged, in courts or patent offices in the U.S. and abroad. 23andMe or 23andMe’s collaborators may be subject to a third party preissuance submission of prior art to the U.S. Patent and Trademark Office (“USPTO”) or be involved in opposition, derivation, revocation, reexamination, inter partes review, post-grant review or interference or other similar proceedings challenging 23andMe’s or 23andMe’s collaborators’ patent rights. An adverse decision in any such submission, proceeding, or litigation could reduce the scope of, or invalidate or render unenforceable, such patent

 

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rights, allow third parties to commercialize 23andMe’s drugs or other technologies and compete directly with 23andMe, without payment to 23andMe or result in 23andMe’s inability to manufacture or commercial products without infringing third-party patent rights. Additionally, if 23andMe and 23andMe’s licensing partners initiate or become involved in legal proceedings against a third party to enforce a patent covering one of 23andMe’s products or technologies, the defendant could counterclaim that the patent covering 23andMe’s product is invalid or unenforceable. In patent litigation in the U.S., counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including patent eligible subject matter, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. In addition, the U.S. now awards patent priority to the first party to file a patent application, and others may submit patent claims covering 23andMe’s inventions prior to 23andMe. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, 23andMe cannot be certain that there is no invalidating prior art, of which 23andMe and the patent examiner were unaware during prosecution. A successful third-party challenge to 23andMe’s patents could result in the unenforceability or invalidity of such patents, which could have a material adverse impact on 23andMe’s business. Furthermore, if the breadth or strength of protection provided by 23andMe’s patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with 23andMe to license, develop or commercialize current or future products and services.

23andMe may not be aware of all third-party intellectual property rights potentially relating to 23andMe’s drug pipeline, products and services. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until approximately 18 months after filing or, in some cases, not until such patent applications issue as patents. 23andMe might not have been the first to make the inventions covered by each of 23andMe’s pending patent applications and 23andMe might not have been the first to file patent applications for these inventions. To determine the priority of these inventions, 23andMe may have to participate in interference proceedings, derivation proceedings or other post-grant proceedings declared by the USPTO. The outcome of such proceedings is uncertain, and other patent applications may have priority over 23andMe’s patent applications. Such proceedings could also result in substantial costs to 23andMe and divert 23andMe’s management’s attention and resources.

23andMe may be subject to claims that 23andMe’s employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that 23andMe’s employees have wrongfully used or disclosed alleged trade secrets of their former employers.

23andMe employs, and expects to employ in the future, individuals who were previously employed at universities or other companies, including 23andMe’s competitors or potential competitors. Although 23andMe tries to ensure that 23andMe’s employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for 23andMe, 23andMe may be subject to claims that 23andMe’s employees, consultants or independent contractors have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers or other third parties, or to claims that 23andMe has improperly used or obtained such trade secrets. Litigation may be necessary to defend against these claims. If 23andMe fails in defending such claims, in addition to paying monetary damages, 23andMe may lose valuable intellectual property rights or personnel, which could adversely impact 23andMe’s business. A loss of key research personnel work product could hamper or prevent 23andMe’s ability to commercialize potential products and services, which could harm 23andMe’s business. Even if 23andMe is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees.

 

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23andMe may not be able to protect and enforce 23andMe’s trademarks.

23andMe has not yet registered certain of its trademarks in all of 23andMe’s potential markets, although 23andMe has registered 23andMe, Inc., 23andMe, and other 23andMe logos and product and service names in the U.S., the EU and a number of other countries and are seeking to register additional trademarks. As 23andMe applies to register 23andMe’s unregistered trademarks in the U.S. and other countries, 23andMe’s applications may not be allowed for registration in a timely fashion or at all, and 23andMe’s registered trademarks may not be maintained or enforced. In addition, opposition or cancellation proceedings may be filed against 23andMe’s trademark applications and registrations, and 23andMe’s trademarks may not survive such proceedings. In certain countries outside of the U.S., trademark registration is required to enforce trademark rights. If 23andMe does not secure registrations for 23andMe’s trademarks, 23andMe may encounter more difficulty in enforcing them against third parties than 23andMe otherwise would.

23andMe may be subject to claims challenging the inventorship or ownership of its patents and other intellectual property.

23andMe may be subject to claims that former employees, collaborators or other third parties have an interest in 23andMe’s owned or in-licensed patents, trade secrets or other intellectual property as an inventor or co-inventor. Ownership disputes may arise, for example, from conflicting obligations of employees, consultants or others who are involved in developing 23andMe’s future products and services.

Litigation may be necessary to defend against these and other claims by a third party challenging inventorship of 23andMe’s or 23andMe’s licensors’ ownership of 23andMe’s owned or in-licensed patents, trade secrets or other intellectual property. If 23andMe or 23andMe’s licensors fail in defending any such claims, in addition to paying monetary damages, 23andMe may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to 23andMe’s product or services. Alternatively, 23andMe may need to obtain one or more additional licenses from the third party which will be time-consuming and expensive and could result in substantial costs and diversion of resources and could have a material adverse effect on 23andMe’s business. Even if 23andMe is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on 23andMe’s business, financial condition, results of operations and prospects.

If 23andMe becomes involved in patent litigation or other proceedings related to a determination of rights, 23andMe could incur substantial costs and expenses, substantial liability for damages or be required to stop 23andMe’s development and commercialization efforts of its products and services.

There is a substantial amount of litigation, both within and outside the U.S., involving patent and other intellectual property rights in the life sciences, clinical diagnostics and drug discovery industries, including patent infringement lawsuits, declaratory judgment litigation and adversarial proceedings before the USPTO, including interferences, derivation proceedings, ex parte reexaminations, post-grant review and inter partes review, as well as corresponding proceedings in foreign courts and foreign patent offices.

23andMe may, in the future, become involved with litigation or actions at the USPTO or foreign patent offices with various third parties. 23andMe expects that the number of such claims may increase as 23andMe’s industry expands, more patents are issued, the number of products or services increases and the level of competition in 23andMe’s industry increases. Any infringement claim, regardless of its validity, could harm 23andMe’s business by, among other things, resulting in time-consuming and costly litigation, diverting management’s time and attention from the development of 23andMe’s business, requiring the payment of monetary damages (including treble damages, attorneys’ fees, costs and expenses) or royalty payments.

It may be necessary for 23andMe to pursue litigation or adversarial proceedings before the patent office in order to enforce 23andMe’s patent and proprietary rights or to determine the scope, coverage and validity of the

 

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proprietary rights of others. The outcome of any such litigation might not be favorable to 23andMe, and even if 23andMe were to prevail, such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on 23andMe’s business, operating results or financial condition.

As 23andMe moves into new markets and expand 23andMe’s products or services offerings, incumbent participants in such markets may assert their patents and other proprietary rights against 23andMe as a means of slowing 23andMe’s entry into such markets or as a means to extract substantial license and royalty payments from 23andMe. In addition, future litigation may involve patent holding companies or other adverse patent owners who have no relevant product or service revenue and against whom 23andMe’s own patents may provide little or no deterrence or protection.

Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that 23andMe’s current or future products, technologies and services may infringe. 23andMe cannot be certain that 23andMe has identified or addressed all potentially significant third-party patents in advance of an infringement claim being made against 23andMe. In addition, similar to what other companies in 23andMe’s industry have experienced, 23andMe expects its competitors and others may have patents or may in the future obtain patents and claim that making, having made, using, selling, offering to sell or importing 23andMe’s products or services infringes these patents. Defense of infringement and other claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and employee resources from 23andMe’s business. Parties making claims against 23andMe may be able to sustain the costs of complex patent litigation more effectively than 23andMe can because they have substantially greater resources. Parties making claims against 23andMe may be able to obtain injunctive or other relief, which could block 23andMe’s ability to develop, commercialize and sell products or services and could result in the award of substantial damages against 23andMe, including treble damages, attorney’s fees, costs and expenses if 23andMe is found to have willfully infringed. In the event of a successful claim of infringement against it, 23andMe may be required to pay damages and ongoing royalties and obtain one or more licenses from third parties, or be prohibited from selling certain products or services. 23andMe may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all, or these licenses may be non-exclusive, which could result in 23andMe’s competitors gaining access to the same intellectual property. In addition, 23andMe could encounter delays in product or service introductions while 23andMe attempts to develop alternative products or services to avoid infringing third-party patents or proprietary rights. Defense of any lawsuit or failure to obtain any of these licenses could prevent 23andMe from commercializing products or services, and the prohibition of sale of any of 23andMe’s products or services could materially affect 23andMe’s business and 23andMe’s ability to gain market acceptance for 23andMe’s products or services.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of 23andMe’s confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of 23andMe’s common stock.

In addition, 23andMe’s agreements with some of 23andMe’s customers, suppliers or other entities with whom 23andMe does business require 23andMe to defend or indemnify these parties to the extent they become involved in infringement claims, including the types of claims described above. 23andMe could also voluntarily agree to defend or indemnify third parties in instances where 23andMe is not obligated to do so if 23andMe determines it would be important to 23andMe’s business relationships. If 23andMe is required or agree to defend or indemnify third parties in connection with any infringement claims, 23andMe could incur significant costs and expenses that could adversely affect 23andMe’s business, operating results or financial condition.

 

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Patent terms may be inadequate to protect 23andMe’s competitive position on its products and services for an adequate amount of time.

Patents have a limited lifespan. In the U.S., if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering 23andMe’s products and services are obtained, once the patent life has expired, 23andMe may be open to competition from competitive products. Given the amount of time required for the development, testing and regulatory review of new products and services, patents protecting such products and services might expire before or shortly after such products and services are commercialized. As a result, 23andMe’s owned and licensed patent portfolio may not provide 23andMe with sufficient rights to exclude others from commercializing products similar or identical to ours.

23andMe may not obtain patent term extension and data exclusivity for its drugs.

Depending upon the timing, duration and details of any FDA marketing approval of any drugs, 23andMe’s U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Act), which permits a maximum of 5 years of patent term extension as compensation for patent term lost during FDA regulatory review. The extended patent term must not extend 14 years beyond the date of product approval, and may be used to extend only one patent and may be only used to extend a patent with claims covering the approved drug, a method of using it or a method of manufacturing the drug. Similar extensions are available in other foreign jurisdictions outside of the U.S., such as Supplemental Patent Certificates in Europe. Such extensions may not be granted in situations where there is a failure to exercise due diligence during the testing phase or regulatory review phase, failure to apply within the deadline, failure to apply prior to expiration of the relevant patent, or failure to satisfy the applicable requirements. In addition, the term of patent extension that is granted may be less than is requested. Failure to obtain patent term extension, allows 23andMe’s competitors to obtain approval of competing products following 23andMe’s patent expiration, and may harm 23andMe’s business and financial and growth prospects.

23andMe may not be successful in obtaining, through acquisitions or otherwise, accessory rights to 23andMe’s drugs.

As other biotechnology and pharmaceutical companies and academic entities are competing with 23andMe, they may have patents or have filed and are likely filing patent applications potentially relevant to 23andMe’s business. 23andMe may find it necessary to obtain licenses to such patents from such third parties to avoid infringing on these third-party patents. The licensing of these third-party patents may be competitive and if 23andMe is unable to successfully obtain such rights, 23andMe may have to abandon development of the drug which may affect 23andMe’s business and financial and growth prospects.

23andMe utilizes open source software, which may pose particular risks to its proprietary software and source code.

23andMe uses open source software in 23andMe’s proprietary software and will use open source software in the future. Companies that incorporate open source software into their proprietary software and products have, from time to time, faced claims challenging the use of open source software and compliance with open source license terms. Some licenses governing the use of open source software contain requirements that 23andMe makes available source code for modifications or derivative works 23andMe creates based upon the open source software, and that 23andMe licenses such modifications or derivative works under the terms of a particular open source license or other license granting third parties certain rights of further use. By the terms of certain open source licenses, 23andMe could be required to release the source code of 23andMe’s proprietary software, and to make 23andMe’s proprietary software available under open source licenses to third parties at no cost, if 23andMe combines its proprietary software with open source software in certain manners. Although 23andMe monitors its

 

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use of open source software, 23andMe cannot assure you that all open source software is reviewed prior to use in 23andMe’s software, that 23andMe’s developers have not incorporated open source software into 23andMe’s proprietary software, or that they will not do so in the future. Additionally, the terms of many open source licenses to which 23andMe is subject have not been interpreted by U.S. or foreign courts. There is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on 23andMe’s ability to market or provide 23andMe’s proprietary software. Companies that incorporate open source software into their products have, in the past, faced claims seeking enforcement of open source license provisions and claims asserting ownership of open source software incorporated into their proprietary software. If an author or other third party that distributes such open source software were to allege that 23andMe has not complied with the conditions of an open source license, 23andMe could incur significant legal costs defending ourselves against such allegations. In the event such claims were successful, 23andMe could be subject to significant damages or be enjoined from the distribution of 23andMe’s proprietary software. In addition, the terms of open source software licenses may require 23andMe to provide software that 23andMe develops using such open source software to others on unfavorable license terms. As a result of 23andMe’s current or future use of open source software, 23andMe may face claims or litigation, be required to release 23andMe’s proprietary source code, pay damages for breach of contract, re-engineer 23andMe’s proprietary software, discontinue making 23andMe’s proprietary software available in the event re-engineering cannot be accomplished on a timely basis, discontinue certain aspects or functionality of its PGS, or take other remedial action. Any such re-engineering or other remedial efforts could require significant additional research and development resources, and 23andMe may not be able to successfully complete any such re-engineering or other remedial efforts. Further, in addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have a negative effect on 23andMe’s business, financial condition and results of operations.

Risks Related to the Business Combination and Integration of Businesses

Each of VGAC and 23andMe have incurred and will incur substantial costs in connection with the Business Combination and related transactions, such as legal, accounting, consulting, and financial advisory fees.

As part of the Business Combination, each of VGAC and 23andMe are utilizing professional service firms for legal, accounting, and financial advisory services. Although the parties have been provided with estimates of the costs for each advisory firm, the total actual costs may exceed those estimates.

Risks Related to the Business Combination and VGAC

Unless the context otherwise requires, any reference in this section of this proxy statement/consent solicitation statement/prospectus to the “VGAC,” “we,” “us,” or “our” refers to VGAC prior to the Business Combination and to New 23andMe and its subsidiaries following the Business Combination.

The Sponsor has entered into a letter agreement with VGAC to vote in favor of the Business Combination, regardless of how VGAC public shareholders vote.

Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, the Sponsor, pursuant to the Sponsor Agreement, has agreed, among other things, to vote in favor of all the proposals being presented at the extraordinary general meeting, including the Business Combination Proposal and the transactions contemplated thereby (including the Merger). As of the date of this proxy statement/consent solicitation statement/prospectus, the Sponsor owns approximately 20.0% of the issued and outstanding ordinary shares (excluding the private placement shares underlying the private placement warrants).

 

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Neither the VGAC Board nor any committee thereof obtained a third-party valuation in determining whether or not to pursue the Business Combination.

Neither the VGAC Board nor any committee thereof is required to obtain an opinion from an independent investment banking or accounting firm that the price that VGAC is paying for 23andMe is fair to VGAC from a financial point of view. Neither the VGAC Board nor any committee thereof obtained a third-party valuation in connection with the Business Combination. In analyzing the Business Combination, the VGAC Board and management conducted due diligence on 23andMe and researched the industry in which 23andMe operates. The VGAC Board reviewed, among other things, financial due diligence materials prepared by professional advisors, financial and market data information on selected comparable companies, the implied purchase price multiple of 23andMe, and the financial terms set forth in the Merger Agreement, and concluded that the Business Combination was in the best interest of VGAC shareholders. Accordingly, investors will be relying solely on the judgment of the VGAC Board and management in valuing 23andMe, and the VGAC Board and management may not have properly valued 23andMe’s business. The lack of a third-party valuation may also lead an increased number of shareholders to vote against the Business Combination or demand redemption of their shares, which could potentially adversely impact VGAC’s ability to consummate the Business Combination.

The COVID-19 pandemic triggered an economic crisis which may delay or prevent the consummation of the Business Combination.

In December 2019, the COVID-19 outbreak was reported in China, and, in March 2020, the World Health Organization declared it a pandemic. Since being initially reported in China, COVID-19 has spread throughout the world and has resulted in unprecedented restrictions and limitations on operations of many businesses and governmental entities, including in the United States and the United Kingdom. Given the ongoing and dynamic nature of the COVID-19 crisis, it is difficult to predict the impact on the businesses of VGAC, 23andMe, and New 23andMe, and there is no guarantee that efforts by VGAC, 23andMe, and New 23andMe to address the adverse impact of COVID-19 will be effective. If VGAC or 23andMe are unable to recover from a business disruption on a timely basis, the Business Combination and New 23andMe’s business and financial conditions and results of operations following the completion of the Business Combination could be adversely affected. The Business Combination may also be delayed and adversely affected by COVID-19, and become more costly. Each of VGAC and 23andMe may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect their respective financial condition and results of operations.

Since the Sponsor and VGAC’s directors and executive officers have interests that are different, or in addition to (and which may conflict with), the interests of VGAC shareholders, a conflict of interest may have existed in determining whether the Business Combination with 23andMe is appropriate as VGAC’s initial business combination. Such interests include that the Sponsor, as well as VGAC’s executive officers and directors, will lose their entire investment in VGAC if VGAC’s business combination is not completed.

When you consider the recommendation of the VGAC Board in favor of approval of the Business Combination Proposal, you should keep in mind that the Sponsor and VGAC’s directors and executive officers, have interests in such proposal that are different from, or in addition to (which may conflict with), those of VGAC shareholders and VGAC warrantholders generally.

These interests include, among other things, the interests listed below:

 

   

the fact that the Sponsor has agreed not to redeem any Class A ordinary shares held by it in connection with a shareholder vote to approve a proposed initial business combination;

 

   

the fact that the Sponsor paid an aggregate of $25,000 for the 12,713,750 Class B ordinary shares it currently owns and such securities will have a significantly higher value at the time of the Business Combination;

 

   

the fact that Sponsor paid $12,171,000 for its private placement warrants, and the Class A ordinary shares and private placement warrants underlying those units would be worthless if a business

 

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combination is not consummated by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the fact that the Sponsor and VGAC’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if VGAC fails to complete an initial business combination by October 6, 2022;

 

   

the fact that the Amended and Restated Registration Rights Agreement will be entered into by the Sponsor;

 

   

the fact that the Sponsor transferred 30,000 Class B ordinary shares to each of VGAC’s three independent directors prior to the initial public offering, and such securities would be worthless if a business combination is not consummated by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the fact that each of Mr. Bayliss and Mr. Lovell invested $300,000 in the Sponsor and hold interests in the Sponsor that represent an indirect interest in 1,667,581 Class B ordinary shares and 197,814 private placement warrants, and the fact that Mr. Brown, Mr. Lockhart III and Ms. Briggs invested $1,000,000, $500,000 and $250,000, respectively, in the Sponsor indirectly through an investment in VG Acquisition Holdings LLC, an affiliate of the Sponsor, and hold interests in VG Acquisition Holdings LLC that represent an indirect interest in 706,819, 353,409 and 176,705 Class B ordinary shares, respectively, and 665,740, 332,870, and 166,435 private placement warrants, respectively, and all of such securities would be worthless if a business combination is not consummated by October 6, 2022 (unless such date is extended in accordance with the Existing Governing Documents);

 

   

the fact that the Sponsor entered into the Sponsor Agreement pursuant to which the Sponsor has agreed that the Earn-Out Shares will be subject to a lockup of seven years, subject to an early release effective (i) with respect to 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $12.50 per share for any 20 trading days within any 30-trading-day period and (ii) with respect to the other 50% of the Earn-Out Shares, upon the closing price of the New 23andMe Class A Common Stock equaling or exceeding $15.00 per share for any 20 trading days within any 30-trading-day period;

 

   

the continued indemnification of VGAC’s directors and officers and the continuation of VGAC’s directors’ and officers’ liability insurance after the Business Combination (i.e., a “tail policy”);

 

   

the fact that the Sponsor and VGAC’s officers and directors will lose their entire investment in VGAC and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated by October 6, 2022;

 

   

the fact that if the trust account is liquidated, including in the event VGAC is unable to complete an initial business combination by October 6, 2022, the Sponsor has agreed to indemnify VGAC to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which VGAC has entered into an acquisition agreement or claims of any third party for services rendered or products sold to VGAC, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;

 

   

the fact that the Virgin Group owns 39,760 shares of 23andMe Class A Preferred Stock, for which it invested $50,000, which shares will be converted to shares of 23andMe Class B Common Stock immediately prior to the Closing and canceled in exchange for the right to receive approximately 91,487 shares of New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, which shares of New 23andMe Class B Common Stock will represent approximately 0.02% of outstanding shares of New 23andMe Common Stock and approximately 0.03% of the voting power of New 23andMe Common Stock and have a value of approximately $914,870 based on an implied value of $10.00 per shares of New 23andMe Class B Common Stock; and

 

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the fact that the Virgin Group and the Sponsor will collectively own 12,713,750 shares of New 23andMe Class A Common Stock and approximately 91,487 shares of New 23andMe Class B Common Stock, which collectively will represent approximately 3.23% of outstanding shares of New 23andMe Common Stock and approximately 0.42% of the voting power of New 23andMe Common Stock and have a value of approximately $914,870 based on an implied value of $10.00 per shares of New 23andMe Class B Common Stock and assuming that the maximum number of VGAC Class A ordinary shares are redeemed such that the remaining funds held in the trust account after the payment of the redeeming shares’ pro-rata allocation are sufficient to satisfy the Minimum Available Cash Condition of $500.0 million, less transaction expenses, estimated at $64.1 million.

See “Business Combination Proposal—Interests of VGAC’s Directors and Executive Officers in the Business Combination” for additional information on interests of VGAC’s directors and executive officers.

The exercise of VGAC’s directors’ and executive officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in VGAC shareholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Merger Agreement, would require VGAC to agree to amend the Merger Agreement, to consent to certain actions taken by 23andMe, or to waive rights that VGAC is entitled to under the Merger Agreement. Such events could arise because of changes in the course of 23andMe’s business, a request by 23andMe to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement, or the occurrence of other events that would have a material adverse effect on 23andMe’s business and would entitle VGAC to terminate the Merger Agreement. In any of such circumstances, it would be at VGAC’s discretion, acting through the VGAC Board, to grant its consent or waive those rights. The existence of financial and personal interests of one or more of the directors described in the preceding risk factors may result in a conflict of interest on the part of such director(s) between what he or she or they may believe is best for VGAC and VGAC shareholders and what he or she or they may believe is best for himself or herself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/consent solicitation statement/prospectus, VGAC does not believe there will be any changes or waivers that VGAC’s directors and executive officers would be likely to make after shareholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further shareholder approval, VGAC will circulate a new or amended proxy statement/consent solicitation statement/prospectus and resolicit VGAC shareholders if changes to the terms of the transaction that would have a material impact on VGAC shareholders are required prior to the vote on the Business Combination Proposal.

The dual-class structure of New 23andMe’s common stock will have the effect of concentrating voting power with the current 23andMe stockholders, which will limit an investor’s ability to influence the outcome of important transactions, including a change in control.

Shares of New 23andMe Class B Common Stock will have ten votes per share, while shares of New 23andMe Class A Common Stock will have one vote per share. Upon the consummation of the Business Combination, the current holders of 23andMe Class B Common Stock and 23andMe Preferred Stock will hold all of the issued and outstanding shares of New 23andMe Class B Common Stock. Accordingly, upon the consummation of the Business Combination, the current holders of 23andMe Class B Common Stock and 23andMe Preferred Stock will hold, directly or indirectly, and assuming maximum redemptions by the public shareholders, approximately 97% of the voting power of New 23andMe’s capital stock on a fully-diluted basis and will be able to control matters submitted to VGAC shareholders for approval, including the election of directors, amendments of VGAC’s organizational documents, and any merger, consolidation, sale of all or

 

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substantially all of VGAC’s assets, or other major corporate transactions. The current holders of 23andMe Class B Common Stock and 23andMe Preferred Stock may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentrated control may have the effect of delaying, preventing, or deterring a change in control of New 23andMe, could deprive VGAC shareholders of an opportunity to receive a premium for their capital stock as part of a sale of New 23andMe, and might ultimately affect the market price of shares of New 23andMe Class A Common Stock. For information about New 23andMe’s dual-class structure, see the section titled “Description of New 23andMe Securities.

VGAC cannot predict the impact New 23andMe’s dual-class structure may have on the stock price of New 23andMe Class A Common Stock.

VGAC cannot predict whether New 23andMe’s dual-class structure will result in a lower or more volatile market price of New 23andMe Class A Common Stock or in adverse publicity or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell and S&P Dow Jones announced that they would cease to allow most newly-public companies utilizing dual or multi-class capital structures to be included in their indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite 1500. Beginning in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, New 23andMe’s dual-class capital structure would make New 23andMe ineligible for inclusion in certain indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices will not invest in New 23andMe Class A Common Stock. These policies are still fairly new and it is unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from the indices, but it is possible that they may depress these valuations compared to those of other similar companies that are included. Because of New 23andMe’s dual-class structure, New 23andMe will likely be excluded from certain of these indices and VGAC cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds and could make shares of New 23andMe Class A Common Stock less attractive to other investors. As a result, the market price of shares of New 23andMe Class A Common Stock could be adversely affected.

Subsequent to consummation of the Business Combination, VGAC may be required to take write-downs or write-offs, restructuring and impairment, or other charges that could have a significant negative effect on VGAC’s financial condition, results of operations, and the share price of VGAC’s securities, which could cause you to lose some or all of your investment.

VGAC cannot assure you that the due diligence conducted in relation to 23andMe has identified all material issues or risks associated with 23andMe, its business, or the industry in which it competes. As a result of these factors, VGAC may incur additional costs and expenses and VGAC may be forced to later write-down or write-off assets, restructure VGAC’s operations, or incur impairment or other charges that could result in VGAC reporting losses. Even if VGAC’s due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with VGAC’s preliminary risk analysis. If any of these risks materialize, this could have a material adverse effect on VGAC’s financial condition and results of operations and could contribute to negative market perceptions about VGAC’s securities or New 23andMe. Accordingly, any VGAC shareholders who choose to remain New 23andMe stockholders following the Business Combination could suffer a reduction in the value of their shares and warrants. Such VGAC shareholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by VGAC officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the registration

 

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statement or proxy statement/consent solicitation statement/prospectus relating to the Business Combination contained an actionable material misstatement or material omission.

Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of key personnel of New 23andMe, including those from 23andMe, and some of whom may join New 23andMe following the Business Combination. The loss of key personnel or the hiring of ineffective personnel after the Business Combination could negatively impact the operations and profitability of New 23andMe.

Our ability to successfully effect the Business Combination and be successful thereafter will be dependent upon the efforts of VGAC’s key personnel. VGAC expects New 23andMe’s current management to remain in place. VGAC cannot assure you that VGAC will be successful in integrating and retaining such key personnel, or in identifying and recruiting additional key individuals VGAC determines may be necessary following the Business Combination.

The unaudited pro forma financial information included elsewhere in this proxy statement/consent solicitation statement/prospectus may not be indicative of what New 23andMe’s actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement/consent solicitation statement/prospectus is presented for illustrative purposes only and has been prepared based on a number of assumptions including, but not limited to, 23andMe being considered the accounting acquirer in the Business Combination, the debt obligations and the cash and cash equivalents of 23andMe at the Closing, and the number of public shares that are redeemed in connection with the Business Combination. Accordingly, such pro forma financial information may not be indicative of VGAC’s future operating or financial performance and VGAC’s actual financial condition and results of operations may vary materially from VGAC’s pro forma results of operations and balance sheet contained elsewhere in this proxy statement/consent solicitation statement/prospectus, including as a result of such assumptions not being accurate. Additionally, the final acquisition accounting adjustments could differ materially from the unaudited pro forma adjustments presented in this proxy statement/consent solicitation statement/prospectus. The unaudited pro forma condensed combined financial information does not give effect to any operating efficiencies or cost savings that may be associated with the Business Combination. See “Unaudited Pro Forma Condensed Combined Financial Information.”

The ability of the public shareholders to exercise redemption rights with respect to a large number of VGAC public shares may not allow VGAC to complete the most desirable business combination or optimize the capital structure of New 23andMe.

At the time of entering into the Merger Agreement, VGAC did not know how many shareholders may exercise their redemption rights, and therefore, VGAC needed to structure the transaction based on its expectations as to the number of shares that will be submitted for redemption. The consummation of the Business Combination is conditioned upon, among other things: (i) the approval of the Condition Precedent Proposals; (ii) the expiration and termination of the applicable waiting period under the HSR Act relating to the Merger Agreement; and (iii) the Minimum Available Cash Condition. Therefore, unless these conditions are waived by the applicable parties to the Merger Agreement, the Merger Agreement could terminate and the Business Combination may not be consummated.

The Sponsor, as well as 23andMe, VGAC directors, executive officers, advisors, and their affiliates may elect to purchase public shares prior to the consummation of the Business Combination, which may influence the vote on the Business Combination and reduce the public “float” of VGAC Class A ordinary shares.

At any time at or prior to the Business Combination, during a period when they are not then aware of any material nonpublic information regarding VGAC or VGAC’s securities, the Sponsor, 23andMe, and/or their

 

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directors, officers, advisors, or respective affiliates may purchase public shares from institutional and other investors who vote, or indicate an intention to vote, against any of the Condition Precedent Proposals, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire public shares or vote their public shares in favor of the Condition Precedent Proposals. Such a purchase may include a contractual acknowledgement that such shareholder, although still the record or beneficial holder of VGAC shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that the Sponsor, 23andMe, and/or their directors, officers, advisors, or respective affiliates purchase shares in privately negotiated transactions from public shareholders who have already elected to exercise their redemption rights, such selling shareholder would be required to revoke their prior elections to redeem their shares. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements that (i) the Business Combination Proposal, the Governing Documents Proposals, the NYSE Proposal, the Incentive Equity Plan Proposal, the ESPP Proposal, the Director Election Proposal, and the Adjournment Proposal are approved by the affirmative vote of holders of a majority of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, (ii) the Domestication Proposal and the Charter Amendment Proposal are approved by the affirmative vote of holders of a majority of at least a two-thirds (2/3) of the issued ordinary shares who, being present in person or represented by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting, (iii) the Minimum Available Cash Condition is met and/or otherwise limit the number of public shares electing to redeem, and (iv) New 23andMe’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) being at least $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing.

If such transactions are effected, the consequence could be to cause the Business Combination to be consummated in circumstances where such consummation could not otherwise occur. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the proposals to be presented at the extraordinary general meeting and would likely increase the chances that such proposals would be approved.

In addition, if such purchases are made, the public “float” of VGAC public shares and the number of beneficial holders of VGAC securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing, or trading of VGAC securities on a national securities exchange.

If third parties bring claims against VGAC, the proceeds held in the trust account could be reduced and the per share redemption amount received by VGAC shareholders may be less than $10.00 per share (which was the offering price in the initial public offering).

VGAC’s placing of funds in the trust account may not protect those funds from third-party claims against VGAC. Although VGAC will seek to have all vendors, service providers (other than VGAC’s independent registered public accounting firm), prospective target businesses, or other entities with which VGAC does business execute agreements with VGAC waiving any right, title, interest, or claim of any kind in or to any monies held in the trust account, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against VGAC’s assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, VGAC’s management will consider whether competitive alternatives are reasonably available to VGAC and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in the best interests of the company under the circumstances.

Examples of possible instances where VGAC may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by

 

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management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts, or agreements with VGAC and will not seek recourse against the trust account for any reason. Upon redemption of the public shares, if VGAC is unable to complete a business combination within the prescribed time frame, or upon the exercise of a redemption right in connection with a business combination, VGAC will be required to provide for payment of claims of creditors that were not waived that may be brought against VGAC within the ten years following redemption. Accordingly, the per share redemption amount received by public shareholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors. In order to protect the amounts held in the trust account, the Sponsor has agreed to be liable to VGAC if and to the extent any claims by a vendor for services rendered or products sold to VGAC, or a prospective target business with which VGAC has discussed entering into a transaction agreement, reduces the amount of funds in the trust account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest, or claim of any kind in or to any monies held in the trust account or to any claims under VGAC’s indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, even in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. VGAC has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and VGAC has not asked the Sponsor to reserve for such indemnification obligations. Therefore, VGAC cannot assure you that the Sponsor would be able to satisfy those obligations. None of VGAC’s officers will indemnify VGAC for claims by third parties including, without limitation, claims by vendors and prospective target businesses.

Additionally, if VGAC is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against VGAC which is not dismissed, or if VGAC otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in VGAC’s bankruptcy estate and subject to the claims of third parties with priority over the claims of VGAC shareholders. To the extent any bankruptcy claims deplete the trust account, VGAC may not be able to return to the public shareholders $10.00 per share (which was the offering price in the initial public offering).

If, after VGAC distributes the proceeds in the trust account to the public shareholders, VGAC files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC that is not dismissed, a bankruptcy court may seek to recover such proceeds, and VGAC and the VGAC Board may be exposed to claims of punitive damages.

If, after VGAC distributes the proceeds in the trust account to the public shareholders, VGAC files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC that is not dismissed, any distributions received by public shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by VGAC shareholders. In addition, the VGAC Board may be viewed as having breached its fiduciary duty to VGAC’s creditors and/or having acted in bad faith, thereby exposing it and VGAC to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of creditors. VGAC cannot assure you that claims will not be brought against VGAC for these reasons.

If, before distributing the proceeds in the trust account to the public shareholders, VGAC files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of VGAC shareholders and the per share amount that would otherwise be received by VGAC shareholders in connection with VGAC’s liquidation may be reduced.

If, before distributing the proceeds in the trust account to the public shareholders, VGAC files a bankruptcy petition or an involuntary bankruptcy petition is filed against VGAC that is not dismissed, the proceeds held in

 

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the trust account could be subject to applicable bankruptcy law, and may be included in VGAC’s bankruptcy estate and subject to the claims of third parties with priority over the claims of public shareholders. To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by VGAC shareholders in connection with VGAC’s liquidation may be reduced.

VGAC shareholders may be held liable for claims by third parties against VGAC to the extent of distributions received by them upon redemption of their shares.

If VGAC is forced to enter into an insolvent liquidation, any distributions received by VGAC shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, VGAC was unable to pay VGAC’s debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover all amounts received by VGAC shareholders. Furthermore, VGAC directors may be viewed as having breached their fiduciary duties to VGAC or VGAC’s creditors and/or may have acted in bad faith, and thereby exposing themselves and VGAC’s company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. Claims may be brought against VGAC for these reasons.

VGAC is an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if VGAC takes advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make VGAC’s securities less attractive to investors and may make it more difficult to compare VGAC’s performance with other public companies.

VGAC is an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and VGAC may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in VGAC’s periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, VGAC shareholders may not have access to certain information they may deem important. VGAC could be an emerging growth company for up to five years, although circumstances could cause VGAC to lose that status earlier, including if the market value of VGAC Class A ordinary shares or, after the Business Combination, the New 23andMe Class A Common Stock held by non-affiliates exceeds $700 million as of any June 30th (or if after the Business Combination, September 30th) before that time, in which case VGAC would no longer be an emerging growth company as of the following December 31st (or if after the Business Combination, March 31st). Following the Business Combination, VGAC expects that New 23andMe will remain an emerging growth company until March 31, 2022. VGAC cannot predict whether investors will find VGAC’s securities less attractive because VGAC will rely on these exemptions. If some investors find VGAC’s securities less attractive as a result of VGAC’s reliance on these exemptions, the trading prices of VGAC’s securities may be lower than they otherwise would be, there may be a less active trading market for VGAC’s securities and the trading prices of VGAC’s securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. VGAC has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may

 

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make comparison of VGAC’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Additionally, VGAC is a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. Following the Business Combination, VGAC expects that New 23andMe will no longer be a smaller reporting company.

Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for VGAC to effectuate the Business Combination, require substantial financial and management resources and increase the time and costs of completing a business combination.

The fact that VGAC is a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on VGAC as compared to other public companies. 23andMe is not a publicly reporting company required to comply with Section 404 of the Sarbanes-Oxley Act and New 23andMe management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to New 23andMe after the Business Combination. If VGAC is not able to implement the requirements of Section 404, including any additional requirements once VGAC is no longer an emerging growth company, in a timely manner or with adequate compliance, VGAC may not be able to assess whether its internal control over financial reporting are effective, which may subject VGAC to adverse regulatory consequences and could harm investor confidence and the market price of New 23andMe Class A Common Stock. Additionally, once VGAC is no longer an emerging growth company, VGAC will be required to comply with the independent registered public accounting firm attestation requirement on VGAC’s internal control over financial reporting.

The price of New 23andMe Class A Common Stock and New 23andMe’s warrants may be volatile.

Upon consummation of the Business Combination, the price of New 23andMe Class A Common Stock and New 23andMe’s warrants may fluctuate due to a variety of factors, including:

 

   

changes in the industries in which New 23andMe and its customers operate;

 

   

variations in its operating performance and the performance of its competitors in general;

 

   

material and adverse impact of the COVID-19 pandemic on the markets and the broader global economy;

 

   

actual or anticipated fluctuations in New 23andMe’s quarterly or annual results of operation;

 

   

publication of research reports by securities analysts about New 23andMe or its competitors or its industry;

 

   

the public’s reaction to New 23andMe’s press releases, its other public announcements, and its filings with the SEC;

 

   

New 23andMe’s failure or the failure of its competitors to meet analysts’ projections or guidance that New 23andMe or its competitors may give to the market;

 

   

additions and departures of key personnel;

 

   

changes in laws and regulations affecting its business;

 

   

commencement of, or involvement in, litigation involving New 23andMe;

 

   

changes in New 23andMe’s capital structure, such as future issuances of securities or the incurrence of additional debt;

 

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the volume of shares of New 23andMe Class A Common Stock available for public sale;

 

   

sales of shares of New 23andMe Class A Common Stock by the PIPE Investors; and

 

   

general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political, and economic risks, and acts of war or terrorism.

These market and industry factors may materially reduce the market price of New 23andMe Class A Common Stock and New 23andMe’s warrants regardless of the operating performance of New 23andMe.

A significant portion of VGAC’s total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of New 23andMe Class A Common Stock to drop significantly, even if New 23andMe’s business is doing well.

Sales of a substantial number of shares of New 23andMe Class A Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of New 23andMe Class A Common Stock.

It is anticipated that, upon completion of the Business Combination, (i) the 23andMe Stockholders will own approximately 79.6% of the outstanding New 23andMe Class A Common Stock and (ii) the Sponsor will own approximately 2.1% of the outstanding New 23andMe Class A Common Stock, in each case, assuming that none of VGAC’s outstanding public shares are redeemed in connection with the Business Combination, or approximately 84.9% and 2.3%, respectively, assuming that 25,864,535 of VGAC’s outstanding public shares (being VGAC’s estimate of the maximum number of public shares that could be redeemed in connection with the Business Combination in order to satisfy the Minimum Available Cash Condition based on a per share redemption price of $10.00 per share) are redeemed in connection with the Business Combination. These percentages assume that (i) 334,623,186 shares of New 23andMe Class A Common Stock are issued to the holders of shares of capital stock of 23andMe at the Closing; (ii) all shares of New 23andMe Class B Common Stock that will be held by existing holders of 23andMe Class B Common Stock and 23andMe Preferred Stock, including affiliates and permitted transferees thereof, immediately following Closing, have been converted into New 23andMe Class A Common Stock on a one-for-one basis; (iii) 25,000,000 shares of New 23andMe Class A Common Stock will be issued in the PIPE Financing; (iv) no public warrants or private placement warrants to purchase New 23andMe Class A Common Stock that will be outstanding immediately following the Closing have been exercised; and (v) no vested or unvested options to acquire New 23andMe Class A Common Stock that will be held by 23andMe Equityholders immediately following Closing have been exercised. If the actual facts are different than these assumptions, the ownership percentages in New 23andMe will be different.

Although the Sponsor and certain 23andMe Stockholders will be subject to certain restrictions regarding the transfer of New 23andMe Class A Common Stock, these shares may be sold after the expiration of the lock-up under the Sponsor Agreement. VGAC intend to file one or more registration statements prior to or shortly after the closing of the Business Combination to provide for the resale of such shares from time to time. As restrictions on resale end and the registration statements are available for use, the market price of New 23andMe Class A Common Stock could decline if the holders of currently restricted shares sell such shares or are perceived by the market as intending to sell such shares.

The public shareholders will experience immediate dilution as a consequence of the issuance of New 23andMe Class A Common Stock as consideration in the Business Combination and in the PIPE Financing.

In accordance with the terms and subject to the conditions of the Merger Agreement, based on an implied equity value of $3.6 billion, (i) each share of 23andMe Class A Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of shares of the New 23andMe Class A Common Stock, as determined pursuant to the Share

 

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Conversion Ratio, (ii) each share of 23andMe Class B Common Stock (other than dissenting shares) will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of the New 23andMe Class B Common Stock, as determined pursuant to the Share Conversion Ratio, (iii) each share of 23andMe Preferred Stock will be converted into shares of 23andMe Class B Common Stock immediately prior to the consummation of the Merger and such shares of 23andMe Class B Common Stock will be canceled and converted into the right to receive the applicable portion of the merger consideration comprised of New 23andMe Class B Common Stock, as determined in the Merger Agreement, and (iv) each outstanding option to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock (whether vested or unvested) will be assumed by VGAC and converted into comparable options that are exercisable for shares of New 23andMe Class A Common Stock, with a value determined in accordance with the Share Conversion Ratio (and, with regard to options that are intended to qualify as “incentive stock options” under Section 422 of the Code, in a manner compliant with Section 424(a) of the Code). The implied equity value of $3.6 billion includes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of vested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock but excludes the value of the options exercisable for shares of New 23andMe Class A Common Stock that are issued in respect of unvested options to purchase 23andMe Class A Common Stock and 23andMe Class B Common Stock.

The issuance of additional New 23andMe Class A Common Stock will significantly dilute the equity interests of existing holders of VGAC securities, and may adversely affect prevailing market prices of New 23andMe Class A Common Stock and/or New 23andMe warrants.

Warrants will become exercisable for New 23andMe Class A Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to VGAC shareholders.

If the Business Combination is completed, outstanding warrants to purchase an aggregate of 25,065,665 shares of New 23andMe Class A Common Stock will become exercisable in accordance with the terms of the warrant agreement governing those securities. These warrants will become exercisable 30 days after the completion of the Business Combination. The exercise price of these warrants will be $11.50 per share. To the extent such warrants are exercised, additional shares of New 23andMe Class A Common Stock will be issued, which will result in dilution to the holders of New 23andMe Class A Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the prevailing market prices of New 23andMe Class A Common Stock. However, there is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless. See below risk factor, “Even if the Business Combination is consummated, the public warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment.”

Even if the Business Combination is consummated, the public warrants may never be in the money, and they may expire worthless and the terms of the warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment.

The warrants were issued in registered form under a warrant agreement between Continental, as warrant agent, and VGAC. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision or correct any mistake, but requires the approval by the holders of at least 50% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, VGAC may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment. Although VGAC’s ability to amend the terms of the public warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such

 

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amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period, or decrease the number of shares of New 23andMe Class A Common Stock purchasable upon exercise of a warrant.

VGAC may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

VGAC has the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the New 23andMe Class A Common Stock equals or exceeds $18.00 per share (as adjusted for share subdivisions, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30-trading-day period ending on the third trading day prior to the date VGAC sends the notice of redemption to the warrantholders. If and when the warrants become redeemable by us, VGAC may exercise its redemption right even if VGAC is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to: (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

In addition, VGAC may redeem your warrants at any time after they become exercisable and prior to their expiration at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants prior to redemption for a number of Class A ordinary shares determined based on the redemption date and the fair market value of VGAC Class A ordinary shares. The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the warrants. None of the private placement warrants will be redeemable by us, subject to certain circumstances, so long as they are held by the Sponsor or its permitted transferees.

Nasdaq may not list New 23andMe’s securities on its exchange, which could limit investors’ ability to make transactions in New 23andMe’s securities and subject New 23andMe to additional trading restrictions.

An active trading market for New 23andMe’s securities following the Business Combination may never develop or, if developed, it may not be sustained. In connection with the Business Combination, in order to list VGAC’s securities on Nasdaq, VGAC will be required to demonstrate compliance with Nasdaq’s listing requirements. VGAC will apply to have New 23andMe’s securities listed on Nasdaq upon consummation of the Business Combination. VGAC cannot assure you that VGAC will be able to meet all listing requirements. Even if New 23andMe’s securities are listed on Nasdaq, New 23andMe may be unable to maintain the listing of its securities in the future.

If New 23andMe fails to meet the listing requirements and Nasdaq does not list its securities on its exchange, 23andMe would not be required to consummate the Business Combination. In the event that 23andMe elected to waive this condition, and the Business Combination was consummated without New 23andMe’s securities being listed on Nasdaq or on another national securities exchange, New 23andMe could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for New 23andMe’s securities;

 

   

reduced liquidity for New 23andMe’s securities;

 

   

a determination that New 23andMe Class A Common Stock is a “penny stock” which will require brokers trading in New 23andMe Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for New 23andMe’s securities;

 

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a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If New 23andMe’s securities were not listed on Nasdaq, such securities would not qualify as covered securities and VGAC would be subject to regulation in each state in which VGAC offers VGAC’s securities because states are not preempted from regulating the sale of securities that are not covered securities.

Reports published by analysts, including projections in those reports that differ from VGAC’s actual results, could adversely affect the price and trading volume of New 23andMe Class A Common Stock.

Securities research analysts may establish and publish their own periodic projections for New 23andMe following consummation of the Business Combination. These projections may vary widely and may not accurately predict the results New 23andMe actually achieves. The share price of New 23andMe Class A Common Stock may decline if New 23andMe’s actual results do not match the projections of these securities research analysts. Similarly, if one or more of the analysts who write reports on New 23andMe downgrades New 23andMe’s stock or publishes inaccurate or unfavorable research about its business, the share price of New 23andMe Class A Common Stock could decline. If one or more of these analysts ceases coverage of New 23andMe or fails to publish reports on New 23andMe regularly, the share price or trading volume of New 23andMe Class A Common Stock could decline. While VGAC expects research analyst coverage following consummation of the Business Combination, if no analysts commence coverage of New 23andMe, the market price and volume for shares of New 23andMe Class A Common Stock could be adversely affected.

VGAC is subject to, and New 23andMe will be subject to, changing law and regulations regarding regulatory matters, corporate governance, and public disclosure that have increased both VGAC’s costs and the risk of non-compliance and will increase both New 23andMe’s costs and the risk of non-compliance.

VGAC is, and New 23andMe will be, subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. VGAC’s efforts to comply with new and changing laws and regulations have resulted in, and New 23andMe’s efforts to comply likely will result in, increased general and administrative expenses and a diversion of management time and attention.

Moreover, because these laws, regulations, and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to New 23andMe’s disclosure and governance practices. If VGAC fails to address and comply with these regulations and any subsequent changes, VGAC may be subject to penalty and VGAC’s business may be harmed.

VGAC’s warrants are accounted for as liabilities and the changes in value of VGAC’s warrants could have a material effect on our financial results.

On April 12, 2021, the SEC issued a statement (the “Statement”) discussing the accounting implications of certain terms that are common in warrants issued by special purpose acquisition companies. In light of the Statement and guidance in ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity”, VGAC’s management evaluated the terms of the Warrant Agreement entered into in connection with its initial public offering and concluded that its public warrants and private placement warrants (together, the “Warrants”) include provisions that, based on the Statement, preclude the Warrants from being classified as components of equity. As a result, VGAC has classified the Warrants as liabilities. Under this accounting treatment, VGAC is

 

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required to measure the fair value of the Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in our operating results for the current period. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based on factors which are outside our control. We expect that we will recognize non-cash gains or losses due to the quarterly fair valuation of our Warrants and that such gains or losses could be material.

VGAC has identified a material weakness in its internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

Following the issuance of the SEC Statement, on May 2, 2021, VGAC’s management and its audit committee concluded that, in light of the SEC Statement, it was appropriate to restate its previously issued audited financial statements as of and for the period ended December 31, 2020. See “—VGAC’s warrants are accounted for as liabilities and the changes in value of VGAC’s warrants could have a material effect on our financial results.” As part of such process, VGAC identified a material weakness in its internal controls over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.

Following the issuance of the SEC Statement, our management and our audit committee concluded that it was appropriate to restate our previously issued audited financial statements as of December 31, 2020 and for the period ended December 31, 2020. See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As part of such restatement, we identified a material weakness in our internal controls over financial reporting.

As a result of such material weakness, the restatement described above, the change in accounting for the warrants, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this registration statement, VGAC has no knowledge of any such litigation or dispute arising due to restatement or material weakness of our internal controls over financial reporting. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.

 

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Risks Related to the Consummation of the Domestication

Certain Holders may be required to recognize gain for U.S. federal income tax purposes as a result of the Domestication.

As discussed more fully under the section “U.S. Federal Income Tax Considerations,” the Domestication will constitute a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. Accordingly, U.S. Holders (as defined in such section) of VGAC Class A ordinary shares will be subject to Section 367(b) of the Code and, as a result:

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of VGAC Class A ordinary shares whose ordinary shares have a fair market value of less than $50,000 on the date of the Domestication and who is not a 10% shareholder (as defined above) will not recognize any gain or loss and will not be required to include any part of VGAC’s earnings in income.

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of VGAC Class A ordinary shares whose ordinary shares have a fair market value of $50,000 or more, but who is not a 10% shareholder will generally recognize gain (but not loss) on the deemed receipt of New 23andMe Class A Common Stock in the Domestication. As an alternative to recognizing gain as a result of the Domestication, such U.S. Holder may file an election to include in income, as a dividend, the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367) attributable to its VGAC Class A ordinary shares provided certain other requirements are satisfied.

 

   

Subject to the discussion below concerning PFICs, a U.S. Holder of VGAC Class A ordinary shares who on the date of the Domestication is a 10% shareholder will generally be required to include in income, as a dividend, the “all earnings and profits amount” (as defined in the Treasury Regulations under Section 367) attributable to its VGAC shares provided certain other requirements are satisfied.

 

   

As discussed further under “U.S. Federal Income Tax Considerations” below, VGAC believes that it is (and has been) treated as a PFIC for U.S. federal income tax purposes. In the event that VGAC is (or in some cases has been) treated as a PFIC, notwithstanding the foregoing, proposed Treasury Regulations under Section 1291(f) of the Code (which have a retroactive effective date), if finalized in their current form, generally would require a U.S. Holder to recognize gain as a result of the Domestication unless the U.S. Holder makes (or has made) certain elections discussed further under “U.S. Federal Income Tax Considerations – The Domestication.” The tax on any such gain would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of rules. It is difficult to predict whether such proposed regulations will be finalized and whether, in what form, and with what effective date, other final Treasury Regulations under Section 1291(f) of the Code will be adopted. Further, it is not clear how any such regulations would apply to the warrants. For a more complete discussion of the potential application of the PFIC rules to U.S. Holders as a result of the Domestication, see the section entitled “U.S. Federal Income Tax Considerations.” Each U.S. Holder of VGAC Class A ordinary shares or warrants is urged to consult its own tax advisor concerning the application of the PFIC rules to the exchange of VGAC Class A ordinary shares for New 23andMe Class A Common Stock and VGAC warrants for New 23andMe warrants pursuant to the Domestication.

Additionally, the Domestication may cause Non-U.S. Holders (as defined in “U.S. Federal Income Tax Considerations” below) to become subject to U.S. federal income withholding taxes on any dividends in respect of such Non-U.S. Holder’s New 23andMe Class A Common Stock subsequent to the Domestication.

The tax consequences of the Domestication are complex and will depend on a holder’s particular circumstances. All holders are strongly urged to consult their tax advisor for a full description and understanding of the tax consequences of the Domestication, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the U.S. federal income tax considerations of the Domestication, see the section entitled “U.S. Federal Income Tax Considerations.

 

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Upon consummation of the Business Combination, the rights of holders of New 23andMe Class A Common Stock arising under the DGCL and the Proposed Governing Documents will differ from and may be less favorable to the rights of holders of Class A ordinary shares arising under Cayman Islands law and the Existing Governing Documents.

Upon consummation of the Business Combination, the rights of holders of New 23andMe Class A Common Stock will be as provided in the Proposed Governing Documents and the DGCL. Those new organizational documents and the DGCL contain provisions that differ in some respects from those in the Existing Governing Documents and Cayman Islands law and, therefore, some rights of holders of New 23andMe Class A Common Stock could differ from the rights that holders of Class A ordinary shares currently have. For instance, while class actions are generally not available to shareholders under Cayman Islands law, such actions are generally available under the DGCL. This change could increase the likelihood that New 23andMe becomes involved in costly litigation, which could have a material adverse effect on New 23andMe.

In addition, there are differences between the Proposed Governing Documents of New 23andMe and the Existing Governing Documents of VGAC. For a more detailed description of the rights of holders of New 23andMe Class A Common Stock and how they may differ from the rights of holders of Class A ordinary shares, please see “Comparison of Corporate Governance and Shareholder Rights.” The forms of the Proposed Certificate of Incorporation and the Proposed Bylaws of New 23andMe are attached as Annex E and Annex F, respectively, to this proxy statement/consent solicitation statement/prospectus, and VGAC urges you to read them.

Delaware law and New 23andMe’s Proposed Governing Documents contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

The Proposed Governing Documents that will be in effect upon consummation of the Business Combination, and the DGCL, contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the New 23andMe Board and therefore depress the trading price of New 23andMe Class A Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the New 23andMe Board or taking other corporate actions, including effecting changes in VGAC’s management. Among other things, the Proposed Governing Documents include provisions regarding:

 

   

a classified board of directors;

 

   

the dual-class structure that provides for New 23andMe Class B Common Stock being entitled to ten votes per share;

 

   

the ability of the New 23andMe Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

 

   

the limitation of the liability of, and the indemnification of, New 23andMe’s directors and officers;

 

   

the requirement that a special meeting of stockholders may only be called by a majority of the entire New 23andMe Board, the Chairman of the New 23andMe Board, or the Chief Executive Officer of New 23andMe, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;

 

   

controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;

 

   

the ability of the New 23andMe Board to amend the bylaws, which may allow the New 23andMe Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and

 

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advance notice procedures with which stockholders must comply to nominate candidates to the New 23andMe Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the New 23andMe Board, and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of New 23andMe.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the New 23andMe Board or management, that stockholders may consider to be in their best interests.

In addition, the Proposed Certificate of Incorporation includes a provision substantially similar to Section 203 of the DGCL, which may prohibit certain stockholders holding 15% or more of New 23andMe’s outstanding capital stock from engaging in certain business combinations with VGAC for a specified period of time.

New 23andMe’s Proposed Certificate of Incorporation will designate a state or federal court located within the State of Delaware as the sole and exclusive forum for substantially all disputes between New 23andMe and its stockholders, which could limit New 23andMe’s stockholders’ ability to obtain a favorable judicial forum for disputes with New 23andMe or its directors, officers, stockholders, employees, or agents.

The Proposed Certificate of Incorporation, which will be in effect upon consummation of the Business Combination, provides that, unless New 23andMe consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of New 23andMe, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee, or agent of New 23andMe to New 23andMe or New 23andMe’s stockholders, (iii) any action arising pursuant to any provision of the DGCL or the Proposed Certificate of Incorporation or Proposed Bylaws (as either may be amended from time to time), or (iv) any action asserting a claim against New 23andMe governed by the internal affairs doctrine. The forgoing provisions will not apply to any claims arising under the Securities Act and, unless New 23andMe consents in writing to the selection of an alternative forum, the federal district courts of the United States will be the sole and exclusive forum for resolving any action asserting a claim arising under the Securities Act.

These choice of forum provisions in New 23andMe’s Proposed Certificate of Incorporation may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with New 23andMe or any of New 23andMe’s directors, officers, or other employees, which may discourage lawsuits with respect to such claims. There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find the choice of forum provision contained in the Proposed Certificate of Incorporation to be inapplicable or unenforceable in an action, New 23andMe may incur additional costs associated with resolving such action in other jurisdictions, which could harm New 23andMe’s business, results of operations, and financial condition.

Risks Related to the Redemption

Public Shareholders who wish to redeem their public shares for a pro rata portion of the trust account must comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline. If VGAC shareholders fail to comply with the redemption requirements specified in this proxy statement/consent solicitation statement/prospectus, they will not be entitled to redeem their public shares for a pro rata portion of the funds held in the trust account.

A public shareholder will be entitled to receive cash for any public shares to be redeemed only if such public shareholder: (i)(a) holds public shares, or (b) if the public shareholder holds public shares through units, the

 

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public shareholder elects to separate its units into the underlying public shares and public warrants prior to exercising its redemption rights with respect to the public shares; (ii) submits a written request to Continental, VGAC’s transfer agent, in which it (a) requests that New 23andMe redeem all or a portion of its public shares for cash, and (b) identifies itself as a beneficial holder of the public shares and provides its legal name, phone number, and address; and (iii) delivers its share certificates (if any) and other redemption forms (as applicable) to Continental physically or electronically through DTC. Holders must complete the procedures for electing to redeem their public shares in the manner described above prior to 5:00 P.M, Eastern Time, on [●], 2021 (two business days before the extraordinary general meeting) in order for their shares to be redeemed. In order to obtain a physical share certificate, a public shareholder’s broker and/or clearing broker, DTC and Continental, will need to act to facilitate this request. It is VGAC’s understanding that public shareholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because VGAC does not have any control over this process or over DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, public shareholders who wish to redeem their public shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares.

If the Business Combination is consummated, and if a public shareholder properly exercises its right to redeem all or a portion of the public shares that it holds and timely delivers its share certificates (if any) and other redemption forms (as applicable) to Continental, New 23andMe will redeem such public shares for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of the initial public offering, calculated as of two business days prior to the consummation of the Business Combination. Please see the section entitled “Extraordinary General Meeting of VGAC—Redemption Rights” for additional information on how to exercise your redemption rights.

If a public shareholder fails to receive notice of VGAC’s offer to redeem public shares in connection with the Business Combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.

If, despite VGAC’s compliance with the proxy rules, a public shareholder fails to receive VGAC’s proxy materials, such public shareholder may not become aware of the opportunity to redeem his, her, or its public shares. In addition, the proxy materials that VGAC is furnishing to holders of public shares in connection with the Business Combination describes the various procedures that must be complied with in order to validly redeem the public shares. In the event that a public shareholder fails to comply with these procedures, its public shares may not be redeemed. Please see the section entitled “Extraordinary General Meeting of VGAC—Redemption Rights” for additional information on how to exercise your redemption rights.

VGAC does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for VGAC to complete the Business Combination with which a substantial majority of VGAC shareholders do not agree.

The Existing Governing Documents do not provide a specified maximum redemption threshold, except that VGAC will not redeem public shares in an amount that would cause VGAC’s net tangible assets to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement and the PIPE Financing (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act).

As a result, VGAC may be able to complete the Business Combination even though a substantial portion of public shareholders do not agree with the transaction and have redeemed their shares or have entered into privately negotiated agreements to sell their shares to Sponsor, directors or officers, or their affiliates. As of the date of this proxy statement/consent solicitation statement/prospectus, no agreements with respect to the private purchase of public shares by VGAC or the persons described above have been entered into with any such investor or holder. VGAC will file a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that would affect the vote on the

 

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proposals to be presented at the extraordinary general meeting or the redemption threshold. Any such report will include descriptions of any arrangements entered into or significant purchases by any of the aforementioned persons.

If you or a “group” of shareholders of which you are a part are deemed to hold an aggregate of more than 15% of the public shares, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the public shares.

A public shareholder, together with any of his, her, or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her, or its shares or, if part of such a group, the group’s shares, in excess of 15% of the public shares. In order to determine whether a shareholder is acting in concert or as a group with another shareholder, VGAC will require each public shareholder seeking to exercise redemption rights to certify to VGAC whether such shareholder is acting in concert or as a group with any other shareholder. Such certifications, together with other public information relating to stock ownership available to VGAC at that time, such as Section 13D, Section 13G, and Section 16 filings under the Exchange Act, will be the sole basis on which VGAC makes the above-referenced determination. Your inability to redeem any such excess shares will reduce your influence over VGAC’s ability to consummate the Business Combination and you could suffer a material loss on your investment in VGAC if you sell such excess shares in open market transactions. Additionally, you will not receive redemption distributions with respect to such excess shares if VGAC consummates the Business Combination. As a result, you will continue to hold that number of shares aggregating to more than 15% of the public shares and, in order to dispose of such excess shares, would be required to sell your stock in open market transactions, potentially at a loss. VGAC cannot assure you that the value of such excess shares will appreciate over time following the Business Combination or that the market price of the public shares will exceed the per-share redemption price. Notwithstanding the foregoing, shareholders may challenge VGAC’s determination as to whether a shareholder is acting in concert or as a group with another shareholder in a court of competent jurisdiction.

However, VGAC shareholders’ ability to vote all of their shares (including such excess shares) for or against the Business Combination is not restricted by this limitation on redemption.

There is no guarantee that a public shareholder’s decision whether to redeem its shares for a pro rata portion of the trust account will put the public shareholder in a better future economic position.

VGAC can give no assurance as to the price at which a public shareholder may be able to sell its public shares in the future following the completion of the Business Combination or any alternative business combination. Certain events following the consummation of any initial business combination, including the Business Combination, may cause an increase in VGAC share price, and may result in a lower value realized now than a public shareholder might realize in the future had the public shareholder not redeemed its shares. Similarly, if a public shareholder does not redeem its shares, the public shareholder will bear the risk of ownership of the public shares after the consummation of any initial business combination, and there can be no assurance that a public shareholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/consent solicitation statement/prospectus. A public shareholder should consult the public shareholder’s own financial advisor for assistance on how this may affect his, her, or its individual situation.

 

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Risks if the Adjournment Proposal is Not Approved

If the Adjournment Proposal is not approved, and an insufficient number of votes have been obtained to authorize the consummation of the Business Combination and the Domestication, the VGAC Board will not have the ability to adjourn the extraordinary general meeting to a later date or dates in order to solicit further votes, and, therefore, the Business Combination will not be approved, and the Business Combination may not be consummated.

The VGAC Board is seeking approval to adjourn the extraordinary general meeting to a later date or dates if, at the extraordinary general meeting, based upon the tabulated votes, there are insufficient votes to approve each of the Condition Precedent Proposals. If the Adjournment Proposal is not approved, the VGAC Board will not have the ability to adjourn the extraordinary general meeting to a later date or dates and, therefore, will not have more time to solicit votes to approve the Condition Precedent Proposals. In such events, the Business Combination would not be completed.

Risks if the Domestication and the Business Combination are not Consummated

If VGAC is not able to complete the Business Combination with 23andMe nor able to complete another business combination by October 6, 2022, in each case, as such date may be extended pursuant to the Existing Governing Documents, VGAC would cease all operations except for the purpose of winding up and VGAC would redeem VGAC Class A ordinary shares and liquidate the trust account, in which case the public shareholders may only receive approximately $10.00 per share and VGAC warrants will expire worthless.

If VGAC is not able to complete the Business Combination with 23andMe nor able to complete another business combination by October 6, 2022, in each case, as such date may be extended pursuant to the Existing Governing Documents VGAC will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest income to pay dissolution expenses) divided by the number of then-outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining VGAC shareholders and the VGAC Board, liquidate and dissolve, subject in each case to VGAC’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, the public shareholders may only receive approximately $10.00 per share and VGAC warrants will expire worthless.

You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or public warrants, potentially at a loss.

Our public shareholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of a business combination (including the Closing of the Business Combination), and then only in connection with those Class A ordinary shares that such public shareholder properly elected to redeem, subject to the limitations described herein; (ii) the redemption of any public shares properly tendered in connection with a shareholder vote to amend the Existing Governing Documents (A) to modify the substance or timing of VGAC’s obligation to provide holders of VGAC Class A ordinary shares the right to have their shares redeemed in connection with a business combination or to redeem 100% of the public shares if VGAC does not complete VGAC’s initial business combination by October 6, 2022 or (B) with respect to any other provision relating to the rights of holders of VGAC Class A ordinary shares; and (iii) the redemption of the public shares if VGAC has not consummated an initial business combination by October 6, 2022, subject to applicable law and as further described herein. Public shareholders who redeem their public shares in connection with a shareholder

 

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vote described in clause (ii) in the preceding sentence will not be entitled to funds from the trust account upon the subsequent completion of an initial business combination or liquidation if VGAC has not consummated an initial business co